Leadership is not rocket science

The Value-Added Curve and Today's Wake-Up Call

Last week I was blogging about the difference in results organizationally when you have a common, shared sense of purpose and when you don't.  Simply put, the difference can be stark.  Most businesses and government departments don't make the time to focus on purpose - they're focusing on results, and in so doing, they sabotage the potential results they could be making.  I also posted about how, perhaps, our addiction to crisis in the industrialized world may, in fact, be a hunger for the common shared purpose we're missing in our workplaces.

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Michael Basch, one of the founding partners of FedEx, and the designer of most of the systems that drove its legendary service levels in its early days has a simple and powerful framework that starts to explain what's happening here:  The Value Added Curve.  Today's economic climate may be a wake-up call that it's time to move up this curve.

An organization can meet the needs of its employees and customers at many levels.  Most organizations meet the basic physical needs of these constituents - providing employees with regular pay for their work, and customers with the basic product or service that they purchase.  The value they receive back for doing this is minimal.

The second level of the value-added curve is information.  For employees, this means letting the organizations understand how they fit into the organization and what the organizational goals are.  By understanding how they fit in the puzzle, they can make more effective decisions for the organization, and there is greater value both ways.  For customers, this means providing information on the product or service that allows them to have more assurance of their purchase.  This could be a listing of ingredients, or something like the parcel tracking system that couriers like FedEx offer.

Most organizations do these two things to some extent and they stop there, and that is why they have limite results.  As shown in the Value-Added Curve, below, there is a 'glass ceiling' above these points that most organizations never progress beyond.

By providing the physical and informational product, the value you provide to your stakeholders - and in return the value they provide to you - is limited.  To truly take off up the exponential value-added curve, you need to progress to meet the emotional and spiritual needs of your employees and customers.

What does this mean?  Simply put, when we make decisions and commitments, we make them emotionally, and then we find the logic/rationale to justify that emotional decision, including our commitment to an organization or product/service.  You only reach that emotional engagement when you go beyond the glass ceiling on the curve.  it is at this point that you truly understand the difference between 'managing things and leading people'.

To meet the emotional needs of your employees you need to engage them in your vision and goals, not just tell them about them.  They need to understand how they can benefit from the organization realizing its goals, and they need to know that they are supported and cared for.

When it comes to meeting the emotional needs of your customers, they need to know that, when there are problems, that you will do whatever it takes to look after them.  When ka-ka happens, do they have to resort to dealing with an online complaint system or dialing through an automated mine field, or will there be a person who will have the courage to face them and do whatever it takes to solve their problem?

Another of Mike's frameworks that I love is 'Proact Creatively, React Outrageously'.  That's the essence of this place on the value added curve.

So what does it mean to take it to the top and meet the spiritual needs of your customers and employees?  No, this doesn't necessarily mean religious.  It means spiritual - being part of something greater than them.  This is where purpose comes in.  What is the purpose of your business? 

In an earlier post I spoke of how the Canadian Armed Forces became operational within 3 weeks (an 'impossible' task) when Iraq invaded Kuwait in the 1990s.  They broke every rule in the book and every union-management issue disappeared off the table because they were al part of a higher cause.  That's the power of purpose - the spritual element of the Value-Added Curve.   What your people will put in at this level is off the charts - the challenge is: how can you live here without being in crisis as most organizations do?

For customers, their loyalty also goes off the charts if you have a clear purpose that they can buy in to.  What is the greater good that you are doing that they can also join in with by buying your products or services?

I'll go out on a limb here and say that the organizations that are having the greatest difficulty in today's economic times are those that never crossed the glass ceiling to fully involve and engage their employees and customers, and perhaps this crisis is a wake-up call to tell us that it's time to step up and go beyond the glass ceiling for all of us.

That's my 2 cents.  What do you think?

With purpose you can do anything. Without it...

In the early 1990s I spent about 5 years doing a lot of work with the Canadian Armed Forces (teaching them how to question the rules - great fun!), and during my time there I learned a powerful lesson about the power of purpose.

