Archive for the ‘Valuing the Intangible’ Category
What Business Leaders Can Learn From Bhutan
Wednesday, February 10th, 2010Having spent the past thirty-two years in the Silicon Valley/Bay Area region, I guess I’ve grown accustomed to start-ups wreaking havoc in mature industries. Hewlett-Packard, Apple, Google, Facebook….they all were launched within a 15-mile radius of my alma mater, Stanford University, and they went on to revolutionize not just their industry, but they changed our relationship with technology and, frankly, in Facebook’s case, our relationship with each other.
So, I’m not surprised that I’m fascinated with a little, almost-mythical country in the Himalayas that is revolutionizing how world leaders are looking at the definition of success. Like “The Mouse That Roared” (a popular book and film from the late 1950’s about an imaginary, bucolic country situated between France and Switzerland that becomes the admiration of modern society when it declares war on the United States), Bhutan is getting the kind of attention an off-off-Broadway play gets when you know it’s destined to be a hit. In 1972, the 17-year old King of Bhutan asked the blasphemous, “Why are we so focused on Gross Domestic Product? Why aren’t we more concerned with Gross National Happiness?” For nearly forty years now, Bhutan has been remaking their country based upon the premise that the ultimate public good a leader can provide his or her people isn’t material possessions, but instead it’s happiness or well-being.
This “beginner’s mind” idea has found fertile ground in the 21st century as more than forty countries are now studying their own GNH (Gross National Happiness). Nicolas Sarkozy recently announced what some are calling a “joie de vivre index” in France based upon an 18-month study of two Nobel economists who recommended that the largest countries of the world end their obsession with GDP and consider some new intangible metrics. In essence, they’re suggested that GDP – which focuses exclusively on tangible production and consumption – no longer should be our sole definition of global success especially at a time when 64% of the world’s GDP now comes from the intangible service industry. In other words, GDP measures outputs which might have made sense in a more mechanized, industrial era. But, given the knowledge era we now live in, measuring those inputs that influence the output is a more holistic method of evaluating whether we’re creating sustainable success.
This may seem abstract, but it’s extremely relevant to business leaders who have come to realize that a myopic focus on purely the bottom line can have the same effect as driving a car at full speed all the time without doing occasional maintenance and refueling. Here are three important lessons for business leaders to learn from Bhutan:
1. Leaders don’t create happiness for people. The Prime Minister of Bhutan told me his goal is “to create the conditions in which happiness can flourish.” Abe Maslow once suggested business leaders “can set up the conditions so that peak experiences are more likely, or one can perversely set up the conditions so that they are less likely.” Great leaders create healthy habitats. From that healthy habitat sprouts the outputs we’re looking for whether that’s happy citizens or a profitable business. Silicon Valley has an eco-system that is primed for innovation, but as many regions of the world have learned, you can’t easily replicate the intangibles that create such a cultural habitat. So, first, brainstorm with the leaders in your company about what cultural “conditions” would help your company flourish and what kinds of specific things you can do to create that habitat.
2. Leaders value and measure the intangible. The Bhutanese have created a science behind the art of happiness. They measure four pillars, nine key indicators, and seventy-two various metrics to help them understand whether they are creating fertile conditions for happiness. The Gallup organization has developed twelve questions that help leaders measure employee engagement like “at work, do you have the opportunity to do what you do best every day?” or “does the mission/purpose of your company make you feel your job is important?” (http://www.workforce.com/section/09/article/23/53/40.html). It’s time for leaders to distinguish between what they can easily count (“are you being paid enough?”) with what employees most value. The intangibles of mission and meaning are powerful fuel for knowledge-driven industries, so find ways to measure these vital inputs.
