Issue 4.1 | March 2013

In this Article: knowledge comes from the future, but wisdom from the past.

by Jonathan Wilson 

Earlier this year I transitioned, for just a few weeks, between universes.  I passed from the business world into the tribal world, from steely skyscrapers to rainforests, from crawling commutes and city noise to nothing but the wind caressing a lonely mountain trail, from falling snow to sweltering heat, and from a mechanistic worldview to an organic worldview.  Most intensely of all, I crossed from the looming future into ancient, but dimming, history.

In the Northern part of the globe, we love the future.  In the business sector especially, we breathe the pure oxygen of a relentless preoccupation with innovation, fed in turn by the twin priorities of progress and economic growth.  We love the new (a condition with a name: “neophilia“).  In particular, we possess a near-religious faith in the power of technology to solve all human problems.  As a result, we do indeed discover and design some remarkable, potentially life-improving, things.  Here’s a handful of current examples: 3D printing technology signals the potential to radically cheapen the large-scale distribution of complex and even customized products; Google Glass brings us closer to a seamless integration of the real and the virtual; and mind-controlled robotic legs for the paralyzed are currently in trial stages of development.

The Dimming Past

In the Yali village that was my childhood home – where thatched huts still nestle among trees beneath high mountain walls, and into which no road comes and where there is no electrical power – there sits a garage-sized metal-roofed shed beside which a large, white, concave dish points skywards.  Inside are six laptop consoles powered by solar panels and linked to the Internet by satellite.  When the afternoon rain and mist cloaks the village and the Heluk river thunders in the gorge below, the shed fills with young and a few older Yali seeking to get onto Facebook or, less often, to access the educational sites made available to them by the NGO who built the installation.

The Yali represent the ancient past.  Only decades ago, they emerged, in technological terms, from the Stone Age.  Then, they lived in utter isolation as hunters, gatherers and gardeners, in a life marked by myth, spirits, community, natural splendour, inter-village savagery, fear and even cannibalism.   They have benefited immensely from the changes they have subsequently experienced: vastly improved health care, unbroken peace (for fifty years!), literacy and new kinds of learning, a loss of fear of the ancestral spirits that resulted in taboos lifted on, for example, important dietary sources.  Still, they remained largely cut off from the rest of the world’s head-long hurtle towards the future, and in many ways remained quite thoroughly, and in the best ways, Yali.

The Trade-Off

The new Internet station is just one mark of the process by which the Yali are being on-streamed to modernity, and illustrates powerfully the trade-off that is occurring as new overwhelms ancient.

Our technologies and the structures we have built around them facilitate an individualistic mindset and the behaviours that support it.  We are quickly becoming isolated selves, able to customize our world to our precise, self-defined interests.  Via the Web, we create “communities” that are typically (but not always) networks of isolated selves.  I watch the Yali being drawn towards this and away from their ability to function at a very high level of interpersonal skill and interdependence: an ability that can only be learned in an in-your-face environment where the village is an organism with a purpose (to make life work well).  It is more instantly gratifying to surf the Web or watch a DVD than to gather around the fire in the hut.  They have not yet lost their ability to sit and ponder the meaning-filled story of the elder or to craft and tell their own stories around the hut fire, but I see them losing their grip on it.

The Yali live in a world with zero mechanical noise.  They possess an extraordinary knowledge of their natural surroundings.  This knowledge is not necessarily scientific (sometimes it is scientifically erroneous), but it is a relational knowledge akin to your intimate knowledge of your family, and thus it is irreplaceable.  Yet they increasingly interact with the systems of our future and all the corollary assumptions about what makes life work and what constitutes fulfillment: travel by car, branded clothing, instant food, cool friends, cool gadgets.  An elder showed me his cell phone with some diffidence (he can only use it when he goes to the town) and complained to me, “the younger generation is drawn only to things that are new.”  Slowly but steadily, the Yali are trading the instant for the old, the fleeting for the lasting, the gadget for the grandeur of their wilderness.

The Wise and Progressive Leader

The Yali journey is a warning to us to evaluate the things we pursue.  Just as we cannot easily diagnose ourselves without an external perspective, we cannot objectively assess our rush to the future.  We need an external perspective, and time being what it is, the only one available to us is from the past.  Gaining such perspective is harder than we might think: one reason we don’t take “the good old days” too seriously is that we can’t be sure our memories serve us correctly.  But there are voices from the past to which we can listen, and not just through questionable sentimental recollections or books, because these voices, the voices of the Yali, are still with us.  The Yali allow us the opportunity to check our rush to the future by pondering the wisdom the past has to offer.

We need the future.  New knowledge and new solutions lie in the future.  Progress (which should be synonymous with an increasingly flourishing world) lies forward.  But only the past can offer wisdom.  We need to be leaders who gaze, and ponder in thought, in both these directions.

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.

Issue 3.12 | November 2012

In this Article: if it doesn’t take you decades, the difference you make may not be one history will remember.

by Jonathan Wilson 

Many of us want to make a difference in our lifetime.  Those of us who do imagine making that difference on planet earth.  Not so Elon Musk, the technology entrepreneur.  One of his passions is to enable humanity to live on Mars.

