[Originally posted June 22, 2009 on the Huffington Post]
I stumbled into my 25th Stanford Business School reunion over the weekend somewhat chagrined by the fact that my pockets are relatively empty a quarter of a century after I graduated from this august institution. I expected to feel small relative to the corporate titans who were my former classmates as while many of these alums have experienced the “once in a lifetime” historic downturn that we’re all living through, few could match my misfortune of experiencing it twice in the same decade (as my Bay Area hotel company was pummeled in the dot-com bust, 9/11 era also). But, I was surprised to discover that misery truly does love company as this collection of venture capitalists, investment bankers, high-tech execs, management consultants, non-profit leaders, and entrepreneurs had one thing in common. Every one of them had a net worth at this reunion that was lower than it was at the 20th reunion five years earlier and many of these folks had come back out of early retirement due to financial necessity.
One of my favorite panel discussions was a “View from the Bottom” (in each of the past reunions, this panel had been called “View from the Top”) where we learned that this past decade has been more severe than even the 1930’s. Professor Jack McDonald told us that in the 1930’s (after the big drop in stock prices in late 1929), the stock market showed basically flat growth (although lots of up and down swings) along with an average of 2% annual deflation, so there was 2% real growth in the stock market during that time. Given the wreckage we associate with the Depression, this was a bit of a shock to me. Yet, in the past ten years from January 1999 to January 2009, we’ve experienced a 3% average annual drop in the stock market and have had 3% annual inflation along the way which registers a 6% negative net growth for the decade. So, when we say “at least it’s not as bad as the Depression,” there’s certainly truth to that when it comes to unemployment and soup kitchen lines, but for those whose nest egg has shrunk 6% annually in real terms as compared to 2% growth in the 30’s, it’s understandable why you’re feeling a little blue.
And, this is for the monied class. Think about what the average middle class family has faced in the past 30 years in order to try and assure that their income was keeping up with their expenditures. Many families became two income households in order to pay the bills. Then, they started working longer hours, or, at least commuting longer distances because they could only afford a home further out in the sticks. Then, they mortgaged their home up to the hilt (or maxed out their credit cards) in order to keep the bill collectors at bay. Financial engineering isn’t just a Wall Street phenomenon as the CFO of any middle class family will tell you that their balance sheet has been sorely out of balance for years, especially when you factor in the scarcity of time in our lives. Henry David Thoreau once wrote, “The cost of something is measured by how much life you have to give for it.” Based on this premise, our modern lives are very, very expensive!
So, I left my Stanford reunion feeling a surprising dose of gratitude. I didn’t feel “lesser than” like I thought I would and I felt “at one with” so many of my humbled classmates. One of my classmates who has worked with the same investment banking firm for decades pulled me aside at one of the luncheons. He said he needed to have a private moment with me, so we ducked behind a potted palm and he whispered in the kind of tones one uses when talking about infidelity or a curiosity with Viagra. He said, “I made a bundle and lost half of it. For a few months, I felt like half a man. Then, I read your book PEAK and realized that you have a different ‘scorecard’ for success. I love that the name of your company is also your mission statement and your strategic goal for what you produce: joy. Now, I realize how far off my path I am. I realize I’ve been climbing the wrong ‘peak.’”
The world is chaotic and unfair. And, certainly, it isn’t controllable. One thing you can control is your definition of your scorecard. Just as my grandpa Potka told me years ago when, as a young teenager, I threw a tantrum on the golf course because I was hitting divots further than golf balls, “When you’re having a bad golfing day, stop counting your strokes and start counting squirrels, or how many different cloud formations you see in the sky, or how many times you’ve made your grandpa smile with one of your silly jokes.” What scorecard are you using to define success in your life?
June 23rd, 2009
[Originally posted June 4, 2009 on The Huffington Post]
Close your eyes for a moment and consider the collection of bosses you’ve had since you joined the workforce. I remember my first boss, Mac, when I suffered through six week at the fries and shake work station of McDonald’s. He helped me understand that “boss” was a four-letter word and spelled backward it’s what I felt like doing when I came home from work each day (SOB also defines how I described Mac to my friends). But, I also remember Larry Keating, who mentored me with great patience and wisdom in my summer internship between college and business school. Larry helped me realize I had more ability than I thought I did so I could accomplish more than I thought I would. He helped me realize I could jump much higher than I ever imagined.
My hotel company, Joie de Vivre, has a more than ten-year tradition of celebrating “Employee Recognition Week” just as we’re going into our busy summer season. We started this tradition as a means of helping our maids, bellmen, bartenders, and managers realize that we truly appreciated how much life they gave to our enterprise. While we initially were thrifty with our expenditures during this week by just having a companywide BBQ, with time our generosity grew such that we were offering employees the opportunity for their families to go to local theme parks or for cruises on the San Francisco Bay or tickets to see the SF Giants or Oakland A’s. More recently, we spent nearly $100,000 on these various recognition week activities which may sound lavish, but when you realize that this is only about $35 per employee (or about $1 per hour that each of our employees worked that week), you come to realize that the good feelings about our company culture that are generated from these activities are probably worth it. Heck, you could spend $100,000 in legal fees in California just settling one wrongful termination suit of an employee who didn’t feel properly recognized.
