Every business ever created runs according to how it is designed to run. There exists an established management SYSTEM for guiding how the work gets done. Sometimes it is quite sophisticated and other times it is so basic (as might be the case of a one man barber shop); that many might argue that, there is no management system here it’s just me and my Customer. But believe me there is always a system and set of processes for ensuring that the business runs according to the designed intent.

I have often said that every business has two basic elemental components in common and they are Capital and People and in this short note I want to focus on the people or the human capital piece, that enables the business ecosystem to function.

So regardless of which stakeholder group we refer to, I believe that the 2 most important questions in business apply to them all.

1. Why do they come?

2. What makes them stay?

I am not going to outline what the possible answers may or may not be for employees, customers, investors, suppliers to name a few of the more common stakeholder groups, but I invite you to go have some fun with these two questions and let me know how they work and what you find out.

I contend that these questions followed by a few more deeper levels of Why, ( or in order to accomplish what) can help uncover the intrinsic motives of all individuals and groups. I also contend that if an enterprise can satisfy the needs of each stakeholder group in a balanced and aligned manner, that the enterprise will endure and outperform the market over time.

Commitment Continuum:

5. Unconditional & Complete Commitment ….Fully commited even under great uncertainty and accepting of the outcomes even though there may be negative consequences personally.

4. Conditional Commitment … Commitment is dependent on the person’s unspoken needs being met. They are masters at the verbalization of commitment and exceptionally skilled at directing low impact actions and cheer leading to feign commitment.

3. Referral Commitment….Commitment is dependent and linked to that of others.

2. Deceptive Commitment.. Not commited, the person verbalize they are but with little energy and no other noticeable signs of commitment.

1. Self-Declared Non-Commitment…Not commited and honest and forthright about where they stand.

As one looks at the above continuum, it is easy to accept that those at the beginning and end of the continuum are pretty easy to recognize. In fact I would argue that levels 1, 2, 3, and 5 are easy to recognize and that 2 and 3 are relatively unsophisticated and hence easier to manage. However Conditional Commitment is the level that I feel has the potential to paralyze many organizations.

How I characterize it is when people verbalize their commitment but it is not authentic, as the underlying intent behind it is that their commitment is conditional on their own (often UNSPOKEN) personal needs being met. This conditional commitment is very similar to the famous Passive Aggressive style of engagement. It is not uncommon for people to go out of their way to convince others that they are commited. They may even engage in low impact activities as part of the campaign to feign their commitment. If the individuals have significant power in the organization then it can be exceptionally difficult to identify, call and address this behavior. For this reason I see this as a cancer within the business environment and if it is practiced by the Snr. Executives then it quickly becomes a learned behavior and an engrained part of the culture. So in difficult economic times, this FOR SURE will limit the capacity to be resourceful and innovative enough to finding the breakthroughs needed for improved performance.

I am looking at businesses using Value as my filter.  Some of my early conclusions are some of the following (not necessarily earth shattering and probably covered in a multitude of differing areas of studies, but I have not seen them represented via the Language of Value before.)

I am not limiting this study to Large Fortune 500 companies, I am looking at a large strata of businesses from the local bakery, Coffee Shop, Convenience store all the way to the large multinationals.

My list so far is :

Rhythm… Once you enter into the enterprise there is an established and palpable Rhythm that is not stress inducing on any stakeholders. It creates an environment where you get the feeling that this business machine works.

Offering Simple to Understand.. It appears that the product or service needs little or no explanation. The Customer is  engaged, knows what he needs and can interpret the offering in a manner that is not confusing  where he can easily make determinations of Value and what the offering is worth to him.

Customer Exchange is Smooth ..The exchange of the product or service between the customer and the enterprise is smooth, where expectations are met and where Customer management does not become burdensome. Value flows naturally and does not need to be forcibly extracted or agressively pushed.

No Excessive Financial Leverage and Good Cash Flow…There does not appear to be any significant stress induced due to excessive financial leverage or strain from a liquidity perspective. That does not mean that there is no Debt, it simply means that the ability of the business to generate sufficient cash flow to fulfill its financial obligations is not in question or threat and the business can absorb some of the normal and expected up and down cycles.

Effective & Competent Team with a Great Attitude…It is difficult to envision a business running well over the long term where the employees are miserable. In the successful businesses there always appears to be the right match of competence/capabilities to the functions and positions within the business.  Once this happens people generally have a chance to feel fulfilled and significant, they feel good about themselves which turns into a positive outlook. They generally have a progressive leader that nurtures the intrinsic needs of the employee and the performance gets to the right level through voluntary committment. Pride does appear to matter at least as much as money and the language of value is prevalent.

All Stakeholders needs met ..The business works in balanced harmony in its own Eco-System where the Customers, Investors, Suppliers, Employees and connected communities all have their needs met in a manner commensurate with their role. It is equitable, fair and appropriately transparent.

