Lots of thoughts and words about Steve Jobs in the wind tonight. He has gone too soon.

What sticks for me is that he was relentlessly about the product and maybe more abstractly about the experience of interacting with the product. From the humble Apple II to the Lisa, the Mac, NeXT, Pixar, iPod, iPhone, iPad and the MacBook Air, even the Apple store, the integrity of the design, the feel, the experience was his focus. It has taken a long time for the rest of us to begin to catch up with him and grasp what he was about.

For me, it happened about four years ago. I had been reading in interaction design and interface design when, on the recommendation of a couple of my clients, I bought an iPhone after my Motorola died.

I was transfixed.

This was what a cell phone was meant to be. At that moment, I grokked Apple. Shortly thereafter my IBM ThinkPad passed away and I promptly bought a MacBook Pro which I use to this day. Over the next year, all our PCs were replaced by Macs and last year we put in an Apple Xserve server, as elegant a piece of engineering as I have ever seen.

If we are to do more than enjoy the fruits of Steve Jobs’ genius, then we must internalize what he demonstrated to us in every dimension of the company he built. Whether it is a call to tech support (actually they call you), an interaction at the Genius Bar at the Apple store, downloading an album you remember from your youth on iTunes, the quality of the experience works. The caring shines through.

If we want to honor his contributions and memory, let each of us step to the bar he set, and scrutinize the experiences we create for others, at home, at work, with our customers and ask the question, “Have I created an experience for them that has made them smile, made them feel good?” Steve Jobs showed us that this is not only very good business, but creates a very good life.

Thanks Steve.

I’ve been engaged in a meaningful dialogue on Donna Fenn’s Facebook about Peter Thiel’s foundation gift of $100,000 each for college students to drop out and start businesses.  Personally, I’m appalled, but if you want to read my comments about that, you can find them at Donna’s page.

In my last blog post, I explored the question, where does the pursuit of individual freedom cross the line into sociopathic behavior? Later I found a quote that really helped clarify the points I raised by Geoffrey James which I posted in the comments and I’ll repeat it here:

“…corporations are natural sociopaths that can, must and will take advantage of society at large if not restrained by laws and regulations.”

James made the comment in describing why Atlas Shrugged was one of the seven most overrated business books of all time along with many other of my “this sold 20 million copies?” faves like The One Minute Manager and Who Moved My Cheese. Please.

But I digress.

James stated baldly what, in my last blog post, I had not quite wrapped my brain around, that corporations are “natural sociopaths”. Like true sociopaths, they are masters of disguise. They are like the likable Joe next door who turns out to have kept his kids chained in the basement for twenty years. They are likable because the collectively spend billions on the best perception manipulation talent in the world, fabricating memes that infect the collective consciousness, that BP cares about the environment, that DuPont really gives us “Better Living Through Chemistry”, or that Monsanto really cares about feeding the hungry of the world.

In my argument on Facebook, I quoted Lincoln’s Gettysburg address, surely one of the most powerful and concise speeches ever made. It is something, I think everyone should reread at least once a year, if not once a month, particularly after just having perused the morning news. I present it here for you in toto:

Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

But, in a larger sense, we can not dedicate — we can not consecrate — we can not hallow — this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us — that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion — that we here highly resolve that these dead shall not have died in vain — that this nation, under God, shall have a new birth of freedom – and that government of the people, by the people, for the people, shall not perish from the earth.

Lincoln was wrong.

Relatively few people today know what happened at Gettysburg or why. But his words ring down through history with as much power as ever.

And, they are just as relevant today as they were in 1863.

The Civil War was about economics. The South’s economic structure was built on the foundation of the cheap labor of slavery and they did not want to be forced to develop a different model. The morality of slavery was not at issue for the South. Slavery was an economic sociopathy which was institutionalized into the culture of the South.

It was the same battle that we fight every day in this country: the freedom for business to innovate and grow versus the legitimate interests of society as a whole. Those who assert that there should be no constraints on business appear to have no historical perspective from which to extrapolate the future such lack of constraints would produce: even more massive accumulation of power in wealth in ever fewer hands, the demise of the middle class, the elimination of social safety nets, the demise of democracy as the legislative process is overwhelmed by a flood of money from corporations like AT&T whose $46 million in lobbying costs is so much petty cash. It is a Dickensonian vision of life “nasty, brutal and short”, a throwback to a hundred years ago.

By the way, did you ever meet a poor Libertarian?

We have created a legal structure where corporations are living entities with the rights and privileges thereof, but with few of the responsibilities. We have a death penalty for murderers, but no death penalty for corporations who by cutting corners cause widespread death and destruction (see my blog post on corporate death penalty).

This struggle, I suspect, has to do with the “divine right of capital” that seems to cut across all cultures. Capital is intrinsically amoral, like a virus, only wanting to create more of itself. Capitalism and the institutions to which it gives rise appear to be at best only thinly veneered with concern for employees, communities or the environment. At least no more than absolutely necessary to further the creation of still more capital.

We have seen in Egypt that once power is firmly consolidated, an entire nation may have to take to the streets to unseat that power and redistribute it more equitably.

One of the problems with the intrinsic amorality of capital is that it attracts that spectrum of the population who find it easy to surrender any personal moral qualms (assuming they have any to begin with, since not everyone does) to the internal cultural pressures of the institutions in which they participate.

Those people with a greater social conscience often are people who find confrontation to be an anathema and who are intrinsically suspicious of concentrations of power and therefore reluctant to wield it.

As a nation struggling to free itself from a hostile takeover by corporate interests (what constraints have we actually managed to put on the banks over the past two years and why is a consumer protection agency such a bad thing?) it is incumbent on us to explore these issues. Is capitalism the be all and end all? Socialism and communism have failed. They aren’t the answer. There is a major variable in play now which effects all of humanity which was never on the table during the industrial revolution or when Ayn Rand engineered her meme of endless expansion and “progress” and that is the fragile state of the global ecosystem.

