Debates at the crossroads

So, Canada and the U.S. both hosted debates last evening; Canada for it’s national party leaders, in advance of the upcoming Federal Election in October, and the U.S. Democratic National Committee (DNC) for candidates seeking the Democratic nomination in the March 2020 Primary.

These debates are significant for one simple yet existential reason: choosing the ‘wrong’ leader at this crossroads of history will have repercussions the likes of which humans have never before experienced.  The reason: climate emergency.

For those who have not yet checked out the findings of the scientific community, do so, before you vote. This is not a hoax, scam, or money-making scheme for businesses in the Green sustainability industry.  It is very real, and human caused. If you have not read the summary of the October 2018 Intergovernmental Panel on Climate Change (IPCC) report, do so, before you vote. In the short year since it’s publication, scientists have alarmingly stated that the recommendations in the report are already understated. Earth is warming even more quickly than that radical report cautioned.

Canada, as a historically fossil fuel-driven economy, faces a fundamental ‘paradigm shift’ away from resources to a knowledge-based sustainable one. Fossil fuel workers, who contributed to our national prosperity for decades, need to be retrained and protected during the transition. Massive capital and human resources need to be devoted to this change initiative. We face also a rare opportunity to step up on the world stage by demonstrating that we have the courage and leadership to show that major transformation is possible, even from a fossil fuel economy, to a cleaner one.

America, leader in fracking and oil production and consumption, remains the unilateral global power to whom the world (at least pre-November 6, 2016) looked for guidance and responsible, measured action in emergencies. Yet collusion between Congress, Wall Street, the fossil fuel industry and mainstream media has kept the climate issue well off the public radar until the last two devastating hurricanes forced them to address it. Their puerile president insists it’s a Chinese hoax.

In both countries the level of public ignorance and feckless leadership is startling and unnerving.

Canada’s glamour-boy Prime Minister, being influenced by the fossil fuel industry, used taxpayer funds to actually buy a pipeline contract from a U.S. company, when he saw that public sentiment was shifting in the other direction. Then, true to courageous leadership form, he failed to even show up for the first debate last night, being represented instead by an empty podium. As for the public, a quick post-debate poll showed that 76% of Canadians thought the Conservative leader (who is also beholden to the fossil fuel industry) won the debate, and they also ranked the climate issue far behind those of immigration and taxes. They don’t get it.

Down in America, the DNC earlier refused member demands to host a separate debate solely on the climate emergency, leaving CNN to step up and do so. And while that debate did have substantive discussion about very important issues (health care for all, gun violence, immigration, racism, corruption) the participants failed to drive home the point that should we fail to curtail this climate emergency, all the efforts on those other issues simply become an exercise of re-arranging the deck chairs on the Titanic.

Every once in awhile, society encounters events that slap it awake from its sleepy day-to-day concerns. Whether the Biblical story of the Flood is historical or allegory, imagine the stress and courage experienced by people facing that catastrophe. Less dramatic, and definitely real, were the World Wars, Great Depression, the 2008 Great Recession. Each of those required the emergence of strong leaders to guide the public to safer ground. Yet none of those involved existential consequences for failure. Only the 1962 Cuban Missile Crisis comes close, and fortunately for us, both Kennedy and Khrushchev had the moral courage and leadership strength to make the right decisions and ease back from the brink.

Here’s the critical fact: scientists say that at most we have an 11 year window in which to hold the global temperature increase to 1.5 degree Celsius above pre-Industrial Age levels. Should we fail, we won’t experience severe disruption immediately, but the momentum will be irreversible, and the consequences catastrophic.

Yet our current global ‘leaders’ seem more preoccupied with maintaining the status quo, with incremental change, with the financial minutiae topics of Davos, with personal enrichment. If we fail to elect the right leaders this time around, the window for remedial action will close, and we will deserve to be cursed by our children, if they survive.

We are at the crossroads of human existence, created by us, and manageable by us. But we need to elect the right leaders, and the will and courage to support them. NOW.

Michael Darmody is a leadership consultant and executive coach. More detail on the challenges we currently face can be found in his new book The Boiling Frog: How Complacency and Ignorance Created Our Leadership Crisis and What We Can Do About It.

The Insidious Conspiracy of Conspiracy Theorist Labels

“Just because I’m paranoid doesn’t mean they’re not really out to get me.”

