Organizational Governance Blog

Some stories are so well known that we forget their message. One of those stories is about the Christmas Roast. A mother would always cut-off the cap on both ends before placing the roast in the oven. So one day, her daughter asked, why do you that? Well, the mother answered, that’s how my mother always did it. The daughter was not content with that explanation and asked: why did grandma do that? When mom didn’t know the answer to that question either, they decided to ask grandma who solved the mystery explaining that – you already know the answer – she only had a small oven and the roast was too big!

I feel that the whole dialogue about strategy is taking the same course. Everyone is PREcribing how to do strategy; you should first do A and then B and certainly not forget C! People get tired about hearing all those shoulds but no one is asking the most obvious question: “WHY”? Why does a business need a strategy to begin with?

When you’ve reached the board-level after a lifetime of achievements, who needs anyone telling you “HOW” to do your job? What General George Patton said regarding his soldiers is equally applicable to board members and executives: “Never tell people “HOW” to do things. Tell them “WHAT” to do and they will surprise you with their ingenuity”.

“WHAT” your specific business needs in order to be sustainable, profitable and the obvious choice for your particular target audience should be the result of innovation and creativity. Unfortunately, in most corporations, structure becomes increasingly rigid toward the top, just the opposite from biological organizations that put innovation and creativity at the top of the hierarchy; in the brain.

It was Albert Einstein who gave us the solution out of that predicament of complacency, when you believe you know everything there is to know about business: “The important thing is not to stop questioning. Curiosity has its own reason for existing. One cannot help but be in awe when he contemplates the mysteries of eternity, of life, of the marvelous structure of reality. It is enough if one tries merely to comprehend a little of this mystery every day. Never lose a holy curiosity.”

There’s a distinct difference between knowing “How to fly an aircraft” and “Knowing what makes an aircraft fly”. My point is that creativity and innovation originates from the latter. When was the last time you engaged your childlike curiosity and asked yourself about the mechanics of the business system; how does it work or what makes it tick?

You may ask, why should I care? Oh, that’s an easy question to answer. Systems are very powerful and you want to make sure that your decisions will work WITH the system and not AGAINST it. When working against the system you can only expect one of two outcomes:

• You damage or destroy the system or …
• The system destroys you.

We have seen plenty of that lately although we’d like to take credit for success and blame failure on anything but us. However: “Systems are impartial just like railroad cars. But, the way you lay the tracks is the path the train will follow!” This path, the connection between where you are today and where you want to be at some future date, is the business strategy! Strategy touches upon every aspect of the business and is thus an executive responsibility that cannot be delegated!

Notice that there can only be ONE strategy for realizing the vision of the company! All the rest that we like to call strategy, such as an Internet-Strategy or an M&A Strategy is either tactics or operations. The latter concerns “how-to” instructions, also known as micro-managing when coming from the board-level or executive.

Therefore, strategy is your benchmark for success, the yard-stick against which you measure all strategic decisions. As a matter of fact, its not only the measure for success on the board level, it applies to the entire organization. This is where you create a “Hierarchy of Goals”. After all, not everyone is performing the same activities. Therefore, each hierarchical level needs to define its own goals in order to support the goals of the next higher level.

When doing this, your business has “Integrity”; realize that integrity is not something vague but it means the opposite of dysfunctional. Consequently, strategy cannot be the business’ best kept secret or everyone is pulling the organization in different directions at the same time; they’re working against the system’s design – they’re destroying the system from within because you didn’t give them the guidance they needed!

In conclusion

In the absence of board-level sponsorship, no strategic change will ever be successful. Therefore, in order for you to find great personal job satisfaction, I encourage you to stop asking others what they can do for your business and start asking yourself: “What can I do to make others successful.” Does that quote sound familiar?

Consequently, rather than PREscribing HOW to run your business, I believe that overall corporate performance greatly benefits from its board members and executives looking for information DEScribing WHAT makes a business system effective; what decisions they can take to facilitate people working WITH the system rather than AGAINST it.