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Like many bureaucracies, the Forces suffered from many inefficiencies - fighting over policy, union-management issues, etc.  Then the first Gulf War happened, and they had to become operational within 3 weeks, something that was impossible - but they did it, and they did it by breaking every rule in the book.

A week before the Gulf War hit, this would have been impossible.  But the Forces are about mission, mission, mission.  There was a clear purpose, one that almost every Canadian could believe in, and this mission drove them.  Regulations were irrelevant.  Long hours for unionized workers was not an issue.  People working outside their job descriptions was not an issue.  The mission was something they all believed in, and it over-rode all of that.  They all had a clear, shared sense of purpose.

Once the operation was over, they reverted back to the way it had always been and all the inefficiencies came back.

The Forces know how to work in wartime, when they have a common, shared purpose - they can and will break every rule in the book to accomplish the mission. When the war is over, and there's no clear, shared purpose, they get lost in their silos and policies and that takes over.

Are other organizations that different?  What do you think?

Why systems to control expenses can waste expenses

Recently I did some work for a government client where they had to book travel for me, as opposed to me booking my own travel and billing them back.  Little did I know I was to receive a big lesson in how feedback can impact organizational performance - for the worse.

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The first thing that I had to do was contact a person to get some file numbers for the travel.  She entered my information and produced my specific numbers that I had to use.  Then I called the travel agent to book the travel.  The agent had to confirm the file numbers I was given, and then looked for flights.  I selected what seemed to be a good flight, and then the agent had to check if there were cheaper flights.  She found some and booked me on them even though the times were not as good as the original flight.  Then she had to re-check if there were cheaper flights that had miraculously appeared in the five minutes since she'd checked.  Then, for reasons I couldn't understand, she had to recheck two or three more times if there were cheaper flights before she could process and book me.  Then, they were not able to e-mail me a confirmation and itinerary - they had to fax it to me.  And when they came, I got 14 faxes.

There were other hoops to jump through, but the bottom line is that it took half an hour to do what I could have done in 5 minutes online.  Yes, the first flight I picked was not the cheapest because I didn't want to waste time sitting in an airport all day.  I honour my clients' wishes and book the lowest fares for them within such parameters.  Yes, it may have been $50 more.  But let's look at the additional costs:

• The time for the public servant who generated my file numbers
• The time for the travel agent to search and research for cheaper flights (they don't give that service to the government for free)
• My wasted time on the phone (yes, I'm not in the government, but public servants have to go through the same process, wasting their time
• My wasted time in airports (again, public servants wasted paid time in most cases)
• My wasted time figuring out 14 needless faxes plus material costs of the paper
• Time for the original clerk to figure out and file the paperwork from the 14 faxes

Now, I don't know the details of these costs, but I'm pretty sure they add up to waaaaaaay more than the extra $50 I would have spent doing it myself.

So why is this type of situation typical for any bureaucratic system, not just government systems?

In the systems approach that I use in diagnosing organizational problems, one of the key elements is feedback.  One thing that governments, in particular, are sensitive about is criticism on excess expenses.  If people spend too much on travel or food or entertainment and the media gets ahold of it, there's ka-ka everywhere.  And that's why government bought this travel service and requires them to go through all those checks - over and over again.

And I've used the same travel agency for another (private sector) client, and we were finished within 5-10 minutes for a much more complex travel agenda.  The checking and rechecking is not the basic service - it's something government pays extra for.

In trying to avoid negative publicity, they are paying far, far more than would be abused to protect themselves - this is a cover-your-butt policy.  However, these expenses are hidden.  It's really hard for the media or anyone to find these costs because they're hidden in corporate expenses.  There is no line showing how much it costs to check an re-check every single booking that's made or all the work the clerks do to process this. 

Ironically, there are probably very few people who actually abused the situation and booked expensive travel.  However, like most bureaucratic policies, you are punishing the majority for the sins of the few and spending far more money than the original wastage.

So what feedback counts in  your organization?  What feedback systems shape the behaviour you want - and the behaviour you don't want?