While employee recognition week may be a wise investment, this year we don’t have the cash to invest so we’ve had to make substantial cutbacks in some of the more expensive activities. Sound familiar? Does that mean we can’t recognize our people? Why don’t we go back to the roots of what recognition means? Compensation is a right, but recognition is a gift. What gift could I give my staff that would be as meaningful as what Larry Keating gave me that summer 27 years ago? Yesterday, I decided to write each of the 80 people who work in our headquarters a handwritten, heart-felt thank you card. For less than a dollar per card and about six hours of my time, I could give the ultimate gift that we all are looking for. Cancel your round of golf this weekend and plant your self in your favorite chair watching the NBA finals and pen some thankful prose to those who work for you. As William James once wrote, “The deepest hunger in humans is the desire to be appreciated.” I don’t know about you, but I’ve saved cards that old high school flames wrote me as well as those that employees have written me over the years. The power of genuine, customized appreciation will never lose its value, even in a gloomy economy….in fact, it’s probably what we’re all thirsty for in this desert of a depression.
The Gallup organization found that the single most important variable in employee productivity and loyalty is not the pay, the perks, or the benefits. It’s the quality of the relationship between employees and their supervisors. Isn’t it ironic that pay, perks, and benefits all cost your company at the bottom line, but authentic recognition, especially when it’s most unexpected, costs very little and gives the most impressive return on investment. I believe the $73 I spent on those cards was the best investment I’ll make in 2009!
June 4th, 2009
[originally posted May 18, 2009 on the Huffington Post]
Can little Bhutan with its humanistic development philosophy create a new global currency of well-being? For you skeptics who think innovation only occurs in the developed world, consider Bangladesh’s Muhammad Yunus and his microlending approach to financing the aspirations of the poor. Yunus, who won the Nobel Peace Prize in 2006, has helped to revolutionize how the financial community and governments view the poor and the Grameen Bank’s efforts have led to similar projects in more than 40 countries. Bangladesh, a country that’s even poorer than Bhutan, has taught us that business can’t sustainably thrive in societies that fail at the bottom of the pyramid.
Simon Bolivar, the South American independence leader, said long ago, “The most perfect system of government is that which produces the greatest possible amount of happiness.” Bhutan, through its Gross National Happiness (GNH) index, has tapped into that fundamental aspiration that unites us. The Bhutanese have redefined their objective of development and countries around the world are taking notice. In tandem with the growth of the positive psychology movement, there is a new paradigm arising in both global economics and psychology. Recognizing that modern man has been liberated by prosperity but not fulfilled by it, psychologists and economists are seeking new ways to measure the intangibles of public welfare.
One wise man once wrote, “Happiness is designed to evaporate.” So, how do you measure something that disappears? The U.N. Millennium Summit commissioned the largest international poll ever taken (by the Gallup organization) and found that people value good health and a happy family far more than they do material well-being. The Philippines have modified their approach to measuring subjective well-being such that each individual surveyed identifies which particular domains – whether it’s leisure time or compensation – are most important to them and then the government is able to tabulate the overall subjective well-being for the country. Given that the U.S. is on the cusp of its 2010 census, wouldn’t it be instructive for us to ask more meaningful questions than just the demographic and personal financial data of our citizens?
As the CEO of hospitality company that surveys the well-being of our 3,500 employees twice a year, I’ve learned that asking revealing questions – beyond the tangible of “are you getting paid enough?” – helps us better understand how we can address our employees’ higher needs. We have been able to create the conditions for our people to feel more engaged and inspired by asking, “Have you been recognized for what you do in the past month?” or “Do you feel that your work positively impacts our customers and how do you know this?” And, we’ve cut our employee turnover to one-quarter the industry average by rethinking what we’re measuring. Our people will never aspire to more than a job if all they focus on is the fact that they clean toilets in a hotel. But when one sees the broader purpose of what they do, they start to realize their work can fulfill in ways they hadn’t imagined. And, the positive result of being in a workplace full of happy fellow employees is noticeable to everyone who comes into contact with an organization. Harvard’s Nicholas Christakis has shown that happiness - like the fear and the flu – can spread from person to person and even affects people peripherally like neighbors and relatives.
What if we took Abraham Maslow’s ideal of self-actualization and used it as an organizing principle beyond the individual? Most don’t realize that in his latter years, Abe Maslow was focused on how to take this individual-focused theory and apply it more collectively to organizations. I’ve found that using his Hierarchy of Needs theory as a means of understanding the collective higher needs of my company brought me great insight. In essence, Bhutan is doing that as a country as they’re focusing more on the intangible higher needs that a tangible metric like GDP misses. What the world needs now is an actualization index that measures something worthwhile, something that helps us move people up both the economic pyramid as well as Maslow’s needs pyramid.
The world’s economic crisis is a symptom of a deeper malaise that threatens our collective well-being and survival, yet using the old measuring tools may not allow us to address the disease beyond its symptoms. Many of our dominant economic theories – from Smith to Ricardo – were espoused in the 19th century and were based upon the tangible scarcity in agricultural and industrial societies. While the world’s tangible, precious natural resources are certainly scarce, some of our deprivation today is in the intangibles of the cultural, spiritual, and emotional realm. Some of the scarcity is “capability deprivation,” those who have talents but lack access to opportunity or “time deprivation,” a scarcity that’s very familiar in modern society. How do economists evaluate the theory of scarcity when it comes to the intangibles that define the quality of modern life?
