Positive Power of Principled Profit
Volume 3, Number 4 — December, 2005

Positive Power Spotlight: MSA Pedal Steel Guitars

One of the key principles of an ethical, successful business is the ability to listen to and respond to your customers in a meaningful way. The failure to do that cost an auto company my business last year, and if that company doesn't figure out a way to win me back, that's going to be a whole lot of lost business over the coming decades; I'd been I'd been buying that company's designs exclusively since 1982 (six vehicles).

Instead of the negative example of that automaker, let's look at how to do it right. And one model for that is Reece Anderson of MSA Pedal Steel Guitars. In a profile by Bill McCloskey for MediaPost.com's Email Insider, we learn that Anderson, himself a player and instructor, designs his guitars by hanging out on forums, asking what features people would like to see in a pedal steel guitar, and making himself extremely available to answer questions on steel guitar discussion forums such as steelguitarfoum.com.

Anderson is no neophyte. He started the company, which has gone through several incarnations, in 1962.

And quality is another significant piece of the company's mission. From the website http://www.msapedalsteels.com/html/about_us.html:
After much study, we concluded that together we had the production facilities, design capability, management experience and marketing skills to produce and sell a dramatically advanced concept in steel guitars that would truly "raise the bar of excellence and innovation" in the world of steel guitar.

The commitment to being "there" for customers extends to the website. The home page is rather desperately in need of a copy makeover, suffering under a bad case of "me-itis"--the first rule of good copywriting is that you focus on your customer, not on yourself--but it includes this remark: " We most sincerely hope we have the privilege of welcoming you as a member of the MSA family." It's sweet and sincere. And that got me to click on the "MSA Family" link, where I found numerous pages of photos of their customers, posing with or playing their guitars (including one from the stage of the legendary Grand Ole Opry--including 20 pages of photos sent by fans in a section called "Your Pics." That's one more way to build community.

Another Recommended Book: It Takes a CEO by Leo Hindery

A call for ethics and strong leadership from an insider: Hindery has been CEO of several major cable and Internet companies, including AT&T Broadband. He's also been actively involved in social justice work in both the Catholic community and as a supporter of equal treatment for gays/lesbians and AIDS research, among other causes.

Interestingly, his corporate insider stance is in many ways quite similar to my solopreneur's perspective. He's quick, for instance, to point out the high cost of corporate decisions made on bad moral choices, citing a $2.65 *billion* payout by Citigroup to compensate WorldCom investors who got taken based on one of its analysts' fraudulent advice.

Likewise, on issues ranging from the role of tax cut policy (to stimulate economic development among the have-nots rather than the already super-rich) and the disgrace of CEO compensation all out of proportion to ROI--or what folks make at the bottom of the corporate ladder--I find myself in basic agreement. He doesn't understand why average worker pay climbed only 15 percent from 1980 to 2001, while CEO pay mushroomed 600 percent, and he notes that Disney would have actually shown a greater return if it had taken CEO Michael Eisner 's pay and put it into treasury bonds. Forcing companies to expense stock options, as Microsoft does voluntarily, is one part of his prescription to fix the broken CEO compensation system.

And he points out, as I so often do, that corporate scandals have a real human cost. The Enron retiree who expected to live on a $700,000 nest egg and was left with only $20,418 is one face on that human cost.

Hindery also notes that stockholders aren't the only stakeholders, and decisions should take into account the effect on five major classes: shareholders, of course, but also employees, customers, community (both broadly and narrowly defined), and industry. To that list, I'd add future generations. As an example of this big picture thinking, consider the French government's decision to subsidize a shipyard rather than let it close, recognizing that the economic costs of government assistance to laid-off workers and the social costs of their unemployment, not to mention the loss of a key industrial capability, were going to cost more than the subsidy. He's got plenty of examples from the business side, a well.

Can a company be socially responsible and still compete economically? Hinder contrasts Wal-Mart's rapacious policies with Costco's much more responsible approach, and discovers that the performance numbers wildly favor Costco.

There's more--a lot more--but you'll just have to read the book.

Order: http://www.amazon.com/exec/obidos/ASIN/0743269853/ref=nosim/globalartstravel