3. Leaders are willing to deviate from the norm. Most world leaders didn’t take notice when the teenage King of Bhutan asked his impertinent questions about GDP. Those that did notice chuckled and chalked this idea of GNH up to “Buddhist economics.” But, if you’re a small country or a small company, your best strategy to compete with the big boys is to find a niche and own it. In my case when I started my company twenty-three years ago with an inner city motel, I went after rock ‘n roll bands as our core customer, even though conventional hoteliers told me I was crazy to want these party animals. Yet, this target customer was perfectly suited to my funky motel and this was an untapped market (bands) that was growing and recession-proof. Similarly, it took thirty years for the world to embrace Bhutan’s approach to GNH, yet this “happiness niche” has turned out to be much larger than the King of Bhutan ever imagined. Find a niche, embrace it wholly even if it’s unconventional, and deliver on your promise better than any of your competitors.
What We Measure Matters
Tuesday, May 19th, 2009[originally posted May 18, 2009 on the Huffington Post]
Can little Bhutan with its humanistic development philosophy create a new global currency of well-being? For you skeptics who think innovation only occurs in the developed world, consider Bangladesh’s Muhammad Yunus and his microlending approach to financing the aspirations of the poor. Yunus, who won the Nobel Peace Prize in 2006, has helped to revolutionize how the financial community and governments view the poor and the Grameen Bank’s efforts have led to similar projects in more than 40 countries. Bangladesh, a country that’s even poorer than Bhutan, has taught us that business can’t sustainably thrive in societies that fail at the bottom of the pyramid.
Simon Bolivar, the South American independence leader, said long ago, “The most perfect system of government is that which produces the greatest possible amount of happiness.” Bhutan, through its Gross National Happiness (GNH) index, has tapped into that fundamental aspiration that unites us. The Bhutanese have redefined their objective of development and countries around the world are taking notice. In tandem with the growth of the positive psychology movement, there is a new paradigm arising in both global economics and psychology. Recognizing that modern man has been liberated by prosperity but not fulfilled by it, psychologists and economists are seeking new ways to measure the intangibles of public welfare.
One wise man once wrote, “Happiness is designed to evaporate.” So, how do you measure something that disappears? The U.N. Millennium Summit commissioned the largest international poll ever taken (by the Gallup organization) and found that people value good health and a happy family far more than they do material well-being. The Philippines have modified their approach to measuring subjective well-being such that each individual surveyed identifies which particular domains – whether it’s leisure time or compensation – are most important to them and then the government is able to tabulate the overall subjective well-being for the country. Given that the U.S. is on the cusp of its 2010 census, wouldn’t it be instructive for us to ask more meaningful questions than just the demographic and personal financial data of our citizens?
As the CEO of hospitality company that surveys the well-being of our 3,500 employees twice a year, I’ve learned that asking revealing questions – beyond the tangible of “are you getting paid enough?” – helps us better understand how we can address our employees’ higher needs. We have been able to create the conditions for our people to feel more engaged and inspired by asking, “Have you been recognized for what you do in the past month?” or “Do you feel that your work positively impacts our customers and how do you know this?” And, we’ve cut our employee turnover to one-quarter the industry average by rethinking what we’re measuring. Our people will never aspire to more than a job if all they focus on is the fact that they clean toilets in a hotel. But when one sees the broader purpose of what they do, they start to realize their work can fulfill in ways they hadn’t imagined. And, the positive result of being in a workplace full of happy fellow employees is noticeable to everyone who comes into contact with an organization. Harvard’s Nicholas Christakis has shown that happiness – like the fear and the flu – can spread from person to person and even affects people peripherally like neighbors and relatives.
What if we took Abraham Maslow’s ideal of self-actualization and used it as an organizing principle beyond the individual? Most don’t realize that in his latter years, Abe Maslow was focused on how to take this individual-focused theory and apply it more collectively to organizations. I’ve found that using his Hierarchy of Needs theory as a means of understanding the collective higher needs of my company brought me great insight. In essence, Bhutan is doing that as a country as they’re focusing more on the intangible higher needs that a tangible metric like GDP misses. What the world needs now is an actualization index that measures something worthwhile, something that helps us move people up both the economic pyramid as well as Maslow’s needs pyramid.