In a recent interview with The Economist, Musk declared his intention to “… achieve full and rapid re-usability of a rocket…” for it represents “… a fundamental breakthrough that’s needed for humanity to ultimately become a multi-planet species.”  Few people could say this with a straight face, and fewer yet could receive it with a straight face.  But Musk has a knack for declaring the extraordinary as if it were ordinary, and the interviewer simply nodded in approval.  The reason for this is that this 41-year-old man raised in a middle-class family in Pretoria, South Africa, has proven his ability in space travel.  And not to Mars.  Not even close.  No, Musk has simply shown that he can get a rocket to an orbiting space station with greater efficiency and cost-effectiveness than those giants of space exploration, NASA.  Even as they closed down their Shuttle program this year, NASA contracted SpaceX, Musk’s rocket company, to provide them transport services to space.

While Musk’s vision of the future is breathtakingly ambitious, this is not what marks him out as a difference-maker.  Many dream grand dreams.  A few pursue them.  A smaller fraction achieves them.  Three things distinguish those who make a difference from those who simply dream about it.

Incrementalism

History is shaped by those who break their grand vision down into incremental building blocks.  When my parents entered the Yali tribe of New Guinea in 1971 they had a vision for the transformation of that people.  A wise colleague counselled my father, “If you want to transform the Yali, don’t.  Start with a few individuals, and they will transform the Yali.”  Twenty years later the Yali saw themselves as entering a Golden Age for their tribe: a time of greater social stability, physical health, knowledge and agricultural productivity than they had ever known before.

As a young college student, Musk identified three crucial areas “that I thought would most affect the world”: the Internet, renewable energy and space exploration.  He went on to build successful companies in each of these areas: PayPal, Tesla Motors and SpaceX.  In the latter two companies in particular, Musk is engaged in narrowly-scoped projects that to many seem worthy enough on their own – a high-performance electric car, re-usable space rockets.  For him, however, they are only stepping-stones to something much bigger, namely the ubiquitous use of zero-emission cars and the preservation and advancement of the human race by putting people on other planets.

Failure

Failure is crucial to making a difference.  It helps you to identify and correct your bad assumptions about your good ideas.  It is a gift to be welcomed even though it is often harsh to experience.

Today Musk is the darling of the tech and business media.  In 2008-2009 he was regularly pilloried by the same, and derided for pursuing unrealizable ambitions.  Despite having made hundreds of millions from the sales of previous start-ups such as PayPal, he was selling personal possessions and borrowing money to keep alive his dreams.  Tesla was losing money and SpaceX was not yet turning a profit.  Presidential candidate Mitt Romney commented during the American 2012 election campaign that Tesla should be lumped among “loser” companies that were bad investments.

Yet SpaceX is today a profitable enterprise.  This is remarkable for an industry as wasteful as the space transport industry.  Tesla’s electric-only Model S sedan is praised for its superior engineering and its astonishing performance, and has just been awarded the prestigious Car of the Year award by Motor Trend magazine, who described it as a “damned good car you happen to plug in to refuel”.

Patience

Difference-makers understand that shaping history takes time.  The rapid successes of the likes of Mark Zuckerman are, thus far, historical anomalies that have misled many an aspiring difference-maker.  Forty-two years passed between Nelson Mandela’s introduction to political activism and the realization of his dream, in 1994, of a democratic South Africa in which the black majority could fully participate in choosing their government.  It took 46 years for British activists to abolish slavery.  Apple Inc. was established in 1976 but it wasn’t until the late 2000s that it truly began to reshape both its industry and consumer behaviours.

History shows that whatever the sphere of your dream, be it technological, social or political, it needs decades, not years, to come to fruition.  It is clear that Musk takes the long view: “The companies he’s started are executing against a vision measured not in years but in decades”, says Peter Thiel, Musk’s cofounder of PayPal.

Ordinary People, Extraordinary Outcomes

You and I may or may not be the difference-makers that are remembered in the next century’s history books.  But we can still be a part of the difference that history remembers as mattering.  To do so, we need to:

“… work quietly away at limited objectives [that address major human problems] … the art of life consists in tackling each immediate evil as well as we can. To avert or postpone one particular war by wise policy, or to render one particular campaign shorter … is more useful than all the proposals for universal peace that have ever been made.” C.S. Lewis

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.

Issue 3.11 | October 2012

In this Article: three acts of reflection carry us from dissatisfaction to vision.

by Jonathan Wilson

Jason Kilar didn’t begin the revolutionary online video service, Hulu, because he had a vision, but because he had a reaction.  The world was changing rapidly when Kilar left Amazon in 2006, and access to blockbuster movies and popular TV shows wasn’t where it should be – on the internet.  Kilar represented a generation that understood and wanted this.  But the minds of the potential suppliers of movie and video content occupied a different space.  They feared the internet, because they feared the loss of their domination through the piracy which the internet made so easy.  Perhaps secondarily, they also feared the loss of quality that they believed the web would force on them.

But Kilar was not about to settle for this.  He would not settle with constraint and poor access, nor would he settle for poor quality and piracy.  And at that point, he began to envision.  He dreamed of “an elegant, clutter-free, easy-to-use video hub for all the TV and movies anyone could ever want, available whenever and wherever they wished”.  And when he eventually started the vehicle for that vision, Hulu’s explicit mandate became, “to create a service that users, advertisers and content owners unabashedly love”.

Every vision finds its beginning in frustration.  We dream because we are dissatisfied.  We think of vision as a creative thing, which it eventually is: but it begins with a reaction – against what should not be, but is.

