How a Compelling, Human-Centered Vision Inspires a Company

11th in a series of excerpts from the book The HIP Investor (John Wiley & Sons, 2010). See other articles in the series here.

A compelling vision is inspirational, measurable, and has a deadline.

“I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.” —U.S. President John F. Kennedy, May 1961

The United States rallied behind President Kennedy’s unifying aspiration. A compelling vision is specific in expected result and timing—"man on the moon,” returned safely to earth, by the end of the decade—which makes it easy to judge success or failure.

Just as the moon shot inspired young scientists to dream, so does a maker of computer chips, semiconductor producer AMD (NYSE: AMD). Because engineers are by nature inclined to solve the world’s toughest problems, AMD’s executive team laid out this challenge for the company’s product developers back in 2004: “50×15”.

Or to put it less cryptically, half (“50” percent) of the world’s population, (more than 3 billion people today) should have access to the Internet by the year 2015 (“15”). Since about 2 billion people have mobile phones (not all of which are Internet-enabled) and fewer than 300 million have computers, AMD engineers would need to think creatively about which devices (mini smart phones powered by AMD chips?) as well as which types of wireless transmission technology (innovations like Intel’s WiMax broadband towers?) could serve another two billion people. Now, that’s a compelling HIP (human impact plus profit) vision: “digital inclusion with a deadline,” AMD says, with increased information access for another third of the world would likely lead to more human impact—such as better health, increased wealth, and more equality. Of course, if the engineers could create this innovation at the right price, it would also boost AMD’s profits.

Both AMD and Intel see this base-of-the-pyramid market (the world’s poorest four billion making under $2 per day) as central to their next wave of growth—and inspiration for innovating new products, which will improve quality of life for citizens in places like Senegal, Cambodia, or Bolivia.

Still, today many companies’ visions are to “increase shareholder value” or to “boost cash flow per share” or “maximize return on invested capital (ROIC).” These visions are only inspiring to narrow-minded profiteers. To truly inspire employees, suppliers, and customers requires a compelling vision of Human Impact AND Profit—especially as 72 percent of employees want their employers to address social issues in the course of doing company business.

Honeywell (NYSE: HON ) is a company of several businesses—from aerospace systems, to turbochargers for vehicles, to building-control systems. Honeywell is also a company of engineers who seek to be systematic in solving problems. Chairman and CEO David Cote, in the 2006 annual report, declared boldly: “Nearly 50 percent of our product portfolio company-wide is linked to energy efficiency. We estimate the global economy could operate on 10 to 25 percent less energy just by using today’s existing Honeywell technologies”.

One-tenth to one-quarter less energy usage, worldwide, just by using half of Honeywell’s technologies in existence today—wow! To be clear, while this statement was published with large type in the CEO’s annual letter, it was not yet Honeywell’s business vision; the letter’s early pages still talked about “financial performance” and “cash deployment,” as well as “one Honeywell culture.”

Two years later, David Cote declared in Honeywell’s 2008 annual report in his typical folksy language:

“The energy efficiency drive is extremely beneficial for us because with our existing product line-up (i.e., stuff we already have) if, for example, the United States could just immediately and comprehensively adopt the products we have already designed and that are in the marketplace today, the country’s energy consumption could be reduced by 15 to 20 percent.”

Interestingly, this is not yet a formal, public goal for the company. To be compelling, it would need a stated deadline (by 2010 or 2020, for example). But it is a gauntlet that appeals to today’s need for more efficient energy usage—and it would simultaneously boost Honeywell’s profits. Stay tuned to see if this statement finally becomes a rallying cry, like AMD’s “50×15.”

Visions focused on positive impacts, but not specific to goals or timing include those of Intel (Nasdaq: INTC ), United Technologies (NYSE: UTX), Johnson Controls (NYSE: JCI), and 3M (NYSE: MMM) - all engineering cultures, by the way.

In 2007, Intel’s Gary Niekirk talked of its “sand to sand” vision. Since chips are made from silica, which comes from sand, the company’s goal is to have the end of the lifecycle result in sand as well. At United Technologies, “successful businesses improve the human condition,” say Chair George David and CEO Louis Chenevert, in the annual report for 2008. Johnson Controls seeks “a more comfortable, safe and sustainable world”. Innovator 3M, building on a constant stream of new products, expresses a “singular commitment to make life easier and better for people around the world.” Each of these visions gets some HIP credit for their aspiration to solve human problems. However, to earn the best score requires a more specific outcome and time frame for achieving it.

In Conclusion

It takes a strong vision of the future to bring it into fruition. This is why we recognize great leaders in politics, industry, spirituality, etc as visionaries. But a strong vision is more than an idea of progress; it included actual quantitative goals with ambitious deadlines. These are the visionaries that bring about change for a better and brighter future.

Once you understand how HIP a company’s vision actually is, then you can evaluate how a corporation applies a “balanced scorecard” of metrics that incorporate both Human Impact and Profit. In the next installment, we will discuss how leading companies have introduced these metrics in to their operation.

Photo by Eric Hersman/flickr/Creative Commons

To navigate this series, please use this table of contents.

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HIP Investor supports Spring of Sustainability.  For three months, the Spring of Sustainability will feature 100 “stars” of sustainability, from Jane Goodall to Bill McKibben to Van Jones, in free interactive teleseminars throughout the spring of 2012. Live events will also be held in cities across the globe.

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R. Paul Herman is CEO and founder of HIP Investor Inc. Herman is the author of “The HIP Investor: Make Bigger Profits by Building a Better World,”  published by John Wiley & Sons in 2010. Herman is a registered representative of HIP Investor Inc., an investment adviser registered in California, Washington and Illinois.

NOTE: This feature, excerpted and adapted from the HIP book, is not an offer of securities nor a solicitation. The information presented is for information and education purposes, and is not an investment recommendation. Past performance is not indicative of future results. All investing risks losing your principal. The author may invest in the companies mentioned above, and several are included in the HIP 100 Index portfolio. Details and full disclosures are at www.HIPinvestor.com

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