Peter Drucker said, "Culture eats strategy for lunch." Raj Sisodia warns that it doesn't wait until lunchtime.
Concious companies need to be trustworthy and transparent. The minute information is hidden, it brings out the worst of the gossip mill. Perception is reality. If someone thinks a bad thing is happening, it doesn't matter whether or not it is actually happening. Empowerment is one of the keys to all of this. Expect the best and train them in the values and purpose. Then give them freedom to enact what you have trained them to do, all the while keeping the transparency there. Everyone should realize that whether they do the right or wrong thing, it will be known.
When creating a transformation within a company, individuals must buy in and be willing to change their behaviors. Enough people changing their individual behaviors will create the expected shift. Some people will be lost, however. Not everyone will be willing to make the change. Pushing out the naysayers, whether actively or passively, will serve to improve positive behaviors in two ways. One is that the naysayers are gone and their bad behaviors with them. Two is that those who remain will recognize that the company's commitment is there - it is serious. I ran into this as a manager. We were having quality issues, so we did training and let people know of our expectations, but we had to take some temporary but drastic steps to ensure that everyone was buying in to the transformation. Not everyone could handle the pressure and some left, as they were offended that I didn't fully trust them to do their job. The thing is, I believe in empowerment but at the same time expect greatness. Empowerment doesn't mean simply allowing people to do whatever they want. It means making it clear you expect a high level of performance and then giving them tools and trusting them to make it happen. The transition isn't always comfortable.
When hiring, make it clear what your criteria are. Attitude is most important. Skills can be taught, but attitude is difficult to change. Interview in groups to see how the person interacts with a variety of existing employees. Include front line employees in the process, as well as high level management to ensure the best people are hired and that new hires know the company is serious about what they ask of them. Culture and behavior are different but related. You can make a behavioral change by requesting people act in a certain way. Over time, the change in behavior will either be rejected or accepted. Eventually if accepted, it will be integrated into the culture. Rejected behaviors are not sustainable and will result in the requested behavior being subverted or dropped.
The sandwich chain Even Stevens is known for a delicious menu, live music, and most of all their charitable giving. Their deal is that for every sandwich you buy, a sandwich is donated to charity. This is in the form of each sandwich including a credit of about 50 cents that preselected charities can use to purchase food from their suppliers. Their website talks about how they are a collective rather than just individuals and that they care immensely about the enjoyment of food as well as making a difference in society. The downside is that they lost sight of this mission, expanded into too many stores too quickly, and had to close several stores and suspend the charitable donations. Their sandwiches are still delicious and expensive, but a couple years later they are unable to resume the sandwich credits. They claim they are still tracking what they owe their charities and will make it up to them. They serve as a warning against taking your eyes off the prize. They forgot about what set them apart in favor of rapid growth.
It will be interesting with the current pandemic to see how companies emerge on the other side with their strategy and their culture intact or improved, vs. those who will not weather the storm well. Many companies have moved to telecommuting after avoiding it for years in spite of research that shows people are often happier and more productive working from home. After having such a drastic change forced on them, I will be among those watching to see what changes when a cure is found. It is one thing to see which companies will survive the pandemic itself; it is another thing to see which companies can transition out of it when it is over.
Don’t start a business to serve yourself and use others. Start a business to express yourself and serve others.
Friday, June 26, 2020
Wednesday, June 24, 2020
A Business' Purpose
Victor Frankl wrote that happiness cannot be pursued; it ensues: it is the outcome of living a life of meaning and purpose. That comes from three things: doing work that matters, loving without condition, and finding meaning in our suffering.
If we wanted to rewrite that for a business, we may have to start with changing the outcome of happiness. People can be happy, but a corporation is not a person and can't be happy. I believe it can create happiness in others. Not every company would necessarily have happiness as a desired outcome, although perhaps every organization we have would make someone happy or else it would not exist. That may be part of the key - it is not that we would pursue something other than happiness but rather we need to ask who is this company supposed to make happy?
A related question may be whether it is possible to make people happy as a win-win or if happiness is a zero-sum game. Is one person's happiness at the expense of someone else's? In many sporting events, if one team wins by 5 points, the other team loses by 5 points. Most races work a little bit differently, where you'll have the first, second, and third place finishers receive medals - one overall winner but top finishers are acknowledged as well. Someone is still going to end up in last place, but finisher medals go to everyone who completes the race, knowing that finishing a marathon is still a fantastic achievement in and of itself. The Fan Favorite, Miss Congeniality, or Most Improved awards are other ways of letting more people win a little, because we recognize that more winners is better.