We’ve been too pervasively susceptible to confusing ends and means and needs and wants. Is it possible that Gross Domestic Product should just be a subset of a Gross National Happiness index rather than the other way around? As we’re exposing so many emperors with no clothes these days, can we now see that GDP is an artifact from a time when it was presumed that if there were more goods in circulation, general welfare would naturally follow? Paraphrasing Viktor Frankl, the world has been pushed by drives, but it is now pulled by meaning. The vast and intricate envy-producing machine called “consumerism” may have overpowered the other “isms” with a “c”: communism and capitalism. But a good portion of the world has woken up to the insatiable and insane arms race that comes with “positional consumption,” buying not to meet a need but to create a relative superiority. Gandhi said it best, “The world has enough to satisfy everyone’s needs, but not enough to satisfy one’s greed.” It is time for the world to reconsider what we measure and how the very act of measurement impacts what matters.
May 19th, 2009
[originally posted May 11, 2009 on the Huffington Post]
Born in the shadow of Disneyland, I have a natural predilection for seeking happy utopias. Having founded a company named Joie de Vivre in a place described as “49 square miles surrounded by reality” (San Francisco), I’m not surprised by my fascination with Bhutan, the first country in the world to proclaim happiness as its primary civic goal.
Flying into this Himalayan Shangri-La, I was immediately struck by the world’s highest unclimbed mountain, the exquisite temples perched precariously on cliffs, the friendly and handsome people adorned in traditional silk attire, and a healthy dose of wafting incense and chanting mantras. With relatively strict limits on foreign travelers (about 50 a day), there were virtually no mainstream tourists to be found scurrying from holy site to spectacular vista. This is the kind of “boutique country” that could resonate with a boutique hotelier like me.
I came here to learn how the world’s newest democracy could be a model for a new definition of global success. But, understanding that this thoroughly un-modern place was no bulls-eye (they love archery here) for the conventional definition of a developed country, I pondered whether poverty and utopia could co-exist?
Fortunately, I started my investigation dining with the Prime Minister and a collection of the leaders of Bhutan’s Gross National Happiness (GNH) movement. At dinner, when the Prime Minister said his goal was “to create the conditions in which happiness could flourish,” I almost fell off my seat. My happiness guide Abe Maslow suggested in life and especially in the workplace, “One can set up the conditions so that peak experiences are more likely, or one can perversely set up the conditions so that they are less likely.” Having visited Zimbabwe two years earlier, I viscerally understood that “creating conditions” for a happiness habitat is one of the most profound responsibilities of any leader (as there’s no better example of a set of perverse conditions than in Zimbabwe.)
The Bhutanese dream big (and so did I as my week was full of lucid and vivid dreams). They don’t dream in material ways, but the leaders I spoke with talked about development in such humanistic terms that I worried that their goals might remain lofty and intangible. Fortunately, Bhutan’s Gross National Happiness Commission has spent the past five years identifying nine key indicators that they now measure to gauge civic well-being: environmental conservation, sustainable and equitable economic development, promotion of culture, good governance, psychological well-being, community vitality, health and wellness, accessibility of education, and how people allocate their time daily. As one new member of Parliament said to me, “Bhutan will never be a financial or military world leader, but we can be the leader in learning how to preserve our culture and live a rich life.” I learned long ago in business, if you’re small, go niche, and the Bhutanese have got the happiness niche down to a science.
Given the civic boosterism of Bhutan’s GNH movement, there were moments when I thought I was part of some Madison Avenue advertising stunt. This primitive paradise all seemed a little too perfect, even with all the rough and occasionally inconvenient edges. Clearly, those of us in the “developed” world long for a place where the grass is greener (literally, they’ve got green “grass” as marijuana grows uncut throughout the country), where simplicity, authenticity, generosity, and safe drinking water abound (three out of four ain’t bad). Franklin Delano Roosevelt even named his presidential retreat Shangri-La (later renamed Camp David) based upon the imagination of such a far-off nirvana.
But, Bhutan isn’t just a Hollywood set for Lost Horizon. There’s a contentment here that is real. As one observer suggested, Bhutan is “simultaneously placid and intellectually invigorating”….not a simple combination. Their Tantric Buddhist traditions (there are more monks than soldiers), the unspoiled landscape, their splendid isolation (the last country in the world to have television), their benevolent kings, and their unique history of never being colonized nor conquered, have all created the conditions for happiness to flourish. But, beyond that, in a modern world full of self-help books and shrinks on every corner, the Bhutanese don’t “pursue” happiness (there’s supposedly just one psychiatrist in the country). Happiness is the natural by-product of a life built on gratitude, not gratification. There may have been a time when “ignorance was bliss” in this country, but today Bhutan is well-aware of how it delightfully deviates from the world’s national norms. And, there’s even an Emotional Equation I cooked up that sums up their unique recipe that the rest of us could learn from:
Happiness = Wanting What You Have divided by Having What You Want
(credit: William Shakespeare)
So, can we bottle Bhutan and distribute it to the rest of the world? No doubt, we’ve entered an era in which global transformation isn’t just a nice idea, it’s truly an imperative. But, could a little country the size of Switzerland, with a population no larger than my hometown, and a per capita GDP smaller than Haiti prove to be a leader in a new movement toward an alternative metric for success? Bhutan is ironically bordered by two countries which represent nearly 40% of the world’s population (China to the north and India to the south) where the 21st century’s version of “middle class values” will be borne. Will this new generation of the Jones (or Wangs or Shahs) pursue excess as their definition of success? If Bhutan plays its cards right, this country is fated to be noticed and potentially be a role model for how we measure and define happiness and well-being in the new millennium.
