OUR ECONOMY WITH PERFORMANCE ANXIETY

August 8th, 2011

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.

Posted by Chip Conley      Comments (0)

THE TOP 10 EMOTIONALLY-INTELLIGENT FORTUNE 500 CEO’S

July 27th, 2011

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.

 

Posted by Chip Conley      Comments (0)

What Drives an Entrepreneur?

July 1st, 2011

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).

Posted by Chip Conley      Comments (0)

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