Books We Trust: Interviews with Influential Authors shares our recommendations for books within the field, and takes a closer look through conversations with their authors.

Books We Trust: Interviews with Influential Authors is a project of Charles H. Green’s Trust Matters blog.

Agile Selling: Q&A With Jill Konrath

Agile SellingJill Konrath has made a name for herself as one of today’s top thought-leaders in sales. A well-known author & speaker, Jill seems to be just about everywhere these days, and with good reason.

I’ve known Jill for years. A smart, driven and straightforward woman, Jill epitomizes the best of the Midwest – she lets you have the truth between the eyes, with good intent and a generous spirit. She also knows just about all there is to know when it comes to selling. Her most recent book, Agile Selling, represents a further evolution of her thinking. As I note in the interview, it reminds me in some ways of The Trusted Advisor.

We sat down recently to discuss her new book on how when it comes to sales, you can never stop learning.

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CG: How did you come up with the idea for Agile Selling?

JK: Shortly after SNAP Selling came out, tons of salespeople said to me, “This is great info on selling to today’s crazy-busy prospects. But I’m frazzled too. Just like them. How can you help me?”

Initially, I thought it was a time management problem. But, after pondering it awhile, I realized it was an information management problem. Too much was changing: customers, products, buying cycles, the economy, competitors. It was literally impossible to keep up.

When I thought about it, I realized that rapid learning was one of my core competencies. And, I’d never even talked about it before. It was just who I was.

Then, when I thought deeper about it, I realized I’d developed innumerable strategies over the years to address the fears and challenges you face when you’re trying something new. In researching the book, it was fun to discover that the approaches I’d stumbled on were now verified by neuroscience research.

CG: This book struck me as very similar to Trusted Advisor – a ‘wisdom’ book that can only be written after subject-matter and process mastery. It’s fundamentally about consulting. Comments?

JK: Personally, I’m amazed that it took me so long to “see” some of these things that are now blatantly obvious to me. They are truly the meta-skills that enable subject-matter and process mastery. Yet no one really talks about them. That’s why so many people don’t reach their potential.

And, you are so right that selling is really about consulting. Nothing more, nothing less. It’s about maintaining a singular focus on your client. Where are they trying to go? How can you help them get there? What value will they get from working with you?

Unless you do that today, you won’t get clients. Selling is truly about service.

CG: How far can you get in sales without coming to grips with some of these agility issues? I assume the answer is getting ‘less and less’ as the pace of change accelerates – is that true?

JK: Learning agility issues start from Day One of any new position. At that moment in time, you’re thrown into massive overwhelm, trying to learn all sorts of new things.  And, unless you have a process for doing that, it will take you longer than necessary to become proficient.

Most people don’t realize there are rapid learning practices they can use to quickly master new information or pick up skills. I’m talking about strategies like dumping, chunking, connecting and more.

Plus, when you take a new sales position, you need to take an immediate 30-day deep dive in order to develop situational credibility. Unfortunately, most people don’t know how to maximize that time frame. Instead, they muddle around, hoping to absorb everything by osmosis.

In reality there are certain things that need to be learned first – which I outline very clearly in Agile Selling.  And, if the company doesn’t have the info you need (which many don’t), there are fast strike ways to get it.

CG: What about dealing with all the changes? Does that cause more agility issues?

JK: Absolutely. In a world of lookalike products and services, our expertise is primary differentiator. Essentially that means we can never stop learning.

And, those who learn faster than others will have a serious competitive advantage.

CG: On the face of it, this book is an “advanced” book on selling.  Does that mean a newbie can’t read it? What advice would you give a relatively new salesperson on reading this?

JK: Funny you should ask that. Too me, it’s a foundational book that all sellers should read. Here’s what I’d say to a new person:

“These are the underlying skills of all top sellers. They’re not visible on the surface, when you observe or talk to them.

“But this is what’s at their core.  It’s about how they learn, deal with challenges and transform themselves into an invaluable resource.

“If you focus on becoming an agile seller at the onset of your career, you will be in high demand – regardless of the direction you choose to take in your life.”

I think Agile Selling will help anyone who wants to shorten his/her path to proficiency.

CG: This book strikes me as out of sync with what’s usually written in sales books these days – and beautifully so. It’s about the art and craft of sales, not about the mechanics and plumbing. Is that how you see it?

JK: It’s totally out of sync with other sales books. Nobody is writing about this critical meta-skill of agile learning.  And thanks for your kind words too.

To me, Agile Selling is about “being” a top performer. It’s about the mindset that enables people to thrive when they’re in the midst of change. It’s a skill set about being able to quickly assimilate lots of information or to pick up new skill. It’s also a discipline about creating an environment for success.

The more you embrace agile selling strategies, the higher your likelihood of short-term success and long-term mastery.

Insight Selling: A Q&A with Author Mike Schultz

Insight SellingIt’s no secret that I’ve been a contributing author at RainToday for many years. In that time, I’ve had the opportunity to collaborate and connect with many thought-provoking professionals.

Last year, I had the privilege to sit down with Mike Schultz, the founder and publisher of Rain Group, and talk about their 2013 report, “What Sales Winners Do Differently.”

Recently, Mike and I sat down again and discussed his new book, Insight Selling: What Sales Winners Do Differently, that delves into this same topic in further depth. After reading the book cover to cover in a matter of hours, I was thrilled to get further insight and chat about his findings.

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CG: The sales world has changed dramatically over the past several years. There’s a lot of conflicting advice out there on what works and what doesn’t. In doing research for Insight Selling, what strategies or tactics did you uncover that work today?

MS: Since articles like “The End of Solution Sales” and “Selling is Not About Relationships” were published in by the Harvard Business Review, there’s been a lot of disagreement in the sales world about what’s working and what’s not. We decided to study what was actually happening.

We wanted to find out what the winners of sales opportunities do differently than sellers who came close but ultimately came in second place. So we studied over 700 B2B purchases made by buyers who represent $3.1 billion in annual purchasing power. We found that winners sell radically differently than second-place finishers and that winners exhibit a specific combination of behaviors to achieve better outcomes than second-place finishers. We found that sales winners:

1. Connect with buyers personally and connect buyer needs with their solutions.
2. Convince buyers they are the best choice, that the risks are worth taking, and that they can achieve strong ROI.
3. Collaborate with buyers by bringing new ideas to the table, delivering new insights, and working with buyers as a team.

And we found that solution sales is not dead and that relationships are still important. Sorry, HBR. Solution sales and relationships need to evolve and they are just a piece of the whole, but they’re far from dead and sellers who dismiss these concepts outright put their sales results in grave danger.

CG: What surprised you most about your research findings?

MS: We studied 42 factors that were common pieces of advice given to sellers in order to determine what sales winners do differently.

In our training programs, we poll our audiences asking them to guess what they think sales winners do most differently than second-place finishers. They usually pick things like, ‘was trustworthy,’ or ‘listened to me,’ or ‘understood my needs,’ and so on.

They rarely pick ‘educated me with new ideas or perspectives,’ which, according to buyers, was the number one factor separating winners from the rest. And they rarely pick ‘collaborated with me,’ which was the number two factor most separating winners from second-place finishers.

With this last point, there’s been a lot of buzz that the new trend in selling is to challenge buyers. Our training participants often say to us, “Isn’t the word ‘collaborate’ more of an antonym than a synonym of the word ‘challenging’?” Perhaps. So it’s not only surprising to our training participants but also to us, because these two factors are not what we would have guessed to be what most separates the winners from the rest.