The easily predictable prison death of Jeffrey Epstein has resulted in mainstream media (MSM) once again peppering their reporting with the term ‘conspiracy theory’. This is a good thing; many a wildly imaginative or opportunistic charlatan has hoodwinked the public by spinning intriguing tales out of nothing, in pursuit of a quick buck. We all chuckle at tabloid headlines while standing in line at the supermarket. So the proper use of the term can serve as a caveat that we should use healthy skepticism before blindly accepting just any old unfounded story.

That said, in many cases, the term is used also at times by the ‘elites’ and MSM in a pejorative sense, followed by smug, condescending smiles or even eye rolls with the intent to intimidate those who raise serious questions. It did not take long for people in government and the military in the 1940’s to gap in that the best way to deflect attention away from Roswell was to imply that those asking serious questions were nut jobs, not to be taken seriously by any sane person. As the technique was refined, agencies that did in fact engage in criminal or clandestine activity became quite adept at using ridicule, condescension and aspersions to silence skeptics. Yet YouTube now offers many interviews of aging military and government personnel, down-to-earth decent old guys with nothing to prove or gain from telling their stories, which they’re now legally cleared to do, and verifying what they saw at Roswell.

And I will never forget sitting in my apartment in 1983, around 3 am, reading a section of a book called Best Evidence, that provided exhaustive research that indicated that the body of JFK was altered to make it look like he was shot from the rear by Oswald. I still feel the chills that ran up my spine at that thought. And yet, for a couple of years after, when I tried to tell everyone to read the book, their eye-rolls eventually intimidated me into silence, except with close trusted friends. Now of course, 56 years and an Internet later, many of those witnesses and participants who were legally forced or intimidated into silence are clearly proving that that is exactly what happened. The JFK assassination was an inside coup d’etat. I strongly encourage you to watch the video below (right to the end) to hear doctors who were present in Parkland hospital swear that the wounds shown by the Warren Commission were altered versions of the actual ones.

Serious journalists like James Douglass, in JFK and the Unspeakable, David S. Lifton in Best Evidence, and Russ Baker in Family of Secrets have doggedly tracked down key eye witnesses, FOIA documents, and ordinary people involved in the aftermath, and connected the dots to show that the CIA and Alan Dulles, J. Edgar Hoover, the Mafia, Cuban ex-pats, and LBJ and long-time Texas thug friends of his were all complicit in JFK’s removal from office. The web is complex and the tale old, but the facts are there nevertheless.

Rolling your eyes? Of course you are. Cognitive dissonance refers to the psychological stress that accrues to holding two conflicting thoughts or values in mind at one time. We don’t want to hear things that could shatter our deeply held beliefs. And yet, the facts show that a good many of those so-called ‘conspiracies’ actually did happen! The CIA did sell arms to Iran in order to fund contras in Nicaragua, Bill Clinton did “have sexual relations with that woman.” The autopsy doctor for RFK said the lethal wound came from a shot fired from 3 inches away from the back of his right ear. Many witnesses swore that Sirhan Sirhan only approached RFK from the front left, and 4-5 feet away. Perhaps the greatest current example is 9/11. Are you aware that the 9/11 Commission Report did not even mention the collapse of WTC building 7? Not a word. Yet thousands of architects, structural engineers, demolition experts, metallurgists, physics academics and other professionals have signed a petition stating that the Commission Report defies the laws of science, and calling for a new investigation. (

No. Many of these so called conspiracy theories were labelled such by the guilty perpetrators, knowing that such a label would effectively intimidate or embarrass nay-sayers into silence.

At the Watergate Hotel, a security guard walked past a door that had had the latch duct taped flat. He was puzzled, but removed the tape and continued on his rounds. It was only upon passing again and seeing the door taped a second time, that he called the police. Now imagine if he hadn’t, and the burglars had not been apprehended. If anyone ever suggested later that the burglary had happened, they would have been shown a padded cell, or at least laughed out of the room. And yet, it actually did happen. And for a couple of years afterward, those who suggested it was sinister and that the White House was trying to cover it up, were labelled conspiracy theorists. Then someone said “hey, doesn’t the President record everything?” So much for conspiracy theory.