When I say fragile, let’s be clear. “Save the Planet” is nonsense. We do not have the ability to destroy the planet. Oh we can make a serious dent in it, but in a few million years life will irrepressibly spring up in a plethora of new ways. “Save the Species” is what we should be worrying about. GW Bush’s quip about global warming, “We’ll adapt” reflects a profound ignorance of how astonishingly narrow the temperature fluctuations on the planet are and how even narrower those must be for human survival and how delicate the ecological balance is to maintain that narrow temperature spread.

The stakes on the table now are our survival as a species. Stand back far enough and it’s easy to say that if we fail to survive as a species then we have only ourselves to blame and good riddance. Stand a bit closer and the level of human suffering accumulated on the way to extinction is overwhelming. Stand still closer and we’re talking about our families and their families.

To bring this exploration full circle, an educated populace is essential to begin to understand much less grapple successfully with these issues. Even here we have a conundrum. Business complains that they can’t find employees who can read and write. The reality is that business wants people who are good soldiers who will take and follow orders. The model is hopelessly obsolete, but most companies haven’t figured that out yet (see my Manifesto for the Propagation of a New Discipline of Self-Management). Politicians certainly have no interest in an educated populace with the critical thinking skills to be able to see through their half-truths and distortions.

Is the education system perfect? Hardly. Primary and secondary education is a throwback to the industrial revolution and plagued with administrators who want to be sure that nothing new happens that might effect their tenure. Teachers have unioned up to protect themselves from society’s willingness to pay athletes eight-figure salaries and not pay teachers of our children a living wage. The post secondary system has become out of control expensive and the very objectivity of science itself and the attention of professors to students has been compromised by the lure of corporate consulting contracts. But with all that, luring young minds away from education is not the answer.

We the people need to be educated and support education for our children and grand children as an intrinsic value of life so that we can collectively insure that “government of the people, by the people, for the people, shall not perish from the earth.”

I’m puzzled by the political news.

How is it, given what we have observed even over the past two years, anyone thinks that businesses can be trusted to do what is right by the public?

I’m an individualist. I’m a capitalist. I’ve been self-employed my whole adult life. I believe in free enterprise. But I don’t believe that the stock market can be trusted without a strong SEC. I don’t believe that consumers are safe without a strong Federal Trade Commission. I don’t believe our food supply can be considered safe without a strong FDA.

Where is the evidence, that we can safely dismantle these controls (as ineffective as they have been in recent years) without society paying the price of insider trading, unsafe products sold deceptively and who knows what in our food supply? On the contrary, there is a massive amount of evidence that business cannot be trusted.

The reason for this seems simple enough. It’s called conflict of interest. The company has to make a profit, has to compete with other companies and sometimes it’s easier to cut a corner. It’s just the path of least resistance. If cutting a corner works and produces more profit and competitive advantage, it doesn’t take a lot of imagination to realize that corner cutting is going to quickly become institutionalized. And human beings intolerance for cognitive dissonance being what it is, that corner cutting is also going to be rationalized to resolve any internal conflict.

So why is enforcement of behavior that clearly benefits society as a whole seen as so egregious to so many?

It appears, in what seems to have become the dogma of conservatism, that government imposition on individual choice and responsibility is some how a constraint on our freedom. OK, I can buy that. What I have a difficult time understanding is, why is that a bad thing?

We are social beings, we live and work in groups. Dean Ornish’s important book, Love and Death documents many large scale studies that show the most accurate predictor of illness and mortality among humans is isolation. Is concern for the well being of all not important?

How then do we justify or rationalize this apparent one-sided pursuit of individual autonomy with the reality that our actions affect others? Are we to presume that the free market will ultimately balance the scales on those who don’t play by the rules of a civil society? Did Bernie Madoff not compellingly demonstrate to us that there are no practical limits to the damage a sociopath can do when there are no watchdogs on guard? Is $50 billion not enough damage to suggest that some more oversight might be appropriate?

Conservatism as a philosophy has many legitimate points. But it seems implausible to me that otherwise bright and capable people have so invested themselves in the mythology of individualism without any social constraint, that they have lost touch with human reality.

The normal distribution curve suggests that in a population of more than 300 million, there will be a large number of people who do not have the conscience or impulse control to do what is right. We have a major infrastructure to minimize rape, murder, armed robbery and other violent crimes. Why should we assume that we should not have an infrastructure to inhibit succumbing to the temptations that business people face daily?

It’s as if we recognize that we need the infrastructure to catch the dumb criminals (e.g. bank robbers) but we don’t need one for the smart criminals? Logic would suggest that we need a much more robust enforcement system for the smart criminals.

The rationale appears to be that such government constraints inhibit commerce, stifle job creation and make the country less competitive.

Hmm.

What has been the cost of the recent financial meltdown in terms of the cost of bailouts, the stimulus package, the collapse of the credit markets and persistent unemployment? People close to the situation have been shooting up flares for years, but we couldn’t violate the dogma by putting constraints on the runaway banks and insurance companies.

Ireland offers another chilling example of what happens when banks have no controls and are in bed with the government enough that the government was willing to destroy the country’s balance sheet by taking on the debt irresponsibly accumulated by the out of control banks.

In the current horrific situation in Japan, the effects of which will be drifting to our shores in the next couple of days, we find that the Diablo Canyon nuclear plant on the central California coast, was built a mile from a major offshore fault but was not required to have an earthquake plan. Local groups sued and on appeal (one of the judges was Antonin Scalia) it was determined that earthquakes did not have to be included in their response plans. By the way, Diablo Canyon and San Onofre (between San Diego and Orange counties in southern California) are very similar in design to the Japanese plants about which we are hearing daily.

With consequences this potentially dire, how could Pacific Gas & Electric not want every conceivable safeguard?

