VW Trust: Gone in 60 Seconds…

Upon reading the recent Volkswagen admission to installing stealth software that fooled EPS testing devices, my immediate thought was “here we go again. yet another corporate ethics scandal.” Since 2008, we’ve read increasing accounts of multi-billion dollar fines levied to banks, for everything from LIBOR manipulation to sub-prime mortgage deceit. Such amoral behaviour seems to have become commonplace news in all sectors: Enron engages in ‘off balance sheet’ accounting; JP Morgan Chase is fined $9 billion for their role in the sub-prime fiasco; drug-maker Turin jacks price of 62 year old cancer/AIDs drug by 5500%; Volkswagen sidesteps the EPA regulations for 11 million cars. Just another day in corporate world.
Public complacency is understandable; repeated examples of slap-on-the-wrist, no admission of guilt deals between offenders and government regulators have left us feeling cynical and helpless to alter the corrupt practices.
These events however, are indicative of a larger, much more serious underlying problem: the confusion of purpose; confusion between the original purpose for which an organization first formed (say, to make an affordable, reliable “people’s car”) and the purpose dictated by Wall Street: uninterrupted growth in quarterly earnings per share.
That confusion just cost Volkswagen $28 billion in market value, not to mention the brand trust that took decades of the dedicated hard work of thousands to engender. Gone in 60 seconds.
When discussing purpose, one of my favorite analogies is the saying “profit is like oxygen; we absolutely need it to survive, but it is not the reason we live.” Of late, for corporations, it has become the latter, sometimes due to greed and corruption, but often due to intense pressure from gradually evolved systemic forces.
There was a time when businesses started due to an idea. Someone detected a market need and organized a company to create a product or service to satisfy that need. Financial markets provided access to capital for those companies, and the return to investors was a cost of creating and getting the product to market. Somewhere between that time and now, the purpose seems to have shifted, and the pressure on leaders to comply with that shift is enormous. Facing decisions of whether to go with long-term strategic product or service investments, or to satisfy analysts expected numbers, which leader action does the system reward? And sometimes, the pressure creates a trap from which even well-meaning leaders cannot escape.
Back in 1982, Volkswagen CEO Carl. H. Hahn embarked on an aggressive growth strategy, one with aspirations of global market dominance and cost leadership. To be fair, back then, that strategy may have made perfect sense to assure the company’s long term future. After all, global competition began to intensify around that time, and it was his duty as CEO to position Volkswagen for success in that global environment.
But implicit in that strategy was a shift in purpose (or at least the danger of it) from one of making excellent cars to one of growth. Even if the growth was intended to drive scale cost economies so VW could effectively compete, it nevertheless shifted purpose to profit. To getting more oxygen.
The various investigations will determine whether Mr. Winterkorn is guilty of illegal behaviour, and if so, he should be justly dealt with. My contention though, is that whatever the outcome at Volkswagen, it should make us pause to reconsider the systemic pressures that drive even honest, responsible leaders to make disastrous decisions. Financial analysts serve a useful purpose of keeping management from complacency, by presenting us with ‘best case’ financial performance estimates for that company, against which we can compare actual results. But that useful function becomes dangerous when analysts ignore the real purpose of the business, which is not simply to make as much profit as possible (Peter Drucker contends that the sole purpose of any business is to create a customer). To be responsible, analysts must include corporate mission, and a long-term investment horizon in their reports. For a long time, this has not been the case; quarterly guidance has ruled the day.
It will be interesting to learn to what degree Mr. Winterkorn’s and senior management’s incentive packages were tied to the growth strategy. We should be learning by now that we live in a complex, interconnected ecosystem, where disruptions in any one segment (financial, political, social, environmental) have significant impact on all the others. In the end, we make all the rules and regulations. We can decide that ROI will have a broader definition than simply shareholder returns (after all, what exactly is the definition today of a shareholder?) We can set the rules to encourage and reinforce those CEOs who keep corporate mission in proper perspective, and do more than just live to breathe.
In it’s zeal to maximize short term profits, Volkswagen management has jeopardized the very existence of the company, threatened the livelihood of thousands of employees, and possibly even damaged the German economy, which in turn would impact the global economy. It’s time to learn from this and rethink the current capitalist system that we’ve allowed to evolve, (largely through undue and unethical influence of Wall Street in the U.S.) so that systemic pressures tempting good leaders to make foolhardy decisions are at best, eliminated, and at worst, significantly reduced.

