Firms of Endearment: How World-Class Companies Profit from Passion and Purpose

by David B. Wolfe, Jagdish N. Sheth, Rajendra Sisodia

Love, Joy, Authenticity, and Soul:

Building Winning Businesses in the

New Age of Transcendence

• Why today’s most humane companies are blowing away the S&P 500 averages

• Increasing “share of heart”: delivering the emotional, experiential, and social value your stakeholders are demanding

• 30 powerful case studies, including CarMax®, Timberland™, Jordan’s Furniture, Trader Joe’s, Wegmans, and Toyota™

Today’s best companies get it. From Costco® to Commerce Bank, Wegmans to Whole Foods®: they’re becoming the ultimate value creators. They’re generating every form of value that matters: emotional, experiential, social, and financial. And they’re doing it for all their stakeholders. Not because it’s “politically correct”: because it’s the only path to long-term competitive advantage.

These are the Firms of Endearment. Companies people love doing business with. Love partnering with. Love working for. Love investing in. Companies for whom “loyalty” isn’t just real: it’s palpable, and driving unbeatable advantages in everything from marketing to recruitment.

You need to become one of those companies. This book will show you how. You’ll find specific, practical guidance on transforming every relationship you have: with customers, associates, partners, investors, and society. If you want to be great–truly great–this is your blueprint.

We’re entering an Age of Transcendence, as people increasingly search for higher meaning in their lives, not just more possessions. This is transforming the marketplace, the workplace, the very soul of capitalism. Increasingly, today’s most successful companies are bringing love, joy, authenticity, empathy, and soulfulness into their businesses: they are delivering emotional, experiential, and social value—not just profits.

Firms of Endearment illuminates this, the most fundamental transformation in capitalism since Adam Smith. It’s not about “corporate social responsibility”: it’s about building companies that can sustain success in a radically new era. It’s about great companies like IDEO and IKEA®, Commerce Bank and Costco®, Wegmans and Whole Foods®: how they earn the powerful loyalty and affection that enables truly breathtaking performance.

This book is about gaining “share of heart,” not just share of wallet. It’s about aligning stakeholders’ interests, not just juggling them. It’s about building companies that leave the world a better place. Most of all, it’s about why you must do all this, or risk being left in the dust... and how to get there from wherever you are now.

Foreword xv

Prologue A Whole New World xxi

Chapter 1 It’s Not Share of Wallet Anymore; It’s Share of Heart 1

Chapter 2 New Age, New Rules, New Capitalism 23

Chapter 3 The Chaotic Interregnum 49

Chapter 4 Employees—The Decline and Fall of Human Resources 65

Chapter 5 Customers—The Power of Love 97

Chapter 6 Investors—Reaping What FoEs Sow 125

Chapter 7 Partners—Elegant Harmonies 145

Chapter 8 Society—The Ultimate Stakeholder 171

Chapter 9 Culture—The Secret Ingredient 197

Chapter 10 Lessons Learned 235

Chapter 11 Crossing Over to the Other Side 253

Acknowledgments 273

Genres: Business, Nonfiction, Economics, Leadership, Management, Buisness, Entrepreneurship

284 pages, Hardcover

First published January 30, 2003

Reviews

[Åsa Svensson · Rating 2 out of 5]

Yet another management book that says in 200 pages what could be said in 20.

[Brent Green · Rating 5 out of 5]

When I was a young advertising executive back in the early 1980s, I learned a lot about the science of advertising from my major client, McDonald's. I learned how to plan and execute campaigns precisely to achieve optimum media reach, frequency, TRPs, cumes, and CPMs.

I learned about developing campaigns to win the greatest media "share of voice" and ultimately achieve the largest "share of mind," which of course we measured with research (unaided recall, aided recall, brand associations, etc., etc.).

But the Ronald McDonald House and a little girl with Wilms tumor taught me that hearts cannot be bought or sold with hard-core marketing but must be earned through good works and honest values, forthrightly expressed. I discovered something much more important from a consumer standpoint: "share of heart."

This is what Firms of Endearment teaches with its many insightful case studies about how "share of heart" can be achieved through integrity, humanistic values and community stewardship. I have learned in 30 years that we consumers have a lot of heart to give back to companies that take care of us and reflect our deepest values. It's a simple idea, yet profound and so timely.