May 11th, 2009
[Originally posted April 29, 2009 on the Huffington Post]
Who defines what you value? Of course, we would love to think that we alone define our own sense of value. But, it shouldn’t surprise you to know that – on a global basis – our definition of what’s important is incredibly influenced by statisticians and economists using the equivalent of an abacus to define human progress in the 21st century.
A country’s Gross Domestic Progress (GDP) has been the world’s holy grail for nearly four decades (which was proceeded by similar measure, Gross National Product). This universal measuring tool, as a means of determining which countries are “developed” and which are not, is a gross tally of a nation’s production and consumption. By definition, it assumes every monetary transaction adds to the developed nature or social well-being of a country. In practice, this rewarding of production and consumption masks many of development’s costs whether those costs be the workaholism and materialism associated with these toils or the prisons that are constructed to incarcerate those who don’t play by the rules. Just consider that pollution – or environmental degradation – shows a double benefit to GDP, scoring points when we pollute and, once again, when we attempt to clean-up our messes. This “gross” (love the pun, don’t you?) definition of a country’s value is an artifact from an earlier era that assumes that economic development would naturally lead to human development.
There’s too much evidence today showing that this GDP = Quality of Life perspective is just plain wrong both in the developed and the less-developed world. U.S. per capita income since World War II has tripled and our homes are twice the size, but there’s no reputable survey that shows that Americans are statistically any happier today than they were during Eisenhower’s era. In fact, there’s more and more evidence that past a certain modest level of economic survival, humans tend to judge their happiness more on a relative basis (“keeping up with the Jones”) than on some objective, personal criteria. Capitalism and GDP are the perfect recipes for this zero-sum game of conspicuous consumption. And, in the developing world, we are able to see within a decade’s time the societal costs associated with a GDP-driven strategy, whether they are growing income inequities or the loss of generations of cultural traditions.
Why is this important? Well, the indicators we use for societal success determine our policies and even embody our values. While there’s no doubt that GDP provides an objective, easily-measurable means of defining the relative success of various countries that’s like saying that we could judge a boy’s character by how tall he is. In 1972, Bhutan’s new King Jigme Singye Wangchuck had a moment of clarity that would have inspired MasterCard (even this credit card giant realizes the importance of the intangibles of life: “there are some things money can’t buy…for everything else, there’s MasterCard”). This King of a tiny country wedged between China and India suggested the blasphemous: why don’t we value the intangible of happiness in our calculations of whether a country is getting it right. Twenty-seven years before the country would have its first TV installed in a home, King Wangchuck proclaimed that Bhutan would follow a Gross National Happiness Index (GNH) instead of GDP.
Since that time, a diverse collection of countries, from Australia and the Netherlands to Sri Lanka and Haiti, have jumped on the happiness bandwagon. France’s Nicolas Sarkozy has teamed up with Nobel laureate Joseph Stiglitz to create a Quality of Life Commission to study which indicators have the greatest effect on well-being. There are now HDI’s (the U.N’s Human Development Index), HPI’s (Happy Planet Index), and GPI’s (Genuine Progress Indicators) that factor in such subjective criteria as the crime rate in a country, the percentage of couples getting divorced, a country’s carbon impact on the world, and the access to education. Just like the triple bottom line is gaining momentum in the business world (an alternative means of defining a company’s success based upon people and the planet, not just profits), the governing powers that be are recognizing that these times require a new method of thinking about how we define progress.
If this seems a little abstract, let me share a personal example of how using new, more intangible measuring tools helped save my company during the last economic downturn. When my San Francisco Bay Area hotel company was getting rocked to its core by the combination of the dot-com crash, 9/11, and a variety of other factors beyond our control, I realized that the traditional methods we’d used that defined our success – like year-over-year revenue or profit growth – were no longer relevant as a relative measure of our success since, frankly, everyone was showing huge drops in revenue and net income. Instead, we started giving greater attention to our employee satisfaction surveys and competitive market share as a means of guiding our business strategy. Lo and behold, we came to find that the intangibles of having supremely-engaged employees or evangelical customers created the kind of deep loyalty that allowed us to transcend the bad times. It wasn’t that profits and net income weren’t important, but they were actually the lagging indicators of our success. Changing our approach from measuring these byproducts to, instead, measuring the inputs (happy employees and customers) helped my company triple in size during a very difficult time. So, I’ve seen from personal experience that what you measure matters. And, sometimes, you have to adapt your measuring tools to the intangibles in life that truly define success.