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Game of Thrones: 5 Leadership Lessons

One of the most watched television series over the past 5 years has been The Game of Thrones. While aptly criticized for its inane, gratuitous use of sex and graphic violence, the plots are definitely intriguing, and any story of power struggles among seven kingdoms is bound to offer useful lessons of leadership. Here are five that resonated with me. (For those who have yet to see the series, a spoiler alert is in order.)
1. Actions speak louder than words – Although Jon Snow is a mere Steward of the Night’s Watch on The Wall, his actions during the attack of the Wildlings proved far more effective than the blustery words of acting Lord Commander Alliser, so much so that when the brotherhood held their elections after the battle, Snow was voted new Lord Commander. Alliser himself fought bravely during the battle, but Snow motivated, mobilized and directed the men to strategically fight off the attack, then led by example with courageous resolve.
Leaders are constantly scrutinized, and employees often remain silent about their loyalty and opinions. To talk a good game and construe silence as agreement and commitment is a risky strategy. Leadership is a relationship between followers and leaders, and credibility is built more through example than mere verbal communication. Authentic leaders walk their talk.
2. Surround yourself with (and listen to) those wiser than yourself -The young Queen Daenarys Targaryen is intelligent, ethical, and clear about her vision for ruling a better society, yet also aware of her youth and inexperience in the regal role. Her humility and wisdom result in surrounding herself with trustworthy and wise counsel (Jorah, Daario, Missandei, Hizdahr, Barristan), and there are several occasions when, upon listening to their arguments and advice, she courageously changes her original decision, to follow the wiser course of action. She does not need the idea to be hers.
The very traits, behaviours and characteristics that raise a person to a position of power and authority are often antithetical to those required to maximize results once there. Bold decisiveness and self-confidence make it natural and easy to rely on one’s own counsel. Yet history repeatedly shows that ‘none of us is smarter than all of us’. Effective leaders seek out diverse and conflicting opinions, and listen for hard truths rather than political or popular input. They constantly guard against hubris of others and of themselves, and make broadly informed, sound decisions.
3. Don’t judge the book… – Tyrion Lannister at first glance is a deeply wounded, cynical, drunken philanderer; to many the joke of the powerful Lannister family and ‘also ran’ of the court. As the series progresses, we see him surprise many in the court when appointed the King’s Hand: shrewd, political judgement, an honest sense of humour, a penchant for truth, compassion for the downtrodden and innocent, and even courage in battle. The wily, yet similar Lord Varys was perhaps the only one who looked past the book’s cover, and spotted the highly capable person beneath the facade.
There’s a saying that conflict is caused by those whose needs are not being met, or who feel they are not being heard, yet often we do not openly declare that. If dissonant, we can act out our dissatisfaction by stirring things up in the workplace. Intelligent leaders read the book cover but then look deeper into the pages. Sometimes the troublemakers are just that. Other times, once heard and understood, the troublemaker comes aboard, and can even turn into a champion of the cause who brings others aboard too. Good leaders mine deep to find the talent beneath the surface.
4. Shared visions trump singular ones – if one follows the logic of the plot, it’s difficult not to concede that Stannis Baratheon likely is the true claimant to the Iron Throne. He certainly believes it, and it becomes his obsessive vision to gain the throne by any means. This leads to iron-willed, ruthless behaviour, and in his unswerving ambition, he eventually loses men, brother, wife, daughter, and finally his own life. His attempts to form alliances were by threat, bribery or force. Never did he consider crafting a shared vision of the Seven Kingdoms with other stakeholders.
Because leaders tend to be prescient creatures, it is normal and easy to craft their own vision and forge ahead with good intent and strong will. But is that sufficient? Some of the most effective leaders in history achieved superior results by beginning with their vision, then vetting it through many camps and layers of stakeholders. They truly understand that radical and deep changes can only be achieved through the concerted effort of everyone whom the vision will affect. By inviting input from representatives of all who will be affected, great leaders create a comprehensive and encompassing shared vision that inspires and galvanizes all whose effort is required to achieve it.
5. Expect the unexpected – the rivalries of families and Kingdoms had been ongoing for centuries, and given the times and technology, competition had largely been the same: swords, spears, catapults, horses, armour. The paradigm was clear, and while strategies varied, those doing the planning knew more or less what to expect. That is, until Daenarys showed up with three dragons (which had not been around for a thousand years). This caused many leaders who, (other than trying to murder Daenarys as a child), did not see her as a major threat, to hastily re-evaluate their strategies in light of the new realities.
While the leaders in the Game of Thrones may be forgiven for overlooking the possibility of dragons entering the scene, the lesson is timeless: we cannot predict the future, and must therefore build agility and resilience so as to be able to quickly react to the inevitable surprises. In WWII, the dragon was nuclear weaponry. Recent corporate dragons (Apple, Uber, 3D printing) have already disrupted several industries, whose leaders were no doubt competently planning strategy under the old rules. The game is changing, and so too must expectations.
Will we ever learn?
There has been much praise and much criticism of Game of Thrones, but love it or hate it, there are valuable leadership lessons woven within. When one reviews history: the Civil War, both World Wars, global politics and nation-building, all of these leadership mores are recognizable; sometimes by their skilled application, and sadly, more often by their absence. The cost of ignoring them has been high. And of course they are equally applicable to the ‘battlefield’ of corporate competition, where the risks are less fatal, but the quality of society is nonetheless seriously impacted. Hopefully our political and corporate leaders will watch the series and take notes.

