Chip Conley’s 2010 TED Talk Transcript: WHAT COUNTS

Our esteemed speakers just before me helped us understand some of the simple truths that are behind science and the law. I’m going to talk about one of the simple truths that drives 21st century leadership. My goal during the next 18 minutes is to encourage leaders to rethink one of the simplest things we ever learned in school: how to count, and, most importantly, what to count for what we count truly counts. Let me start by telling you a little story.

Van Quach came to this country in 1986 from Vietnam. She changed her name to Vivian as she wanted to fit in here in America. Her first job was working in an inner city motel in San Francisco as a maid. I bought that motel about three months after she started, so Vivian and I have been working together for 23 years. In 1987, with the youthful idealism of a 26 year old, I named my boutique hotel company Joie de Vivre and this bankrupt, pay-by-the-hour motel was my first acquisition.

As I spent time with Vivian, I noticed that she had sort of a joie de vivre in how she did her work, which got me curious – how could someone find joy in cleaning a toilet?! Vivian helped me understand that her calling wasn’t to become the world’s best toilet scrubber. What counts to Vivian is the emotional connection she creates with her fellow employees as well as with our guests. She gets inspiration and meaning by knowing that she’s taking care of people when they’re vulnerable and traveling on the road far away from home — as Vivian herself knows what it’s like being far away from home. I love Vivian!

That very human lesson about what counts to Vivian served me well during the last economic downturn. In the wake of the dot-com bust and 9/11, San Francisco Bay Area hotels experienced the biggest percentage revenue drop since World War 2. As the largest operator of hotels in the Bay Area, my company was particularly vulnerable. The last downturn was also when Americans stopped eating French fries…well not exactly. We just started calling them freedom fries and boycotting the French. I started getting nasty letters from places like Alabama and Orange County telling me they were boycotting my company, Joie de Vivre. I would write them back telling them we weren’t French, we were based in San Francisco. I’d get a terse response, “Oh, that’s worse.”

So one depressing day when I wasn’t feeling much joie de vivre, I dropped into the business section of the bookstore around the corner to try and solve my company’s woes. But given my befuddled state of mind, I quickly ended up in the self-help section of the store. I stumbled upon a couple of Abraham Maslow’s books and sat the rest of the afternoon on the floor at Border’s reacquainting myself with his Hierarchy of Needs theory that most of us are familiar with.

As I was reading Maslow’s books, it dawned on me that most leaders neglect one simple fact in business. That fact? We’re all human….and, no matter what our role, we have various needs that we seek to be met. As I learned more about Maslow over the next few months, I found that he spent his later years considering how the Hierarchy of Needs could move beyond the individual and be applied to the collective or groups like business, but he died prematurely in 1970 before this dream was really realized.

So, I decided to “channel Abe” to see what could be applied to my company’s challenges during that dot-com crash. I developed what I call the Transformation Pyramid which breaks Maslow’s 5 levels into 3 themes. Survival, Success, Transformation: they’re fundamental in life as well as business. We started asking ourselves how we were addressing the higher, transformation needs of our employees and customers. But, I realized we had no metrics to measure the top of this pyramid.

So, we began measuring less obvious, but important metrics such as our employees’ sense of meaning. We asked whether our employees felt inspired by our company’s mission and do they feel their work supports that mission. We also began asking our customers about how they felt emotionally connected with us focusing on 7 different emotions. Miraculously, as we paid attention to these higher needs, we saw our customer loyalty skyrocket and our employee turnover dropped to less than one-third the industry average. We nearly tripled in revenues during that difficult five-year downturn.

Yet as I compared notes with other CEO’s, I found most of them – in their quest for survival – paid all their attention to just managing what they could measure….and what they could easily measure was usually the tangible stuff at the bottom of the pyramid. I was curious to learn more about how leaders can value the intangible.

I read a worldwide survey that showed 94% of business leaders believe managing intangible assets is one of the most important ways of creating a company’s value…things like a company’s unique culture, brand, intellectual property, customer loyalty, or reputation. Yet only 5% of the execs in this survey said they have a means of measuring the key intangibles in their own company. So, leaders know intangibles are important, but we haven’t a clue about how to count the intangibles.

Einstein once suggested that “not everything that can be counted counts and not everything that counts can be counted.” It’s hard for me to argue with Einstein, but if as leaders we can’t count that which is most valuable in our businesses and our lives, will we just be mired in measuring the mundane?

In an attempt to answer this heady question about what counts, I decided to depart from my CEO role for a week last spring. I ventured to the Himalayan peaks to a small country that some call Shangri-La that has leapfrogged from being at the survival level of the pyramid to becoming a transformational role model for the world. I went to Bhutan.

The teenage King of Bhutan was also a curious man, who ascended to the throne two days after his father passed away in 1972. At 17, the King of this tiny country started asking the kind of questions you’d imagine of someone with a “beginner’s mind.” On a trip through India early in his reign, he was asked by a journalist about the size of Bhutan’s GDP. The young King answered in a way that has continued to transform us 40 years later…he said, “Why are we so concerned about Gross Domestic Product? Why don’t we care about Gross National Happiness?” In essence, he asked us to consider an alternative definition of success – what has come to be known as GNH, Gross National Happiness.

Most world leaders didn’t pay much notice to this provocative question. Those who did notice chuckled and called this “Buddhist economics”. Yet, this was a very notable moment as the King was the first world leader in two centuries – since Thomas Jefferson chose to emphasize the “pursuit of happiness” in the Declaration of Independence – to explicitly define the intangible of happiness as a governmental goal. Over the course of his three dozen years as the King of Bhutan – based upon the principles of GNH – he started remaking how his country operated including voluntarily turning his country from an absolute monarchy into a constitutional monarchy. No bloodshed, no coups, just a peaceful transition to become the world’s newest democracy less than 2 years ago.

