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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Personal Leadership and the Arab Spring

When one watches international news networks like Euronews and Al Jazeera, two distinct global patterns emerge, each with its’ own lessons in leadership.
In pattern 1, we see the Arab Spring movement: collective disgust and dissatisfaction with the historical and current status quo of rampant corruption, oppression and denial of human rights. After several brave souls, early leaders in each Arab nation, forfeited their lives or freedom for the cause, the situation reached a boiling point where individuals made personal leadership decisions to take whatever small act was possible to register their extreme discontent. For hundreds of thousands, this often meant just showing up in the town square at a designated time, yet as we’ve seen, there remained personal risk in doing even that. But people basically asked themselves “what needs to be done? and what can and should I do about it?”
As these personal leadership decisions translated into action, an interesting phenomenon occurred: first Tunisia succeeded, then the Tunisians, using social media, coached the Egyptians in what did and didn’t work for them, facilitating the Egyptian success. And then the remaining part of the Arab world ‘went to school’ on Egypt, and started their own movements; Yemen, Bahrain, Morocco, even Syria are all well underway; the outcome still to be determined.
The leadership lesson: rather than look to a hero or other leader, people instead looked to themselves and to each other to determine what needed to be changed, and then went about changing it. They took personal ownership and responsibility for their situation and problems.
Pattern 2: Witness the “anti-austerity movements” in the debt burdened countries; particularly Greece, Italy and Britain, and the deadlock in the United States over the solution to the serious deficit problem. In these cases, relatively prosperous countries have borrowed heavily to finance a lifestyle they could not afford. Now that it’s time to pay the piper, the people are blaming governments and demanding that they fix the problem. To be fair, especially in the case of Greece, some of the blame is understandable: systemic corruption at all levels of government has caused some of the problem. Nevertheless, it has been said that we get the leaders we deserve. Where was the public outcry year over year as Greek politicians scammed the system? Having our collective heads in the sand does not constitute an excuse or absolve us of responsibility.
Leadership lesson: blame of others and denial of our personal ownership and responsibility can only leave us ineffective and inefficient in bringing about the positive change we want.
In his best-selling book Good to Great, author Jim Collins cites “Confront the brutal facts, (yet never lose faith)” as a ‘must-do’ practice in achieving organizational greatness. This applies to countries as well.
In the Arab Spring, people collectively agreed on the unacceptable conditions, decided what personal sacrifice they were prepared to make in order to effect the change, and then led by example. They found strength in collaborating with others, but understood, ‘owned’, and acted out their individual responsibilities.
In the anti-austerity movements, people have yet to confront the brutal facts. Instead, they continue to blame others: government, big business, investment banks (all of which have played their part in creating the problem). A deeply ingrained, decades old, sense of entitlement blinds them to the fact that they also hold responsibility for the current mess. They seem to be saying “we don’t care what needs to be done; what are YOU going to do about it?”
In countless reports of proposed austerity measures in Greece, Italy, Portugal, Spain, Ireland and the US, not once have I heard anti-austerity movement spokespeople admit that they are living beyond their means, and are prepared to sacrifice personally in order to resolve the problems. No personal ownership; no personal leadership.
One of the basic behaviours of effective leadership is to model the way. That only happens when we each take time to reflect, to clarify our personal values, and then commit to do our part, however small, to live out those values in the interest of solving our collective problems. Let us learn from the Arab Spring leaders. We in the highly indebted, developed countries currently need to confront the brutal facts, yet never lose faith.
Happy Canada Day!! Happy Fourth of July!!

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Precarious Situations: Watch for Common Leadership

When the dust eventually settles, we will be able to look back upon the events in Tunisia, Egypt, Yemen, Jordan and elsewhere, and identify people who stepped up to assume a leadership position to drive positive change in those countries.
It will be interesting to learn whether those people were formal leaders with recognized station and power (say, opposition party leaders), or whether they are common people of passionate values who reached a breaking point where their consciences no longer allowed them to remain silent on the sidelines. I suspect it will be the latter, in the case of Egypt, and in Tunisia the ‘leader’ was the frustrated vendor who set fire to himself in protest against an oppresive regime.
It is usually such precarious situations, crises, or threats to survival that force regular folk into action to demand and force better conditions. The Roman Cincinnatus, twice left his simple farm and assumed the dictatorship of Rome in order to protect her from invaders, then relinquished complete power both times, to return to his farming.
I’m curious to learn who were the instigators of the Tahrir Square gathering, and the Tunisia uprising. In both cases, someone in authority in the military must have a least tolerated if not supported the cause, but it appears that regular citizens orchestrated the gatherings and protests, and if this is the case, there is an important leadership lesson to be learned from it.
The lesson is that anyone can be a leader under the right circumstances, and when we have the courage to step up, the benefits for all can be remarkable. One news reel showed an Egyptian man carrying a folded white cloth in Tahrir Square. He told the reporter “this is my cultural burial cloth; I am leaving this square either a free man, or in this cloth.” Perhaps the Tunisian vendor hoped that the sacrifice of his own life would embolden his countrymen; spark them into action. Powerful stuff!
Whoever did instigate these rallies also knew (intuitively or cognitively) the basic tenets of leadership: they were closely attuned to public sentiment (shared values), knew clearly what the people wanted, had credibility (look how many showed up in the streets), and inspired the crowds to call for the same action (in Egypt and Tunisia, for the current governments and leader to step down). They also knew and leveraged the power of modern communications tools (Facebook, Twitter) to organize people. And for those common leaders, it is some feat to have the courage to risk (or give) their lives for these noble causes.
These stories are not over: Tunisia has forced an interim unity government, more representative of the people, that will rule until new elections will be held mid-year. In Egypt, Mubarak has stated he will step down eventually, and dialogue has begun with all factions of the people, in an effort to find a solution that will end the protests. But the exercise of common leadership that we have witnessed is both extraordinary and encouraging. While it is still possible that old regimes will regain control, or that new, equally nefarious people will take over, it somehow seems that democracy of some sort will take root. If it does, that part of the world will radically change for the better.
And if it does, we would do well to study the stories of the common people who saw the need for strong leadership and stepped up to accept the challenge of driving positive change. We should then teach those lessons to our colleagues, our employees, our politicians and especially, to our children.