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Corporate Transformation and the Physics of Culture

“Everything is energy and that’s all there is to it. Match the frequency of the reality you want and you cannot help but get that reality. It can be no other way. This is not philosophy. This is physics.” Albert Einstein
As a novice student of neuroscience and quantum physics, I’m constantly fascinated by new discoveries that seem to support what sages have maintained for millennia: that there are energy forces that create outcomes, and they are driven by thoughts and emotions: “Faith can move mountains” Mark 11:23; “Love conquers all” Virgil
For centuries, Newtonian science dispelled those notions, (perhaps rightfully so for the times), and focused our attention on only those facts provable by the scientific method. But as technology advanced, people like Einstein circled us back around to the earlier truths.
What does this have to do with corporate transformation, or a leader running a business? A lot. For the last 100 years, most research and attention has been devoted to the fundamentals of management. Statistical models drove marketing, economics, finance and production. Everything else was relegated to that “Soft Stuff” bin; dismissed as emotional fluff that had nothing to do with running a hard-nosed business. And even when trusted gurus like Tom Peters, and (justifiably) revered managers like Lou Gerstner cautioned us that “Wait, this soft stuff matters…a lot!” many still chose, and choose, to ignore it.
But new findings in neuroscience and quantum physics indicate that there are fields of energy that do in fact interact with not only other fields, but with those of individuals as well. Consultant Margaret Wheatley suggests “Many scientists now work with the concept of fields–invisible forces that occupy space and influence behavior. I have played with the notion that organizational vision and values act like fields, unseen but real forces that influence people’s behavior.” Leadership and the New Science, 1999. These fields constitute your organizational culture.
This physics of culture has huge ramifications for any leader struggling to effectively adapt their organization to the constant, rapid change of the world today. As Einstein instructs, you must “match the frequency of the reality you want.” Is your market changing every six months, while your organization is saddled with rigid bureaucracy and clogged decision pipelines? How does a culture of complacency and disengagement ‘match’ your desired reality of high agility, deep resilience, and proactive innovation?
Culture is energy. Walk into a Four Seasons hotel, a Nordstrom’s, or an Apple retail store, a Southwest Airlines counter. You’ll feel that energy. The frequency is high. Those companies are currently thriving. There is a strong match. They’re creating a desired reality.
Any leader striving to succeed must conduct an audit to determine the match between their ‘energy frequency’ (culture) and that of the reality they seek to create. Mission, vision, and strategy matter, and leaders are responsible for creating and implementing all three in genuine and meaningful ways. But that is just the beginning. Corporate transformation requires mastering the physics of culture. Culture drives successful implementation. If your vision calls for innovation yet your culture values and protects the status quo, the energies don’t match. No amount of strategizing, managing and controlling will remedy that imbalance.
Explore your organizational culture. Define it. Test to see if your senior leaders are aligned in their understanding and embracing of it. Then compare it to your stated vision. If the energy frequency doesn’t match that of your desired reality, at least you will now know where to start changing. “It can be no other way.”