Golf is a little different in that a handicap can be calculated, which shows how close to par a golfer scores on average. This allows golfers of different skill levels to be ranked based on how they perform relative to their own average instead of directly head to head. As a golfer gets better, their handicap changes, forcing them to have to continue to improve. You still have one overall winner, just a different mathematical formula to end up with the final ranking. This means that if you modify the algorithm, even though everyone performs the same, the top to bottom ranking changes.
At some point, someone has to make the decision which algorithm is better, affecting who wins and who loses. A systemic conflict is created, where the winners believe the algorithm is good and the losers believe the algorithm is not good. It is said that an election is more about convincing the loser that they lost than it is about convincing the winner that they won. The winner always believes the election was fair. The loser needs to be convinced the results are fair so that they and their followers will not have reason to revolt. The U.S. has had a couple of elections where the electoral college algorithm gave the win to someone other than the winner of the popular vote, but that algorithm has survived as it provides a balance that the straight popular vote does not. Perhaps we need to take it even further and design a new system whereby everyone can win together.
Some board or card games are cooperative instead of competitive. An example of this is the board game Pandemic (which seems particularly appropriate these days). Everyone who plays either wins together or loses together. That's nice for a game, but the company who sells a cooperative board game vs. a competitive board game is trying to make money at the end of the day. There's an opportunity cost to buying their game - you can't use that cash to buy something else if you used it to buy the game.
A few years ago, Google changed its well-known motto from Do No Evil to Do The Right Thing. Just not doing something bad is different than doing something good. One kind of implies the other, but why not be explicit about wanting to do good?
It is sometimes said that integrity is what you do when no one is looking. But what about what you do when people are looking? If your proverbial mom is looking, you'll want to do the right thing, so this statement is that if you have integrity, you'll still do what makes your mom proud even if there was no way she would find out (someone has never lived in a small town, apparently). The part of this that has always bothered me is negative peer pressure or imbalanced power relationships. If you have integrity, you'll still do the right thing when people are looking - in particular those who may want to tempt you to do the wrong thing. Are you willing to stand against your so-called friends and do what is right in the face of temptation or danger? Integrity is doing what is right, period. It doesn't matter if no one is looking or if you're trying not to look silly doing the right thing when everyone is looking. We see photos of white people (students and adults) being out of control racists when the Little Rock Nine showed up to go to school. So what about those who were privately pro-integration? How willing were they to stand up to their racist friends? There are stories but too few and too far between.
I recently learned of an upgrade to the Golden Rule. The original aphorism states that we should treat others as we would like to be treated. The Platinum Rule takes this to the next level, which is that we should treat others as they would like to be treated. Not everyone is the same, so we need to adjust our responses to treat people in the way that is best for them. We need to take time to get to know them and work side by side to the point that we can give them something personally meaningful. Even this doesn't fully take into account that not everyone knows what is best for them. Adjustments still must be made when what is best for someone is not what the person wants.
Back to Frankl, if an individual can become happy by doing work that matters, loving without condition, and finding meaning in our suffering, then what is the equivalent for a company? There may be other principles that could be added, but my proposal follows a parallel structure to the original.
A company maximizes happiness within their sphere of influence by doing work that matters, treating everyone with respect, and reducing suffering.
A company has to start by choosing their sphere of influence. We can't fix every injustice in the world or provide products and services that everyone will want, but we can focus on a place where we feel like we can make an impact and choose work that will result in more good than bad. The important principle is that once we have set our sphere of influence, we have to treat everyone within that sphere with respect. This goes back to the Platinum Rule. It doesn't matter if it is customers, employees, suppliers, competitors, animals, government regulators, or people we encounter but have no official relationship with - we should cooperate with them all. We should do no evil. It is difficult to eliminate all negative externalities, but no one said this process would be easy. For the third principle, we take it one more step and not only do we not hurt others but we specifically reach out to do the right thing or the best thing. We actively work to reduce suffering. We promote building at the same time that we tear down destructive elements.