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Torontonians Set Good Example for US Voters

There are some excellent lessons from the recent Toronto Mayoral election that other Canadian cities and all US cities/states can ‘go to shool’ on.
First, a voter turnout of over 50% shows individual ownership and intention to make a difference; quite impressive given the pervasive apathy and discouragement that has of late descended on our jaded, cynical society. I did not vote this time around (shame on me, but Hazel won again in Mississauga and I favoured her), but kudos to all of those who did get out and exercise their precious right. Recent ads in the US advise disenfranchised Latinos NOT to vote at all, as a sign of protest! Not a particularly good suggestion.
Second, in the end, the campaigns of Smitherman and Ford moved away from attack ads, and Smitherman showed extreme class and dignity with his final speech acknowledging defeat. Both he and Ford based their campaigns on clearly different platforms from which voters could choose, and put it all out there for the people to decide.
While democracy is a flawed form of government, it remains, as Churchill once said, the best one we’ve invented so far. The leadership shown this time around by the candidates (expressing their different visions for the city) and by the voters (modelling the way by taking action and going to the polls) demonstrates that if we truly want it to, our system can work well.
Hopefully, Canadians and our leaders at the national level will learn from this. And given our close integration with the giant south of our border, hopefully, they will take note prior to their November 2nd elections too.

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Leadership Development and Executive Coaching: Not the Same Thing

Lately I’ve been struck by the frequency with which the fast-growing field of executive coaching, and leadership development are mentioned in the same breath. They are sometimes used interchangeably and synonymously. But they are not the same.
While coaching is increasingly proving itself to be a highly effective method for helping executives grow, it should be clearly stated that coaching does not automatically improve their leadership ability or performance. To achieve that, a context around proven leadership behaviours needs to be introduced by the coach or the sponsoring organization.
Some coaches have bridled when I mentioned this to them. In coaching, the client is believed to be “creative, resourceful and whole”, and coach training institutes (ICF, CTI, Alder) rightfully insist that the coach’s role is to help the client identify, set and follow their own learning agenda.
But in leadership development, there is a subtle yet critical difference. In a direct coaching relationship, the client decides they would like help in some growth aspect of their life, and engages a coach to that end. Two partners; the client’s agenda.
In leadership development, it is usually a sponsoring organization that initiates and pays for the executive coaching program, and they usually do so with a specific aim to developing the leadership skills of participants. In such cases, either the organization’s own leadership competencies, or those provided by the coach must become the context within which the coaching takes place. It is only within that context that the client can introduce their own agenda.
Why? Consider this example. Let’s say I’m a senior manager and I take an EQ assessment that indicates I need to improve my emotional self-awareness. The coach works with me to gain understanding and new insights around that topic, and does so within the context of my management duties of planning, budgeting, organizing, coordinating and controlling my people and resources. Things go well, and I improve. Do I become a more effective person? Absolutely. A more effective manager? Probably. A better leader? Unlikely.
Leadership involves setting a vision, which implies change; challenging the status quo. Aligning and inspiring people. Growth in emotional self- awareness definitely will help one be a better leader, but only if one first understands what leadership is all about. The truth is that a growing body of research has shown that leadership competencies are very different from those of management. Both are absolutely necessary, but nonetheless, very different.
There are many highly capable coaches who are skilled in helping clients move to a new level of awareness. This is always beneficial in any context. Yet often these same coaches have no idea of the differences between leadership and management, and have not even heard of Warren Bennis, John W. Gardner, Kouzes and Posner, Jim Collins and the like.
If your organization has a crystal-clear understanding of leadership, and well-defined competencies for your leaders to develop, then a good coach without a background in leadership can still be effective. Just ensure they work within the context of your leadership competencies.
Better yet, if you want to maximize the depth and effectiveness of a leadership coaching experience for your people, select coaches who have a deep grounding in leadership development to complement their coaching offerings.
Doing so will result in transformational change at a faster pace than might otherwise be the case. Stronger leaders in less time.

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