Archive for the ‘blog’ Category
First posted on Huffington Post 11.6.12
Self-actualization? Abraham Maslow’s Hierarchy of Needs pyramid with “being all you can be” at the top (co-opted by the U.S. Army as a marketing slogan) was a wake-up call for Americans in the 1950s when personal behavior and goals were so influenced by predominant societal ways. Abe’s humanistic psychology theory was made for the 60s with the advent of hippie culture and the idea that we should all “follow our bliss.”
Unfortunately, Maslow died young in 1970 at age 62 and the “Me Decade” turned “self-actualization” into “self-absorption.” His legacy got lost in the academic psychology world and, for some, the Hierarchy of Needs represented more of a Tyranny of Wants. I was fortunate to be gifted with Maslow’s journals written in the last ten years of his life. In his writing, it’s very clear that Abe’s desire was to see how his iconic theory could apply to the collective, not just the individual, as he pondered, “Can an organization or a society actualize?” And this is partially why, later in his life, he introduced a seven- and an eight-level pyramid with “self-transcendence” at the top.
It’s been more than five years since I wrote PEAK: How Great Companies Get Their Mojo from Maslow where I outlined how my boutique hotel company reinterpreted Maslow’s theory to transform our organization at the bottom of a deep economic downturn. I’ve had the good fortune of introducing my theories in PEAK to diverse groups on five continents. And, as I spend more time with younger leaders – and more time in Asia – it’s clear to me that it’s time to change the language at the peak of this pyramid.
I see just how important Maslow’s theory was in reaction to the stifling social rules of mid-20th century America. And I deeply believe that all of us aspire on some level when we’re trying to be all we can be in our lives. But, the times and the calculus of how the world works have changed.
I propose we start imagining “social-actualization” at the top of the pyramid. We’re moving from an era when “rugged individualism” was foundational to how we defined success to an era when collaboration is essential for both personal and societal success. Some of my transition may be due to spending so much time in Asia with its historical predilection toward collective rather than individual success. But, it’s even more influenced by what I learn from talking to young people all over the world. And the fact that in many business schools the most popular classes today are on how to become a social entrepreneur focused on solving the world’s collective problems.
So, what qualities distinguish someone who is social-actualizing as opposed to self-actualizing? Abe Maslow suggested that a “peaker” (someone self-actualizing) had a tendency to get lost in the love of what they were doing. This losing oneself can also be prevalent in a social-actualizer, but what’s different is that this person’s purpose is focused on a collective good rather than just a personal good (although a longer discussion with the Ayn Rand-ers might suggest these are the same). So a “social peaker” focuses on systemic effects and social gains in their actualization. Additionally, as more research shows the social and emotional contagion that connects us, a social-actualizer also imagines the ripple effect they may have on others. For example, a self-actualizer might pursue their passion – whether it’s being a triathlete or learning how to give great speeches – with the primary focus being on how it makes them feel. A social-actualizer might choose to enter a triathlon that supports a cause or use their speech-giving to make a difference.
We may feel the glow from someone who’s in the midst of self-actualizing and that can move us to greatness as well. But, when we’re in the orbit of a social-actualizer, we feel drawn to a higher calling and one that can create a sort of “collective effervescence” of a group. A self-actualizer rower can win individual speed records, but a crew, when they’re in the midst of social-actualization, can experience what is called “swing” in rowing circles. It’s that miraculous moment in physics when a group is so connected and in unison of a common purpose that the boat literally elevates in the water – diminishing friction and increasing speed. Here’s to the 21st century being one swinging era in the history of mankind.
Recently, I had the good fortune of attending a daylong conference in Ecuador with 300 South American businesspeople all focused on “Transcendar Par Ganar,“ transcending to win. I gave a speech at the start and at the end of the day, but my primary role was to listen to how numerous companies had used my 2007 book PEAK: How Great Companies Get Their Mojo from Maslow to create a transformational business strategy. Late in the day, I was asked, “If you were to rewrite PEAK today, what would be some of the fundamental changes you’d make to the book?” Here are my thoughts on that opportunity to rewrite history, or at least the book.
First, unlike medicine and law, we don’t think of our profession as business leaders as a “practice.” And, unlike sports, the arts, or religion, we don’t even “practice” our craft…we just do it. And, quite often, we do it rather unconsciously. Business principles are only as good as the practices that back them up. PEAK spoke to the organizational construct, but not to the individual practices that a PEAK leader should emulate to get the biggest bang-for-the-buck from humanistic psychology principles.
After interviewing dozens of leaders who operate effectively with the PEAK principles, I developed a list of 7 Practices that I saw consistently exhibited (and wrote about it in this recent blog: http://chipconley.com/the-7-practices-of-peak-leadership/). While each practice can stand alone, when combining them together a PEAK leader unlocks the human potential that is stored in every organization or team so that PEAK performance is more likely. They are more than foundational beliefs, they represent a new way of doing business.
