Author: Jen Lawrence

Critical thinking enthusiast. Consultant. Writer. MBA. Author of Engage the Fox.

Executives as Agents (or, in defense of Milton Friedman, sort of)

Milton Friedman, the famed University of Chicago economist who was Reagan’s economic advisor, even posthumously continues to court controversy. Rand Paul thinks he should chair the Fed in spite of the fact he is dead.  Container Store CEO Kip Tindall, on the other hand, felt compelled to write, when he filed his IPO in October 2013, “Milton said the only reason a corporation exists is to maximize the return of the shareholder. Well, with all due respect to Milton, at The Container Store we have found that if you take better care of the employees than anybody else, they really will take better care of the customers than anybody else.”  Like Tindall, Simon Sinek, whose book, Leaders Eat Last, I generally adored,  also seems to blame Milton Friedman for the current emphasis on increasing shareholder value at all costs, basing his criticism on Friedman’s infamous quote in his book Capitalism and Freedom in 1962 and requoted in Friedman’s article in the New York Times Magazine in 1970:

there is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.

Certainly Sinek ‘s reaction is not surprising. Current corporate executives and boards have used Friedman’s words to justify the use of dead peasant policies, double Irish tax structures, regular pre-year-end layoffs and other socially toxic tactics as ways to boost the bottom line.  Friedman has become synonymous with the idea of profit over people.

The thing is, Friedman was not against corporations doing socially responsible things. He was against corporations doing socially responsible things for the sake of social responsibility. As an economist, he was keenly interested in principle-agent problems and, as such, was  against corporate executives, in their public role as agents of the corporation, doing anything other than acting in the best interests of the company. He clarified his point:

The executive is exercising a distinct “social responsibility,” rather than serving as an agent of the stockholders or the customers or the employees, only if he spends the money in a different way than they would have spent it. [Emphasis mine.]

In his statement, Friedman was simply highlighting agency dilemma rather than making a statement that it’s wrong to do anything right. His words only look horrifying when taken in a post-Enron/Tyco/Goldman Sachs context, when the thought of a corporation so eager to do good that it acts contrary to its own self-interest seems ludicrous.

Many employees are stock holders by virtue of their compensation plans and, as such, want to see their company’s stock appreciate in value. What employees object to is when they see business leaders making decisions that act contrary to the  interests of customers or employees in order to increase their own bonuses. The objection is not to a focus on shareholder value; the objection is, to borrow from Sinek, leaders eating first. Based on his writings, Friedman would object to any CEO who sacrifices the long term well-being of a company’s key stakeholders in order to line his pockets.

Friedman would argue that, no matter what, an executive should act as agent. And therefore if she is making any decision that compromises the long-term sustainability of the company she is not doing her job. Friedman would be just as opposed to executives making poor company decisions for personal gain, as he would be to executives making poor company decisions in the name of social justice. He never would have supported eliminating key jobs, failing to invest in people, allowing morale to sink, treating clients as unwitting counter parties, and hiding poor financial results, as these practices are never good for company sustainability.

Freidman emphasized this point in his essay, The Social Responsibility of Business is to Increase its Profits:

Of course, in practice the doctrine of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions. To illustrate, it may well be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government. That may make it easier to attract desirable employees, it may reduce the wage bill or lessen losses from pilferage and sabotage or have other worthwhile effects.

The problem with Friedman’s comments on the role of corporate leadership is not his philosophical point of view. The problem is his profession. Corporate executives are neither principals nor agents. They  flesh and bone human beings with hopes and dreams and fears and mortgages to pay and complex brains and endocrinological systems. To see people as theoretical constructs is the classic mistake of management theory and why, after 120 years or so of studying organizations, so little of the theory actually works. Shareholder value creation is a great idea, in theory: if a company is doing well, the stock price will increase. Of course, the stock price will also increase if there is stock manipulation or if an influential analyst changes his rating to a buy or if an executive slashes expenses to increase the value of his options. Looking to shareholder value as a way to measure the success of a company is a radical oversimplification that does not take human behaviour into account. Even Jack Welch, who is best known for his ability to create shareholder value, said, in an interview with the Financial Times in 2009, that focusing on shareholder value as a strategy was “the dumbest idea in the world.”

Sinek simply needed to point out is that, as human beings, we are always principals, even when we supposed to be acting as agents. The only path to long-term corporate survival is for leaders to align our principal and agent selves and work within our human limitations.

What false quotes tell us about ourselves

I’m a huge fan of quotations. When writing an essay or addressing a group, it’s lovely to be able to pull out a couple of sentences by someone famous that neatly summarize the situation. The trouble is a lot of the well known quotations that routinely get slapped on coffee mugs and fridge magnets are wrong. Well, perhaps wrong is not the right word — someone must have said that clever line, after all — but rarely was it uttered so succinctly by Churchill, Lincoln or Ghandi. This practice of is mis-attributed quotes is so widespread that I’ve stopped using quotes unless I can find the primary source.