Now, this doesn’t mean sellers who win don’t say what they need to say in order to help the buyer. But they don’t do it standoffishly. So, what sellers think buyers want and what buyers actually want are two surprisingly different things.

CG: In the book, you introduce a three level model that I love – Connect, Convince, Collaborate. How does this change the way people need to sell?

MS: With connect, even though prevailing thinking in sales has been focused on uncovering needs and crafting compelling solutions to solve those needs, sellers still fall into the pattern of not listening, not investigating, and not tailoring what they sell to the needs of the buyer.

With convince, it’s been drilled into the minds of so many sellers not to pitch or sell anything too strongly that they are unwilling to take a point-of-view or advocate for a particular idea or strategy.

With collaborate, too many sellers have been trained to think of sales as me-versus-them. Or to just try to find ways of selling what they offer. Or simply don’t engage deeply enough. What’s important is that these are the things that buyers value, so they’re the things sellers need to do.

CG: You break down insight selling into two applications – interaction insight and opportunity insight. Can you explain the differences between the two?

MS: When sellers introduce buyers to ideas they need to know about we call it opportunity insight. This is when the seller knows a buyer should be doing something and the buyer has little or no idea about it until the seller brings it up.

Now, I’m not saying go straight to the pitch—there’s a rhythm to getting there—but fundamentally, sellers need to get the passionate beliefs they have in their heads about certain ideas into the buyers’ heads.

The second application is interaction insight. This is when sellers ask disruptive questions, push buyers out of their comfort zones and encourage them to think differently. In this case, buyers often come to new insights by working collaboratively with the seller guiding them.

Sellers bring ideas (opportunity insight), and spark ideas through how they lead their conversations (interaction insight).

CG: But the buyer has to trust you if they’re going to accept your insight. Don’t you agree? They can get information anywhere, but when they trust the person it’s coming from it makes a big difference.

MS: Absolutely. You can’t succeed with insight selling without trust. When buyers trust sellers they:

1. Depend on them
2. Listen to them
3. Give them access
4. Spend time with them

The more a buyer trusts you the more willing they are to listen to your ideas and to implement them. Without trust, insight selling is very difficult to do.

CG: Increasingly we hear how buyers don’t trust information from corporations and sellers – that they trust information from third parties, their peers, or even strangers. How can a salesperson get around this?

MS: Well, Charlie, I’d say they should all listen to you.

There’s not much an individual seller can do to restore someone’s faith in corporations, but they can certainly build faith in them as people and can influence strongly whether a buyer perceives their company to be trustworthy.

When a buyer meets a seller, on the one hand they bring with them a modicum of skepticism about the seller’s competence and motives. On the other hand, when a buyer meets a seller for the first time, that seller has a blank trust slate.

It’s up to the seller to bring their “A” game and demonstrate competence and behave overall in ways that the buyer forms the impression that the seller is trustworthy. Every seller is essentially playing on the same playing field of trust. It’s what they do on that playing field that matters.

CG: What’s the biggest misconception sellers have about trust and where do sellers often fall short when it comes to establishing and maintaining trust with buyers?

MS: Everyone thinks they, themselves, are competent. Amazing, even. But they’re not. The concept is called, in academic circles, “Illusory Superiority.”

What does it mean for trust? Sellers overestimate their competence and buyers don’t. Proving they are competent and have integrity – that they are worthy of trust – is a steeper hill than many sellers think.

Insight selling plays in here. You need to get people to trust your ideas, your advice, and your ability to get things done for and with them. Until they have experience with you, the well of trust you build won’t be very deep. This is why collaboration is so powerful, because it creates shared experience where buyers can be exposed deeply to your competence while spending time with you. At the same time, spending time builds intimacy. All of it leads to trust.

If you want to learn how to sell like winners do, pick up your copy of Insight Selling today. If you order by May 10, RAIN Group has some great bonuses for you. You’ll receive the exclusive expert interview series What it Takes to Succeed in Sales Today with myself, John Jantsch, Jill Konrath, Andrew Sobel, and more along with 5 lessons from Insight Selling and RAIN Selling Online training programs. You’ll also be invited to join Insight Selling author, John Doerr for an exclusive webinar, What It Takes to Become an Insight Seller. Plus, RAIN Group is donating their portion of book sales during the launch to the American Heart Association to support congenital heart defect research (learn why here). So go order your copy today. Mike and John are the real deal.

The Impact Equation: New Book by Julien Smith and Chris Brogan

Yesterday was the official publication date of Chris Brogan and Julien Smith’s new book, The Impact Equation: Are You Making Things Happen, or Just Making Noise?

They are doing some cool promotion for the book; check it out on Julien’s site.  Meanwhile, I wanted to get out the word and give readers an early quick review, since I pre-ordered it and downloaded it to read yesterday.

It’s a very good book, first of all.  I have always had a lot of admiration for Julien and Chris, ever since meeting them at the Trust Summit in New York three years ago, shortly after their best-seller Trust Agents had come out.

This book reminds me why I like them so much, and why I get so much out of them every time I interact with them.

The Structure

Chris and Julien have an obvious flair for being cutting-edge social media communicators; so much so that it’s easy to overlook that they are serious subject matter masters. The subject they bite off here is pretty aggressive – how an individual can have an impact in today’s emerging business world.

This is a non-trivial book; it’s way beyond how-to, and will provoke your thinking on many dimensions, if you let it.

The book has a big picture structure:  think of two axes with “impact” on one dimension, and “plan” or “organization” on the other.

The “Impact” part of it I think of as coming mainly from Julien: they’ve got a very clever 5-part acronym (CREATE) which deconstructs the components of Impact. They are: Contrast, Articulation, Reach, Exposure, Trust, and Echo (echo).

Expressed as an equation, it is: I = C x (R + E + A + T + E).

Using an equation is a nifty idea (think the Trust Equation); it gets you thinking about relationships, magnitudes, and interactions. Very useful stuff.

The other dimension I think of as coming more from Chris: Goals, Ideas, Platform, and Network. Chris has a knack for organizing the world in Big-Picture, but very practical and provocative ways.

Making It Work For You

Just like Chris and Julien, these axes form a powerful combination. The book shows you how to think about your Impact in each of those critical areas (Goals, Ideas, Platform, Network).  And it’s  loaded with practical advice.

But that’s jacks for openers. What I really love about Julien and Chris (and I’m hardly alone in this) is that both are about as genuine, real, and sincere as you can get. Their whole approach to doing business reflects this. Their business strategy is a human business strategy.  The point of social media is to serve people, not vice versa.

And it works.  They are prime examples of it themselves, which is yet another reason the book is a delight.

I hope they sell a ton of books, they deserve it.

 

 

 

 

 

Books We Trust: Fixing the Game, Roger Martin

This is the ninth in a series called Books We Trust.

A devastatingly important book was published last year, one that I think got lost in all the hue and cry of the market crash. I want to do my bit to fix that.

The book is Fixing the Game, by Roger Martin. Roger is Dean of the Rotman School of Management at the University of Toronto. Named the 6th top management thinker in the world by Thinkers 50 in 2011, his ideas are as clearly articulated as they are broadly based. Fixing the Game is his 6th book.

Capitalism and Major League Sports: Fixing the Game

Charlie Green: Roger, this strikes me as a huge book in management theory, and it reads beautifully. But it has not sold as well as it deserves. Do you agree?