If we wanted to rewrite that for a business, we may have to start with changing the outcome of happiness. People can be happy, but a corporation is not a person and can't be happy. I believe it can create happiness in others. Not every company would necessarily have happiness as a desired outcome, although perhaps every organization we have would make someone happy or else it would not exist. That may be part of the key - it is not that we would pursue something other than happiness but rather we need to ask who is this company supposed to make happy?
A related question may be whether it is possible to make people happy as a win-win or if happiness is a zero-sum game. Is one person's happiness at the expense of someone else's? In many sporting events, if one team wins by 5 points, the other team loses by 5 points. Most races work a little bit differently, where you'll have the first, second, and third place finishers receive medals - one overall winner but top finishers are acknowledged as well. Someone is still going to end up in last place, but finisher medals go to everyone who completes the race, knowing that finishing a marathon is still a fantastic achievement in and of itself. The Fan Favorite, Miss Congeniality, or Most Improved awards are other ways of letting more people win a little, because we recognize that more winners is better.
Golf is a little different in that a handicap can be calculated, which shows how close to par a golfer scores on average. This allows golfers of different skill levels to be ranked based on how they perform relative to their own average instead of directly head to head. As a golfer gets better, their handicap changes, forcing them to have to continue to improve. You still have one overall winner, just a different mathematical formula to end up with the final ranking. This means that if you modify the algorithm, even though everyone performs the same, the top to bottom ranking changes.
At some point, someone has to make the decision which algorithm is better, affecting who wins and who loses. A systemic conflict is created, where the winners believe the algorithm is good and the losers believe the algorithm is not good. It is said that an election is more about convincing the loser that they lost than it is about convincing the winner that they won. The winner always believes the election was fair. The loser needs to be convinced the results are fair so that they and their followers will not have reason to revolt. The U.S. has had a couple of elections where the electoral college algorithm gave the win to someone other than the winner of the popular vote, but that algorithm has survived as it provides a balance that the straight popular vote does not. Perhaps we need to take it even further and design a new system whereby everyone can win together.
Some board or card games are cooperative instead of competitive. An example of this is the board game Pandemic (which seems particularly appropriate these days). Everyone who plays either wins together or loses together. That's nice for a game, but the company who sells a cooperative board game vs. a competitive board game is trying to make money at the end of the day. There's an opportunity cost to buying their game - you can't use that cash to buy something else if you used it to buy the game.
A few years ago, Google changed its well-known motto from Do No Evil to Do The Right Thing. Just not doing something bad is different than doing something good. One kind of implies the other, but why not be explicit about wanting to do good?
It is sometimes said that integrity is what you do when no one is looking. But what about what you do when people are looking? If your proverbial mom is looking, you'll want to do the right thing, so this statement is that if you have integrity, you'll still do what makes your mom proud even if there was no way she would find out (someone has never lived in a small town, apparently). The part of this that has always bothered me is negative peer pressure or imbalanced power relationships. If you have integrity, you'll still do the right thing when people are looking - in particular those who may want to tempt you to do the wrong thing. Are you willing to stand against your so-called friends and do what is right in the face of temptation or danger? Integrity is doing what is right, period. It doesn't matter if no one is looking or if you're trying not to look silly doing the right thing when everyone is looking. We see photos of white people (students and adults) being out of control racists when the Little Rock Nine showed up to go to school. So what about those who were privately pro-integration? How willing were they to stand up to their racist friends? There are stories but too few and too far between.
I recently learned of an upgrade to the Golden Rule. The original aphorism states that we should treat others as we would like to be treated. The Platinum Rule takes this to the next level, which is that we should treat others as they would like to be treated. Not everyone is the same, so we need to adjust our responses to treat people in the way that is best for them. We need to take time to get to know them and work side by side to the point that we can give them something personally meaningful. Even this doesn't fully take into account that not everyone knows what is best for them. Adjustments still must be made when what is best for someone is not what the person wants.
Back to Frankl, if an individual can become happy by doing work that matters, loving without condition, and finding meaning in our suffering, then what is the equivalent for a company? There may be other principles that could be added, but my proposal follows a parallel structure to the original.
A company maximizes happiness within their sphere of influence by doing work that matters, treating everyone with respect, and reducing suffering.
