Forge Your Path

Unconquerable Soul

“He was a man that had accepted the creed that no one had the right to stop him.”

-Ayn Rand

I have come to realize that if you are to pursue anything worth a damn in life it is going to take time. There are going to be setbacks, there are going to be failures and there are without a doubt going to be people who do not want you to succeed. More often than not these people are not coming from a place of hate but from a place of hurt. It hurts when someone’s dreams do not come true and it’s hard to see others taking those same risks. The people who are successful in this life though, have the ability to learn from shattered dreams. They have the ability to put failures into perspective and realize that what they actually got from these failures was an invaluable…

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Steps to Extraordinary Leadership #2

“Some leaders cannot manage— some managers cannot lead.” anonymous

Some people think that leadership and management can be found under the same category in a Thesaurus.  Fundamentally, they are as different as a captain’s spyglass versus a captain’s helm.

For clarity, I am coining two new terms here today:  “Disruptive Leadership” and “Managing Leadership.”  The first is what most people mean when they point to an entrepreneur or founder of a company.  The second is what most people mean when they point to a Chief Something-or-other Officer within a company.  I prefer these terms because neither one is more or less important.  They are both essential leadership styles within any winning company.

Although both leadership types are essential to successful business development they don’t exactly work together smoothly under the same umbrella.  Yet they are both necessary in order for small to large businesses to experience strength, vitality and growth.   And in this way, companies experience harmonious action with both leaders on the same ship!

In order to be a Disruptive Leader or a Managing Leader in any business you must, and of course you will want to, explore your inner leadership qualities and unleash your talents in the work place. The problem is some Disruptive Leaders think they are Managing Leaders, and some Managing Leaders think they are Disruptive Leaders. And this just isn’t so.  You have to know what you are best at.

The two types of leaders we will be discussing are the Disruptive Leader, such as Ghandi and the Managing Leader, such as General George S. Patton.

It may ring funny to have Ghandi and Disruptive in the same sentence for some, but all in all he disrupted a government with a peace movement, and was in no hurry to go anywhere or to make vast changes immediately for the people of his country.  He was thinking long term. And if you have the qualities and traits of someone that can inspire a nation, or at least a small group, then you may very well be in the Disruptive Leader category.

Ghandi  had a vision of what his countrymen should experience as citizens and determined to bring this in such a way that crowd control, even by force, would not overcome the overwhelming vision of freedom.

On the other hand, as a Managing Leader, General Patton had a very limited time-line at The Battle of the Bulge.  On December 16, 1944, the German armies prepared to strike the Allied lines and were ordered to attack the Meuse River.  Once Patton became aware of the attack he re-directed his corps. Consequently, he was able to communicate to Eisenhower that his forces were positioned to counter-attack almost immediately.

General Patton ordered this strategic movement before his meeting with Eisenhower.

He didn’t have the time to consider the possible troubles waiting. Nor did he have the patience for someone to interrupt his Leadership or try to envision the outcome of the movement.

Now let’s take a look at current well known Disruptive and Managing Leaders.

Steve Jobs as a Disruptive Leader inspired an entire industry with a vision of unknown technology, and blazed the communication trial for all to follow, some to envy, and all to enjoy with his various technical hand held devices.  He wasn’t just thinking long term.  He was thinking innovative by design and ground breaking by demand.

He had a vision of what we could experience as a technically inclined country and was determined to bring this into reality.

Mark Zuckerberg on the other hand has a competitive mindset and understands the necessity of making deadlines and cultivating creative theories into fruitful realities. In this ever changing world of Managing Leadership it is not so much the goal that is important, but the pace of the team.

The Managing Leader must get his or her subordinates to flow congruently, on an even keel, in an orderly fashion so that they don’t create any chaos from miscalculations.

To sum things up, the leadership traits you may have will be varied, but one of the two types of leadership are going to dominate your personality. Once you connect with which one you are, you will become a much more affective leader, with a much more cooperative following.