When I was researching my piece on Doing Business the Eleanor Roosevelt Way, I came lots of quotes like this one:

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It’s a great quote, right? “A woman is like a tea bag – you never know how strong she is until she gets in hot water.” It sounds like a thing Roosevelt might have said in her book of sage advice, You Learn By Living. She might have said it, but she never did. Quote Investigator, a website run by Dr. Garson O’Toole, tracks down the origins of these rogue quotes, including the teabag one, in a way that is absolutely fascinating. The first records indicated that the quote was an Irish proverb dating from around 1860. There is a record of a reader of the Los Angeles Times sending that quote to the paper in 1961. Both Dorothy Elston and Phyllis Schlafly used the quote in political speeches in the 1960s. In the 1990s, the quote began to be attributed to Eleanor Roosevelt and this notion was popularized when Hilary Rodham Clinton reportedly started to use it as an example of Roosevelt’s wise words.

Most quotes seem to be misattributed through a similar form of “broken telephone” over time but there are some general patterns in how these misquotes evolve that reveal something about human behaviour.

We need our heroes to be wise

One of my favourite quotes is “Well-behaved women seldom make history.” I’ve seen it attributed to Marilyn Monroe, May West, and Eleanor Roosevelt. It was really written by Laurel Thatcher Ulrich. Now Laurel is not exactly a slouch and is, I hope, the most famous person in her neighbourhood. Among her list of accomplishments are she is a Harvard professor and Pulitzer-prize winning author of A Midwife’s Tale. But apparently she’s not quite enough of a household name to be featured on a fridge magnet (the ultimate high-water mark!) There is some sort of innate desire to believe that the people we elevate to fame are capable of speaking wise, universal truths. Heaven knows what things history will attribute to Kim Kardashian. Often we think of famous people as wiser than they are and this can translate to the boardroom where we tend to lend more weight to the words of the senior people at the table.

We need our heroes to be perfect

Any gift shop worth its salt will have a little motivational plaque or tote bag featuring Gandhi’s  inspirational quote: “Be the change you wish to see in the world.” Unfortunately, Gandhi never said this. Elephant Journal tracked down the origins of this misquote.  Apparently, Ghandi said something similar to the quote, but rather less bumper-sticker friendly: “If we could change ourselves, the tendencies in the world would also change. As a man changes his own nature, so does the attitude of the world change towards him. … We need not wait to see what others do.” We want our heroes to be perfect and when they are not perfect enough, we just edit them into the form we want (this is the same phenomenon that let guys like Bill Cosby get away with acting badly for years, I suspect.) It’s kind of depressing that the world does not consider Gandhi to be Gandhi enough. It creates a lot of pressure for the rest of us!

In some cases, the great figure being quoted did not say the great thing at all. Megan McArdle tracked down the origins of a Martin Luther King Jr. quote for her piece in The Atlantic. McArdle explained why we might want to put other people’s words in the mouths of our recognized heroes: “We become invested in these quotes because they say something important about us–and they let us feel that those emotions were shared by great figures in history.” We need to feel part of something great and if it’s not quite great enough, we embellish.

We needed our heroes to be men

For a long time in our history, women were not believed to be capable of things like voting, running for office, running a company, or saying great things. So, for a long time men got a lot of quote credit. Maseena Zielger wrote a fascinating piece for Forbes titled, 7 Famous Quotes You Definitely Didn’t Know Were From Women. Take Thomas Edison’s “Genius is 1% inspiration and 99% perspiration.” Edison never said it: an 1890s academic named Kate Sanborn did.  Ralph Waldo Emerson never wrote “Do not follow where the path may lead. Go instead where there is no path and leave a trail.” The credit goes to poet Muriel Strode. And “I disapprove of what you say, but I will defend to the death your right to say it” was not Voltaire, but Evelyn Beatrice Hall. Thankfully, we are at a stage now where women like Eleanor Roosevelt, Dorothy Parker, May West, Virginia Woolf, and Maya Angelou are oft quoted. Which leads to the next problem…

Once you say a few things well, people will give you credit for more.

Mark Twain is both one of the most quoted and wrongfully quoted people on the planet. “The only two certainties in life are death and taxes” was not said by Mark Twain nor was “There are three kinds of lies: lies, damned lies, and statistics.” Mental Floss has tracked down a list of 10 Things Mark Twain Didn’t Really Say and Quote Investigator lists many more. Mark Twain said a lot of brilliant things and, because he did, we are willing to believe he said every brilliant thing out there. In recruiting we used to call this the halo effect and it’s one of those thinking traps that can make give credit undeservedly. In business, it’s useful to know if you are dealing with a Mark Twain – a brilliant person who got a lot of credit he did not deserve – or a Dorothy Parker – a brilliant person who did not receive as much credit as she was due (read this Mental Floss piece to see how very quotable she was.)

 

 

 

 

 

Book Review: #GIRLBOSS

Every once in a while a book comes along that speaks to me on all levels: business, personal, and — dare I say it? — spiritual. Kelly Cutrone’s If You Have to Cry, Go Outside was one such book. Nasty Gal’s Sophia Amoruso’s #GIRLBOSS is another.

In some ways, Cutrone’s and Amoruso’s books are similar.

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Both women were fashion outsiders turned insiders: one is a fashion publicist who runs her own firm and the other runs the online retail business she created. Both women use the “I’m in charge”, hands-on-hip stance on their book covers and they both seem to favour the rocker-chic look. Neither woman has a typical business background and became successful through intelligence, crazy hard work, good instincts and moxy. Cutrone was born in 1965. Amoruso was born in 1984. I’m a 70s baby, wedged neatly between the two. I read Cutrone as a wiser, older sister, letting you in on the secrets of life. Amoruso – pre-kids, pre-wrinkles – is the wild-child baby cousin who is absolutely fearless. Her book reads like a giant kick in the rear, which we all need from time to time.

