In his book Firms of Endearment, Raj Sisodia proves that success of any enterprise is built on a foundation that goes deeper than what we do and how we do it. In the FoE (Firms of Endearment) companies, terms like purpose, meaning, appreciation, joy, and yes, even love are not only acceptable, they are critical in the corporate language and culture. And they are not reserved for internal use only; they are attributes that are applied to all stakeholders–employees, customers, suppliers, investors and society.

This is not a call to embrace a new paradigm based simply on a touchy-feely justification that corporations should simply do the “right thing.” This is about an in depth study of firms that have out produced their peers and the market as a whole. The publicly traded FoE companies studied returned 750% over 10 years while the S&P overall provided a 128% return. What is even more telling is that over the last 5 years, these same companies provided their investors 205% return, when the S&P lost 13%. And many of these companies are well known–Southwest Airlines, IKEA, Whole Foods, Trader Joes, The Container Store to name a few.

What gives? Why does having attributes such as caring, appreciation and love as part of the corporate culture make such a difference?

It’s simple, actually. As described in The Living Organization^® model, the act of producing goods and services is an act of transforming energy. The more energy you have available and the more you focus that energy, the greater the results. The attributes that are core to the corporate culture of FoE companies set a context that allows for a greater flow of energy through the system. This energy is aligned and focused by their deep sense of meaning and purpose that permeates through their whole stakeholder community.

It’s not so hard to understand how this happens. Think of the various relationships you have had in your life, whether in business or personal. Think of those relationships where you felt appreciated, truly appreciated. Now compare those to relationships where you were simply having an interaction, a transaction if you will. Which one gives you more energy? Which one would your prefer having more interactions with? Now turn it around. Don’t you also experience more energy when you are being appreciative of what you are doing and whom you are interacting with than if you were feeling dread about it.

Now magnify that energy to the size of a corporation who, as a collective, truly appreciates their customers, each other, and all stakeholders. How much more energy do they have available to them? How much more would customers choose these Firms of Endearment, over other choices?

When you truly think of a corporation in the same terms as other human interactions it is not so difficult to understand why FoE companies would always outperform all other traditional companies. Perhaps you should think of your organization more as a living organization rather than the traditional efficient machine of production.