Sunday, September 25, 2016

Who Gets To Set the Rules of Business?


As we continue our journey into the 21st Century are global businesses setting higher standards for themselves or are they becoming more selfish and greedy?
 
If the latter – maybe we should be asking some basic questions on social media and elsewhere to try and get some substantive change. For example, who gets to set the rules in business? And how well are they doing their job? What values should these rules reflect? What’s fair and how is this defined? And what, if anything, do we owe to one another?
 
The 21st Century has seen large global brands being caught misleading their customers for financial gain. The global financial crisis was a tough time for most consumers across the world, who must have been saddened (and more) to find that many of the financial institutions they trusted to look after their hard earned cash were misleading customers or had colluded to make financial gain through for example rigging forex rates.
 
More recently we had the Volkswagen (VW) emissions cheating scandal allegedly brought about when VW realized that a new generation of diesel motors could not meet United States air quality standards legally. The company officially admitted the cheating to regulators, but not to the public, on September 3, 2015, after the E.P.A. threatened to refuse to allow 2016 models to go on sale.
 
According to the documents reviewed by The New York Times, a confidant of Mr. Winterkorn (the Chief Executive of Volkswagen at the time), wrote to him in May 2014, warning that regulators might accuse the carmaker of using a so-called defeat device - software that recognized when the car was being tested for emissions and activated pollution-control equipment. At other times, the cars produced up to 35 times the allowed amount of nitrogen oxide emissions, which are linked to lung ailments and premature deaths.
 
On September 1, 2016 the Australian Competition and Consumer Commission (ACCC) sued Volkswagen AG (VW) and its local subsidiary for misleading customers. The suit alleges that VW engaged in misleading or deceptive conduct, made false or misleading representations and engaged in conduct liable to mislead the public in relation to diesel vehicle emission claims. Specifically, the ACCC claims that between 2011 and 2015 VW misled customers in relation to the significantly higher nitrogen oxide emissions being produced by the vehicles, misled customers to believe that the vehicles complied with Australian and European standards and all Australian regulatory requirements, and marketed the vehicles in Australia as being environmentally friendly, clean burning, low emission and compliant with stringent European standards when this was not the case under normal driving conditions. The ACCC claims that this constituted multiple breaches of the Australian Consumer Law. The ACCC is seeking declarations, pecuniary penalties, corrective advertising, findings of fact and costs.
 
On September 7, this year Bloomberg Business Week asked the question “can ExxonMobil Be Found Liable for Misleading the Public on Climate Change? Where it’s alleged that scientists at the biggest U.S. oil company understood as early as anyone that fossil fuel emissions were heating up the earth’s atmosphere. The world’s largest oil explorer by market value had been hit by a pair of multipart investigations by InsideClimate News and the Los Angeles Times. Both reported that as early as the 1970s, the company understood more about climate change than it had let on and had deliberately misled the public about it. One of Exxon’s senior scientists noted in 1977 - 11 years before a NASA scientist sounded the alarm about global warming during congressional testimony - that the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels.”
And then there’s Wells Fargo.
 
Two former Wells Fargo & Co employees have filed a class action in California seeking $2.6 billion or more for workers who tried to meet aggressive sales quotas without engaging in fraud and were later demoted, forced to resign or fired. The lawsuit on behalf of people who worked for Wells Fargo in California over the past 10 years, including current employees, focuses on those who followed the rules and were penalized for not meeting sales quotas.
 
"Wells Fargo fired or demoted employees who failed to meet unrealistic quotas while at the same time providing promotions to employees who met these quotas by opening fraudulent accounts," the lawsuit filed in California Superior Court in Los Angeles County said. Wells Fargo has fired some 5,300 employees for opening as many as 2 million accounts in customers' names without their authorization. On September 8, a federal regulator and Los Angeles prosecutor announced a $190 million settlement with Wells.
 
