New Times Demand New Leaders

Chapter 1 New Times Demand New LeadersFor political and business leaders in America, the onset of the 21st century has brought with it a millennium of change and challenges. Politically and economically, the world is now a different place than it was when the 20th century drew to a close. Politically, the last half of the 20th century may have seemed complicated at the time, but looking back, times were actually a lot simpler when it was just the West versus the East – Capitalism versus Communism. Political leaders had an easy job. It was us against them. We knew who “us” was and who “they” were. Today every point on the compass portends crisis and conflict that is difficult to delineate and even more challenging to resolve. In some part of the world America has been in a shooting war for this entire century. And we are still not sure who we are fighting, or why. Worse yet, there seems to be no clear way to define objectives and determine victory. Believe it or not, as perplexing as the political world may be, the business world has become just as convoluted and confusing. That’s because the American economic system has been at war with itself since the start of this century. It was not so long ago — in simpler times — when top- and bottom line-growth (no matter how achieved) was the only objective of business leaders. The simplicity of that model and the abuses it perpetuated has caused the very fiber of the business world to unravel. As a result, we are now trying to figure out how to climb our way out of “The Great Recession.” Everyone now accepts that the same will never be the same again. It seems like a distant memory, but just 10 years ago the biggest fear facing the business world was the purported oncoming “Y2K” computer crisis. (We know now that this “crisis” was nothing more than a sophisticated effort by devious, geeky IT consultants to bilk companies out of billions of dollars.) If one had been prescient enough at the time to predict all that was going to change in the American economic system in just the first decade of this century, they would either have been ignored or committed. Think about it. In less than 10 years, we have suffered through the illicit machinations of the leaders of companies such as Enron, Tyco, Adelphia, Halliburton and many, many others. The airline industry has crashed. The 1 auto industry has shrunk like an ice cube on a Key West beach. We have had to learn terms such as subprime lending, derivatives, hedges, credit default swaps and collateralized mortgage obligations. Who would have believed that during the first decade of this century that icons such as General Motors, United Airlines, AIG Insurance, Lehman Brothers, Merrill Lynch, Bear Stearns, Fannie Mae, Freddy Mac, Citicorp and scores of other established institutions would be in turmoil, file for bankruptcy, disappear or be acquired? What is even more unbelievable is that many of these companies would become owned and controlled by the U.S. Government. While it is still hard to fathom that these events have happened, what is even more surprising is how quickly they happened. Living in the New Order Certainly we are living in new times, and if we as a society are going to effectively respond, it is incumbent upon us to grow a new type of leader. And that is what this book is all about. It discusses how we can grow these new leaders to meet new times and how you can be one of them. Traditionally our society attempts to grow leaders by planting the hybrid seeds of ethics and leadership skills into an individual at a young age. Education about ethics seems to start right after we are old enough to go potty by ourselves and does not end till we are too old to go potty by ourselves. The idea of us growing up to be a great leader starts the first time our parents see us and can swear they hear Hail to the Chief playing as background music in the delivery room. With that as a start, our lives are forever more bombarded with what ethical people do (or don’t do) and how leaders lead. Be it at home, school, church, boy/girl scouts and even at work, we are besieged and implored to be ethical and to learn to be a leader. But, this book is not about basic ethical mores. Enough people have already told you not to lie, cheat or steal so you know what it means to be ethical. And, it’s also not about being a “good leader.” After all, how many times can people tell us that in order to be a leader we have to have vision, trustworthiness, courage, dedication and enthusiasm? My belief, honed from decades of experience and observation in the business world, is that it will take more than the traditional concept of being ethical and more than the classic traits of leadership to emerge as a new type of leader who can be successful in these new times. The business world is filled with thousands of ethical individuals working hard to be effective leaders. And, that is good, but it is not enough to stand out and distinguish oneself as a “new leader for new times.” If you want to rise above the rest and achieve truly unique levels of success as 2 leader, it is not enough to simply follow the rules and lead like everyone else. You need to be different and do more than other ethical individuals in positions of leadership. Think about the world of professional golf. There are literally thousands of professional golfers who are highly talented and make a good living playing the game. They have spent most of their lives being schooled in the rules and techniques of golf. These professional golfers spend untold hours honing their skills and learning their game. But the reality is that among those who make a living as professional golfers, there is a razor thin difference in the knowledge of the game and skills at striking the ball. Despite only the slightest differences in experience and talent, certain golfers consistently rise above the rest to achieve remarkable success. On the PGA Tour in 2009, the number one golfer – Tiger Woods – averaged 68.84 shots per round, while the number 100 ranked golfer – Ted Purdy –averaged 70.68 shots per round. That is less than a two-shot difference per round. And yet this ever so slight difference in scoring translated into six victories and $10.7 million in earnings for the player ranked number one in scoring compared to no victories and $800 thousand in earnings (not such a bad living) for the player ranked number 100. And that does not even count monies earned by endorsements and other benefits gained by being the best. Clearly it is not physical ability that separates golfers; something else makes the difference between a good and great golfer. The world of leadership and success in business is much the same as the world of professional golf. There are countless thousands of individuals who have the education, opportunity, experience and ethics to be successful leaders. And yet some leaders seem to do more and emerge from the pack. As in professional golf, it may be only a slight difference between those who are good leaders and those who become great leaders, but that difference makes all the difference in the world. And it is that difference that new leaders will need to meet the challenges of new times. My belief is that it is possible for all of us to absorb what we have learned regarding ethics and leadership and then take it one step further. Doing so enables us to break out of the crowd to become an exceptionally effective and successful new type of leader. While we have learned all the rules of ethics and the traits of leadership, what has not been taught is how to thoughtfully go beyond the basics of ethics and leadership in a way that allows us to merge them into a new system and philosophy of ethical leadership.3 Here is what I mean. Traditionally being an ethical leader means doing the right things that are required to be done. However, to meet the new times we face, being an ethical leader means doing the right things that are not required to be done. Ethical Leadership is the process of social influence in which one person can use simple concepts and techniques that enlist the aid and support of others in the accomplishment of goals for the benefit of all. Ethical leadership is simply doing more than what should be done and doing what can be done. When a CEO rejects a bonus and instead shares the proceeds among rank and files employees – that’s true ethical leadership. When a manager pitches in to work on an assembly line when an emergency arises – that’s ethical leadership. And when top management is open and eternally forthcoming with corporate information and power, that’s true ethical leadership. And ethical leaders demonstrate this trait in a multitude of permutations for the good of themselves and the companies they lead. There is nothing complicated and secret about this new order of ethical leadership. Ethical leadership has only been a secret because it is not taught and rarely practiced. And that’s all the more surprising since the benefits of ethical leadership are legion. Being an ethical leader – on whatever business level you seek to achieve – will enable you to be more successful and lead a richer, more satisfying career than you ever thought imaginable. Being an ethical leader will pay you dividends that far exceed those of the average leader, even the most ethical of them. It is no coincidence that companies that operate under the aegis of ethical leadership consistently perform better than those that don’t. It does not mean that competing companies are managed by leaders without ethics, but only that those with ethical leadership traits are able to outperform on every business level. You may not fully believe that the payoff for ethical leadership will be significant, but just like consistently scoring only one shot better in a round of golf creates a significant difference in results over time, the evidence is everywhere in the business community that ethical leadership, as defined here, does make a difference. For example, every year Fortune magazine surveys and then rates the top 100 companies to work for. Not surprisingly, analyses of the companies that achieve the “Best Place to Work” list share common traits, each springing from the wellspring of ethical leadership. Each company has developed a cultural environment that 4 goes well beyond the standard of ethics an employer is expected to offer an employee. This activity is not limited to simple salary and benefits but reaches to the very heart of a motivating relationship between an employer and employee to create a place where people really want to work and contribute. And the Moral of the Story . . . Leaders and companies that exhibit traits of ethical leadership operate in a constant, consistent, respectful, parallel and open manner (remember those words; you’ll be hearing a lot more about them in future chapters). They are willing to share the success of the organization with those who helped achieve it. Ethics does not require that they do this, but they do it anyway because they fully understand that for every inch they go beyond the norm, they will always be paid with a foot, even a yard of a more harmonious, successful business. The objective of this book is to fill in the gap between understanding ethics and learning to be a leader by discovering how to combine these attributes in a way that will allow you to become an ethical leader who stands out from the pack and always shoots at least one shot better than the rest. Chapter 2 What it takes to Become An Ethical Leader It may seem strange to say, but it takes more than solid ethics and polished leadership skills to become the type of ethical leader that is needed in these new times. Despite dramatic examples to the contrary, i.e. Bernie Madoff el al, the vast majority of people we encounter in life and business have a fairly decent core of ethics. Likewise, there are thousands of people who work hard to become good leaders. However, there are precious few who understand what it takes to blend ethics with leadership to create a new type of hybrid leadership. The individual practicing ethical leadership starts with a solid base of ethics and leadership skills and then combines these attributes in a way that magnifies their effectiveness. It is not unusual for those with strong ethics and leadership skills to achieve success. After all, success is the incentive to be ethical and to work hard to sharpen leadership skills. However, studies clearly show that those who have taken the next step to grasp and apply a different concept of 5 ethical leadership consistently achieve success that separates them and the organizations they lead from the rest. Once ethics and leadership traits have been embedded in a person’s psyche, it is an easy step to rise above the rest. Unfortunately, that next step is rarely taught. Those who adopt this leadership style have, for the most part, learned it on their own. This uncommon approach to leadership is seldom taught because it is more of a concept than a tactic. Tactics can be taught, while concepts need to be experienced and felt. “Nothing ever becomes real,” said the poet Keats, “till it is experienced. Even a proverb is no proverb to you till your life has illustrated it.” Ethics is easy to quantify and teach. However, as the Ten Commandments illustrate, teaching ethics is more of a negative science, i.e., thou shall not do this and shall not do that. To learn ethics is to learn what not to do, such as not lying, cheating or stealing. Teaching leadership is more positive, but is still based on specific tactics to be learned and then applied. The belief driving this approach is that the individual who learns and applies specific leadership