The world’s economic crisis is a symptom of a deeper malaise that threatens our collective well-being and survival, yet using the old measuring tools may not allow us to address the disease beyond its symptoms. Many of our dominant economic theories – from Smith to Ricardo – were espoused in the 19th century and were based upon the tangible scarcity in agricultural and industrial societies. While the world’s tangible, precious natural resources are certainly scarce, some of our deprivation today is in the intangibles of the cultural, spiritual, and emotional realm. Some of the scarcity is “capability deprivation,” those who have talents but lack access to opportunity or “time deprivation,” a scarcity that’s very familiar in modern society. How do economists evaluate the theory of scarcity when it comes to the intangibles that define the quality of modern life?
We’ve been too pervasively susceptible to confusing ends and means and needs and wants. Is it possible that Gross Domestic Product should just be a subset of a Gross National Happiness index rather than the other way around? As we’re exposing so many emperors with no clothes these days, can we now see that GDP is an artifact from a time when it was presumed that if there were more goods in circulation, general welfare would naturally follow? Paraphrasing Viktor Frankl, the world has been pushed by drives, but it is now pulled by meaning. The vast and intricate envy-producing machine called “consumerism” may have overpowered the other “isms” with a “c”: communism and capitalism. But a good portion of the world has woken up to the insatiable and insane arms race that comes with “positional consumption,” buying not to meet a need but to create a relative superiority. Gandhi said it best, “The world has enough to satisfy everyone’s needs, but not enough to satisfy one’s greed.” It is time for the world to reconsider what we measure and how the very act of measurement impacts what matters.
The Happiest Place on the Planet?
Monday, May 11th, 2009[originally posted May 11, 2009 on the Huffington Post]
Born in the shadow of Disneyland, I have a natural predilection for seeking happy utopias. Having founded a company named Joie de Vivre in a place described as “49 square miles surrounded by reality” (San Francisco), I’m not surprised by my fascination with Bhutan, the first country in the world to proclaim happiness as its primary civic goal.
Flying into this Himalayan Shangri-La, I was immediately struck by the world’s highest unclimbed mountain, the exquisite temples perched precariously on cliffs, the friendly and handsome people adorned in traditional silk attire, and a healthy dose of wafting incense and chanting mantras. With relatively strict limits on foreign travelers (about 50 a day), there were virtually no mainstream tourists to be found scurrying from holy site to spectacular vista. This is the kind of “boutique country” that could resonate with a boutique hotelier like me.
I came here to learn how the world’s newest democracy could be a model for a new definition of global success. But, understanding that this thoroughly un-modern place was no bulls-eye (they love archery here) for the conventional definition of a developed country, I pondered whether poverty and utopia could co-exist?
Fortunately, I started my investigation dining with the Prime Minister and a collection of the leaders of Bhutan’s Gross National Happiness (GNH) movement. At dinner, when the Prime Minister said his goal was “to create the conditions in which happiness could flourish,” I almost fell off my seat. My happiness guide Abe Maslow suggested in life and especially in the workplace, “One can set up the conditions so that peak experiences are more likely, or one can perversely set up the conditions so that they are less likely.” Having visited Zimbabwe two years earlier, I viscerally understood that “creating conditions” for a happiness habitat is one of the most profound responsibilities of any leader (as there’s no better example of a set of perverse conditions than in Zimbabwe.)
The Bhutanese dream big (and so did I as my week was full of lucid and vivid dreams). They don’t dream in material ways, but the leaders I spoke with talked about development in such humanistic terms that I worried that their goals might remain lofty and intangible. Fortunately, Bhutan’s Gross National Happiness Commission has spent the past five years identifying nine key indicators that they now measure to gauge civic well-being: environmental conservation, sustainable and equitable economic development, promotion of culture, good governance, psychological well-being, community vitality, health and wellness, accessibility of education, and how people allocate their time daily. As one new member of Parliament said to me, “Bhutan will never be a financial or military world leader, but we can be the leader in learning how to preserve our culture and live a rich life.” I learned long ago in business, if you’re small, go niche, and the Bhutanese have got the happiness niche down to a science.