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JPMorgan Chase Way off the Mark

Shareholders of JPMorgan Chase bank voted today to retain the joint office of CEO and Chairman, with Jamie Dimon remaining in the posts.
Many larger clients had triggered the debate over splitting the jobs, in the wake of the London Whale investment scandal that cost the bank some $6.2 billion in trading losses. The bank and Dimon had argued that letting Dimon keep both jobs was the most effective form of leadership.
Dimon and the bank are way off the mark.
In the short interview below, McKinsey & Company consultants speak with Harvard’s Gary Hamel, well known leadership professor and writer. Hamel lays out a concise and logical argument for how leadership must be redefined going forward if organizations are to gain the flexibility, agility, and resilience necessary for success. He submits that the traditional pyramidal organizational structure cannot sustain the speed, pressure and knowledge demands in a timely manner. He correctly notes that by the time (if at all) that the next idea, opportunity or threat reaches top management’s radar, it’s too late; the window has closed. In the case of Dimon, either he knew about the activities around the London Whale trade (but that’s a topic for another blog) or he didn’t, in which case either he’s negligent, or the job is too big for one person. It would be most interesting, in my view, to hear Dimon refute Hamel’s theory and defend the decision to keep CEO and Chairman role.
Perhaps most troubling is that even if Hamel has failed to perfectly describe the future of effective leadership structures, at the very least he is correct about the general direction in which it must move: syndicated versus consolidated. How can JPMorgan Chase be so far off the mark? Hubris and the narrowest definition of shareholder maximization; Dimon’s deep belief that he is smarter than anyone else. And while he may well be, in a one-to-one context, he isn’t smarter than all the best minds at JPM. It is disheartening to see monolith companies insist on clinging to leadership models past their prime, and doing so certainly doesn’t serve stakeholders efficiently. One thing is certain: should any investment bank decide to operate based upon Hamel’s model, Mr. Dimon and his bank will fall quickly behind.
http://www.mckinsey.com/Insights/Organization/Leaders_everywhere_A_conversation_with_Gary_Hamel?cid=other-eml-alt-mip-mck-oth-1305

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Pope Francis I: Level 5 Leader?