Newt Gingrich recently declared his contention that the EPA should be abolished.

Who in their right mind believes for a moment, that free of enforcement, companies will not foul the water we drink and air we breathe? They’re doing it now with enforcement. Does Newt get his oxygen and H₂O somewhere the rest of us don’t know about?

There is a line here somewhere beyond which rugged individualism and the pursuit of freedom from any constraint becomes sociopathic. I’m not clear precisely where that line is and it’s probably not so much a line as a zone. But surely, there is a point at which a rational human being would say, “This person’s behavior is remorselessly self-centered with no apparent interest in or conscience regarding the impact of his/her behavior on others or society as a whole.” At that point we have crossed into sociopath territory and and any psychologist will tell you that sociopaths are a danger to the rest of us, individually and collectively.

I have a theory about this.

I think American businesspeople are creatively lazy. By that I mean they hate limits. Detroit screamed for years about gas mileage restrictions. Interestingly, the Japanese didn’t scream. They just built cars with better gas mileage and laughed all the way to the bank. The fossil fuel companies have resorted to astonishing and expensive disinformation campaigns to do everything possible to inhibit the development of alternative energy. BP got huge mileage out of their PR campaign touting all their investments in alternative energy until the blowout in the Gulf of Mexico when the covers got pulled off their deception and the real (and trivial) numbers were made clear.

Whatever one may think of global warming, it’s hard to understand why there would be any argument against eliminating the use of fossil fuels. Acid rain destroying forests, mercury in the water ways and food supply, ecological risks of oil production just for openers. That’s not even counting strategic dependence on and financial support for “friendly” nations like Saudi Arabia and Venezuela.

A full court press on alternative energy would create massive numbers of jobs and huge investment opportunities for the big energy companies. Why would they not support this?

It would require creativity. Creativity to solve the technical problems, creativity to redeploy and retrain thousands of employees, creativity to build new business models. Nope. They would rather spend tens of millions of dollars on PR agencies to convince Americans that global warming is a hoax (by whom and for what reason?) than roll up their sleeves and do what’s best for society as a whole.

This is over the line, by any conceivable standard.

What then is it about our systems that makes the people in these companies creatively lazy? Probably many things, but a couple of obvious ones stand out.

First, change brings risk. The capital markets hate risk. If they smell risk, they run away and take their money with them and stock prices go down. We in our society pay lip service to creativity, but when budgets get tight, the first thing to go is art and music from the school curriculum. Science and math are great things. But they are not the only “practical” things.

Finally, in most organization environments, people who challenge the status quo get punished. These huge companies take on a level of inertia that makes them virtually ungovernable.

Yet we have in this country, in the very Constitution created by the wisdom of the Founding Fathers both so revered by those hell bent on preserving individual freedom at any cost, the model for a durable, sustainable system. It’s called the balance of powers. The Legislative, Executive and Judicial branches of government share power so that no one branch or person can seize control of our country and government. It was a smart move and a logical one as the Founding Fathers sought to learn from what they had seen in England and Europe.

Why then is this principle so intolerable in the world of commerce? Why should there not be a balance of powers between those who would exercise the freedom of the market and those who would insure that everyone plays by the rules?

If we allow huge corporate interests to take control of the government to enable their ability to get ever larger and more powerful, how does that benefit the rest of us? When big pharma controls the FDA (which they do), they get to load the dice. For example, drug companies do not have to publish studies that contradict the claimed efficacy of their drugs. They can publish the studies that support their interests and sweep any inconvenient data under the rug. How does this benefit society? Is this freedom at work?

Caveat emptor is all well and good, but is it not reasonable for us as a people to appoint technical experts to oversee the activities of other technical experts so that if we are prescribed a drug that we can follow our physician’s advice with some confidence we are not poisoning ourselves?

Freedom, individuality and autonomy are as American as apple pie. Our tolerance for social control is much less than the Europeans’. Imagine the outcry if you failed to have a dented fender on your car repaired and the police told you if it wasn’t repaired with in a prescribed time your car would be impounded? That’s what they do in Germany.

I’m not suggesting that. What I am suggesting is that economic dogma is a dangerous thing. When applied in the real world without thought for the consequences (intended or unintended and I believe both are in play) the results are bad for everyone. Philosophies require rational debate, discourse and dialogue in order to evolve and continue to validate their viability. Once they are frozen into dogma, they become inaccessible to rational assessment and critique.

Limits are good. We put limits on our children so they don’t run amok. Janice Joplin sang, “Freedom’s just another word for nothin’ left to lose.” Limits force us to be creative.

Creativity brings good things into our lives. It’s time to wake up as a society and pay attention to the line between individualism and sociopathy.

Some years ago I found myself contemplating the organization chart. It is a useful map of the organizational territory. But like all maps, it is a highly abstracted version of the reality. There are many dimensions of organizational life it doesn’t measure. Also, like all other metrics it has built in biases that are worth being aware of. In the case of the org chart, the hierarchical structure is explicit, but it also skews our frame of reference.

Back in the 80’s, Jan Carlson of SAS Airlines transformed his company by turning the org chart on its head. He also added the customers to the org chart. His message was simple: the front line people are there to support the customers and if you are not supporting the customers, you should be supporting someone who is.

It was a great reframing of the organizational model and became the foundation of service management theory (as opposed to traditional management theory that grew out of manufacturing). Service management theory was elegantly codified by Karl Albrecht in his classic work, Service America which remains well worth reading today, even if his stories and examples are dated.

But Carlson’s upside down org chart retains the same feature of the traditional org chart: it is hierarchical in nature.

So I found myself wondering, how might we eliminate that hierarchical quality and what might we learn in doing so. The simplest solution was just to turn the org chart on its side. Taking a cue from Carlson, I fleshed it out with the customers, the community and the planet on one side and the Board of Directors and shareholders on the other and stepped back to see if this map of organizational reality offered insights that the intrinsically hierarchical maps did not.