The need to control

One of the patterns of the 20th century way of doing things that still lingers in places is the need to control and the need to know everything.  In the old world, knowledge and experience meant power.  Now, when half of all you know is obsolete within 18-24 months, it has far less impact.  Flexibility, sharing information and letting go of power actually give you more power.

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In my work I use social technologies that are based on systems thinking, chaos theory and even quantum physics to host meaningful conversations.  Instead of having 20 or 50 people carry on one conversation in a room, as was often considered appropriate in the past (translation: 2-5 people speak, 10 people drift in and out of conversation, the rest are blackberry-ing below the table), we allow people to self-organize and cluster into smaller, more intimate conversations using processes such as world cafe, open space and circle. 

In these environments, they have phenomenal conversations that engage everyone (it's hard to hide or blackberry in a group of 4 people), great insights and come up with breakthroughs and alignment as a group that they never could have with traditional methods from the old world (ie: more dictatorial or autocratic or bureaucratic solutions).

Despite the results, which are astounding, I still hear people saying they wish they could have shared what they gained in a cafe conversation with everyone else, not realizing that they now carry that knowledge and they have the responsibility to carry it forward.  It's not up to the person who they gained the wisdom from alone any more. 

Or, the other reaction I sometimes encounter is the discomfort with the uncertainty and the lack of precision of these processes.  Because they are self-organizing, you can't say exactly when each element will start.  And because the process is an emergent process, you can't predict exactly what will come up, and some people are uncomfortable with not having that level of control (as much as that control was mostly perception - they never really had it).  In one breath, these participants will say they got phenomenal insights, acknowledge the great strides that came out of the meeting (things that could never have been achieved in the old, controlling way), and then with the next breath say they didn't think the process was good because they were confused or didn't know what was coming.

This is part of the letting go that we are transitioning through - letting go of the need to control everything to ensure that we actually accomplish things.  The paradox is that the more you try to control, the less you and your organization can actually do.  The reality is that organizations that controlled tightly from the top may have been profitable in the old world, but they also threw away half their profits, half their profit growth, half their sales growth and more.  There's hard data that shows that.

In today's complex, uncertain world, I question whether those organizations can continue to remain profitable at all.  The rules have changed and leaders have to change as well, or they will be crushed by the competition that does. 

This is simply a time of transition.  Yes, there are still some who react in the way described above.  But there are more and more every day who are stepping out to discover the new rules of the game.  And that's what makes this so much fun to do!

That's my 2 cents. What do you think?

The secret to discovering the new rules of the game

Image by Changhua Coast Conservation Action via Flickr

The ‘old’ rules were based on mechanistic thinking – seeing people and organizations as machines.

And they’re not.  We’re not.

People and organizations are living systems.  It’s not the org charts that define organizations – it’s the relationships.  The relationships between the people in the organization and between the people in the organization and other organizations are the living systems of your organization. 

The more constrained these relationships are by policies and controls (the ‘old’ rules), the more limited they become, and the more ineffective the organization becomes.

The stronger and richer the relationships and the interactions and the sharing of information, the more vibrant and dynamic the organization.  The more people can connect authentically and honestly, the more

And the currency of these living systems, of these relationships?  Conversation.

To nurture the living systems that our organizations are, to discover this new game, its rules and what ‘winning’ means, you, as a leader must be able to engage the players and nurture meaningful conversations.  And this is true whatever level and position you are at in the organization.

To engage others, you have to create a safe environment that allows them to let down their barriers, their masks and have the real conversations they need to have to find the way through these challenging times.

And to do that, to create that safe space, you have to model what you want.  You have to show up authentically to show them that it’s safe for them to do the same.  If you can’t do that, they never will.

That's my 2 cents.  What do you think?

Upcoming webinar on leading complex change

If you're challenged with leading complex change, this webinar will focus on how you can gain more leverage by approaching your challenges by seeing the people involved as a living system rather than as elements of an org chart.  Click here for more information.

How leadership impacts healthy workplaces

There is growing evidence that creating a healthy workplace actually creates a more productive and - in the private sector - profitable organization.  Hard data is showing that the old autocratic, and even bureaucratic environments actually harm and impact productivity and profitability.  There is a bottom line to effective leadership, and we have to measure it and hold leaders accountable to create the quality, healthy workplaces that are truly possible.

