Archive for the ‘Leadership in a Recession’ Category
Admiring Actualized Companies
Wednesday, March 25th, 2009[originally posted March 24, 2009 on the Huffington Post]
Fifty years ago, Abraham Maslow wrote, “Where fear reigns, enlightened management is not possible.” More recently, the management consulting firm Accenture revealed the results of a study that showed that companies have “emotional fields” that can immunize them from the kind of fear that is plaguing most companies today. Accenture’s Jane Linder says, “Emotion is the silent partner behind organizational success especially when it comes to the capacity for continuous renewal. Although executives may regard effective project management as something that demands rationality in the extreme, Accenture research has established a direct link between employees’ emotional engagement and performance.”
This will come as no surprise to anyone who has hung out in a company in a death spiral. The contagious emotion of fear (which is usually a ripple in most companies, but has become a tsunami) shuts down creativity, productive communication, and the sense of team spirit that one tends to find in those companies that are able to transcend the difficult times. As the CEO of a company that was on the verge of a financial meltdown seven years ago, I know that the solution requires a certain healthy “psycho-hygiene” which allows a company and its people to build on small successes and believe that they can rise above the times.
Building on success is what you’ll see on the cover of this week’s Fortune magazine; it’s the annual cover issue of the “World’s Most Admired Companies.” In the era of bad banks and incompetent insurance companies of historic proportions, it’s hard to imagine that Fortune could round up 50 companies from around the world to make this list. But, one look at the list and I was sold. The top four companies — Apple, Berkshire Hathaway, Toyota, and Google — were all profiled in my book, PEAK, as companies that operate under principles that resemble Maslow’s Hierarchy of Needs of human behavior. In fact, six of the top eight companies are organizations that I suggested were self-actualized in my book (this includes FedEx and Southwest Airlines also).
So, what makes a company self-actualized? Almost all companies today are seriously focused on their survival needs. In fact, some of these companies make odd decisions out of being ruled by financial fear. How can you explain that many airlines now charge their customers for soft drinks, pillows and blankets and one European airline, Ryanair, has even mused about installing pay toilets on their planes? At what point does the customer value proposition become a joke? These faulty flyers are so obsessed by their need to financially survive that they don’t recognize that they are seriously upsetting their customers and, even their limited remaining customer credibility, in the process.
I had the good fortune of observing Southwest Airlines CEO Gary Kelly hand out peanuts during a flight recently and was able to spend ten minutes with him in the back of the plane asking him about why his company chose to take a different path (and they’ve even made it into a marketing campaign of “no hidden fees”). Surprisingly, he didn’t say that Southwest’s reluctance was primarily due to the fear of how their customers would react. Instead, he reminded me who in their company would probably be most barraged by the likely customer complaints. Gary Kelly said, “There’s a reason our flight attendants appear happier than those at the other airlines. We take them into account when we make key operating decisions in our company. I’m not sure our competitors do the same.” It is quite telling that there was no other U.S. airlines on Fortune’s list.
Great companies create the conditions for their employees to live up to their potential. In fact, great leaders visualize the potential in their employees and actualize that potential into reality as former CEO and co-founder of Southwest Herb Kelleher did with his secretary Colleen Barrett (Colleen is now the President of the company!). Southwest Airlines flight attendants are more likely to be living their calling. United’s flight attendants probably are just living through a job. Toyota’s execs imagined the Prius. Google is able to recruit the best and the brightest with an actualization-focused culture. Apple creates evangelist customers who truly feel transformed by using Apple’s products.
The companies we admire are very similar to the people we admire. They are passionate, smart, resilient, trustworthy, original, and forward-thinking. They are “being all they can be.” They are able to transcend the survival-driven fear of the moment and instead focus on the higher success and transformational needs of their employees, customers, vendors, and investors.
Less Busy-ness on Sundays
Monday, December 8th, 2008I don’t know about you, but there are certain Sundays when I can curl up like a cat with my Sunday NY Times, shot of adrenalin from Meet the Press, and then the zombie afternoon watching NFL Football….I need to install a flat-screen in my bathroom so I can do this in my favorite place: the deep-water bathtub.