Only when you understand how the business works as a singular, unique and integrated system can you gain the necessary insight for unleashing all your ingenuity to initiate successful strategic change for crafting a sustainable and profitable business with respect for humanity.

Yes, people are an asset and not a line-item of expenses that can be cut at will. After all, the business system has three components:

• People,
• Machines (tools, technology, process, procedures, etc.)
• Human-Machine Interface

Those aspects of a business system should be enough to get your creative juices flowing for your next meeting on strategy!

“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tends to be the difficult one.”

- Donald H. Rumsfeld, US Secretary of Defense;

DoD News briefing, February 12, 2002

Do you remember this press conference? Rumsfeld was asked to account for his claim alleging the possession of evidence to Iraq’s attempts at supplying terrorists with weapons of mass destruction in view of reports contradicting that evidence. Be that as it may, the operative word her is “evidence”; did he have the proper arguments to back up his strategic decision with far reaching consequences, or not!

Instead of answering this journalist’s question, he baffled his audience by stating the obvious; brilliant! Although it sounds like gobbledygook, it was very good advise. But, because he confused his audience, no one asked any relevant tie-on questions such as:

• What do you know?
• What do you know you don’t know and what do you propose doing about that?
• What do you propose doing to discover what you don’t know you don’t know?

This piece of advice does not only hold true on the political level but also in business. When faced with a strategic decision, where you must trade-off more of one alternative against less of another, or vice-versa, when both alternatives are equally appealing, you need very convincing evidence for reaching a decision that gives you peace-of-mind. History might prove your reasoning wrong but at least you would be able to demonstrate that you did your homework!

As we know from our own school days, you either build your own line of reasoning or you copy someone else’s answers. The first option requires DEScribing the mechanism, system or situation. You look for cause and effect relationships as you build a thesis. You test your thesis and if its wrong you learn from your mistakes and formulate an anti-thesis. And, if that line of reasoning proves to be wrong too, you create a synthesis. This way you create insight into the inner-workings of your business. You develop an appreciation for how the business functions as a singular, unique and integrated system. Remember that you learned riding your bicycle by falling down combined with a zeal for mastering the challenge!

There is a second option where you rely on a PREscribed solution; where you copy someone else’s answers – you cheat yourself out of learning anything new. This means in the business world satisfying yourself with blind adherence to an ideology or a best-practice. These forms of thinking inside-the-box tend to be non-thinking. Its a lot easier than building your own arguments, because you do not have to learn anything. After all, you already know the answer to everything; it is absolutism and thus not penetrable by new facts. What is troubling about this approach is the lack of intellectual curiosity, which does not allow for any critical discussions. Therefore, this certainty of personal infallibility prevents any learning from mistakes. Furthermore, anyone trying to open a dialogue is even discouraged from pursuing this endeavor because of the risk of ridicule; being subjected to character assassination.

In conclusion …

The lack of higher purpose and the absence of any intellectual curiosity in combination with the fear of making mistakes, explains why many C-suites are challenged realizing their goals for creativity, self-renewal and innovation. In the absence of Executive Sponsorship, no strategic change will ever be successful. Consequently, its not unusual for such leaders to pride themselves on enforcing a “Zero-Tolerance” policy.

By-the-way, what would you advise those leaders with an aversion for experimenting with unproven solutions or dissenting opinions when they ask you to solve their recurring challenges with the “War-for-Talent”?

Am I a heretic for saying all this?

Have a nice day!

Many authors, trainers and consultants have been giving their interpretations of leadership in the form of books, seminars and coaching practices. Diverse as they are, the golden thread linking these theories together is a search for the illusive secret of success; the one-size-fits-all approach to profitability. You have seen those titles right; the seven secrets to …; the 50 common mistakes of …; how to be a better …; etc.