Given the civic boosterism of Bhutan’s GNH movement, there were moments when I thought I was part of some Madison Avenue advertising stunt. This primitive paradise all seemed a little too perfect, even with all the rough and occasionally inconvenient edges. Clearly, those of us in the “developed” world long for a place where the grass is greener (literally, they’ve got green “grass” as marijuana grows uncut throughout the country), where simplicity, authenticity, generosity, and safe drinking water abound (three out of four ain’t bad). Franklin Delano Roosevelt even named his presidential retreat Shangri-La (later renamed Camp David) based upon the imagination of such a far-off nirvana.
But, Bhutan isn’t just a Hollywood set for Lost Horizon. There’s a contentment here that is real. As one observer suggested, Bhutan is “simultaneously placid and intellectually invigorating”….not a simple combination. Their Tantric Buddhist traditions (there are more monks than soldiers), the unspoiled landscape, their splendid isolation (the last country in the world to have television), their benevolent kings, and their unique history of never being colonized nor conquered, have all created the conditions for happiness to flourish. But, beyond that, in a modern world full of self-help books and shrinks on every corner, the Bhutanese don’t “pursue” happiness (there’s supposedly just one psychiatrist in the country). Happiness is the natural by-product of a life built on gratitude, not gratification. There may have been a time when “ignorance was bliss” in this country, but today Bhutan is well-aware of how it delightfully deviates from the world’s national norms. And, there’s even an Emotional Equation I cooked up that sums up their unique recipe that the rest of us could learn from:
Happiness = Wanting What You Have divided by Having What You Want
(credit: William Shakespeare)
So, can we bottle Bhutan and distribute it to the rest of the world? No doubt, we’ve entered an era in which global transformation isn’t just a nice idea, it’s truly an imperative. But, could a little country the size of Switzerland, with a population no larger than my hometown, and a per capita GDP smaller than Haiti prove to be a leader in a new movement toward an alternative metric for success? Bhutan is ironically bordered by two countries which represent nearly 40% of the world’s population (China to the north and India to the south) where the 21st century’s version of “middle class values” will be borne. Will this new generation of the Jones (or Wangs or Shahs) pursue excess as their definition of success? If Bhutan plays its cards right, this country is fated to be noticed and potentially be a role model for how we measure and define happiness and well-being in the new millennium.
What Do We Value?
Wednesday, April 29th, 2009[Originally posted April 29, 2009 on the Huffington Post]
Who defines what you value? Of course, we would love to think that we alone define our own sense of value. But, it shouldn’t surprise you to know that – on a global basis – our definition of what’s important is incredibly influenced by statisticians and economists using the equivalent of an abacus to define human progress in the 21st century.
A country’s Gross Domestic Progress (GDP) has been the world’s holy grail for nearly four decades (which was proceeded by similar measure, Gross National Product). This universal measuring tool, as a means of determining which countries are “developed” and which are not, is a gross tally of a nation’s production and consumption. By definition, it assumes every monetary transaction adds to the developed nature or social well-being of a country. In practice, this rewarding of production and consumption masks many of development’s costs whether those costs be the workaholism and materialism associated with these toils or the prisons that are constructed to incarcerate those who don’t play by the rules. Just consider that pollution – or environmental degradation – shows a double benefit to GDP, scoring points when we pollute and, once again, when we attempt to clean-up our messes. This “gross” (love the pun, don’t you?) definition of a country’s value is an artifact from an earlier era that assumes that economic development would naturally lead to human development.
There’s too much evidence today showing that this GDP = Quality of Life perspective is just plain wrong both in the developed and the less-developed world. U.S. per capita income since World War II has tripled and our homes are twice the size, but there’s no reputable survey that shows that Americans are statistically any happier today than they were during Eisenhower’s era. In fact, there’s more and more evidence that past a certain modest level of economic survival, humans tend to judge their happiness more on a relative basis (“keeping up with the Jones”) than on some objective, personal criteria. Capitalism and GDP are the perfect recipes for this zero-sum game of conspicuous consumption. And, in the developing world, we are able to see within a decade’s time the societal costs associated with a GDP-driven strategy, whether they are growing income inequities or the loss of generations of cultural traditions.