Roots, Reaction, and Re-imagination

There are three phases to the development of vision.  Each phase is an act of reflection, and only one emphasizes imagination. Too often, leaders bypass reflection to get to imagination.  The result, as with other aspects of strategic planning, is the oft-practised art of the “thumb-suck”.  Vision does not equal fantasy or froth.  If it is not substantial, if it is not rooted in truth, it will fade and it will disappoint, or it will fracture under the duress of facts, and in the end it will leave a legacy of disbelief and even cynicism.  Getting to that truth takes some work, some thinking work.

The first act of reflection is on one’s own company – on what I call its soul, its root identity, its Strategic Centre™.  As a single organism made up of many people, what does your company do best, what are its areas of greatest insight, and what, together, do you and your colleagues believe matters most?  You have to have clearly determined the truth about who you are – and who you are not – before you can even think about bringing it to the marketplace where everyone is trading value.

The second act of reflection is on the world around you, and what’s wrong with it (which is where, by the way, your resident grumpy pessimist can be such an asset to your visioning process).  It is natural that you will react most to what’s wrong based primarily on your organizational soul: your areas of greatest capability and insight and moral concern.   But sometimes it takes a little lateral thinking to discover that in fact you may have something to offer in the most unexpected of places, for problems you thought had nothing to do with you.  This is what enabled Nucor to switch from the paper to the steel industry, and why Cirque du Soleil could create a circus the likes of which nobody had ever thought of, bringing theatre and circus together with tremendous flair – with, it must be said, a very French flair.  Cirque du Soleil puts on productions that are a song from its soul.

The third act of reflection is the dream, the introduction to the equation of tremendous imagination and creativity.  You have moved from thinking about who and what you are as a company, to thinking about what should not be, to thinking about what could be.  Vision may begin with frustration or even anger, but negative emotion cannot be its primary driver.  If it is, the vision will merely become vindictive, an act of revenge or vindication.  It cannot move beyond its narrow concerns to create value that is more substantial and enduring.

We have to introduce love to what frustrates or angers us.  We have to guide our reaction to what’s wrong with our values, with what we believe matters most (which are richest when stated in positive terms: for example, beautiful craftsmanship, excellence in engineering, just relationships, and healthy people are all positive values).  At this point, reaction becomes vision.

I suspect Apple somewhat lost its way when Steve Jobs decided his frustration and sense of betrayal towards Google should result in “thermonuclear war” with them.  He did better when he guided Apple by his frustration with the impractical and the ugly coupled with his passion for, and ability to create, the beautiful and the excellent.

Into the Future

When crafting your vision, be aware of some basic pitfalls.  When you describe what you do and how you do it, you are in the space of identity and values, but not vision.  When you describe what you hope to achieve, you are describing your purpose or mission, but not a vision.

Your vision is the articulation of a future condition that does not presently exist.  But if your vision has to do with self-aggrandizement, you’ve missed the point entirely.  You will never be the biggest this, or the leading that, or the greatest whatever, unless you serve your customer well and change their life for the better.  But when you describe how things will have changed in the future for your customer because of your contribution, then you have captured your vision, and the adventurous journey towards it can begin.

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.

Article Photo © Karel Prinsloo/Beeld/Gallo Images. Used by permission.

Issue 3.10 | August 2012

In this Article: how we define success will define how we get success.

by Jonathan Wilson

Through the lush hills of KwaZulu-Natal, South Africa, a road winds past quiet fields and woods and descends gently into the pretty town of Richmond.  Replete with an Anglican church at its heart, Richmond is an African echo of the quintessential English country village.  There was a time, however, when, beneath its pastoral exterior, Richmond was something altogether darker.  In the months that followed my first lazy-summer’s-day visit to Richmond in early 1998, my life and that of my colleagues’ was marked by a constant and taxing navigation of political intrigue, secret meetings with skittish warlords and their heavily armed henchmen, and the intense pressure of peace negotiations in which the trigger is a finger away.  Soon after we began our initiative, one of the politicians with whom we worked, Percy Thompson, was dragged out from under a pool table in a pub and executed.  His killers randomly selected eight other patrons and, using high-powered assault rifles, shot each one in the head.  A few of the onlookers were children of the victims.

Many had a stake in the maelstrom of tribal-infused political violence that wracked Richmond and the surrounding townships in those years.  For, to all concerned, Richmond was a prize to be won.

What kind of prize, exactly, was Richmond?  To the various political parties and other stakeholders in the mix, Richmond represented just one thing: power.  If they won the conflict, they had power.  But power over what, exactly?

As we struggled through the process of facilitating dialogue between men bent on one another’s elimination, we sought to bring that question to the fore: once a particular party gained hegemony in the region, what lay beyond?  The splendid victor would stand astride, not a mountain of spoils, but a pile of ash: a community paralyzed by fear, ravaged and traumatized by violence, divided along politically manipulated tribal lines and stricken by unemployment (for, of course, commerce was at a standstill).

Missing the Point About Victory

Although the tide is changing, we in business still tend to set for ourselves a vision of success that similarly misses the point.  In a landmark New York Times article published in 1970, Milton Friedman said that the social responsibility of the corporation is to make profits.  Having taken that as a fundamental law of reality – on a par with the rules that govern physics – we have made winning the money game our one and only moral obligation.  As a result, corporations breathe the supposedly pure air of pragmatism from which moral consideration has been filtered as if it were a pollutant.