This Sunday’s Business section was meant for the Hall of Fame. There was more valuable wisdom in the articles that graced those 14 pages than I learned during my two years at Stanford Business School. First, I have to direct you to an article by a neuroeconomist (who knew such a profession existed?) that point blank proves something that my book, PEAK, hypothesizes: that fear is a de-motivator in the workplace. At times like these when fear pervades, the number one sensible response for a leader is to lead people away from this contagious, pervasive emotion. Dr. Berns says it best, “Fear prompts retreat. It is the antipode of progress. Just when we need new ideas most, everyone is seized up in fear, trying to prevent losing what we have left.” http://www.nytimes.com/2008/12/07/jobs/07pre.html?_r=1&scp=1&sq=neuroeconomist&st=cse
Then, there’s a thoughtful cover story on Best Buy, one of the lone survivors in the retail electronics world (with Circuit City, Sharper Image, Comp USA, and Tweeter all failing in the past year), which has succeeded due to savvy management, but also because of an enormous investment in their people. I don’t know about you, but I’ve found Best Buy employees to be the best trained, the happiest, and the most helpful floor reps out there, and, that’s after having shopped the competition to make a major home entertainment system purchase this past month (doing my part to keep the economy going when national electronics sales dropped 22% in November). To learn more about why Best Buy is succeeding, check out the article. http://www.nytimes.com/2008/12/07/business/07best.html?scp=2&sq=best%20buy&st=cse
On the other hand, the feature cover article in the NY Times Biz section focused on Apollo, a private equity firm that is truly struggling and is a poster child for the greedy investor that skims the profits of their portfolio companies only to find that these companies have been bled dry when the economy turns sour. Warren Buffett is a great model for the long-term, legacy investor that I admire, but Leon Black of Apollo is a good cautionary tale of how an investor can capsize a business. http://www.nytimes.com/2008/12/07/business/07leon.html?scp=2&sq=apollo&st=cse
On page 3, there’s a great article called “Teamwork, the True Mother of Invention” which talks about how successful companies bake the innovation process into their culture and it’s a very collaborative process. Based upon that premise, you might think that these companies are all about brainstorming, but this Silicon Valley thought leader suggests that brainstorming is passe and that there are many other ways to create an innovation culture. http://www.nytimes.com/2008/12/07/business/07unbox.html?scp=55&sq=dec.%207,%202008&st=cse
There were a few other articles that caught my eye, but these four were my favorites. I’ve said for a long time that the greatest bargain that exists for consumers is a well-written newspaper and the NY Times proved that to me once again this weekend as this $5 purchase is much more affordable than a $50,000 MBA.
Recessionary Recognition
Monday, July 14th, 2008I give about 8-10 speeches a month and, over the course of 2008, I have noticed – just based upon the questions I’m being asked at these speeches – a big shift in the “fear factor” out there in the American workplace. As I tell my historical tale of woe (that’s outlined in the book PEAK) of what it was like being the Bay Area’s largest independent hotelier in the dot-bomb, post-9/11 years when hotel revenues in the region were dropping 30-50%, the number one question I’m hearing these days is “How can I keep a positive company culture intact during really difficult times?” I have four suggestions: (1) Read the Recognition chapter of PEAK. The number one reason people leave their jobs is due to a poor relationship with their boss. We all feel under-appreciated and under-recognized. But, in a downturn when fear is rampant and everyone tends to be focusing on problems, that sense of under-recognition is amplified. Companies get very good at “catching someone doing something wrong.” As I talk about in chapter 5 of PEAK, great companies create a culture of recognition that’s based upon both formal and informal forms of recognition. In a downturn, informal recognition – just catching someone doing something right and letting them know how much you appreciate it – has the greatest impact as it’s personal and spontaneous. And, miraculously, it’s free – a word we all want to hear in these penny-pinching times. What if I told you that your company could create much happier employees who were more engaged in what they did such that your customers would become more loyal even in difficult times and you could do this without spending a dime? Would you take this happy pill? Of course you would. That happy pill is created by developing a culture of recognition. When we are fearful, we need even more recognition. This doesn’t mean that you accept or cheerlead bad performance, but it does mean that those who are most valuable to the company – some of whom are doing mundane tasks – are recognized and appreciated. (2) End your meetings with 10 minutes of Recognition. While chapter 5 gives you all kinds of suggestions on how to create a culture of recognition, the number one tactic that you should start tomorrow is to end all your meetings with a recognition moment. Four years ago – when the San Francisco hotel market was at its worst – we started this practice of ending our weekly Executive Committee meetings (the top 16 people in the company) with 10 minutes of recognition when any EC member could tell a one-minute story about someone out there in the field or in our home office who had done something wonderful – whether it was a bellman who made a child’s day by given her a birthday gift or a maintenance person who pulled an all-nighter when a plumbing pipe burst in a hotel. Once the recognition is mentioned, one of the other senior leaders at the meeting (but from a different department) volunteers to say thank you to this person who has done a great deed. Three great outcomes sprouted from this new practice: (a) We ended our meetings on a positive note which is a valuable ritual when you’re going through tough times; (b) Someone out there in the field got recognized for doing something right which probably made their day and made them a joy to work with (and I bet the customers they came into contact with that day also noticed the spring in this recognized employees step); and (c) Because the recognition came from someone from a different department (for example, the head of Accounting might have recognized the bellman), it creates a cross-departmental positive connection which is very important during a downturn when the silos between departments can lead to lots of finger pointing. (3) Support your superstars. Sit in a room with your other manager/colleagues. Each of you write three names and put them in a hat and then tally the results. The names you will write will be those who first come to mind when you ask yourself the following question, “If our biggest competitor were to come in and raid our company and steal three people, who would be the biggest losses for our organization?” Once you’ve tallied the results, have a discussion about what extra recognition you can do to make sure these superstars are feeling the love. The reality is the ideal time to steal a superstar is when a company is going through a challenging period. You are vulnerable and you get more vulnerable when you lose those folks who are difficult to replace. This is the death spiral. Avoid it like the plague. (4) Use the metaphor of a pond. Have you ever noticed a pond that was stagnant and maybe a little parched from a lack of rainfall or new water flowing into it? That’s what it feels like in a company when it’s going through a difficult time. There are thousands of companies across America that are like stagnant ponds given the economic climate we’re living through. So how do you make a pond healthy during tough times? First off, realize that ponds can be full of ripples. If you throw a stone into a pond, there is a ripple effect that helps to stir up the water. The question is whether the ripples you are creating are positive or negative ones. In fearful times, companies have lots of negative ripples and those ripples ricochet off of each other in ways that create a turbulent culture. Great companies create positive ripples. They create healthy habits that promote great “psycho-hygiene” in the workplace. What if you created a habit for yourself that you would give one positive piece of feedback to someone every day you’re at work? What kind of ripples would that create and how would those ripples come back in a positive way to you? I’m a big believer in “karmic capitalism”: what goes around comes around. As Gandhi said, “be the change you want to see in the world.” If you want to be in a positive workplace (a healthy pond), be a role model for it…you’ll be amazed by the ripples you create.