If you’ve read PEAK, you know there are three pyramids of three levels each: one for each of the primary stakeholders in most businesses: employees, customers, and investors. My other three revelations each center on a separate pyramid. With respect to the employee pyramid – which has a progression from Money at the base to Recognition in the middle to Meaning at the peak – my aha moment came when I spoke to 400 investment bankers the same week I spoke to 300 arts administrators. Both groups were initially resistant to the framework of this pyramid with the investment bankers saying their pyramid is Money, Money, Money and the arts folks saying their pyramid is inverted (standing upside down) and unstable with Meaning being predominant at a pointy base.
What’s now clear after speaking about PEAK in depth on four continents is that virtually everyone agrees with the employee hierarchy of needs pyramid as long as the underlying two lines that separate the three levels have malleability. For salespeople or those who can seem to be mercenary, the line for the Money may take up 80% of the lower part of the pyramid. But, those organizations that truly differentiate themselves in money-driven environments still use Recognition, and even Meaning, as an employer differentiator. If they didn’t create a culture that did so, their competitors could offer a 5% better pay package to their top performers and they’d have a brain drain. Frankly, the 80% Money based of the pyramid also defines the employment relationship in most developing countries as money is such a necessity for living. For many non-profits, quite often the Money layer of the pyramid may only be 25% and Recognition might be the next 15% with Meaning representing 60% of the rest (a very large PEAK-shaped hat), but people still do recognize the hierarchy of priorities inherent in the pyramid.
With respect to the customer pyramid, my B-to-C bias (as a hotelier) shows in the fact I call it a customer rather than a client pyramid. If I were to do a revision of PEAK today, it would be focused on how to address client needs in a B-to-B world. The majority of my speeches are to companies that sell to other businesses with many of these companies being based in Silicon Valley. The good news is that they recognize the logic in this pyramid and the magic that can occur when you address the “unrecognized needs” at the peak.
PEAK leaders are mind readers, but they need to imagine the unspoken needs of not just their client, but also of their key decision-maker. This is the big difference of how this pyramid works for B-to-B versus B-to-C. You need to use this pyramid twice: first to understand what you expect your clients’ expectations, desires, and unrecognized needs to be, and, then, do it again for the person whose butt is on the line by making this decision. That key decision-maker has a hierarchy of needs as well that needs to be satisfied. The more risk averse they are, the more likely they’ll focus on the survival base of just looking to have their expectations satisfied. But, if you’ve got a decision-maker who has an appetite for a game-changer for their organization, then you need to help them see and get excited about the transformational nature of this decision they’re about to make and present your choice in that light.
Finally, while, initially, reinterpreting Maslow’s human needs pyramid for investors felt like a stretch when I wrote the book, I’ve been pleasantly surprised by how many entrepreneurs use this pyramid to size-up their potential investors when raising money. In fact, that’s what I did when I considered four different finalists when selling a majority interest in my company. I tried to size them up to understand whether they were purely transactionally-focused such that the investment was really just an exercise in Excel spreadsheet mastery or whether they were like Warren Buffett, focused on developing a long-term return and investment strategy based upon relationship alignment. And, then there were glimmers of hope that a couple of the groups we were talking to might be legacy investors, focused as much on the non-financial, industry-changing opportunity of investing in a successful boutique hotel company as they were focused in the short-term ROI.
In sum, I’ve learned since our sale that few investors stay on just one level of the pyramid. Investors – like all of us – can change their priorities or change their perspective – moving up or down the pyramid at will. There may be some opportunities that create great pride of ownership for the investors and then other opportunities when it’s all about, “How much did we earn today?” When I first wrote PEAK, I’m not sure I truly understood just how important it is, not to just size up your investors when you start the relationship, but to continually check in to determine, at any given moment or with any prospective new investment, just which level of the pyramid best describes the investors’ motivations.
(Published on Huffington Post April 17th, 2012)
Why don’t we “practice” business? I’ve come to realize that – unlike medicine and law – we don’t think of our profession as business leaders as a “practice.” A few years ago, in the last downturn, I developed the principles of PEAK as an alternative operating model for my business based upon Abraham Maslow’s iconic Hierarchy of Needs pyramid. Reinterpreting this well-known theory of human motivation helped me to see that all stakeholders associated with a company have their own Hierarchy of Needs. My company Joie de Vivre tripled in size during this difficult period and I came to find out that a variety of other transformational companies like Harley-Davidson have used Maslow’s theory as a foundation for their business model.