Here are the traits of both:

Disruptive Leader (has managers and is inspirational)

• Protects the goal from the managing leader
• Determines where group/company is going.
• Values the direction
• Thinks more of the goal than the people
• Creates disruptive actions
• Thinks long term

Managing Leaders (has subordinates and rewards or punishes)

• Determines how we are going to get there and actually drives
• Values the speed of direction (loathes slowing down or people out of sync or different speeds)
• Managing leaders think more of the people
• Thinks about protecting the company from the disruptive manager
• Tends to think short term (shorter than the disruptive leader)
• Tends to think as much about defensive as offense

How do you use this distinction in practice?  More in the next post.

 

 

 

 

Steps to Extraordinary Leadership #1

Image via CrunchBase

Today we get down to brass tacks.  I’ve had my vacation (in Ohio, middle of winter, white Christmas, lots of fun).  I’ve also had a few weeks in January to plan for the coming year at Intelliversity.  For example, we’ve decided to launch a live showcase exposing previously-hidden steps to “extraordinary leadership for innovative entrepreneurs.”  Attendees will be well-placed investors, media and entrepreneurs.  The actual title, dates, and location will be announced shortly.  Stay tuned.

What’s most interesting in putting on such a showcase is revealing what goes on behind closed doors.  Have you ever wondered what real winners like Steve Jobs and Mark Zuckerberg do behind closed doors to magnetize their teams?  It’s nothing you see in a documentary or interview.  There are almost-magical things they do behind closed doors to draw amazing performance out of their teams.  Like great magic, it’s rarely exposed but can be learned.  That’s what we’ll expose at our showcase event.

For today, I wanted to begin to reveal some of the steps to extraordinary leadership.  The first step is the foundation.  Winning leaders display extraordinary awarness of their own leadership strengths and weaknesses.

You’ve heard this wisdom in so many ways:  “A man’s got to know his limitations.” (Clint Eastwood as Dirty Harry).  Taking this advice, HR executives are trained to ask job candidates “Tell me your strengths and weaknesses for this job.”  None of this is easy at the leadership level.  Here’s why:

The problem is that most people don’t have clear pictures of different aspects of leadership.  In other words, most people don’t have the technical vocabulary to identify different leadership skills.  Yet we need key distinctions to identify where we’re strong in ways that matter. Professional organizational development experts may have these distinictions, but business leaders typically don’t know them with any precision.

For example, there is a distinction between strategic and visionary leadership.  If you’re a fan of World War II history, you may agree that General Patton was a strategic leader while Roosevelt was a visionary leader.  Both types of leadership are essential in a triumphant company.  There are several other such distinctions in leadership skills.

Once you have all the necessary distinctions, you then have to know how to assess yourself in an objective way.  This is the second area of difficulty.  It’s not enough to guess, because most leaders don’t have enough personal experience. It’s even hard to know objectively how you rank in a skill area as simple as driving.  How can we expect business leaders to rate themselves subjectively in an area as subtle as leadership skill?  They’ll either inflate their ability or underestimate it.

So that’s why it’s so difficult to rate yourself on the key areas of leadership skills.  In summary, 1) The key distinctions are not well known, and 2) methods of rating a leader objectively are not well known.   I’ll have to address these technical questions in later posts.  For now, you’re invited to answer the question — what are different aspects of leadership that you believe are important in entrepreneurial businesses, and how do you rate yourself on each?  Comments are welcome, such as which areas of leadership are most important for the founder of a company?

See you in the next post.

Part IV. Impact of Workplace Trust on Well-being

Note:  This post will continue previous blog discussions by Robert Porter Lynch relating to: 

“The Economics of Trust”

What is the biggest factor in well-being? This question was posed by  John Helliwell of the University of British Columbia economics department. He and his team conducted several studies between 2001 and 2010, and analyzed nearly 30,000 survey responses across the United States and Canada. He found that, surprisingly, it was neither money nor education that produced the highest well-being ratings. 

He discovered: “Workplace trust is one of the most important [factors] in explaining well-being, across groups of populations, across surveys, and across countries.”

He also observed that significant trust in workplace colleagues carried over into personal friendships and close relationships with these same people outside of work, and in the community in general, stating: “Without trust, people are loath to reach out, and to make the social connections that underpin any collaborative action.” He concluded stating simply: “Trust improves health and saves lives.”

Helliwell’s findings also noted a difference between men and women: “Women are significantly more trusting of their co-workers [than men] …attaching higher values to workplace trust and choosing workplaces marked by higher trust…but are less likely to place trust in strangers.” 