One critical reviewer posting here does not apparently understand that appealing to endearing emotions -- and building brands based on appeals to the emotions seeking affinity (and their underlying core values) -- is the wave of the future. Consumers have multiple choices today in any category -- parity reigns -- and it's those companies making cogent and genuine appeals to the heart that will prosper more than those who remain stuck in 20th century approaches involving logical sales arguments, low-price positions as the primary business goal (e.g. Wal-Mart), obsession with killing competitors, and strong-armed sales tactics. Low pricing wins a segment of the market and always will, but I can't think of a widely admired firm that has achieved substantial "share of heart" when focused on making money over creating affinity with stakeholders.

The authors are suggesting a revolutionary idea: humanism can merge with capitalism through a truly win-win business/consumer strategy, an endearing strategy -- a 21st century capitalism.

[Experience Life · Rating 4 out of 5]

The strategies that make a business successful are undergoing an abrupt about-face, according to these authors — two business-school marketing professors and one renowned trends expert. Companies that prize profits over people are faltering, they assert, while socially responsible companies that respect all their stakeholders are on the rise. The authors identify several publicly traded “firms of endearment” (FoEs) — successful companies that have endeared themselves to employees, suppliers, customers and investors by deploying certain responsible purpose-centered business practices. Those practices include compensating employees at above-average rates and executives at below-average ones, working in partnership with suppliers rather than angling for competitive price advantages, and investing profits in socially responsible ventures rather than marketing schemes. As a result, FoEs (which include IKEA, Costco, Toyota and Whole Foods) have not only reliably outperformed their competitors, they’ve also significantly outperformed the 11 companies profiled in Jim Collins’s classic book, Good to Great. In addition to making a quantitative, research-based case for the stakeholder model of business, this book explains why companies making a positive difference in the world are the ones most likely to succeed over time.

[Chris Yoko · Rating 4 out of 5]

If this book was rated only on its message it would be 5 stars. The content is well structured and clearly showcases the authors argument that business which are more evolved and self actualized tend to out perform the market greatly.

My only complaint about the book is that it reads very academically - more like a textbook. I, personally, would have prefered a version which expressed the same message in a more conversational tone without belaboring the point with 4 pages of additional examples and research.

Nonetheless I believe the book illustrates why these businesses are leaps and bounds ahead of many of their competitors and more importantly how the world would be a better place if there were more businesses that acted as the FoEs do.

[Chuck Heikkinen · Rating 5 out of 5]

When I first got the book, I thought I was getting "Terms of Endearment," and thought, oh, that would be nice to read. It turned out quite differently and I liked the result. The book lays out how corporations who put "stakeholders" first (employees, suppliers, retailers and customers) ahead of profit actually perform better than corporations dedicated to making money for shareholders (and top executives). The shareholder profit is better, the working conditions are better, the community benefits and employees, suppliers, and retailers feel (and are) valued.

[Marty · Rating 5 out of 5]

Nice to read a book that says you can do well by doing good. That exploitation of employees,customers and the environmemt is not really the path to success for shareholders.

[Oudom Rith · Rating 4 out of 5]

I picked this book cuz of watching a professor use it as reference at Coursera.

[Sam Motes · Rating 4 out of 5]

The book argues that we are entering a new age of transcendence where the zeitgeist of society due to its aging (majority of adults over 40 now) is moving towards a higher calling of giving back to society and moving beyond the drive for more individual materialistic gain. The pull of this movement is so great it is impacting the soul of capitalism itself and giving it a more humanistic feel. The book goes into detail of how Firms of Endearment are at the cutting edge of this movement in focusing on societal value of their output and not just their shareholders. The book makes some compelling arguments for this movement but it seems to be indirectly at odds with the cut to the bone belt tightening going on by industries to survive the economic meltdown even if the greed and corporate corruption that lead to this mess is a direct supporting cause for the movement. As we move out of this mess this movement could catch steam and become even stronger. Book is a little dated in that it was written in 2007 prior to the current economic meltdown which is evident in its discussion of things like Wal-Mart stock falling behind Target which reversed sharply during the last few years but the ideas it talks about are still relevant