The election last week of Pope Francis I sent the media scrambling to unearth available details of his past, sordid and otherwise, in an effort to build a character profile of the new Pope. Aside from the disputed issue of failing to protect two Jesuits from the violent Argentinian political regime in the 1970′s, the main conclusion is that he is a man of genuine humility.
This conclusion was supported by his actions during the pre- conclave, and post-election periods in Rome: staying in modest quarters, travelling by bus, collecting his own baggage from his hotel and paying his own bill. While cynics may claim that this merely could have been shrewdly effective and symbolic theater, further scrutiny reveals that it is in fact a consistent behaviour pattern of many years. It is said that in Buenos Aires he lived in a modest one-room apartment instead of the “palatial Archbishop’s mansion”, made his own bed, cooked his own meals, and spent a large percentage of his time in the slums working with the poor. Pope Francis it seems, when it comes to humility, is the real deal.
What does this have to do with a blog on business leadership? Watching this Pope reminded me of Stanford management guru Jim Collins’ best seller Good to Great. In it, he identifies Level 5 leaders as rare yet highest in achieving sustainable results. Specifically, they “embody a paradoxical mix of personal humility and professional will.” So far, it would appear that the Catholic Church has elected at worst, a leader with half (the tougher half to develop?) of the Level 5 pre-requisites; at best a master reformer for the organization.
Collins again:”Level 5 leaders display a compelling modesty, are self-effacing and understated…are fanatically driven,infected with an incurable need to produce sustained results…display workmanlike diligence-more plow horse than show horse…are resolved to do whatever it takes to make the (organization) great, no matter how big or hard the decisions.”
While his record of church reform in Argentina and his work with the poor shows leadership authenticity and skill, those localized challenges pale in comparison to the ones currently and globally facing the Catholic Church: systemic, longstanding financial and child-abuse scandals, declining, disenfranchised membership, and perhaps most important, an entrenched, rigid and highly political Curia. The Church needs change, yet has been known for centuries as (and remains) the poster-child of institutional intransigence (albeit also the oldest continuously operating organization on the planet; they must be doing something right).
And so begins a case study in the making; one that leaders of all organizations in business, government and non-profit sectors might consider observing and learning from. The publicity surrounding the Vatican has highlighted the current problems and opportunities facing the church, and from his first few addresses, it appears that the new Pope clearly understands and holds strong opinions about them too. Whether he does indeed possess the professional will and “fanatical drive” to rattle and move that Vatican mountain remains to be seen, but his history to date would demonstrate that he is certainly not afraid to swim against the current, and to live out his strongly-held values.
Perhaps if he succeeds, it will force some broad reflection about Level 5 leadership. Many leaders at lower levels also possess professional will, and a results-oriented focus. It seems the humility factor is much more rare, and is perhaps the key factor in motivating employees, members, and all other stakeholders to embrace the values and vision of the organization, to commit intellectually and emotionally, to take ownership by placing the objectives of the organization ahead of their own. Difficult stuff; Level 5 for sure. If he succeeds, we all might do well to take a page out of his book on combining and developing the two powerful leadership behaviours.
So as the Pope starts off on this difficult journey, he can take comfort that he has already mastered the more difficult half of the Level 5 leader formula. I will watch with interest to see whether his will can withstand and dissolve the anticipated resistance, and restore the church to its original mission and faithful constituents. It’s a monumental task, and I wish him well; God bless and Godspeed.

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Strong Leadership Leverages Talent

There’s an old adage in business that says “People join companies, and quit bosses.”
In my own experience, this has proven true, and recent research supports the claim.
In a study of 1000 American executives (cited in Forbes magazine) positive psychologist Michelle McQuaid found that (only) “35 percent of Americans are happy at their job. And, 65 percent say a better boss would make them happy. Only 35 percent say a pay raise will do the same thing. A 2009 study published by the Harvard Business Review suggested, “…the majority of people say they trust a stranger more than they trust their boss.””
If we accept the premise that success in today’s hyper-competitive business environment demands the best talent, and that a majority of that talent dislikes and mistrusts their boss, the need for exceptional leadership that attracts and retains star talent becomes painfully obvious.
The brand recognition, product/service reputation, or culture of a company may initially grab the interest of the best talent, but it’s the attitude, style and behavior of their direct superior that determines the quality and pace of their growth, level of motivation and fulfillment, and possibly even their decision to stick around. Every employee’s daily reality is directly influenced by the leadership skills of their boss.
The unfortunate thing is that often a poor relationship between boss and subordinate is not intentional. Hectic pace, market pressures, and financial stress, can easily suck a manager into the vortex of minutiae that disconnects them from direct reports. It’s not necessarily that they don’t want to connect more deeply with employees or show interest in their development; sometimes it’s simply too much distraction and too little time.
Regardless of intent, the primary responsibility for keeping top talent within the fold still lies with leadership (including line managers and supervisors), which means they must take a strategic approach to attracting, challenging, engaging and inspiring employees. The most effective way for leaders to go about this is to create an environment or culture that is supportive, challenging and inclusive.
Here are a few steps leaders can take to create that environment:
1) Start with yourself: make sure you’re clear about whom you want on the team, what you expect of them, what talents each brings, and how to best leverage them.
2) Clarify corporate identity and values for your people, and make sure your actions demonstrate both. Regularly (daily, weekly) schedule specific actions that reinforce those values to employees
3) Create opportunities for employees to develop (as Dan Pink suggests) autonomy, mastery and purpose in their work. Hold firm on accountability, outcomes and deadlines, but let the ‘how’ evolve from their own ideas. Monitor, don’t micromanage.
4) Spend brief time in every meeting connecting the daily tasks to the larger picture. Remind people why everyone comes to work there; what they’re trying to accomplish in the long term. Help employees to feel part of something bigger than their own roles.
5) Recognize and reward their behaviour that supports and ‘lives’ the organization’s values; give timely corrective feedback when it doesn’t.
6) Coach people to think through problems and challenges for themselves, as opposed to instantly giving them the answer.
Employees will often gladly endure adverse circumstances such as stress, tight deadlines, and frustrating changes, as long as the relationship with their direct boss is strong. Trust and the clear communication of company identity, mission and values lets employees feel an integral part of a cause larger than them, and engender a loyalty to the boss as well as to the company. In this way, strong leadership leverages talent.