Although those books relate nice stories that otherwise would have remained untold, I believe that the theories they put forward are flawed. The simple reason being that IF they had discovered the Holy Grail of leadership, than everyone following their lead should be successful; which is not the case. Consequently, the shelf-life of these books is less than a year and every year new books with new theories appear onto the scene only to vanish into oblivion a few months later.

The more academic reason for why these theories are inconclusive is that they are based on a fallacy; a misconception resulting from incorrect reasoning. The scientific model for verifying a theory is the “Syllogism”, a logically correct line of reasoning. For example:

• IF it rains, THEN the roof tops get wet.
• It rains!
• Therefore the rooftops get wet.

Here is the fallacy used in most success-literature:

• IF this theory is valid for ALL businesses, THEN it’s valid for SOME
• It’s valid for SOME!
• Therefore it’s valid for ALL.

Another commonality among success-literature is an emphasis on describing what is GOOD leadership; this is a value-judgment and no definition. It’s a “Tail-Wags-Dog-Story” where you come-up with an explanation or reasoning for your actions after the fact and then turning that theory about leadership into a theory for leaders. It’s common sense that a theory is either about something or for someone but it cannot be both at the same time!

When discussing leadership, the first question that comes to my mind is WHO or WHAT needs to be led to WHERE and WHY? As a systems’ thinker, I typically find my answers by asking the following questions:

• Who are the “Actors”; the people, departments, systems, processes or tools involved in this issue?
• What is their “Behavior”; the relationships between Means & Ends and Cause & Effect?
• What is the “Purpose” of the company?

Actors, behavior and purpose are the main ingredients of a business system. One way or another, we have all experienced the awesome power of systems whether they were mechanical, social, or political. Therefore, the objective of leadership is working WITH the system and not AGAINST it. When trying to work AGAINST the system, you either destroy the system or you get destroyed yourself; don’t do it! (If you want to change the system you need to change your thinking about the system and start changing the system from within, step-by-step.)

You can only be working WITH the system if you understand how the system works. Working without that critical knowledge is called “Trial & Error”. The fact that modern business systems are complex is an additional reason for studying how your business functions as a singular, unique and integrated system. With everything connected to anything, one wrong leadership decision can start a chain reaction that collapses the entire business. The effect of poor design, incorrect implementation, faulty maintenance and bad management decisions tends to show a delayed action of hours, days, weeks, months or sometimes years. Welcome to the intriguing world of Human Error!

In 1990, the British psychologist James Reason published his authoritative study on Human Error. The two conclusions that stand out from his theory are:

• Human error is not the cause of failure; its the symptom of a failing system.
• Although we cannot change the human condition (the fact that people make mistakes), we can change the conditions under which people work.

What James Reason revealed are critical principles on how leadership decisions systematically defeat disable and by-pass system defenses. This body of knowledge has given rise to new leadership principles that are based on:

• Resource Management
• Organizational Climate
• Organizational Process.

Here’s my point:

How you lead and what you do to lead depends on how the system you lead functions. Because you know how to lead a “Bicycle-System” does not imply equal success in leading a “Car-System” a “Truck-System” let alone an “Aircraft-System”. Aircraft are complex systems and just because desks in the “C-Suite” do not have a yoke, rudder paddles, throttles, toggle switches or gauges, a business system in not less complex than an aircraft. Furthermore, every aircraft is different and commercial pilots are even required to have a type-rating for the aircraft they fly! Where did you obtain a type-rating for the “Business-System” that you command?

In our world of incredible reverence for “deep-domain expertise” for every silo of specialized knowledge, we have an urgent need for executive leaders with keen insight into the complex and interdependent relationships between means & ends and cause & effect in order to connect those silos and paint the bigger picture perspective. That’s the service I provide; coaching, training and consulting of executive leaders on working WITH the system!

