May 11, 2020
May 11, 2020
Even GE’s former CEO, Jack Welch, long seen as a staunch advocate of a shareholder-dominated worldview, has had an epiphany: “On the face of it, focus on shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy … your main constituencies are your employees, customers, suppliers, and products.” While one comment from even the most iconic leader does not change the world, Welch’s statement is an indication of the biggest ideological change in capitalism since Adam Smith wrote The Wealth of Nations.
An important core value of Firms of Endearment is service to all stakeholders without favoring one over another. Sisodia & Co. found this even more remarkable when they realized that companies featured in Good to Great dramatically trailed FoEs in shareholder returns over the past twenty years. While Collins states in Good to Great that there are no specific “right” core values for becoming an enduring great company, we do not believe that is correct. The solid data sighted in Firms of Endearment clearly reveals that the best way to create value for shareholders, in the long run, is by deliberately creating value for all stakeholders. Costco, as an example, pays its employees more than its direct competitors but also generates significantly more sales and profits per employee. Costco extracts far more productivity from its workforce and has dramatically lower turnover than its competitors.
Costco, along with every other company highlighted in Firms of Endearment are also replete with emotional intelligence. One of the best definitions of emotional intelligence I have heard was offered by Daniel Coleman, in his 1995 book Emotional Intelligence: Why It Can Matter More Than IQ. Coleman defines EI as “the capacity for recognizing our own feelings and those of others, for motivating ourselves, for managing emotions well in ourselves and in our relationships.” It includes the components of self-awareness, self-regulation (self-mastery of self-management of emotion), social awareness (empathy), and social skills (relationship management). Coleman believes that self-awareness is the most fundamental element of emotional intelligence, but this has been largely ignored in business settings.
When I decided to begin the formal TPL study, the first call I made was to Pattye Moore, who had been a client and friend for over twenty years. Pattye had been President of Sonic, and at the time we began the study, was Chairman of the Board of Red Robin and was on the boards of QuikTrip and ONEOK. She arranged my first three interviews; she was the first, Chet Cadieux of QuikTrip the second, and John Gibson at ONEOK third. Pattye told me that John was one of the finest leaders she had ever had the pleasure to work with and that his leadership at ONEOK was manifested throughout the organization by exceptionally high employee engagement, abnormally low workforce turnover, and shareholder returns at the very top of its sector.
When I sat down to interview John in his office in Tulsa, I felt immediately that I was meeting with an exceptional leader. I did not detect one shred of arrogance, aloofness, or superiority. He was nicely dressed, poised, confident, and clearly an accomplished executive. His demeanor was very compelling in that he had a big smile, a firm handshake, bright eyes, and an aura that exuded warmth, sincerity, and caring. When I asked him what he thought the most important attribute of a great CEO was, he responded without hesitation: “Self-awareness”.
The next two hours were fascinating. John began by saying that a bold, compelling vision is necessary to build a great company. The problem, John said, was that he is not a visionary, but an operator. He went on to say that at ONEOK, he and his COO practiced traditional role reversal, with his #2 contributing the vision and John providing the execution prowess. John said that he had been blessed with mentors early in his career who counseled him to become aware of his natural inclinations and to use introspection and feedback to leverage those inclinations or to mitigate or compensate for them.
John said that self-awareness is in short supply among today’s leaders and represents a huge opportunity to improve the overall quality of leadership in corporations. Increasing self-awareness and emotional intelligence John said, would improve leadership team alignment, workforce engagement, customer experience, and financial performance. He mentioned a recent study in which 19 percent of women executives exhibited self-awareness as compared to 4 percent of their male counterparts. He pointed out that while women were five times more likely to lead with self-awareness, 19 percent is still dismally low.
Self-awareness does not come naturally and in most cases, must be learned. Working at developing self-awareness in yourself and among your colleagues has been shown to pay big dividends. It is tremendously empowering and equips you with knowledge enabling you to make better choices – to change and grow personally and professionally.
Identifying external factors or triggers, both positive and negative that prompt unproductive behavior can be huge. We now know from very recent studies in neuroscience, that all human decisions are made emotionally, even when we justify or rationalize them with data. Closely examine how you feel when you do the things you do; make the decisions you make and respond (or react) the way you do. The way you respond or react to triggers, to which we are all susceptible, will have a dramatic and positive impact on your behavior, the behavior of your subordinates, and the culture of your organization.
Honestly and sincerely seeking trusted feedback can be invaluable and leads to a heightened degree of empathy and helps you to fully understand the impact of your actions and behaviors on others. A fatal flaw among the unaware are personal blind spots; traits or propensities to adversely affect the way you act, react, behave, or believe, and in turn, limit your ability to build strong enduring relationships, engage your stakeholders, and maximize your effectiveness.
Paying particular attention to the specific environment in which you find yourself can be of enormous value. As the fictitious golf caddie Bagger Vance said to his golfer, Captain Randolph Junuh, there’s a time to hit that club, and there’s a time to leave it in the bag. We all have tendencies and arrows we like to pull out of our quivers. Being aware of your propensity to pull your favorite pistols when they’re not needed should cause you to ask: Is this really the right time to use these? Is the audience right? Is the timing right? Does this need to be done or said at all? Self-aware executives carefully consider the circumstances and determine what actions are optimal at any point in time.
Getting clear about who you are, who you want to be, and what your real values and priorities are, can be a lens through which you evaluate all your actions. Being honest in assessing competing values and priorities and identifying those which if altered might serve you and your organization better makes a big difference. The best outcome of self-awareness is zeroing in on what makes you great and doing more of it. Conversely, identifying the things that cause you to stumble and doing less of them. This will always be a work in progress for all of us. Continue to add to the list, refine it, and build on it. Stay curious, and do not stop trying to understand yourself and how you can get better. Stay tuned for next week as we explore dealing with disorder.
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