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Leadership and the Bottom Line

When deciding how to best allocate limited resources to performance improvement systems and activities, leaders tend to err on the side of factual research.
So over the years, as academic and private sector research established the reliability of such concepts as the profit impact of market strategy (PIMS), total quality management (TQM), business process management (BPM), and Six Sigma, real and perceived risk was reduced, and adoption of those practices became more mainstream. Today we’ve reached a point where Boards can even be held accountable by shareholders for ensuring their companies are applying these proven best practices.
We’re now approaching just such a time in the field of leadership development. An existing and fast-growing body of research is proving a causal link between leadership development and shareholder value. There are three connected facts that establish this:
Fact 1: Leadership development drives employee fulfillment
Fact 2: Employee fulfillment drives customer satisfaction
Fact 3: Customer satisfaction drives shareholder value
These three elements are highly interconnected, and employee fulfillment is maximized by a strong, adaptive culture.
A Strong, Adaptive Culture Impacts Profitability
Several landmark studies have demonstrated the power of corporate culture in successful companies. Agility, speed and resilience allow continuous discovery and exploitation of new products and markets. This is known as ‘adaptive capacity’, and stems from a collective clarity and commitment to shared mission, values and vision of the organization. Culture drives sustainable competitive advantage, and in one study, yielded an 8.7 percentage point difference in operating margin over a weaker culture competitor. The difference derived from higher employee and customer retention, and productivity.
The Cost of Fear and Cultural Entropy
All organizations have some level of cultural entropy, (defined as the energy involved in sustaining bureaucracy, internal competition, hierarchy, empire building, image, blame, information hoarding and the like), but research also shows that companies with weak or toxic cultures suffer from fear paralysis, and high cultural entropy. There is a concrete cost to these fear-driven behaviours, usually reflected in higher turnover and employee disengagement, lower productivity, efficiency and commitment, and lost opportunities. In weak culture companies, it is usually a big, yet hidden number.
Strong Leadership Builds Strong, Adaptive Cultures
While research co-relates high performance with strong, adaptive cultures, and excessive costs with weak ones, it also shows that adaptive cultures cannot be achieved without highly developed leaders. Expert Richard Barrett tells us that “ultimately, the culture of an organization is a reflection of the personality of the leader or the personalities of the leadership group.” To transform a culture, one must either change out the leadership, or the leaders must be willing to reflect upon and make changes to their approach.
It is the domain of the leader to:
• Be self-aware; clear about his/her own values, beliefs, strengths, weaknesses, vision for the future
• Clearly understand and communicate the mission, values and vision of the organization (create the culture)
• Align their own and their employees values with those of the organization
• Create an environment of fairness, openness, collaboration, and responsible risk-taking
• Attract, retain, motivate and inspire the best possible talent to engage and deliver on the mission
• Strengthen others resolve during difficult periods by leading by example
• Build trust
Notice no mention of technical proficiency, functional skills, and intellectual superiority. Of course, at higher levels of management, those capabilities are almost pre-requisite, but the important finding of the research is that they alone are insufficient to drive outstanding results. The reason is that today, only pools of bright, highly-engaged, interactive, collaborative people will win the race.
Perhaps the leader could do it him or herself in the past; not any longer.
This is good news. Now we no longer need to speculate on the efficacy of leadership development programs on profitability. The ‘bottom line’ is: leadership development builds the bottom line.
What is the current culture in your organization? How much cultural entropy exists? What steps are you taking to ensure your best leaders are getting the development they will need to step up to the challenges of tomorrow?

