What Makes Us Human Conference

If you’re going to be in the Los Angeles area at the end of this month, you might want to check out the What Makes Us Human Conference.

Asking what makes human beings unique brings to mind a seemingly endless list of attributes and activities, both positive and negative.

Self-awareness and free moral agency, speech and symbolic cognition, our nimble thumbs, conscience and the capacity to imagine: these are just a few of the traits that distinguish us from other species.

Join some of today's leading thinkers from a broad spectrum of backgrounds, including religion, psychology, biochemistry, social philosophy, humor, art and music, as they present their views on the many faces of humanness at the What Makes Us Human Conference, April 28 - 29, 2008 (Monday/Tuesday).

Two days of panel discussions and question-and-answer opportunities will explore topics ranging from the age-old question of what sets us apart to what the future may hold for humanity.

The conference is jointly sponsored by Vision.org Foundation and the Oxford International Biomedical Centre. Vision.org publishes a superb, thought provoking, high-quality journal. I am an occasional contributor to the Vision Journal and you can get your own free one-year subscription here.

Posted by Michael McKinney at 08:52 AM
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Outsmart Your Competition

In the opening pages of Outsmart!, Jim Champy argues that “in whatever field you’re playing, you must outsmart all your rivals. But luckily, the world is expanding rapidly. Shrewd competitors can stake out new territory, define the boundaries, and even set new rules for the game.” How do you do that?

Champy demonstrates how eight companies have outsmarted the competition by either:

Seeing what others don’t,
Thinking outside the bubble,
Using all you know,
Changing your frame of reference,
Doing everything yourself,
Tapping the success of others,
Creating order out of chaos or by
Simplifying complexity.

This adds up to a lot of intriguing lessons in how to. While there are no formulas to be found here, there are principles that certainly can be applied in your situation. In general though, Champy says ambition matters. Look for dramatic growth. Of course this means risk and not getting bogged down in research and analysis. Intuition counts. Risk is just part of doing business and we need to get comfortable with it. He writes, “I believe shortsightedness of shareholders prevents many incumbent companies from doing what the need to do to grow.” Risk and innovation need to become part of the culture. Everyone needs to be engaged in the process.

In talking with people at every level of the smartest companies I know, it’s clear that they all believe they own a piece of the solution. Because these companies look for distinctiveness in almost everything they do, opportunities abound for everyone to get involved, whether it be contributing ideas or executing them. The inclusiveness also nurtures a company’s growth because everyone see himself as a partner in setting strategy, not a minion being imposed upon from on high.

This book will leave you with new questions and generate wind-ranging conversations. It’s a great place to start when reorienting your thinking.

Posted by Michael McKinney at 10:24 AM
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The Increasingly Political Role of Business

Recent articles in Foreign Affairs and The McKinsey Quarterly, promote the idea that businesses have a clear responsibility—increasingly a very political one—to the community beyond its shareholders.

In Foreign Affairs, Klaus Schwab, the Executive Chair of the World Economic Forum, writes, “Above all, a new imperative for business, best described as "global corporate citizenship," must be recognized. It expresses the conviction that companies not only must be engaged with their stakeholders but are themselves stakeholders alongside governments and civil society. International business leaders must fully commit to sustainable development and address paramount global challenges, including climate change, the provision of public health care, energy conservation, and the management of resources, particularly water. Because these global issues increasingly impact business, not to engage with them can hurt the bottom line. Because global citizenship is in a corporation's enlightened self-interest, it is sustainable. Addressing global issues can be good both for the corporation and for society at a time of increasing globalization and diminishing state influence.”

Schwab writes that state power has shrunk. “At the same time as state power has declined, the influence of corporations on communities, on the lives of citizens, and on the environment has sharply increased. This fundamental shift in the global power equation means that just as communities and citizens look to government for answers and leadership, so now they target corporations with both requests for help and criticism for wrongdoing.”

Similarly, in an interview published in The McKinsey Quarterly, with the head of the Council on Foreign Relations, Richard Haass observes that “Today, the environment that business leaders operate in is fundamentally different than it was a generation or two ago. It’s far more political. There is a conceit in the business and management literature that businesses face the toughest problems and have a lot to teach the rest of us. But the reality is that the environment business leaders operate in is increasingly political. It is global and it involves tremendous transparency, greater accountability, independent stakeholders, less freedom to maneuver, and an inability to narrowcast messages. That sounds a lot like politics. Businesses actually have a lot to learn.” Businesses should look to government for clues.