I still read physical books and I dog-ear the pages I like. This is what the book looked like when I finished reading it and, yes, it was that good.

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Here were some of the standout quotes for me.

There are secret opportunities hidden inside every failure.

How true is this? I’m not a big fan of the fail fast movement because, except in areas like industrial design where you need to throw a lot of things against the wall to see what sticks, failure should not be too easily embraced. But I do believe that failures can often be salvaged and always present learning opportunities. The key thing is to learn from one’s failures and not repeat them.

Money looks better in the bank than on your feet.

Now isn’t this a surprising statement from an online retail queen? But it’s true, in business and in life. Having money gives you choices. By building up a war chest of cash in the bank and taking on no debt in Nasty Gal’s early days, Amoruso had a lot of flexibility. She was able to choose her investors, choose the timing of investments, and grow the company as she wished. So many companies (and people!) are eager to find investors, take out loans, or go public based on the lure of Other People’s Money. As a former banker, I can tell you that Other People’s Money comes along with other people’s terms and conditions and you do not want a less-than-ideal covenant structure or demands from shareholders limiting what you can do. When you own the bus, you get to drive the bus.

Each time you make a good decision or do something nice or take care of yourself; each time you show up to work and work hard and do your best at everything you can do, you’re planting seeds for a life that you can only hope grows beyond your wildest dreams.

Amoruso believes in magical thinking. No, she does not think that by putting a picture of a car on your wall, the car will manifest itself, but she does think that with a vision, a positive attitude and — here’s the key — lots of hard work, you can make magic happen in your own life and business. I tend to agree.

In business, a disproportionate amount of importance is placed on the ability to network.

Yes! Like Amoruso, and about 50% of the population, I am an introvert. (The common notion is that only 30% of the population are introverts as this statistic seems truer than the reality, based on our more quiet nature!) Extroverts have shinier skills such as the ability to build a large network and create a pipeline of potential clients. Also, they tend to talk about their accomplishments. But, as Amoruso points out, introverts have valuable skills as well and a successful organization makes sure they are not overlooked. Introverts are often great at deepening client relationships and building loyalty. As Amoruso discusses in the book, both types of people are needed for an organization to succeed.

You can be entrepreneurial without being an entrepreneur.

Absolutely. If you treat the company for which you work as your own company and are willing to work hard, safeguard the assets, and take calculated risks, you’ll do better and have more fun on the job.

What no one seems to talk about is that business is creative.

Amoruso argues that any job can be creative. You can use creativity to arrive at a new algorithm for a software program. You can use creativity to choose the auditing company that will best support your business’s stage of growth. You can be creative in choosing how to finance your company. Don’t let the designers and marketing people have all the fun.

If you are looking for a fresh voice giving out some good advice for business and life, Sophia Amoruso’s #GIRLBOSS is well worth your time.

 

 

 

 

 

6 Ways to Live Like a Boss

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So, do you want to live your life like a boss, calling the shots and living on top? Consider living life like a boss. We’ve taken six top tips from the business world that can improve your personal life too.

Have a vision. Any CEO worth their salt has a clear idea of where they want their company to go. Often, there is a vision statement that serves as a guide for customers and employees. At Starbucks the mission is “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.” LinkedIn has a vision of “connecting talent and opportunity at massive scale.” What is your vision for your life? Do you want to pursue your dream of entrepreneurship? Do you want to be fit, happy and healthy? Do you want to take a few years off to have kids? Do you want to travel the globe? Think big. As Tory Burch said in her commencement speech for the entrepreneurship program at Babson College, “If it doesn’t scare you, you’re probably not dreaming big enough.”

Break things down into smaller steps. Having a great vision is only the first step. If Starbucks simply directed its employees to “inspire and nurture the human spirit” and left it at that, it’s doubtful anyone would have mastered the art of the half-caf vanilla latte. You need to figure out realistic steps to move you toward your dreams. Want to go back to school to get a master’s degree? How are you going to save the money to do that? Can you get your company to support you earning your degree on a part-time basis? Can you save up and then take a sabbatical from work? Perhaps you want to sail around the world. Can you get a job as crew on someone’s boat? Would you be content to forgo lattes and designer shoes for a decade to finance a one-year sailing holiday? Almost anything is possible if you are willing to do all of the small steps required. It’s like eating the proverbial elephant: Do it one bite at a time.

Recognize your strengths. Companies that are successful focus on what they do best. Walmart manages the supply chain to drive lower prices. Apple creates beautiful devices that are easy to use. Disney owns creative storytelling. What do you do best? What key strengths are identified in your performance reviews? Are you a great communicator? Are you a whiz with numbers? What nice things do people write in your birthday cards? Are you charming? Does your openness and honesty draw people in? The key to success lies in identifying what you are good at doing and doing that a lot. In the movie Love Actually, character Colin Frissell knows that his key to success with women hinges on American women finding his English accent charming: “Stateside I am Prince William without the weird family.” His friends think he’s crazy to move to the U.S., but he knows to play to his strengths.

