Principle and Profits: A Surprising Connection

Last night I had dinner with some impressive people.  Those at the table included the outgoing, international president of a major service organization, the director of a national leadership institute, an executive in a large corporation, a female entrepreneur, and the co-founder of a local business.  While they all came from different backgrounds, they were all committed to the service of the higher good and they all radiated positivity.

There were many stories told but the one that most stays with me was told by the co-founder of the local restaurant business.  His name is Paul.  In setting up their restaurants Paul and his partner committed to the constant, intense training of their people, particularly around the concepts of quality and of customer service.  They also committed 10% of their profits to community needs.  As a major recession began, it was clear that less people would be able to afford to eat out.  Since their restaurants are high end, it was a certainty that profit would decline.

Paul and his partner made two decisions that were counter-intuitive.  The first decision was to increase their financial contributions to community service.  Because the community organizations would be receiving less, Paul and his partner felt that they should do more.

The second decision was to increase rather than decrease their investment in training.  They reasoned that people would only go out to eat on rare occasions, and when they did they would want to be sure that they received high value for their precious dollars.  Paul wanted to train his people to provide even greater quality and service during the recession.  He wanted his customers to be delighted.

The outcome was interesting, instead of a decline in profit, they experienced an increase in profit.  The first year profit went up 8%, the next it went up 10%, and the third year of the recession it went up 12%.  As we explored this phenomenon, Paul said something interesting:

“If you have deeply held guiding principles, you follow them when the situation changes, when it is suddenly hard to follow them.  If you do not, you do not have guiding principles.  You have a best practice.  Best practices can change with a situation, guiding principles do not change.  When times get tough that is when you find out who you really are.  You find out what principles are central to you identity.”

This morning I woke up thinking about Paul’s statement.  I have heard similar statements from other people.  They are very much like Paul.  They are people who have succeeded in the face of adversity.  They are people who have learned how to do hard things.  They have become real leaders, driven by some set of unchanging principles.

Then the central insight came.  When we are really leading we have a purpose that is higher than self.  When we also have principles from which we will not deviate, and we encounter a situation that calls for compromise, we have to make new decisions.  We have to clarify if we are still committed to the purpose and to the principles.  If we answer yes, the purpose invites us forward as the principles constrain us from taking the easiest path.  They require us to move forward on a new path, they require learning by faith.  We do not know, for example, if we are going to lose the business.  In the midst of uncertainty we must be mindful, we must learn from the new experience that is unfolding.

Research suggests that fear hinders the learning process while positivity elevates learning.  When the situation is threatening (we may lose the business) we can remain positive.  We can accept the risk that others would avoid because we feel the moral power that comes with positive self-regulation.  The process of learning by faith becomes an attractor of resources we could not previously see.  These may be emotional, intellectual, physical, social or spiritual resources.  As we draw them to us, it changes our perception of what is possible in the world.  We acquire new capacity to engage the journey of deep change and to effectively invite others to grow in difficult times.

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