Helliwell’s other conclusions were quite revealing, and some might be considered astonishing:

1. Our results show that those who feel themselves to be living in a trustworthy environment have much higher levels of subjective well-being.
2. Household income does not appear in the trust equations, since it was found to have no significant effects.
3. Having high trust in co-workers, which we find to be the largest of all the specific directional trust measures, is associated with 7.6% higher life satisfaction. This is followed trust in neighbors (5%), confidence in police (3%), and a belief that a stranger would return your lost wallet (2.5%). How much higher life satisfaction is for those who have high levels of trust in all these life domains? The answer is more than 18%.
4. Increasing trust in management by just one point higher on a ten-point scale has the equivalent effect on life satisfaction as a 40% increase in income.

Conclusions

If your company has low trust, it probably has high absenteeism, high turnover, a bad attitude, labor strife, unhealthy workers, and poor performance. Just improving trust by a factor of ten percent would remedy many of the ills of the company, increase profitability, and provide as much increase in people’s overall life satisfaction as a 40% pay raise.

That sounds like a very powerful return on investment.

Part III: Impact of Distrust on Physical and Psychological Wellbeing

Note:  This post will continue previous blog discussions by Robert Porter Lynch relating to: 

“The Economics of Trust”

  

Part III: Impact of Distrust on Physical and Psychological Wellbeing:

It’s been proven in study after study that stress has a highly detrimental impact on health and well being.

Stress is the emotional and physical strain caused by our response to pressures from the outside world or seemingly out of our control.

Causes of Stress

There are two basic causes of stress: Fear and Loss.

Loss includes things such as:

• Loss of a Loved One (death, grieving),
• Loss of Financial Security (bankruptcy, job loss),
• Loss of Home (foreclosure, moving, hurricane), or
• Major Disruption (divorce, parents in ill health, child being arrested).

Fear manifests where there is some threat of harm or conflict, whether physical (such as a fistfight, being robbed or attacked by a deadly weapon) or psychological (such as heated arguments or verbal abuse or increased competition among co-workers who fear a layoff). Fear is typically accompanied by Anxiety and Distress:

• Anxiety is the anticipation of being harmed in the future,
• Fear is the anticipation of being harmed in the present.
• Distress is the awareness of actually being harmed at this particular moment.

Lumped together, these forms of Fear and Loss are termed “Stress.” If the Fear or Loss is related to other humans (not natural causes), then Distrust is at play. Distrust is not benign; it not only causes economic damage, it can wreak havoc on one’s health. (Later we’ll show how.)

Fear Can Kill

For example, the theory that fear alone can kill people is backed by compelling evidence from a study of deaths following the 1994 Los Angeles earthquake. Dr Robert Kloner, a cardiologist at the Good Samaritan Hospital in Los Angeles, analyzed the records of the Los Angeles County Coroner’s Department for the week before the earthquake, the day of the earthquake and corresponding control periods in 1991, 1992 and 1993.

His team found that on the day of the quake, the coroner recorded five times more sudden cardiac deaths than would ordinarily be expected. None of the deaths were related to people having a heart attack from over exertion as they dug themselves out of the rubble. Dr Kloner said: “The typical story was that a patient clutched his chest, described chest pain, and dropped over dead.”

Not all stress is bad; not all stress is created equal.

A little stress can do us good—it pushes us to compete and innovate.

Many professions, such as business executives, doctors, police, and firefighters live in high-stress environments, and there is no evidence that they have higher rates of cancer, heart disease, or stroke.

Why? Because they believe they have reasonable control over their lives. These people believe they are able to solve most of their problems. They don’t feel helpless in dealing with their problems in life. They affirm that what happens to them in the future depends mainly on their own abilities; and they can do just about anything they really set my mind to do.

People who answer positively like this report very strong satisfaction with life.

It’s when people don’t feel like they have control over their destiny, or when they believe that life has no meaning or purpose, that stress can then turn deadly.

Impact of Stress on Personal Health

The after-effects on health caused by stress have been studied extensively by the medical profession.

Stress often triggers major physical reactions, including tension, irritability, inability to concentrate, poor decision making, and anxiety, along with a variety of physical symptoms that include headache and a fast heartbeat.