On Friday I attended a conference on Advancing Quality Workplace Quality Healthcare in Nova Scotia, which is a leader across Canada in this work.  There were representatives there from the national Quality Worklife Quality Healthcare Collaborative, who have prepared guidelines and a strategy for health care organizations to craft healthier workplaces.  The Conference Board of Canada has prepared a report Healthy People, Healthy Performance, Healthy Profits, which shows how employers investing in their people impact not only their own productivity, but also impact the social determinants of health, reducing the burden on the health care system.

All of these findings are phenomenal, and well-based in solid evidence, and taking the action they recommend does impact outcomes. I applaud everyone who has invested so much into developing this work and these initiatives - they are making a difference and they will make a much larger difference in the days to come.

I have only one concern.  Both of these reports (and others like them) speak of the impact of the organizational culture (simple english: how you work and interact in the work environment) on workplaces and on health.  There are great recommendations and examples in the Conference Board report of initiatives such as backup child care services or ergonomics, and of how they impacted productivity.

My concern is this: 70+% of the organizational culture is shaped by the leadership.  While it is mentioned, leadership has not been explicitly identified as a core driver and leverage point for creating quality, healthy workplaces. There's talk of 'implementing best practice leadership guidelines', but little more on how to build accountability and sustainability.

If you follow many of the issues identified further upstream, such as absenteeism, turnover and lost time due to accidents, as I did in my book, StressCosts Stress-Cures, the root cause of much of these problems is leadership and leadership style.  I document evidence that shows that, over a ten year period in one study, private sector organizations with more effective people management practices have far higher sales growth, profits and profit growth than those that don't.  For turnover, the data is black and white: people don't leave jobs - they leave bosses.

Leaders have to take responsibility for their impact on their people - and, as a result, on their productivity and effectiveness.  Only when we start regularly measuring leadership and holding leaders accountable for it will we tap the full potential in creating and shaping health, quality workplaces. 

All of the other work that is happening and that is outlined by these reports is good - it creates good change.  There's just so much more that's out there if you can give your system teeth and hold leaders - all the way to the top - accountable for how they impact their people and their workplaces.

That's my 2 cents. What do you think?

What really separates management from leadership

We now have rapidly growing masses of data that show that the traditional theories of management simply don’t work.  85% or more of reengineering initiatives fail.  75% or more of quality initiatives fail.  72% or more of mergers fail to realize their expected financial gains.  Stress leave and disability are going through the roof.   The new generation is simply not ‘playing by the rules’.  And far more.

This pattern echoes what happened one hundred years ago, when the leading scientists in the world gathered in Copenhagen because, for many years, there had been growing evidence showing that the way the universe was supposed to work, according to traditional, Newtonian physics (the stuff you learned in high school).  Together, these scientists took the new data and created a new understand of how the universe works that transformed our thinking, and gave birth to quantum physics.

Here are the five most powerful parallels I see between our understanding of how the universe works and our understanding of how people work in organizations:

1)    Knowable versus Uncertainty

In traditional, Newtonian physics, everything could be measured and knowable.  If it couldn’t be measured, it didn’t really exist.  Core to quantum physics is Heisenberg’s Uncertainty Principle, which states that you can’t know everything.  The more you know about one thing, such as the location of a particle, the less you know about that particle’s velocity, for example.

In traditional management and MBA thinking, you can measure and know everything.  In fact, we’ve actually made great strides in measuring even ‘warm and fuzzy’ things like leadership and corporate culture with 360° and climate surveys, respectively.  However, it is not possible to measure and predict everything that will happen.  The markets over the past few months prove that.  Any good strategic plan outlines the vision and 3 or 5 year goals, milestones for each year, milestones for each quarter of the first year, and then may flesh out the first quarter or two.  Beyond that, you can’t predict what you’ll do because too much can change.  You adapt as needed as you go, with your milestones to guide you. 

