How many principles does a firm need? And what does it mean for Procurement?

Lucy Kellaway in the FT this week was comparing Goldman Sachs' 14 principles, which are supposed to govern the way they do business, with the much more concise and meaningful six principles espoused by Stockmann, a Finnish retailer.  Kellaway doesn't like the Goldman list (and I agree with her); it is clumsy, contradictory and inaccurate.  For instance, the first principle is "our clients always come first".  No they don't, says Kellaway robustly!

But I would highlight an even better list; that of the Mars organisation, where I worked from 79-88.  Mars has five principles , and it says something that 20 years after I left I can still remember them; quality, efficiency, responsibility, mutuality, and freedom.  'Freedom' is a bit of an odd one; Mars is still privately owned and 'freedom' basically means staying that way.

But the principles' genuinely informed the way the company worked, and while efficiency, responsibility and quality all had obvious implications for procurement, 'mutuality' was perhaps the most interesting. Here it is:

A mutual benefit is a shared benefit;  a shared benefit will endure.
We believe that the standard by which our business relationships should be measured is the degree to which mutual benefits are created. These benefits can take many different forms, and need not be strictly financial in nature.  Likewise, while we must try to achieve the most competitive terms, the actions of Mars should never be at the expense, economic or otherwise, of others with whom we work.

Our Mutuality Principle has guided us reliably as we have established successful enterprises in new geographies and cultures. It has enabled us to act as a good corporate citizen, to minimize our impact on the environment and to use the natural resources of our planet wisely and efficiently.

This did influence our behaviour.  It didn't mean we couldn't negotiate hard, look for new sources of supply, or put strong pressure on suppliers to improve performance.  We did.  But you had to bear in mind that underpinning principle; that we shouldn't benefit at the expense of others, including our suppliers. We had to treat them in a reaosnable manner, with respoect, and so that they felt they got something out of being associated with Mars.

So if you're looking for some business principles, ignore Goldman Sachs, and take a look at Stockmann and Mars.

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