If the stress is prolonged, serious physical effects then damage the immune system, resulting in disease. (This occurs because continued stress produces a never-ending release of hormones that, while good in the short run to defend against danger, ultimately turn destructive against the immune system.) Stress has been directly attributed as a major causative factor in fatalities from heart disease, and stroke, as well as suicides, auto fatalities, headaches, diarrhea, absenteeism, and increased illness, and the ability to recover from cancer. According to the American Academy of Family Physicians, two-thirds of office visits to family doctors are for stress-related symptoms.

Trusting Attitudes and Beliefs Saves Lives

Trust can play an important role in such matters of life and death.

There is a strong case to be made that people who are capable of building trusting relationships have more supportive people in their lives who will come to their aid in times of adversity. These relationships make a big difference in mortality. According to one study, middle-aged men under severe stress who lacked emotional support were five times more likely to die within seven years than those who had the same amount of stress but had close personal ties.

People who are trusting tend to be optimistic, and those who distrust tend to be pessimistic. What difference does that make? Optimists live longer, healthier lives than pessimists.

Researchers at University of Pittsburgh, led Dr. Hilary Tindle, examined the death rates and chronic health conditions among participants of the Women’s Health Initiative study, which tracked more than 100,000 women ages 50 and over for fifteen years, since 1994.

Women who were optimistic were 14 percent less likely to die from any cause than pessimists and 30 percent less likely to die from heart disease after eight years of follow up in the study. Optimists also were also less likely to have high blood pressure, diabetes or smoke cigarettes.

Other studies have shown that people who go to church regularly or believe in God live three years longer and report higher levels of well-being. Researchers have also found that married persons have higher well-being scores than divorced ones.

Clearly, the role of trust in the health and well-being of our society is enormous. It certainly points to the conclusion that it should be a vital component of our educational system, and a priority in our workplaces.

 

How Trust Generates Enormous Economic Value

(In this blog we’re continuing the insights from the previous blog on the “Economics of Trust.”)

How does trust produce such enormous competitive advantage? We can illustrate it with the example of Lean Production.

Lean Production systems were pioneered by Toyota. One of the primary objectives is to remove “Non-Value Added” (NVA) work, such as wasted time moving parts from one location to another, or redundancies, or paperwork.

The term “NVA” makes it seem that these are just benign parasites in the value creation process, and expurgating them will produce high production efficiencies. Distrust, however, creates a very different set of organizational dynamics, which we have named “Value Destroyers.”

Value Destroyers (VD) are those actions which are far worse than NVA, and actually

do significant damage to a system. Think of them not as “benign parasites,” but as “deadly viruses.”

To understand Value Destroyers and how they differ from NVA, let’s look at four key areas for winning in an organization. In each of these situations, we will look at Value Destruction and Distrust, compared with Value Creation and Trust:

First, Time:

• Distrust: Destructive Time is when people use their time to protect, argue, or fight
• Real Trust: Creative Time is when people are engaged in Learning or Creativity 

Second, Human Energy:

• Distrust: Destructive Energy is Conflictive, Confused or Depressed
• Real Trust: Innovative Energy is Harmonious, Enthusiastic, or Synergistic

Third, Strategic Direction

• Distrust: Destructive Direction(s) – Lose-Lose, Subsystems working in opposition
• Real Trust: Integrated & Aligned Direction – Win-Win, Collaborative Innovation

Fourth, Communications

• Distrust: Malicious, Faulty,/Misunderstood Communications
• Real Trust: Interactive/Real Time Communications of Information, Knowledge, Wisdom, & Compassion

What is the real impact on organizations when distrust prevails? I posed the question to Bob Chalice, a health care expert who specializes in using “lean” methods in hospitals. We explored not just the impact on a hospital, but on the “health care system,” which included providers, patients, insurers, suppliers, and others.

His answer was shocking and compelling: Bottom Line: distrust adds about 25 cents to every health care dollar. Why? Here’s a quick list of where the distrust manifests as extra costs:

Malpractice insurance costs, insurance verification processes for patients, insurance underwriting, high administrative costs, billing and collection processes, inspections, Medicare/Medicaid/insurance billing, large administrative structures/staffs, duplication of services among competing providers, all extraneous paperwork, turmoil, law suits, ugly negotiations, onerous contracts, sabotage, withholding information, lack of response, fiefdoms & silos that refuse to communicate, buying equipment that could have been shared in an alliance, etc. etc.