Both Haass and Schwab see a wider role for the CEO now than in the past. Haass tells MQ, “There is a slightly hermetic quality to management books that doesn’t quite capture an increasingly political, transparent, and demanding reality. Too much of the business literature operates within the confines of the firm, inside the balance sheet, or inside headquarters. That is important and necessary, but insufficient....The new role involves nothing less than a fundamentally different way of doing business. It is about dealing with a wider and more powerful group of stakeholders and constituencies and being proactive, not reactive, with them.”

Areas where businesses should assume a stronger social role include the lag between globalization and global arrangements, climate change, how best to integrate a rising China and a rising India into that region and the world, and the Middle East, which contains enough issues to keep anyone occupied. Haass adds, “The uncomfortable reality is that there is no shortage of subjects worth thinking and writing and speaking about if your business happens to be assessing political, economic, and strategic risk and suggesting what to do about it.”

Posted by Michael McKinney at 06:58 AM
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Alan Greenspan: The Age of Turbulence

Alan Greenspan begins The Age of Turbulence on the morning of September 11th, 2007, but then leaps back to his childhood, and follows the arc of his remarkable life’s journey through to his more than 18-year tenure as Chairman of the Federal Reserve Board, from 1987 to 2006, during a time of irrational exuberance. It’s a good read, written in clear language on the workings of the economic world (and then some). Here are some of the informed opinions he presents in the book:

“For the five years we overlapped, President Bush honored his commitment to the autonomy of the Fed….The administration also took the Fed’s advice on policies we thought were essential for the health of the financial markets. Most important was the effort that began in 2003 to curb excesses at Fannie Mae and Freddie Mac….President Bush had very little to gain politically by supporting a crackdown. Yet he backed the Fed through a two-year struggle that resulted in crucial reforms. My biggest frustration remained the president’s unwillingness to wield his veto against out-of-control spending.”

“After the Republicans lost control of Congress in the November 2006 election, former House Republican majority leader Dick Armey published a perceptive op-ed piece in the Wall Street Journal….Armey had it exactly right. The Republicans in Congress lost their way. They swapped principle for power. They ended up with neither. They deserved to lose.”

“[Wealth Creation] requires people to take risks. We can’t be sure our actions to acquire food, clothing, and shelter, for example, will succeed. But the greater our trust in the people with whom we trade, the greater the accumulation of wealth.…Reputation and the trust it fosters have always appeared to me to be core required attributes of market capitalism. Laws at best can prescribe only a small fraction of the day-to-day activities in the marketplace. When trust is lost, a nation’s ability to transact business is palpably undermined. In the marketplace, uncertainties created by not always truthful counterparties raise credit risk and thereby increase real interest rates.” Looking toward the U.S. economic future, a 4 to 5 percent inflation rate “is probably not a bad first approximation of what we will face.” He continues, “Yet to keep the inflation rate down to a gold standard level of under 1 percent, or even a less draconian 1 to 2 percent range, the Fed, given my scenario, would have to constrain monetary expansion so drastically that it could temporarily drive up interest rates into the double-digit range not seen since the days of Paul Volker.“

“A simple test for any retirement system is whether it can assure the availability of promised real resources to retirees without overly burdening the working-age population. By that measure, America may be on a collision course with reality….[W]e likely won’t have enough people working, nor will we likely have a sufficient increase in the amount each worker in average can produce, to cove the enormous shortfall from entitlements under current law. It may not even come close.”

“The notion of enlisting representatives of a corporation’s various stakeholders on the board—unions, community representatives, customers, suppliers, and so forth—has a nice democratic ring to it. But it is ill-advised and I strongly suspect it will not work. Today’s highly competitive world needs each corporation to execute plans from a single coach, as it were. A vote by the whole team on each big play is a recipe for defeat. I assume that eventually some of the more abrasive edges of Sarbanes-Oxley, especially Section 404, will be honed down.”

"The shift of manufacturing jobs in steel, autos and textiles, for example, to their more modern equivalents in computers, telecommunications and information technology is a plus, not a minus, to the American standard of living,"

“However we get to 2030, the U.S. economy should end up much larger, absent unexpectedly long crises—three-fourths larger in real terms than that in which we operate today.”

“We should focus on addressing and assuaging the fears induced by the dark side of creative destruction rather than imposing limits on the economic edifice on which worldwide prosperity depends.”

