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.

Issue 3.4 | January 2012

In this Article: how a misguided sense of urgency undermines value creation.

by Jonathan Wilson 

If patience is a virtue, the world of business, which has exchanged fear of God for fear of Darwin, has forgotten it.  When people come together to do business the emphasis is on do: a call to “action!”  When we start meetings – that most despised yet universal method for achieving great things – we typically begin business with a set of questions: “What shall we do? How shall we do it?”  We are champing at the bits, for the race is on.  For all we know, our competitors are out of the gate.

These questions are indeed crucial.  They are the precursor to making a better product or service, perhaps even a better world.  In the last issue of Leadership by Soul, I argued that it is ultimately action, not thought, that defines leadership.  But action that is driven primarily by a survival instinct is exactly where Darwin, who lives forever in Capitalism if not on Earth, does a disservice to humanity (or, it could be argued, the damage comes from how we read him).  For the survival instinct, rooted as it is in fear, kills the virtue of patience and pressures us to pass over other equally significant questions that are equally crucial to doing business well.

The problem begins when we emphasize a good word at the wrong time: “do”.  How do we answer the questions “what shall we do?” and “how shall we do it?” if we have not adequately determined who “we” is?  And by we, I mean anyone in the (ideally collaborative) network that makes up your business model – from colleagues, to suppliers, to customers, to venture partners.

Who is We?

To find out who “we” is requires answering two prior sets of questions that are simple, but often overlooked.

The first set of questions is “Who am I?” and “Why am I here?”  It is going to be difficult to contribute effectively to a team or collaboration if I don’t know what I bring to the table, what I believe is important and what return on investment I desire from this endeavour.  Again, these are not just questions for colleagues on a team.  They must be answered, consciously or unconsciously, by everyone who plays a role in your business model.

The second set of questions is “Who are you?” and “Why are you here?”  When we start to understand the stakeholders within our business network — their skills, their desired outcomes, their context — a great deal of potential misunderstanding falls away, and trust begins to form.  When we buy into who they are and why they are in the mix, we will willingly communicate, share resources and cooperate closely with them.

Thus a conversation for understanding has to precede a conversation for action.  This has impacts on every level of business.

A supplier jealously guards against granting exclusive rights to their product, much to the frustration of a very powerful but unsuccessful buyer.  A conversation for understanding is eventually conducted.  It reveals that the supplier is simply protecting one relative who likes to have access to that product.  The problem is quickly solved.

A CEO is seen as a pit-bull by her team, until they take time to develop mutual understanding, at which point she recognizes the effect of her actions and they realize she hasn’t been directing her aggression at them as people. It’s ambiguity she hates.  Lack of information drives her crazy.  Both adjust their assumptions and behaviours accordingly, much to the benefit of their productivity and effectiveness.

Waste, the Cost of Haste

In contrast, an accountant working in a bureaucratic services company constantly steps on hidden mines, laid mostly unconsciously by inept managers who neglect to hold conversations for understanding – or who do hold them, but in a rush.  As a result, team members assume the worst of each other, often inaccurately, and fiercely guard their own little bit of knowledge and influence.  Darwin is in the house.

When we fail to effectively answer these two sets of questions about “we”, the best way to describe the impact is in terms of waste:

1. We waste emotional and physical energy as conflicts arise around the objectives of our collaboration.
2. We waste knowledge and learning.  We withhold crucial knowledge because we fear its misuse.  This kills learning and the development of finely calibrated and high-powered solutions.
3. We waste time as we and our partners resist one another, introducing delays, and resulting in missed deadlines and most of all, missed opportunities.
4. We waste money: our financials will show a shrivelled bottom line caused by the inefficiencies introduced by delay-tactics and stall-tactics, inter-party frictions, and reluctance to cooperate or share.
5. We waste more money: creating a top-line shaped by missed opportunities – the failure to synergistically develop higher quality solutions to which customers would migrate.

Creating Value – by People, for People

Business is value creation.  And value creation happens by people, for people – the “we” behind every “do.”  .  If we build trust before (and while) we attempt to figure out what to do, we position ourselves for powerful, integrative solutions.  To achieve action that is powerful, we must build trust that is substantial.

Now the stage is set for developing synergy.  A conversation for action is possible now that we have had a conversation for understanding, and we can move to the final, and crucial, set of questions: “What shall we do?” and  “How shall we do it?”

When stakeholders know and buy into each other, they can jointly leverage their expertise, insights and shared vision to accomplish something more significant than they could achieve independently of each other.  They will enjoy, then, the fruits of synergy.  One of those fruits is the very thing we feel so pressured about: making money.