Enlist help. In the Reese Witherspoon movie How Do You Know, Tony Shalhoub’s character reveals the secret to life: “Figure out what you want, and learn how to ask for it.” Rarely can we get everything we want on our own. Successful business leaders are masters at enlisting other people to help them work toward their goals. You can do the same in your personal life. If you want to start your own business, ask a successful entrepreneur if they’d consider mentoring you. If you want to be a better parent, ask someone with functional adult children the secret to their success. Mentors do not have to be formal. As Net-a-Porter’s Natalie Massenet revealed to Financial Times, “I don’t have a mentor in the strict definition. I take as much advice and inspiration as I can from the people I am close to. Sometimes, though, I ask myself: “How would Audrey Hepburn handle this?” The world is full of people who can help you if you are brave enough to ask.

Take stock. Companies are very good at determining how well they are achieving their goals. Sales figures are compared to monthly targets, inventory is counted seasonally, employee performance is reviewed annually, and financial results are reported and analyzed quarterly. It makes sense to take regular stock of your personal progress too. Perhaps you said you’d write a book by age 40. If you have only a fuzzy recollection of your 38th birthday, perhaps you need to get writing. Maybe you wanted to travel a lot, and have yet to apply for a passport. Often it seems like the big things you want to do are pushed aside by all of those little things you have to do: taxes, grocery shopping, returning online shopping mistakes to the post office. In Think Like Zuck, Ekaterina Walter writes that Facebook founder Mark Zuckerberg regularly asks himself “Am I doing the most important thing I could be doing?” Why not ask yourself the same thing? Are you spending most of your time and energy working on fulfilling your vision? If not, why not?

Focus on the next play. LinkedIn CEO Jeff Weiner has adopted a “Next Play” philosophy for his company based on the practice of Duke Blue Devils coach Mike Krzyzewski. Krzyzewski would routinely shout the phrase during games as a reminder that the next play is always more important than the last one. At LinkedIn, Weiner does not want employees to rest on past successes, or be paralyzed by their mistakes. This approach works equally well outside the office. Got a promotion? Fabulous! Go for celebratory drinks with the gang and then get down to work. Got dumped by a total jerk? Shake it off, as Taylor Swift would counsel. The great thing about life is you can’t be fired or cut from the team. There is always a next play.

Doing Business the Eleanor Roosevelt Way

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Eleanor Roosevelt wrote “You must do the thing you think you cannot do.” While she was encouraging personal boldness, the message is also applicable to corporate life. In 2010, Audi stated its bold goal of “becoming the leading brand worldwide in the premium car segment.” They aimed to overtake BMW, who has held the No. 1 sales position for the last decade, by 2020. This audacious goal has helped increase their overall performance significantly — courage pays off. Here are six ideas for bringing Roosevelt’s sense of bravery to the job:

Differentiate between smart risk and silly risk
Being courageous at work does not mean challenging the boss to a dual at the next board meeting. We would never recommend that you walk into a meeting unprepared, take an overly aggressive trading position or give your boss an ultimatum. While these are risks, they are not smart ones. A smart risk pushes you slightly out of your comfort zone without pushing others out of theirs. Smart risks include asking for the sale, asking for the promotion or asking for more responsibility. A manager, coach or mentor can be very helpful in encouraging you to take smart risks.

Have a strong vision of what you want
I used to be terrified of needles and would do everything in my power to avoid them. Then, when I wanted to have children, I had to have needles almost every day. Suddenly they were not as scary, as my clear vision of family life trumped my fear. The same thing happens at work. You might be terrified of public speaking, but if you want to take on more interesting work in your field, the opportunity to keynote at a conference will help you get over your fears. Have a clear vision of what you want, write it down and tape it someplace prominent. The daily risks you must take to get you where you want to go will not seem as scary.

Practice makes perfect
You can practice courage by taking small risks on a regular basis. This could mean anything from asking to be part of a new project, to writing an article for an industry publication, to offering to mentor a new employee. Take on small stretch goals and then climb, jump or borrow a ladder in order to reach them on a regular basis. You’ll get used to feeling brave.

Courage can be borrowed
In a third century B.C. parable from Zhan Guo Ce, a fox is caught by a hungry tiger. The fox, trying to figure out a way to save himself, tells the tiger that he is king of the beasts and should not be eaten. The tiger does not believe the much smaller animal so the fox challenges him to follow him through the forest and see how the other animals react. The two set off together and the other animals, seeing the tiger, run away in fear. The fox takes full credit for their fearful response and the tiger, believing him, spares his life. While this parable mainly seems to be about the gullibility of tigers, it also shows how we can borrow courage. Surrounding ourselves with courageous people can help us to feel bolder. We can attend conferences with like-minded people, join a mastermind group or invite someone we admire for lunch. There are lots of people out there who are taking risks and doing interesting things. Spend more time with them and you will find their courage is contagious.

Practice courage in your personal life
If you are nervous taking risks at work because the stakes feel too high, start building those courage muscles at home. Take the microphone on karaoke night, volunteer for that school committee or sign up for zip lining. If you learn the benefit of taking calculated risks in your personal life, you’ll be more comfortable taking them at work.