On my search for happiness in Bhutan, I was able to meet with all kinds of people in the GNH movement, including the Prime Minister. Over dinner, I asked him an impertinent question, “how can you really create and measure something that evaporates…in other words, happiness?”

The Prime Minister is a wise man. He told me that Bhutan’s goal wasn’t to create happiness, but instead to create the conditions for happiness to occur…in other words, a sort of “habitat of happiness.” I learned there was a science behind the art of GNH. Bhutanese leaders have created 4 essential pillars, 9 key indicators, and 72 different metrics to measure this intangible of happiness. For example, one of the 9 indicators they measure is how happy are the Bhutanese with how they spend their time each day. A good question for any of us. How happy are YOU about how you spend your time daily? Time is one of the scarcest resources in the modern world, but obviously this intangible piece of data doesn’t show up in how we calculate GDP.

Amidst these Himalayan peaks, I started to see what I call an Emotional Equation for happiness during my week in Bhutan. My experience reminded me of something Rabbi Hyman Schachtel wrote in a little-known book, “The Real Enjoyment of Living,” in 1954 when he suggested happiness is not about having what you want, but instead it’s about wanting what you have. In other words,

The Bhutanese aren’t on some “aspiration treadmill” obsessed with what they don’t have. Their religion, their isolation, their deep respect for their culture, and now their government programs foster a sense of gratitude for appreciating what they do have. There’s a lot to be learned from this equation. How many of us here today find ourselves more focused on the denominator than the numerator? In western countries, we often get caught up in the “pursuit of happiness” as if happiness were an object…or, better yet, many objects. But, beware of how some dictionaries define pursuit: “to chase with hostility.” Do we pursue happiness with hostility?

Bhutan is touched on its borders to the north and south by 38% of the world’s population….could this little country – like a start-up in a mature industry – be the sparkplug to help influence the definition of happiness for a new generation of 21st century middle class in China and India? Bhutan has popularized the ultimate export – a new global currency of well-being – as more than 40 countries in the world are now studying their own GNH.

You probably all heard Nicolas Sarkozy in France talk this past fall about the results of an 18 month study by 2 Nobel economists regarding happiness and well-being in France. Sarkozy has suggested that the larger countries of the world – that have myopically focused on GDP – should consider creating what some are calling a “joie de vivre” index. I love the co-branding opportunities. And, just 3 days ago at the start of TED, David Cameron – potentially the next Prime Minister of England – briefly highlighted Robert Kennedy’s poetic 1968 speech about the misplaced metrics of GDP. It shows the momentum of this movement among world leaders.

Excerpt of Robert F Kennedy’s speech:“Too much and for too long, we seem to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product…counts air pollution and cigarette advertising and ambulances to clear our highways of carnage…Yet, the Gross National Product does not allow for the health of our children, the quality of their education or the joy of their play…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…except that which makes life worthwhile.”

I love that RFK speech and I’ve used it to create sort of a new balance sheet that outlines all that GDP counts and what it doesn’t count. As you read this list of the variety of things Kennedy outlined in his speech, you can’t help but wonder whether it’s time for us to start rethinking how we count. As Kennedy suggests, our primary definition of global success, GDP “measures everything…except that which makes life worthwhile.”

So how could we create a new math that accounts for those items on the right of my slide a minute ago? Well, consider the US census. This country is spending $10 billion right now to ask 10 basic questions that only address demographics, whom we live with, and whether we own or rent our home. Don’t you think we could come up with some more meaningful metrics to ask our citizens?

Abe Maslow popularized a phrase long ago that you probably didn’t know he created, yet it’s very appropriately used here. “If the only tool you have is a hammer, everything starts to look like a nail.” We’ve been fooled by our tool. GDP has been our hammer and our nail has been a 19th and 20th century industrial era model of success. Yet, 64% of the world’s GDP today comes from the service industry, which is all about intangibles as opposed to the tangible industries of manufacturing or agriculture. It’s time we create a bigger toolbox that focuses not just on the tangible things that can be easily counted, but also on the intangibles that are most valued by us.

I guess I’m a curious CEO. I was also curious as an Economics undergrad major when I learned that economists measure production and consumption in tangible units as if all the units are exactly the same. But, not all units ARE the same. As leaders, we can truly influence the quality of that unit of production by creating the conditions for our employees to live their calling. In Vivian’s case, her unit of production isn’t the tangible hour of her time, but it’s the intangible difference she makes during that hour.

We have a guest, Dave Aringdale, who’s stayed at Vivian’s hotel more than 100 nights in the past 20 years. He says one of the primary reasons for his loyalty is because of the relationship she’s created with him as Vivian has created a “habitat of happiness” for Dave. He tells me he can always “count on” Vivian and the rest of the staff to make him feel at home. Dave loves Vivian.

It amazes me that most business leaders and investors don’t value the connection between creating the intangible of employee happiness with the tangible of creating profits for their business. We don’t have to choose between inspired employees and sizable profits. We can have both. In fact, inspired employees usually lead to sizable profits.

What the World Needs Now is business and political leaders who know what to count. We count numbers. We count on people. What really counts is when our numbers truly take into account our people. I learned this from a maid in a motel and the king of a country. What one thing in your personal or work life can you start counting today that is truly meaningful to you? Thank you.