As I have written elsewhere (here and here), such self-serving thinking leads to pursuits, products and services that are, at best, superficial in value and, at worst, destroy value.  Some of the most financially successful companies, however, such as Apple, have long shown a disdain for profits-first thinking, recognizing instead that profits are merely a measure of value created and the efficiency with which it was created.

This evidently increasing shift in defining corporate success may not be sufficient.  For, in time, you and I will not be remembered only for whatever value we created for our customers.  We will be remembered for our whole legacy.

En-Route to Victory: Collateral Damage

On the island of Bangka, Indonesia, ramshackle, badly managed and often dangerous mines provide about 30% of the world’s tin, and supply close to 100% of the tin used by the Chinese manufacturers who make components for LG, Sony, Samsung, Panasonic, and Apple.  The tin is often used for solder-points, of which there are about 7000 in the iPad.  According to the BusinessWeek exposé from which I am drawing this information, “mining has wrecked the landscape” of Bangka and the dredging for tin off its shores is doing the same to its reefs.  On average, a miner dies every week because of shoddy mining practises, while local fishermen are steadily losing their livelihoods.

Your and my iPad, therefore, is a lot more expensive than we may at first have thought.  Apple is not directly responsible for the conditions in Bangka, but they do enable those conditions to persist (and so do Apple customers, of whom I am one).  In a world that has always been interconnected – only now, because of the web and social media, much more obviously so – they, and we, are obliged to think of business success in systemic terms.  The ingenuity that marks business at its best has to be brought to bear on all parts of the system in which we participate, and which we enable.

Supply chains are not the only places we exploit in order to be efficient.  Too many corporate employees are simply well-paid and well-dressed slaves living a numbing, cubicle-shaped existence that feeds into a grinding engine of wealth generation.

A Bigger Vision of Victory

Is the iPad a success?  Yes, but it is a median success.  A true measure of Apple’s legacy will not simply be the devices it creates and how clever or beautiful they are, nor will it be the genuine improvement and opportunity they bring to the end user.  As long as this remains their only consideration, they risk standing in victory over a pile of ash.

Rather than regulate ourselves out of these dilemmas, as business leaders we need to enlarge our vision of success.  For how we define success will define how we get there.  We need to see the victory of value creation in comprehensive terms: in terms of the value we have created within the design and delivery system, for the end user, for the end user’s community, and for the investor.

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.

Issue 3.9 | July 2012

In this Article: how to avoid the trap of building a sophisticated strategy on a shaky foundation.

by Jonathan Wilson

Everyone loves a rags-to-riches story.  The North American reader may not have heard of Tesco, but it is the third largest retailer in the world.  It’s also unlikely you’ve heard of Tesco’s recently retired CEO.  Sir Terry Leahy, who spent his childhood in government housing, earned his knighthood for leading Tesco out of its 1990s mediocrity.  It quickly unseated British behemoths Sainsbury and Marks & Spencer and, in less than two decades, achieved its current top-three global standing.

For readers in the UK, you’ll likely know exactly how Tesco became number three: its Clubcard, a loyalty card.  This seemingly tiny innovation not only won over loyal customers, it came at a time when computer processing power could turn the card into a tool for listening to customers – without necessarily talking to them.

This is not a story about the glories of clever innovation, however, or the powers of data mining, important as these both are.  Rather, it is a story about strategy.

Every company does strategic planning.  Some do it unconsciously, on the run.  Others take strategy very seriously, and apply considerable scientific rigour to it: working through research and data by way of focus groups, executive off-sites, and meetings.

Broadly speaking, strategy development is comprised of two pieces: internal and external.  The first is built on company analysis, the second on customer (and also industry) analysis.  Tesco’s use of its famous Clubcard to mine for customer information reflects the second, more familiar, piece of strategy development.

The capabilities of data mining to accurately profile the interests and behaviours of customers are astonishing.  Tesco quickly found that the Clubcard delivered a far more accurate picture of the customer than traditional research (customer surveys): for although their interpretation is required, the customer behaviours tracked by the Clubcard are invariably a solid indicator of preferences, assumptions and values.

Tesco utilized its treasure trove of data to develop a fresh retail strategy.  The result: a massive increase in both growth and retention, far beyond the loyalty they would have gained solely by the benefits to the customer of the Clubcard.

Strategy Breakdown: The Dirty Habits Begin

If the second piece of strategy development is rooted in the close study of the customer and their world, the first, piece, which is equally significant, is the close study of your company, and its inner world.  For many companies, core identity is articulated via mission, vision and values statements, or some equivalent.  This is precisely the point that the breakdown in strategy occurs.  The rigour with which companies gather and analyze external data regarding their market and industry is rarely applied to the equally significant internal analysis of the business: the corporation and its DNA.

Many see organizational identity as something “soft”, to be determined by “soft” methods.  Vision, Mission and Values are often developed via what one might call a “thumb suck” approach.  Corporate executives gather around flip charts and list what they believe to be their corporate values or competencies, and turn it into a vision for the future.  It is too often an entirely subjective approach, with little dependence on hard data or the analysis of it, and without any mechanisms in the process for bypassing or rooting out personal or group bias.

Frequently, the result is a series of possibly inspiring but ultimately nebulous statements that will have only the most general bearing on what many regard as the “real” work of strategy, which is the external piece.  Their long-term legacy is ultimately to beautify a boardroom wall.