Why is this important? Well, the indicators we use for societal success determine our policies and even embody our values. While there’s no doubt that GDP provides an objective, easily-measurable means of defining the relative success of various countries that’s like saying that we could judge a boy’s character by how tall he is. In 1972, Bhutan’s new King Jigme Singye Wangchuck had a moment of clarity that would have inspired MasterCard (even this credit card giant realizes the importance of the intangibles of life: “there are some things money can’t buy…for everything else, there’s MasterCard”). This King of a tiny country wedged between China and India suggested the blasphemous: why don’t we value the intangible of happiness in our calculations of whether a country is getting it right. Twenty-seven years before the country would have its first TV installed in a home, King Wangchuck proclaimed that Bhutan would follow a Gross National Happiness Index (GNH) instead of GDP.
Since that time, a diverse collection of countries, from Australia and the Netherlands to Sri Lanka and Haiti, have jumped on the happiness bandwagon. France’s Nicolas Sarkozy has teamed up with Nobel laureate Joseph Stiglitz to create a Quality of Life Commission to study which indicators have the greatest effect on well-being. There are now HDI’s (the U.N’s Human Development Index), HPI’s (Happy Planet Index), and GPI’s (Genuine Progress Indicators) that factor in such subjective criteria as the crime rate in a country, the percentage of couples getting divorced, a country’s carbon impact on the world, and the access to education. Just like the triple bottom line is gaining momentum in the business world (an alternative means of defining a company’s success based upon people and the planet, not just profits), the governing powers that be are recognizing that these times require a new method of thinking about how we define progress.
If this seems a little abstract, let me share a personal example of how using new, more intangible measuring tools helped save my company during the last economic downturn. When my San Francisco Bay Area hotel company was getting rocked to its core by the combination of the dot-com crash, 9/11, and a variety of other factors beyond our control, I realized that the traditional methods we’d used that defined our success – like year-over-year revenue or profit growth – were no longer relevant as a relative measure of our success since, frankly, everyone was showing huge drops in revenue and net income. Instead, we started giving greater attention to our employee satisfaction surveys and competitive market share as a means of guiding our business strategy. Lo and behold, we came to find that the intangibles of having supremely-engaged employees or evangelical customers created the kind of deep loyalty that allowed us to transcend the bad times. It wasn’t that profits and net income weren’t important, but they were actually the lagging indicators of our success. Changing our approach from measuring these byproducts to, instead, measuring the inputs (happy employees and customers) helped my company triple in size during a very difficult time. So, I’ve seen from personal experience that what you measure matters. And, sometimes, you have to adapt your measuring tools to the intangibles in life that truly define success.
So, tonight I travel to Bhutan and tomorrow I have dinner with some of the royal family (including, hopefully, the new King, who at 29, has an incredible likeness to Elvis) and a collection of the members of their relatively new democratic government. I will be meeting with members of the Gross National Happiness Commission to understand the nine key areas that they measure and to question whether a subjective means of measurement has risks of devolving into a sort of “Brave New World” paternalism (don’t worry, we know what will make you happy).
Abraham Maslow once said, “If the only tool you have is a hammer, everything starts to look like a nail.” This has been the case for world leaders who’ve myopically been focused on GDP as the only tool in their toolbox. There’s a growing misalignment between the kind of human needs Maslow and others have espoused and the professed world economic goals as defined by production and consumption. Robert Kennedy probably summed it up best four years before the Bhutanese King uttered the concept of the Gross Happiness Index, “Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product…counts…cigarette advertising, and ambulances to clear our highways of carnage….Yet the Gross National Product does not allow for the quality of our marriages, the intelligence of our public debate, or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile.”