“Venice, I realized, is the antithesis of creative destruction. It exists to conserve and appreciate the past, not create a future. But that, I realized, is exactly the point. The city caters to a deep human need for stability and permanence as well as beauty and romance. Venice’s popularity represents one pole of a conflict in human nature: the struggle between the desire to increase material well-being and the desire to ward off change and its attendant stress.”

Posted by Michael McKinney at 08:08 AM
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Making Your Team Swing

World renown Jazz artist, Wynton Marsalis, has some profound things to say about business and relationships that are worth reviewing. Earlier this year, USA Today's Del Jones interviewed Wynton Marsalis about principles found in both jazz and business.

Marsalis told USA Today, “When you listen to great jazz musicians, you hear the respect they have for each other's abilities. During a performance, most of the musicians' time is spent listening to others. You see the trust they have for each other because they are always making adjustments and improvising based on what someone else does.”

Marsalis acknowledges that trust and listening to others goes hand-in-hand, but he brought up another important point that I think applies to any functioning organization or relationship. He points to the mindset of being aware of what others are doing and making adjustments for them in what you are doing, for the sake of the whole group. It’s not pointing fingers and affixing blame. It’s being so tuned-in to others that you can absorb their mistakes and they can absorb yours without missing a beat. He calls it “swing.” Here is more on that concept:

Swing is a rhythm, an era in American history, and it is a world view. In this world view, there is a belief in the power of a collective ability to absorb mediocre and poor decisions. When a group of people working together trust that all are concerned for the common good, then they continue to be in sync no matter what happens. That is swing. It's the feeling that our way is more important than my way. This philosophy extends to how to treat audiences, consumers, staff or dysfunctional families. This may seem idealistic, but think about how church congregations recite, nearly together and completely unrehearsed. They proceed by feel. Swing is the single objective. It is the core that makes us all want to work together.

Posted by Michael McKinney at 07:05 AM
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Neuroscience in the Workplace Podcast

In this recording, David Rock speaks with John Case, CEO of Electrolux Home Care Products North America about how neuroscience links to the performance strategies implemented in his organization. John first heard David speak in Las Vegas and found that neuroscience helped to explained why his business strategies have worked.

  Listen Now / Total time: 36:29 minutes

Posted by Michael McKinney at 08:44 AM
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The Strategy Paradox

The Strategy Paradox is about managing risk. It provides a vocabulary and set of frameworks to help us begin to embrace our ignorance about the future and deal with it.

The strategy paradox lies in the fact that the characteristics that we typically associate with success are also systematically associated with total failure. That is, the strategies with the greatest possibility of success also have the greatest possibility of failure. Author Michael Raynor, says that resolving this paradox requires a new way of thinking about strategy and uncertainty.

In his research he found that strategies normally associated with success look very much the same as strategies that in fact lead to failure as well. What was interesting is that while successful and failed strategies look the same, strategies that lead to mediocre financial performance look very different from strategies associated with both successful and failed strategies. This leads us to the conclusion that the opposite of success is not failure, but mediocrity. So to assume that we are safe with a compelling vision, commitment and a clear focus—all defining elements of successful strategies—is misguided as these elements are also systematically connected with some of the greatest strategic disasters. The real issue is that these elements must be based on an accurate view of the future, and not surprisingly even the best minds often get this wrong. Naturally, the further out you go the greater the degree of strategic uncertainty.

One of the reasons the future is difficult to predict is because it is random. In other words, the past isn’t always a good indicator of the future. Randomness enters in your analysis because at some point you have to confine it. You have to leave some data out, thus reducing your accuracy. To avoid this “we find ourselves compelled to build a theory of everything in order to predict anything.” Not practical—analysis paralysis.

Another issue is cause and effect. Accurately determining why something happened before—initial conditions—is a judgment call. Even if we are correct, recreating those conditions exactly is not generally doable. (See The Halo Effect.)

What are we to do? Raynor suggests implementing what he calls strategic flexibility and using what he calls requisite uncertainty to allocate responsibility for managing uncertainty vertically through an organization. That is, calibrating the focus of each level of the hierarchy to the uncertainties it faces.

For instance, Board members should be looking ten or more years out and asking, “What is the appropriate level of strategic risk for a firm to take? What resources should be devoted to mitigating risk? What sacrifices in performance are acceptable in exchange for lower strategic risk?” CEOs looking out five to ten years, should ask, “What strategic uncertainties does the company face? What strategic options are needed to cope with those uncertainties? In other words, it falls to the CEO, and the rest of the senior team, to find ways to create the strategic risk profile the board has mandated for the firm.