This is a very unhealthy position from which to develop a strategy.  You are not in a position to create optimal value for your customer until you have looked at the whole value equation: Customer Situation ÷ Your Corporate DNA x Innovation = Value Created.  A weak self-understanding will breed a weak strategy.  What hasn’t been identified clearly or accurately (core skills, traits, insights, etc) can’t be leveraged powerfully.  Thus, in turn, what value you create is not as good as it could be.

Getting to The Strategic Centre

Your corporate DNA consists of empirically verifiable facts regarding the key sources of value possessed by your company (in Soul Systems we talk about the “soul” of a company and in our analysis we define “The Strategic Centre™” of the business).  These facts can be found through a rigorous, third-party facilitated analysis of the history of a company.  Such an analysis typically surfaces “hard” and “soft” elements that are genuine strengths of the company and, furthermore, will uncover the key ways they work together to create optimal value for the customer.  These also prove to be the greatest sources of differentiation from competitors, and the most difficult to replicate.

Such a process may also reveal inaccurate self-perceptions, with the result that someone, somewhere, will have the happy task of quietly removing an irrelevant poster from a boardroom wall.

The general preoccupation with the external side of strategy is revealed in the journalistic coverage of Tesco.  What is often missed, or glossed over quickly, is the first part of Tesco’s strategy development process: as Leahy says, “ironically, when we stopped trying to copy Marks [& Spencer] and Sainsbury, and went back to our heritage … we finally overtook them.”

In the 1980s and ‘90s, Tesco learned to mimic its competitors’ service to a middle-to-upper-middle class market.  It saw modest growth for its efforts.  When, however, it returned to its “heritage” and recognized its own core identity for what it was (a value retailer), and leveraged it, it was able to deliver much more significant value to its customers.  The Clubcard was the first step in this direction.  Customer signals – via behavioural feedback from card data – reinforced the self-identity Tesco had just begun to recognize.

Companies who “thumb suck” about their identity tend to do so because they are unaware of a better way (a leading book on strategy dedicates just a few pages, out of several hundred, to the internal side of strategy).  But the better, more scientific way to corporate self-understanding is also the more profitable.

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.

Issue 3.8 | June 2012

In this Article: how you use power will determine your leadership legacy.

by Jonathan Wilson

It is one of the great mistakes of a leader to believe that he will be measured by what he has personally achieved.  You may have met the vice president in charge of a certain greenfield project, the one so obsessed with how she is seen by those who appointed her that she controls every detail of activity, holds her cards close to her chest, uses her staff as tools and, when she presents to her superiors, embeds her direct reports’ successes anonymously into her own.  But this leader was not appointed to make things or do things, although as well as leading she may have another role to play on her team, given her industry-specific expertise.  No, she was appointed to enable a team to achieve its purpose.  If a leader designs, or creates, or innovates, it is all well and good, but it is not leadership.

Where does such leadership lead us?  It leads us into the narrowest of solutions and the most minimal of gains.  For the solutions and gains alike are rooted in the imagination of one, the skills of one, and the capacity of one.  Very often, however, such leadership is responsible not only for low-grade achievement, but for loss, harm and hurt.  It should be no surprise to anyone that this executive is suffering high turnover, missed milestones, and poor financial results.  Within her team there are public, angry arguments, cold-shouldering, sudden departures from meetings, and all such behaviours that make a working day miserable.

Having bought into a flawed assumption about legacy, such a leader only knows one means by which to achieve a great end, and that is to wield power over others.  Coercive, forceful power yields the meanest of dividends.  Exploitative power is worse yet, for it only gouges and uses and reduces.

As I’ve written elsewhere, a leader’s responsibilities lie in two directions: the first is external, to the cause she represents, and the second is internal, to the team dedicated to achieve that cause.  Any power given to a leader is for the fulfillment of these two responsibilities.  In turn, these two domains of responsibility break down into four integrated fundamentals of leadership, and they are all to do with power: with tapping it, focusing it, releasing it and managing it.

Firstly, a leader is responsible to foster a collective and precise understanding of her organization’s unique identity – it’s soul.  For it is from its unique set of skills, insights, cultural traits and resources that the organization has anything of distinctive value to offer.  The source of your organization’s power is its corporate soul.

Any considerations about a company’s identity only take on meaning or significance when it creates value for a customer.  As a result, the second responsibility of a leader is to ensure the organization develops a clear purpose.  Purpose is, at root, the optimal way an organization can use its core identity to create value for others.  Purpose focuses power.

Thirdly, a leader is responsible to encourage the relational conditions that naturally release power: an environment of trust.  Creative power is unleashed in a climate of mutually perceived safety, freedom and transparency, in which people willingly communicate, willingly share information, and willingly collaborate.

Fourthly, a leader is responsible to create and maintain a culture of discipline: discipline harnesses and manages power.  Discipline is committed to rigour and enabled by accountability: with regards not just to performance but to maintaining an unshakable focus, an uncompromised method, to a unified community, and to a refusal to deny hard truths combined with a corresponding dedication to learn.

Together, the four dimensions of leadership work in concert to ensure the successful movement of leaders and their teams from conviction (about what matters most and what they have to offer to what matters most) to action to achievement.