tactics, while not doing what should not be done can become a successful leader. This philosophy worked well for the vast majority of people in past times, but it falls short of what is needed for those who seek to achieve uncommon levels of success in these times. What is needed today is the ability to accept the basic tenets of ethics and then to go further by turning ethics from a negative to a positive way of acting. This demands a new approach to ethics that calls for doing things that are not required to be done and then combining those actions with the tactics of outstanding leadership. This approach to ethical leadership is difficult to teach, understand and apply, because there is not a specific, quantifiable list of things to do that are not required to be done. There are no 10 Commandments of Ethical Leadership, but this book may become as close as you’ll find. Does this all seem confusing and abstract to you? Join the crowd! I can understand the confusion, because we have never been taught to think this way. In reality, though, it is a very simple notion and those who take the time to understand and apply it are rewarded with success that is head and shoulders above what other achieve. In the world we live in, probably the biggest impediment to becoming a new style of leader is being able to maintain a rock-solid core of ethics and basic leadership skills. If we are not able to do so – and it is not that easy – then it becomes impossible to rise above others. As we go through life – especially in the business world – all manner of pressures work to bend and break our ethical instincts. We have all read the 6 lurid accounts of epic ethical lapses; so many that one could begin to get the feeling that business is just one, giant morass of despicable and unethical behavior. You know what I’m talking about. We’ve seen a lot of it in recent years. Obviously, nobody can compete with Bernard Madoff, the New York City investment shyster. He was convicted of operating a Ponzi scheme that has been called the largest investor fraud ever committed by a single person. Federal prosecutors estimated client losses, which included fabricated gains, of almost $65 billion. In June 2009, he was sentenced to 150 years in prison, the maximum allowed. (If he does happen to serve out his term, prosecutors have promised to bring additional charges.) But Madoff is just one of many whose business ethics were, by all accounts, sadly flawed, perhaps even non-existent. How about Dennis Kozlowski? He was the CEO of Tyco International, and for sheer profligacy and conspicuous consumption of which Thorstein Veblen himself would be proud, Kozlowski is unmatched. You have no doubt read the stories of the infamous $15,000 umbrella stand, the $6,000 shower curtain, the ice sculpture of Michelangelo’s David urinating vodka—all paid for with company funds. Kozlowski and his Tyco cohorts allegedly plundered $600 million from corporate accounts and skimmed company profits to buy themselves swanky apartments and vacation homes, festooning their spacious digs with fine art and expensive baubles. But the list goes on and on. We’ve also got Enron and WorldCom and Adelphia. You remember Adelphia, the big cable television network founded by John Rigas and two of his sons. They were convicted of concealing $2.3 billions in loans and looting to the tune of $100 million, all while lying to shareholders and the government about corporate finances. Toss in a little Martha Stewart (convicted of lying to investigators about a stock sale and served five months in prison), some Leona Helmsley (“Only the little people pay taxes.”), a pinch of Halliburton, a dab of Tom Petters, and many others like them, and what have you got? An encyclopedia of unethical business behavior. Many of the actions of these businesses and their managers were – pure and simple – illegal. However, sometimes the worst of the ethical lapses are not illegal, but simply stupid or driven by greed and arrogance since it can sometimes be difficult to define the more righteous course. The recent activities of Wall Street brokers, insurance companies and commercial banks were not illegal, (although maybe they should have been) but driven by stupidity and greed they ran the entire U.S. economy off a cliff. It was not illegal to offer subprime mortgages to individuals who could7 not pay them back, but it was unethical. It was not illegal for insurance companies to take risks that were not understood or could not be managed, but it was unethical. It was not illegal for Wall Street to sell securities that were closer to gambling than investing, but it was unethical. And remember, there are no explicit “Ten Commandments” to guide us; no “Thou Shall Neither Give nor Receive Credit Default Swaps.” The individuals running these organizations considered themselves to be ethical – they were doing nothing illegal. However, the constant drive to acquire money and success so eroded their understanding of ethics that they were able to convince themselves they were doing nothing wrong. Leadership in Practice The theory of leadership and its practice are often different as well. Among other things, we learn that good leaders should be focused, consistent, open, supportive, fair, understanding and top-notch communicators. Unfortunately, the glare and pressure of the real world often drives individuals to either forget or take shortcuts in their leadership behavior. Too often, once an individual – out of a perceived necessity – begins the water down the traits of leadership they become ineffective leaders. Probably the best example of this failure to maintain core leadership skills is former President Jimmy Carter. No one would accuse Jimmy Carter of not being highly ethical to the core. He was schooled in leadership at the Naval Academy and a career in the navy. Clearly, he demonstrated the leadership ability to become governor of Georgia and to be elected president. However, under the pressures of being President, he seemed to lose all sense of leadership ability. It was obvious to all that President Carter was unable to maintain focus and consistency when it came to critical issues. He ceased to be open and lost his ability to communicate effectively to his followers. As a result, he was perceived (and was) a weak leader who was turned out of office; ironically by a man whose strongest leadership skills were focus and communication. And the Moral of the Story . . . To become a new leader for new times and rise above the common levels of success that others achieve, we first have to make sure that our ethics and leadership are strong enough not to be compromised by the pressures of the world and the behavior of our peers. Remember the definition of a new type of leader is doing the right things that are not required to be done. While there are no specific lists as to what those “right things” might be, there are a lot of examples of what others8 have done and we can learn from them. With this knowledge we will be more likely to recognize the opportunity to do the right things that are not required to do and be on our way to becoming an ethical leader.9 Chapter 3Ethical Leaders are Ethical to a FaultOne of the reasons why so few leaders are able to rise to the level of ethical leadership is because they learn about leadership in the form of a caricature. In the media, movies, television and stories, those wanting to be leaders are constantly bombarded with out-sized characterizations of leaders as swashbuckling, devil-may-care, god-like Masters of the Universe. Among the many misconceptions people develop about what it takes to be a leader is the belief that leaders must be as decisive as a dictator and as single-minded as a laser. The public image of leaders can lead one to believe that success as a leader requires the use of a sharp knife to shave ethics and cut corners. It is a myth that this type of approach signifies real leadership. Sure, there are “leaders” who rule so harshly they make Saddam Hussein seem like Mother Teresa. And yes, there are “leaders” who care more about making money than love. And there are “leaders” who should be in the “executive suite” in San Quentin. But like most myths, there is an element of truth that perpetuates them; although the reality for the ethical leader is very different from the legend. True leadership – especially ethical leadership – is the antithesis of this image. And to put the ethical leader under this cloak is like saying all those who drink wine are winos. Ethical to a Fault Ethical to a fault? How can anyone be too ethical? When it comes to basic honesty you can’t, but remember this book is not about ethics in the sense of lying, cheating, stealing and coveting thy neighbor’s net income. There is the assumption that most leaders operate with a strong grounding of basic ethics. They do the right things that are required to be done. The thesis of the book is that some leaders go beyond what is required and do the right things that are not required to be done. And, they do them all the time without flinching, waffling, or changing. Some might suggest that expanding the concept of ethics to this level is carrying ethics to a fault. But, ethical leaders understand that being ethical to a fault is just as important as not lying, cheating or stealing, because it raises the effectiveness of their leadership to a higher, more successful level. 10 The ethical leader exhibits strong core beliefs that are never compromised, qualified or abandoned. Beliefs that include shared value, parallel interests, open and honest communication, along with the constant equitable recognition of the value that all stakeholders – employees, customers, and vendors – bring to an organization. The ethical leader understands that with this expanded ethical behavior comes the needed trust that sets the table for the ultimate success of the organization. He knows that not only espousing, but living this type of behavior creates a strong sense of ownership among all members. It also engenders a feeling of participation by all, a common mission, and an environment that encourages risk and enables those who contribute to the company’s success to share in the resulting rewards. Those who seek to rise above others and become an exceptional leader learn that the best kept secret about the ethical leader is the belief and commitment to the full body of ethical performance – even to a fault. On Being Decisive There is this idea that being a decisive leader means operating as an overbearing, personality-challenged individual who rapidly fires off commands and decisions in Gatling-gun style, having little interaction with those who have to follow or implement the orders. But that is a myth perpetuated by those of the Donald Trump ilk. (Except Donald Trump is the epitome of the caricature leader – more like a huckster on steroids.) Don’t be fooled, the ethical leader is decisive, but that is more an adjective defining the personality, not a method of operation. The ethical leader believes it is a failure of leadership when they are forced to make a decision. It’s not that they can’t make a decision, but contrary to the typical leader who believes decision-making should be narrowed to just a few, the ethical leader understands that leadership works best when those involved are empowered to make the decisions. Ethical leaders spread the decision-making process and power throughout the organization so those with responsibility also have authority. Ethical leaders don’t make decisions for their employees. They teach them how to make decisions for themselves. The ethical leader understands that the best way to lead is to encourage others to be leaders. A Glimpse of Decisiveness in Action When I was running a company it was not unusual for people to come to me for a decision on some issue. My response (and they would soon learn from this) would be, “Whoa, wait a minute. Why should I make this decision? I hired you to make the decisions. If I have to make all the decisions, then I don’t need you.”11 I would then ask them to define the problem, lay out the alternatives and make a recommendation. If they were unable to clearly define the problem, offer multiple options, and make a solid recommendation, they were sent away until they could. It’s amazing how people empowered to make their own intelligent decisions began to do so; and just how much better they felt about themselves for not having to come to me to make the decision. When entering a meeting to review a problem and develop a plan of action, the ethical leader will see it as a failure if, at the end of the meeting, he has to say, “Okay, this is what we are going to do.” Ethical leaders go into such meetings with a pretty strong (call it decisive) sense as to what action should be taken. However, unlike the typical leader who is often there to show his power and pass decrees, the ethical leader uses the meeting to encourage the members of the group to find and own the final recommendation. It is even better if the solution is their idea, even though the leader may have known exactly what the decision would be at the beginning of the meeting. Isn’t That Being Less Than Ethical? Some might suggest that this approach is inefficient and even dishonest. If the leader already knows what the answer is going to be, why waste the time to pretend the group is making the decision? Isn’t it disingenuous for the leader to lead people to believe they are making the decision when all along he knows what he wants? That is not the case in either situation. The ethical leader is decisive when it comes to knowing what he wants and working to achieve it, but that does not mean that he is dictatorial. Instead