Moving down the hierarchy, operational divisions dealing a time horizon of two to five years should ask, “What commitments should we make in order to achieve our performance targets? For these folks, it’s no longer about mitigating strategic risks, but making strategic commitments. And then managers with a short term time of horizon of 3 months to a year should ask, “How can we best execute the commitments that have been made in order to achieve our performance targets? There are no strategic choices to make at this level, because the time horizons are too short.

What is useful about this book is that it is not just for CEOs. As just shown, people at all levels in an organization deal with a certain amount of uncertainty. Regardless of the timeframe they are dealing with or looking at, the tools outlined here are valuable for managing that risk.

Posted by Michael McKinney at 12:16 AM
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Five Tests of Obviousness

We’ve received a lot of interest over the last few days in a little book written 90 years ago, due to a Forbes commentary by Jack Trout entitled In Search Of The Obvious. The book is the business classic, Obvious Adams written by Robert Updegraff. Jack Trout calls it his favorite marketing book, although its application is far wider. Why does Jack like it so much?

Well, because the search for any marketing strategy is the search for the obvious. Consider the dictionary definition of the word "obvious": easy to see or understand, plain, evident. With that definition you begin to see why an obvious strategy is so powerful. It's simple, easy to understand and evident. That's why it works so well.

Interestingly, when presented with a simple, obvious strategy, many clients are not impressed. They are often looking for some clever, not-so-obvious idea. What I often hear is something like, "That’s something we already know. Is the solution that simple?" I then have to go into my evident speech, which goes like this: "You’re right, it is evident. But if it's evident to you it will also be evident to your customers, which is why it will work."

The author warned of this reaction when he wrote, "The trouble is, the obvious is apt to be so simple and commonplace that it has no appeal to the imagination. We all like clever ideas and ingenious plans that make good lunch-table talk at the club. There is something about the obvious that is--well, so very obvious!"

In 1953 Updepgraff added a section where is laid out five tests of obviousness:

Test One: The problem when solved will be simple. The obvious is nearly always simple--so simple that sometimes a whole generation of men and women have looked at it without even seeing it.

Test Two: Does it check with human nature? If you feel comfortable in explaining your idea or plan to your mother, wife, relative, neighbors, your barber and anyone else you know, it's obvious. If you don't feel comfortable, it probably is not obvious.

Test Three: Put it on paper. Write out your idea, plan or project in words of one or two syllables, as though you were explaining it to a child. If you can't do this in two or three short paragraphs and the explanation becomes long, involved or ingenious--then very likely it is not obvious.

Test Four: Does it explode in people's minds? If, when you have presented your plan, project or program, do people say, "Now why didn't we think of that before?" You can feel encouraged. Obvious ideas are very apt to produce this "explosive" mental reaction.

Test Five: Is the time ripe? Many ideas and plans are obvious in themselves, but just as obviously "out of time." Checking time lines is often just as important as checking the idea or plan itself.

Jack adds, “To me, those five principles are worth a thousand books on marketing, mine included.”

Posted by Michael McKinney at 08:06 PM
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Can’t Think For Yourself?

Are consultants making us insecure? Are we afraid to make decisions for ourselves? According to a recent article in the Guardian even consultants are saying enough is enough. Guy Clapperton reports: Alastair Clifford-Jones, chief executive of management consultancy Leadent, has identified what he calls "consultancy addiction" - the process by which clients get so hung up on having consultants around that they won't let them go. "You just see that people are using consultants and work alongside them - you go to a meeting and next to them is a consultant," he says. "It's like losing the ability to make a decision."

Indeed, some consultants actually create this dependency by not giving the client the decision making responsibility. Clapperton continues: Simon Rawling, head of project management consultancy PIPC, puts a lot of the onus on the client's stated requirements. "The consultant should help with the business and not run it," he says. "They can put a new IT platform in, put a required change in, but not run the day to day business." People have to recognize the roles of consultants before commissioning them, he says.

Consultants can be of immense value to an organization—and often quite wise—by bringing awareness of another viewpoint or approach. In the end, for successful change to occur, the change needs to become a part of the organizations culture and that only happens by implementing it yourself. You can’t outsource out change. Consultants influence, guide, facilitate and structure change, but the goal is ownership by the organization and not the partnership.