What is Leadership:

I believe that leadership is about understanding what the system requires in order to reduce the incidence of human error. Funny enough, the necessary early-warning, detection and problem-solving capabilities come from human intelligence; people are simply better equipped to reduce human error than any machine. When leaders understand that principle, they’ll never see people as a line-item expense ever again; they’ll never leave anyone behind. This simple principle has become the secret of leadership because we’ve forgotten to look out for each other. It’s my recommendation to re-read: “All I Really Need to Know I Learned in Kindergarten” by Robert Fulghum, to relearn that in simplicity lies the sublime.

Any enterprise is built on a single idea, emanating from a personal vision for a better future. The success of an enterprise depends on the translation of this idea into a business system. Instead of inventing the wheel you increase your effectiveness and efficiency through the experience curve, the learning curve and economies of scale.

Every man-made system needs to be Designed, Built, Implemented, Maintained and Managed. Furthermore, every system is governed by a compelling, clear and well-defined purpose, describing the system’s reasons-for-being. Without purpose there’s no commercial reason for investing time, money and efforts in a system.

Purpose is the driving force behind the realization of a vision because it describes the critical success factors and prerequisites for the Design, Building, Implementation, Maintenance and Management of the system. In other words, purpose provides the guidelines for the quality of the products and services and that of the process by which they are created and delivered. Think of corporate values, ethics and beliefs such as equal opportunity, sustainability, respect for humanity, eco-friendliness, employee-owned, for-profit, etc.

Quality is an experience, which is different for different people because we have different back grounds. Rather than trying to blend in with the competition, we want to capitalize on our differences by targeting people who are similar to us; people who resonate with us. And, because they resonate with us, our products and services are the “Obvious Choice” for fulfilling their needs. They simply cannot wait to do business with us once they are so inspired. Does this sound like creating a kick-ass brand? Well, David Tyreman wrote the book on it; visit www.WorldFamousCompany.com to order your copy.

Now, it seems like the critical issue is knowing what inspires people to do business with us. Clearly, whatever this is, it must be designed, built, implemented, maintained and managed within the business system. If it’s not part of the system, the business cannot deliver it. Moreover, whether the system inspires or discourages you from doing business with it, you can be sure that someone authorized this measure in some way, shape or form; nothing happens by accident.

Time Warner Cable in San Diego, CA is a great example of how not to inspire an audience. I shudder, hesitate and procrastinate calling them because every time I contacted them something was fouled-up or disconnected. Why does it take hours on the phone to correct their mistakes? Well, because their system is designed to discourage clients from speaking to a decision-maker. They want us to pay one way or another; we either give in and pay whatever they charge us, or we pay in wasting our time and dignity on the phone, listening to menu-options that have changed, pushing buttons, repeating senseless information to verify our identity before getting connected to another person with no authority to rectify what Time Warner did wrong. Note that this form of “Customer Service” is by design. Its no accident that they lure us with temporary discounts into signing-up for all-in-one packages. After all, with the competition out-off the way they have us by the short and curlies; if we don’t please them, they take away our email, internet, phone and TV!!!

What I want to impress upon you is that management’s perception of quality is what brands the business system. Now, you as decision-maker will have to choose how to position your brand or how to inspire clients who resonate with your value-proposition.

Whenever I need to make-up my mind about something, taking a position on an issue and making a decision, I create a continuum. A continuum is an axis with two extremes. The axis represents a certain principle; in this case the use of quality for the design of your business system that is representative of your brand; what you stand for.

Lets put Time Warner Cable on one extreme as an example of how to discourage clients from doing business with them. By the way, have you ever met anyone bragging about being a Time Warner Cable client? Lets position Southwest Airlines on the other extreme, as a shining example of a business inspiring its target audience. Where would you position your business? What are the qualities you believe will resonate and inspire your target audience most?

This is what I want you to take away from this article:

• Any business is a man-made system that’s created by design.
• Any commercial system has Purpose or “Quality”, which governs how the system functions; the Brand-Experience.
• Management can change the Brand-Experience by changing their perception about quality.