If the fraud isn’t bad enough it’s worth highlighting that institutional investors now want Wells Fargo to reclaim money it gave to Carrie Tolstedt - the executive who oversaw the Wells Fargo unit during the time it carried out a massive fraud. Tolstedt resigned earlier this year with a $124 million severance payment, plus equity.
 
One can sadly Google many other organizations misleading the consumers in some form or other – which begs the current question – who’s setting the rules of business? As individuals ‘we’ have two simple choices – we can either turn a blind eye to forms of corporate corruption and greed and thereby tacitly approving these bad practices, which at a minimum are ripping us off and at worst will destroy the planet – or we can start to ‘fight’ and stand up for the world we want our children and grand-children to inherit from us.
 
If we’re going to put our heads in the sand thinking ‘I have no power to make a difference; I don’t drive a VW or bank with Wells Fargo; or I don’t know what to believe anymore so I just won’t get involved’ – then sadly we’re accepting that it’s okay for businesses to cheat, lie and be focused on selfish greed. In which case why don’t we start teaching our kids the skills required to be good at lying and corruption - as we might as well ensure our future businesses and associated nations are best equipped to maximize this apparent tacitly ‘acceptable’ approach to business.
 
The business ‘buzz words’ of the past few decades have focused on leadership development; corporate governance and corporate social responsibility – in fact many organizations are making millions of dollars supposedly ‘developing’ these importance areas of business.
 
But if businesses are corrupt – then it’s the fault of their leadership; their corporate governance and their approach and belief in corporate social responsibility.
 
One of the key rules of business should be to have stringent corporate governance rules in place to ensure the organization is operating at the highest ethical standards, for the good of their stakeholders, their community and when appropriate the planet; for organizations to embrace and genuinely understand the long-term and sustainable benefit of corporate social responsibility; and to have the right leadership in place to ensure these first to rules are upheld each and every day.
 
When organizations cheat – then the leadership must be held to account and be held personally liable to their stakeholders.
 
Until this happens we are sadly allowing and tacitly approving greedy corporations and institutional investors to make a mockery of the concept of leadership and the accountability that comes with it – and taking the principled role of leadership back to the dark ages.  

Sunday, August 28, 2016

How Effective is Your Team, Really?


There’s a great quote by the author Simon Sinek, who wrote, “a team is not a group of people who work together. A team is a group of people who trust each other.” There’s nothing mind-blowing about this quote on the surface – but how often do teams spend real quality time assessing their genuine cohesiveness? And who’s the right person to be ensuring they have the best performing team, where each member trusts the other, both today and into the future?
 
Trust is a huge issue and not something that can be assessed accurately unless, to some extent, trust already exists within the team. Confused? It’s a bit like the chicken and egg. It’s unlikely that you’ll ever really know if you have a truly high performing, trusting team if the team doesn’t operate in a culture where full transparency is the rule and not the exception – and for transparency to exist you first need at least some degree of trust to be present or a genuine desire to get to a point where the team can trust each other.
 
The general rule in most organizations seems to be to ignore this part of team dynamics and just let the group sort out their problems if and when they arise; tacitly accepting that not everyone is going to get on and allowing levels of dysfunctionality to exist – without fully understanding the impact on team performance and hence optimum output. In fact it seems that unless the underlying mistrust starts to negatively affect short-term performance goals, the problem will be ignored, in most cases, simply because leaders don’t have the confidence and skills to deal with it.
 
This approach fails on so many levels (1) you’ll never optimise your teams true potential; (2) individual team members will not support their colleagues above the very basic level; (3) the team will not innovate best in class solutions due to the distrust among its members; (4) ‘underground’ splits occur in the team where often one section thinks they are superior to another part of the team and gain favour with the leader, creating messy silos of distrusting self-serving sub-teams.
 
Another sad fact about dysfunctional teams are that they are the playground of command and control type leaders. These leaders thrive on their team being dysfunctional as it gives them more power to manipulate the business environment for their own personal gain. They have absolutely no interest in developing a cohesive team, as they fear losing their own slightly misplaced perception of control. Further they do not subscribe to one of the core roles of a leader that being to develop each team member to their optimal potential – as they fear this may threaten their very existence.
 