he uses the experience, ideas and suggestions of others to challenge, test and verify his assumptions. He adopts the attitude that, if he can’t convince the people he works with to buy into and own what he thinks should be done, then he needs to rethink his position. However, in order for this to work, those involved must have the “free will” to offer suggestions and not be threatened by the ideas of “their boss.” It is the typical leader, the so-so leader, who often attempts to be intimidating in these situations. This type of leader tends to be intractable while the ethical leader is encouraging and flexible. Intimidation is a tool used by the weak, not the strong. Maybe because it has been used on them, many typical leaders use intimidation and the fear of repercussions to inhibit decisiveness in individuals. They fear being open to ideas from others because that may be seen as a weakness and loss of power. Sure, processing ideas and recommendations under this open format can be messy, but the real world is messy. Weak leaders need things clean, neat and complicated (to show how smart they are). It is the ethical leader who 12 thrives when things are dirty and messy. What all this means is that the ethical leader does not make all the decisions. In fact, the fewer decisions he makes, the more successful he will be as a leader. So, if the ethical leader is not decisive about making decisions, what is he decisive about? The ethical leader is decisive about cutting through the clutter of events to expose the real core of the issues that constantly confront a business, even in good times. That paves the way for easy decision- making. But how do they do that? The ethical leader is decisive about what he wants the organization to accomplish, not how it is accomplished. The ethical leader has the ability to quickly identify and define a situation and establish priorities. He has a keen decisive sense of urgency and an instinct for knowing what to do. Bolstered by this belief, the leader is decisive in his support and defense of the effort by others. Ethical Leaders Stay the Course Probably the greatest value gained from a leader being decisive is that it allows them to identify, communicate and stay the course. One of the most frustrating traits of a typical leader is the inability to remain focused and consistent. Employees working for this type of leader become discouraged by this “flavor of the month,” wishy-washy style of management. Employees who labor under such a leader don’t know where they stand, they don’t know where their company stands, and the ground underneath them is constantly shifting like a seismic liquefaction. Very few things are worse for the morale of employees than when they have no idea where management stands on central issues. Leaders lose the respect of the troops when they garner a reputation as one who follows the idea of the last person in their office. Employees quickly give up on a company that grandly announces a major effort that “will make the company,” only to have that effort quickly abandoned and replaced with another and yet another in swift succession. That is not a problem the employees face when dealing with an ethical leader. Once ethical leaders set a course for an objective, they stay the course until it is achieved. That does not mean that tactical adjustments will not be made in the face of a changing environment, but the objective does not change. In order to make both a mental and physical commitment to a company or a leader, employees must have confidence that they can rely on the mission being constant and consistent. The ethical leader recognizes this and delivers. A Pair of Caveats13 Two points need to be made regarding the leader’s decisive commitment to a specific goal. First, this kind of decisiveness works even if employees do not agree with the goal or believe it is what they would attempt. When the leader is trusted, those in the organization will follow and work hard to achieve success, just so long as the goal remains constant. Second, being a decisive leader does not mean being inflexible. The beauty of being an ethical leader is the ability to change and react to different conditions, without losing sight of the ultimate objective. It is the average leader who most often becomes rigid and inflexible. For these leaders, whatever initiative is in vogue must follow the “business plan” or else. If things go wrong the entire plan is jettisoned. The ethical leader is decisive regarding the overriding goal, but totally open to adjustments as the plan moves forward. Employees respond positively to this style, because they can rely on the “what,” while feeling empowered to implement the “how.” The Ethical Leader Builds Consensus By nature, a leader is successful when he or she develops the ability to motivate other people to fulfill his vision. The ethical leader knows the big picture but realizes he can’t (and shouldn’t) make all the decisions; so while he sets the agenda he empowers others to make the decisions. Accordingly, the ethical leader becomes an expert at building consensus among these employees. What is it that ethical leaders view as consensus? Well, I would define it this way: A consensus occurs when employees embrace the objectives of the leader and adopt them as their own. Once employees “own” the objectives set down by the leader, they are motivated to seek and implement the actions that will achieve “their” objectives.Only a leader with the ability to be multifaceted can build such a consensus. This means that the ethical leader is not high in the ivory tower, but is constantly selling, teaching and coaching as he builds a team. The leader plants the seeds of a direction and decision, but allows others to tend the garden. The true leader does not solve all the problems that may arise, but is a solution facilitator. He or she makes it possible for employees to expand their competence and expertise to reflect their true value. There are a number of techniques for turning cogs into creators: questioning, probing, suggesting, and being flexible. It’s the leader’s role to 14 build a consensus while maintaining control of the agenda. Solutions to problems are facilitated when people are motivated to work together and empowered with the right to come to a consensus. And the Moral of the Story … Ethical leaders understand that it takes more than following the classic rules of ethics – doing what you are supposed to do – to rise above the crowd and become an exceptional leader. Ethical leaders understand the basic tactics of leadership – strength, decisiveness, focus, confidence – and they raise them to an art form. Rather than using these tactics to show their position and power, they use them to raise the position and power of others. And, they do it every time and all the time. They are as obsessive about the success of those in the organization as the typical leader is obsessive about their own success. This is the true ethics of leadership. Gary Kelly, CEO of Southwest Airlines, said in an article in Leader (December 2005), that ethical conduct is manifested in the way you treat others in all of your important relationships: customers, vendors, buyers, employees, shareholders. “If you don’t have honesty and integrity, you won’t be able to develop effective relationships with any of those stakeholders.” Exceptional integrity is one quality rarely mentioned in discussions about leaders, but it is probably the single, most important attribute an ethical leader possesses. And, he practices it to a fault. Chapter 4 The Power of Parallel Leadership in professional sports presents an interesting parallel for leadership in business. In sports, individuals may achieve remarkable – even exceptional – individual achievements; so much so that they earn the title “Superstar.” Yet it is amazing how many of these “superstars” have never been able to lead their team to win the cherished “championship ring.” Likewise, there have been any number of highly talented business leaders who have achieved remarkable levels of individual success – rising to the equivalent of business “Superstar” (otherwise known as CEO). Yet it is amazing how few of these business “superstars” are able to lead their company to levels of exceptional success that allows the company to distinguish itself and stand out above the others. 15 To be fair, most sports superstars are not able to pick their teammates and are often surrounded by individuals with talent inferior to theirs. Yet, even in that situation, some sports stars work with what they are given and are able to motivate the team to perform beyond its capabilities. While it is more likely that the business leader can pick and build his team, often – especially when working up the ladder – they have to work with what they are given. Yet, even in such situations, some business leaders are able to motivate individuals and the organization to perform beyond what might normally be expected. What makes the difference? My definition of a “Superstar” in both sports and business does not revolve around individual statistics or personal achievement. For me, the real “Superstar” in sports and in business is the highly talented individual who is not concerned with individual achievements, but is one who makes all others better. Michael Jordan is a classic case of a super-talented individual who became a true superstar and a champion because he made his teammates better. Michael Jordan would have been considered one of the greatest individual basketball players of all time, even if he had never won a championship. However, what has made him an icon – even beyond sports – was his ability to elevate those around him – players with good but not exceptional talent – and lead them to six championships. In simple terms, by working, acting and playing in parallel with the whole team effort, as if he were no more talented than the rest of the team, Jordan motivated others to be better. It is legend that Jordan worked harder in practice than anyone else on the team. In games, Jordan could score at will, but he took as much pride in his defensive efforts as he did at scoring. (Jordan was a perennial member of the NBA’s “All-Defensive Team.”) Clearly if Jordan – despite his immense natural talent – had not exhibited the type of leadership he did, there was no chance he would have ever worn a NBA Championship ring – let alone six. Business Leadership is the Big Show Leadership in business is much the same. There are many leaders with exceptional talent who never win the championship. In order to be a Michael Jordan in business you need to be like Mike; you need to make those around you be the best they can be. You need to set the example of leadership that motivates those on your “team” to achieve accomplishments to their full potential and even more. Despite his talent, Michael Jordan could not command others to be better. And you can’t either. Jordan’s leadership 16 created an environment in which everyone was motivated to do better, because it made everyone better and all benefited. There is a simple technique you can use in leadership that if consistently applied, will allow you to rise above the typical leader to motivate your organization to achieve exceptional results. It is called “parallel interests,” and if you adopt it as the basis of your leadership style you will become the ultimate ethical leader and have the opportunity to become the Michael Jordan of your business, your division, or your department. Building parallel interests is the ultimate leadership technique that separates typical leaders from “ethical” leaders. If you learn nothing else from this book other than to make parallel interests the cornerstone of your leadership philosophy, you will be prepared to ascend the corporate ladder with relative ease and unimaginable success. Not that the other traits of ethical leadership are unimportant, but if you learn and use the concept of parallel interests, you will be positioned to achieve entrepreneurial success in any bureaucratic world. Start the process by branding your philosophy with the following: In all you do, in all your personal and business relationships, seek to create and maintain parallel interests. The Dynamics of Parallel The power of parallel is an ethical leadership tool founded on the universal truth that activities aligned in parallel are more powerful and effective than those that are divergent or conflicting. Horses to a wagon or dogs to a sled are harnessed in parallel so their power can be combined into a single, dynamic force. The wheels of a car are aligned in parallel for efficient, balanced operation. When one wheel is out of alignment, the car becomes difficult to control and inefficient, if not dangerous. Humans are impacted by this law of parallel as well. A basketball team may have five individuals on the court at the same time, each with different talents and assignments, but the team will only be successful if all five work in parallel to achieve a common goal. Moreover, as the least solitary species of all, we are driven to network, associate, relate, and cohabit with one another. We join social networks, clubs, fraternities, sororities, churches, and just about any organization we can find because there is strength in greater numbers united by a common cause. Despite strong personal egos, most of us desire to be accepted, to belong, and to feel we are part of something larger than ourselves. The bottom line is that we are happier when we 17 associate with others who have interests we can relate to, interests that are parallel to our own. Parallel Power on a Business Level On a personal business level, a parallel interest exists when