Capperton offers the following five questions as an Addicted to Consultancy Self-Check:

Ask yourself the following questions to find out whether you're over-using consultants:

1. Can you say for certain, or even roughly, when your consultant will be leaving the premises permanently?

2. Do you have a good reason for not taking someone on as staff to fulfill the consultant's role?

3. Do you have a defined objective for the consultancy you've employed?

4. Do you ask your consultant for advice on matters other than the task for which you hired them?

5. Do your employees refer to the consultant as the "owner" of an initiative, as distinct from the internal sponsor?

Answer "yes" to the first three questions and "no" to the last two and you're likely to be using consultants sensibly. "No" to the first three and "yes" to the last two means you're using consultants as a crutch rather than a defined part of your business. Ask them about it - if they're any good they'll probably be pleased to hear it from you rather than having to raise it themselves.

Posted by Michael McKinney at 08:54 AM
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Hiring Teams as the Talent

Often overlooked in the rush to find that one person that can make a difference in your organization is the context that that superstar worked in. Rarely is an individual great of and by themselves. It usually requires a team of people working together in a great environment to make something great happen. Taking the superstar out of that context can often lead to less than great performance. Thinking of and hiring the team as the talent may be what we should be looking for when trying to hire-in great performance.

Bob Sutton makes this point in an excellent post on his blog. Commenting on a May 2006 Harvard Business Review article by Boris Groysberg, Andrew McLean and Nitin Nohria entitled, Are Leaders Portable? he writes:

One of the most interesting findings … was that GE executives who brought along 3 or more GE alumni to join their teams had “annualized abnormal returns” of 15.7% above average; while those that hired one or none from GE had -16.7%. Groysberg and his colleagues call this past experience working together “relationship human capital,” horrible language from economics. Other researchers call it “prior joint experience,” which isn’t much better. But whatever you call it, while HR practices turn attention to individual stars, study after study shows when people have experience working together – and have learned who knows what, how to read those little signals that people send off, and can communicate ideas quickly and efficiently – their teams and organizations perform better.

The implication of this research is pretty clear and shows the limits of modern HR practices, assumptions, and even the enterprise software systems that they use. If you are going to hire some “talent,” don’t focus on just landing that lone star – focus on hiring as much of his or her team, or network, as possible. You win the war for talent by bringing aboard talented sets of people, not talented solo acts.

[A]s the war for talent seems to be heating up again, companies that fight it right will spend less time looking for solo stars and more time looking for dynamic duos, teams, and networks of people that have worked together in the past and want to work together more in the future. And perhaps it is time for modern HR practices to catch-up with the evidence.

Posted by Michael McKinney at 03:50 PM
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Executive Compensation

Prompted by a piece in the New York Times reporting that Ivan Seidenberg, CEO of Verizon, collected $19.6 million in compensation last year, Tom Peters commented on executive compensation. Here’s an excerpt:

In general, there's been a firestorm surrounding executive pay this year. I've generally avoided the topic. I believe in markets—including markets for exec pay. On the other hand, when something looks downright silly ... it may well be downright silly. Seidenberg is but one of many examples of this magnitude of apparent disjunction between pay and performance.

Frankly, I think the impact of mega-corp CEOs on performance is wildly overrated. Looking at the pay scales you'd think the CEO had done all the work of the company single-handedly. I acknowledge that there are probably a handful of CEOs who have indeed moved mountains—Gerstner at IBM in the 90s, Nardelli at Home Depot today. But by and large, the boss's impact, while important, is hardly as important as the pay disparity between him and his top lieutenants, let alone the rank and file.

So, I give up. I hereby join the parade of those who say, "Enough."

Tom is right on. In general, we give CEO’s too much credit for successes and too much blame for failures. This impairs the performance of both the top management team and the organization as a whole. Robert Sutton, professor of management at Stanford, recently said in an interview that new research is coming out that suggests that the bigger the difference in pay between the CEO and next top three people of that management team, the worse that firm performs. The problem isn’t that they get more. They should. The problem is that is disproportionately more. But, how should that compensation be determined? Perhaps compensation should be linked to defined earnings performance goals? Should a highly qualified CEO get what the market is willing to pay? Should a wise CEO place a self-imposed cap on their compensation for the good of the organization and the market in general?

Posted by Michael McKinney at 09:18 AM
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