So how does one reverse this trend? Here are some fundamentals;
 
1) You have to want your team to be the best they can be?
2) You want an authentic team where honesty is a core value – which leads to a trusting environment (note: genuine honesty can be hard initially as team members hear the truth about how they are perceived, often for the first time and their ego’s get dented; but in the medium to long term the team, through focused leadership, get over themselves and focus on a honest future together).
3) You’re prepared to invest the time to build a successful team.
4) You set ground rules so you create an authentic environment, not a bitchy one.
5) You focus on the benefits of building the best team of highly motivated individuals.
6) You’re prepared to set the example.
 
 
So the starting point is for the board and executive team to ensure that they develop a leadership philosophy that rejects any form of command and control leadership; and they set the example to encourage leaders to develop high performing teams as a core responsibility. This means that as a leader you must be prepared to deal with team dynamics head on and be prepared to invest time and effort in developing a culture of trust – however hard that might be in the short term – as failure to develop a team that trusts each other means you will have accepted mediocrity as one of your core business values.  
 
As Patrick Lencioni, author of The Five Dysfunctions of a Team, wrote; “remember teamwork begins by building trust. And the only way to do that is to overcome our need for invulnerability.”
 
Besides reading the theory on team dynamics, business leaders can learn a lot from observing the best sports teams around the world where for example Phil Jackson (former coach and former player, currently serving as president of the New York Knicks) said “the strength of the team is each individual member. The strength of each member is the team.”
 
One strength of great sports team is their authentic communication – it’s one of the things that makes them stand out from the crowd of wannabe teams where, as the author Michele Jennae states “if we don’t communicate, we certainly can’t get much done and if we don’t communicate authentically, what we get done is less effective.” Players on and off the field are authentic about their strengths and weaknesses; they understand their primary team role; but are also prepared to support other teams mates as and when necessary – they know that if their communication isn’t authentic, the team will not play to its best potential and they won’t be the best.
 
It’s worth noting from a business perspective that this sports analogy isn’t saying the ‘dysfunctional’ team might not win – it just won’t win by the margin it could if it was working together as ‘one’ cohesive unit. And this is often where the confusion exists for the business leader – they see their ‘team’ winning and hence assume that things must be ‘good’ and don’t get involved enough in the team dynamics to understand that the winning is more ‘luck’ than due to the team ‘playing together’.
 
So it’s your choice as a leader, are you confident and good enough to truly examine your team dynamics to find out if you have an environment of transparency and genuine trust; and are you prepared to invest time and effort in developing the best team dynamics possible?
 
 
Remember “leadership is not about your ambition. It is about bringing out the ambitions of your team” ― Cheryl A. Bachelder, Dare to Serve: How to Drive Superior Results by Serving Others

Sunday, July 31, 2016

Are You Image Focused?

Your personal brand is your unique competitive advantage which is a precious commodity in today’s highly competitive business world; and your brand is significantly affected by your perceived image out in the big wide world. It doesn’t matter where you are on the career ladder or what skills and experience you have – unless you have somehow saved enough money for your brand not too matter anymore, how you ‘promote’ yourself and how you let others promote you will have a significant short-term and long-term impact on your perceived image by others – and hence impact your dreams and aspirations on a business and personal level.
 
As HBS professor Laura Morgan Roberts sees it, if you aren't managing your own professional image, others are; "people are constantly observing your behavior and forming theories about your competence, character, and commitment, which are rapidly disseminated throughout your workplace," she says. "It is only wise to add your voice in framing others' theories about who you are and what you can accomplish."
 
The art of developing our own brand is something that is lacking in many educational and business environments. Yet considering how important your image is in optimizing your potential future – the art of personal image and brand building should be a part of a teenager’s basic education from 16 years old at the very latest.
 