others care as much about your success as you do, because they stand to personally gain from your success. Parallel interest exists when you care as much about the success of others as you do for yours, because their success will assure your success. If you as an individual understand, believe in, and employ the power of parallel interest then you will harness a powerful new force that marshals the support of others to support your individual goals. This philosophy of parallel interests separates ethical leaders from typical leaders and it motivates members of an organization to work to their full potential. In today’s highly competitive world — filled with well-educated employees and savvy consumers — the secret to achieving lasting success is a conscientious effort to avoid traditional rules of leverage and conflicting interests and replace them with the concept of parallel interests. Why are Parallel Interests so often Ignored? There are many who may think this brand of selfless parallelism is a naïve concept which is so ingenuous as to be believed only by third-graders and the mentally challenged. While few argue with the natural law that things go better in parallel, you have probably discovered (or soon will) that in many businesses today this principle is not only ignored, it is often scoffed at. For some reason, in business there seems to be a rule that says things go better with conflict. Employer-employee, management-shareholder, seller-buyer, and vendor relations all seem to be based on the rule that getting what we want is best achieved by actions based on divergent interests and conflicting objectives. Many in business – especially the typical business leader – will approach relationships with an attitude of, “What is mine is mine and what is yours should be mine.” Businesses seem to adopt a strategy of exploiting divergent interests and working in conflict as the way to win. This approach is counterproductive and simply wrong. How parallel were the interests of management and workers in the sweatshops of the early industrial revolution? Violent strikes and the rise of labor unions in the 1920s were the obvious result of conflicting, not parallel, interests. It’s the appearance of conflicting interests that causes customers to distrust companies. Were the problems of Enron, Adelphia, Tyco, WorldCom, and other rogue companies the result of parallel or divergent 18 interests? Would these problems have been prevented if the interests of all stakeholders had been in parallel? Why is “jungle” a popular synonym for the world of business? And why do people accept that, in business relationships, “the law of the jungle” should prevail? The reason is simple. Stupid, but simple. Traditional business leaders were raised in the “dog-eat-dog” school of ethics that dictates the most successful posture in relationships is to gain leverage and take advantage of a situation whenever possible. Many corporate cultures foster competition between employees, seek leverage with vendors, and opportunistically exploit advantages at the expense of customers. There is no doubt that the practice of gaining leverage and taking advantage of opportunities has its proper place. My complaint is with the traditional technique of achieving this objective at the expense of, rather than in unison with, the interests of others. It’s a philosophy that ethical leaders avoid. Ethical leaders know that success is not achieved by stepping on, over, or going through people, but by aligning the interests of others to be in parallel with theirs. Follow this one simple philosophy, and it will lead to the instinctive ability to build on the natural power of parallel relationships: People who have the ability to add value to your efforts will be encouraged to do so when they are allowed to share in the value created. This is a straightforward, basic, and maybe even mundane philosophy, but it works. You’ve heard the expression, “You can accomplish a great deal, so long as you are willing to share the credit.” By aligning parallel interests, the individual interests of many are powerfully directed toward the welfare of the whole. For example, if employees stand to gain personal benefit from the success of the company (beyond simply keeping their job), it stands to reason they will work harder to contribute more toward the success of the company. Earlier in this book, I mentioned by way of ethical leadership example, the CEO who shared his bonus with the rank and file. It was, of course, a true story. Former Best Buy CEO Brad Anderson’s total compensation (for year 2003) increased to $3.2 million. But he declined to accept 200,000 stock options he was entitled to as part of his compensation package. Instead, Anderson decided to donate the options, worth about $7.5 million, to outstanding non-executive employees of the electronics retail chain. That’s ethical leadership. It’s the kind of working in parallel that I am talking about. When parallel interests are established, the company and employees are joined together like links in a cooperative chain—all sharing and working together toward a common goal. The same philosophy should be applied to relationships with the distribution system, customers, suppliers,19 and shareholders. The result in the Best Buy example is that non-executive employees, the rank and file that are really responsible for generating corporate profits, will work harder as a result of Anderson’s largesse. And when employees work harder, everyone wins. If you avoid the traditional practice of fomenting conflictive relationships and make it your objective to align parallel interests in both your personal and business dealings, then you will achieve power and success far greater than those who define relationships within the context of a power-and-control dynamic. Keeping Parallel in Parallel A critical aspect of maintaining parallel interests is to make sure that the model becomes a way of life and not just a gimmick. If it doesn’t come from your heart, it just won’t work. Remember Northwest Airlines, the company that disappeared into the bowels of Delta Airlines? It’s a perfect example of what happens when you’re disingenuous about parallel interests. In the 1990s, Northwest Airlines was buffeted by rising costs and plummeting net income, a commonplace phenomenon in the airline industry. Even after a series of bandages, like downsizing and cutting employee salaries, the company was headed pell-mell toward bankruptcy. As a final desperate action, Northwest Airlines turned to an employee stock ownership plan. The concept was sound, but the implementation was guileful and insincere. It was doomed to fail from the beginning. Why? Because management brought the employees in as “owners” of the company not because they thought it was the ethical thing to do, but because they had no other choice. Accordingly, employees were never truly perceived or treated as owners of the company, so they never acted like it, either. The plan never bore the fruitful abundance that parallel interest offers, and the airline continued to struggle. If stock ownership, options, or other such plans are to build successful parallel interests, there must be a sincere and heartfelt desire to create the reality of parallel interests, rather than the mere perception. Management must recognize and respect employees as both employees and owners of the company. Likewise, employees need to understand they have two roles with a company—as an employee performing a specific task and as owners participating in the overall performance of the company. The bottom line is this: Had Northwest management genuinely adopted the philosophy of parallel interests, it might have remained a strong, independent airline. Instead, it was swallowed by Delta in a fall 2008 merger.20 Equity, Not Equality It would be a mistake to confuse parallel interests with egalitarian democracy, equality, or the brotherhood of the mob. Like a football team with eleven different players with eleven different talents, playing 11 different positions, there still needs to be someone who calls the plays and provides the leadership. Accordingly, not all employees earn the same salaries, nor are all workers entitled to same size bonuses or shares in stock options. But, salaries, wages, bonuses, and other perks are equitable when no one group, i.e. the top paid executives, can benefit unless all benefit. That’s what’s wrong with most benefit programs: only the top dogs and chief underlings get the nifty perks and bonuses. Believe me, you will truly be amazed at the results your business can achieve the moment you start equitably sharing from top to bottom. Yes, I have heard the argument that these programs are too expensive to include everyone. Well, if that is the case, then find one that is not too expensive to include everyone! Ethical leaders don’t argue for equality but for equity. If everyone in an organization is directed toward the same objective, the ultimate reward is greater for all involved. The Great Payoff of Parallel Interests Using parallel interest as a basis for creating your corporate or departmental culture can create the dynamic environment whereby what is good for the company is also good for the employee. Likewise, what is good for the employee is good for management and, in turn, the company as a whole. Instead of employees feeling as though they had just a “job,” they feel as if they own their job. When an ethical leader builds a business culture based on parallel interests, workers will view themselves more as capitalists than captives. Time and again, employees will prove that people take better care of what they own than what they rent. Once employees are baptized in the concept of parallel interests, they will be consumed and motivated by this idea. They will learn that if a little effort was rewarded, then more effort will mean greater rewards. Does Any of This Parallel Stuff Work? The concept of parallel interests does work wonders. And while the concept of parallel interests has fallen on deaf ears of many typical leaders, savvy management teams led by truly ethical leaders are slowly catching on. A recent study by Columbia University, for example, demonstrated that companies that share profits and gains with employees have significantly better financial performance than those that don’t. Unfortunately, there are 21 still too many companies that don’t understand or accept the concept and continue to follow the traditional system designed to give the most to those who already have the most. The point of all this is that with a little effort, creativity, and willingness to change the traditional approach to corporate management and compensation, you can build a powerful culture that is in parallel with the objectives of your organization. And the Moral of the Story Is . . . I am absolutely convinced that in today’s highly competitive world — filled with well-educated employees and savvy consumers — the secret to achieving lasting success is a conscious, conscientious effort to change the approach to the traditional rules of leverage and conflicting interests and replace them with the concept of ethical leadership that drives parallel interests. Regardless of whom you are dealing with, whether the subject is personal or professional, you should approach every business relationship with the objective to “get in parallel.” Whether it is managing a company, division, job interview, promotion, pay raise, or acquisition, your chances of winning are virtually assured when you ensure that the other party wins when you do. By using the benchmark of “Is this in parallel?” you will develop a natural inclination to reverse the traditional ideas of leadership and more and more you will be like Mike. 22 Chapter 5 Reminiscing about the FutureAt Rice University in May 1961, President John Kennedy gave a short, 16- minute speech that changed the world forever. At the time, the Cold War with Russia was at an icy impasse, and did not seem to be going the West’s way. Kennedy had just been humiliated by the Bay of Pigs fiasco in Cuba; Communist insurgencies were spreading in Africa and in Southeast Asia, and Russia was using its early successes in space to trumpet its (supposed) industrial and technological superiority over America and the West. Kennedy desperately needed something to inspire and motivate Americans (indeed, all of the Western countries) in a way that would prove, once and for all, the supremacy of Capitalism over Communism. It was only a few years earlier, of course, that Soviet Premier Nikita Khrushchev boasted “We will bury you.” To do so, Kennedy focused on the space race as the ultimate battle ground in the Cold War. Kennedy knew that if America could do what had not been done, and do it before the Russians, it would energize Americans and send a clear signal to the world as to the industrial strength and vibrancy of Western culture. In short, such an achievement would mark the beginning of the end of the Cold War. Kennedy determined that the best way to achieve this objective was for America to put a man on the moon first. As Kennedy said, “No single space project in this period will be more impressive to mankind or more important for the long range . . . and none will be so difficult . . . to accomplish.” This was a clear signal to all that if America could accomplish this feat and Russia could not, there would be little question as to which system is superior. Kennedy’s ultimate goal was to defeat Russia in the Cold War, but he understood that objective was too broad and vague to inspire and motivate specific action. (Like a business leader setting a goal of “building a successful business.”) So, Kennedy employed a