What became immediately apparent is that this horizontal chart is a map of constituencies, groups of individuals with congruent, if not identical interests. It also became clear that the CEO’s job is to create an ecosystem in which, to the greatest extent practical, the legitimate interests¹ of all the constituencies are addressed and aligned.

What also becomes clear, the cost of ignoring the interests of any of these constituencies. The BP Gulf of Mexico oil well fire and blowout is a tragic but wonderful example. Drilling oil wells is an intrinsically hazardous business. Drilling oil wells at sea is doubly so. The people who do the work rely on their company to provide all the necessary and appropriate safety measures, equipment and most importantly, culture to insure the safety of the front line workers. BP is notorious in the industry for failing to do this.

Ignoring the safety of workers in this case also coincides with ignoring the safety of the community and the planet. What has been the result? Tragic loss of life, decimation of BP’s carefully constructed (and as it turns out, fallacious) image, severe damage to their retail distribution channel, total distraction at the top of the organization, loss of the CEO’s job (deservedly, in my opinion), and staggering financial cost. From my point of view, BP’s historical record of intransigence around safety (both environmental and for its workers) qualifies it for the corporate death penalty (see my blog post Corporate Death Penalty).

At one of my current clients an interesting model has emerged. The model is that is all decisions must be made in equal consideration of the interests of the customers, the company, and the employees. This model is rarely realized in my experience. In many closely held companies, entrepreneurs routinely sacrifice their own interests to the customer and frequently sacrifice their employees’ interests to the customer and company as well.

Looking at these constituencies’ legitimate interests as a touchstone for all decisions is a useful operating definition of integrity. It implies integrity in the exchange of service for money with the customers, it implies integrity in the exchange of service for money with the employees and integrity in honoring ones’ own legitimate interests.

Of course employees do not trust this at first, because it smacks of “managementspeak” to which they have been overexposed in their careers. But as the evidence of leadership walking the talk adds up, the result is a powerful mix of trust, engagement, commitment and optimism on the part of employees and trust and respect on the part of customers. For the owners, once they have overcome the habit of sacrificing their own interests, comes the comfort and confidence that comes from knowing they have built a network from which flows revenue and profit and all parts of the network are supportive of sustaining it.

The media enjoys trumpeting information about the economy. But for the business leader, this network is the only economy that matters.

It’s been months since I’ve written here. I’ve been on a sabbatical of sorts helping my wife with her business (www.wholewoman.com). Things are perking along well over there now so I can get back to my own business.

Besides, I’m sick of looking at Blankfein’s smarmy expression from my last post.

Why Change Matters

Things have gone pretty nonlinear in many markets and a lot of business people are scratching their heads trying to figure out how to survive, much less prosper. From my point of view, there is only one thing to really focus on, as illustrated by the chart, to the right.

The message in this chart is simple: one line is your company and the other is your customer(s) that you cannot afford to lose. What matters here is which line is which.

If your customer is changing faster than you are, it’s only a matter of time before the gap between what they need and what you are capable of delivering will become large enough that it will break your relationship with that customer.

It’s not a question of if, it’s a question of when.

Even if somewhere along the way you get the message that you’re behind the power curve, look at the slope of change you will have to hit to come into alignment.

Almost vertical.

Think for a moment about the disruption and cost this kind of revolutionary change entails, if it’s doable at all without breaking the company.

If on the other hand, your company is the green line and your customer is the red, you will find yourself pushing your customer forward. They will either appreciate it and it will make you a preferred vendor, or they won’t. If they don’t appreciate your pushing them into the future, your enhanced capabilities will be opening new markets and new opportunities for you so it won’t matter. At some point you’ll probably need to fire that customer or the market will punish that customer to the point where they won’t be important for you any more anyway.

The thing to keep in mind is that cultural change is at best a 2-3 year process. So if you get significantly behind your customers and can’t revolutionize your company without breaking it, you have to ask the question, “Is my customer going to give me 2-3 years to demonstrate that I’m getting my act together?”

A Tale of Tools

I love technology. I’ve been very actively involved with it for thirty years.

In my pre-technology days, I owned a fine jewelry manufacturing company. Every industry has its info tidbits. In the jewelry business, one of the many involved the diamond cutting industry in Antwerp, Belgium. Diamond cutting is the process by which the little glassy lumps of raw diamond are turned into the remarkable sparklers that made them “a girl’s best friend”. In the early days of diamonds, Antwerp was the diamond cutting center. Later on, the high end cutting went to New York and the low end to India, but the tidbit is that the richest guy in Antwerp was the guy who sold tools for the diamond cutters.

What people who work with their hands understand is that tools extend and expand their capability, which allows them to do more work which allows them to make more money. Tradespeople understand implicitly that they can only earn what they can produce. As a result, they tend to be quick to pick up new tools. Anyone who has ever used a cordless drill will never go back to one with a wire.

Interestingly, knowledge workers do not have the same tangible feedback mechanism. For the tradesperson, the deck is either complete or it isn’t. The engine rebuild is complete or it isn’t, the duct work is hung or it isn’t. A person who can do the job in 2 hours is going to make more than the person who takes three to do the same job.
Because what knowledge workers (like CEOs) do is so much more intangible, new tools don’t have the same immediacy and impact. For the tradesperson, it is a given that new tools require changes in behavior. Using a pneumatic lug wrench is a different process than using a manual lug wrench.

What most business people don’t seem to realize is that information tools extend and expand the capabilities of employees. But using them requires a change in behavior.

Let’s look for a minute how tools develop.

The first figure shows a company that is learning how to do thing in new ways. The curve is the classic adoption curve. In this case it reflects a company that is experimenting with new and better ways to do things.