Assess the risk
Part of what makes bold actions scary is the inherent downside. Before doing something brave, it can be helpful to contemplate what might go wrong. It’s useful to look at the potential problems (what might go wrong) and the potential causes (why it might go wrong.) You can look at preventing these problems and minimizing the impact should the problem still occur. As an example, perhaps you are contemplating buying a house but are terrified it will burn down. As a way to prevent fire, you can make sure the electrical system and stove are in good working order. As a way of minimizing the damage of a fire, you can install an alarm system and sprinklers. Assessing risk can help you to be more courageous, as it’s easier to take a leap of faith when you are fairly certain it won’t lead to disaster.

We hope you do something today to flex your courage muscles — it’s fun, makes your job more interesting and can serve to inspire others. Most people regret what they don’t do more than what they do, so take a page from Eleanor and do that thing that scares you just a bit.

Engage the Fox: The First Review

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The first review for Engage the Fox: A Business Fable About Thinking Critically and Motivating Your Team is out and we were thrilled that it’s a great one. It’s always hard when you write a book to know how it is going to be received. So, you do your best and after edits and re-edits until its as perfect as you can get it, you send it out there with a wing and a prayer (and confidence in your publishing team.)

Here is Kaye Parker’s review in The Chronicle Herald.

 

Book Review: Leaders Eat Last

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I adore the movie The Little Foxes with Bette Davis and Herbert Marshall. It’s based on one of those lovely 1930s morality plays about the dangers of unbridled greed. Its title comes from the Bible’s Song of Solomon:

Catch for us the foxes,
the little foxes
that ruin the vineyards,
our vineyards that are in bloom.

The general interpretation of this passage is that anyone who does not allow others to flourish will be stopped. In the film, Bette Davis’s character, Regina, and her brothers plan to build a cotton mill that threatens the well-being of their town but will make the family very rich. Regina conspires against her husband and brothers and even her own daughter in order to seize a leadership position within the family. One of the most powerful scenes is when Marshall’s character, Horace, tells his ruthless wife what he thinks about her and her brothers’ relentless attempts to make money at any cost:

I’m sick of your brothers and their dirty tricks to make a dime. There must be better ways of getting rich than building sweatshops and pounding the bones of the town to make dividends for you to spend. You’ll wreck this town, you and your brothers. You’ll wreck this country, you and your kind, if they let you.

His speech reminded me of Simon Sinek’s terrific book, Leaders Eat Last.  After hearing Sinek speak at Leadercast in May, I bought the audiobook and listened to it twice in the car. I then bought a print copy of the book in order to digest the detail. So, yes, I liked it a lot.

Leaders Eat Last takes its title from the US military, where the highest ranking officers traditionally eat last as a way to show their people that a good leader puts the needs of his or her people first. The idea seems refreshing at a time when stories of corporate greed and CEOs stopping at nothing to preserve their own bonus pools abound. Certainly, today’s culture of relentless shareholder value creation has led to a sense that business is “building sweatshops and pounding the bones of the town to make dividends.” The news is filled with stories of dead peasant policies and regular layoffs and elaborate tax avoidance strategies and other examples of corporate leaders putting neither their people nor their broader stakeholders first. When Burger King and Tim Horton’s recently announced their partnership, the media focused on the deal as an aggressive tax play rather than as a strategic alliance (I like to call the tax angle the Double Double Irish with a Dutchie sandwich. Har har.) Perhaps the thought of marrying two companies for reasons other than a short-term goosing of the stock seems unfathomable even though there are potentially a lot of other reasons why the partnership might make sense.

Sinek blames this climate of cynicism on the fact that the social contract between leaders and their followers has been broken. Leaders are supposed to protect their followers and the need for such people is wired into our very physiology as part of our instinct to survive:

We … are not like crocodiles. Though we may share the primitive, reptilian portion of our brain with them, our brain continued to grow beyond its reptile roots. We are anything but loners. The addition of the mammalian layer of our brain helped us to become highly functioning social animals. And for good reason. If we weren’t adapted to live in tribes and cooperate, we would have died off long ago. We don’t have thick scaly skin to make us less vulnerable to attack. We don’t have rows of sharp teeth like a great white shark, able to keep chomping even after we lose a few. We’re just not strong enough to survive alone, let alone thrive.

In order to figure out how to best distribute food, we evolved into hierarchical animals and elected the strongest members of the group to act as leaders who could allocate the resources in a way that best ensured the survival of the group:

Those who work hardest to help others succeed will be seen by the group as the leader or the “alpha” of the group. And being the alpha – the strong, supportive one of the group, the one willing to sacrifice time and energy so that others may gain – is a prerequisite for leadership.

Based on his understanding of anthropology, Sinek has crafted this definition of leadership:

Leaders are the ones who run headfirst into the unknown. They rush towards the danger. They put their own interests aside to protect us or to pull us into the future. Leaders would sooner sacrifice what is theirs to save what is ours. And they would never sacrifice what is ours to save what is theirs. This is what it means to be a leader. It means they choose to go first into danger, headfirst towards the unknown. And when we feel sure they will keep us safe, we will march behind them and work tirelessly to see their visions come to life and proudly call ourselves their followers.

There are not many leaders in the current corporate world who fit this description and, thus, it’s not terribly surprising that employees do not feel particularly motivated. As Sinek points out in the book, “According to the Deloitte Shift Index, 80 percent of people are dissatisfied with their jobs.” Although their dissatisfaction won’t necessarily drive them to quit, they certainly won’t be bringing their best selves to the job. According to the G20 Innovation Report, the US is down 7% in domestic innovation from 2003 to 2012: people who are dissatisfied do not bring their energy or ideas to work.