[E · Rating 4 out of 5]

Intellectual argument for corporate altruism

Authors Raj Sisodia, David B. Wolfe and Jag Sheth contend that as U.S. society becomes more concerned with caring, responsible practices, businesses are becoming more aware of serving the society around them, rather than being motivated only by profit. More companies now are building corporate cultures around humanistic values. They provide equal service to each stakeholder group: society, employees, customers, partners and investors. This creates lasting loyalty and even earns a profit. Despite a bit of jargon, the book paints an idyllic but desirable business portrait. Readers might even see its optimism and altruism as a balance to the prevailing negativity. getAbstract suggests this book to executives, entrepreneurs and business theorists.

[Bruce Flanagan · Rating 5 out of 5]

A must read, although not everyone will agree. I loved it

[Edmond Porter · Rating 3 out of 5]

A bit dated information but still interesting to see that there is a place for companies that actually treat customers and employees well and turn a profit

[Matt Kaspari · Rating 5 out of 5]

If you like Good to Great, you will love Firms of Endearment. This book looks at the real things businesses should measure.

[Christophe Lorvo · Rating 5 out of 5]

Inspiring book!

It shows how a company higher purpose driven makes a difference. A company that cares equally for each of it stakeholders -

[Parimal · Rating 4 out of 5]

Nice read

[John Oswald · Rating 4 out of 5]

Business has fashions and fads just like everything else. The worst fashion has been the idea that companies’ only duty is to make profit (I simplify a complex debate here…). Nowadays that’s almost viewed as heretical (and rightly so) for all sorts of reasons. Reading this rather wonderful second hand copy (thanks @abebooks ) has also exposed much of my own arrogance. When I was working with some colleagues to reconsider the role of culture and purpose in companies, I felt like we were discovering this for the first time! But of course, there have been enlightened souls for much longer. And this book was first published in 2007. It seems almost crazy that there are still companies around whose only goal is to make a ton of money, score a higher valuation, get acquired for the maximum amount. But maybe I’m just an ageing hippy. I don’t think so though. In spite of this particular edition (it’s been updated and there’s a FoE website too) being very US-centric and a little breathless in its prose, there are some superb principles, heuristics and - crucially - evidence here that doing the right thing by *all* stakeholders (environment and society included) is just good business. What happens to us to make us forget this…? #guehennoreads #booksofinstagram #booksof2021 #firmsofendearment

[Richard Fitzgerald · Rating 3 out of 5]

This book provides a needed view that is more expansive than only focusing on profits. The predominate industrial idea of solely having a responsibility to maximize profits for shareholders will take culture into a dystopian future of darkness, violence, environmental degradation, and increased poverty. Books like this help reframe the conversation. And, this book does it well.

I do, however, question many of their “example” companies. I’ve found Commerce Bank to be the most expensive and heartless bank that I’ve ever dealt with. Toyota has regularly covered up misbehavior to not lose market share. And, Caterpillar has made business decisions that have displaced thousands of people. Whole Foods has been bought out by Amazon. All these weaken the argument of the book and maybe make it a bit dated.

[Diego Ferreira · Rating 3 out of 5]

Achei o livro muito moroso e que não engaja o leitor. A princípio o segredo das empresas queridas são:

- desafiam livremente dogmas industriais
- geram valor alinhando os interesses dos stakeholders
- se dispõe a romper com as opções tradicionais
- operam numa perspectiva de longo prazo
- favorecem o crescimento orgânico em vez de um crescimento mediante fusões e aquisições
- misturam trabalho e divertimento
- rejeitam os modelos tradicionais de marketing

Além de dar exemplos na prática da Southwest Airlines, Starbucks, Honda, IDEO e IKEA.

De aprendizado tirei que não adianta as empresas somente focar no lucro e sim em fortalecer seu relacionamento com todos os envolvidos em sua cadeia de valor.