A company has to start by choosing their sphere of influence. We can't fix every injustice in the world or provide products and services that everyone will want, but we can focus on a place where we feel like we can make an impact and choose work that will result in more good than bad. The important principle is that once we have set our sphere of influence, we have to treat everyone within that sphere with respect. This goes back to the Platinum Rule. It doesn't matter if it is customers, employees, suppliers, competitors, animals, government regulators, or people we encounter but have no official relationship with - we should cooperate with them all. We should do no evil. It is difficult to eliminate all negative externalities, but no one said this process would be easy. For the third principle, we take it one more step and not only do we not hurt others but we specifically reach out to do the right thing or the best thing. We actively work to reduce suffering. We promote building at the same time that we tear down destructive elements.
Tuesday, June 23, 2020
Finding Your Purpose
Notes from my continued reading on Conscious Capitalism:
Besides the day you were born, the most important day in your life is when you figure out the purpose for which you were born.
Purpose is the difference we're trying to make in the world.
How do you find your purpose? Look where your talents and the needs of the world cross.
Even further, then, they show a four-way Venn diagram with your purpose being the intersection of what you do well, what you love, what the world needs, and what you can get paid for.
Questions to help discover your purpose:
Roy Spence paraphrases Aristotle, that we should do good rather than simply be good. We need to change the story, bring competitors together, and use our strengths to serve a higher purpose.
Besides the day you were born, the most important day in your life is when you figure out the purpose for which you were born.
Purpose is the difference we're trying to make in the world.
How do you find your purpose? Look where your talents and the needs of the world cross.
Even further, then, they show a four-way Venn diagram with your purpose being the intersection of what you do well, what you love, what the world needs, and what you can get paid for.
Questions to help discover your purpose:
- Why was the organization originally founded?
- What were the guiding principles that this organization was founded on?
- What spirit or intention must be preserved and captured in our purpose at all cost?
- When we are at our absolute best, what is going on?
- When we love what we are doing, what is going on?
- When we’re failing, just getting by, in a slump, or not that interested in our work, what is going on?
- What is the ultimate impact we hope to make?
- When we’re at our best, what difference do we make in the lives of the people we serve?
- What is our organization’s greatest strength; what do we have the potential to be the best at in the world?
- What are we most passionate about? What do we love the most about what we do?
- Where can we have the most meaningful impact? Which big problems or needs in the world are we capable of and passionate about solving?
- What would people reward us for? What products and services would our customers happily purchase from us?
- What do you love most about this company or this brand?
- What does this company or brand do for you that no one else does?
- If this company or brand ceased to exist, what would be lost? What would you miss the most?
- At the most basic level, what do we have to offer people?
- Functional benefit: what does our offering enable people to do?
- Emotional benefit: how does our offering make people feel?
- Ultimate value: what is the ultimate value of these functional and emotional benefits in their lives?
- What is your heart calling you to do?
- What is absolutely essential for the purpose to be truly meaningful?
Roy Spence paraphrases Aristotle, that we should do good rather than simply be good. We need to change the story, bring competitors together, and use our strengths to serve a higher purpose.
Saturday, June 20, 2020
Leadership
“In human relationships there are too many tacit, silent deals in which one person agrees not to demand full measure, if the other person will agree to mediocrity when excellence may be possible. In any event, the unwillingness of most leaders to set standards, to administer feedback when standards are not met, to praise clearly when standards are met, stands in the way of the development of excellence on the part of followers with inevitable loss in follower effectiveness and follower satisfaction. The leader who makes no demands of his disciples cannot really lead them at all. The sense of new excitement and new challenge generated by the gospel will be blunted by leaders who shield followers from the full demands of followership”
-Neal A. Maxwell
-Neal A. Maxwell
Friday, June 12, 2020
Conscious Capitalism
Why capitalism needs to evolve:
Capitalism has improved income, quality of life, literacy, and lifespan, but most people don't trust businesses. The invisible hand of Adam Smith has worked to increased income for many people through the industrial revolution and other changes and improvements, but the idea of shareholder maximization has had the opposite effect of decreasing efficiency and productivity.
John Mackey, CEO of Whole Foods pushes back against Milton Friedman's assertion that businesses should only be looking out for maximizing returns for their shareholders. Whole foods considers a range of stakeholders that should benefit from a company's existence - customers, employees, suppliers, investors, vendors, communities, and the environment.
Mackey discusses what a common answer would be to the question about the purpose of business. The first answer is always to make money. At the same time, a doctor who is very well paid will not say healthcare's purpose is to make money. It is to help people become healthy. Of course, a hospital or doctor's office is still a business and one that shuffles a lot of money through it, but there is still an overarching purpose beyond just the money itself.