Sinek provides a powerful explanation of why we feel demotivated when we do not have leaders who care for us. He explores the role of  human physiology in connecting us to the leaders of our current tribes: namely our families, communities and the workplace.

Almost all the the systems in our bodies have evolved to help us find food, stay alive and advance the species. However, for a lot of the world, and certainly throughout the developed world, finding food and avoiding danger no longer preoccupy our days. We no longer hunt and gather, at least not in the caveman sense. In our modern world, advancing our careers and trying to find happiness and fulfillment are the definition of success. But the systems inside us that guide our behaviour and decisions still function as they did tens of thousands of years ago. Our primitive minds still perceive the world around us in terms of threats to our well-being or opportunities to find safety. If we understand how these systems work, we are better equipped to reach our goals. At the same time, the groups in which we work are better able to succeed and thrive as well.

When we do not feel protected by our leaders, we are hardwired to feel anxious and distrustful. Every time a corporation announces a round of layoffs to increase their quarterly numbers, it quite literally makes us feel sick. Sinek briefly discusses what we have learned about human behaviour from the fields of neuroscience and anthropology (also described in books like Malcolm Gladwell’s Blink and Andrew O’Keeffe’s Hardwired Humans). He then spends considerable time describing the powerful effect of hormones such as oxytocin, serotonin, endorphins, cortisol and dopamine:

Mother Nature figured out a lot earlier than our bosses…to use an incentive system to condition us to do certain things to achieve desired results. In the case of our biology, our bodies employ a system of positive and negative feelings – happiness, pride, joy or anxiety, for example – to promote behaviours that will enhance our ability to get things done and to cooperate. Whereas our bosses might reward us with an end-of-year bonus, our bodies reward us  for working to keep ourselves and those around us alive and looked after with chemicals that make us feel good.

Good leaders understands how people tick and know that when employees feels secure and valued, they are much more effective than when they feel threatened. A good leader provides opportunities for employees to release feel-good chemicals by giving out praise, making people feel part of a team, building a sense of pride in one’s work, and helping people complete assigned tasks. A good leader also understands how to  minimize the release of negative hormones that flood the nervous system when people feel unsafe. This can be accomplished through having open communications, providing a sense of job security, and helping people navigate change.

Sinek believes that building a culture where employees feel safe and valued is critical to a company’s long-term success. Unfortunately, this can be hard to do when a CEO feels pressured by shareholders to continually trim costs by firing staff, decreasing levels of customer service, and making people do more with less in order to increase profits. And when executive compensation plans reward executives for putting the people they are meant to protect in harm’s way, the leader is no longer fulfilling his anthropological purpose:

When cultural standards shift from character,values or beliefs to performance, numbers and other impersonal dopamine-driven measurements, our behaviour-driving chemicals fall out of balance and our will to trust and cooperate dilutes…. We lose our sense of history, of responsibility to the past and shared tradition. We care less about belonging. In this kind of weak culture, we veer away from doing “the right thing” in favor of doing “the thing that’s right for me.

Sinek is an excellent storyteller and whether he is telling the story of military hero Johnny Bravo or Bob Chapman of Barry Wehmiller or the culture at 3M, he shows us clearly what good leadership looks like. More importantly, he shows us how effective it is at achieving long-term results. Sinek’s belief is that “capitalism actually does better when when we work as we were designed – when we have a chance to fulfill our very human obligations.” Sinek knows that the key to strong leadership lies not in understanding management theory – Winston Churchill, Nelson Mandela, Rosa Parks, Mahatma Ghandi, and Martin Luther King Jr. all lacked an MBA –  but rather in understanding human behaviour. Great leaders have a deep understanding of the social code between leaders and the led. They understand what followers expect of them and uphold their end of the bargain.

At the end of The Little Foxes (mild spoiler ahead), Bette Davis’s character gets her way. She bests her husband and her brothers and will likely become a very wealthy women. But she is left all alone, the punishment for the alpha who has been blessed with many gifts but does not protect those who rely on her. She is expelled from the tribe and ends up the leader of nobody: according to Sinek, an anthropologically fitting end.

 

 

 

8 Habits of Effective Critical Thinkers

Critical thinking is the ability to make decisions, solve problems, and take appropriate action in a systematic fashion. It has been identified as one of the key skills required for future success by educators, business leaders and governments. 97.2% of managers surveyed by the American Management Association for its 2012 Critical Skills Survey believed that critical thinking skills were important to drive future growth of their organizations. The same group, however, believed that only 10% of their employees were fully competent in critical thinking. As most of us could improve our thinking skills, here are eight simple ways to become a better critical thinker at work and in life:

  1. The five second rule.  Nope, this isn’t about the edibleness of that cookie you just dropped on the floor. We are talking about the brief pause you should take before making a decision. Some decisions require the triune or instinctive brain (“Hungry!), others the limbic or emotional brain (“That cookie would make me feel better”), and the rest the neocortex or rational brain (“That cookie fell where the wet dog was sitting and therefore should not be eaten.) By taking a brief pause of a few seconds, we allow the appropriate brain the time to function.
  1. There is no “I” in Critical Thinking. (Scratch that, there are several of them.) Thinking is, in many ways, an individual activity (“group think” and “sharing a brain” are not overly positive terms.) This does not mean that most decisions should be made in isolation however. The more people who are involved in making a decision, the more successful it tends to be. With differing points of view, you will get better ideas on the table as each person can draw from his or her experience (“My aunt once got very sick from eating a cookie off the floor.”) Effective critical thinking involves four key skills: gathering information, generating ideas, evaluating options and gaining agreement. Nobody has equal strength in all four areas. The best thinking happens when several people pool their individual thinking strengths to arrive at a collective solution.
  1. Not my circus, not my monkeys. You can waste a lot of time and energy trying to change what is outside your sphere of influence. Take a page from the oft-quoted Serenity Prayer: accept the things you cannot change; change the things you can; and learn to recognize the difference. Put your time and energy into the issues over which your have control: your team, your clients, your product line… If someone else’s cookie falls in the floor and they eat it, that’s not your concern.
  1. Assume nothing. Have you ever been at a training session where the guy at the front of the room reminds you that to assume makes an “ass” out of “u” and “me.” Annoying, huh? It’s also totally correct. Critical thinkers never assume. They ask open questions to find the information they need, rather than trying to confirm what they already think (“Cookies on the floor are fine to eat, right?”) Don’t assume that other people think the same way that you do: ask them for their perspectives. You’ll arrive at better solutions this way.
  1. No bandaid solutions. Often we are so eager to fix the problem that we don’t take the time to figure out what the problem really is. A big trap here is correlation versus cause. Correlation means that two things happen at the same time. Cause means that one thing causes the other. Let’s say that ever since your birthday, you’ve been dropping cookies on the floor. Has age made you clumsy? Perhaps. Or perhaps the new hand cream your aunt gave you for your birthday is making your hands slippery. Critical thinkers always seek root cause.
  1. Stay at the reins. Plato, a 5thC BC philosopher, used the concept of a charioteer driving two horses to describe human nature. One horse had an ethics-driven code of conduct. The other one simply followed his emotions and appetites. The job of the charioteer, Plato’s symbol for the rational mind, was to keep these two horses going in the same direction. Critical thinkers keep a tight hold on the reins to bring reason and emotion into balance. They know that just because we want to believe the cookie is edible, doesn’t mean it is.
  1. Don’t jump to conclusions. Perhaps your significant other always eats the last cookie. So when you get home from work and see that the cookie you have been craving all day is gone, you blame your spouse. He looks guilty. There are crumbs all over the floor. Jumping to conclusions too quickly can lead one to wrong information and poor decisions. Before you start to yell, take a look at the dog in the corner with the oatmeal-cookie crumb beard… Critical thinkers draw conclusions from their evidence, not evidence from their conclusions.
  1. Consider the risk. A lot of life focuses on risk mitigation. Think about fire safety: we install smoke alarms, fire hydrants, fire extinguishers and emergency exits. While these things reduce the damage of fire, they do nothing to prevent the fire in the first place. In order to prevent a fire, you must do complicated things like update building wiring to prevent electrical fires, initiate strategic ground fuel burns and tree cuts to prevent wildfires, and disallow smoking and campfires in high risk areas to prevent controlled fires from spreading. Installing a couple of new batteries in the smoke detector each year is so much easier. Effective critical thinkers know how important prevention is, however. They will keep their kitchen floors sparkling clean so that if someone happens to drop the cookie, there is little risk it will make them sick.

Keeping the above points in mind will make you an effective critical thinker: you will solve problems more easily, reach better decisions, and will have more agreement from stakeholders. Your life will be easier, you will be more popular, and your enemies will have more reason to hate you. But hey, that’s the way the cookie crumbles.

Talent Planning, Chef Style

I’m excited to announce that Engage the Fox: A Business Fable about Thinking Critically and Motivating Your Team, is now available for preorders. I cannot wait to share the story of Thaddeus P. Fox and how he saved The Toad Hollow Gazette.

Recently, I was interviewed about talent planning by search consultant, Nancy Massey. I’ll share my comments in this reprint from The Headhunter Chronicles. I apologize that the chef discussed is not a vegan but I think the message is still relevant to readers of The Gazette.

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In the movie Chef, Chef Carl Casper is a talented but hot-headed chef who threatens to leave restaurant-owner Riva high and dry on one of the most important nights of the year. Riva is calm as he thinks he has a competent sous chef and line cook who can step into the void. While Riva is by no means an ideal manager (it’s never good when one of your key employees regularly sleeps in his car) common kitchen hierarchy, known as brigade de cuisine, means that there are always a couple of understudies who can help out if a key contributor leaves.

5c637500-a7e8-11e3-b2bb-b940b4e3c814_chef_sxsw_gsSource: Merrick Morton/Open Road /via/

Even if you do not employ temperamental chefs, it’s smart have have a talent management strategy in place. Over the last six years, the baby boomers have started to retire. According to a US survey released earlier this year, 21% of employees plan to change jobs in 2014. Employers should be prepared to rehire almost a quarter of their workforce this year just to preserve the status quo (those in growth mode will have even greater hiring needs.)

Many employers are reactive when it comes to staffing: they do not think about hiring until someone quits or a skills deficiency causes a problem (these are the clients who call me asking if I can have someone hired within a couple of hours.) As a recruiter, I love the challenge but the trouble with this approach is that you are starting out behind the eight ball — the cubicle is empty, the skills deficiency is obvious, the client has nobody to call — and you need to fill the role as quickly as possible. You don’t have the luxury to think about who the best hire would be and so simply try to hire someone who most closely represents the last person who filled that position. Each new hire represents an opportunity to make organizational change and having a talent plan in place can help you optimize the recruiting process.