Roger Martin: That is hard to say. It is a policy book more than a self-help or methodology book, so that has a somewhat smaller audience I think. I was disappointed that the sports press didn’t take notice! I gave them a lovely bouquet and they largely ignored it. But policy makers and in potential pension fund managers have taken lots of note.

Charlie: That’s good to hear. About the sports press, you start out with a great metaphor. The NFL has outperformed Major League Baseball on every dimension. That’s because football has been run for the fans, while MLB was run for the owners and players. In the long run, everyone wins if you manage for the fans.

The analogy in business would be to serve the customer. But rather than do that, as Peter Drucker suggested, we have bought into the shareholder value view of the world. We run companies for the owners and players, not the fans. And you show with real data – real companies like Google and Cisco, decades of shareholder performance across all industries – how this approach has failed.

We have fundamentally, basically, gotten it wrong. And we need fundamental, basic fixes.  Is that right? And where did we first go off the rails?

Roger: We started off the rails with an innocent-sounding theory by way of a paper by Mike Jensen and Bill Meckling in 1976.  It argued that we should align the interests of managers and shareholders by giving managers stock-based compensation. The simple and compelling idea was that with stock-based compensation if shareholders do well, so will managers and if shareholders do badly, so will managers.

That produced perfect alignment – or so we thought. Unfortunately, it had an unintended consequence of focusing management on the firm’s stock price rather than its real operations.

There are two important markets in the life of a firm – one is the real market in which it produces real products/services which they sell to real customers who pay them real money and they earn a real profit or loss. The other is the expectations market in which investors imagine what will happen in the real market in the future and on the basis of that make a decision to buy or not buy the firms stock – which results in a stock price.

Before stock-based compensation, the real market and the expectations markets were largely separate; with stock-based compensation, they became tightly linked.

There is a parallel in the world of sports. In the NFL, teams play a real game with real passes and runs, field-goals and touchdowns.  There is a real score with a real winner and a real loser.  There is also a linked expectations market – betting on football. In this game, the betters form expectations about what will happen on the field on the coming Sunday and bet accordingly. To balance the betting on either side of the game, the book-makers create a point spread which gives points to the underdog.

The point spread is the exact analog of a stock price. It is the level that results in equal money being wagered above and below the stock price/spread.

Charlie: The sports metaphor continues. Bettors on a game bet the spread; but we’re horrified if players play for the spread, not the game. In business, however, we’ve gotten to the point where management is incentivized by the spread – not the real game. Is business really a casino in that sense?

Roger: It has become one – and not for the better of the world, that is for certain.

In football, we know that teams can’t keep beating the spread forever. As they do well against the spread, the spread widens until the team will no longer beat the spread – as happened to the 16-0 New England Patriots. They beat the spread the first 8 games of the season and then went 2-6 against the spread while they won the remaining 8 games of the season on the field.

Stock-based compensated executives figured this out. They could only drive expectations and with them the stock price up for a relatively short period; then expectations would come crashing back down. So their personal profit-maximizing route was to drive up expectations until the breaking point and then get out before the expectations come crashing down – and then do it again and again.

That has made the market a casino and the CEOs are the house: they always win.

Charlie: Haven’t there been some warning signs along the way?

Roger: There were many – all ignored. The first was subtle. It had to do with beating analyst earnings expectations.

During the late 1980s and into the beginning of the 1990s, large American public companies met or beat earnings expectations 50% of the time – which is what would be expected. But by the mid-1990s, they were beating expectations 70% of the time, which was only possible only if CEOs and CFOs were manipulating expectations and earnings.

Then we had the dot.com bubble and bust, driven by option compensation. Then we had massive accounting fraud (Enron, WorldCom, Adelphia) that was designed to drive expectations. Then we had massive options backdating fraud, that was designed to help executives cash in on expectations.

We ignored all of this at our peril and the consequence of ignoring it was the subprime meltdown of 2008 – yet another expectations-based meltdown.

Why the Game of Capitalism is Broken

Charlie: This is larger than just individual greed, isn’t it?  What are the aspects of business today that keep us locked in this casino mentality?

Roger: The focus on shareholder value maximization has sapped the authenticity of executives. They have become more focused on Wall Street analysts than on their customers. And they have become willing to sacrifice the welfare of their employees to attempt to meet the expectations of Wall Street.

This has resulted in increasingly cynical and distant customers; all who know they come after the shareholders in the pecking order. And the worst thing is that all of this manipulation of expectations has facilitated massive growth of the hedge fund business and hedge funds simply contribute to the casino mentality.

Charlie: Is this casino mentality of betting on the spread rather than the game partly responsible for the horrendous global economic situation we face now?

Roger: Indeed it is. The banks at the center of the subprime crisis all had senior leaders who knew very well the game that they were playing; as Chuck Prince put it, they all “danced until the music stopped.” And dancing meant taking ever-greater risks to meet expectations that were already so high that they couldn’t be met with normal business.

In the face of this situation, the banks created the world’s first infinitely-sized market: synthetic financial derivatives. Unlike all other markets, there is a limit to their size.  There is only so much that can be produced and only so much demand because the product in question is real.

But synthetic CDOs can be created out of thin air – almost forever. That is how the banks forestalled the failure to meet expectations by several precious years – precious for their personal compensation. The problem was that in doing do, they created the worst bubble the world has ever seen – and we have been living with the consequences ever since.

Charlie: George Soros recently gave a speech that got a lot of play. He said we’ve failed partly because we thought we could think our way into success; we need to recognize that humans are fallible and design our world accordingly. Do you see a parallel with our obsession with shareholder value?

Roger: This is standard Soros stuff. He is a falsificationist who closely follows the work of Karl Popper and Imre Lakatos. So he doesn’t believe there is any absolute truth out there, just the best theory that has yet to be found wanting. And when the flaws of the best theory are found, they will provide the seeds for a still better theory – which will automatically be found wanting in due course.

As a consequence, whenever George sees everyone thinking the same thing, he thinks that it is probably, if not certainly, wrong. I assume that he is applying that thinking to the world of the quants at the banks who think their models are perfect but really aren’t.

I think he would argue that once everyone thinks that shareholder maximization is the ‘right’ approach, it almost certainly is wrong – and I certainly agree!

Charlie: Your insights are huge. Do you see them as supported by or integrated with other major thinking going on nowadays? Realignment of strategy? Global integrated reporting? Other thinking you find grounds for optimism?

Roger: Old theories die hard. I liken it to the story of peptic ulcers. For decades, the theory was that they were caused by excess stomach acid and patients were prescribed bland diets and anti-acids; and if that didn’t work, peptic ulcer surgery.

Two Australian researchers, Marshall and Warren, came to the conclusion that the reason that the treatments rarely worked was that peptic ulcers were caused by a bacterial infection – h pylori. Their views were wildly dismissed for the better part of a decade while patients continued to have their stomachs carved apart.

Only when Marshall ingested h pylori, grew a peptic ulcer and cured himself with antibiotics did the world decide to stop ruining patients’ stomachs with needless and damaging surgery. And twenty years after ingesting h pylori, Marshall (and his colleague Warren) won the Nobel Prize in Medicine.

Shareholder value maximization combined with stock-based compensation is an old and beloved theory that will probably take a decade to die because its proponents will continue to argue as they do today that the theory is sound; there are just problems with implementation. That is always the refuge of theory scoundrels!