Want to Create Change? Tell a Story.
Monday, October 22nd, 2007I was a freshly-minted adult when I graduated from Stanford Business School half a lifetime ago (23 years to be exact). Along with my classmate Seth Godin who was also a youngster when he graduated, I found all the theory that filled the biz school classrooms to be rather stale. Seth and I were so bored that we created our own independent studies course where we interviewed interesting businesspeople and asked them to share their rules for success (the result, “Business Rules of Thumb,” was the first book for us both…good luck finding a copy). We found these corporate leadership stories to be much more compelling than any decision tree or manufacturing bottleneck analysis. Two years ago, Seth even wrote a book on storytelling called “All Marketers are Liars,” in which he suggested that successful marketers don’t talk about features or benefits, they just tell great stories.
Since then, I’ve read a lot of great books on storytelling but I’ve yet to read one that so systematically and convincingly explains the steps for creating the drama and landscape for storytelling as the one I’ve just finished. Authors Richard Maxwell and Robert Dickman, who are consultants in the entertainment industry (if there ever was an industry based on spinning a tale, that’s it), have written The Elements of Persuasion which came out a few months ago. They suggest that all successful stories have five basic components: the PASSION with which the story is told, a HERO who leads us through the story and allows us to see it through his or her eyes, an ANTAGONIST or obstacle that the hero must overcome, a moment of AWARENESS that allows the hero to prevail, and the TRANSFORMATION in the hero and in the world that naturally results. Sounds a like a Hollywood hit to me. But, reading this book, I became convinced that great leaders are also able to express their reality and vision using this arc to define their story.
I was reminded of this last week while giving a presentation about my book PEAK: How Great Companies Get Their Mojo From Maslow. I was speaking to this group, not knowing that the wife of one of our employees was in the audience. For those of you who’ve read PEAK, you know this is a tale of how I launched my impractically-named company (Joie de Vivre Hotels) more than 20 years ago because of the passion I felt for the hospitality business’ approach to making customers feel good. I talked about how I was burnt out at the age of 25 having spent my first two years out of biz school getting pummeled in the rough-and-tumble world of commercial real estate development and construction. Starting Joie de Vivre (mindful of the company’s mission statement – defined by our name: “joy of life”) and growing it to be one of largest boutique hotel companies in the world was exhilarating. But, in our fifteenth year, we experienced the worst hotel downturn since World War II and Joie de Vivre was particularly exposed since all of our hotels were in the same region, the San Francisco Bay Area. Having all of our eggs in one geographic basket led me to not take a salary for three and a half years, during which time I became a real Abraham Maslow nut reading all kinds of books by this mid-20th century psychologist. I then applied his self-actualization-driven Hierarchy of Needs theory to how we created deeper relationships with our employees, customers, and investors. In the end, Joie de Vivre flourished during a difficult time and a new psychology of business was sprouted, which I applied to the company and came to realize was being used – in various forms – in other peak-performing companies.
So, I was telling this story on my book tour and the employee’s wife I mentioned came up to me after I spoke. She said she’d told my tale to probably 50 people because it was like describing a Jimmy Stewart film in which the good guy wins in the end. As she was describing my story back to me, I realized she was following that arc of PASSION – HERO – ANTAGONIST – AWARENESS – TRANSFORMATION that “The Elements of Persuasion” speaks of. So, I asked her, “Why do you keep telling this story?” And, she responded, “All of us need the inspiration to believe that if you persevere with your passion, you will one day succeed. Your story gives people strength.” While I don’t recommend going through the fire the way my company did, it is more than gratifying to know that our story is now inspiring others.
So, the next time you’re trying to persuade your colleagues about a particular strategy or idea, consider telling a story. Maybe tell a true story of someone who’s tale might mirror what you’re trying to articulate. If it’s your own story, all the better. Or possibly tell a future story that describes the positive, transformative outcome of what might happen if your team pursued your path. Facts and figures can help rationalize your story, but it’s the raw emotion that will draw people in and help them to remember just what you had in mind. Change happens when people are inspired.