Professor Roberts highlights how “in the increasingly diverse, twenty-first century workplace, people face a number of complex challenges to creating a positive professional image. They often experience a significant incongruence between their desired professional image and their perceived professional image. In short, they are not perceived in the manner they desire; instead, their undesired professional image may be more closely aligned with how their key constituents actually perceive them. Members of negatively stereotyped identity groups may experience an additional form of identity threat known as ‘devaluation.’ Identity devaluation occurs when negative attributions about your social identity group(s) undermine key constituents' perceptions of your competence, character, or commitment. For example, African American men are stereotyped as being less intelligent and more likely to engage in criminal behavior than Caucasian men. Asian Americans are stereotyped as technically competent, but lacking in the social skills required to lead effectively. Working mothers are stereotyped as being less committed to their profession and less loyal to their employing organizations. All of these stereotypes pose obstacles for creating a positive professional image.”
 
The world has become a very critical and hypocritical place as we try to learn to come to terms with living our lives in such a public arena. The beauty about the human race used to be our unique individuality and yet this can feel like a curse in this new social-media focused world with people making blind judgements based on their own, often ignorant, ‘beliefs’ without even pausing to understand the situation and the facts. It’s quite scary just how quickly people are prepared to make huge assumptions and judge complete strangers based on as little information as a simple photo or set of words.
 
Professor Roberts reminds us that “even positive stereotypes can pose a challenge for creating a positive professional image if someone is perceived as being unable to live up to favorable expectations of their social identity group(s). For example, clients may question the qualifications of a freshly minted MBA who is representing a prominent strategic consulting firm. Similarly, female medical students and residents are often mistaken for nurses or orderlies and challenged by patients who do not believe they are legitimate physicians.”
 
She goes on to add that “In order to create a positive professional image, impression management must effectively accomplish two tasks: build credibility and maintain authenticity. When you present yourself in a manner that is both true to self and valued and believed by others, impression management can yield a host of favorable outcomes for you, your team, and your organization. On the other hand, when you present yourself in an inauthentic and non-credible manner, you are likely to undermine your health, relationships, and performance.”
 
30 years ago unless you were some form of celebrity or very successful business person, you were pretty much anonymous outside of your personal and business circle of friends and colleagues. You just had to worry about your ‘local’ image, which was pretty much in your hands to control. Probably 30 years ago people actually wished they could ‘market’ themselves more easily on a global scale, though it seems that we have gone from one extreme to the other.
 
In today’s business world “people attempt to build credibility and maintain authenticity simultaneously, but they must negotiate the tension that can arise between the two. Your ‘true self,’ or authentic self-portrayal, will not always be consistent with your key constituents' expectations for professional competence and character. Building credibility can involve being who others want you to be, gaining social approval and professional benefits, and leveraging your strengths. If you suppress or contradict your personal values or identity characteristics for the sake of meeting societal expectations for professionalism, you might receive certain professional benefits, but you might compromise other psychological, relational, and organizational outcomes.”
 
The desire to be noticed and be part of the ‘social media community’ must be tempered by the need to manage your personal image, both in the short and long term, to the extent that you feel in control of your ‘projected message’ allowing you to market yourself more effectively – which should be one of the core benefits of social media.
 
Professor Roberts concludes by reminding us that “first, you must realize that if you aren't managing your own professional image, someone else is. People are constantly observing your behavior and forming theories about your competence, character, and commitment, which are rapidly disseminated throughout your workplace. It is only wise to add your voice in framing others' theories about who you are and what you can accomplish. Be the author of your own identity. Take a strategic, proactive approach to managing your image.”
 
 
References:
 
Roberts, L.M. (2005). Creating a Positive Professional Image. Harvard Business Review, June [http://hbswk.hbs.edu/item/creating-a-positive-professional-image]

Sunday, June 26, 2016

Does Your Organisation Encourage Learning From Failure?