Business principles are only as good as the practices that back them up. Recently, with the assistance of some good friends, I’ve developed a set of PEAK Leadership practices that can assist any leader or leadership team to move from survival to success and on to being a transformative role model in their industry. When a company embeds these principles and practices in how they grow their leaders, the end result is PEAK performance: a phenomenon of sustained growth – both for the organization as well as for those within the organization.
Practice 1 Embody an inherently positive view of human nature.
The principles of PEAK have their roots in humanistic psychology and a basic belief that man is meant to “be all that he can be.” So, it’s not surprising that the fundamental first practice is assuring that a PEAK leader believes that humans – at their very core – gravitate to goodness when the right conditions exist for them to flourish.
Creating what Maslow called “psycho-hygiene” in a company means focusing on people’s best qualities and believing in what’s been known for a half-century in business as a “Theory Y” perspective on management versus “Theory X.” With Theory X, management assumes employees are inherently lazy and will avoid work if they can. As a result of this, management believes that workers need to be closely supervised and a comprehensive system of controls developed. With Theory Y, management assumes employees may be ambitious and self-motivated. They believe the satisfaction of doing a good job is a strong motivation and seek to create the conditions for the employee to develop their own strengths to be successful. While this latter theory may feel intuitively right to many of us, is your organization still structured in a Theory X style of business?
Practice 2 Create the conditions for people to live their callings.
Great leaders understand there are only three relationships you can have with your work: a job, a career, or a calling. A job tends to deplete you and a calling energizes you. Most employees live in the bartering world of work. The company gives them a compensation package and recognition and, in return, the employee gives their time and energy. Yet, those that are living their calling have moved from external to internal motivation. And, these employees are not exclusively focused on the specific collection of tasks they perform and are more focused on the impact or purpose of what they do. The best hospitals have more nurses living their calling. The best airlines have the happiest flight attendants (Southwest). What are you doing to help your people find their sense of calling in what they do?
Practice 3 Promote and measure the value of intangibles.
In business, we are taught that leadership is all about managing what you can measure, but what’s most easily measurable is the tangible in life. Yet, is it the tangible or the intangible in business and life that creates value? In business, the metrics that track the tangible are well known: your profitability, assets & liabilities, cost structure, market share. Yet, in reality, these tangible metrics are the result of a series of intangibles that drive excellence: brand loyalty and reputation, employee engagement, customer evangelism, the ability to innovate. Great leaders nurture, value, and evolve corporate culture – one of the most valuable intangibles – as a key differentiator for their company. These intangibles are the inputs that drive the tangible output that most companies use to evaluate their performance. In the 21st century, great leaders are learning how to measure and benchmark these intangibles so that they’re not out of sight, out of mind. Which intangibles are most valuable to your business and how are you measuring them?
Practice 4 Ability to move fluidly between being a “transactional” and a “transformational leader.”
Author James McGregor Burns once wrote that, “Transformational leaders look for the personal motives in followers, seek to satisfy higher needs, and engage the full person of the follower.” Yet, most management decisions require only transactional thinking because the goal is purely to optimize existing resources. A great leader is able to move fluidly between addressing the foundational needs that people have, but also helping them see beyond the short-term so that they can be motivated by a compelling vision that helps them transcend their momentary challenges. How much of your time is stuck in the trenches as a transactional leader versus focusing on how to create transformation?
Practice 5 Calibrate the balance between “Conscious” and “Capitalism.”
Business has quite often been seen as a “zero-sum” game. One person’s win is another person’s loss. Taken to the global level, some believe that capitalism’s short-term gains are often to the long-term detriment of the environment and to certain communities. And, at this crossroads, in an increasingly transparent world, this is why great leaders have to think more broadly about the impact of their decisions, not just on the bottom line, but on their broader stakeholders. In many ways, Wal-Mart took this step when they saw their stock price flat line even with sizable revenue and net income growth. Yet, for those socially conscious business leaders, cash flow is the blood that keeps your organization alive. Make sure the basic survival needs of your company are met. How do you balance the priorities of the broader community versus the financial needs of your company?
Practice 6 Focus on your customers’ highest needs.
Henry Ford once suggested, “If I asked my customers what they wanted, they would have said a faster horse.” PEAK leaders and companies understand what the customer wants even before the customer has articulated it and they realize that customer innovation requires a certain amount of mind reading and cultural anthropology. By doing this well (with Apple being the best example in the world), you create a movement and evangelists and reduce your need to spend money on traditional marketing. Are your customer satisfaction surveys just asking the obvious questions that will track their expectations and desires, but not their unrecognized needs? How can you “mind read” your customers?
Practice 7 Lead to PEAK
Just as a Sherpa does in the Himalayas, great leaders meet their people where they are on the pyramid and help them to see the natural path to the peak. They recognize the value of loyalty and mentoring as a means of sustainable success in business. PEAK leaders champion personal development in tandem with corporate development knowing that there’s a synergistic effect of having a self-actualized individual in the workplace as evidenced at companies like Google. And, most importantly, they embody authentic leadership by being, not just by doing. How are you incubating a collection of great leaders?