2)    Mechanistic versus Vitalism

Old world physics said that everything is mechanistic, can be explained by physical causes and understood as mechanical systems.  Traditional management, coming out of the industrial age, is like this – it sees organizations as machines and people as cogs in that machine, and their behaviour can be predicted based on specific actions.

In contrast, the new sciences incorporate vitalism, which says that the functions of a living organism go beyond its physical and chemical interactions, and it says that life has a “vital spar” or “soul” that cannot be quantified, and is to at least some extent self-determining.  Similarly, effective leadership acknowledges that people are self-determining and have that “vital spark” that must be engaged to effectively co-create the way forward.  They are not simply cogs in a machine and as a result, behaviour cannot be predicted in a deterministic way.

3)    Reductionist versus Holistic

The reductionistic approach in the old scientific model says that anything is simply the sum of its parts, that any complex system can be broken down into the interactions of its parts.  In contrast, holism says that you have to look at the whole entity as a system, and that the system as a whole defines how its components behave.  It’s from a holistic view that systems thinking, chaos theory and complexity theory have arisen.

In simple terms, a reductionist approach would say that you can digitize an image of the Taj Mahal and capture all that you see there in the constituent pixels. Anyone who has been there knows that there is a powerful aura that extends from the building that you feel that cannot be captured in any picture or video.

In traditional management, any organization can be dissected into its org charts, made more effective and more efficient and re-assembled to maintain those efficiencies.  Leaders realize that this simply doesn’t happen in practice the complex human interactions – the ‘system’ – impacts the results more than any theoretical reorganization.  That’s why most change initiatives fail – they don’t take into account the human element.

Accountants, for example, make the reductionistic argument of economies of scale – greater efficiencies as you increase your scale of operations.  However, powerful leaders such as Bill Gore of William Gore and Associates knew that if you get more than 100 people in a plant, efficiency drops, because everybody doesn’t know everybody else.  So he made sure he built plants with fewer than 100 people each, and grew by leaps and bounds because of it.

4)    Controllable versus Flow

The old model of understanding the universe said that you could control everything.  If you could reduce any system to the sum of its parts, you could make any adjustment to any part and the whole would gain those efficiencies.  However, in a holistic, uncertain, vitalistic world, you have to realize that you can’t control everything.  You can only control certain aspects of the system and change the probability of a result happening.

In traditional management, the more you controlled, the more power you had.  Leaders realize that this control was always an illusion.  Managers never had the control they thought they had because you can’t control people like machines.  Leaders realize that organizations as living systems need a living core – a clear purpose and principles – and then you let it self regulate and create itself.  You can co-create the vision with the people in the organization, but then you have to let go and let every person own their piece of it to make it happen – and be prepared to be surprised.

5)    Objective versus Subjective

In the old world, all observations were objective and unchangeable.  In the quantum world, the very act of observing an event changed the event (and this applies to and entire living organism – a person – as well as to organizations, not just to quantum particles).  It’s been proven that the belief of the experimenter can change the results, even in real-world experiments, not just in the sub-atomic world.  What you believe changes the results.

Traditional managers set plans and put them in motion and people were chess pieces on the board.  Leaders understand that their people, their mind-state, and their beliefs affect the results, and so understand that whatever they do can only be co-created with the people on their team.

As I go through this list, I realize that the difference between leadership and management isn’t just something that you do differently. To go from management to leadership is a quantum leap in consciousness, a key stage of human evolution that we are on the edge of today.  You cannot think your way through this and you cannot control your way through this.  Only by taking a good, long look in the mirror can managers start to do the work and begin the journey to grow their personal leadership so that they can make the shift from management to leadership.  This can be terrifying and requires great courage.  And it’s time.

What an exciting time to live in.

What works, works

Jim Clemmer, in his most recent posting, suggests a systems framework for setting and cascading goals. I was blown away when I read this because it so well overlaps another systems framework I use (explained here), developed by a dear friend and mentor, Michael Basch, one of the founders of FedEx, and the creator for most of the systems that gave it its legendary service in its early years.

But then again, why should I be suprised?  What works, works.