leadership technique that is available to all, but used by few. In clear, specific and concrete terms that people could understand Kennedy reminisced about the future. Kennedy laid out a specific future for America when he said, “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth.” Everyone who heard that statement immediately knew what it was that 23 Kennedy was asking people do for their country. Kennedy was not predicting the future; he was challenging Americans to create the future. Kennedy understood that winning the battle for space was part of an overall strategy in the chess match between West and East. And by using the leadership technique of reminiscing about the future in specific, concrete and achievable (even difficult) goals, Kennedy was able to communicate and motivate the country to action. Approaching the Future There is a fundamental difference between the way the typical leader and the ethical leader confront the future. The typical leader is focused on what can be controlled, while the ethical leader is focused on what can be created. Typical leaders are not taught, and therefore do not practice, the concept of reminiscing about the future, because the accepted practice in business is to attempt to predict the future. Unfortunately, most business leaders are led to believe that the fastest and surest way to predict the future is to control it by gazing into five-year plans, massaging complex business models and by manipulating sales forecasts and budgets. And that is exactly the opposite of what the ethical leader believes. Ethical leaders have found a better way to arrive at a successful future plateau with almost ease and grace. That’s because they believe that, while it would be nice to be able to predict the future, it is distinctly better to create the future. Reminiscing about the future is a powerful leadership technique that ethical leaders use to differentiate themselves from the typical leader and motivate their organizations to action and success. They try to understand the future by reminiscing about it. Not only is the power to shape our future more valuable than the ability to foresee it, it’s something we all can do. Rather than spending time and money on a fruitless attempt to predict the future, we should learn to nurture the capacity to reminisce about the future. If this leadership technique is learned and practiced, the ethical leader can achieve virtually anything. What Reminiscing about the Future is all About To reminisce about the future means to develop the ability to visualize the future as if it were the past. We already reminisce about the past. We visualize significant previous life events—graduation, marriage, the birth of a child—with a vision that allows us to see the past and almost relive it. We can even tell others about it and take them with us as we retell the story. Now, think for a moment how powerful you would be as a leader if you were to possess a form of intuitive reasoning that would enable you to reminisce about and visualize the future as clearly as you do the past. By that I mean drawing in our mind a picture of what we seek to achieve so 24 clearly and so distinctly, that it shapes our present reality to the point that it actually begins to take on the characteristics of our vision. Skeptics will argue that this is a pie-in-the-sky fantasy practiced by the Harry Potters of the world. Common sense might suggest that no one can possibly have the power to predict and actually influence the future. And the skeptics will be proven right, if we join the masses that nestle like couch potatoes to dream about the past and watch the true opportunities of life pass by like scenes in a TV sitcom. But, ethical leaders are successful because they don’t do that. I am not suggesting that you spend your time as a leader idly dreaming about the future. However, if you as a leader have a concrete vision of what you’d like the future to look like, then your actions will help transform the vision into reality. Simply put, although it is not possible to see the future, it is possible to take actions that will allow us shape it. A Case in Point To demonstrate the success of this leadership secret, take a look at NetApp, a provider of enterprise storage and data management software and hardware products and services. Instead of wasting time writing business plans, many key unit leaders write "future histories," imagining where their business will be a year or two out. The idea began in 2003 when NetApp co-founder Dave Hitz reminisced about the future of his company. But rather than allowing his vision to gather cobwebs in his mind, he committed his views to a 20-page “reminisce” aptly titled, “A Vision of NetApp as a $2.5 Billion Company.” In it, Hitz clearly reminisced about where he wanted his company to be in the future, clearly avoiding typical business plans and dreamy forecasts. Since he had such a vivid picture of his business’s future, he was enabled to deftly picture it, communicate it, and lead the organization to achieve his foreordained goals. Did it work? You be the judge. The company has gained market share during the recent global financial crisis while avoiding layoffs and stockpiling $2 billion in cash on hand. What’s more, employee enthusiasm for the legendary egalitarian culture helped catapult NetApp to No. 1 on Fortune’s list of Best Places to Work after six years on that rarefied roster. That’s success in anyone’s book and it all began with a bit of fruitful reminiscing about the future. Defining Our Own Success Of course, success – even the future – is how you define it. Ethical leaders believe that success and winning are defined by the organization when all members come to understand and reminisce about a future they can25 create. Success, after all, is really the ability to exercise the right and power to decide and create our own future. This kind of success can only be achieved when a leader communicates a crystal-clear vision burned into the culture of an organization in such a way that all members work steadfastly toward turning the ephemeral image into a tangible victory. Here is another example of what it means to reminisce about the future. In 1987, I helped found LifeUSA as a startup life insurance company. In a large, slow-growth industry such as life insurance, dominated by large financial giants, the chance of survival, let alone success for a new company is very remote. And yet, LifeUSA grew to be one of the most successful life insurance companies in the 1990s. I am convinced that this success was achieved because everyone in the company was focused on reminiscing about the future. The message to everyone was simple. The vision was that, within a decade, LifeUSA would become a national company, operating in every state and competing head-to-head against the largest companies in the industry. There were no complicated and detailed business plans; no projections or forecasts, but simply the vision of what we wanted to be. Unencumbered by the constraints of detailed business plans and the pressure of fixed projections, those involved with LifeUSA were free to use their creativity and imagination to create the future as a national company. When decisions were to be made regarding anything to do with the development of the company, there was only one question to be answered: Will this action help LifeUSA achieve the vision of becoming a national company competing effectively against the largest companies? If the answer was, “yes,” then it was an action taken. If the answer was “no,” then it was an action to pass on. That may seem too simple and even a naïve approach to leadership, but you know what? Ten years later LifeUSA had become a national company, operating in every state and competing effectively against the very largest companies in the industry. The real lesson to learn here is that to be effective as a leadership tool, reminiscing about the future must be clear, concise, simple, transferable to others and achievable. President Kennedy reminisced about the future in clear, simple terms: “We will put a man on the moon and return him within 10 years.” Like all ethical leaders, he then allowed others to understand and buy into the vision and gave them the flexibility and support to achieve the vision. Winners Reminisce26 All ethical leaders operate in the present, but they think in the future. They have a vision that, when combined with experience, they use to build their futures and the future of their organizations. But typical business leaders don’t do that. They operate on the basis that goals will be achieved only if they draw together a sufficient number of business plans, complicated proformas, and other financial planning busywork. How much time and money is wasted chasing the grandiose dreams of five-year corporate business plans? Have you ever seen a plan even came close to achieving one of these “forecasts”? Of course not—because these plans, even though they are among the accepted techniques of business management, attempt to predict the future, when what is needed is the vision to make the future. Ethical leaders, whether they are in the mailroom or the CEO’s office, share at least one thing in common—they always carry a true vision of what they are trying to achieve. They know exactly how their personal vision of success looks and feels—they even know what it smells like. Without such vision, leadership becomes pedestrian and commonplace. And all the business plans and corporate busywork in the world won’t save the day. It’s not that I am against planning. There was a tremendous amount of planning, coordination and organization that had to be accomplished in order to fulfill Kennedy’s vision of a man on the moon. The difference is that for the typical leader, plans are often planned for planning’s sake. Moreover, it is important to have an educated “guesstimation” of sales, revenues, expenses, and income; but recognize that they are nothing better than a guess. Business plans are best used for budget planning and measuring the progress of a company, but should not be relied on as a basis for predicting the future performance of a company. However, it is important not to confuse the vision one builds by reminiscing about the future with a “forecast,” which is the stuff which packs most business plans. How Reminiscing Works The reminisce-about-the-future approach to ethical leadership plots a course of achieving future growth and success in reverse. Instead of plotting a business course from today into the future, you begin by developing your vision of the future and work back to the present. That’s what NetApp asks of its key employees. It requires managers to spell out a clear vision of what they expect to accomplish with their divisions, departments, business units, etc. To do this, these managers are forced to develop and produce a clear-cut vision of the future, and that, of course, requires the leader to start thinking about the strategies to turn such visions into reality. 27 What Reminiscing Isn’t Reminiscing about the future should never be confused with forecasting, dreaming, or planning. Forecasting is an effort to predict what will happen in the future, like picking the winner of the Super Bowl three years from now or predicting what sales volumes will be three years from now. Dreaming is a naïve hope for something to happen in the future—such as being happy, achieving riches or success. Reminiscing about the future encompasses none of these ideas. There is nothing soft or mystical involved with reminiscing about the future. Reminiscing about the future is, in fact, a hard, serious, effective, ethical management technique that is comparatively made more effective because so few leaders actually practice it. Dreams are what others wallow in while the ethical leader moves the organization toward a future where they have already been. To reminisce about the future, we use the sum power of our experiences, creativity, imagination, desire, and commitment to create a simple, specific, realistic mental image of what we seek to achieve. The key is to make sure the “reminisce” is specific, attainable, and focused. Once the future has been visualized, decisions regarding planning and needed actions are much easier and more realistic. Why Reminiscing Works It is surprising that this technique is not used more often, since the law of imagination is now recognized as a universal principle by those who study successful people. The mental images and ideas we hold in our mind tend to manifest the physical reality to which the images correspond. In other words, a human tends to act in accordance with the mental images of the future that they hold in their minds. “The imagination,” according to motivational author Napoleon Hill, “is literally the workshop wherein are fashioned all plans created by man. The impulse, the desire, is given shape, form and action through the aid of the imagination faculty of the mind.” Before we achieve something worthwhile, we must first have an image of it already alive in our thinking—our reminiscing. Once the image or the specific inspiration of the future has been created, then we have installed the guide for transforming the vision to reality. What’s more, our brain has the power to do this automatically. When we reminisce, our brains will automatically provide us with the specific actions necessary to make the vision a reality; much like a guided missile seeks its target. There is evidence of this everywhere. When we have an idea—when we reminisce about the future—our minds cannot help churning out ideas and actions to turn that vision into reality. In short, if we can reminisce about our28 future, we can successfully