The Servant Who Became King

The measure of a leader is not what she achieves, but who her people become and, in turn, what they are therefore able to achieve.  By the age of thirty-six, the fresh-faced Jason Storsley, originally a farm-boy from British Columbia, was made President of Royal Bank of Canada, Direct Investing.

Jason did not gain this role by wielding power, but by enabling it.  Although driven by a love for trading and a fierce passion for excellent performance, he did not take the false leap of logic that great performance requires a leader to personally deliver a great show.  Instead, he “helped out everywhere”, starting on the trading floor.  He made it his job to always find out what his peers and, especially, his superiors, needed from him if they were to succeed.  The result: Jason was “pushed into management.”  As he rose through the ranks, he realized in each new role that he didn’t need to adopt new, power-wielding behaviours in order to succeed: by enabling others to succeed he had already been exercising leadership.

On May 8, 1945, Winston Churchill appeared before rapturous crowds in London to announce the end of World War II.  In his brief speech, he said, “God bless you all. This is your victory!”  In response the crowd roared back, “No, it is yours!”  He persisted:

“In all our long history we have never seen a greater day than this. Everyone, man or woman, has done their best. Everyone has tried. Neither the long years, nor the dangers, nor the fierce attacks of the enemy, have in any way weakened the independent resolve of the British nation. God bless you all.”

Britain’s victory in WWII was not won by Winston Churchill, but by the British people.  Yet there is no doubt he led them to that victory.  As you consider your own legacy, remember this: in the end, it is the servant who becomes the king, for the servant is the enabler and those who are enabled, together, build kingdoms.

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.

Issue 3.7 | May 2012

In this Article: why a company should master culture before it attempts to manage complexity.

The Myth of Mastery: Leading Your Company Through Complexity

by Jonathan Wilson

The nasty surprise awaiting every growing organizational leader is the utter complexity of the world in which they are meant to make a success of their business.  The complexity is comprehensive to a degree that can paralyze the mind.  It is at once political, societal, financial, economic, technological, environmental and interpersonal.  So it is no surprise that a major preoccupation of the average C-Suite is about how to manage this complexity and, especially, the risk that goes with it.  It has certainly been a preoccupation for Jamie Dimon, CEO of JP Morgan, and his colleagues.

Last month’s trading debacle at JP Morgan’s Chief Investment Office – in which it lost two (but possibly going on five) billion dollars and, as a result of which, its share price dropped like a stone (9%) – has become a lightning rod for opinions about managing complexity and risk.

Finance pundits, business school professors and politicians are variously recommending: improved mechanisms for risk disclosure, increased regulation and oversight (in particular, increased capital requirements), and functional division (institutionally separating investment from commercial banking, as Sarbanes-Oxley divided consulting from auditing for the accounting industry).  A serious suggestion is that Mr. Dimon should become a micro-manager, and acquaint himself more closely with the reams of data that lie behind JP Morgan’s trades.  All these solutions assume the failure was rooted in flawed structures or processes or information intelligence (nobody has suggested competence, because JP Morgan simply wouldn’t hire anyone but the most brilliant).  In other words, the solution to managing complexity and the risk that goes with it is … to stay on top of it.

This is impossible.  It is the nature of complexity that it is infinite.  It is infinite in scope and it is infinite in duration.  No individual, nor any human system, is capable of staying on top of complexity, because people and their systems are finite.  Complexity cannot be mastered.

Thus it is that a second nasty surprise awaits the newly minted executive: the C-Suite is not a place of unrestricted power.  Not just complexity, but finitude, defines that heady world.  The challenge is made greater still by the fact that organizational constraints are not simply neutral, but often detrimental: insufficient capital, inherited bad debt, a troubled economy, a competitor’s market share, sub-performing employees or disgruntled stakeholders.

At some point in your organization’s journey through complexity, the brick wall of finitude will present itself.  To run foul of finitude as egregiously as JP Morgan did is a result of hubris, and hubris arises when we think we can master complexity (in the early days of this particular trading crisis, Dimon assessed it as nothing more than a “tempest in a teapot”).

No, we cannot master complexity.  Even to speak of “managing” it is misguided.  But we can engage complexity, and do so with great effectiveness.  It requires not mastery of complexity, but mastery of self, as a company.

Engaging Complexity with Culture

It is hard to understand why Mr. Dimon isn’t more red-faced than he is, because the humiliation of the losses, the fall in share price and the subsequent scrutiny by regulators are not really the fall-out of bad decisions caused by ineffective systems.  They are a set of fingers all pointing to a much larger problem: a dysfunctional organizational culture.

In an age in which we, like dogs to squirrels, are not only wowed, but unthinkingly transfixed, by every shiny new technology or clever technique, we have forgotten that, operationally, these are little more than means for scaling value and/or for speeding up its delivery.  They are less so a means for creating and consistently delivering value.  The most stable platform available from which to generate and repeatedly deliver value is culture.

The converse is also true.  Where value is compromised, it is the result of a dysfunctional culture, i.e., a place where the assumptions and behaviours of employees ultimately degrades or diminishes whatever value is created.  JP Morgan might have some of the most sophisticated complexity and risk-management tools available, but how they were used was entirely dependent on the nature and quality of the company’s people.