So, tonight I travel to Bhutan and tomorrow I have dinner with some of the royal family (including, hopefully, the new King, who at 29, has an incredible likeness to Elvis) and a collection of the members of their relatively new democratic government. I will be meeting with members of the Gross National Happiness Commission to understand the nine key areas that they measure and to question whether a subjective means of measurement has risks of devolving into a sort of “Brave New World” paternalism (don’t worry, we know what will make you happy).
Abraham Maslow once said, “If the only tool you have is a hammer, everything starts to look like a nail.” This has been the case for world leaders who’ve myopically been focused on GDP as the only tool in their toolbox. There’s a growing misalignment between the kind of human needs Maslow and others have espoused and the professed world economic goals as defined by production and consumption. Robert Kennedy probably summed it up best four years before the Bhutanese King uttered the concept of the Gross Happiness Index, “Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product…counts…cigarette advertising, and ambulances to clear our highways of carnage….Yet the Gross National Product does not allow for the quality of our marriages, the intelligence of our public debate, or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile.”
Our American forefathers wrote about our unalienable right toward the “pursuit of happiness” long ago. I am now pursuing the ephemeral concept of happiness in Bhutan and I’ll report back to you in a few days as my next posting will overview what I’ve learned from this trip.
April 29th, 2009
[Originally posted April 14, 2009 on the Huffington Post]
You can catch much worse than the flu at work. W. Edwards Deming, the father of the total-quality movement in business, once said that the primary duty of every leader is to remove fear from the workplace. Smart man. Today, our workplaces have become “fear factories,” with an emotional contagion far more serious than the cold germ. Successful companies create a kind of psycho-hygiene that can immunize employees against the fever charts of misery that exist in most workplaces today.
Recently, neuroeconomist Gregory Berns wrote in the New York Times, “We are caught in a spiral in which we are so scared of losing our jobs, or our savings, that fear overtakes our brains. And while fear is a deep-seated and adaptive evolutionary drive for self-preservation, it makes it impossible to concentrate on anything but saving our skin. Ultimately, no good can come from this type of decision-making. Fear prompts retreat. It is the antipode to progress. Just when we need new ideas most, everyone is seized up in fear, trying to prevent losing what we have left.”
Berns conducted an experiment and found that people would rather expedite a bad experience rather than wait for it. He writes, “Nearly a third feared waiting so much that, when given the chance, they preferred getting a bigger shock right away to waiting for a smaller shock later. It sounds illogical, but fear — whether of pain or of losing a job — does strange things to decision-making.” I’ve experienced this kind of “shock me now” illogical thinking recently in my business. We were in the midst of launching a San Francisco restaurant and a Southern California hotel when two separate owners independently decided to potentially shutter the new restaurant and the new hotel after spending millions of dollars and time to create them due to a severe case of fear-itis. Fortunately, in both cases, we were able to convince the owners (as my company, Joie de Vivre Hospitality, is the manager of both properties) that it made more sense to launch the venture and not layoff all the managers and staff that had been hired and trained as opposed to mothballing the business for a year until times were better.
The irony is that risk aversion is running rampant just at the time that creativity and innovation are more needed than ever. Downsizings and the fear associated with them are part of the business landscape, but corporate anorexia – companies that downsize to get too thin – isn’t healthy for an organization or its people. But, just as the anorexic doesn’t have a realistic perspective on his or her body, the corporate leader who is possessed with thinning the company has no clue what kind of long-term negative impact they’re creating on a cellular level in their organization. One of the most important questions any leader needs to ask before they downsize is, “What do we want this company culture to look like at the end of this downturn?”
New thinking in both psychology and medicine suggests that wellness isn’t just the absence of disease, but, instead, it’s the prevalence of fulfillment and vitality. This is just as true in an organization as it is someone’s body. We need to practice a radical rethinking of the idea of management. Notice I used the word practice as my friend and fellow entrepreneur Jesse Jacobs recently pointed out to me that doctors, lawyers, religious professionals, and athletes all “practice” their craft, but no one uses that word to describe businesspeople.
First, peak-performing leaders need to practice clarifying for their associates what’s within their grasp to change and what’s beyond their grasp. Life is full of constants and variables, just like algebra. Those companies and leaders that create serenity in place of fear know how to practice accepting the things they cannot change, having the courage to change the things they can, and the wisdom to know the difference (credit the Serenity Prayer). Fear comes from the unknown and the uncontrollable, so it’s essential to redirect the corporate energy from the light at the end of the tunnel to the metaphorical candle you can light in your hand. And, creating a couple of small wins will help build the momentum such that a positive emotional contagion can grow.
Secondly, companies are meant to be the vehicle for the aspirations of their workers as integrated human beings. And, great leaders are truly awakeners of potential, not managers of experience. Many of us are asleep to what we are capable of becoming, yet a brilliant boss and times like these can be the actualizing alarm clock you’ve needed to awaken to all you have to offer to your company and the world. Fear can be a motivator, but the scent of possibility is so much more powerfully sustainable as an influencer. When one door closes, another opens, but quite often we look so longingly and regretfully upon the closed door that we do not see the one which has opened for us. In fact, too many of us become enamored with the open window as our escape.