Charlie: I wonder what is the financial equivalent of h pylori…Roger, many thanks for taking time with us, I do appreciate it.

Roger: And thanks to you as well.

 

Books We Trust: The Collaborative Organization by Jacob Morgan

This is number 11 in a series called Books We Trust.

I first met Jacob Morgan a little over a year ago in New York. Appropriately, we had first met on Twitter, then agreed to a coffee on an East Coast trip of his that coincided with a free midday on my end. Lucky for me!

What’s unique about Jacob is the extent to which he intuitively grasps how new digital tools and strategies can be used to create Collaborative Organizations where employees share, connect and engage with each other and with information.  This in turn helps build trust, fosters collaboration and positively impact the lives of employees both at and outside of work.

Most of us “get” that collaboration – whatever that means – is a powerful force in today’s networked business world. Unlike most of us, Jacob “gets” just what that does mean. That’s what his book is about.

Charlie Green: Jacob, you’re so modest. I honestly did not know, until I saw the draft the number of interesting people you connected with in writing this book: Don Tapscott, Gil Yehuda, Craig Newmark, Darren Entwistle – and I’m just scratching the surface. How did you gain entrée to all these interesting folks?

Jacob Morgan: I’ve been very fortunate to get such amazing people involved. The former CIO of the USA (Vivek Kundra) was the closest I could get to the President himself endorsing the book!  As soon as I had something I could share with people I immediately began reaching out to leaders who I thought would make great supporters of the book.

These leaders themselves believe in the concept of a Collaborative Organization so the book really resonated with them.  I had relationships at many of the companies who were able to help make this happen; without them, none of this would have been possible.

Charlie: You spent a month traveling throughout China, including rural areas, and were amazed at how easy it was to stay digitally connected. Easier, in fact, than inside some major US corporations. The corporate use of technologies lags the social uses that are developing outside the walls. What’s up with that?

Jacob: The barrier for individual use of social media is non-existent. All you need is an internet connection.  For corporate-led collaboration initiatives to take place, all sorts of things need to be considered: cost, security, risks, employee adoption issues, vendor selection, integrations and customizations and more. Realistically many companies are still trying to figure out what it all means and how it can be applied to their business. There is also a high degree of fear.

Charlie: We often hear people – let’s say mainly from my generation – who bemoan the lack of depth in relationships that comes about from the “shallowness” of social media connections. In contrast, you point out that in 1977, an MIT researcher found that people working 30 yards apart from each other interacted as well as people half a world away.

The problem this raises is not what came to be called strong ties, but rather one of weak ties.  The power of weak ties to extend functional work relationships, you point out, is revolutionary and massive.  Say a bit more about that please?

Jacob: The study showed that if you’re more than 30 meters away from someone, you might as well be in another city.  Beyond 30 meters, collaboration and communication drop off significantly.

Weak ties act like bridges between groups or areas. Think of Oakland and San Francisco.  Each can be considered a strong community with a lot of strong ties. But the Bay Bridge, which connects the two, allows people from San Francisco to go to a new area, Oakland, and vice versa.

The same is true within companies. People with strong ties typically know the same group of people; it’s an overlap, it can lead to staleness, which is why we need to extend beyond our networks. This we do through weak ties.

How often were you able to get a job interview, access to a party, a discount on something, or an introduction to someone based on a weak tie?  LinkedIn is a great example of a platform that allows you to build weak ties in the business world that you can potentially call on later.

Charlie: It’s my sense that many people in business think of collaborative tools with the paradigm of sharing databases, as a problem of knowledge management, powerful queries and the like. But you caught my attention with three items right out of my own books: thinking out loud, listening and remote team trust-building.

These are core skills for human-to-human trust creation; how in the world can bloodless abstract digital tools help us to connect in these powerfully human ways?

Jacob: Keep in mind that technologies are simply the enablers; it’s still people that are using these tools and engaging with each other. These tools allow us to share information in new ways; the same is true for listening. 

We can have a pulse on the company by checking out a corporate activity feed, or sharing an idea or a challenge that we’re trying to figure out.  This happens often in the consumer space with Facebook and Twitter – again, it’s the corporate world that lags.

As far as trust goes, we tend to trust people with whom we have something in common.  These new collaborative tools allow us to form communities of interest, passion and expertise that help employees build relationships, and hence trust with one another.

Charlie: One of the several rich case studies you describe was for a 1500-employee group at Penn State that created an intranet. What struck me was that the plan for implementation and adoption was to take 3-5 years. In fact, it was done in 1.5 to 2 years. And – wait for it – you say there was never an in-depth strategy for doing this.

What was the secret sauce that pulled that one off?

Jacob: No two companies go down the same path. Penn State planned quite conservatively for their initiative but even they were surprised by the faster adoption.

I can’t say there was a secret sauce per se, but I do know that they really cared about this initiative and they made it front and center. Though they didn’t have an in-depth strategy, they did have some foundation laid out for what they wanted to do.

It’s a bit like trying to become a great swimmer by studying YouTube videos, reading books, and interviewing the greatest swimmers.  Sure, it’ll you give you some tips and ideas, but at the end of the day you need to jump in the water to learn and adapt.

Is this the best approach for every company out there?  Probably not, but it can certainly work for some, as Penn State has shown.

Charlie: You talk about the risks of implementing new collaborative technologies, but also about the risks of not implementing them.  What are the biggest of those latter risks, the risks of not taking a risk?

Jacob: I’d say some of the top risks are:

  • Having a disengaged workforce that doesn’t care much about the work they do or the company they work for
  • Inability of the company to stay competitive
  • Having an inefficient workforce

Charlie: Jacob, I’m totally sold that an organization using these technologies fluently could become enormously successful. If you had to narrow down the top two or three barriers to acceptance of them, what would you say they are?

Jacob: There are three types of resistance: they come from employees, managers, and IT. Respectively:

The top employee barriers are not wanting to learn a new technology, and saying they don’t have enough time.

The leading managerial barriers are not seeing it as a priority (which I believe is a fear and a lack of understanding problem), and uncertainty about the overall business value and ROI.

For IT, the top barriers are low prioritization (again, often due to fear and understanding), security issues, and lack of budget.

Charlie: The full title of the book is The Collaborative Organization: A Strategic Guide to Using Emerging Social and Collaborative Tools, and it just formally came out on July 9th. I hope you sell a boatload of books. Thank you for sharing your thoughts with us here.

Jacob: My pleasure, thanks Charlie!

 

 

Books We Trust: The 3 Power Values by David Gebler

This is the tenth in a series called Books We Trust.

The 3 Power Values is, simply, an excellent book. Author David Gebler’s unique talent is to combine a Big Idea, such as the need to remove roadblocks as the key to performance, with precisely defined linkages between values, culture and behavior. He brings needed commonsense to the often vague, un-actionable, and fog-sculpting enterprise known as organizational effectiveness.

David is a consultant and educator, with 20 years experience helping leaders understand how to use their organization’s culture to improve performance and to stay out of trouble.

The Interview

Charlie Green: David, we spoke a couple of years ago about why companies have so much trouble getting a handle on ethics issues and it seems like things are getting even worse.

David Gebler: I agree. Ethics scandals fill the papers every day. We don’t see change because we’re not dealing with the real issues that lead people to do bad things. We think that regulations will define outer boundaries to actions and that morals will guide us inside those boundaries. And that just isn’t the case.