He argues that legacy companies with a different mindset will have to evolve or else they will be replaced by start-ups to have a conscious capitalism approach.
What is conscious capitalism?
The metaphor is given of a caterpillar who simply consumes as much as possible, adding no value. Eventually nature takes its course and the metamorphosis to a butterfly results in a creature of light and beauty that gives back as much as it takes.
The four tenets are higher purpose (why), stakeholder integration (what), conscious culture (how), and conscious leadership (who).
Conscious capitalism goes beyond corporate social responsibility, which only mitigates some potential negative impacts without significantly building beyond that. Other concepts such as sustainability, triple bottom line, and shared value capitalism likewise do not go far enough in terms of who can benefit from the company and how.
Raj Sisodia presents conscious capitalism as a philosphy of doing business rather than a business strategy or business model. Such a philosophy will create value rather than extract value, leading to a Win-Win, rather than a Zero-Sum result. The key is patience. Such a metamorphosis cannot happen overnight, and there will be failures along the way. Companies trying to practice conscious capitalism may fail, but that does not mean it wasn't a good idea. It just means they need to keep trying.
Just like a doctor or hospital is still a business but working towards a greater purpose of improving health, really any non-profit is at the end of the day a business. The local humane society can't fulfill its mission of taking care of pets if they don't have the money from adoption fees or donations. The thrift store can't keep the lights on if no one donates their used items. Individual owners and employees can still be paid decently personally while the organization gives back to society.
The CC Credo:
We believe that:
Business is good, because it creates value.
It is ethical, because it is based on voluntary exchange.
It is noble, because it can elevate our existence.
It is heroic, because it lifts people out of poverty and creates prosperity.
Capitalism has improved income, quality of life, literacy, and lifespan, but most people don't trust businesses. The invisible hand of Adam Smith has worked to increased income for many people through the industrial revolution and other changes and improvements, but the idea of shareholder maximization has had the opposite effect of decreasing efficiency and productivity.
John Mackey, CEO of Whole Foods pushes back against Milton Friedman's assertion that businesses should only be looking out for maximizing returns for their shareholders. Whole foods considers a range of stakeholders that should benefit from a company's existence - customers, employees, suppliers, investors, vendors, communities, and the environment.
Mackey discusses what a common answer would be to the question about the purpose of business. The first answer is always to make money. At the same time, a doctor who is very well paid will not say healthcare's purpose is to make money. It is to help people become healthy. Of course, a hospital or doctor's office is still a business and one that shuffles a lot of money through it, but there is still an overarching purpose beyond just the money itself.
He argues that legacy companies with a different mindset will have to evolve or else they will be replaced by start-ups to have a conscious capitalism approach.
What is conscious capitalism?
The metaphor is given of a caterpillar who simply consumes as much as possible, adding no value. Eventually nature takes its course and the metamorphosis to a butterfly results in a creature of light and beauty that gives back as much as it takes.
The four tenets are higher purpose (why), stakeholder integration (what), conscious culture (how), and conscious leadership (who).
Conscious capitalism goes beyond corporate social responsibility, which only mitigates some potential negative impacts without significantly building beyond that. Other concepts such as sustainability, triple bottom line, and shared value capitalism likewise do not go far enough in terms of who can benefit from the company and how.
Raj Sisodia presents conscious capitalism as a philosphy of doing business rather than a business strategy or business model. Such a philosophy will create value rather than extract value, leading to a Win-Win, rather than a Zero-Sum result. The key is patience. Such a metamorphosis cannot happen overnight, and there will be failures along the way. Companies trying to practice conscious capitalism may fail, but that does not mean it wasn't a good idea. It just means they need to keep trying.
Just like a doctor or hospital is still a business but working towards a greater purpose of improving health, really any non-profit is at the end of the day a business. The local humane society can't fulfill its mission of taking care of pets if they don't have the money from adoption fees or donations. The thrift store can't keep the lights on if no one donates their used items. Individual owners and employees can still be paid decently personally while the organization gives back to society.
The CC Credo:
We believe that:
Business is good, because it creates value.
It is ethical, because it is based on voluntary exchange.
It is noble, because it can elevate our existence.
It is heroic, because it lifts people out of poverty and creates prosperity.
Subscribe to:
Posts (Atom)