[Kallie · Rating 4 out of 5]

Can capitalism be progressive? Perhaps, but the CEOs of corporations (and their shareholders) have to be less greedy, more interested in the welfare of their employees, and the general public good. The thing is, this strategy though it would never bring obscene profits is far more stable, far less likely to bring on the kinds of economic crises and extreme concentration of wealth we have seen lately. Unfortunately, corporations will not behave this way if our lawmakers continue to be complicit in and enabling of predatory practices. For now, greed wills out though we see very clearly how destructive that can be.

[Neeraj Bagi · Rating 5 out of 5]

Its a good book to learn the changes in mindset in the way of doing business in the 2004-2005 era. This book highlights the advantages of being a Firm of Endearment (FoE) and its responsibilities towards all the 'stakeholders' and not only its 'shareholders'.

The book largely talks about the need for companies to change their mindsets from 'Share of Pocket' to 'Share of Heart'.

Fantastic examples mentioned. A recommended read for people who have intentions to run a business.

[Susan Wilson · Rating 2 out of 5]

So verbose and repetitive I had to skim a lot of it. I also question the reality of many of the organisations held up as Firms of Endearment. I am offended that an organisation is praised for having 44% women employees, with 32% in management roles WTF!!!

[Manish Nigam · Rating 4 out of 5]

Good case studies and examples.

[Ligia Bonetti · Rating 2 out of 5]

It’s an ok book. Some interesting points about culture but not impressive.

[Daniel · Rating 3 out of 5]

This book has many nuggets of wisdom, albeit it’s
a little repetitive. It also has numerous relevant examples, but they are scattered somewhat confusingly throughout the book.

[Kent · Rating 2 out of 5]

boring sorry business school readings are so predictable and impractical

[Sofus Kristensen · Rating 3 out of 5]

Very interesting thoughts and arguments. Even now many of the companies are still performing very well.
However, the book is very repetetive and could easily have been half the length.

[Euihyeon Pyeon · Rating 5 out of 5]

[이 책은 '상생 경영'을 다루고 있다. 고객들이 사랑하는 기업의 공통점은 '상생 경영'을 하는 기업이며, 실제로 타 기업들 대비 높은 기업 성과도 보이고 있었다.]
- '상생 경영'이라 함은 모든 이해관계자들의 이해를 고려한 경영을 펼친다는 개념이다. 해당 연구는 일반 소비자들에게 '사랑받는 기업'들의 공통적 특징을 발견하는 것에서 시작 되었고, 놀랍게도 그들의 장기적인 성과는 전통적인 경영방식을 취한 기업들을 훨씬 상회 하였다.
- '상세 경영'을 펼치는 기업들이 높은 성과가 가능했던 까닭은 첫번째로 비용 이슈인데, 단기적으로는 마케팅 비용과 리스크 처리 비용을 줄이고 장기적으로 근본적인 원가 절감까지 가능했기 때문이다. 두번째로는 매출 이슈로, 충성도 높은 기존 고객을 유지하면서 기업 가치를 높게 산 새로운 신규 고객 유치도 용이해지기 때문이다.
- 근본적으로 보았을 때 '상생경영'이 대두된 것은 소비자들의 의식 수준이 향상되었기 때문이고, 매슬로우가 말하는 '자아실현의 욕구'를 추구하는 사람들이 증가했기 때문이다. 또 다른 단어로 'Generativity'의 증가로 설명할 수 있다.

[이 책이 나에게 큰 영향을 준 배경은, '자아실현 욕구'라는 컨셉을 가져와 기업에게 적용시켰다는 점이다.]
- 나는 어릴 적 매슬로우의 '자아실현 욕구'라는 개념에 매료 되었고, 사람들에게 이를 제공코자하는 삶을 살아왔다. 하지만 컨설턴트라는 현 직업과 내 기존 꿈 사이의 괴리는 내가 명쾌하게 답하기 어려운 질문으로 남아 있었다.그 까닭을 살표 보면 내게 두가지 전제가 있었기 때문으로 보인다. 첫째 매슬로우의 욕구 위계설은 기업에게 적용할 이론이 아니라는 생각과, 두번째 '자아실현 욕구'를 자신의 꿈과 커리어를 추구하는 것이라는 생각이 있었다.
- 우선 후자의 전제는 깨질필요가 있었다. '자아실현 욕구'가 단순히 자기개발 등에 국한 된 것이 아닌 타인의 성장을 바라는 것(위에 언급한 말에 따른 Generativity)까지 확장시켜 이해할 필요가 있었다. 다음으로 첫 번째 전제대로 기업이 해당 욕구를 가질 순 없다. 하지만 '자아실현 욕구'를 가지는 가지는 사람들(여기선 이해관계자)이 증가해지면서 이들이 기업에 미치는 영향력이 급격히 증가하고 있다.