If you practice these two steps – focus on what you can control and help people see and actualize their potential - you will build confidence and reduce fear. And, that bundle of human energy that we call your company will weather this storm just fine. In fact, our emotionally-intelligent President is trying to use this two-step dance to immunize the country from the fear tailspin we’re in collectively. Fear creates failure. The strange irony is that on Friday, the U.S. shut down its 22nd bank of the year and it was called Cape Fear Bank.
On a personal level, I’ve noticed the change in the corporate mood of this country. When my book, PEAK, came out a year and a half ago, most of the questions I was asked at speeches related to how to create a more vital workplace, but today the questions are more survival-driven. From fulfillment to fear and from mojo to malaise, I’ve seen a dramatic shift in where we are paying our attention. But, one thing we can learn from the great spiritual practices of the world is life is all about where you pay your attention. Practice paying your attention on the higher needs of your employees, customers, and investors, and, miraculously, you’ll find that this is the true differentiator when everyone else is stunted at the bottom of their Hierarchy of Needs pyramid.
April 15th, 2009
[orginally posted April 1, 2009 on the Huffington Post]
Admit it. We are in uncharted territory. We’re spending more than a trillion dollars to prop up an economy that was overly-stimulated during the dot-com bubble and then propped-up again by the Fed during the real estate bubble. When Republicans are talking about nationalizing banks and the Obama administration is taking a more expansive role in virtually every industry, we have to recognize that our next bubble may be the viability of our government. We can’t afford to have that bubble burst. In fact, the Chinese, our biggest offshore “pusher” that have helped facilitate our consumption and borrowing addiction, have warned us. They’ve asked us to tame our government-sanctioned stimulus sensibilities for fear of piling on the future America’s debt burden. You know when the largest Communist country in the world is educating the U.S. on the risks of too much government intervention and debt that we’ve crossed some sort of line that only Ayn Rand would have imagined a generation or two ago. So, within the context of this new version of the New Deal landscape, let me propose a blasphemous concept. Given the huge logistical exercise that the Obama administration will be conducting in health care, environmental, infrastructure, and virtually every other policy matter, why not learn from the masters of how to make big things work better: Wal-Mart? This resilient and entrepreneurial company has pranced across the planet creating annual revenues that surpass most mid-size countries’ annual GDP. Of course, Wal-Mart and McDonald’s were the only two American companies that experienced growth in their 2008 stock prices in this new survivalist economy, so they may be the right role model for these trying times.
Yes, I know you hate Wal-Mart. So, do many Americans. In fact, between 2000 and 2005, the company’s stock price dropped more than 25%, partly due to the fact that almost 10% of Wal-Mart consumers had stopped shopping there due to the company’s well-documented reputation of being socially-irresponsible (or for the conservatives in the crowd, at least severely politically incorrect). But, this company has remade itself in some truly impressive ways…partly out of necessity. But, ultimately, Wal-Mart is a brilliant case study of how a behemoth can do well by doing good and do that with the kind of speed that Barack and his team need.
Exhibit A: Health Care. While Wal-Mart still trails many of its competitive retailers in terms of the health care benefits it provides employees, it has made large-scale changes such that the percentage of employees covered is 15% higher today than it was in 2006 (at the same time that most companies are going in the opposite direction by reducing benefits in this recession). It helps to be the world’s largest self-insured employer, but this fact means that the company has innovated in all kinds of ways that would be deeply instructional to the U.S. government: hundreds of in-store health clinics have recently opened which are meant to provide affordable access which saves big money for local government public health facilities, $4 generic drug prescription programs have saved over $1 billion for customers and employees, a $20 per month catastrophic care program for employees, an investment in digitalized and secure medical records (one of Obama’s most well-received health proposals) for its employees and retirees, a contract with the Mayo Clinic to provide all transplants for Wal-Mart employees as a means of a single source approach to reducing the costs associated with these expensive procedures, and a “Life With Baby” education program aimed at reducing the rate of premature births and early infant diseases for employees. Whether its making health care more affordable and accessible or revolutionizing some of the systems associated with this slightly-archaic industry, Wal-Mart’s best practices are noteworthy for the White House.
Exhibit B: Environmental. Prior to 2005, Wal-Mart was appropriately scolded for its passivity with respect to how it was reducing its environmental footprint as the world’s largest company. While today no one would mistake Wal-Mart for Patagonia or any other eco-focused retailer, it’s remarkable what changes have been made in such a short time based upon the company’s collaboration with a variety of environmental organizations. Wal-Mart created its own environmental standards – since there weren’t any federal standards to rely upon – regarding eco-packaging and they imposed these on Procter & Gamble, General Electric, and even the folks who make the Radio Flyer wagon (you may have heard the much-told story of how a Wal-Mart employee saw how much waste occurred when they unpacked their child’s gift, which gave this employee the incentive to recommend changes to their Wal-Mart superiors). Additionally, they created a supplier index and eco-rating system that they rolled across all of their product categories. With the largest private trucking fleet in the world, the company is changing the design of these trucks to create 25% better fuel efficiency which will save Wal-Mart $500 million annually by 2020. And, they’ve made great efforts to provide more eco-friendly products for their customers such that they now sell more than 100 million fluorescent bulbs annually.