Charlie: Why not? You would think that following the rules and knowing right from wrong would be enough.

David: What doesn’t get factored in is the environment we work in. Whether we follow the rules, even what we think is proper, is heavily influenced by the culture. Social norms tell us whether it’s OK to flout the rules. The norms also tell us whether to feel entitled or remorseful when we cheat or do something wrong.

Charlie: When is it OK to violate rules?

David: Charlie, even you have driven over the speed limit. But you wouldn’t call it morally reprehensible, I suspect. We have normalized that speeding, up to a certain point, is something we all do. So even if it’s illegal, we don’t see it as a moral issue.

Charlie: Did you say that moral issues are also subjective? What do you say to those who say morals are morals, right is right, and wrong is wrong?

David: The truth is, even our definition of what is right is subjective. Leaders in behavioral economics, such as Dan Ariely, point out that everybody has the propensity to be dishonest, and almost everybody cheats—just by a little. The behavior of almost everyone is driven by two opposing motivations.  On the one hand, we want to benefit from cheating and get as much money and glory as possible; on the other hand, we want to view ourselves as honest, honorable people.

What determines whether we feel good about ourselves is the environment we’re in. If we’re in a culture where cheating is frowned upon, people will cheat less, because cheating impacts their sense of self. But if the culture is to take advantage and win at all costs, then cheating and cutting corners becomes just the way we do business.

Charlie: So if the key factor is culture, why do so few leaders tackle this issue head on?

David: Culture is so intangible that leaders hesitate to dive in – not even just to understand it, much less to tweak it. Many leaders haven’t focused on measuring and managing culture, not realizing that they can. Most don’t understand whether their culture hinders or supports performance, much less the implementation of strategies. And finally, many leaders don’t even know whether their culture encourages unethical or illegal conduct.

Charlie: In the book you explain that three “Power Values” are essential to get a handle. What do you mean by that and what are those values?

David: Twenty years of work with companies showed me that three values – integrity, commitment and transparency – stand out in fostering identification and community. I call these the power values because they can influence specific behaviors that in turn positively influence an organization’s culture. The chain is: values > behaviors > culture. It is the behaviors that nudge the organization’s cultural components (goals, principles, and standards) into alignment.

By focusing on the specific behaviors that make up integrity, commitment and transparency, you can transform negative behaviors impeding performance into positive behaviors supporting performance. This is how you measure and manage culture as a way to rev up performance and reduce risk.

Charlie: What if employees in the organization don’t understand these values?

David: Most employees already hold these three power values personally. When the power values are highly visible in an organization, they clarify the organization’s intentions and give employees a unifying sense of purpose and direction.

Employees who share their principles, goals, and outlook – the essence of the power values – can let their guard down a bit. They can trust that they will be understood, that there will be fewer booby traps, and that their leaders and coworkers will generally act in a predictable way, consistent with their shared values.

Charlie: What’s the connection between these power values and the kinds dysfunctional cultures we were just talking about?

David: In a positive corporate culture, employees feel good about themselves and their work (commitment).  They raise issues and freely ask questions (transparency).  They don’t feel challenged by unfair or inconsistent work processes, because people take personal responsibility for their actions and live up to their commitments (integrity).

When the elements of culture are out of alignment, frustrations arise. If principles are unaligned with goals, employees disengage and don’t feel a vested interest in their work (lack of commitment). When goals are out of sync with standards, unfairness arises as managers and employees “do what they have to do” rather than what they have said they would do (lack of integrity). And when standards are aligned with values, employees see that the organization’s actions are inconsistent with its principles, and it becomes hard to ask uncomfortable but important questions and ensure that the truth is heard (lack of transparency).

Charlie: How can you foster a positive corporate culture right from the start?

David: Organizational culture isn’t something that can be faked – or “implemented” – by leadership. The culture is simply the way the organization and its people conduct themselves. Organizations have cultures from their outset, though few start-ups spend time defining their culture when they’re small and everyone knows everyone.

When a culture goes bad, it’s not a sudden event; it’s a case of of slow erosion over time. Things begin to change. At the beginning it’s little things, e.g. a business decision made in the heat of the moment when the decision-maker didn’t feel the urgency to deal with the long-term impact at the time of the decision.

Leaders who understand the role organizational culture has in shaping behavior and performance, however, will be mindful of the early warning signs of trouble. Successful culture management means that leaders recognize the first steps down the proverbial slippery slope, and take actions to address them when they’re still small.

To do that, leadership must have a clear sense of a) what kind of culture is needed to achieve the organization’s goals, and b) what behaviors are needed to ensure that the desired culture is sustained. Successful leaders know that the small things matter greatly, and that veering off course is not to be done lightly or without serious plans to right the ship.

Charlie: Thanks, David, for sharing your insights. Until reading this, I also didn’t have a good idea of how one could actually manage culture.  You have managed to educate me greatly!

David: A pleasure, Charlie .

Books We Trust: The Decision to Trust by Bob Hurley

This is the eighth in a series called Books We Trust.

The Decision to Trust is one of the best books written in recent years on trust; it is a major contribution to the subject.

Author Bob Hurley teaches at Fordham and Columbia, so it’s no surprise that the book is solidly rooted in the extensive academic work on trust. Perhaps more surprising is that the book is also intensely practical, based on his years of consulting and research work with significant companies.

I sat down recently with Bob at his decidedly un-Lincoln Center-ish Fordham offices near Lincoln Center.

Capitalism: Back to the Future

Charlie Green: Let’s get one thing clear: you’re not doing double-duty as Basketball Hall of Fame high school coach Bob Hurley over in Jersey City – are you?

Bob Hurley: No, but I’m a fan, so I’m flattered by the confusion.

Charlie: OK, that’s out of the way. This is a wonderful book, Bob, clearly the result of years of research.

Bob: Decades, actually. I started as an accountant, then got an MBA and did consumer marketing. Eventually I realized I really wanted to be a teacher. I ended up at Columbia, where I studied under Morton Deutsch, the founder of the field of conflict resolution and a brilliant psychologist.

Today, I teach various courses in leadership and management at Fordham, and I teach executive education at Columbia

Charlie: Let’s jump right to the book. The heart of it, and I think the genius of it, is your idea of approaching trust from the point of view of a decision. A decision to trust is a largely psychological decision by the trustor, which is affected by the trustor’s own propensity to trust, and by the trustor’s view of the trustworthiness of the trustee in the particular situation.

Tell us the power of approaching things that way?

Bob: Well most people especially business people understand decision-making. When we frame the issue of trust as a decision we can help people not only understand about trust but also understand how to help others make a choice to trust vs. be suspicious. We do this by helping trustees understand how to be trustworthy in the eyes of others. This not only makes the model grounded in research in psychology, but also very practical.

It turns out that this approach also it allows you to make sense of trust from an interpersonal, group and organizational perspective. It may have a psychological locus at the heart of it, but it also allows for intelligent discussion about social environments and institutional behaviors.

Charlie: Would you list the ten factors please, as a teaser to get readers to click through and buy your book?

Bob: Sure. The first three factors are trustor-related: the level of risk tolerance, the trustor’s level of psychological adjustment, and the power position of the trustor all affect their likelihood to put themselves at knowing risk of another, which is how I think of the decision to trust.

The other seven factors are situational: They are security, similarity, alignment of interests, the level of perceived benevolent concern, capability, predictability and integrity, and communication. Some of those are about the trustee’s character as perceived by the trustor – some are about the trustor’s perception of the situation.