program our future. Typical leaders scoff at such thoughts, but ethical leaders communicate, motivate and inspire all in the organization to work toward the same future. And the Moral of the Story Is . . . The fastest, surest way ethical leaders achieve their goals, whatever they may be, is to reminisce about the future. Reminiscing about the future is like going back to the future. In simple terms, if you knew what the future was going to be, then getting there would be easy. Leaders who reminisce about the future find it easy to get there because, mentally, they have already been there. Having reminisced about the future, ethical leaders have the mental wherewithal to effectively communicate, motivate and inspire all in the organization to work toward the same future. If John Kennedy had not reminisced about the future on that warm day in Texas, would it still be the American flag that is planted on the moon? Just as he had reminisced . . ..29 6 Ethical Leadership and the Battle of the Bulging Bureaucracy How leaders react to bureaucracy says a lot about their philosophy and style. The typical leader may express frustration with bureaucracy, but more often than not, they wrap themselves in the blanket of bureaucracy. For them bureaucracy becomes a tool to be used to control and stifle others; it also serves as a convenient excuse if objectives fail. The ethical leader recognizes the need for structure and order, but chafes under the limitations that bureaucracy places on innovation and creativity. The ethical leader recognizes that bureaucracy cannot be eliminated, but he sees it as something that can be turned against itself to create the freedom to do what needs to be done. Growing the Culture of Bureaucracy Like the attack of mold spores in a home, the incursion of bureaucracy in an organization starts so subtly you barely notice. Unless identified and checked, mold can infest a home until it is uninhabitable. Likewise, bureaucracy left unchecked can infest an organization until it becomes too paralyzed to act. Bureaucracy is a natural byproduct of growth. Growth creates the need for varying degrees of rules that attempt to standardize employee behavior and company procedures. Often these rules and regulations become institutionalized in employee handbooks and operating procedure manuals. The well-intended objective of these rules is to prevent chaos and to help coordinate the forces of many different departments together into one, unified, dynamic whole. That is all well and good, but there is a downside. When following the rules becomes the objective rather than a path to the objective, they begin to dampen the spirit and effectiveness of the organization. When rules are obeyed simply out of tradition—without ever asking why? —they often evolve into a dam of endless delay that can stem the flow of ideas and action in the system and make life difficult for all employees. This is particularly true for the creative, entrepreneurial types who are inclined to take the very actions that make an organization better.30 The federal government is obviously the poster child for this kind of senseless bureaucracy. How bad is it? Consider this: The Ten Commandments endorses morality in a mere 297 words. The Bill of Rights is postulated in 463 words. Lincoln’s Gettysburg Address touched the masses with only 266 words. A recent federal directive to regulate the price of cabbage contains 26,911 words. It’s this kind of bureaucracy that produces those $300 toilet seats and $45 screwdrivers. I rest my case. Typical leaders are comfortable with the rules of bureaucracy because they give them an accepted structure to rely on and help to control the activities of employees. The ethical leader understands the need for well- intended rules, but constantly resists making rules the be-all and end-all that could hamstring employees and suppress creativity. Principles of Engagement The typical leader may see straightjacket-by-rules as a way to provide security and protect against risk, but it also suffocates the vitality of change. In an effort to block the bureaucracy and counter its effects, the ethical leader learns to develop what are called “principles of engagement.” A principle of engagement is a clear guideline for doing business, but not a specific, fixed rule as to how to do business. A principle of engagement defines what the business is about, but it does not set the rules as to how an organization goes about its business. There is a difference between guidelines and rules and the ethical leader knows that. Rules are for those you don’t trust. Guidelines are for those you respect. Give a person a rule and you take away thought. Give a person a guideline and you stimulate creativity, accountability and responsibility. Operating under a principle of engagement, a leadership environment allows those who will be required to follow the rules to set them. For example, at LifeUSA a principle of engagement was that the company would not sell term life insurance. (The product simply did not fit the overall objectives of the company.) The marketing people were free to develop and sell any type of life insurance they desired, just so long as it was not term insurance. Even within the sphere of the insurance products sold there were principles of engagement, i.e., all products offered had to be in parallel so that the customer, company and selling agent benefited equitably. If that could not be accomplished, then the product was not sold. However, the specific rules as to how equitable benefits were achieved were not something imposed from above. Rather they were established by those charged with the responsibility of developing and selling the products. 31 The ethical leader understands that using the concept of “principles of engagement” brings supervision, structure and order to the efforts of an organization, without imposing the stultifying details of rules that full- fledged bureaucracy brings. Contrary to the approach of the typical leader, the ethical leader does not care how an objective is accomplished, so long as it is within the principle of engagement. Problems When a Leader is Handholding with Bureaucracy Allowing bureaucracy to infest an organization has a negative impact on all elements of an organization, but especially four areas that significantly affect the performance of an organization. They are: Accountability Responsibility Reward for achievement Sense of urgency A bureaucratic corporate mindset arises when the leader allows for the loss of these key elements. Such a cultural bent – while not precisely unethical – does sap an organization’s strength and vitality because it enmeshes employees in an ever-widening net, like a domino theory gone bad (to mix a metaphor). One by one, the key elements that bolster employee productivity are bridled. Accountability The concept of accountability means different things to the typical leader and the ethical leader. The typical bureaucratic leader sees accountability as a way to assign blame and punishment. The ethical leader sees accountability as a way to teach and assign reward. When a leader uses accountability as a weapon of punishment or to transfer blame, then the organization begins to wander down a path that leads to a paralysis of analysis. In a bureaucratic environment where failure is not an option, no one will assume the ownership risk of an action because there is no reward of equal value. As true accountability vanishes from an organization, decision making becomes constipated through the body culture, leading to missed opportunities and ultimate failure. The ethical leader uses accountability as a tool to identify and reward those who are willing to accept the risk of action. If the reward for success exceeds the risk inherent in failure, then more people are willing to step up and assume the ownership risk of action. The ethical leader also uses accountability as a teaching device that allows people to learn rather than perish from mistakes. If a member of an organization knows they will be allowed to learn from failure, they are much more likely to make the effort 32 and accept accountability. The ethical leader is always willing to accept one step back in exchange for two steps forward. Only in such an environment can an organization grow and develop its ability to take action and move forward. Responsibility Responsibility comes part and parcel with accountability. Those operating under a leader who does not understand or practice healthy accountability soon develop sophisticated techniques to avoid responsibility. All too often this is expressed in a “that ain’t my job” mentality. A bureaucracy defuses responsibility into a catacomb of committees, reports, analyses and a parade of consultants, all of which results in diluted lines of responsibility and therefore, inaction. It is simple: In a bureaucracy people will shun responsibility because they want to avoid the accountability and the punishment that go with it. The typical leader is often happy to assign responsibility, but rarely recognizes that for responsibility to be embraced it must be part of a triad of actions. Along with responsibility must come healthy accountability and authority to do the job at hand. Rarely is the typical leader willing to give up true authority and often the accountability is in a negative form. As a result, in a bureaucracy you see individuals taking all sorts of creative actions to avoid being identified as “responsible.” The ethical leader understands that for an organization to be vibrant and effective, there must be clear lines of responsibility and along with them must come the transfer of the authority to do the job and a healthy element of accountability. In other words the ethical leader is able to motivate others to action by being willing to transfer all elements of his power – responsibility, authority and accountability – to others. Reward for Achievement The concept of “reward” within the context of an organization presents a stark contrast between the attitude and approach of the typical leader and that of the ethical leader. The typical leader learns that compensation and reward are large parts of their portfolio of power. The typical leader is almost obsessed with the organization’s compensation system. (Many a “compensation consultant” makes a good living playing to the typical leader’s concern over compensation.) The problem is that such leaders are concerned about compensation and reward for the wrong reasons and only in terms of pecuniary reward. One of the reasons why we have seen pay scales – especially at the executive level – growing out of whack with reality is because the typical leader equates worth (especially his own) with the amount of money paid. It 33 is a philosophy that espouses, “If you are paid a lot, then you must be worth a lot; so the more you are paid the more you are worth.” The typical leader also believes that compensation and reward are tools they can use to “buy and hold” others. They believe that anyone can be bought and once they are bought, they can be controlled. There may be nothing unethical about this approach, but it is not ethical leadership. A Valuable Lesson in Ethical Leadership Remember, ethical leadership is going beyond the so-called call of duty and managing your company with exceptional leadership. An excellent example of this kind of leadership is when Missouri-based MEMC Electronic Materials announced that its CEO, Ahmad Chatila, had refused to accept a $500,000 bonus for 2009 and instead, decided to use the funds to retrain 450 workers that were to be laid off from two plant closings in the following years. That’s ethical leadership. And that’s in addition to other severance, training, and benefits awarded that the company kicked in. And his selflessness didn’t go unnoticed. As one blogger wrote , “To see a CEO in big business turning down money in order to take care of employees impacted by the recession -- that's refreshing.” Often the typical leader uses compensation to make others beholden to them and if so, they can be manipulated and are not a threat. What the typical leader does not understand is that if they can “buy” someone, then so can someone else. And using compensation as a way to make some “beholden” to them is the wrong way to go about it. Using money to buy loyalty and control over someone is a sure path to failed leadership. Forms of Rewards The ethical leader recognizes that pecuniary compensation is important, but it should be constructed to reward value – at all levels of the organization – and not used to buy and control people. They understand that money is not the only type of “compensation” that will motivate an employee to add value to an organization. Simply giving the employee appropriate credit for a good idea, or recognizing employees in front of their peers for the work they do, can provide incentive to add value. The important element of reward is recognition—in an equitable fashion—for the value contributed by the employee. The ethical leader has a simple approach to compensation. He uses salary to pay for the value of the job being done today and he provides reward, in the form of sharing the value added and recognition for accomplishment beyond the norm. 34 The ethical leader does not attempt to “buy and hold” and employee. Rather he supports a compensation system that will encourage the employee to “buy in” to the objectives of the organization and motivates the employees to “hold on” in order to share in the success they help create. The Pressing Need for Urgency Operating with a sense of urgency is the measure of an organization’s leadership and vitality. A sense of urgency does not mean operating at