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Nothing New Under the Sun

I’m pleased yet not surprised at the popularity of the TV series Undercover Boss, and it’s Canadian version. Although it’s a bit puzzling how intelligent employees (and all of the ones seen in the episodes I’ve watched certainly have been intelligent) cannot recognize the CEO or President, or even be suspect of the fact that a camera crew is filming the orientation of a new employee, the shows do bring the public’s attention to effective leadership behaviors that are transforming organizations in the fast-changing world of commerce. It’s encouraging to watch these CEO’s feel a sense of pride, and also humility, as they witness the day-to-day commitment and effort demonstrated by line employees and supervisors, and equally engaging (though at times a touch maudlin) is the employee response to the human gestures of kindness extended in gratitude by the appreciative CEOs.
Hopefully, the popularity of the series will prompt water-cooler or social media conversations that will spill over into and positively affect every company; perhaps spur CEOs to embark on similar incognito adventures within their own organizations.
But while this is an interesting and effective exercise, it is not new in any way. “Management by Walking Around” (MBWA) was cited in Tom Peters and Bob Waterman’s famous book “In Search of Excellence” way back in the early 80′s, and rumor has it that they got it from Hewlett Packard. Generals like Napoleon and Patton were renown for wandering around their regular troops to gauge morale and gather first-hand intelligence, as was apparently, Abe Lincoln during the Civil War.
When you think about it, it makes perfect sense: information reaching the top of any organization has been repeatedly filtered (sub-consciously and perhaps consciously) to the point where ‘reality’ is often quite distorted. The best way to really get a sense of what’s going on, is to go there and experience it first-hand. Why? Because one can receive information with multiple senses as opposed to homogenized data in a report. Asking a question of a line employee, a savvy CEO can see the look in their eyes, sense nervousness or hesitation in their voice, feel nuances that indicate the true state of employee morale, even if unspoken. Being there is a richer experience; more likely to reflect their true ‘reality’.
So kudos to the Undercover Boss creators for bringing to the mainstream what effective leaders have done for decades: come down from the tower and wander among the doers. As Rudyard Kipling suggests in his poem “IF”:
“If you can talk with crowds and keep your virtue,
or walk with Kings, nor lose the common touch,”
No matter how elevated one becomes, staying genuinely and closely connected with those who execute the strategy yields the best odds for success.

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‘New’ Leadership in Action at Occupy Toronto