To facilitate this, they need new tools. Either they build their own or they attract the attention of a developer who sees an opportunity. But the tool development is out of phase to a greater or lesser degree with the demand of the company that needs it, illustrated in the second drawing.

As the tool becomes mature and commercialized, other companies get on the bandwagon, the third drawing. Chances are the third drawing is or has been your company.

You hope your competitors are somewhere to the right of you.

What’s interesting is look at the gap between the first line and the third. That gap represents the competitive distance between you and the company on the left. 

There are lots of assumptions here, to be sure.

Once could make the case that customers don’t innovate, vendors do. No one knew they needed a photocopier until they saw one in action. I suspect that’s more true of tangible product businesses than software. There will certainly be exceptions, but we’re exploring broad principles here.

The adoption curves are not necessarily congruent either. Some companies take much longer to adapt than others.

The critical point I want to make here is that adopting any tool, whether it’s a cordless drill or a new information technology requires changes in behavior. In my experience, few business leaders really understand this. Nor do they understand how far behind the adoption curve they are, not necessarily in spending the money on new software, which is easy — write a check — but in driving behavioral and cultural change the tools require in their companies.

Enterprise Resource Planning (ERP) has emerged in the past 10-20 years as the platform of choice for companies. It is very expensive software (can easily run into the millions for larger companies). But it does something that has never been possible before in business.

Think for a moment how many decisions, large or small, are made every day in your company. It’s a big number. People make decisions based on lots of things, many of which aren’t very rational, but by in large, they make decisions to optimize what they can see in their local environment. If I’m a supervisor and have an employee who needs something to do, I’ll have her make up widget parts to help get ahead a bit on widget production. This is called local optimization. The problem is that local optimization may actually suboptimize the functioning of the organization as a whole. To go back to our example, having an employee create more inventory, may be more expensive to the company than having the employee do nothing at all.

Employees generally make a good faith effort to make locally optimized decisions, because that is all they have ever been able to do. With ERP, where every part of the business is driven off one database, employees for the first time in history can make globally optimized decisions because all the data is (or should be) available to them.

I haven’t seen any research on this, but I would guess that if you studied a hundred companies that are five years into an ERP implementation, you would see relatively little behavioral change. The data are there, but to what extent are they being used to make globally optimized decisions?

The point is this: technology is not about tools. Technology is about behavior. If you use a wired drill, you either bring the work to be drilled to it, or you never go anywhere without a long extension cord. The drill sits on the floor or table waiting for you to pick it up because it’s tethered to the wall outlet. If you use a cordless drill, you take it to the work. In fact, you never put it down because you wear it in a holster on your hip.

If you don’t change your behavior, you cannot get full value out of the tool. If you aren’t getting the full value out of the tool as a result of changed behavior, you are falling farther and farther behind the change curve, becoming increasingly irrelevant in the marketplace and your company is wandering down and evolutionary dead end, a box canyon from which you may or may not be able to extricate yourself from when the light dawns that you need to change your ways.

I love this picture.

It fairly oozes sincerity, humility and aw shucks integrity.

Of course, unless you’ve been on vacation in Zimbabwe, you know this is Lloyd Blankfein, CEO of Goldman Sachs taken from an article in the Huffington Post by Ryan McCarthy.

You know, the one who sanctimoniously told us a couple of days ago that Goldman Sachs was “doing God’s work.”  

Please.

Today, the Goldman Sachs spinmeisters are telling him to explain to the unenlightened who think that a company that invents securities that no one can understand, with risks no one can assess, insured by companies that can’t cover their losses and sells them to companies who ought to know better is not in the public interest, that the billions GS rainmakers earn in “bonuses” is because “The people of Goldman Sachs are among the most productive in the world.”  

Unfortunately, they appear to be primarily productive at doing what I just described.

Of course, if you’ve got a goose the size of the Chrysler building laying eight hundred pound golden eggs, it would be naive to assume that the owners of said goose are simply going to roll over the first time their game comes under some scrutiny.  Quite the contrary.  When you control the kind of fungolas these guys do, you can afford the best legislation money can buy.  

And, if you’ve been following the news, Congress is having a pre-holiday sale…all the Representatives and Senators are on sale, but don’t leave home without your Amex card as prices seem to start in the seven figures.

You would think, however, that given the level of PR talent these guys can afford, they would come up with something more credible than “we’re doing God’s work.”  Are they hoping that the Tea Baggers will ride to their rescue because of a reference to God?

I guess when you own Wall Street and the Treasury Department (thank you Tim Geitner!) then you really don’t have to worry very much about what the great unwashed think about you.  Certainly no need to waste any of those hard-earned billions on a bunch of dumb PR flacks who demonstrably if they had any brains would be working at GS (very productively) and making real money. 

Do you every get the feeling that the world has slipped on its axis and that the inmates have taken over management of the asylum?

Beliefs.

Everyone has them.  They are essential to our ability to function.  We have to believe the sun will come up tomorrow.  We have to believe there is some logic behind life’s mysteries and tragedies.  

But the last few months in the United States, we have seen appalling evidence of how badly people believe.  We have seen senior Senators and Congresspeople lying through their teeth because legislation is being proposed that violates their beliefs.  We have seen so called Town Hall meetings turn into near riots because people appear to be terrified that something will be done that violates their beliefs.  TV and radio personalities have been spewing an astonishing and revolting litany of fear and hatred because they feel their beliefs are being threatened.

All these examples are symptoms of people who do not believe well.  

What is believing well?

It’s simple.  We believe well when we have the courage to acknowledge that believing something doesn’t make it true.

This statement may appear paradoxical, that of course if we believe something to be true, to us it’s true.  Yes, that is the nature of belief.  But I could believe the sun circles the earth and that the earth is flat, and for centuries, intelligent, educated people believed both those things.  Those beliefs did not reflect the reality.  