Conscious people pay attention. It’s true of spiritual leaders. It’s true of business leaders. PEAK leaders pay attention to the higher needs while not neglecting the base needs that provide a foundation for their organization. Leadership is all about making conscious choices and knowing that the higher you are in a company, the more magnified your decisions and behavior will be throughout the organization.
I sip my lemongrass tea and watch with divine curiosity. Like hundreds of thousands of her fellow island people, the elderly Balinese woman places a series of daily morning offerings (known as Canang Sari) at strategic places around the home. The tropical scent of frangipani and incense wafts throughout the indoor/outdoor living room surrounded by verdant rice paddy fields. Even though no one other than me is watching, she bows with respect each time she places the palm leaf-based offering on the ground. These daily devotional gifts are a way of life in Bali and part of their Hindu/animist belief system dedicated to pleasing the gods and warding off demons with this ritual.
Whether we’re conscious of it or not, our work and personal lives are made up of daily rituals including when we eat our meals, how we shower or groom, or how we approach our daily descent into the digital world of email communication. Our habits comfort us much like the Balinese feel reassured by their morning offerings. But, have you ever taken an inventory of your daily rituals and how they’re serving you? And, have you ever imagined what daily rituals could make you a better leader or a happier person?
About a decade ago, I experimented with a daily offering at the worst of times for my company. As CEO, I could see that the dot-com bust was taking a huge toll on the psycho-hygiene of our hotel company. Knowing that creating a culture of recognition was one means of developing a ripple of positivity in an organization, I made it a practice of giving a minimum of two heartfelt expressions of recognition to two different people in the company each weekday. My rule was that it had to be unexpected by the recipient, it had to be specific in terms of what I was thanking them for, it needed to have a level of detail that was more like a paragraph than a sentence, and – if possible – it needed to be done in person. I tried this for a month and found that like a stone falling into a pond, the reverberating effect of people feeling significant by being caught doing something right helped change the mood and morale around the offices. My daily offering was the American workplace equivalent of a Balinese gift to the gods.
The Balinese could teach us a few things about how to create the conditions for a happy culture. One of my favorite Emotional Equations is the one about Happiness which is defined by Wanting What We Have divided by Having What We Want. The numerator of this equation is all about Practicing Gratitude, finding the time to really want we have rather than take it for granted. A daily offering is one means of doing that. The denominator – having what we want – is the act of Pursuing Gratification. When we jump on that never-ending treadmill of aspiring to have what we want in life, it can create a momentary adrenaline high but it also can distract us from all that we already have in our lives. Some dictionaries define “pursuit” as “to chase with hostility.” At work, do we chase happiness with an edge of hostility? I saw some of that at the mall this holiday season.
We can either be conscious or unconscious about our personal daily rituals as well as our organizational rituals. I just finished reading a groundbreaking book by Teresa Amabile and Steven Kramer called “The Progress Principle.” Based upon giving a large sampling of employees in seven diverse companies a daily journal along with precise instructions about how to review their work experiences of the day, the authors were able to create one of the most authoritative studies of the inner emotional life of American workers. And, they were able to show that the most fruitful means of managing or leading a work group is to give them a meaningful sense that they were making progress and had the resources and encouragement to feel like they were living up to their potential. It’s a very instructive read that I highly recommend. But, one of the most interesting lessons of their study was just how much the employees got out of their daily ritual of reflecting on their work day. Here’s a quote from one manager who was disappointed that the daily journal study was ending: “I am sorry this is coming to an end. It forced me to sit back and reflect on the day’s happenings. This daily ritual was very helpful in making me more aware of how I should be motivating and interacting with the team.”
Starting tomorrow, what offering, ritual, or habit are you going to start practicing that is going to serve you in your personal or work life?
Has Anxiety become your middle name? No doubt, we’re living through unpredictable times and this is taking a toll on our physical and emotional health. This is becoming most pronounced in the context of the workplace which is having disastrous impacts on employee engagement and such prized qualities as innovation and creativity which wither in a fear-based corporate habitat. Some of us resort to tribal, “Lord of the Flies” behaviors to get by, while others of us just retreat to our cubicle in hopes that invisibility is our best means of saving our jobs. Somehow, the contagious emotion of fear has eroded our fundamental trust in our co-workers and the company. In the past few years, the Center for Work-Life Policy (according to Bloomberg Businessweek) says the percentage of Americans who trust their organizational leaders has dropped from 79% to 37%.