a forced frenetic pace, but rather it means all tasks, decisions and actions are tackled in a consistent, timely fashion, exhibiting neither delay nor panic. The winning marathon runner does not sprint at the beginning; neither does he dawdle. Rather, the marathon runner moves steadily forward toward the finish line at a measured, consistent gait that leaves him with enough “juice” to enable a sustained pace and perhaps even a winning sprint at the end. So too with the successful organization; there is not the panic of the sprint or idling delay, but instead a sense of urgency to press forward. Without a sense of urgency an organization can spurt, sputter and stutter its way to failure as tasks are completed in a state of panic or not at all. Bureaucracy fertilizes indecision and delay, leading to a harvest of last- minute panic actions. As a result, the typical leader – one who foments bureaucracy as a tool for control – rarely recognizes or understands the importance of a sense of urgency. However, the ethical leader seeks to instill a sense of urgency in the culture of an organization, because he recognizes that such an attitude is actually an antidote for bureaucracy. It is extremely difficult – if not impossible – for bureaucracy to take control in an organization that operates with a sense of urgency. There is a mistaken belief that a sense of urgency only works in smaller ventures. Whether or not an organization operates with a sense of urgency is not determined by the size of the organization but by the ethics of its leadership. Smaller organizations led by entrepreneurs tend to operate with a sense of urgency, but that does not mean that even the largest of organizations can’t also have a sense of urgency. A good example of an ethical leader understanding the value of a sense of urgency in battling bureaucracy and moving a company forward is Cisco CEO John Chambers. Cisco is the company that manufactures much of the plumbing that links the Internet. When John Chambers took over leadership of Cisco in 1995, it was rank with the standard command-and-control school of management. That’s what most business school grads learn and that’s the leadership style they bring to the businesses they manage.35 Chambers was the first to admit that the corporation hewed the line of that old-school kind of leadership. "All decisions came to the top 10 people in the company,” said Chambers, “and we drove things back down from there." But in order to instill a sense of urgency in the organization, Chambers saw the wisdom of sharing corporate decision-making with a much wider base. Accordingly, he led the company through a massive, sometimes bumpy reorganization to spread the company's leadership and decision making far wider than any major corporation has attempted before. The goal of the Cisco program was to create a sense of urgency by empowering more and more employees to make decisions and execute them without being straightjacketed by typical bureaucratic restraints. Today, the company employees a collaborative network of councils and boards empowered to launch new businesses and products. The eye-opening result, according to Cisco, is that the leaders of business units that used to compete for power and resources now share responsibility for one another's successes. What used to be "me" is now "we." The goal, says Chambers, is to get more products to market faster. Chambers was quoted in a recent issue of Fast Company as saying, "The boards and councils have been able to innovate with tremendous speed. Fifteen minutes and one week to get a [business] plan that used to take six months!" As storm clouds form for the rest of the business community, he says, "We're going to gain market share. Rain? What rain?” The company has moved into more than two dozen new businesses, from consumer camcorders to giant TV screens for stadiums. The best results, as you might expect, accrued to its bottom line. The company’s revenues have soared from $1 billion to almost $40 billion since Chambers assumed leadership, proving that Cisco’s ethical leadership model is working, and it’s working very successfully. Such ethical leadership is even more important in these new times of business uncertainty. It is imperative that ethical leaders gain trust and confidence through partnership and clear communication to encourage the most productive results from employees. Getting the Ball Rolling The challenge for the ethical leader, of course, is motivating people to respond to all issues with a sense of urgency. There is a difference between having a sense of urgency and shooting from the hip. Having a sense of urgency does not mean that you are not organized and does not mean that you are not planning—nor does not mean that you are running off at the cuff. It means that you have a sense of determination to get things done.36 The ethical leader understands that in order to instill or retain a sense of urgency in the organization, that singular actions just won’t cut it. Success requires a variety of exploits. People need (and want) to be held accountable for the results that they achieve—both good and bad. Priorities need to be clear, consistent, achievable, and staunchly supported. Deadlines must be set —held to and met. And those charged with responsibility must be given authority, held accountable, and rewarded for success. And the Moral of the Story Is . . . Typical leaders tend to embrace bureaucracy for the comfort, control and risk management it promises. Most of these leaders fail to recognize that institutionalized bureaucracy can rob their organization of its ability to perform up to its potential. It’s bad enough when employees have to buck an inflexible tradition of mindless rules and regulations, but when they aren’t rewarded for resisting bureaucracy and fomenting creative action, the whole enterprise suffers. The ethical leader recognizes the value of structure and organization but clearly understands that when bureaucracy becomes the controlling culture, it encourages all to hide behind committees, pass the buck, shirk responsibility, sulk, and sit idly by as the organization rolls over and sinks. The brave steps needed to make a business a true success story are never taken. The antidote for the ravages of bureaucracy is a culture that operates with a sense of urgency to encourage risk-taking, freedom from fear-of-blame type accountability, learning from failure, and rewarding success. The ethical leader encourages employees to make their own rules within established principles of engagement and rewards them when they succeed. 37 Chapter 7Ethical Leaders are Masters of CommunicationThink back for a moment to any of the election campaigns you have observed. Did you notice a theme or topical thread that seemed to weave its way through all of them? It makes no difference if it was an election for dog catcher, governor or president of the United States, if there is one message synonymous with any election campaign it is the idea of change. It is as if the first commandment for anyone seeking public office is “Thou shall always start, center and finish thy election campaign with the concept of change!” All candidates strive to position themselves as the true “agent of change.” Failure to do so means almost certain loss. That’s fine, but there is one problem. Do we ever really know what the candidate means when they talk about change? Most often it seems that change for change’s sake is about as far as the politician is willing to go. As soon as the election is over, it’s back to the same old same old and change is put back in the closet till the next election. This is not really surprising because real change is difficult to achieve. While the electorate may vote for change, once elected most politicos are uncomfortable with the challenges that come with implementing change and prefer the status quo. So change is a constant part of the political landscape, but rarely is true change implemented. When it comes to leadership there is a parallel to the concept of change in politics and it is called communication. Communication is to leadership what change is to politics. When the attributes needed for successful leadership are listed, most often they start with communication. Just as a politician has a difficult time being elected unless wrapped in a cloak of change, so too is it a given that unless a person is a good communicator they cannot be an effective leader. I could not agree more with this philosophy, but as with change in politics, in leadership there is little understanding as to what communication really means. Most leaders talk about communication – and claim to practice it – but few do. Their efforts to communicate bear as much credibility as if they read from a teleprompter. 38 Many leaders confuse disseminating information – sending memos, posting on a website, having a meeting, or blasting out an email – with communication. Ordinary leaders may talk a lot and do a lot of telling, but they rarely actually communicate. They don’t convey the important information, the vision, the feeling of camaraderie that is so essential to ethical leadership. That’s because real communication is much more than simply imparting information. The ethical leader sees real communication as a process of interaction that sends a message of respect, inspiration and motivation as much as it imparts information. Posting a notice on the company Web site may pass out information, but stopping by an employee’s desk to chat or asking for input from others is real communication. Helping others in the organization to understand why something is being done, not just what is being done, is the type of communication the ethical leaders practices. It is not entirely the fault of the average leader who mistakes the imparting of information with real communication. After all, that’s how they’ve been taught and, moreover, that’s what most employees expect. But this typical attitude toward communication leads to the number one complaint of employees working in business today: they never know what is really going on. What little information they get is gleaned from the “rumor mill,” a cottage industry in many businesses because there is a true communication vacuum. And why is there is such a vacuum? It happens because the average business leader hoards knowledge because being “in the know” is equated with power and control. Information is power. Ordinary leaders take this quite literally, believing that if they have information that you do not have, then they are more important and more powerful than you. The result is an obsession on the part of some leaders to squirrel away information and this creates a (planned) disconnect with the employees. However, this is where the ethical leader rises above the average and shines brightly over his counterparts. The ethical leader agrees that information is power, but he or she uses this power to connect and bond with those they want to lead. The ethical leader is passionate about an honest, deep-seated commitment to continuous communication; they understand there is a difference between talking to and talking with someone. Why is the Mastering of Real Communication so Critical? Communication is a vital tool for the ethical leader’s efforts to express his vision of the future, enlist others in the effort, provide feedback about progress, maintain specific focus on the objective and reinforce the very concept of entrepreneurial spirit within an organization. This is the kind of 39 leader who knows that when people feel involved in an organization they become involved. In order for communication to be effective it must cycle throughout the organization. Like the blood in our body it constantly flows into and out of the heart. If our blood did not circulate we would die. The same is true for communication in an organization. True communication is an all- encompassing process and not simply limited to passing on “information.” The ethical leader does not seek to drown employees in information while starving them of knowledge. On the other side of the coin, information that does not flow freely throughout an organization creates a negative dynamic. There’s an actual syndrome (or at least there is now) called “power-man syndrome.” It occurs when a business leader is so isolated from unfiltered outside information that he or she never learns what is really going on. Instead, intelligence is learned from “yes-people” who are unwilling to tell the emperor he has no clothes. As a result, the leader —regardless of corporate level —inevitably begins to make almost unbelievably bad decisions and often destroys the enterprise he or she is trying to lead. In his book, The 7 Habits of Highly Effective Technology Leaders the author Stephen Andriole, points out that “Communication is a continuous process. When things are relatively quiet, leaders still need to communicate what they are doing, the status of their projects, and their strategies. When things are bad, they can call upon a deep, continuous relationship with their partners and stakeholders to jointly solve problems; and when things are good, leaders can exploit their communications investments to make sure everyone understands the significance of the victory at hand.” The ethical leader understands that true communication is the sealant that builds and binds the corporate culture of an organization. When it flows freely an organization becomes entrepreneurial. When communication is constricted the organization atrophies into bureaucracy. There is no such thing as an ethical leader who is not also an excellent communicator. What is Gained from Real Communication? Probably the most important benefit to be gained from