Another soul insight from www.soulsystems.ca.

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

Issue 3.3 | November 2011

In this Article: disciplined action, not just a great idea, makes a leader.

by Jonathan Wilson

It is a tiresome and common fact of our world that the noble-minded are plenty, but few of them act in accordance with their sentiments.  Thought-leadership does not a leader make.  It is a man’s actions that define his leadership.  But not any action: busyness does not a leader make.  Discipline distinguishes the action of a leader from the action of a follower.  Specifically, a leader is disciplined about three things: where she’s going and why (focus), how she will get there (culture), and what will get her there (persistent learning).

Disciplined Focus

Disciplined focus enables the concentration of power – not in a leader, but in a cause.  The disciplined allocation of resources optimizes capacity.   An organization’s identity and purpose should be so well defined that it is always clear, on reflection, how to align and allocate resources.  The more fuzzy its purpose, the more likely a company is to experience conflict between divisions or among leaders, for there is no clear guide to sort out internal competition for resources.

Organizational leaders tend to be innately curious, creative and visionary.  These qualities can pose a considerable danger, however: the danger of distraction.  Market volatility, competitor actions, customer whims and interesting technological developments can all distract leaders from fiercely focusing their and their organization’s resources on its purpose.  Distraction leads to the dilution and dissipation of an organization’s power.

Distraction can come from desperation too – the need to survive.  I saw this in southern Africa when the AIDS crisis was peaking and large donors were making significant funds available for relevant interventions.  Suddenly, virtually every hard-done-by not-for-profit had an AIDS component to its work, even where there was no apparent connection to its core purpose.  Now while the pandemic certainly requires a comprehensive, cross-sectoral response, it was equally evident that the promise of a new source of operational funds pulled many organizations down a path not genuinely aligned with their identity and purpose.

Disciplined Behaviour

Disciplined behaviour is the strict adherence to and nurture of the cultural qualities that shape the ways and means by which an organization does its business.  A company’s power is found in its distinctive ethical, relational and other operational qualities (for example, one company may excel at highly transparent and collaborative approach with customers, while another produces magic from within secret “skunk works”).  When a company pays rigorous attention to the support and nurture of these qualities, it enhances its operating power and increases the likelihood that it will reach its goals and deliver superlative value.  This discipline is exercised both positively and negatively.  One CEO recently described having to remove what he called a “cancer” from the organization: an employee whose behaviour badly undermined the team culture of the organization.

Disciplined Learning

The discipline of learning accounts for two proven dimensions of a successful initiative: firstly, that great things are achieved only by the dogged pursuit of a great objective over a long period of time (this includes dogged practise); and secondly, that the success of such determined perseverance is enabled chiefly by a company’s willingness to learn.  An organization that is hungry to learn is willing to listen to all voices including those bearing bad news; it is willing to measure and to be held accountable, willing to take the significant time required to think well, willing to experiment and willing to fail.

When the 19^th Century British politician William Wilberforce and others concluded that slavery was an evil that should be removed from the British Empire, they cannot have known that it would be some forty years before this grand vision would be realized.  In-between lay at first dreams, then fierce opposition, accusations of undermining the British nation, and personal sacrifice – but also clever experimentation, then failure, then fresh experimentation and, through it all, unrelenting grit.  All this culminated in 1807 with the abolition of the slave trade by the British Parliament.  Slavery itself was outlawed 26 years later.  A glance at modern history shows that any company has to plan for a similar time frame if it wishes to achieve significant influence.

Building a Culture of Discipline

Earlier this year a colleague and I helped a mid-sized technology company thoroughly work out its soul (or identity) and its purpose (the first informs the second).  The analysis revealed specific ways in which the company’s expertise, resources, insights and passions combined to create unique and significant value for customers.  This motivated the leadership to immediately begin two key initiatives.  The first was a progressive restructuring of the major divisions (sales, research and development, and service) so that they were thoroughly and seamlessly integrated – not just for efficiency’s sake but because this company’s soul came alive when particular strengths present in each division were brought together synergistically.  Historical analysis had already shown that, wherever this synergy was at work, customers got the best out of the company and the company got the best out of them in terms of revenues.  The second initiative was to develop criteria that clearly defined the optimal client.  The best motivational speech could not have spurred the sales team into action as effectively as did that list of clear, rational, soul-aligned criteria.

?The result of discipline in leadership is that an organization’s resources have been stewarded well, when they could have been squandered or abused and exploited; that its efforts issue in excellent and superior products or services; and that it has endured where others failed — failed to learn, failed to adapt and, most especially, failed to be faithful to who it is and what it truly has to offer.