Getting back to Epstein, while it is inappropriate for the impetuous, American child-President to implicate Bill Clinton, the late night talk shows automatically label it conspiracy theory. And yet Clinton has lied about the number of trips he took on Epstein’s plane; he says four, independent flight logs say twenty-six. And remember Pizzagate? The conspiracy theory that outrageously claimed the Clintons and other powerful people were involved in a pedophile sex ring? Of course, it could be simply coincidence that the Clintons moved in the circle of pedophile sex trafficker Epstein, but I suspect there is a lot more here than meets the eye. Then again, Trump has also been implicated as a participant with Epstein in earlier times, and what better way to deflect attention away from himself than to implicate Clinton. Watch carefully to see how Trump’s AG Barr goes about this investigation. Watch to see whether the video from Epstein’s cell mysteriously disappears. (By the way, were you aware that in 1966, when investigators sought to measure the wound in JFK’s brain, in order to determine bullet trajectory, the brain, bullets and other evidence had disappeared from the National Archive? Imagine that.)

This month, I launched a book about poor leadership, suggesting that we the public have been lulled to sleep for that past 50 years, shrugging off and tolerating egregious neglect of responsibility and duty by our leaders. It’s called The Boiling Frog: How Complacency and Ignorance Created Our Leadership Crisis and What We Can Do About It. There are several messages in it, but the Epstein death, and subsequent rush to judgement by the media about conspiracy theories has sufficiently concerned me that yet another serious crime against society could well be underway.

Let’s follow this closely. Let’s demand a serious, objective investigation, and serious answers to the question of how a high-profile prisoner, with damning information on extremely powerful people around the globe, could possibly be removed from suicide watch and left un-monitored with sufficient material in his cell that he could commit suicide.

There is a lot more going on here. Focus clearly on those who roll their eyes and insist we are conspiracy theorists, and ask what they have to hide and why.

A Vibrant Culture Requires Strategic, Systematic Conversations

Published on July 24, 2017

“Shortcomings in organizational culture are one of the main barriers to company success in the digital age… cultural obstacles correlate clearly with negative economic performance.” McKinsey article on the importance of Culture

It is reassuring to see that venerable, traditionally ‘quant’ consultancies like McKinsey are finally lending credence to the intrinsic power of organizational culture. Other writers like Tom Peters, John Kotter, Jim Collins, Jim Kouzes and Barry Posner have railed about it for decades, yet it took the intensity of a VUCA world to finally raise broader awareness.

The authors cite three main areas of concern: silos, risk aversion, and lack of a customer-centric mindset, as being collectively detrimental to organizational success in a digital world, and offer some excellent strategies and anecdotes as remedies.

But a deeper dive would show that true cultural development and sustenance requires not only strategic policies, but organic, strategic and systematized conversations, that deepen relationships, clarify mission, values and expectations, and foster accountability.

Digital strategy, while requiring much faster creation than traditional strategic plans, still requires agile and resilient execution. First, individuals must clearly understand and take personal ownership of the strategy and policies, and then agree as to how teams and tribes will share accountability to drive results. The power of effective culture lies at that granular level. It is not a top-down, one-off process.

In speaking of his famous 8-step change management model, Harvard professor John Kotter lamented that he witnessed many companies drive the process well, right up to Step 7 (Consolidating Gains and Producing More Change) and Step 8 (Anchoring New Approaches in the Culture), only to see senior managers or champions leave or let up on communication, and watch the organization slip back into old habits within a year or two. Devastating. But the main reason was that no systematic method of continual communication was built into the structure and policy, to ensure the change took deep root.

To guard against this, one company, Actionable Conversations, has hit upon an effective solution. Their logic states that better conversations lead to deeper relationships,which lead to higher employee engagement, which improves any performance metric you can think of. They prescribe one-hour, leader-led conversations, once a month, that help teams apply cutting-edge business thinking to their current challenges and opportunities. Employees then enter a small behavioural change commitment into a platform that provides progress metrics over the course of the following month.

The key is to implement vertical and lateral conversations, across teams, functional and departmental silos, and on a regular basis, so that strong, trusting relationships are simultaneously built, while employees discuss the most pressing issues facing the company. Regular strategic conversations act like a massage, keeping key messages front and center in mind, and facilitating the gradual behavioural changes that eventually become the fabric of a new, stronger culture.

It is somewhat surprising that it took so long for the competitive advantage of a strong, positive culture to be more widely recognized and deployed, but perhaps that is because creating and nurturing such a culture is hard, relentless work. But in VUCA world, as the article says, solving these cultural problems is no longer optional. And that, in the long run, will be a very good thing.