In today’s heated health care debate, if we could reduce distrust in the “system” we would generate enough money that is currently being wasted to pay for all Americans to have health care coverage without paying an additional tax dollar.

Is Trust Economical?

Every business leader and entrepreneur is seeking to create a competitive advantage. Some do it with great strategy, some with technology, some with marketing, and some with speed.

But regardless of the strategy you use to build your business, it can be accelerated like a rocket by adding good “chemistry” – high trust.

We all know that high trust improves speed, performance, and innovation. But by just how much?

To gain a better understanding of the financial impact, we’ve begun asking seasoned managers just how much more “boost” does an organization get from high trust, and “drag” for distrust.

I do a lot of workshops with organizations, ranging from large corporations to start-up businesses throughout North America, and also work with government agencies across the span of Canada. All these workshops become a “laboratory” to test new ideas and validate theories.

To test the economic impact of trust, my team (made up of two experts in cross-boundary economic analysis) chose 16 impact dimensions of “Total Cost of Ownership.” These are somewhat standard measures in the supply chain management field:

PRODUCTIVITY, TIME WASTERS, REDUNDANCY, INTEGRATION, SHARED RESOURCES, PROCUREMENT, JOINT PLANNING, FORECASTING, EARLY WARNING SYSTEMS, RISK MANAGEMENT, PROBLEM SOLVING, LABOR RELATIONS, STRATEGIC ALIGNMENT, & COORDINATION. For good measure we added a last dimension: HUMAN ENERGY – the level of enthusiasm or depression one experiences in either a high trust or distrustful environment.

Then we asked over 500 senior managers to answer two questions:

First, where there is a high level of trust, what is the “boost” or “premium” an organization receives in each of the dimensions?

Second, in situations of strong distrust, what is the “drag” or “discount”?

The answers astounded us. The average “boost” from high trust ranged between 50-65% above that with just “neutral trust.”

And, on the downside, the average “drag” ranged between 50-75% reduction in efficiencies and energies.

We then ask the senior teams to calculate the “differential” between the average highs (for trust and average lows (for distrust). Consistently the differential is ranging between 135-155%.

Consider the implications of this data for a moment – a high trust environment will produce a supercharged “uplift” that will provide a “secret’ competitive advantage that your competitors can’t see (because trust is invisible).

For example, Southwest Airlines has had 30 straight years of profitability — which is unparalleled in the airline industry; an industry that has, collectively, lost more money than it has made in its seventy five year history. Certainly Southwest has a good strategy, but that alone doesn’t explain its phenomenal success. Trust and Teamwork are the invisible parts of the success formula.

The economics of trust provide the competitive advantage that truly makes a difference.

The investment in trust is actually very small, but produces probably the largest return on investment of all, as well as a massive competitive advantage.

In the next blog we will explore how trust and distrust create or destroy value.

 

A modest proposal for angel and VC investing

I was sitting though a series of presentations at Tech Coast Angels the other day.  As usual, 80% of each presentation, including the follow-up questioning by investors, concerned the presenter’s “business plan” — the product, the market, the competition, the finances, etc.  When the management team was mentioned, the only concern was their background — what prior companies they’d worked for.  No one (including myself) asked about the corporate culture they hoped to establish — the standards and norms they would establish internally. No one questioned their people-management practices and philosophy.  No one asked them what management training and coaching they would use.  No one even asked about their personal motivations and leadership style.  In summary, no one questioned their “management plan.”

In the investor’s defense, there just isn’t time for this in the brief time allotted for initial presentations.  Does it get much better during due diligence?  I’m afraid to say, not much time and effort is spent on the people-side of management during due diligence either, though it’s getting better.

The problem is, the entire assessment process in the angel community is biased toward evaluating the entrepreneur’s business plan.  So, even if we were to discover a management team that’s doing all the right things on the people-side of management, we’d be hard-pressed to persuade the other investors to go along.  This is because everyone is thinking about the “business plan,” not the “management plan.”