Another soul insight from www.soulsystems.ca.

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

Issue 3.2 | October 2011

In this Article: restoring confidence in the marketplace by building business that is trustworthy.

by Jonathan Wilson 

The alarming possibility of a decade or two of economic stagnancy across the globe is driving many players, in governments and businesses, to flail about this economic quagmire in a panicked search for a way out.  Hints are there is a third amount of quantitative easing on its way in the US.  In Europe governments and business dither about sovereign defaults and further debt-leveraging initiatives for banks and countries.  But while the Euro destabilizes and the US dollar trembles at the brink of possibly its final decline, there is another, very powerful, currency that is equally at stake: trust.

Business builds on trust.  When the currency of trust is in decline, it is a sign that the marketplace is indeed in very bad shape.  If trust is regained, business can rebuild, and only that will enable the economy to right itself.

The Anatomy of Trust

As between your business and another, or your sales team and a customer, or between partners in an enterprise, so with the marketplace as a whole: trust serves as both glue and grease.  It enables a healthy marketplace to thrive with dynamic and meaningful business interactions.  Trust is the glue that cements relationships, thereby enabling the kind of stability needed for a healthy marketplace.   Equally, to switch to a very contrasting metaphor, trust is the grease that enhances the responsiveness, quality and creativity of business interactions.

Considering trust between individuals will help bring home its nature and its significance.  As to its nature, when you trust someone, it is usually for at least one of these three reasons: you believe in their safety, their reliability and (or) their ability.  As to its significance, when there is trust between you and an individual, it results in an unblocked back-and-forth flow of high quality information that powerfully aids effective collaboration. When we trust each other, the barriers we normally erect to protect ourselves come down, and the willingness to give to and help each other – and to do so spontaneously and timeously – goes up.  Trust serves as a catalyst for tremendous creativity.

How to Undermine Your Own Business

A recent Canadian study in the Journal of Organizational Behavior reveals that while many companies invest heavily in knowledge-sharing software, it does not achieve the desired result of great collaboration and innovation. The general lack of trust in these environments motivates employees to hide their knowledge.

I once worked with a group of executives who came together every few months from across North America for their strategy meetings.  Listening to their conversations over meals and during work sessions, I realized that, although they respected each other’s particular competencies and enjoyed each other’s company, they did not trust each other.  This was made obvious by their interactions.  On several occasions, one or other of them introduced business-critical information to the discussion that was months old.  Often it had informed a significant decision by that executive.  Judging by the startled responses of the other executives, however, these successive revelations were breaking news!  It became clear that each withheld information because he didn’t trust his fellow leaders to act on that information in an appropriate way.  You can imagine how severely this hampered the effectiveness of the team to make timely decisions or develop robust solutions that benefited from everyone’s creative input (fortunately they were tired of the distrust and open to taking corrective measures).

Building Business by Building Trust

As protestors occupy the business districts of capitals around the developed world, they convey their cynicism about the marketplace and their anger at having been, as they see it, exploited.  While Communism’s failure is still recent enough to give such protestors some pause about what to offer as an alternative, there is a definite (and understandable) bent towards the view that Capitalism is bad.

The trust deficit, however, is a clear indication that it is not that Capitalism is bad per se but that it is broken.  Those who influence the direction of the marketplace have shown themselves to be, to one degree or another, unsafe, unreliable and/or incompetent.  But rather than gripe and tweet about the failings of big business and government policies, for you and me to act as leaders in this situation we have to take responsibility for the condition of our marketplace and do something about it.  Within our own sphere of influence – with our colleagues, employees, customers and other stakeholders – we need to build our businesses on foundations that, over time, will be proven trustworthy.

To be seen as safe, our business has to be done in a manner that is demonstrably service-oriented.  When it endeavours to create value, which is ultimately what the marketplace is about, it needs to consider all affected stakeholders.  To be seen as reliable, our business has to be reliably good, not just reliably clever.  Instead of, for example, trying to game the system with complex financial instruments (in the name of sophistication) that in fact obfuscate the self-serving interests that inform them, what comes out in the wash in the future has to show that our business initiatives were driven by the deepest understandings of what constitutes value.  And of course, our business needs to act with a pragmatic competence that addresses the dysfunctions in the marketplace rather than pursue expedience and self-protection at the expense of others.

Economists look for confidence in the markets.  To the markets’ detriment, policy makers and business leaders have sought to build confidence artificially.  True confidence will come only when business – starting with your company and mine – has proven itself to be safe, reliable and competent.

Another soul insight from www.soulsystems.ca.

