[MUSIC] So what is the alternative to linear alignment as a mechanism for defining objectives? Well, over the last five years or so, I've been kind of grappling with that question, and a couple of years back I came across this term, obliquity. It's not my term. I saw it because John Keynes, a well known British economist, wrote a book with the title. But I kind of started looking into it. And I decided that actually that this is really quite a clever way of capturing a slightly alternative principle that some companies adopt as a way of setting their objectives. I'll define exactly what the term means in a second, but for, for now, consider these two alternative world views. One from ExxonMobil, one from Tata. And Exxon on their website says we must continuously achieve superior financial and operating results while simultaneously adhering to high ethical standards. So, in the context of what I just said, it's clearly an example of the kind of classical alignment approach, which is, we're deliberately creating an organization which is seeking to make a great deal of money. And we're going to, you know, build a set of structures that support that and enable us to do that whilst also making sure we, we do everything ethically. So I have nothing against that, it's a, it's a very effective model and Exxon is a very successful company. The right hand side here, Tata, is a good example of, of a company with, with a very clear purpose, with a very clear higher order goal. And one of the things they say very explicitly is that our reason to exist is to improve the quality of life for the communities we serve. In other words, we, we're, we're out to, to make a profitable business, and we're to do that in areas like steel, and car making. And indeed in professional services. But behind all of that, we are making a commitment to the communities in which we serve. And I'm going to give you some more specific examples about and how Tata does that shortly. Suffice it to say that we got these two alternative views, and Tata is much more as sort of an example of what I'm going to call the oblique principle, or obliquity, than the classical linear line model. So what is the definition of obliquity? Goals are best achieved indirectly. Or to say it slightly differently, if you want to get to point A, you should aim at point B. Now that might sound like complete nonsense but I want to at least convince you that it can be true under certain circumstances. Consider that the quote on this slide from, from Viktor Frankl, some of you might have heard of him, he was a, he was actually a Holocaust survivor, and he went on after, after, after the war to found a successful branch of psychotherapy called logotheropy. And he, and he has the following statement, you know, if you read his work carefully, he says, don't aim at success. The more you aim at it and make it a target, the more you're going to miss it. For success, like happiness, cannot be pursued, it must ensue and only does so as the unintended side effect of a dedication, a personal dedication, to a cause greater than oneself. Now, he's a philosopher, he's got a particular point of view here. I'm just trying to extract a very, very sensible concept, which is this notion that in order for us to be successful or happy in life, we have to do that by doing something a little bit more difficult. We actually have to take on a challenging, challenging task or worthwhile cause. And that in doing that, that's actually what makes us successful and happy. Much more than trying to what, like live life every, every day as if it was our last that makes us much less happy than if we try to do something worthwhile. So for me that's a great individual example of the oblique principle. Let me now pull that up to the level of the organization and to say, is it possible to take that concept and think about examples of companies that by deliberately shooting for something different or difficult, that they actually find themselves being profitable as a result? And it turns out when you look across the literature, you've got quite a lot of examples of studies which actually prove that exact point. So I'll just briefly acknowledge three here. There's a very famous study by Jim Collins and Jerry Porras, Built To Last and they studied a bunch of what they called visionary companies. Big successful American companies that had very visionary goals, very long sighted goals. And what they discovered by comparing their visionary companies to a bunch of sort of a bunch of other companies in the same industries. They discovered that, paradoxically, the companies that were seeking to do visionary things, worthwhile things for society, ended up actually having better financial performance than the, the benchmark companies, which had much narrower financial goals. So, that's an example of oblique principle at work. Two other examples a study called Firms of Endearment by Sisodia, Wolfe, and Sheth. And what they do, is they looked at companies like, like Whole Foods Markets in America. Companies which explicitly and deliberately focusing on creating businesses which are good for society. They actually figured out that by taking a basket of those companies and comparing their performance over the long term to the stock market as a whole, that they dramatically outperformed the stock market as a whole. And then the final one, a very, very careful analytical study by Alex Edmans, who's a colleague of mine at London Business School. He showed, by taking the companies which were listed in the best companies to work for index. And looking at their performance, again, over a long term, and comparing it to the index. He figured out that those companies, again perform better financially by investing in people, by making companies good places to work for. They actually ended up doing better financially. Now, when you look at those studies and you sort of think to yourself, what's going on? It is absolutely the case that the kind of causal link between these two sides goes both ways. In other words, the companies that invest in, in, in the planet or in their, the people, tend to do better financially. But it is also case that the companies that are better-performing, the ones with higher profits, are able to give more back to society. There's no question that this, this is a kind of a, a mutual causality in the relationship between these two sides. But, you put it together, and you look at it over a 20 or 30 or 40 year period. I think it is safe to say that, it is possible for a company that has higher order goals. Has got some sort of shared purpose, will be able to make a very strong case. That they will actually do very well financially as well, even though they weren't going for money as their primary objective. So, in a nutshell, that's what the oblique principle says. It says that if we, as a company shoot for some sort of higher or long term goal, then chances are that will enable us to be more profitable than the companies that always have a very shor, narrow and financial in short term focus.