Catholics believe their God is different from that of the Lutherans, Methodists, Episcopalians and so on.  The Jews have their own God, the Muslims theirs, the Hindus a whole panoply of Gods.  All firmly believe their God is the only true God.  I’m sorry, but they can’t all be right.

Our beliefs in “ultimate reality” are where we go astray in our belief process.  More trivial items are easy to deal with.  I believe Joe’s Pizza is at the corner of Main and Oak Streets.  My friend believes it’s in the next block.  Am I going to destroy my friendship over the matter?  Of course not.  I’m willing to acknowledge that just because I believe that Joe’s is at Main and Oak, I may be wrong.  I understand that my belief is not equal to objective, verifiable truth and I remain open to the alternate possibility.  That’s easy.

But the problem with ultimate reality is there is no objective, verifiable truth.  Every religion tries to make its case for verifiability, but the hard reality is that what happens after death, what’s beyond the universe, why are we born, age and die, are we alone in the universe, why do life, time, entropy, the expansion of the universe exist are all questions to which we have no answers.  We only have beliefs.

The difficulty in believing well is acknowledging that there may not be a heaven or hell, Christ may not have been the Son of God, Mohammed may have just been a great salesman, and the great teachers and “saints” of the east may be as deluded as the rest of us requires courage and the willingness to live in existential ambiguity.  

Where is there any evidence that human beings even have the capacity to perceive ultimate reality?  Even the Buddhists and Vedic mystics acknowledge in their framework that the highest levels of consciousness are not sustainable in a human body.

What believing well gives us is an open mind and an open heart.  Having worked through the fear of living with life’s existential ambiguity, we can live in freedom from the known and therefore be able to see and assess without the constraint of a belief system that does not permit us to even consider alternatives.  In fact, we immediately (and rightly) become intensely suspicious of anyone who tries to sell us a belief system in which all other options are taboo.

When we believe well, we are also disinclined to kill and maim our fellow human beings because they believe something different from ourselves.  When we have acknowledged life’s fundamental ambiguity, it is clear that we have no right to deny others their beliefs since we have no way of verifying that we are in fact right and they are in fact wrong.

When life is viewed from this point of view, the rabid reactions that so many human beings manifest when they feel their beliefs are being threatened are easily understood.  They are manifestations of fear.  At some level, existential terror is not an overstatement.  

One could say that fear is a part of life, it’s biological and unavoidable and in many cases desirable.  I disagree wholeheartedly.  I have known fear, I have known what it means to have one’s life circumscribed by fear and I have known life with very nominal and completely manageable fear.  There is no intrinsic benefit to fear.  It robs us of our ability to be proactive.  Fear is like a computer virus of the mind that locks us in an endless loop.  It is stressful to the physiology.  In fear we lose our autonomy, our ability to listen and hear, our ability to learn, our ability to expand and grow, even our ability to love.  

Fear causes us to close down, shut off our minds, our reason, our intuition.  It causes us to close our hearts lest we be hurt.  None of these things are life affirming, life supporting or help us becoming more conscious and aware.  Further, fear triggers violence.  History shows us that more wars have been fought over religion than any other cause.  How much suffering in the world has our beliefs caused?  It is incalculable.  

You may believe that global warming is a hoax.  A lot of intelligent people do.  You may equally adamantly feel it is the greatest threat humanity has ever faced.  How are we to move forward as a species if we remain intransigent in our beliefs?  Are the changes necessary to minimize our footprint on the planet so terrifying?  Are the consequences of failing to do so, so terrifying?  At some level, the answers to both questions are legitimately, “yes”.  At another level, it doesn’t take belief to understand cause and effect is a property of manifest reality.  That is easily verifiable.  Either way we respond to the environmental situation will produce effects that everyone on the planet will have to live with.  

So what?

Yes, people’s lives will be disrupted, in some cases tragically so.  This is also true of crossing the street.  As human beings, we struggle to understand what is going on around us and to instigate causes that produce desirable effects.  

The big New York banks created causes that for many people in the world have created tragic effects.  Bernie Madhoff created causes that produced hugely dislocating effects for hundreds, probably thousands of families.  An airplane goes down and hundreds of lives are snuffed out in a second.  A car bomb decimates a marketplace in microseconds.  Someone wins the lottery who has never had two nickels to rub together in their lives.

My point is this, we are all leaves tossed on an unpredictable sea of cause and effect.  We cannot know from one minute to the next if we will be struck down physically, financially, professionally, emotionally, relationally or that the person standing next to us will be.  Beliefs are our bulwarks against this uncertainty.  But when we grasp onto these beliefs because really assimilating the reality that our lives are truly “dust in the wind”, we become closed, violent, entropic.  We breed fear in others and worst of all, become easy prey for those demagogs who resonate with our beliefs but encourage us to be closed to serve their own ends.

Should we have beliefs?  Of course.  Should we o
rder our lives around those beliefs?  Again, of course.  Should we work and strive to persuade others to share our beliefs?  Yes.  But we should also acknowledge that believing something does not make it so.  Then we can be passionate, but not violent, we can be persuasive, but honor the integrity of others.  We can act in ways that further the influence of our beliefs, but we will be less inclined to lie, manipulate, and disrupt movement when we acknowledge the limitations of our own beliefs.

One of the symptoms we see in the US of not believing well is that political dialogue has become virtually non-existent.  It is taboo in American society to discuss politics and religion, because politics has become religion.  Conservatives believe that the unfettered market is God and Milton Friedman is his prophet.  Liberals feel that compassion for the less well off is the soul of goodness and that society should be geared to the lowest common denominator (as long as it doesn’t effect their lifestyle).  Driven by these beliefs, which cannot be questioned, cannot be assessed critically, the flaws, strengths and weaknesses cannot be rationally explored and dialogue is impossible.  