Hire a greedy person, and your reward will be decisions based on quick-gain considerations that minimize or harm value.  Hire an egotistical person, and you will ensure the failure to think systemically and to take responsibility for an institution that is “too big to fail”.  You will guarantee silo-ism and the failure to generate the cooperation and creativity that generates the most substantial value.  Hire a person for whom personal need takes precedence over the greater good, and when the storms come you will have an executive who lacks the self-discipline that brings sanity and order in the midst of chaos.

There is much more than this to organizational culture. It is the whole package of driving ideas, sentiments, values, insights, skills and instinctive behaviours that make up a company’s core identity: its soul.  Organizational culture is only fuzzy to those who haven’t bothered to clarify their own.  And that usually happens when we prioritize technique and technology over people.  In fact, technique and technology are an extension of culture.

JP Morgan’s world will remain very complex.  What will guarantee both prudence and value creation as they move forward?  Not regulation, which stifles even good risk.  Not the micro-managing of traders and the high-level scrutiny of every transaction, which would bog the company down.  Not a functional division, which, some experts say, would have done little to thwart this or the 2008 crash.  A stronger guarantee of success is possible, however, if JP Morgan learns to master itself.  It can do this by investing more carefully in the quality of its culture and the people it hires to drive that culture.

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.

Issue 3.6 | April 2012

In this Article: business might be fast, but success requires thinking slowly.

by Jonathan Wilson 

Even at 5:30 in the morning, the sauna-like climate saturated the airport terminal on the north coast of New Guinea.  With other first-flight travellers who had arrived ahead of me, I stood near the back of a roped-off line outside the locked check-in hall.  A heavy backpack hung off one shoulder.  A camera bag hung off the other.  At my feet sat boxes of supplies intended to keep me going for months in the remote interior.  At the stroke of some unseen clock, an airport worker opened the door, and the rush was on.  The notion of a line instantly vanished.  Knowing how things worked, I quickly hefted my luggage by foot and hand through the hall and, by the time I arrived at the single check-in desk, was the leader in the surging pack of travellers.  I slapped my ticket on the counter and moved my luggage to the manual scale.  Locals massed at the desk in apparent disarray, each one placing his ticket on top of another in a steadily growing pile of paper.  At that point, a plaintive voice with a distinct German accent rose above the fray: “but I vas here first, I vas here first!”

I quickly educated the distressed tourist: “Put your ticket on the pile right now!  The queue was irrelevant!  They sort and process tickets by order of placement on the pile.”  While he remained pinned to the desk by the crowd, I moved through to the shabby travel lounge.  Eventually, the German made it through, shaken but unharmed, a victim of behaving in one world as though he was in another.

In business, the quest for the holy grail of differentiation and market share regularly takes us, whether by force or by our own will, into unfamiliar and often uncharted territory.  When we get there we run the very real risk of choosing the wrong approach, because we impose on this new world the understanding we have of signals in the old world.  We do so at the peril of our business.

I am told by observers on the ground that, when India’s telecommunications market first opened up in the early 2000s to foreign enterprise, Western companies quickly took advantage of the opportunity posed by a new market comprised of a billion people.  Their initial efforts, however, failed to gain them traction with Indian users.  Bharti Airtel, by comparison (a local provider), quickly established its dominance in India’s cell phone market, and today it remains India’s largest telecommunications provider with a market capitalization of around $12 billion.  In time, after Europe’s Vodafone bought shares in a local telecom, becoming Vodafone Essar, it began to make significant gains in the Indian market.

At their first run, Western companies failed to read the signals of this new world correctly, and by doing so, had consigned themselves, for some time, to being a follower in the market, and not a leader.

Their initial failure arose because they imported business model assumptions from their primarily European market base.  Cell phones were introduced to Western markets as an overlay on the base of a long-established landline infrastructure.  The pricing model that worked in this environment depended on high margins, initially on the premise that wireless technology constituted a premium service (that it no longer does, however, has not affected this price model).

India, on the other hand could use the relatively low infrastructure costs associated with wireless technology as its primary means of bringing telecommunications to the whole country.  Thus local telecom businesses such as Bharti Airtel introduced a radically different pricing scheme – typically pay-as-you-go at extremely low rates.  Low margins were offset by a truly massive customer base (one needs to combine the populations of the US, Canada, and the fifty-odd countries of Vodafone’s European base to get the same number of one billion potential users).  As a result, cell phone usage across India exploded and so did the coffers of Indian telecom providers.

Few can know what was going on in the minds of the executives of incoming foreign telecoms at this time.  But we can reasonably guess: for the common tendency in any human enterprise is to act on our assumptions, because assumptions provide the lowest barrier to haste.  Fools rush in, as the saying goes.

The Danger of the Lazy Mind

Our minds operate by two basic systems, what leading psychologist Daniel Kahneman describes as fast thinking and slow thinking.  Business is fast.  It is an environment that easily encourages us to use our fast thinking, our intuition.  Fast thinking is crucial in situations that require a quick response.  If you’ve hit an icy patch in your car once and survived, chances are the next time it happens your intuition will serve you very well.

Your intuition works by way of signal and pattern recognition, specifically by associating what it sees with what it previously has learned.  The second system – slow (reflective) thinking – lays the foundation for our intuition.  Unfortunately, it is lazy.  Our brains are hardwired to avoid doing hard mental work any longer than necessary, and thus lead us away from thoughtful reflection and towards acting on instinct and intuition.

