Invest in morality to be a 100-year business

For most businesses, being successful this year, or for the next five years, just isn’t enough. No company aspires to have a good run and then fall apart. And yet, so many companies are giving this strategy a good old go.

Ryanair is doing all it can to antagonise both its workforce and its customers. Bell Pottinger chased short-term profit only for it to result in liquidation and a call for new standards within the PR industry. And Uber is witnessing the rotten fruits of its labour in London after Transport for London (TfL) chose not to renew their private hire license.

My past client, Phil Libin, CEO of Evernote, had absolute clarity in his vision for the company. Evernote, hopes Libin, is to be the first 100-year start-up. He claimed there were two critical elements to achieving this goal:

  1. It should be a company that’s around in 100-years, which means Evernote’s product needs to be durable
  2. It should still be a start-up in 100-years, which means it should still be an innovative company that people love

A durable product is, of course, a staple. But the second criterion is what I believe matters most, once the base requirement is catered for; an innovative company that people love. No one invests in a company they hate.

And yet there are so many companies out there doing their very best to be hated. The example that is closest to home (and yet so far from our values) is Bell Pottinger – a PR agency that had repeatedly crossed over to the dark side of morality, only to go too far in its most recent escapade.

When I heard the latest furore over Bell Pottinger, I almost shrugged it off. They have hit the headlines before, after editing Wikipedia articles for clients (not only a waste of time but just poor PR) and boasting of political access and quite literally saying “we’ve got loads of dark arts” in an undercover media operation by the Bureau of Investigative Journalism.

Despite these previous examples of their lack of morality and inability to manage reputation for even just themselves, they had carried on, as successful as ever. And perhaps this success was due to their acceptance of the murkier side of PR, where they could charge £100,000 per month, if only they were willing to stir up racial tensions in South Africa. We all know what happened next.

But what of Uber and Ryanair?

Uber, it seems, is looking to challenge its demons. The new CEO, Dara Khosrowshahi, figuratively threw his predecessor under the bus in a memo which stated the private hire company would be changing its ways under his new leadership. Here are two key quotes from that note:

  1. “The truth is that there is a high cost to a bad reputation.”
  2. “We will show that Uber is not just a really great product, but a really great company that is meaningfully contributing to society, beyond its business and its bottom line.”

Khosrowshahi absolutely hits the nail on the head in the first quote, but the latter really harks back to what Evernote’s Libin was saying about the 100-year start-up. People do not love a profitable business, they love a business that goes beyond their bottom line, and provides added value to the world.

Ryanair, on the other hand, may not last 100-years. Fuelled by previous experience of generating custom despite negative press, Ryanair is unlikely to change their ways. In fact, during the pilot strike and flight cancellations, Ryanair still denied refunds to customers. But as Khosrowshahi says, there is a high cost to a bad reputation.

What is clear is that a complete void of morality will never do businesses well. In the short term, massive profits may be made. But skeletons in the closet will and do come back to haunt. Better to invest in morality from the very beginning, and to achieve the goal of being a 100-year business.

See you in 2117.