If your business does not resonate with the target audience you want to reach, you might want to call us for a free consultation.

Title                  Instinct

Starring             Anthony Hopkins as Anthropologist Ethan Powell / Cuba Gooding Jr. as Psychiatrist Theo Caulder

Director             John Turteltaub

Dr. Ethan Powell had a profound experience living with gorillas in the wild. He was overwhelmed by the experience of being included into the group and being watched over by the Silverback. It gave him a very safe and comfortable feeling. However, he was derided by many people for “Living as a monkey”, which they felt was beneath a specimen of the human race. 

What they couldn’t understand was that “those monkeys” accepted him as a human being in their midst; different but equal. When poachers came after the gorillas, Ethan protected the gorillas and the gorillas protected him. In that engagement with the armed poachers, Ethan Powell killed three of them, who happened to be corrupt Ranchers. The “Ranchers” killed most of the gorillas for some trophy-merchandise and apprehended Ethan Powell. Powell was extradited to the United States and imprisoned for manslaughter. Theo Caulder, an eager careerist psychiatrist does his mental evaluation.

During the interviews with Caulder, Powell explains how most people are “takers”. They have a sinister need for control; to be in control – to have dominion over others. It makes them feel important and powerful. When Powell surprises Caulder by grabbing him from behind in a choke-hold, he asks him: “What have I taken from you and what have you lost?”

Caulder believes he has lost control. After all, he was the free man, the rising star in Psychiatry who holds with his evaluation the future of the prisoner in his hand. Then, Powell explains to Caulder, “you never had control, you only thought you did. What you control for sure is the volume on your stereo or the temperature in your car. What I took from you and what you lost is just an “illusion”; the illusion of control.

Caulder has been grappling with a question that Ethan Powel had put to him early on in their encounter: “What has you all tight up in knots when you wake-up sweating in the middle of the night?” Towards the end of the movie the answer comes to him: it’s “the Game”. He tells Powel how important it is to him to be in the game; knowing that you’re cool with your superiors; with those who can do you favors. He knows how to please them, how to play them like a piano by saying what they want to hear. And Theo is on top of his game!

Powell’s situation looks grim; locked up in a high-security detention center for the criminally insane. Time and again, he stands up for his new family when they are abused by the guards who take a sick pleasure in exercising their dominion over defenseless inmates. This gets him into more trouble and the likelihood of a favorable evaluation and a transfer to a better facility are slipping through his fingers.

The moral of this intriguing story is that we condition our brains by the appearances of things and situations as they are. Since we imprison ourselves by buying into other people’s illusion of controlling our destiny, we need to learn that ”Freedom is not something that you dream; it’s real, it’s there on the other side of those fences we build all by ourselves.”

When Ethan Powel stops challenging the guards, he gives them back their cherished illusion that they are in control. And, when the guards back-off, Ethan finds a way to escape to freedom.

What’s  the programing running your mind, controlling your freedom? What illusions are you clinging to? What would happen if you gave up your dominion over others and your environment?

What are the fences that we have put up all by ourselves and that have conditioned our thinking and belief that:

• we must cut cost to be profitable
• we cannot afford producing int he U.S.
• universal healthcare is too expensive
• we must destroy the competitor in order to survive
• we can use the hiring and firing of people like a gas-pedal in a car for speeding-up and slowing down
• internal competition among departments is a good thing
• anything goes as long as you make money.

Dominion is an illusion because everything belongs to a system whether it’s a simple device, a business, the economy, or nature itself. Our choice is to work with the system or to work against it. When you try to dominate the system you are more likely to fail because you either break the system or in the end, the system will break you. Systems are indeed that powerful!

In order to work with the system you need insight into organizational dynamics; understanding what makes it tick, which is not the same as how well you interpret financial statements! The former refers to relationships between means & ends and cause & effect and the latter refers to the effect or the symptom only. Are you working WITH or AGAINST the system of your organization? The financial statements will give you your answer!