Yesterday I wandered down to Occupy Toronto in St. James Park, to experience firsthand how leadership principles might be in play there. While everyone I spoke with politely but firmly denied there are any leaders, they are (knowingly or not) applying the principles of new ‘revolving’ leadership, which involves individuals stepping up at the appropriate time to exercise their strengths and skills on behalf of the greatest number.
So what does this mean? Well firstly, Occupy Toronto organizers ( from what I could gather, a handful of people who were inspired by the Occupy Wall Street OWS movement) used social media to inspire and organize the rally at St. James Park. They were obviously the point people to get it going, and set the meeting times and places, yet they choose to remain anonymous. I was told that the group is in daily contact with OWS through Facebook and texting; ‘going to school’ on their successes and errors. From OWS, Occupy Toronto has adopted the daily General Assembly, working groups for Internet, Legal, Sanitation and Order (they watch for and manage any violent protesters before the police need to get involved). So necessary order and structure is being provided by this behind-the-scenes leadership
Secondly, I witnessed a smaller ‘group circle’, where a group appointed facilitator assigned speaking times to anyone interested, and moderated the discussion. There are many such breakout groups attempting to crystallize the main messages of the movement, which will be later presented at the General Assembly for adoption vote. In the circle I watched, the articulate and knowledgeable people tended to lead the way for the others, who strongly felt the same, yet found it harder to express. These leaders emerged to clarify the main issues, suggest direction, and propose action, then faded back into the crowd. This is an attempt to craft the movement’s inspired vision right from the grassroots.
I was actually moved as a homeless man was given his rightful turn to speak, and was actually listened to, and asked to clarify some of his points, by others in the group. The respect they showed him was touching and encouraging.
Thirdly, I observed individual leadership: a 29 year old man stood silently in the center of the park, with a bristol board placard that expressed his views. His view was that we fight corporate corruption and unethical business practices not by protesting, but by boycotting their products and services; that we must not be mindless consumers, but rather take our responsibility for corporate misdeeds by voting with our wallets.
He fully recognized the good value that banks and governments can add to our capitalist society, and was only protesting, he said, because a government, through irresponsible deregulation, permitted unethical banks to place outrageously risky bets with taxpayer money, resulting in global oppression and economic destruction. Turns out this guy in the Tibetan earflap hat and hole-in-the ear rings owned a sustainable junk recycling business, was incredibly grounded, positive and articulate, and wanted non-violent change that ensured a safer, more stable society. I suggested he try to get the Occupy movement to adopt his message, as it would resonate beautifully with the public and the media, and help build broader support. I walked away much more hopeful for our world, with young people like him quietly but actively leading the way.
There’s a Chinese proverb that says something like “out of crisis, opportunity”. The global “Occupy” movements could be one of the opportunities yielded by the current global economic meltdown, in that it is becoming an experiment in non-violent, participation leadership, with a view to the greatest good for the greatest number. What started as the Arab Spring has gone viral in different forms, but with the same underlying theme: that we all must live in our societies, and there is a general consensus (the 99%) that current systemic imbalances must be remedied.
I’m hoping that Occupy Toronto succeeds in its effort to clarify and express their main messages of discontent, and was encouraged to witness a new kind of leadership in action; one where common vision and goals supersede individual egos (at least for now). Systemic change is, in my view, desperately needed, and this is as good an opportunity that we’ve had in a long time to get it started. Go down and see, hear, feel it for yourself. You may be pleasantly surprised, as I was.
For some further related good ideas on the Occupy movement, Ray Brescia of the Huffington Post: http://www.huffingtonpost.com/ray-brescia/the-peoples-bailout-how-o_b_1013857.html

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Why No Mention of Efficiency?

As governments in the US (and to some degree here in Canada) wrestle with global financial system strains, deficits and austerity programs, the lack of attention paid to scrutiny of current system inefficiencies simply astounds me.
Remember the old story of the $125 hammer in the US military budget?
I just read that the US Office of Personnel Management (OPM) issued an audit report criticizing the Federal government for paying out $600 million to dead former Federal employees over the past five years. http://ca.news.yahoo.com/report-govt-paid-600-million-benefits-dead-people-155600786.html
About a year ago, President Obama mentioned in a speech that digitizing medical records in the US would release $75 billion annually in medical administration expenses.
I have no idea as to the accuracy of either of these claims, and imagine there are hidden complexities involved in each case, but what amazes and troubles me is the lack of discussion (at least in the media) about how we might find relief by seeking more efficiency in current programs.
All we seem to hear about are the ‘either/or’ options of raising taxes or cutting spending, and the cutting always seems to involve the slashing of full programs. But as every private sector company knows today, a better solution is to keep effective programs but make them as lean as possible.
Effective government leadership here would involve a clearer explanation of our debt challenges and their long-term implications, and a request for public service employees (and the rest of us too) to examine their work areas for efficiency ideas that eliminate careless waste. Just as most of us have by now learned, and follow, new recycling habits (with little disruption to our lifestyles), so can we learn to operate more efficiently in other areas, with minor irritation or inconvenience.
But doing so requires personal ownership and accountability, and that comes (in companies and countries) when good leaders a) galvanize our attention around the pressing changes that are needed, and b) inspire us to want to do our part to achieve better results.
Example: the largest US trucking firm persuaded it’s 10,000 truck drivers that by raising the air conditioning temperature by several degrees for only a few hours at night (most sleep overnight in their trucks on long hauls), they’d save gallons of fuel and significantly reduce pollution, with little or no discomfort in their sleep. They tried it out, and saved $24 million a year.
Peter Drucker capsulized the essence of good leadership in two questions: “What needs to be done?” and ” What can, and should I do about it?”
If our public leaders don’t get it, may I suggest we speak to our MPs and MPPs about general efficiency within the current system, and at least prod them to explore how much systemic waste might be eliminated.
We may just discover that a large portion of our deficit can easily evaporate.

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