The fact is that almost all anxiety can be distilled down to two basic variables: what we don’t know and what we can’t control. So, the Emotional Equation for Anxiety? ANXIETY = UNCERTAINTY x POWERLESSNESS. You may have heard about the social science experiment in which people were given the choice between an electric shock now that’s twice as painful as one they would receive randomly in the next 24 hours. As you can imagine, the vast majority of people chose more pain now as opposed to less pain at some unpredictable time in the near future. Mystery creates anxiety, especially when we feel we have no influence on the situation.
Once you know the emotional building blocks of Anxiety, you can influence them. Take out a piece of paper and label it “The Anxiety Balance Sheet.” Create four columns with the first one being a list of what you DO know with respect to this issue that is giving you anxiety. Then, in the second column, write down what you DON’T know. In the third column, list what you CAN influence with respect to this issue and, finally, in the fourth column, write down what you CAN’T influence. Most people’s experience of this exercise is enlightening as they have more items in columns one and three (what they do know and what they can influence) than they expected. But, the magic comes from looking at what you don’t know and what you can’t control. Often, you can move an item from column two to column one by just asking a few knowledgeable people on the subject whether it’s regarding your likelihood of a promotion or your job security. And, I’ve often seen people review column four and realize that they may have a little more influence over some of these items than they’d previously considered.
In sum, the lessons for leaders are simple. Even if you have bad news, it’s better than no news. Transparency is the leadership equivalent of giving people that electric shock early. It may be painful, but the uncertainty creates an even more distracting and debilitating environment. And, as a leader, one of the most effective steps you can take in harrowing times is to help your people steer away from what psychologist Martin Seligman calls “learned helplessness.” Great leaders help their people see how they can directly impact the company’s objectives and their own personal goals. The more externally chaotic the world becomes, the more we need sound internal logic, especially when it comes to our emotions.
Years ago, young Lana Turner skipped her typing class and bought a Coke at the Top Hat Café in Hollywood where she was discovered by the publisher of the Hollywood Reporter and soon became a celebrated movie star. A couple decades later in a hilarious episode of I Love Lucy, Lucille Ball hung out at Schwab’s Pharmacy in Hollywood hoping to be discovered. Over the years, aspiring entertainers from Warren Beatty to Ben Affleck have dropped out of college to try their hand at acting in order to become a star and move to Hollywood.
The entertainment industry has been gravitating north for years as companies like Netflix, Apple, and Pandora in the San Francisco Bay Area have been reshaping the film and music industry. Facebook, which was chronicled in the film The Social Network, has been talking with former My Space co-President (and former MTV exec) Jason Hirschhorn about spearheading the company’s outreach to Valley media companies. And, the entertainment industry’s largest talent representation firm, CAA, has been mulling the opening of an office in Palo Alto.
A couple of weeks ago, I spent four days in a row in downtown Palo Alto right in the midst of the news that Steve Jobs had passed away. As I walked by his home just south of downtown with hundreds of candles and thousands of flowers lovingly placed there, a neighbor remarked that “this is the kind of reception America used to give to its film heroes.” The next day, as I sat in a local café and overheard young entrepreneurs hawk business plans to angel investors like screenwriters might do the same to an agent, I was struck with by the electricity in the air. Young people – many of them college dropouts like Bill Gates and Mark Zuckerberg before them – are streaming to Palo Alto hoping to be the next Steve Jobs (another dropout) with the desire to invent something incredible that might change the world. And, yes, they are looking to be “discovered,” or at least, funded.
Palo Alto doesn’t have a Schwab’s or a Top Hat Café (both of which no longer exist), but it does have Palo Alto Creamery, a soda fountain full of aspiring entrepreneurs comparing notes on the Valley’s powerful players just like struggling actors did in Hollywood years ago. Having spent a few days hanging out in the collegial environment of a few Palo Alto start-ups, it struck me that the optimism, curiosity, and vitality of this tech eco-system is probably not nearly this pure or potent anywhere else in the world. Just eavesdropping on the heady conversations made me giddy! I’m sure a half-century ago, being in Hollywood must have felt quite similar as the entertainment industry gained a global foothold.
And, while Palo Alto is the celebrated place of the moment, there’s a legacy of thinking big and different in this community. Taking a walking tour with a partner of the world-famous IDEO design firm (headquartered in downtown Palo Alto), I saw that the roots of this entrepreneurial gold rush have a storied legacy. There were the first offices of Google and Intuit on University Avenue. And, next door to where my company aspires to create a luxury boutique hotel is where Facebook got started (across the street from the Creamery). But, no tour of Palo Alto could be complete without a visit to mecca, the famous garage (now a historical landmark) where Hewlett and Packard got started just a five-minute walk from where Mark Zuckerberg first started paying office rent for Facebook. There is no star Walk of Fame in Palo Alto (yet), but there’s an unmistakable spirit that the world is counting on this little community to chart a path of hope and renaissance for the world, just like Hollywood did in our darkest days of the past.