The result is ranting and raving, deceit, violence where more than ever before is needed alignment, consensus, collaboration.  From Aesop to Patrick Henry, the phrase “united we stand, divided we fall” has never been more true.  Believing badly is the barrier that makes a  United States, a United Nations, a Global Village difficult and perhaps ultimately impossible.  

We will live well as a species only when we believe well.  We will believe well only when we have conquered our fears.  

Last October, I drafted the above manifesto which I made available on one of my other sites (managementtech.com).  It occurred to me today that I should have posted it on my blog.  So here it is:

————————–

Manifesto for the Propagation of a New Discipline of Self-Management

Whereas:

Organizations exhibit a wide variety of dysfunctions that undermine their ability to fulfill their potential and adapt to rapidly changing environmental conditions and

Whereas:

These dysfunctions rob employees of enthusiasm, vitality, satisfaction and fulfillment, and companies of productivity, profitability and market leadership and

Whereas:

Traditional management practice was designed very intentionally to minimize employee contributions and

Whereas:

The marketplace is increasingly global providing natural advantages to those countries who have invested in technical education and/or whose cost of labor is very low and

Whereas:

The demographics of the workforces in many developed countries over the next ten years show dramatic declines in the number of available workers meaning that the labor pool will increasingly be a seller’s market and

Whereas:

We can no longer afford business practices which sub-optimize the productivity and creativity of either our organizations or our people and

Whereas:

It is morally wrong to continue to design and support organizations that treat employees like children, rob them of their vitality, and condemn them to supporting dysfunctional systems and processes when they know they are doing so and

Whereas:

The principles of traditional leadership, management, and organization design are human artifacts, designed by humans and are capable of being redesigned in ways consistent with the current realities of the markets, technology, labor pool and demographics and

Whereas:

We now know how to design more humane and effective organizations that are intrinsically created to leverage the total talent, intelligence, creativity, knowledge, experience, energy and enthusiasm of our employees,

Be it Resolved That:

1. We commit to the propagation of a new model of organization design that requires a different framework for the disciplines of leadership and management, namely self-managing organizations.  We make the commitment to redesign for our time and context that which those who came before us designed for their time and context.  We do so drawing on the bodies of knowledge we have acquired in recent decades through the quality disciplines, science (especially complexity theory), and human development.
2. In business, virtue creates its own reward.  We are confident that those leaders with the vision, courage, commitment and skill to be early adopters and build self-managing organizations will prosper and establish competitive leadership that will be very difficult for competitors to usurp.
3. We will draw on the knowledge of the past for that which is useful, but recognize that in these times of dramatic change, experience can be as much a liability as an asset.
4. The knowledge and experience we gain in building self-managing companies we will propagate and share freely with the confidence that the rising tide we create will raise all ships including our own.

Signed the 22nd day of October, 2008

Lanny Goodman

————————–

I know all the whereases seem a bit high falutin’, but that’s the nature of manifestos.  The bottom line is this: we could dramatically increase quality, reduce cost and make millions of our businesses more productive, competitive and profitable if we got out of our employees’ way, gave them the tools (knowledge and feedback mechanisms) they need to unleash their creativity.

This is not new news.  Back in the ’90s Ralph Stayer and Jim Belasco wrote Flight of the Buffalo which I think may have been the premier business book of that decade, sharing their stories of how they got out of their employees’ way and built amazing companies.  Jack Stack did as well in The Great Game of Business.

How many millions of people wake up Monday mornings and are depressed about having to go to work.  This is data.  Traditional management has reached the end of its useful life as all things do.  It was incredibly powerful in its early years but it is much more a liability than an asset at this point in history.

Let’s rewrite the rules.  The only thing that is holding us back is fear of the unknown and inertia.

For more information, why not download a free copy of my book, The End of Management?  Click here to get a copy.

You heard it here first…the S.O.L.A.R. revolution is upon us.

No, I’m not talking about arrays of silicon on your roof or giant propellers whirring in your backyard.  I’m talking about the death of one of the most cherished and persistent of the traditional management artifacts: the job description.

If ever there was an icon of the machine model of management, surely the job description is it.  What clearer evidence of the “cog-in-the-machine” mindset that gave us “modern scientific management” one hundred years ago could there be?  Here are your specifications as a cog in the machine: 243 teeth, spin clockwise at 49.7 rpm and engage with the following other cogs…Have a nice day.

And business leaders scratch their heads wondering why their employees hate coming to work.

It’s not like there is any mystery about this.  Since the first organization studies were done in the 1930′s it’s been clear that traditional management practice is profoundly enervating and diminishing to the human spirit.  Unfortunately, because talent was plentiful and cheap and the productivity gains at the time were so great, the human cost of what has become traditional management practice was deemed acceptable.

But today, even in this economic climate, top talent is scarce and expensive and unlike in the ’30s, employees have options.

So what is the SOLAR revolution?  To answer this question, we need to go back to the 1970s when a man named John Carver began doing ground-breaking work with non-profit Boards of Directors.  If you know anything about non-profit Boards, you know that the members are there primarily because they are either in a position to donate significant money or have the ability to get others to donate significant money.  As a result, non-profit Boards are notoriously contentious and ineffective and providing governance for their organizations.  This is true by virtue of the Board being either unable to reach consensus on strategic direction and execution and/or by being meddlesome and intrusive into the operational workings of the organization.

What Carver did was first, work with the Board to clarify their vision for the organization and its values.  Then he had them define in that context, what it was not OK for the officers of the organization to do.  This would include broad strategic issues such as “you will not instigate and service offerings outside of our core service without Board approval”.  Also financial limitations such as what are the financial limits beyond which officers could not obligate the company without Board approval.  More detailed limits were also typical such as policies having to do with sexual harassment and other kinds of legal and values related limitations.

Beyond those limitations, however, the Board’s message to the officers is “Go forth and multiply.”