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

Issue 3.1 | September 2011

In this Article: why an exclusive focus on profit creates a dangerous distraction from value creation.

by Jonathan Wilson 

Apple does not exist to make a profit.  If it did, it would never have made the ground-breaking iPod nor the ensuing iTunes, let alone a magnificent series of breakthrough products in laptops, smartphones and tablets.  In fact it would have remained unprofitable and it would not now be ricocheting around the list of top three richest companies in the world (by market value) along with Exxon and PetroChina.

As counter-intuitive as it sounds, profit fixation is bad for business.  Profit is simply a measuring device.  It nets revenues from operating expenses and what’s left is a number that measures the value created.  Economic Profit (EP – also called Economic Value Added), also accounts for capital and tax for a more accurate assessment of wealth created for the shareholder.  But profit measures not only value to the shareholder, but to the buyer, from whom all revenues flow.  Implicitly, profit also measures the efficiency with which that value was created.

When a company makes profit its primary goal, its entire system becomes oriented to the number instead of the real output that the number is supposed to measure.  Typically, the result is excruciatingly short-term thinking that focuses on cost-cutting and aggressive sales tactics at the expense (financially and more broadly) of creating truly substantial and sustainable value.  You see this in the utter silliness of the company that brags of its continuing profitability in a recession, when in fact its revenues are falling and it has just indiscriminately laid off a third of its talent.  Such a company isn’t actually creating value, it has simply saved its financial skin in the very immediate term.  Profitability derived primarily from efficiency is superficial and unsustainable.  It is one-dimensional value.

Three-Dimensional Value and Profitability

If a business wants to be profitable, it should not focus on profit.   It should focus on value creation.  Profits will follow.  If you cannot create value for the customer, you will not create it for the shareholder.

Value is created when your company pays serious attention to three sources of demand.  This is three-dimensional value, a richer form of value altogether, for it is not just based on efficiency (a common focus of businesses), but on the main ingredients to value creation: the unique qualities that make up the soul of your company, and the deepest needs and desires of potential customers.

To create fully-orbed value you need to pay very close attention to the soul of your company.  Jay Elliot, a former colleague and biographer of Steve Jobs, says that the recently retired Apple CEO believes that, “You have to be burning with ‘an idea, or a problem, or a wrong that you want to right.’” and that ,”Great products only come from people who are passionate.”  Apple’s customers did not know what they wanted any more than Henry Ford’s horse-riding market knew they wanted a car.   Apple has a passion that drives – that demands – a quality of innovation that in turn wows the potential customer.  What does your company actually care about and what can it be really good at, and how can you bring something of great worth out of that unique source of incredible vitality and strength?

The second source of demand is the world of the customer, the potential end-user – the one who has to perceive the value and pay for it.  Apple could not have brought its “insanely” well crafted products to market if they had not been attentive to the signals that revealed the felt needs and priorities of everyday people.  Elliott remarks that Jobs’ commitment was to “create an [intuitive] experience so satisfying that the user would feel an emotional attachment to it”, and that, “Every opportunity starts with an unmet need. If you can build a product to meet that need, it becomes a ‘must-have.’”

At heart, business is an utterly human enterprise – it is the connecting point between the passion and ingenuity of one group of people and the needs, desires and experiences of another group of people.  The deeper the connection with the priorities (not necessarily articulated) of the potential customer, the more substantial and complete the solution, the greater the value your company has created.

The third source of demand is the shareholder.  The demand of the shareholder for maximum returns is a demand for efficiency, not just value creation.  Efficient processes do not only lower costs, they decrease waste.  The benefits accrue to multiple stakeholders, not just shareholders: think, for example, of Wal-Mart’s greening of its supply chain and packaging systems, etc., which benefits buyers (cheaper goods), the community and environment in which Wal-Mart operates (reduced damage) and, of course, the shareholder (increased wealth).

A fixation on profit is deadly to value-creation.  It drives shareholder wealth in the short-term only and creates a mere echo of value.  I wonder if this is the root to RIM’s woes of late.  Perhaps they are not working as purely as they once did from their passion and towards the needs and desires in the market, but are instead concerned only with a number.

Rich, three-dimensional value arises where there is synergy between the deepest needs and priorities of the market with your company’s passion and skill.  At Apple, according to Elliot, “The goal was never to beat the competition, or to make a lot of money; it was to do the greatest thing possible, or even a little greater.”  The measure of Apple’s greatness is, of course, how astonishingly profitable it has been.

Another soul insight from www.soulsystems.ca.