We have a lot to learn from Wal-Mart. Through no contractual obligation, Wal-Mart employees were elbow-to-elbow assisting Katrina victims faster than feeble FEMA due to some independent decision-making by local store managers. Within a couple of days, the senior leaders of Wal-Mart made the kind of decisive decisions sorely lacking in the Bush White House. They committed 1,500 truckloads of free merchandise, food for 100,000 meals, job security for all displaced Wal-Mart workers in the area, and they contributed $20 million in donated cash to the efforts. And for those who think a Wal-Mart job is a dead-end experience, realize that the company has a well-respected career development program that promotes line level workers quickly such that two-thirds of all Wal-Mart managers are elevated hourly employees. You may not like Wal-Mart, but the vast majority of their employees do seem to be committed to the company and every single employee has the potential to earn a quarterly bonus based upon store performance.
Yes, I know that Wal-Mart deserves to be the corporate piñata for a variety of other business strategies and tactics and their commitment to many of these new-found practices may seem to be as much bottom-line and reputation-driven than a new-found religion (and, I’m not sure that the ratio of Prius’ to Hummers in their headquarters parking lot has escalated any faster than any other American corporate giant). But, what the Obama administration needs to succeed today isn’t more politically-correct zealots. What it needs is an efficiency expert that can implement logistics very quickly on a grand scale as Barack’s agenda is vast and the stakes are high. The last time I checked the U.S. government wasn’t all that good at efficiency, logistics, or speed (although I will say that our government has gotten much better in these areas during the past decade).
Don’t be surprised if we’re going to be “bending toward Bentonville” in these next few survival-driven years. If you need a little proof that Wal-Mart’s reputation is making a comeback, take the case of Wal-Mart.com’s signage in the bastion of liberalism, San Francisco. My college fraternity brother was President of Wal-Mart.com a couple of years ago. He told me about how his employees were occasionally embarrassed to tell their friends in the Bay Area (where Wal-Mart.com is headquartered) that they worked for the company. And, for potential sabotage reasons and to limit their exposure in this geographic hot bed of political protest, Wal-Mart.com chose for years to downplay their Bay Area office building signage presence. So, given Wal-Mart’s recent “coming out” as a good corporate citizen, I guess I shouldn’t be surprised that the other day when I was driving to the San Francisco airport, there was a huge sign on a bayside office building proclaiming Wal-Mart.com was headquartered in that building.
For those of you who are still having a hard-time digesting the idea of Barack being mentored by Bentonville, would you consider a joint venture with Wal-Mart, instead of an outsourcing or consulting contract? I can certainly think of better investments for the U.S. government (and all of us who “invest” in our government) than A.I.G.
April 2nd, 2009
[originally posted March 24, 2009 on the Huffington Post]
Fifty years ago, Abraham Maslow wrote, “Where fear reigns, enlightened management is not possible.” More recently, the management consulting firm Accenture revealed the results of a study that showed that companies have “emotional fields” that can immunize them from the kind of fear that is plaguing most companies today. Accenture’s Jane Linder says, “Emotion is the silent partner behind organizational success especially when it comes to the capacity for continuous renewal. Although executives may regard effective project management as something that demands rationality in the extreme, Accenture research has established a direct link between employees’ emotional engagement and performance.”
This will come as no surprise to anyone who has hung out in a company in a death spiral. The contagious emotion of fear (which is usually a ripple in most companies, but has become a tsunami) shuts down creativity, productive communication, and the sense of team spirit that one tends to find in those companies that are able to transcend the difficult times. As the CEO of a company that was on the verge of a financial meltdown seven years ago, I know that the solution requires a certain healthy “psycho-hygiene” which allows a company and its people to build on small successes and believe that they can rise above the times.
Building on success is what you’ll see on the cover of this week’s Fortune magazine; it’s the annual cover issue of the “World’s Most Admired Companies.” In the era of bad banks and incompetent insurance companies of historic proportions, it’s hard to imagine that Fortune could round up 50 companies from around the world to make this list. But, one look at the list and I was sold. The top four companies — Apple, Berkshire Hathaway, Toyota, and Google — were all profiled in my book, PEAK, as companies that operate under principles that resemble Maslow’s Hierarchy of Needs of human behavior. In fact, six of the top eight companies are organizations that I suggested were self-actualized in my book (this includes FedEx and Southwest Airlines also).
So, what makes a company self-actualized? Almost all companies today are seriously focused on their survival needs. In fact, some of these companies make odd decisions out of being ruled by financial fear. How can you explain that many airlines now charge their customers for soft drinks, pillows and blankets and one European airline, Ryanair, has even mused about installing pay toilets on their planes? At what point does the customer value proposition become a joke? These faulty flyers are so obsessed by their need to financially survive that they don’t recognize that they are seriously upsetting their customers and, even their limited remaining customer credibility, in the process.
I had the good fortune of observing Southwest Airlines CEO Gary Kelly hand out peanuts during a flight recently and was able to spend ten minutes with him in the back of the plane asking him about why his company chose to take a different path (and they’ve even made it into a marketing campaign of “no hidden fees”). Surprisingly, he didn’t say that Southwest’s reluctance was primarily due to the fear of how their customers would react. Instead, he reminded me who in their company would probably be most barraged by the likely customer complaints. Gary Kelly said, “There’s a reason our flight attendants appear happier than those at the other airlines. We take them into account when we make key operating decisions in our company. I’m not sure our competitors do the same.” It is quite telling that there was no other U.S. airlines on Fortune’s list.