The psychology of confidence is just as important in the boardroom as the bedroom. As Wikipedia suggests, “Confidence can be a self-fulfilling prophecy as those without it fail or don’t try because they lack it and those with it may succeed because they have it rather than because of an innate ability.”
Harvard Business School Professor Rosabeth Moss Kanter wrote a book “Confidence” which could be distilled down to the following: Losing streaks are often created and then perpetuated when people lose confidence in their leaders and systems, while winning streaks are fueled by confident people who are secure in their own abilities and the ability of their leaders. Winning streaks are characterized by continuity and continued investment, while losing streaks are marked by disruption and a lack of investment that typically give way to a self-fulfilling prophecy of failure. Long-term winners often face the same problems as long-term losers, but they just respond differently. They know how to recover quickly and not let failure mess with their head.
We’ve all seen classic human behavior when our confidence is shaken. It could be the coach who throws out the game plan and tries the “Hail Mary” leading to further embarrassment of the team or the business group that starts blaming each other for petty issues. Or, at the high school dance, it could be the shy guy who feels smaller and smaller after two girls turn down his offer for a dance. And, of course, in the bedroom when performance anxiety strikes, one can feel like there are three Olympic judges propped on chairs above the bed ready to reveal their scores.
If “Disappointment equals Expectations minus Reality”, at some point after a few too many disappointments, we start expecting less. This is often the path to personal depression and it could be the same for an economy, which shares that same word – depression – to describe a similar valley. We end up with a “sulking economy.” And, that’s where we are today. For a leader, it’s not an easy thing to rebuild the expectations of one’s people after constant disappointment. The tried and true method of doing this is what I call the “momentum of victory,” creating a feasible goal in the short-term and achieving it. Once that’s accomplished, it means finding another small, concrete win on the horizon. Winning and losing are 90% mental.
Lyndon Johnson was the first White House occupant to have The Conference Board looking over his Presidential shoulder and rating “consumer confidence” as a monthly measurement of our collective psychological well-being. This strong man from Texas saw confidence plummet late in his time in office. True again four decades later when his fellow Texan George W. Bush saw nearly an 80 point drop in confidence, the worst since LBJ. Our most effective confidence-producers have been Reagan (41 point rise) and Clinton (40 point rise). Barack Obama is a man who inhabits his head. Yet, like any athlete – especially a basketball player – hopefully, he knows that over-thinking rarely enhances performance. It’s time for our shrink-in-chief to step it up and find his natural rhythm as a leader. When in doubt, find the goal that we can all believe in and achieve (maybe, today it’s re-establishing our credit rating of AAA) and start creating a micro-map of small victories that can re-establish our confidence as Americans who have a common goal.
I entered Stanford Business School twenty-nine years ago as a naive twenty-one year old, the youngest in my class. One of my classmates immediately sized me up, asking “So, what did you specialize in before coming to get your MBA?” I said, “Growing up.” Not satisfied with my answer, he continued, “No, seriously, what’s your expertise and why’d they let you in here?” I paused and sheepishly said something absolutely true, but somewhat blasphemous for the times, “I guess I understand people well. My boss this summer told me my expertise is how I use my emotions to my advantage.” My classmate couldn’t stop laughing and he was on to glad-handing the next person because, clearly, I was a loser.
A decade and a half later Daniel Goleman’s Emotional Intelligence (EI) theory was introduced to business schools around the world. But, this idea –still radioactive to some – that the dominant trait in effective leadership comes from EI (also called EQ), not IQ or the level of one’s experience or depth of their resume, took a while to become commonplace language amongst mainstream business folks. But, while there’s still no hard metric for EI , conventional wisdom now favors this fluid ability as compared to the fixed capacity of one’s brainpower. When I graduated from biz school, I thought I had to be superhuman if I were ever to be a successful CEO. But after two dozen years of being a CEO, I’ve come to learn that the best leaders aren’t comic strip heroes, they’re just super humans who have developed the four capacities that Goleman outlined for EI: self-awareness, self-management, social awareness, and relationship management. As Goleman recently told me, “EI includes a broad spectrum of competencies, and no leader is A+ across the board – even the best have room to improve.”
I’m often asked which business leaders are the ultimate examples of Emotional Intelligence, so I decided to do a little research. Limiting my search to only Fortune 500 CEO’s of American companies (so Oprah doesn’t qualify), I started asking everyone I knew who they most admired as a role model for EI and then I talked with employees in these CEO’s companies and did a deep dive into speeches they’d given and articles that had been written about them. And, of course, I took a look at the performance of their companies while they’ve been the “emotional thermostat” for their organization. So, drum roll please, here’s the first annual Top 10 Chief Emotions Officers in the U.S. (in alphabetical order):
- Jeff Bezos (Amazon): With his quirky laugh and self-deprecating style, Bezos doesn’t sound like a Fortune 500 CEO and that’s probably to his benefit. His obsession with the hearts and minds of his customers and his long-term perspective on relationships (and business strategy) are legendary, as was his YouTube announcement of Amazon’s Zappos acquisition in 2009.