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

Issue 2.12 | August 2011

In this Article: courage in leadership begins with the courage to not think of yourself.

by Jonathan Wilson 

August 2nd, 2011 is a date that will remain infamous in history.  The day saw the close of the US government’s debt-ceiling debacle that, it is claimed, brought the world to the brink of economic crisis.  Whatever the true threat to the world that is associated with America defaulting, it is certainly on a portentous scale.  Yet it was tackled with an utterly disturbing display of brinkmanship, electioneering, posturing and ideological rigidity on fiscal policy.  What the world watched with dismay (and I suspect, increasing anger), Mitch McConnell, the US Senate’s minority Republican leader, described as nothing worse than “the will of the people working itself out”.

What in fact we saw was the most grievous display of self-interested leadership.

It is easy to point fingers.  The world of politics is normally governed (I use the word ironically and intentionally) by the short-term and the expedient.  We expect this in politics and it results in jokes that understandably convey cynicism, such as, “How do you know when a politician is lying?  Answer: his or her lips are moving.”  In truth, however, all leadership – and especially formal (institutional or organizational) leadership – is political.  Everyone of us – writer and readers – has made political leadership decisions.

I once coordinated the executive committee of a major initiative that included nearly a hundred stakeholder organizations and a substantial budget.  For very political reasons, a couple of committee members were opposed to my leadership.  Through misinformation, stalling of processes and direct challenges they made my role nearly unworkable.  At one point they accused me of “gross leadership incompetence” and of financial mismanagement of the project.  The rest of the committee disagreed on the former and an independent audit cleared me on the latter charge (we were in fact under budget).  Nevertheless, the powers that be were unwilling to take any decisive action to address their behaviour or the bid for power that it represented, nor would they allow me to do so.  The reason given was that the individuals concerned were “too politically significant.

Wherever self-interest is valued at a premium we have leadership politics.  It is the trumping of self-preservation over responsibility, cause or principle.

Many a splendid vision lies wrecked on the rocks of its apparent cost.  Many a critical action dies in the hands of fear.  The perceived cost might be the loss of your job.  It might be the expenditure of yet more energy on frustrating experiences and unpleasant people.  It could be a life made miserable or a reputation tarnished.  It could be a relationship jeopardized.

The real cost of leadership politics, however, is usually much greater than anything the self-serving leader has managed to avoid.  With an eye on constituents (of whom only a fraction are the “people”) and the 2012 elections, among other things, US leaders held to ransom America’s economic health, and by extension, the world’s.  The great irony of the project I mentioned above was that, in the end, everyone lost: the troublemakers didn’t get the platform they wanted; despite its success the project in fact significantly underperformed against its real potential; and because of its dysfunction the committee was unable to capitalize on its strategic success – to the detriment of nearly a hundred stakeholders representing millions of people.   More often, the cost of leadership politics shows up in situations as common and simple as the dysfunctional but connected employee who remains ruinously in charge of an operation, to the detriment of products, colleagues and, most especially, customers.

Emerging leaders in particular need to learn very quickly that politics in leadership is the norm, not the exception.  To expect otherwise is naïve and dangerous.  Furthermore, it will prove a major cause of disillusionment.  Skilled leaders learn to navigate political environments with savvy.  But political savvy and political leadership are not the same thing.

There are at least three things we can do to avoid being leaders whose decisions are political rather than principled, self-preserving rather than leading.

The first is to think systemically.  It is important to consider the reactions of stakeholders, but to inform, not govern, strategic action.  Very often, the urge to please a powerful constituency distracts us from the longer-reach and longer-term implications of a decision.

The second is to think morally.  Although we live in a culture uncomfortable with (at least some) moral claims, it is my observation that what is unjust and immoral eventually plays itself out destructively.  As I’ve said before, my former boss Michael Cassidy has remarked that Apartheid failed in part because it was economically unsustainable: oppression gets expensive.  Expedient business decisions often prove to be insufficient and non-strategic.

The third is what not to think of: yourself.  This is the greatest challenge for every leader, because it cuts to the heart of leadership, but against the grain of being human.  Courage in leadership arises from a heart that considers the welfare of others as more important than the welfare of oneself.   But it also comes with that systemic and moral thinking which can give proper perspective to our inevitable self-interest, and enable us to recognize that there are other powers, other people, and other possibilities that lie outside of the network we are perhaps afraid of offending, that can be our fall-back, our refuge and our resource.

Another soul insight from www.soulsystems.ca.