Charlie: You can then use this model to test, rate, rank, diagnose, consult and so forth, right? It’s a powerful tool for consultation and management.

Bob: Exactly, and it’s been widely tested over the years in thousands of situations. I started out testing it in exec ed programs; I wrote up a version of it in an HBR article, which led to more consulting and more testing.  It’s extremely workable, in addition to being well-grounded in the trust research literature.

Charlie: What are some of the problems to which you’ve applied the model?

Bob: There’s quite a range, from making better individual decisions, to leadership, to more effective team organization, even to culture change and trust repair. The model describes the failures of organizations like the Catholic Church’s problems with priestly sexual abuse, and the DaimlerChrysler debacle.

Charlie: You’re quite clear about the need to address trust issues systemically, aren’t you?

Bob: I think so. Personal trust is critical, but culture trumps personality. If we don’t get leaders to start to high trust create cultures and systems, we won’t get there. You can’t just change individuals and stop there.

For trust to get better in the trust-challenged world we live in, we have to get better at all three dimensions; trustors have to get better at making better trust decisions, trustees have to become more trustworthy, and we have to make our organizational cultures, systems and processes more trustworthy .

Charlie: David Gebler, in the field of ethics, makes much the same point: most ethical lapses are not due to moral failure on the part of individuals, but to an environment that is insufficiently supportive of ethical behavior.

Bob: Makes sense to me, and I would add that we need to go well beyond ethics to understand what makes people and companies trustworthy. Just because a person is ethical does not mean people will or should trust them!

Charlie: Let’s talk about one particular application of the Decision to Trust Model (DTM), that of leadership and management. First of all, what’s your take on how our ideas of “leadership” have evolved over the years?

Bob: I would say that the science behind leadership has evolved from trait theory to focus more on relationship, the need for flexibility and agility, EQ and the importance of self awareness and authenticity. When I teach leadership I tell people that the generic version of leadership is not terribly helpful to you.

The real challenge is finding out given who you are, what form of leadership can you manifest. We do not need to all become Winston Churchill! Trust fits into this notion of leader-follower relationship and authenticity. Bill George at Harvard has done a great job adding to this notion.

Charlie: Interesting.  And how does the DTM play out here? How can a leader use it practically?

Bob: Given that we know what makes people decide to trust, we can start by manifesting these “signals” of trustworthiness. Behaviors like aligning stakeholders interests, demonstrating benevolence and not opportunism, articulating values and ensuring value congruence and perhaps most importantly communicating with openness, transparency; and don’t forget listening with empathy and being approachable. These things can be taught but we have not focused on them enough!

Charlie: What’s your take on how our capitalist system has turned into such a low-trust system. It clearly wasn’t always this way; what has happened?

Bob: We need to re-define capitalism. It has been a great creator of wealth but it needs to evolve. As the global financial crisis showed us in spades, many business leaders have become opportunists focused on short-term greed. We need to grow a generation of integrative stewards who bring stakeholders together in moving the enterprise forward and focus on the long term. We need more incentive for capital to take a long-term view. Managing our businesses for the next quarter and our country for the next election is a prescription for disaster when we are competing with companies and nations that have 10, 20 and100 year plans!

Charlie: I think your model has another virtue, which is it’s useful even in application to our political system – no small feat in a polarized world. Is that right?

Bob: Political marketing is essential about getting people to doubt your opponent and trust you. Since Bush Senior’s win against Dukakis, this has been done using the same tricks used in marketing soda or soap. There is an emphasis on appearing trustworthy, while not actually being trustworthy.

We are mostly to blame because we take short cuts in assessing trustworthiness and at some level we do not want to hear the truth. We need systemic reform in politics; we need to “get the money out” as a first step (create alignment of interests). After that, term limits, and strict rules limiting lobbying.

We need to stop talking about big or small government, and starting talking about effective or ineffective government. I talk about this in the book. The major reason people do not trust government in the US is that they see the system as incompetent and wasteful. 

Charlie: Bob, thanks so much for spending time with me, and congratulations again on the book. It truly is a milestone in the literature on trust, in my humble opinion, and I hope it gets all the attention it deserves, which is a ton.

Bob: You’re welcome, it’s been a pleasure.

 

 

Books We Trust: The Speed of Trust

This is a special edition of Books We Trust. Stephen M. R. Covey, Jr. wrote the hugely successful The Speed of Trust: The One Thing that Changes Everything, and I am delighted to interview him in the same week as our own Trusted Advisor Fieldbook hits the street.

Some of you may still confuse Stephen M. R. Covey with his famous father, Stephen R. “Seven Habits” Covey. You will no longer confuse them after this interview.

I first reviewed The Speed of Trust nearly four years ago, and the success of the book has since only accelerated. Stephen’s message has been heard globally in all walks of business and society. It is a compelling formulation that has stood the test of time.

Stephen also has a new book coming out in January; we got him to talk about that as well.

Why Trust

Trusted Advisor Associates: Stephen, first of all, thank you for joining us. It’s a privilege to have your voice in this series.

I’m guessing this book did not come to you in a flash of overnight insight. It has all the earmarks of thoughtful development. At the risk of oversimplifying—how did you get interested in trust in the first place?

Stephen Covey: Great to be with you, Charlie. My excitement for trust grew out of a number of simple, yet profound, experiences I had as a practitioner. For example, I’ll never forget an experience several years ago when a company I was in charge of worked with two different suppliers to provide the same product for our business. Both had good people and good reputations.

We started off trusting them both. But while one supplier consistently performed, the other was sporadic. We had to put in place redundant inspection processes for the inconsistent supplier which took extra time and cost more money, causing our product costs to rise. We ultimately decided to drop that supplier and do all our business with the one we trusted.

Soon after, I found myself noticing this same phenomenon everywhere: that the economic implications of trust were as great as, if not greater than, the social implications. I began to see the impact of trust—or the lack thereof—in every area of business and of life. I eventually concluded that trust is the one thing that changes everything, and today I am only more convinced that is true.

TAA: The “speed of trust” is a brilliantly concise statement of an essential aspect of trust. I find that when I quote you, “As trust goes up, speed goes up and cost goes down; as trust goes down, speed goes down and cost goes up,” people’s heads nod vigorously. That is distilled, refined essence of insight—how did you come to that simple, precise formulation?

Stephen: I could see it everywhere I turned. I could see these dividends of trust—speed and cost—everywhere in my business and in client organizations we were working with. And it worked in either direction whether the trust was low or high. Because trust impacts so many things—again I call it “the one thing that changes everything.” The biggest challenge was to keep this insight simple and focused, instead of trying to cover the waterfront.

It seemed to me that in the discussion of trust, what had too often been neglected or at least was unpersuasive, was what I call the “economics of trust”—showing the hard-edged, quantitative, tangible dimensions of trust. I felt that speed and cost was the best way to capture that. Speed was the biggest insight since it is something people immediately resonate with, but cost was equally important since it was the most quantifiable of all the measures.

Rich Details

TAA: The story of Warren Buffett doing a mega-deal with Wal-Mart in a half-day meeting and a handshake was brilliant. How did you come to hear of that?