Powerful, Elusive Employee Engagement

The CEO of Rapid Corp., astonished at recently reading in a Gallup report that North American employee engagement levels sat at a miserable 33%, quickly inquired as to the engagement level of her own employees. Learning that her company did not measure it, she immediately ordered that a survey be conducted.
The resultant 43%, while a tad better than the national average, prompted a hasty call to action. A top leadership development consultancy was sourced, survey results analyzed, and a custom-tailored program created, including cultural/values clarification, programs and messaging, and leadership workshops, all launched with sincere fanfare and highly visible senior team involvement. The launch and workshop facilitators were expert, knowledgeable, and gifted speakers, and delivered the highly relevant content with empathy and humour.
The launch and workshops were judged resounding successes, (a post-launch and initial workshop survey yielded very favorable data), and even more important was the elevated energy level that could be tangibly felt throughout the company following these activities. The CEO cautioned her team to remain vigilant and involved, so as to sustain and nurture this new energy and commitment.
Unfortunately, by the time of the next engagement survey a year later, to score fell to 38%, and the CEO and senior leadership team were both disappointed and puzzled.
What Happened?
Sadly, what happened at Rapid Corp. is not an uncommon experience. Their world moves incredibly fast; definitely a VUCA (volatile, uncertain, complex, ambiguous) world company. So despite raised energy, hopes and the best intentions of all involved, it fell prey to the 10/20/70 rule. Research shows that we learn and retain 10% of what we see and hear, 20% of what we’re coached or shown how to do, but 70% of what we practice on a continuous basis. We learn and retain by repetitive doing.
After the activity of the program launch, the workshop delivery, and the immediate short-term follow-up, life at Rapid Corp. slowly drifted back to ‘normal’; to old habits and patterns soon resurfaced. People returned to the frenzied pace of their jobs, once again pulled into the vortex of their respective tasks, and all the well-targeted and intended information that had been delivered faded in both memory and priority. No villains here; just a relentless, crazy-busy, demanding work environment, and normal human learning entropy. Behavioural transformation could not take root.
But how could their score be even lower than before they took any action? Another pitfall in the effort to transform a culture: employee emotion, following the hope, excitement and elevated expectations generated by the initial programs, sank lower due to the disappointment of having been first introduced to a ‘better’ world, yet then slipping back into the old norms. The disappointment was accompanied by some degree of cynicism among some employees as well.
The Solution
Rapid Corp. did almost everything right. What they overlooked was the 70% learning rule. Whenever attempting to transform behaviour, we need a program or system that structures regular conversations between leaders at all levels, and their employees, and between the employees themselves. All learning content and theory, while extremely important, only has meaning when discussed and experienced within our specific context. We have to actually digest theory and content, and then discuss among ourselves what it means for us in our department, division, company. We then need to apply theory to our own situation in order to get excited, take ownership and sustain interest; to become engaged.

Here are a few steps Rapid Corp. might have taken to sustain the employee engagement they worked so hard to generate:
1. Create and launch the program exactly as Rapid Corp. did, but…
2. Structure program learning material into short modules that can be delivered by manager/leaders to their own teams and groups, in a conversational format
3. Require leaders to hold monthly meetings (one hour can suffice) where the program material is discussed, debated, critiqued by everyone in the group, asking “how can this theory help us right now?”. Gain consensus as to how the new information can improve the group’s own performance.
4. Ask each employee to make a personal commitment to practice one small behavioural/habit change, based on the conversation of the meeting.
5. Deploy digital technology to track and support the behavioural transformation, as employees make their efforts to change. There are apps and platforms available today that facilitate this process.

The key here is that small, persistent incremental changes gradually become new habits, and yield the broader, deeper behavioural transformation that will shift, strengthen and sustain employee engagement. And incremental change starts with conversations. “Are there better ways to do what we’re doing? How will they make my life at work better? What’s involved in changing to that way?”
Using our leaders for content delivery in small group conversations builds their knowledge, skills and confidence, and brings them closer to their employees and the issues most important to them. Conversations, being two-way, allow employees to engage in the issue, to feel included and involved. Using technology to monitor progress adds rich data on the health of your employee engagement in real time, while giving guidance as to what additional conversations (instructional, motivational, remedial) can be arranged to support those employees in need.
While the work of building employee engagement can be difficult, especially in the early stages, the formula is quite simple: good conversations build strong relationships, which strengthen employee engagement, which delivers outstanding performance and results.