They know what they are good at and they stick to it but are able to change if needed …It is clear to the business leaders what they are good at and they commit to being the best at it. They understand their intrinsic value and how the marketplace perceives that value. They also strive to continually develop their competence, paying close attention to any shifting tides. They always appear to be just that little bit ahead of their Competitors. and they rarely appear to get caught out of position or need to shift into chaotic reactive agents.

It is common for companies to run into challenges and obstacles that are difficult to foresee and overcome. In today’s global environment it can sometimes be difficult to see troubled times ahead. Businesses are inherently engaged in a process of providing a product or service where there are known and unknown risks and it is anticipated or at least hoped, that the rewards for success far outweigh those risks.

So given the pace of change and the multiplicative effect of change, speed and complexity, it is to be expected that there are and will continue to be, lots of future risks and thus lots of failures. But just as pain provides the stimulus that leads to self preservation, failure plays the same role as we try to take the failures as learning moments and share it with others such that the future behavior is influenced and we make better decisions next time. Applied Learning is a term that has been recently used to capture that concept and one definition is the art of taking an experience and internalizing it such that there is a change in future behavior.

I remember a poster that an employee of mine had in her office in the 80’s, it read :

“Good judgment comes from experience and experience comes from bad judgment”.

To a large extent we are all judged or have our competencies assessed by the judgments we make. It is also true that the degree to which we are viewed to be successful is very much linked to the results we achieve based on those judgments that we make. Those that encounter difficult times and fail, whether it be a big or small failure and that look upon them as opportunities to learn such that they will never make that mistake again, are more likely to succeed in the future.

Those that do not look at failure from that perspective are prone to become paralyzed and thus progress stalls.

It is an age old wisdom that we are not defined by our challenges or failures, but rather by our response to them.  That however takes courage and it generally needs a special kind of work environment for people to feel that they are free and encouraged in certain circumstances to try, and be let fail from time to time.  A business that wants to be known for creativity, innovation and having a culture that is able to adapt and change as business conditions shift, must have this kind of environment. I contend that a company with this type of environment would be a magnet for progressive, ambitious people that are committed to bringing their talents and offerings to the world. It really is exciting to imagine a company that could actually create these optimal conditions, balanced with a strong purpose and good set of management systems and principles. I believe they would have a high likelihood of great success and would be hard to compete against.

So remember that at the end of the day it’s OK to fail as long as you learn from it, in fact it might be the answer for your own personal growth and that of your companies. !

Contemplating The World

While at Graduate School a friend drilled three words into me that shall always remain at the pinnacle of my lexicon for life and business. They are Authenticity, Congruence and Transparency. I don’t think that any of these words needs a technical definition but I will offer my interpretation of them.

Authenticity: A person that is authentic is someone who is: Genuine, Real, Pure, Truthful, Honest, Dependable and Trustworthy. You will always know where you stand with this person.

Congruent: A person who is congruent demonstrates that there is harmony and consistency between his/her thoughts, words and actions. They walk the talk. There is rarely a word or an action that confuses or confounds you.

Transparency: A person that is transparent is someone that is open, easy to work with, and that generally does not have a hidden agenda i.e. everything is clear and nothing is cloudy. Typically this person could be said to wear their heart on their sleeve and does not maliciously distort information for personal advantage.

In the world of academia the debate as to whether the practice of Management is an Art or a Science has raged for years and I believe this will continue, but for me that is not the most important debate.

I believe that what matters the most is how professionals engage and behave with each other in the practice of management. Marshall Goldsmith once said that it’s not the understanding of management practice that is difficult, it is Practicing the understanding of management that is difficult. So as people engage in the practice of management, I continually hear people (including executives) express the desire to have more honest and forthright conversations, better decisions, less bureaucracy and more speed. I also notice a general desire for more freedom and less control to be exercised from their superiors.  However I then notice that those same people that want freedom don’t actually give much of it away and many times engage in very controlling ways i.e. they do not trust or empower their people as much as they think they do.

So in this simple example I believe people are not behaving with Authenticity, Transparency and Congruence, therefore it is essentially an ACT. In other words they are managing their image to the degree that others will have a certain favorable impression of them, which they can use to their personal advantage. This takes huge amounts of wasteful energy and effort. What it generally leads to, is an organization driven by self interest, where people keep things close to their chest, have a low level of trust, where information is managed and does not flow freely, which in turn creates unnecessary bureaucracy. It can also stifle creativity, reduce risk taking and problem solving, and causes people to become more afraid to fail so as not to dusturb the status quo. This ultimately slows down the business system, often leads to poor decisions and results in sub-optimal performance.

So as you look at your organization and in the mirror, ask yourself whether your work environment is full of ACTors or is it full of authentic and real players. What do you do?  How do you behave ? and How do you contribute to creating the future that you want for you and for your organization ?