- Warren Buffett (Berkshire Hathaway): “Success in investing doesn’t correlate with IQ once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble investing.” Intensely loyal and relationship-driven, he asks his CEO’s to run their companies as if they were to own them 100 years from now.
- Ursula Burns (Xerox): In tandem with Anne Mulcahy who moved up to Chair, Burns transitioned to CEO as the first woman-to-woman CEO leadership transition in a Fortune 500 company in what has become a pivotal case study in organizational development.. Direct, yet respectful, her assertiveness is matched by a sense of mission that inspires her employees.
- Jamie Dimon (JP Morgan Chase): At Harvard Business School, Dimon said: “You all know about IQ and EQ. Your IQ’s are all high enough for you to be very successful, but where people often fall short is on the EQ. It’s something you develop over time. A lot of management skills are EQ, because management is all about how people function.” Read “Last Man Standing” about him.
- John Donahoe (eBay): Donahoe inherited a difficult situation from Meg Whitman with the need to truly alter the company’s business strategy. As a role model for Jim Collins’ Level 5 (humility & ambition) and Bill George’s “True North” leaders, Donahoe’s disciplined self-awareness and his listening ability have created a deeply loyal team and a healthy, evolving culture.
- Larry Fink (BlackRock): Called “psychologically astute” in a Vanity Fair feature article, Fink created the largest money-management firm in the world based upon self-reflection, teamwork & direct communication. His senior leadership team embraces EI seminars to improve their skills.
- Alan Mulally (Ford): Walk around Ford’s corporate campus and you will see office cubes featuring handwritten notes that Mulally has sent to employees…praising their work. Great interpersonal skills and a “Clintonesque” ability to make you feel like you’re the only one in the room when you’re in a conversation with him.
- Indra Nooyi (Pepsi): Nooyi is a conscious capitalist whose “performance with purpose” agenda has helped move employees from having a job to living a calling. She is acutely aware that being a woman of color means she may receive more attention and scrutiny, but she still projects her personality without reservation – whether it’s singing in the hallways or walking barefoot in the office. She wrote the parents of 29 senior Pepsi execs to tell them what great kids they’d raised.
- Howard Schultz (Starbucks): He says that the main reason he came back was “love”: for the company and its people. Very dedicated to generous health care benefits – inspired by his father losing his health insurance when Schultz was a kid.
- Kent Thiry (DaVita): Leaders with high EI/EQ create culture-driven organizations that perform at their peak due to the power of mission and teamwork. Thiry took over a demoralized kidney dialysis center company that was almost out of business and, with a passionate spirit, created nearly 44% annual growth in earnings per share in the past decade, 6th highest of any Fortune 500 company.
There are many honorable mentions from Jim Sinegal at Costco to Gary Kelly at Southwest Airlines to Andrea Jung at Avon or John Mackey at Whole Foods Markets. As for the Top 10, there are some obvious choices as well as some more obscure CEO’s. But, before you start throwing stones at these business leaders, don’t forget Daniel Goleman’s premise that we’re all works-in-progress. What tends to set these people apart is a level of disciplined self-awareness that helps them develop as leaders faster than the average CEO, as well as knowing how to attract a complimentary team around them.
If we’re going to see a job recovery in this decade, it’s likely to come from America’s entrepreneurs since 80% of the net job growth in our economy comes from small to mid-size businesses. So, if we know our economic recovery depends on incubating more entrepreneurs, it’s natural to ask, “How can we create more entrepreneurs and what drives an individual to relentlessly work eighty hours a week on a risky new venture?”
Conventional wisdom suggests the primary motivator for entrepreneurs is money or wealth creation and, in fact, much of the political debate tends to center around what kind of tax or regulatory policy changes will turn corporate suits into small business adventurers overnight. But, what drives someone to be an entrepreneur is a much more complex question and one that I’ve grappled with in the quarter century since I launched my company.
When I started my hotel company, Joie de Vivre, at the age of 26, I saw this venture as my ticket to freedom. I’d done my time in corporate America from McDonald’s making shakes to Morgan Stanley making deals and, yet, I felt awfully constrained by the uniform – not just my clothes, but how I felt I needed to conform – that a traditional job required me to wear. So, the freedom to be myself and develop a business based upon my own rules was my first driver. Right behind that was a need to be creative. I joined a maverick commercial real estate development company right out of business school thinking that it was going to unleash my creative juices, but instead, found that I was just a transaction jockey constantly toggling between negotiating high-stress development deals and having my eyes glued to a Lotus 1-2-3 spreadsheet. This was not fertile ground to explore my creative side. Launching a boutique hotel company dedicated to creating original, stylized small properties satisfied my need to be inventive.