[해당 '상생 경영'을 실제에 적용하기 위해선 '다양한 이해관계자'들의 이해를 기업 초기 단계 때 혹은 의사결정 초반에 반영할 수 있어야 한다. ]
- 성능이 발달하면 복잡성이 증가하다 고도로 발달한 시점에 이르러선 다시 복잡성이 낮아진다는 연구가 있다. 애플 제품들은 이에 대한 전형적인 예시로 보인다. 독자적인 OS/앱 생태계/사용자 친화적인 UI,UX 등 극도로 복잡해야 정상일 것 같지만 굉장히 단순하고 직관적이다.
- 기업에서 '자아실현 욕구'를 고려하는 것도 이와 유사하지 않을까 싶다. 고려해야할 이해관계자들 수가 절대적으로 많고, 또 이해관계들이 서로 상충할 경우 복잡성은 기하급수적으로 증가할 것이다. 하지만 그 복잡성은 어느 시점에서 오히려 명쾌해지고 단순해 지는 시점들이 있을 것이다.
- '복잡성을 넘어 단순성'을 가져 오기 위해선 가능한 '이른 시점'에 '최대한 많은 이해관계자'들의 의견을 반영하는 것이 핵심이라 본다. 비록 시작 속도는 상대적으로 더뎌 보일지 모르겠지만, 전체 시간과 자원에서 초반이 차지하는 비율은 작을 것이라는 점에서 큰 문제가 되진 않는다. 다만 초반에 잘못된 방향을 설정할 경우 이로 인해 이후 발생하는 손실은 상상을 뛰어넘을 것으로 생각한다. 따라서 기업 설립의 초반 부 혹은 매 중요한 의사결정의 초반 단계에서 다양한 이해관계자들을 고려하는 것이 중요하다고 볼 수 있다.

[Glenn Van · Rating 4 out of 5]

Helaas nog niet verkrijgbaar in het Nederlands, maar een bron van inspiratie en zeker ook bewijs dat MVO of - zoals het genoemd wordt in het boek - het Stakeholder Relationship Model duurzaam financieel beter presteert. Meest in het oog springende cijfer, de bedrijven in Firms of Endearment zijn in tien jaar 10 keer zoveel waard geworden als de S&P500 en 3x zoveel waard als de bedrijven uit Good to Great van Jim Collins. Daarnaast staan er prachtige anekdotes in over bedrijven als Harley Davidson, Ikea, Timberland, SouthWestAirlines en Google.

[Leader Summaries · Rating 5 out of 5]

Desde Leader Summaries recomendamos la lectura del libro Empresas que se hacen querer, de Rajendra Sisodia y David Wolfe y Jagdish Sheth.
Las personas interesadas en las siguientes temáticas lo encontrarán práctico y útil: management, responsabilidad social corporativa, mejorar el clima laboral.
En el siguiente enlace tienes el resumen del libro Empresas que se hacen querer, Qué están haciendo algunas empresas para que el mundo sea un lugar más habitable y feliz: Empresas que se hacen querer

[Brandi · Rating 5 out of 5]

In a world where too many corporations value the dollar above anything else, no matter what the cost to the environment, people, etc., and engage in shady and unethical means to gain more, it is refreshing to read about other corporations that promote more ethical behaviors and practices. I love how this book uses actual case studies and statistics to show that companies can be profitable and socially responsible.

[JD · Rating 3 out of 5]

Big Ideas and Words, Skip Ahead to Conscious Capitalism

We read Conscious Capitalism at work last year, which I enjoyed. Challenging, mind-expanding ideas. Readable. This book was written about a decade before, and did not add much for me beyond Conscious Capitalism, as I had already bought in. Word choices felt a little precious ("concinnity" anyone?) and so, distracting.