• May 2011

Inside "The Soul of a Business: Managing for Profit and the Common Good"

By Dr. Alice Waagen
Founder and President
Workforce Learning

Can American companies, so many of which are run by numbers-driven graduates of MBA programs, make money — and have soul?

I have struggled with these questions for the 15 years that I have run my business. To date, the best answer I have come up with is a tentative “maybe.”

Indeed, I have scoured scores of books and articles on the topic of how business leaders can bring strong values and ethics into the workplace. Unfortunately, most of them have been bromides that document short-term change, but fail to demonstrate a sustainable shift in the way the business is run.

So I am cheered not only by this month’s Entrepreneur of the Month, Howard Schultz, and his book, “Onward,” but I highly recommend a book about another values-based organization that has survived for decades and continues to flourish, Tom’s of Maine.

Tom’s Magical Formula

Founded in 1970 by Tom and Kate Chappell with just $5,000, products manufactured by the Kennebunk, Maine, firm are sold at more than 40,000 retail outlets worldwide.

Their global outreach began in 2006, when Tom’s of Maine became a partially owned subsidiary of Colgate-Palmolive, which now owns 84 percent of the company. The Chappells, who own the remaining 16 percent, sold the majority of their firm for $100 million. The terms of the purchase stipulated that the policies and company culture of the Tom’s of Maine brand — a crucial part of what makes the overall company so valuable — would be retained.

The reason is simple. Making money, while maintaining core values, is the key to success for the Chappells, as Tom explains in his 1994 book, The Soul of a Business: Managing for Profit and the Common Good.

In fact, he made a conscious choice — or should I say conscience choice? — to let his personal beliefs drive his business strategy.

That decision came soon after he began studying for his master’s degree at Harvard Divinity School, and he had an epiphany: Numbers alone can’t drive business decisions. He realized that decisions must be made within the context of a belief system, which he calls the “soul” of the business.

Of course, nonprofit organizations have always operated this way.

Key strategies are determined by how well they will further the mission of the organization — and then the financial implications are examined.

Traditional for-profit organizations invert this approach. And too often, they only consider cash-flow statements, and profit-and-loss reports.

Tom Chappell and his board chose a different path by basing each business decision on the company’s statement of beliefs. For example, when customers complained about their deodorant, they immediately recalled the product and began researching the problem. That decision cost them a 30 percent loss in annual profits that year.

How applicable is this model to larger organizations, especially in these challenging economic times?

While I’d love to think otherwise, it seems difficult — if not impossible — for most corporations to make strategic decisions that support their core values at the cost of lower profits.

I do think that the entire nation would benefit if more leaders had the courage to see the long-term gain of a values-based decision over short-term profitability. I see the Tom’s of Maine story as one model of how to extract ourselves from the false belief that short-term thinking is the way to run a business.

In fact, reading “The Soul of a Business,” reinforces the fact that numbers alone will not produce sustainability. It is his belief in something greater than market share and sales that has kept his business successful for more than four decades. Here’s to more of us taking a page from Tom’s playbook.

More About Tom Chappell

Like the company he pilots, Tom Chappell has received many awards, including the “New Englander Award” sponsored by the Small Business Association of New England, and CNHB named him the 1991 “Entrepreneur of the Year,” and the Entrepreneur of the Year Institute named him 1995 “Socially Responsible New England Entrepreneur of the Year.”

Tom’s of Maine has been named one of the “100 Best Companies in the U.S. for Working Mothers” by Working Mother magazine and one of the “Top 10 Healthiest Companies” by Health magazine. Tom’s of Maine has received the prestigious “Corporate Conscience Award for Charitable Contributions” from the Council on Economic Priorities.

Tom Chappell is active in many cultural and philanthropic organizations, among them: the Dean’s Council for Harvard Divinity School, the Advisory Council for the Center for the Study of Values in Public Life at Harvard Divinity School, the Board of Fellows for Harvard’s School of Dental Medicine, The Nature Conservancy of Maine, and the Washington National Cathedral National Advisory Group. In 2000, Tom Chappell was appointed by President Clinton to the White House Commission on Complementary and Alternative Medicine Policy.

A graduate of Trinity College in Hartford, Connecticut, with a BA in English, Tom Chappell earned a master’s in Theology at Harvard Divinity School. He is active in the Episcopal Church of Maine and was a member of the Environmental Stewardship Team of the national Episcopal Church.


About Alice Waagen

Alice Waagen, Ph.D., is president and founder of Workforce Learning LLC, a leadership development company she founded in 1997. In the past three years alone, more than 125 leaders from 24 organizations have graduated from Waagen’s unique leadership-development workshop series. Learn more about Waagen’s work at www.workforcelearning.com.

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