Let me put it another way for clarity:  Angel investors are not yet “listening” for distinctions between winning and losing management teams.  We’re not “tuned in” to this channel.  This is because we really don’t know what to listen for, not because we don’t want to.  In fact, most angel investors will tell you we WANT to bet on the jockey not the horse.  We WANT to bet on the team, not the business idea.  We just don’t know HOW to bet on the team.  As a group, we don’t really know what a great team would look like or sound like.  So, as a default, we focus on the business plan.

To remedy this, I’d like to make a modest proposal.  (A “modest proposal,” as famed author Jonathan Swift suggested, is a plan that is intended to make you think outside the box, not to be implemented literally.)  Suppose we interviewed the founding team of each new company on the basis of their “management plan” only?  Suppose we didn’t even listen to their “business plan” (their earth-shaking innovation) at all, at least until AFTER we’re satisfied that their management plan is sound?   In fact, suppose we went all the way and funded the team and not the business plan at all.  After we funded a great team, we’d trust the team to come up with a winning business plan.  How would THAT alter the way we assess entrepreneurs for investment?

I can tell you one thing, it would get us to think really hard about what are winning best-practices of people-management — and what makes a winning management team and winning corporate culture.  I’ve been asking these questions for years myself and getting the opinions of experts, successful entrepreneurs and investors alike.  These aren’t easy questions and there’s not yet a lot of good research to inform the answers.

In future posts, I’ll start revealing the results of this research and how to use it, as an investor or as an entrepreneur.

Can you have Too Much Trust?

A report in Sloan Management Review (Summer, 2010) disturbed me. Entitled:  “Too Much Trust is Death to Innovation,” the European authors stated too much trust stifles innovation, and too little trust disables innovation. After reading the report, I realized the authors “studied” trust, but had never really experienced the trust factor first hand.  My experience with innovation alliances in the last 20 years indicates that an abundance of the right kind of trust never hurts innovation, but there are two important caveats:

First:  High Trust Does Not Equal High Innovation

Reaping the fruits of collaborative innovation is like farming – while flowers need fertile soil to grow, we would never draw the conclusion that fertile soil is all that’s needed to produce a prosperous garden. Naturally, gardens also need sun, water, and highly competent gardeners.  So too with innovation – Trust is the fertile ground, but collaborative innovation is a discipline requiring competent players and high standards of performance.

Second: High trust can manifest as either “harmony” (like Friendship) or “synergy”(we call this “Creationship”).

The researchers who found that too much trust created complacency were trapped in a key fallibility about trust – that all high levels of trust are the same (they’re not).  Harmonious trust is blissful, sometimes even complacent, but not necessarily innovative; Synergistic trust is energetic, filled with tension, constantly pushing the edges of possibility.

Synergistic trust exists in an environment of co-creation where the partners interact in a perpetual state of enlightened dissatisfaction. Conflict is absent in harmonious trust, yet very evident in synergistic trust, where ideas are being challenged daily. The conflict of ideas is used only to spur the mind to higher orders of thinking, while the challengers judiciously honor each other’s intellects. The greater the tension between differentials in thinking, the greater the potential for explosive innovation.

For example, in our study of how the Greeks created the first age of innovation,  several “essential ingredients” were necessary to create the phenomenal explosion of innovation from such as small city as Athens (population: only 30-40,000). Some of the elements of that innovation formula included: pushing the limits of possibility, an endless pursuit of perfection, willingness to discover, dedication to honoring others, and a continuous stream of insightful questions. Socrates epitomized the method of constantly asking questions which drove thinking into root cause, and exploration of greater possibilities. Like all great champions, to keep synergistic trust alive, the leader must live in a perpetual state of enlightened dissatisfaction if the quest for ever-evolving excellence is to be achieved.

Innovation alliances have made enormous progress over the last twenty years. However, the statistics on alliance success can easily be misleading. While many alliances do fail (twenty years ago it was 80%, now it’s considered 50%), alliance professionals who use best-practice alliance architecture regularly produce 70-80% success rates. Clearly the disciplined application of professional standards to alliances has shifted the balance.

Further, what is considered a “success” or “failure” in innovation can be confounding. Eli Lilly, a company that has had enormous success in risky innovation alliances, distinguishes between the science and the relationship. A failed technology innovation may still embody a successful collaborative relationship, a factor that would instill confidence to proceed experimenting with another new technology, despite past failures on the science front.