Stephen: I always study Warren Buffett’s management letters in his annual reports and I know how he operates with enormous trust in his leaders. He shared this experience of his remarkable story of the Wal-Mart/McLane deal in one of his letters [the 2004 Berkshire-Hathaway Annual Report] and I immediately could see that it was a superb illustration of the speed of trust, specifically demonstrating how, as I often say, “nothing is as fast as the speed of trust.”

More recently, I met with Grady Rosier, the CEO of McLane today and also at the time of the deal, and he described to me how this deal could be done so fast, saying, “You also have to understand, it is a core business philosophy at Berkshire-Hathaway, the trust. Warren’s ability to acquire quality companies is built around the trust.”

TAA: In the course of writing the book, was there anything that surprised you, that you wouldn’t have guessed going into the project?

Stephen:  I found the deeper and deeper I got into the writing, the more and more persuaded I became that one of the main reasons trust had been so grossly underestimated and neglected was because it is so obvious, so fundamental, so simple that we tend to look right past it. It’s common sense—but unfortunately it’s not common practice.

Trust Movement

TAA: How would you characterize the market’s response to your message of trust? What do you find people most commonly say about it?

Stephen: There’s been an overwhelming response, especially today, because we’re increasingly operating in a low-trust world. And as Buffett says, “Trust is like the air we breathe. When it’s present, nobody notices. When it’s absent, everybody notices.” Today, almost everybody is beginning to notice the loss of trust. So the most common response I get from people is how relevant trust is to what’s going on with them in their world today—with all stakeholders.

TAA: What would you say are the biggest barriers and obstacles to trust in business these days?

Stephen: I think the biggest barrier is what I call counterfeit behavior. Counterfeit behavior is like counterfeit money—it looks like the real thing, but upon closer inspection, you realize it’s not. Examples of counterfeit behavior include “spinning” instead of talking straight; hidden agendas instead of transparency; overpromising and under-delivering instead of keeping commitments; blaming others instead of practicing personal accountability; “covering up” instead of righting wrongs; and so forth.

The 13 behaviors of high-trust leaders I identify in The Speed of Trust all have opposites and counterfeits. The biggest problem is less about trust’s opposite—it’s obvious to people that won’t work—and more about its counterfeit. The counterfeit appears that it might work and often is culturally acceptable. There are many industries, companies and cultures in which counterfeit behavior is the prevailing norm and practice.

An example of counterfeit behavior being the prevailing norm can be seen in politics today. But as a result of this type of behavior, we don’t trust politicians. A 2011 GfK study of the most trusted professions in 19 countries showed politicians dead last—by a wide margin. Part of it is the nature of the challenges politicians are facing today, but part of it is how counterfeit behavior has too often become the accepted norm.

Global Trust

TAA: I’ve found that trust dynamics are global—but the cultural expressions of those dynamics vary a lot. Do you have any specific observations about similarities or differences across cultures?

Stephen: I agree with your assessment, Charlie. I put it this way: the principles behind trust are universal and timeless but the specific practices can be very cultural. The key is to separate the principle from the practice. Too many confuse the practice with the principle. So, for me, the two key behaviors that help us cross cultures are to listen first and then to demonstrate respect for what we hear. If we do that well, we’ll be in a position to understand how trust plays out in a given culture.

Take the behavior I call “Talk Straight.” The principle behind the behavior is truthfulness—telling the truth. But the particular practices behind the behavior will vary within different cultures. For example, talk straight might be manifested differently in The Netherlands who are renowned straight talkers (the common expression is that “you can’t offend the Dutch!”) than perhaps in many Asian countries where it is typically more subtle, nuanced and balanced (and sometimes achieved through intermediaries).

If we listen first and demonstrate respect for what we see, we usually can come to a better understanding of what trust means in different cultures and situations.

TAA: You’ve contributed, even driven, a global awareness of the role of trust. Do you think it’s a movement that will stick? Are you worried that it may come to be seen as a fad?

Stephen: I’m biased, of course, but I predict it will be a movement that will endure and ultimately transform society. Here’s the paradox: at the same time that we’re seeing a crisis of trust almost everywhere we turn, we’re simultaneously beginning to see a “renaissance of trust” as well—with people, leaders, organizations, and causes that are emerging and rising up to support a better way of leading and living.

For example, consider companies such as SAS Institute, Zappos.com, and Wegmans Food Markets—all of which lead out with trust. And consider leaders such as Indra Nooyi of PepsiCo, with her deliberate focus on “Performance with Purpose.” And consider the best of Sustainability and Corporate Social Responsibility initiatives. Plus, consider causes like Conscious Capitalism and the emergence of Social Businesses.

I don’t think trust will fade away; rather, I believe it will increasingly become part of the fabric of how we lead. In fact, if we’re not creating trust, we’re not leading—we might be managing, we might be administering, but we’re not leading. And leadership is not going away anytime soon.

TAA: What do you say to skeptics who suggest an individual can’t make a difference regarding trust in the business world? Any advice?

Stephen:  If you think the problem is “out there,” that very thinking is the problem. We’ve got to take ownership for this. The ripple effect metaphor is very real as it relates to trust. Trust is an inside-out process. That doesn’t mean we don’t need leaders at the top starting with trust, because we do. It simply means that we don’t need to wait for the leaders at the top to lead out with trust because each of us can take the first steps—wherever we are.

And if we get results in a way that inspires trust, our influence will expand dramatically and we’ll become the ripple effect ourselves for our team. Or our team will for the organization. Or our business will for the industry. Or our industry will for society. And so forth.

Looking Forward

TAA: You have a new book coming out in January. What can you tell us about it―we’re eager to know!

Stephen: The book is called Smart Trust. In a nutshell, it’s about how to trust in a low-trust world. It takes the two extremes—blind trust based on gullibility where people end up getting burned at one extreme, versus distrust based on suspicion where people don’t even see the possibilities at the other extreme. It presents Smart Trust as a  third alternative, a practical way of operating with high trust in a low-trust world, of navigating risk while maximizing possibilities.

The book also focuses on how trust not only impacts prosperity but also how it changes energy and joy—hence the subtitle of the book, Creating Prosperity, Energy, and Joy in a Low-Trust World.

TAA: Stephen, thank you so much for taking this time with us. You have done a great service to the cause of trust in business, and it’s a pleasure to be able to help give it the recognition it deserves.

Stephen: Thank you, Charlie. I reciprocate your kind words because I think so highly of you and your tremendous contributions to this field. It’s great to be co-catalysts together in helping to bring about a renaissance of trust!

 

Books We Trust: True North Groups, By Bill George

This is the seventh in a series called Books We Trust.

Bill George is author (with Peter Sims) of True North: Discover Your Authentic Leadership. Part of the J-B Warren Bennis series, it has been widely read and praised. In his new book, True North Groups, he (with co-author Doug Baker) focuses on how True North precepts can get established for people and organizations.

Bill George is another small-town Midwesterner who made it (very) big. After punching his ticket in the McNamara Defense Department days, he eventually spent a decade each with Litton Industries, Honeywell, and Medtronic (where he was CEO).

These days he teaches leadership at Harvard Business School and serves on the Board of several Very Big companies. Click to his bio; you’ll be impressed.

Bill does not waste time; we got right into it.

Capitalism: Back to the Future

Trusted Advisor Associates: Bill, after your MBA, you spent decades in big-business companies that worked closely with government. How did you feel watching the progression of Milton Friedman, Michael Jensen, Ayn Rand, Alan Greenspan, and the doctrine of shareholder value—an ideology that pitted business against government?