In a self-managing context, the logic of this approach is completely sound.  It gives the Board the controls that are legitimate for their role in the corporate structure and at the same time it gives the officers room to run and space in which to exercise the judgment they are being paid for to grow and strengthen the organization.

Policy Governance has been widely adopted by non-profit Boards in a number of segments of the non-profit world and has made Boards more effective, made being a Board member more fun and productive, and made running a non-profit much more pleasant and less stressful for management.

If you have followed my blog at all, you know that I am a staunch advocate of designing and building organizations which intrinsically leverage the full value that employees are capable of bringing to the party.  Accomplishing this requires a thorough understanding of the pervasive mechanistic assumptions on which the whole edifice of traditional management practice was built.  It requires the conceptual flexibility to grasp how an organizational model that resembles biology more than the machine is much more in alignment with how the universe appears to actually work and much more in alignment with the demographics and psychographics of today’s workforce.

So, in the spirit of Policy Governance, the SOLAR is an acronym which stands for Statement Of Limitations And Responsibilities.  Its structure is:

1) Very broadly defined, this is what we want you to do

2) Very specifically, here are the things you cannot do because you:

a) Have not been trained and certified or

b) Have not yet demonstrated your competence in this area.

Let’s look at some examples.

Welder

1) Work on the production line assembling kitted parts through various welding processes, following all safety procedures, maintaining paperwork for each kit and helping others out where time allows to maximize work throughput, company profitability, and customer satisfaction.

2) You cannot obligate the company for more than $100 without Team Leader approval.  You cannot weld stainless steel.  You cannot do electrical assembly.  You cannot operate the shear or brake.  These restrictions can and will be lifted as you acquire the necessary certifications.  You cannot violate any documented company ethics or policies.

Marketing Director

1) Develop and execute the strategic marketing plan in conjunction with the business unit leaders, serve on the Leadership Team, oversee the marketing function to insure satisfaction of your internal customers’ needs for trade show support, collateral development and any other marketing support.  Be an independent set of eyes and ears in the marketplace to insure that customers are delighted and remain loyal and that the company’s profit objectives are met.

2) You cannot obligate the company for any amount in excess of the quarterly budget approved for your internal service unit.  You cannot run a strategic business unit.  You cannot interact with a strategic business unit’s customers unless that contact was initiated by the customer or the contact is done with the support and approval of the strategic business unit leader.  You cannot violate any documented company ethics or policies.

Clearly, for this kind of autonomy to work, employees require much more knowledge and information than they are traditionally given.  Many companies have struggled to identify the return on investment for comprehensive training programs.  In my view there is only one justification for this kind of investment: we can produce more profitable products and services (and therefore revenue) with the same or even less management infrastructure.  Therefore the cost of that management infrastructure is reduced as a percentage of sales and that reduction in cost flows straight to the bottom line.  This profitability gives us the justification for the significant investment in education, training and orientation necessary to give employees the ability to function relatively independently and reliably exercise good judgment.

Contrast this to the traditional management world.  1) Check your brain at the door and do just what we tell you to do.  2) Don’t worry about or ask about what’s going on the the cubicle next to yours.  Just do your work.  Worrying about the person next to you is my job as your manager.  Don’t step on my turf.

In that context, the only training that is really necessary is the training to do the specific job the employee has been hired to do.

An interesting way to look at organizational heath is to compare it to biological health.  In the human body, every cell is aware of the state of every other cell. The body is flooded with communication (hormones, enzymes, neurotransmitters and others) which keep the whole system apprised of its state of being.  If you cut your finger or catch a cold, the entire organism rallies to its defense.

Compare this model of health to what goes on in your organization.  Does your organization look healthy from that point of view or if your organization was a body would you be calling 911?

The key fact is that the changes in the competitiveness of the world requires that we root out and dismantle the artifacts of traditional management practice and splice new DNA around which the organization creates itself.  There was nothing intrinsically wrong with “modern scientific management”.  It was a brilliant conception, gave rise to the huge productivity gains that made the middle class in this country possible and unquestionably made it possible for the US to win World War II.  But that was then and this is now.  The economy is now service driven, knowledge driven and information driven.  Intellectual capital drives the markets far more than financial capital.  Technology has made things routine that fifty years ago would have sounded like science fiction or the ravings of a mad person.  Reinventing leadership, management and organization isn’t easy because it means that much of our experience is now more of a liability than an asset.  But that doesn’t make the need any less pressing.

The survivors of this recession will be lean, nimble and ready to rock.  Good times will come again, but they will be different than what we have experienced in the past and much more demanding.  We have to reinvent ourselves if we expect to be up to the challenge.  So…

The job description is dead.  Long live the S.O.L.A.R.!

My old friend and rock climbing buddy Bart Berry in San Diego has become a successful consultant but found himself struggling as his clientele began cutting back a couple of years ago.  Finally as the recession got really rolling and a lot of people were starting to get hurt he got a great idea:  Put on a recession expo as a resource to help others who were struggling.

There will be a wide variety of resources there for people needing help with mortgage relief, food stamps, health care, short term financing, you name it.  There will be 150 exhibitors, goal setting and sales guru Brian Tracy will be a keynoter as will be yours truly.  

I think it’s a great example of entrepreneurial thinking and adaptation.  If it works, it will expand to other cities.  Bart is getting some impressive corporate support as well.  It’s becoming a grass roots community effort.

The lessons: 

1) If you’re not sure what to do, find someone in pain and help them. 

2) If a lot of people have a problem, help them find a solution.  At the very least you will attract a great deal of favorable attention to yourself and PR is good.

Pretty basic stuff, but we get so stuck in our own ways of functioning, sometimes it takes an economic earthquake to shake us out of our narrow worldview and realize the scope of opportunities that are out there.

Bart’s a make-it-happen guy.  It will be an interesting experience.  I’ll keep you posted.  Meanwhile, take a look at his site.  http://www.heretohelp.us.