The pressure of business is such that virtually everything we do, we do in haste.  When we enter a new market, or launch a new product, our brain’s natural instinct will be to operate intuitively, and not reflectively.  The result for European wireless companies entering India was that they interpreted the signals of a new, foreign market using the assumptions they had unconsciously acquired in European markets.  The result was a misapprehension on the grandest scale.

Whenever we enter new territory in business, we need to treat it as seriously as if it were a cross-cultural encounter (which it often is, in its own way).  Learning how to properly read – and respond to – the signals of a new world requires a conscious effort to treat our intuitions with circumspection, and to engage in reflective observation.  In other words, although business is fast, we are actually wasting time unless we choose to think slowly.

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.

Issue 3.5 | February 2012

In this Article: how corporate social irresponsibility drives the destruction of value.

by Jonathan Wilson 

If Canada has any prophets, Stephen Lewis is one of them.  Like the ancient biblical prophets, Lewis is a fierce moral critic and, like those indignant rhetoricians of old, he has a way with words.  Recently, Lewis – known in particular for his work as the United Nations’ special envoy for HIV/AIDS in Africa (2001-2006), a concern that he continues to address through his own foundation – levelled his righteous and eloquent fury at the corporate world in, of all places, the Ted Rogers School of Management at Ryerson University in Toronto.  Lewis had been invited to speak on Corporate Social Responsibility.  Drawing on a series of his own unhappy experiences when he attempted, through interactions with one corporate entity or another, to achieve a socially positive outcome, Lewis concluded that, on the whole, “corporations make a fetish out of corporate irresponsibility” (emphasis mine).

As he spoke, Lewis took pains to point out the positive initiatives of a given company.  But even when he could do so, the counterpoints he raised appeared, on first blush at least, to throw the scales off completely.  Here’s an example.  Case Study 1: Barrick Gold has apparently taken considerable initiative to prevent the abuse (including rape) by its security services of locals scavenging from its mines in Malawi.  Case Study 2: Barrick Gold’s iconic founder and chairman, Peter Munk, told Lewis he wanted nothing to do with backing the cause of HIV/AIDS in Africa, a continent that had given him, it seems, “nothing but trouble.”

While Lewis was long on critique, he was, perhaps unsurprisingly, short on solution.  His clearest action point for corporations came as a question: why have no corporate executives publicly criticized the export from Canada of asbestos, when it is a fact that the end user will be killed by exposure to it?  I came away from this informative and genuinely inspiring talk with one conclusion: Stephen Lewis understands righteousness, but he doesn’t understand business.  It is not that the corporate executive shouldn’t be vocal about injustice: the quietness of business leaders about such matters is, well, disquieting.  But the root of social irresponsibility is not a lack of advocacy by corporations, but the failure, in the first place, to do good business.

It is my observation that whenever social responsibility is a struggle for business it is precisely because we have falsely separated the task of the corporation from the task of being human.  We have identified social responsibility as something to be considered as secondary to the pursuit of profits.  Milton Friedman’s now famous argument that “the social responsibility of business is to increase its profits” is specious precisely because it divorces from profitability the very thing that drives it: the creation of value.

Value increases, I believe, when our products and services are not just socially responsible (a negative term that suggests compliance) but socially creative, and in three specific ways.

• Firstly, our offerings truly improve the life condition and experience of the customer, rather than pander to the human tendency to take the shortest cut to gratification.
• Secondly, our offerings manifest the very best we have to offer from within the insights, abilities and resources of our companies.
• Thirdly, our offerings account for the various ways they can impact the customer and the customer’s context – for if the customer’s social and environmental context is degraded, the customer has ultimately been done a disservice, whether or not they recognize it.

The greatest tragedy (and irony) is when business, driven perhaps by the pressure of the quarterly, thinks it is creating value when it is in fact destroying it.  The cause, again ironically, is that particular dynamic that Adam Smith deemed crucial to the success of Capitalism: self-interest.

The Economist has just published “The Proust Index”, which uses seven economic indicators (such as real wages, per-capita GDP and house values) to measure time lost in economic progress.  While critics of the index argue about what constitutes progress or the usefulness of the indicators, the fact remains that the self-serving behaviour of corporations brings about a tremendous destruction of value.  From 2008 to the present, The Proust Index tells us, America has regressed ten years (i.e. the average of the seven indicators places it back where it was in 2001).  The UK has regressed eight years.  Greece has regressed twelve (although Greek stocks have lost twenty years – a total destruction of value for those who invested for the sake of their future livelihood).

Some of the corporations at fault, such as the Lehman Brothers, self-destructed as a result of their self-interested behaviour.  Others survived and continue to behave in the same manner, if with increased internal sophistication and external sophistry.  They may think, even now, that they are creating value, in terms of profitability.  But the historic outcomes of self-interested behaviour would suggest they are not.  They are steadily destroying it.

For business to be socially responsible it has to get its head around the fact that social responsibility is not an additional burden to business, it is a direct result of good business.  If value lasts, it is because it has offered the best of who we are, to address the genuine need of the customer, in a way that truthfully accounts for larger systemic implications.  To do so, self-interest has to be actively countered.  If it wishes to create value, the corporation has to understand itself as a servant.  Even if it is publicly held, it cannot serve its shareholders without first serving the customer and, by extension, the customer’s world.  Anything else, so the numbers tell us, will bring value destruction.

Another soul insight from www.soulsystems.ca.

Leadership by Soul™, Trademark and © Soul Systems, All Rights Reserved.