Chapter 5
In relating to employees and markets, a company often finds itself in asymmetrical interactions: vis-a-vis personnel, management strives to act with considered deference while, at the same time, unleashing a campaign of influence and persuasion on its potential markets. The only corporate arena where mutualized interactions can take place is the boardroom, where executive leadership meets the company patronage. Dependent upon each other for the sustained growth of the corporation, the two must arrive at a modus vivendi that reflects the reciprocity of their relationship.
The principle guiding their relationship should be that of cooperation aimed at strengthening the vital sign of corporate health, a steady "flow" of investment and return. The greater this "flow," the wider the investment channel becomes and the further upstream the company can sail its product. The surest guarantee of free-flowing capital is the establishment of trust between management and investors.
Unlike a company's relationship to employees and markets, which focuses on the conditions necessary for optimizing production and demand, its relationship to investors revolves around profitability. Money is the medium which flows between the two in a swirling motion that carries capital into the company and retrieves profit for its holders. The word in Hebrew for "trust" (emunah) is related to that for "money" (mamone), highlighting the importance of good faith in securing financial well-being. The very term "shareholding" expresses the value of trust and cooperation in solidifying the bonds between management and ownership.
Besides the investor pool, there is another essential body in whom management must inspire trust and confidence if it is to guarantee the company's financial base: the bankers. As the company's debt financier and major lending source of venture and working capital, the bank must be welcomed as an intimate partner in virtually all aspects of the corporate enterprise. By taking care to choose a bank with good knowledge of the business one is in, and cultivating with them a rapport based upon understanding, patience, and friendship, management can find in its bankers an indispensable source of objectivity regarding the health of one's company. At times of fiscal stress, a knowledgeable and concerned banker can help a company evaluate whether the source of difficulty is managerial or purely financial in nature. Establishing a banking relationship upon openness and trust will guarantee the maximum advantage to be gained by all.
One of the goals of management should be to keep the spiraling cycle of trust in one's company growing until it touches all potential investment, drawing even the company's own customers into the vortex. Whereas market-strength is characterized by an aggressive forward thrust in sales, the capital-strength of a company is characterized by the more stable and reassuring pattern of spiral-expansion that draws more and more people into a reciprocal sharing arrangement. The ultimate display of faith that a market can show in a company's product is to enter the investment stream and thereby reinforce the corporate momentum. As the "flow" increases and the channel widens, all benefit from the increased surge in corporate growth.
The term in Hebrew for capital strength is chayil, a word that implies both power and wealth. Unlike the synonyms for strength mentioned earlier–koach and on–denoting the "potential" and "potency" inherent in goods and those who produce them, chayil is a measure of the success one achieves through those goods, expressed primarily through the capital they generate.
Implicit in the root of the word chayil is a connotation of ever-expanding circular motion (mechol) seeking out broader and broader orbits within which to extend its influence. The contagion of success is what every enterprise wishes for itself, its product, and the markets it serves. Let us conclude with the standard blessing offered those who embark upon the road to such success: "May they proceed from strength to strength–from bounty to bounty."