As my company grew, I became aware of another motivating force that led me to entrepreneurial pursuits beyond just freedom and creativity. I became more and more curious about human nature and, as we grew to nearly 40 hotels and thousands of employees, I saw our company as a laboratory for trying things in one hotel – whether it was a new incentive plan for employees or a new unique service for guests – so that we could roll it out elsewhere if we saw that we struck a chord with this innovation. And, ultimately, this curiosity led me to writing books on the crossroads of business and psychology.
But, what’s most fascinating about what drives an entrepreneur isn’t necessarily what’s most conscious to the entrepreneur. For many entrepreneurs, the fuel that keeps them going could be power, fame, a trophy wife or husband, or – possibly – as is true with many workaholics, their business is a means of running away from other elements of their life that either scare them or make them feel small. More than a few entrepreneurs use their business and their success as a means to build their fragile self-esteem. As the business goes, so goes the entrepreneur’s sense of them self. So, for many of us, our ego is a major driver for why we throw ourselves with reckless abandon into a new venture.
Carl Jung said that we are powerless over what we’re unconscious of in our lives. For me, while it was enlightening to know that freedom, creativity, and curiosity – more than money or power – were the key qualities that made my work life a calling, it was when I came face-to-face with how much of my identity and ego was wrapped up in my work that I found real freedom. Becoming conscious that my sense of self didn’t have to be strapped to that inevitable rollercoaster that defines the ups and downs of a business gave me a “joie de vivre” that I never found by just chasing the next success.
So, as politicians harp on about the importance of various tax or regulatory policies that will lead countless entrepreneurs out of their corporate closets, let’s realize that fiscal policy alone won’t fertilize an abundant economic garden. Steve Jobs, Jeff Bezos, Oprah Winfrey, Richard Branson – these folks didn’t launch their employment vehicles because they calculated how the government had made it more financially lucrative for them to launch their businesses. For every entrepreneur who is doing it to get rich, I’ll bet you there are three others who are doing it to either make a difference in the world or their community, make a name for themselves, or just make something that makes them feel good. The best way we can encourage people to create companies that create jobs is to celebrate the diverse entrepreneurial stories and the variety of drivers that led these entrepreneurs to sticking their necks out. Telling powerful entrepreneurs’ stories and aggressively educating people on how to start a business may have more of an impact on reducing our unemployment rate than some subtle or complicated change in tax policy. Silicon Valley didn’t become the entrepreneurial capital of the world because it has some uniquely attractive tax rate (in fact, quite the opposite, it’s in the high-tax state of California).
[Originally posted June 2, 2011 on The Huffington Post]
To B or not to B? Hamlet is not the only one asking that question as I’ve been queried many times by readers of my book PEAK about whether the self-actualizing business principles I espouse are just as relevant to B2B (business to business) as they are to B2C companies (business to consumer). The thought behind this is that PEAK speaks to the idea that great companies address the higher, transformative needs of their key stakeholders, like their employees, customers, and investors. So, companies like Apple, Whole Foods Markets, Southwest Airlines, Netflix, and the like are B2C companies effectively focusing on understanding the “unrecognized needs” of their core customers and delivering on those needs. If you do that well, you create customer evangelists who are feeling a little more self-actualized.
Somehow, when we imagine B2B organizations – IBM, Deloitte, Boeing – we assume that a business doesn’t have higher needs that you can address. Of course, this is a little more complicated because understanding the higher needs of an individual requires a little less mind reading than understanding the meta-needs of a whole organization. But, at the end of the day, most decisions in companies are made by humans. So, it’s fine to imagine how your company can meet a higher need of the organization you’re trying to sell to, but I highly recommend that you look at the key decision-maker, the human, and ask yourself three key questions about this person: (1) What’s the survival need of this decision-maker such that they will not look like a fool a year from now within their organization for having chosen to buy from us? (2) What would make this decision-maker look successful – giving them greater esteem within the organization – if they buy from us? (3) Is this decision-maker looking for a transformative product or service that will help elevate their company far above their competition and how are we communicating those “higher needs” benefits to this decision-maker and their colleagues?
Amidst the spreadsheets, org charts, and policy manuals, there is a heartbeat in our organizations and it comes from humans. Even in the silos of America’s biggest corporations, there is a man or woman, full of emotions and aspirations, wants and needs, who is making the buying decisions that can fuel your B2B company. The most neglected fact in business is that we’re all human. Don’t forget this fact when strategizing about how you can make a sale to that B2B company you’ve had your eye on.