Our American forefathers wrote about our unalienable right toward the “pursuit of happiness” long ago. I am now pursuing the ephemeral concept of happiness in Bhutan and I’ll report back to you in a few days as my next posting will overview what I’ve learned from this trip.
Your Net Worth is Better Than You Think
Friday, January 16th, 2009[originally posted Jan. 14, 2009 on The Huffington Post]
What does it take to help you realize what you’re worth? And, who determines what you’re worth? Two simple questions, but they’re so complex to answer.
Tragically, I’m not sure a Stanford MBA classmate of mine from 25 years ago, Erik, sat down and asked these questions. Erik ran a successful hedge fund and was caught in the downdraft of this treacherous economy. Around Thanksgiving, suffering from deep depression, he tried to commit suicide. After a brief hospital stay, he was allowed to rejoin his family only to take his own life a day later. This is my third friend to choose this path in the last year, including my close friend and insurance agent, Chip, who served as a mirror for me in many ways. Going to Chip’s funeral, knowing our similarities, and hearing his name repeated over and over again was haunting.
As the New York Times recently reported, three prominent European businessmen took their lives in the past few weeks. A London financier threw himself in front of a train. A French aristocrat stabbed himself to death. And, the body of a German industrialist was found near the railroad tracks near his home. All three were distraught with how their net worth had been shattered. During the Great Depression, the suicide rate in the U.S. grew by 21%. There’s no evidence that we’re on the verge of this kind of mass existential crisis again, but there’s no doubt this downturn has wreaked economic and psychological havoc with wild abandon. Hopefully, the two questions above can help add some sanity to the feverish financial nightmares that are racing through our minds too much of the time.
The world of busy-ness can delude us into thinking that our net worth is represented by our balance sheet and that our life is summed up by the narrow path of our career. If there’s one essential lesson that comes from tragedy, it’s that we have a capacity for survival and adaptation that might shock us. Most successful businesspeople are exceptionally adept at putting blinders on as a coping mechanism, but tragedy is the great equalizer. Austrian psychiatrist Viktor Frankl wrote of his experience about life in a prison in his book “Man’s Search for Meaning.” Frankl found that those who didn’t have hope or couldn’t see some kind of future meaning coming from their current dreaded existence were more likely to die quickly in the wretched conditions of the prison. What I took from Frankl’s landmark book was the idea that DESPAIR = SUFFERING – MEANING. There was a constant for all those in the prison and that was suffering, but those who were able to see the meaning or lesson in their experience were able to decrease their sense of despair. Sometimes, our true worth – not financially necessarily – but in how we impact others and the world becomes most apparent in the most troublesome of times. So, rather than ask the silent question of ourselves, “what am I getting from this job or work?” consider shifting that to “what am I becoming as a result of this experience?”
As for who determines what you’re worth, it isn’t necessarily your banker or CPA. It’s you. There may be many contributing influences including your family and friends as well as your enemies and business competitors. But, at the end of the day, you’re the one to determine how to define success in your world. It’s easy to get caught up in someone else’s metrics as I often do with my investors, but the reality is that you have the freedom to define how you want to calculate your net worth. Ironically, I started my company 22 years ago at a time when I had quickly got disillusioned with my first taste of the business world after getting my MBA. I decided to call my company Joie de Vivre (meaning joy of life in French) because it was the mission statement for not just what I wanted to provide our employees and customers, but it was also what I was looking for myself. My definition of success was how much joy I was bringing into my life. This intangible metric is unconventional, but it’s been a powerful reminder of what’s important to me as my company has grown to a quarter billion dollar annual revenue enterprise.
So, on my worst days recently (and I’ve had my share of them), I just remind myself that I can determine my net worth. It’s greater than the number of zeroes on my balance sheet. And, this concentration camp of a recession is meant to teach me some healthy lessons and meaning that I can use the rest of my life. I used to hate that cliché “what doesn’t kill you makes you stronger,” but I have a profound new sense of the wisdom behind that commonly used expression.