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

Issue 2.11 | July 2011

In this Article: what your leadership is built on will dictate how long it can last and what legacy it will leave.

by Jonathan Wilson 

In the course of human history fifty years is a fleeting moment, but for each of us it is a considerable portion of the time we have to steward.  This May the Yali tribe of Papua celebrated fifty years since their first encounter with the outside world.  There are remote tribes for whom first encounter is annihilation, assimilation or simply a long withering dissolution into nothing.  In the minds of the Yali, their first encounter ushered in a transformation that eliminated chronic warfare, radically improved health conditions, elevated the social status of women and improved their education (beginning with the putting of their language into written form).  Today, the Yali, whose recent celebrations were astonishing in energy and scale, maintain a profound sense of their own worth and dignity as a people but value what they have gained from others in the years following the astonishing arrival of two missionaries in their northern-most valley.

A look back over those fifty years provides some insight into the things that give longevity to leadership and its influence; or that leave it a fruitless, wasted effort – a loss to one where there could have been gain for many.

In Papuan tribes, leadership is typically earned, not inherited.  When I was a teenager there was a Big Man (as their leaders are often called) in the neighbouring Hupla tribe whose influence was seemingly complete.  He had risen to leadership through his charisma and social management skills, which he employed manipulatively and coercively.  He used social obligations and his increasing power to intimidate and to eliminate those he opposed, including by murder.  Ikabura was greatly feared.  I remember a tense night among the Hupla when a quiet leader by the name of Yan Kabak was hidden away and men took up posts in the village to protect him – Ikabura was coming for Yan.

What your leadership is built on will dictate how long it can last and what legacy it will leave.  Self-service, exploitation and manipulation form extraordinarily shallow foundations.  These are, after all, erosive and destructive forces, and can only ever contribute accordingly to one’s leadership base.  Even institutional and financial power, which can seem inviolable, are subject to larger, systemic dynamics that can’t be controlled: witness the demise of business leaders in the 2008 recession, or government leaders in the ongoing Arab Spring.  In 1989 a devastating earthquake struck the Yali and Hupla region.  It wiped out Ikabura’s garden lands and many of his pigs, which represented his wealth.  He was, instantaneously, a neutered leader.  He never regained even a shadow of his former power.  Yan Kabak, on the other hand, served and led his people with a steady hand through this time of tremendous hardship.  In time he was regarded as one of the most significant leaders in the tribe.

When Stan Dale and Bruno de Leeuw made first contact with the Yali and set up home among them, they encountered stiff opposition from both political and religious leaders in the community.  Dongla Kobak was the son of one of the most powerful of these leaders (and was himself being groomed for a similar role).  Like Ikabura, Dongla had all the leadership traits admired by most Papuan tribes – social management skills, problem-solving acumen and rhetorical skills.  But Dongla’s leadership story forms a stark contrast to Ikabura’s.  In the 1960s, while he was a rising star, he became convinced that the work of Stan and Bruno was a good thing for his people, not harmful.  They were to be welcomed and aided.  This introduced considerable vulnerability to Dongla’s place among his people.  When in 1968 Yali warriors killed Stan, along with a visiting colleague, Phil Masters, Dongla may have further questioned the viability of his position.  When his own father drew an arrow to shoot another missionary, Dongla threw himself in the way of the shot and deflected the arrow, saving the man’s life.  While Dongla sustained a minor flesh wound, the greater price he paid that day was familial and political.

When your leadership convictions enter into full conflict with your leadership function and status – when what you believe in most is not possible to pursue because of the expectations or demands attached to the title you have – the ultimate leadership test has made its sharp entry into your world.  The most insidious temptation at this moment is to believe that the influence is worth holding onto, even if via compromise: that if you retain your power and influence you can later wield it for what really is good.  The question to ask oneself at this stage is, what foundation am I laying in this choice – one built on things corrosive and therefore ultimately unstable, or one built on things deeply edifying to the human condition, and therefore possessed of longevity?  If we fail to ask this question of ourselves, it won’t be long before the demands of stakeholders, opportunities for quick influence and threats to our well-being will each take their turn to test just how deep our own leadership foundation lies.

Bruno, my parents, Yan Kabak, Dongla Kobak and many others joined the Yali in May’s amazing celebrations of fifty years of transformation.  That transformation came at a price. Nevertheless, notable by their absence, both physically and in the stories recalled, were those leaders whose commitment was to themselves, and therefore to leadership by expedience.  Time had issued them the reward that comes with a leadership built on the fragile foundation of self-interest.  For leadership that lasts – in effect, in influence – is leadership that serves.

Another soul insight from www.soulsystems.ca.