Whether your organisation learns from failure will be very much dependent on your organisations leadership and the culture they have created. I’d suggest that the stronger and more confident the leadership, the more likely the organisation will have a culture that encourages ‘innovation’, is not risk averse and responds positively to failure – though not if the failure reoccurs.
 
It’s the organisations that have weak leadership – those people over promoted or promoted based on past performance – where risk aversion is the norm, and failure is a word that you only hear whispered in hallowed corridors and never openly discussed or debated as a ‘tool’ for organisational, team and individual learning and development.
 
In an article by Julian Birkinshaw and Martine Haas entitled ‘Increase Your Return on Failure’ (Harvard Business Review, May, 2016) they suggest that “though leaders know that they must tolerate and even embrace failure in the pursuit of innovation and growth, most will still do anything they can to avoid it” (p.91), yet when something doesn’t go as planned, it’s an opportunity to challenge your default beliefs and adjust accordingly. Birkenshaw and Haas recommend spelling out what the project has taught you about each of the following;
1. Your Organisations Strategy, Culture, and Process;
2. Your Organisations Leadership Style:
3. Yourself and Your Team;
4. Your Focus on Proactive/Reactive Planning and Re-Planning; and
5. Your Approach Future Projects and Trends – i.e. Key Learning Points.
 
Birkenshaw and Hass highlight how venture capital firms are very disciplined about examining their ‘failure review process’ by asking direct questions like, are we learning from every unsuccessful endeavour? Are we sharing these lessons across the organisation? And is this helping us improve our strategy and execution? (p.93).
 
Arrogance is a ‘common and historical’ block to both seeing and accepting failure. Edward J Smith the captain of the Titanic famously said when asked how he could best describe his nearly 40 years at sea just before that fateful voyage – “Uneventful. I have never been in an accident and I have never seen but one vessel in distress in all my years at sea. I have never seen a wreck and have never been wrecked, nor have I ever been in any predicament that threatened to end in any sort of disaster of any sort.” This arrogance was so strong that it perpetuated throughout the whole crew, to the extent that a steward on the Titanic when asked if it was true that the ship was unsinkable, replied “Madam, God himself could not sink this ship.”
 
Pamela Waymack stated in her 2006 article, “management’s overconfidence and failure to see its own vulnerability contributed to the sinking of the Titanic. Neither historic track record nor size and prowess are a match for a market in flux. We cannot assume that our organisations are invincible. A seaworthy captain with a spotless record for 40 years was no match for a field of icebergs,” (p.41).
 
One thing that is certain in today’s turbulent global economy is that markets are nearly constantly in flux – and to stay ahead, or even just to stay in business, organisations can’t be scared to fail occasionally and embrace must be mature enough to see failure as an integral part of their forward thinking strategy. Having a workforce that isn’t frightened to be innovative and think ‘for’ the organisation is worth its weight in gold.
 
We have to remember that as humans we are actually used to learning from failure – as innocent children we learn so much from failure, like touching that hot stove to falling off our bikes. We have a natural internal failure assessment process seemingly from when we are born – so it is already part of our DNA – and only poor organisational cultures or bad leaders inhibit and scare us into hiding from failure. If you’ve ever worked for an organisation that doesn’t accept failure – then you’ll remember the psychological impact this had on you as an employee and how your productivity, motivation and general engagement is negatively affected. In these situations it’s a lose-lose for all involved – though the leadership sadly never seem to recognises it.
 
As Birkenshaw and Haas conclude “failure is less painful when you extract the maximum value from it. If you learn from each mistake, large and small, share those lessons, and periodically check that these processes are helping your organisation move more efficiently in the right direction, your return on failure will skyrocket,” (p.93) 
 
Reference:
 
Birkenshaw, J. and Hass, M. (2016). Increase Your Return on Failure. Harvard Business Review, May, p.88 – 93.
 
Waymack, P. (2006). Managing the ice in the waters ahead: Lessons from the Titanic. HFM, Vol 60, Issue 7, p.38-41.