We asked Jen Lawrence of Process Design Consultants about the key components of a talent management strategy and turn the blog over to her…

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Hello there. Thanks for this opportunity to share my views on strategic hiring. While it is often a huge inconvenience and expense when an employee quits or retires, it is also a wonderful opportunity. Every time a position becomes available, you have the opportunity to rethink the role. The natural reaction to a resignation is to find an exact replacement as quickly as possible so you don’t disrupt the status quo. In some commodity-like roles (think outbound telemarketers who follow a tight script) hiring a immediate replacement is exactly what you want to do. In more senior positions, however, chances are you want to disrupt the status quo as each new hire represents the opportunity to more closely match your talent pool to your company’s current and future goals.

For example, when a company is in start-up mode it might need lots of employees with a strong lead generation capability whereas when the company matures it might need to add people who can manage the order pipeline and mine existing relationships. A company that once had an engineering competency might have morphed into one with strength in technology and therefore might need to shift the hiring profile to reflect the company’s new direction. Perhaps a company is expanding into a new geographic market and needs people who speak other languages. Or your vertical manager might need less of a focus on oil and gas and more on alternative sources of energy. If you don’t have a talent plan in place that aligns people with your overall strategy, you might miss out on an opportunity to move your organization closer to its vision through your hiring practice.

I’ll keep with the Chef theme to illustrate my point. Think of your company as a cake and your people as the ingredients that make the cake a success or a failure. A good cake is the result of mixing together the right ingredients in the correct amounts and then baking it at the right temperature. You don’t just randomly start throwing sugar and butter and eggs into the oven: you need some sort of plan.

First, you need an overall vision for your cake. Is this cake for a bachelor party or a five year-old girl’s princess-themed birthday party? Each requires a very different kind of cake. How many people does this cake need to feed? In this case, our vision is that we want to bake a cake that will dazzle a group of 15 princess-crazy party-goers.You want to see the face of the birthday girl light up as you carry the cake to the table. What is the vision for your company? Are you a luxury hotel chain where the care and comfort of your guests is your focus? Are you a company that brings the latest technology to the masses? Who are you? What do you bring to your customers? Why do your employees get out of bed in the morning?

Once you have a vision, you need to figure out a strategy that will bring that vision to life. If you want to dazzle pre-school princesses, look is probably more important than taste. You might do some market research to discover that sweet and sugary is popular among the Dora set. You are going to need a big fancy cake, preferably with a lot of glitter. Subtle flourless chocolate cakes need not apply. What strategy is going to bring your corporate vision to life? Are you the low-cost provider or do you provide white glove service with a smile? If you are the low cost provider, you need to manage your margins and your volume. How are you going to do that?

Now that you have a general idea of the type of cake you require, you need to make some concrete plans. You research “fancy princess cakes” on Pinterest and decide on the pink glitter castle cake. Perhaps there are detailed instructions for decorating the cake but no recipe for the cake itself. You know that you will need a stable base for the heavy fondant icing and glitter. You ask around and get a recipe that has worked for other people’s castle cakes. You now know what ingredients you need. Once you have a clearly defined vision and strategy and start to think about action planning, you are ready to think about the skill sets you need to make your vision come to life. These are your ingredients: you need someone who is great at managing an international supply chain; you need someone who is excellent at negotiating vendor terms; or you need the best concierge in Paris to look after your guests’ needs.

Now you can source the ingredients to make your cake. How full is your pantry? If you have been minding the kitchen you should have the basics in place. Hopefully your have an oven and some bowls and a spoon. Perhaps there is some flour around. And some butter. If you are new to baking or things have changed (perhaps you used to avoid sweets entirely) you may need to bring in a lot of new resources. In the leadership and development world, we call this a talent audit. What skills do you have? What skills do you still need? Who can you train? Who must you hire?

Perhaps your pantry is full and you only need vanilla extract. If you have vanilla beans and vodka on hand, you can make your own (think of this as employee development) Otherwise, you will need to go outside to source the vanilla extract. What type of vanilla extract do you need? How important is this vanilla extract to the success of your cake? Do you need the organic, hand-blended variety in the fancy glass bottle or is the generic label variety alright? (And as an aside, if you need the organic, hand-blended variety in the fancy glass bottle, you might want to hire a recruiter like Nancy to help you with that!) What is your budget? Does your local store have stock on hand? Are you willing to bring in the vanilla extract from another town? Your needs will dictate the sourcing strategy. Generic vanilla — such as the type required for our sugar-soaked princess cake — can be found quite easily. The fancy stuff requires a trip to a speciality store. A line manager should work with a recruiter (internal or third party) to draw up a list of specific skill requirements for the new role. It’s tempting to simply use the existing job description but if you want to maximize this hiring opportunity it makes sense to think about exactly what skills you need today and in the future.

So there you have it. That’s talent planning. It’s looking at where you want to go as an organization and figure out how your people are going to take you there. You need to train and develop the people you have and add in new talent whenever you need to. When you break it down into smaller steps, building a great organization through people is, well, a piece of cake…