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

Issue 2.10 | June 2011

In this Article: the why, the what and the how of strategic planning.

by Jonathan Wilson

Far in the distance, palm trees and jungle hung over the blue Pacific waters.  The sun rode high in the sky, casting its warm tropical light onto our outrigger canoe that rode the ocean swells.  This would have been a scene of bliss, if it had not been for the fact that our boat was adrift.  The long canoe with its outrigger pontoons wallowed in the large swells.  Of the ten people in the boat, everyone was seasick except the fisherman busy trying to fix his outboard engine, a young man called David and myself.  Northwards lay thousands of kilometres of water before landfall in the Philippines.  Two kilometres south of us the ocean surged white against a row of cliffs.  Slowly, the current carried us in the direction of a promontory at the eastern end of the cliffs.  The engine was unresponsive to the fisherman’s attentions, and he had neglected to bring paddles.  Prospects did not look good.

Scanning the horizon carefully, David and I noticed a place where a waterfall cascaded over the cliffs.  At its base, barely visible to the naked eye, lay a small beach, perhaps 30 metres wide.  David and I knew what we had to do.  Putting flippers on, we slipped into the water, one on each side of the long canoe, hung onto the cross beams of the outriggers, and began a slow swim forward.

This is a tale about strategic planning – its why, its what and its how.  It is tempting in business to focus on fixing the outboard engine when the company is wallowing in troubled economic waters and the roar of surf carries on the wind from a dangerous shore.  It is crucial, rather, for a company to take pause and, on a routine basis, scan the horizon.  Strategic planning is the act of scanning the horizon, deciding where on the horizon you want to go, and making a plan for how to get there.

The Why, the What and the How of Strategic Planning

On one level, the why of strategic planning is obvious: it is unlikely you will reach a destination you didn’t plan to get to.  But too often, the goal of senior executives is nothing more than to move the company forward.  But “forward” could be out to sea, onto the rocks, or anywhere else that lies in front of the bows.  When they serve as the primary goal of the company, quarterly earnings are one example of this kind of meaningless objective.

Scanning the horizon is a leadership act.  It is the interpretation of the future, and what to do about it.  For this reason, the what (“what should we prioritize?”) of strategic planning is two-fold.  Firstly, a company needs to undertake rigorous self-analysis if it is to determine what to do about the things it sees unfolding on the horizon.  It needs to know its soul – what it does best, why it does what it does best, and how this creates the best value for customers.  Clear and accurate self-knowledge allows us to intelligently engage the realities we face ahead.  Secondly, a company needs to build as holistic a picture as possible of what lies ahead and what lies in-between: socio-political, economic, environmental, cultural, etc.   This requires taking seriously both hard data and the intuition of seasoned observers.  It needs input from those positioned to question our assumptions and biases.

Defining present and future reality is one thing.  Determining how to get there is quite another.  A strategic plan should account for the major areas that typically drive organizational performance – customers, suppliers, organizational processes and organizational learning (or agility).  To be useful in implementation, it should define milestones that will indicate progress in the direction of key goals.  It should identify the linkages between desired outputs and the activities that will generate those outputs.  It should determine how to measure outputs.  Although it is important to use metrics to gauge and even reward employee performance, care should be taken to ensure the metrics are appropriate.  David and I could have been rewarded for getting our boat to a certain point by a certain time, but unforeseeable factors, such as currents and weather, could have hindered us from doing so.  Or we could have been rewarded for swimming as hard as possible in the right direction and making adjustments whenever necessary.  Sometimes the most relevant employee assessments measure performance-critical behaviours, not just outputs.

Planning is Thinking

Nevertheless, the future cannot be controlled.  Anyone who stakes their company’s success on the quality of its strategic plan is likely to be let down.  Planning is essential if your company is to perform with excellence.  Sticking to the plan, however, could ruin it.  The primary function of strategic planning should be that it provides us with a framework with which to think effectively.  The company that routinely and rigorously thinks is best positioned to adapt to the kind of rapid changes that characterize our world.  We have to think comprehensively, and in multiple dimensions, hard and soft: about where things are headed, about our unique strengths and weaknesses as a business, about what matters most in life, and about what will work best if we are to deliver the results we desire.  Thinking is the discipline that will drive strategic and adaptive action.

Winning rarely comes easily.  It was a long swim, from open sea to the narrow beach embraced on each side by a long line of cliffs.  Some of us were badly burnt from the sun.  Only when we entered the little cove could we truly say we were safe – that we had succeeded.  Till then, everything hung in the balance.  Strategic planning is not a guarantee of an easy ride.  Instead, it is the stewarding of our minds and resources to the best ends possible given the circumstances we find ourselves in.

Another soul insight from www.soulsystems.ca.