Michael Darmody, Principal of Darmody & Company, is a seasoned leadership consultant, executive coach and public speaker who helps clients bridge their performance gaps by aligning Purpose, People and Process. He lives in Mississauga, Ontario.

Are You a forward-thinking Leader?

“Every few hundred years in Western history there occurs a sharp transformation. We cross what I call a “divide.” Within a few short decades, society rearranges itself-its worldview; its basic values; its social and political structure; its art; its key institutions. Fifty years later, there is a new world. And the people born then cannot even imagine the world in which their grandparents lived and into which their own parents were born. We are currently living through just such a transformation.”
Peter Drucker – “Post-Capitalist Society” 1993

Every current and aspiring leader today would do well to read Jeremy Rifkin’s The Zero Marginal Cost Society – The Internet of Things, The Collaborative Commons, and the Eclipse of Capitalism.  (If you cannot find time to read the book, this presentation nicely suffices:

Rifkin posits that we are in the midst of a third industrial revolution; one that will completely disrupt the capitalist system. He reviews the first industrial revolution, that began in Britain in the late 18th century, where radical changes in the textile industry resulted in the ‘modern’ factory. According to the author, it was enabled by a convergence of paradigm shifts in three critical economic components: energy (coal/steam), communication technology (steam powered printing presses) and transportation (steam locomotive and railways).

The second industrial revolution came in the early 20th century, where we again witnessed seismic changes in those same three areas: energy (oil), communication (telephone, and later radio and television), and transportation, (the combustion engine and subsequent automobile).

Both of these revolutions embodied the drastic transformations Drucker refers to in the quote above. Literally everything changed.

The third industrial revolution, already upon us, is driven by a similar shift in technology in those three crucial fields, but is considerably more powerful and far-reaching because it is creating Internets: a communication network, an energy network, and a transportation and logistics network, all of which will be further connected to each other through the Internet of Things. These Internets accelerate the rate and depth of change far beyond those of earlier experiences.

Three concepts in particular strike the reader:

  1. Rifkin explains in detail how this revolution is reducing the marginal cost of many goods to near zero (how much does it cost to send an email? to download a song?) and this will eventually render the fundamental concepts of capitalism (productivity, profit maximization, market supply and demand) irrelevant. What happens to a profit motivated system when goods are essentially free? (Think: why buy fossil fuels when the sun powers my home and car for free, and cleanly?)
  2. This is not solely futurist musings about what might happen; Rifkin’s consulting firm is already working under contract with the German government to help prepare their infrastructure for the third revolution, and after reading the book, Chinese Premier Li Keqiang adopted it as the blueprint for the country’s 13th Five Year Plan. (1)
  3. If Rifkin’s claims are true (as evidence tends to indicate), why are we not reading of collaborative efforts among global governments to anticipate and prepare for the massive retraining and adjustment that will be required to transition the global population through the shift?

In other words, where is the forward-thinking leadership that these times demand?

It may be absent on the political front, but if you are leading or aspire to lead any organization, being aware of and understanding the forces behind this third industrial revolution is a must. If you are not forward-thinking on behalf of your organization, you leave it vulnerable to the severe buffeting forces that the third revolution brings.

Forward thinking requires, among other things, incessant and creative questioning: How will 3D printing affect our industry? What are the implications of radical weather on our strategic plan? Is our current pace and quality of innovation sufficient to ensure our organization will survive let alone thrive? Are we crystal clear about what our organization will look like ten years from now? Can we at least be a bit clearer?

For all leaders, it is so easy (and sometimes necessary) to get stuck in Covey’s ‘Important and Urgent’ quadrant 1, putting out the proverbial fires, but to be most effective, to be forward-thinking leaders, we must jump to Quadrant 3: Important and not Urgent. Scan horizons, seek new trends, anticipate opportunities and sidestep threats. That is what forward-thinking leaders do. Today, things move so quickly that we must straddle both quadrants, which yet again emphasizes the need for effective teams, engaged employees and trust. Here are a few simple actions you might find helpful in preparing for the Third Industrial Revolution:

  • Read the book! (or at least watch the video)
  • Systematically look outside the organization: convene a group of your best employees and decide what ‘Outside Our Organization’ trends, concepts, and innovations from this revolution might affect you, and set up news feeds and processes to monitor and stay abreast of key information
  • Structure a process for learning from all employees what they see as the organizations future. Get everyone involved in forward-thinking
  • Share and invite employee feedback on the current strategic plan. Their insights might well surprise you
  • Ask employees to ‘own’ their area of interest on behalf of the organization, and report new outside findings. Example: if someone loves to follow 3D printing, ask them to update monthly and share interesting developments.