Bill George: Michael Jensen has recanted; he’s writing about ontological leadership with Werner Erhard. Greenspan admitted the flaw in that ideology.

There’s been a total transformation. We have collectively realized the flaws in those old simplistic economic theories; this notion that people are motivated only by self-interest, this is simply not true. Mike Porter is another one, a brilliant guy who is now writing about shared value, not shareholder value.

There is a transformation in business right now of major companies moving away from that old paradigm.

Take Alan Mullally at Ford; he’s changing things there right down to the individual employee level. He is focusing on the long term, on sustainability.

Corporate CEOs today are the best I’ve seen, the best in my lifetime. Besides Mullally at Ford, there’s Palmisano at IBM. Steve Jobs rightly got a lot of credit. All the CEOs I know are moving away from shareholder value to values and vision. Paul Polman at Unilever says, ‟My job is not to serve the shareholder, but to serve the customer.”

TAA: That’s pretty optimistic. What do you think happened?

Bill: It’s just what’s happening, that’s all. These things only happen when you come to realize we were going the wrong way. Think Enron; that was a hugely emblematic event…there were 100 large companies with very large “accounting” problems.

You get a raft of major companies like BMS with a $1.5B accounting adjustment, and that’s not an accounting problem—that’s a failure of leadership. This went way beyond a few crooks; this was a business disaster.

But we’ve seen that. Outside Wall Street, there are a lot of really big companies that are just done thinking that way. Not going back.

Wall Street and Washington

TAA: What about Wall Street?

Bill: Wall Street never ceased. The problem is maximizing short term shareholder value―that’s the best way to go out of business. So it’s really not surprising Wall Street melted down.

Regarding Wall Street, I’m a wait and see guy. There are all new CEOs on Wall Street now―Jamie Dimon and Lloyd Blankfein are the old guys. The new folks are the ones who’ll have to make the call. A guy like Paulson can make $4B selling things short; that’s legal, he does it fair and square, but let’s not kid ourselves that’s value creation—it’s not.

TAA: What about Washington?

Bill: I’d like to see them lead, but we’ve got to take it out of the political arena: we’re just not going to get there via the politicians. They’re more interested in the parochial, ideological interests.

And that’s the greatest sin. We in business lost sight of why we were in business, lost track of the role of leadership in the first place.

Toyota and J&J took their eyes off the ball. Ford’s now beating Toyota, because Toyota took its eye off the long-term, culture/quality ball. And Ford rediscovered it.

I was on the board of Novartis. They always focused on a breakthrough drug to solve unmet patient needs―a drug that is going to advance medicine. Look at Ken Frazier at Merck, Pfizer vs. Merck, he’s pushed to keep up the level of R&D spending. Pfizer’s done the exact opposite. The short-termers keep citing Net Present Value as the driver of short-term focus, but the truth is they don’t know how to do the math right.

[CHG: An aside—read this WSJ article from February 4 of this year detailing Bill’s point: when the two companies announced their opposite strategies, the market drove Merck stock down 2.7%, while Pfizer saw its stock rise by 5.2%. That’s an 8% spread because of announced strategies.

Today, 8 months later, try comparing the two companies’ stock prices; they are back to dead even; the gap is gone. But Merck has the advantage of a tailwind in its R&D momentum; Pfizer gave it up.]

Leadership and True North

TAA: Let’s talk about leadership and bring it back to True North Groups. What should leadership be about?

Bill: Back in the day, HP was just a great company. Dave Packard totally practiced MBWA, management by walking around, a truly humble guy. Four successive CEOs now have gone the wrong way. Leadership matters greatly.

The key issue now is that the leaders’ job is not to exert power, but to empower people, including those who have no direct reports. You have to have an empowered group of employees that are excited about mission and values. If you only bring your head to work, you cut yourself off at the neck; if that’s all you can bring to the game, I’d love to compete with you.

The key issue in leadership is not to develop the next CEO, it’s to develop leaders all over the place. It’s not about developing a few good people at the top, but working on 10,000 or more.

The question is how to develop those leaders: you can’t do it through the old Darwinian GE model. Not everyone should be focused on getting Jeff Immelt’s job. That is just not where the traction is.

That’s where True North groups come in. Turns out that the best way to truly develop individual leadership capabilities is in small groups, made up of peers, of people who tell life stories, where people can find out who they really are. Because if they lead life as a fraud, thinking they’re impressing the world, it won’t work.

Steve Jobs’ most powerful message was to be who you are. Don’t let others’ opinions—Wall Street, recruiters—rob you of the courage to follow your heart. They used to snicker at me at Harvard Business School when I talked like that, but they don’t today.

TAA: How do you find a True North Group, and how do they get it right?

Bill: We found it happens in small groups. You see the success of this small-group phenomenon in affinity groups—AA, the YPO, breast cancer survivor groups, Rick Warren’s Saddleback Church—read Malcolm Gladwell’s explanation of it.

We tried to take this to people who don’t have an affinity group like that; people in business—what are they supposed to do? A great way to define a True North group is to ask yourself, “If I found out I was going to die, who would I talk to?” That’s your group.

TAA: What is it that True North Groups do?

Bill: If you buy the premise that we have to help develop people, this is the way to do it. You don’t go to Wimbledon to play tennis—you start years before. You don’t learn leadership by reading, you learn it by doing it—by living it, and talking about it. And then you need a way to process that.

There are several things we write about in the book that are critical to True North Groups’ success; I’ll highlight a few. One is non-judgmental feedback.The courage to tell it like it is—not ‘brutally,’ because that would come with judgment. Just speaking the truth, straight-up.

TAA: This is not leadership development ala Jack Welch’s GE.

Bill: A lot of people still want to use leadership development as a selection process; the big boss comes in and watches a while and says this guy’s good, that guy’s not.

Instead, you’ve got to have confidentiality and peers. This is a little hard for the leadership development people; a lot of them still like bringing people to Crotonville, but that’s too expensive.

You know the one thing we heard from leaders we interviewed? Loneliness. They’re alone. That’s true for middle managers too—the sandwich phenomenon, pushed from both ends. What’s the treatment for loneliness? A group.

People want to know, can I be real in the workplace? Is it OK? A group deals with that.

Making It Happen

TAA: You’ve actually influenced the Harvard Business School to do this, right?

Bill: My course on leadership uses small groups of 6 people. Half your time in this course is spent in authentic leadership development this way. 1,500 HBS students have gone through it—1,100 or so MBAs, and another several hundred from exec ed programs. About half your credit is for hanging out in that small group.

TAA: How well does it go over?

Bill: Neo-classical economists don’t get it, and neither do Wall Streeters—for the most part. Yet. But the rest do. It is quite significant that the Harvard Business School appointed Nitin Nohria as Dean. [Readers might also enjoy an early TrustMatters blogpost on the MBA Oath].

TAA: How does this play out for you?

Bill: Here’s the irony: all my life I’ve seen myself as a leader—because people followed me. Now I realize, that’s not what it’s about at all. It’s about empowering others.

I get to talk to all these great leaders—Mullally, and so on. I tell them all, ‘Just call me, let’s talk.’ Because we all need that. No charge, of course; we just talk.

TAA: This has been great. I will try and organize these notes into a coherent whole, and run them by you so you get the final word.

Bill: Nah, don’t worry about that. Just print it up.

 [CHG: And so that's what I did.  If there were any mistakes made in summarizing our talk, I guarantee you they're mine].