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

Issue 2.9 | April 2011

In this Article: how facts, foundations and friendship protect leaders from their fears.

by Jonathan Wilson

The candle sputtered and flickered in the silent black of a New Guinea night.  I lay in my sleeping bag, staring at the guttering flame in a state of utter depression.  I was days from any form of medical civilization, deep in the mountains of the Yali tribe in New Guinea where the only way to travel the rugged terrain was by foot and I was, as of the last few hours, a cripple.

I was here on a mission.  I had entered these remote valleys to teach in a number of villages; a message borne out of my love for the tribe and my concerns about its rapid and seemingly uncritical capitulation to external forces of change.  I was worried that the people of my childhood were letting go of self-determination in favour of quick material gain: understandable in the short term but damaging in the long run.  But now the mission was receding against the backdrop of the throbbing pain in my knee and the knowledge that any route to a remedy entailed days more trekking through landscape that would prove unforgiving to an injured leg.  I could think only of my own woes and the fears they stirred.  The next morning I woke up to sun streaming into the valley, but when my Yali friend, Hohobo, asked me what was wrong, I used a Yali expression, “my heart is in the mud.”

Leaders often face fears, and sometimes these fears hit us with the force of a locomotive, derailing us, paralyzing us or setting us on a course of reaction rather than pro-action.  We can fear the failure of a new business model or process or product.  We can fear the reaction of powerful stakeholders to our principled stand.  We can fear the volatility of markets or the loss of a significant customer.  Whatever threatens our well-being, whatever is unpredictable or can’t be controlled, such a thing is very likely to generate fear.

Fear hinders effective leadership.  Fear is typically irrational.  It is that dark prison that lacks the light of information.  What we don’t know or can’t see, we fear.  In response, we fill in the information gap with speculation.  Fear-based speculation often drives us to ill-judged and ill-informed decisions.  Consider, for example, the recently implemented body-scanning measures at US borders and customs.  US law enforcement agencies could have been avoided the harassment of travellers and the exorbitant costs (passed onto the US taxpayer) had they taken the time to study the superior strategies of a country that has been dealing with identical security threats for decades: Israel.  If it doesn’t drive us to react, then fear often leads us to denial: think Bear Stearns.  Worse still, fear feeds on fear, and can drive us further into destructive thoughts and behaviours.

Finding Solid Ground

Where should a leader go when he or she is afraid?  I suggest three places: facts, foundations and friends.

Fear distorts perspective.  When we are gripped by fear, perspective has to come from elsewhere, from a trusted source of facts.  On a personal level, it might be your most objective friends or a coach.  On a corporate level it might be an industry analyst who is not paid by the industry for their advice.  Facts may trigger an alarm, or highlight a concern, but neither alarm nor concern constitutes fear.  Alarm is the neurological mechanism that triggers when the finger brushes the hot stovetop, stimulating the body to avoid harm.  Concern is the realistic assessment of circumstances and the acknowledgement of very real negative consequences.  Both are critical components of effective living, let alone organizational leadership.

Winston Churchill is noted for his stirring speech to Britain in which he promised to fight Hitler’s armies on land, sea and in the air “until we have rid the earth of his shadow.”  Less known is his commitment to the unvarnished truth about just how difficult this was going to be.  He set up the Statistical Office whose job was to provide him with a constant and updated stream of unfiltered information on the conflict, which, at the time of his speech, was in its darkest hour.  Churchill stated that he “had no need for cheering dreams … Facts are better than dreams.”

At the end of the day, however, facts can run out, overwhelm or fail.  Long before you exhaust objective information and advice, a pre-emptive strike against fear is to ensure you have solid foundations: convictions about what absolutely matters, and why.  Convictions arise out of the past, not the present or the future.  They are anchored in ancient wisdom, not in novel experimentation or in insufficiently evaluated raw data.  Africans, Asians and others honour elders more than Westerners do because, among other things, the elders are closer to the past, closer to history, closer to things tested and proven.

Fear finds a firm battlement when our friends stand with us, particularly when the threat is to our well-being.  In my distorted misery in that remote Yali village, I did not account for friendship.  On bearing my soul to Hohobo, the response I got was “Jonathan, what we’re doing is important and good.  And we’re with you.  We’ll help you on the trail.  We’ll see this through together.”  In fear I had failed to account for the obvious.  For in Hoboho and my other companions I had friendship, facts and foundations.  We completed the teaching tour.  To do so, my companions kept up my morale and assisted me wherever the trail was difficult or dangerous.  Two villages along we located a two-way radio and were, in short order, helicoptered to help.

Another soul insight from www.soulsystems.ca.

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