The key is to be forward-thinking, not just with your own faculties, but with those of everyone in your organization. Leverage organizational prescience. Finding ways to do so will not only ensure more comprehensive and better decision-making information, and mitigate risk, but will also include, challenge and motivate all of your employees in the process.

In the US, as the Trump administration reverts to the tired and unproven deregulation and tax cut strategy to stimulate the so-called ‘free-market’, the contrast between that and Rifkin’s proposed strategies becomes truly startling. The risk of betting on the wrong strategy could well prove disastrous for America and the rest of us. At perhaps the most crucial moment in human history, where forward-thinking leadership is desperately needed, the most powerful nation on the planet has handed the reins to a backward-thinking administration. At least if we, as forward-thinking leaders, can ensure we stay constantly informed and proactive, we can then intelligently assess and push back against any public policies that threaten our organizations and indeed, even our world.


Michael Darmody, Principal at Darmody & Company, is a seasoned leadership consultant, executive coach and public speaker who helps clients bridge their performance gaps by improving Purpose, People and Process. He lives in Mississauga, Ontario.





Leadership Lessons from Bernie Sanders

The current U.S. Democratic and Republican nominee races are, if nothing else, entertaining and unexpected. Yet independent of political platforms, leadership fundamentals can explain much of the phenomena we are witnessing; in particular, the (what the media calls ‘surprising’) success of Bernie Sanders campaign. When examined under the lens of leadership, it was almost predictable.
In a research survey conducted globally and multiple times since 1987, respondents were asked to select seven qualities they “most look for and admire in a leader, someone whose direction they would willingly follow.” The top four, (which never changed throughout repeated surveys) were: Honesty (always scored highest), and in this order, forward-looking, competent, and inspiring. (1) As long as people believed a leader possessed those traits, they would willingly follow that person.
A quick look at Sanders history shows not only strength in each category, but unusual consistency of policy, ideology, and voting record over his 40-year career. Agree with him or not, he cannot be accused of flip-flop tactics, or of acting contrary to his stated beliefs, which lends great credibility to his messaging, and has inspired formerly disconnected and cynical voters back into the fray. With Congress’s favorability rating in the low single digits, it is not surprising that disenfranchised voters would fall in behind a Beltway outsider; so far over 2 million of them, making 6 million small donations averaging $27.00.
Similarly, Stanford lecturer Jim Collins wrote about what he called Level 5 leaders, the most notable characteristics of which are, paradoxically, intense professional will, and deep personal humility. (2) Sanders campaign from the outset announced that there would be no attack ads; that they would take the high road of setting the agenda around really important national issues, and focusing only on them. His approach with all people, including the media, has been respectful and courteous, displaying a humility unusual at that political level. In fact, he has even cautioned Americans that neither he, nor anyone else elected President, will alone be capable of resolving the monumental challenges currently facing the country. He advises that only a collaborative effort, including a revitalized Congress, can deliver solutions. Yet as we see in the debates (which he had to force on the DNC), his humility does not mean he is a pushover. His fierce will to table the crucial issues, stay on message, and engage in vigorous debate to educate the voters, is anything but passive. Intense professional will; deep personal humility.
Result: he has gone from a ‘fringe candidate’ whom the media joked about, to winning seven of the last eight states’ caucuses and primaries. National polls indicate he defeats Trump by far higher margins than would Clinton.
Whether Sanders can win the Presidency or not remains to be seen. What is certain, is that without demonstrating those proven leadership characteristics, his campaign would never have gotten this far.
What might be the implications of this for leaders in the corporate sector? Do the same leadership traits still apply? Deliver superior results? Former TD CEO Ed Clark once observed “It’s incredible how much energy and power is out there on the front lines if they think you are a true believer too.” Starbucks CEO Howard Schultz recently observed of Americans: “Broken promises, void of truth in leadership have led to a fracturing of trust and confidence not only in our elected officials but in our institutions.” They have “cynicism, despair, division, exclusion, fear and yes, indifference.” (3) Indifference? We are all most familiar with the pathetic employee disengagement statistics cited in so many recent surveys. Yet Schultz’s, (possibly a Level 5 leader) latest results at Starbucks include $3.6 billion profit on $19.2 billion revenue. Not too shabby.
Perhaps the Sanders phenomenon could inspire leaders in all organizations to conduct a personal mirror check on those six leadership characteristics:
• Does my own agenda align with that of the organization? Is it perceived that way?
• Have I set a vision for the company that resonates with and includes employees?
• Do I walk my talk?
• Am I perceived as honest? credible? humble?
• Do employees truly believe that I’m sufficiently committed and strong-willed to pull off the vision?
Often, when the answer to these questions is ‘no, or not really’, it’s by default rather than design. These traits are easy to overlook, and sometimes call for painful personal growth. Yet the data show that as we work to master them, employees connect and deliver better performance.
Honesty, forward thinking, competent, inspiring, professional will, and personal humility: these have enabled Bernie Sanders to make a serious leadership run that eight months ago, no one believed possible. Business research directly correlates leadership behaviours with superior performance, further justifying any efforts to improve our leadership capabilities. It’s well worth our looking in the leadership mirror.
Now you may ask “What about Trump?” but that’s a blog for another day.
1. Kouzes, Jim, and Posner, Barry, The Leadership Challenge, Wiley & Sons, 2002
2. Collins, Jim, Good to Great, William Collins, 2001