Great companies create the conditions for their employees to live up to their potential. In fact, great leaders visualize the potential in their employees and actualize that potential into reality as former CEO and co-founder of Southwest Herb Kelleher did with his secretary Colleen Barrett (Colleen is now the President of the company!). Southwest Airlines flight attendants are more likely to be living their calling. United’s flight attendants probably are just living through a job. Toyota’s execs imagined the Prius. Google is able to recruit the best and the brightest with an actualization-focused culture. Apple creates evangelist customers who truly feel transformed by using Apple’s products.
The companies we admire are very similar to the people we admire. They are passionate, smart, resilient, trustworthy, original, and forward-thinking. They are “being all they can be.” They are able to transcend the survival-driven fear of the moment and instead focus on the higher success and transformational needs of their employees, customers, vendors, and investors.
March 25th, 2009
I am proud to officially announce the launch of the PEAK Seminar Series for organizations. After six months in development and testing, we are now ready to guide individual organizations through the application of PEAK theory and principles to transform their key stakeholder relationships, and ultimately, their business.
To learn more about the series, please click on the “Main Site” button above and then click on the PEAK Seminars starburst.
March 13th, 2009
[originally posted March 9, 2009 on the Huffington Post]
For some reason, the fact that Barbie turned 50 this past week freaked me out. As a guy who’s on the precipice of 48 and a half, I was already struggling with the reality that our President is younger than me. But, now I know that Barbie and I will hit the big Five-O within a couple of years of each other, yet my movable body parts live by the laws of gravity and hers don’t. Damn that Barbie.
Our economy has movable parts, too, and a whole lot of gravity. In fact, there’s so much gravity that savvy observers are starting to worry that my little cusp of a generation (what some have called Generation Jones, those late boomers or early-Xers born in 1954-1965), who’ve seen their retirement piggybacks lose more than half their value, “bail out of stocks for good. Some analysts say stocks, which posted zero gains for the ten-year period ending in October, are setting up for a second ‘lost decade.’” (USA Today) Does that make mine the “lost generation” since we may lead the way to a generational divesture out of the stock market?
Frankly, my generation has been lucky as we’ve experienced the “Great Expansion” from the time we graduated from college. Starting in late 1982 and continuing for 25 years through December 2007, this adult half of my life has been one long economic orgy (with two strictly-defined little recessions: nine months in 1990-91 and eight months in 2001). My generational cohorts have gotten used to the good times. But, what if that’s been a momentary quarter-century illusion and the U.S. may resemble an economy like the rollercoaster Argentina in the next couple of decades? Don’t cry for me, Barbie and Barack!
Our growing national debt, the painful process of de-levering American households and corporations, and foreign competition that at times makes the U.S. feel like Little Leaguers promise a bootstrap era like our grandparents experienced in the 30’s. Hell, amidst all this doom and gloom, our savings rate as a country skyrocketing to 5% last month after years of hovering around zero as we were scared as the dickens to spend a dime. But, like my Nonnie and Potka (yes, that’s what I called my dad’s parents), we’re saving under our mattress instead of in those bankrupt banks (the 17th of which was taken over by the government this year on another failing Friday). Listen, the federal regulators are taking the America’s top 20 banks through a “stress test” to see if these financial giants can make it under a variety of future economic scenarios, but I think that expression is more apt for what we’re all living through at the moment.
Debt financed a national lifestyle of consumption. Ouch, it’s hard to even write that sentence as it makes me feel like a fire and brimstone preacher shouting out of a flatbed truck. But, maybe it’s time to learn a few things from that Great Generation that survived the 30’s, learned to fight in the 40’s, and made babies in the 50’s. Barack’s Inaugural address basically told us it’s time to grow up. I guess he was speaking to me and my classmates who’ve been “kids in the candy store” for most of our adult life. Some of my friends are hoping this is just a “lost weekend” (on a really rainy weekend, watch that classic alcoholic film with Ray Milland — it’ll pick your spirits up or maybe drive you to some spirits), not a “lost generation” or “lost decade.”
But, let me end on a positive note. When I was at the TED conference a month ago, an economist revealed a fascinating graph that showed that if prognosticators in 1930 had predicted American economic growth for the balance of the century based upon either the pace of growth during the roaring 20’s or the growth during the first three decades of the 1900’s, they would have dramatically underestimated the actual growth we experienced by almost half. So, one of the key lessons about life is that we humans tend to imagine when we’re in bad times that they’ll never end and we tend to do the same during good times. Yet, this graph reminded me that there’s some givens in life beyond the fact that Barbie’s skin is still taut and smooth and Joan Rivers’ shouldn’t be. One key given over the past few centuries is that over the course of a lifetime, things do tend to get better economically, at least in a macroeconomic way. That’s an important reminder to those of us who may be approaching 50 and imagining that modern medicine suggests we may have just hit midlife. Now, if modern medicine could only perfect its cure to gravity.
March 10th, 2009
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