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The Myth of Maximizing Shareholder Value

A while ago I was watching Bill Moyers interview Columbia professor and Nobel Memorial prize-winning economist Joe Stieglitz. Moyers was decrying Wall Street and the culprits of the 2008 financial meltdown, and in response to his question of how to remedy this, Stieglitz replied “we forgot that we make the rules.” He went on to say (I’m paraphrasing) that there isn’t and never was a ‘free market’, and that all markets, to serve society properly, require some degree of regulation. Fixing the problem, Stieglitz said, requires telling the politicians to change the rules. He also denounced the widely accepted idea that the real purpose of any business is to maximize shareholder value. In our business, I’ve come to understand the intense pressure that CEOs are under, not the least of which comes from meeting quarterly share price expectations. Yet I have never accepted that; instead believing that when a company values and grows it’s people, they in turn delight customers, innovate, create, and all stakeholders, including shareholders, win big. Shareholder return is a result, not an objective in itself, and when it becomes the overriding objective, we arrive at where we are now.
The link below is a review of Roger Martin’s book Fixing the Game, in Forbes magazine, back in November, 2011. Martin describes how a shift in the 1970′s to the notion that maximizing shareholder value was the true purpose of a business, led to the financial meltdown and the income distribution gap that, he contends (and I agree) is threatening the very system of American capitalism that originally strengthened democracy.
The takeaways for me are threefold:
1) that the majority of CEO’s are well-meaning and capable people, but they are handcuffed by the widely accepted “expectations market” that demands quarterly guidance, and compels a short-term focus and earnings management. This is both damaging to society, and unsustainable in the long run. To allow these leaders to revert to focusing on ‘delighting customers’, and building sustainable businesses that add tremendous value to society, we must shift away from the mindset that the purpose of a business is maximizing shareholder value. Further, regulatory policy must shape and enforce a corresponding behavioural shift.
2) Research continues to show that companies that prioritize employees, customers, and then shareholders (Martin cites J&J, P&G, and Apple) actually generate better (often significantly better) results than those that simply manage to expectations. This implies that reverting to a ‘real-market system’ yields a win/win result for all stakeholders. It takes a longer-term focus, and sometimes more work, but is sustainable and more stable.
3) The problem is much worse now. Four years after the article was written, investment banks are significantly larger than before the 2008 crisis, and Wall Street’s quarterly guidance system continues to reward irresponsible CEO behavior. Executive compensation at best reinforces short-term thinking, and in worst cases, creates moral hazard and self-serving decision-making.
While this story deals with the financial and business sector, the need for strong, authentic leadership in all sectors has never been greater. No one who reads the daily news would deny that the world is experiencing that proverbial ‘paradigm shift’ in not one, but many areas: business, geopolitical, science and technology, cultural, media and more. We are in a place where, as Marshall Goldsmith wrote, “what got you here, won’t get you there.” We need to reinvent a lot of things; discard old systems that no longer serve us well. That calls for deep transformation, and that, in turn calls for courageous, authentic leaders; leaders who remember that we make the rules.

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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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