the willingness to master real communication is the bond of trust and respect between the leader and those looking to be led. This is a powerful, two-way street. When the leader opens up and offers honest communication he sends out a clear signal that he trusts and respects those he leads. In effect the ethical leader uses the power of information to empower others. Even more motivating than money, more sought after than position, rank or perks, is the employee’s desire to be recognized and respected for his40 or her contribution to the organization. It generates a feeling in the employee that they are important and “on the in.” Effective communication imparts this feeling. Unfortunately, lack of employee respect is the hallmark of typical business leadership. When denied respect, how can you expect employees to do any more than “go through the motions” of their job since they have no reason to believe their ideas or creativity will be taken seriously? Employees adopt a lethargic work attitude; they find no reason to give the company 100 percent when the boss cares little for their welfare. Unlike business leaders who hoard and control information as a tool to control the employee, the essence of an ethical leader’s style is the recognition of the importance, contribution and value added by all members of the group. Effective communication weaves these important strands together into a fabric of employee self-esteem. If members of an organization receive constant reinforcement from their leader that they are trusted and respected, then the reciprocal is passed back to the leader. When this happens, the leader becomes even more effective and easily rises above the typical leader. The Secret: Be Open, Constant and Consistent If communication is to build respect it must be open, constant and consistent. Communication is not something an ethical leader thinks about; it is something he lives. Open and honest communication is not a process or a procedure; it’s as natural as opening the office each morning and is a predictable trust builder. It works because ethical leaders build trust with their followers by first showing trust in them. A leader’s simple act of dropping by someone’s workstation is a form of communication. Not necessarily to talk business, but more to communicate that you respect your employees and they are important to you. Remembering a person’s children and asking them questions about them and being genuinely interested are forms of communication. Ordinary leaders don’t do that, but ethical leaders will because it is a way to bond with the people they are working with. For example, at LifeUSA I made it a point to meet with every new employee – no matter what job level – on their very first day at the company. The outward purpose of these meetings was to welcome them to the company, but the real reason was to begin to communicate to them that they were important enough to the company for the CEO to take the time to meet them. Once or twice a month I would sit down in the board room of the company with 15 to 20 employees for a “bag lunch.” It was only the CEO 41 and the employees; no other members of management were present. I would give a quick update of the company plans and progress and then open it up to any question those in attendance may want to ask. The meeting was casual, simple, open and honest. It was a simple form of communication that conveyed the importance and value these employees brought to the company. If they were not important, why would the CEO take time to be with them? Does All This Communication Stuff Work? Treating employees with respect and dignity by keeping them in the loop of important company information is critical to retaining good workers, especially in a better job market. Employees who feel they are not treated respectfully by their employers are three times more likely to leave their jobs within two years than those who feel they are treated respectfully, according to a survey by Sirota Survey Intelligence and the authors of "The Enthusiastic Employee." Sixty-three percent of those who do not feel treated with respect intend to leave within two years, vs. only 19% of those who feel they are shown respect. The bottom line, of course, is that if a majority of employees in whom you have invested time and money to train are walking out the door after a couple of years, then you’ve wasted all that time and money since you’ve got to find, hire and train new employees to take their place. In the meantime, company productivity may lag because the employees who continue to put in their daily eight hours have already quit (you just don’t know it) and their performance will show it. Communication is a Two-Way Street When ethical leaders demonstrate that the opinions of others are respected and appreciated, employees are going to be much more open. This gives the ethical leader a real advantage over the typical leader because he will have a better feel for the pulse of the organization. In such an open environment, it is amazing how many people will open up to the leader about the company. The ethical leader understands that the information received from people at the top is often not as important as that garnered from their rank-and-file employees. Obviously, this may strike some readers as dangerous ground to be treading. And in a sense, it is. You might get feedback that is unusually frank and candid. You may hear things you don’t want to hear. But that’s just the kind of feedback that ethical leaders need and want. They want to know how they’re doing and how they can help improve the business. With increased awareness, agreement as to company goals and with improved communication of results, management can make quick and 42 effective adjustments. Everyone can remain focused on the ultimate goal that is always assumed but sometimes lost during the activities of the day—to grow and prosper as an organization. Learning to Communicate In order for communication to pay the dividends it promises, it must come straight from the heart of the leader. Real communication cannot be faked. The ethical leader proactively seeks ways to improve and impart effective communication that reflects the trust and respect he has for members of the organization. In reality, it is easy to develop tactics and methods to accomplish this objective. Here are some of the things that ethical leaders do to sharpen and enhance their communication skills:  Pay attention to your employees and show an interest in their development.  Give employees the big picture. As I pointed out elsewhere in this book, employees need to know your business’s mission and goal and you must communicate to them how they fit into, and can contribute to them both. Most employees are happiest and work the hardest when they truly feel that they make a difference and when that difference is recognized and rewarded.  Encourage employee innovation and ideas for improving how your business is run. And above all, reward them for their efforts and make sure they have the opportunity to learn and grow and not be punished for failure.  Hold all employees accountable. One of the quickest ways to puncture employee morale and their willingness to give outstanding performance is when slackers are allowed to slack. After all, who wants to give 110 percent when a colleague is offering only 65 percent?  Pitch in. When business is particularly demanding, ethical leaders will ignore rigid employee stratification and climb into the trenches with their staff to get the job done.  Recognize employees for their accomplishments and provide them with the freedom to use their judgment.  Solicit, listen to, and act on work-related ideas from employees, such as input on how to get the work done faster and more efficiently.  Provide employees with helpful feedback and coaching on how to perform more effectively.  Value people as individuals, and give them a sense of being included.43  Encourage full expression of ideas without fear of negative consequences. And the Moral of the Story . . . Ethical leaders open lines of communication and create a respectful, transparent society where people are comfortable coming to them with whatever issue that’s on their mind. Accordingly, communications open up, new ideas proliferate, people are willing to step up with their best efforts and a mutual trust and respect is created. The secret to being an ethical leader is to be a master communicator. The ethical leader builds alliances, never stops painting the vision and making decisions but does so in a way that involves the entire organization. He or she creates consensus, plants seeds, and offers and accepts solutions. Real communication by the ethical leader provides everyone with a clear sense of purpose and an urgency to achieve the objectives of the organization. 44 \Chapter 8 Being an Ethical Leader In the Face of Peer PressureSince 2008, we have all witnessed and felt the worst, worldwide economic downturn and financial crisis of the past 75 years. As if consumed by a pyroclastic flow rushing down the side of an erupting volcano, great American industrial and financial icons have been overwhelmed and destroyed. Millions have lost jobs, homes and life savings, credit has been frozen, home values decimated and futures of peoples, even nations, have been put in question. For decades to come, politicians, economists and historians will be dissecting, analyzing and researching the causes for this economic calamity. Any number of esoteric, interrelated, complicated and analytical reasons will be offered to explain the cause and effect of the economic disintegration. Clearly, the accelerator for this conflagration of economic woe was identified by the prescient comments of then-Federal Reserve Chairman Alan Greenspan when, in a presentation to Congress on December 5, 1996, he said the economy was moving into a state of “irrational exuberance.” But, I have a much simpler theory to explain the economic problems we have encountered. It is insidious and omnipresent in our lives. We all know what it is and have all experienced it. It is hard to resist and easy to succumb to. It is “peer pressure.” It was peer pressure that caused the banker to make loans that should not be made. It was peer pressure that caused the insurance executives to take risks they knew should not be taken. It was peer pressure that caused the investment community (and investors) to move from investing to gambling with their funds (and the funds of others). It was peer pressure that caused otherwise honest business executives to become criminals. It was peer pressure that caused individuals to buy homes they could not afford and take on debt they could not repay. It was peer pressure that caused real estate investors to become real estate flippers. The sad fact is that if it were not for succumbing to this peer pressure and the mob mentality that comes with it, the economic catastrophe would have been averted. 45 I know there are those who will claim that blaming peer pressure for the economic collapse is too simplistic to have credibility, but I beg to differ. The reason why peer pressure is so insidious and powerful is because it seems so safe and simple. Peer pressure tugs at the very core of humanity. We all want to belong and not be left behind. We all want to be accepted and feel we are in with the in-crowd. We all want material goods and want to avoid the stigma – the culture inferiority – that comes with a failure to “keep up” with others, and that includes our business competitors as well as the Joneses. And let’s be honest, many of us succumb to the coercive nature of peer pressure because we are followers, not leaders. The power of peer pressure is emboldened by the comforting but false premise that if everyone is doing it, it must be okay. It is not okay, but unfortunately most do not learn this simple lesson until it is too late. Ethical Leaders and Peer Pressure If you are ever to rise to the level of an ethical leader, you must first become immune to peer pressure. It will not be easy, but resisting peer pressure is a necessity of ethical leadership. The typical leader becomes a slave to peer pressure. The ethical leader recognizes the threat of peer pressure and resists its sinister nature. The only pressure worthy of your attention as an ethical leader is the pressure inside yourself to be the best you can be. Of course, avoiding the influences of peer pressure is easier said than done, but the rewards for doing so are immense and, as you’ll see, well worth the risk. Peer Pressure Starts Early The homogenizing pressure to be like others starts almost as soon as we are able to recognize that we have peers in this world. Parents warn us against falling prey to peer group pressure. Children are largely heedless of that advice because parents are not peers and there are more peers than parents. You see kids who dress alike, talk alike, eat the same food and smoke the same (whatever) because there’s peer pressure to be “part of the crowd.” Yet, there is clearly no “socially redeeming value” in following the herd’s mentality of mediocrity. The only value that can come from peer pressure is to achieve a complete leveling effect for those who fall prey. Imposing peer group pressure simply makes everyone act, talk, think and be the same as if we were the semi-moron dwarf Epsilons of Huxley’s Brave New World. You’d think that we’d outgrow such childish “monkey-see, monkey-do” attitudes, but most don’t. Nor does the inefficiency and repression caused by peer pressure rules stop once we reach adulthood. In fact, the further we progress in our career the stronger peer pressure becomes. As we take our 46 first job and work our way up the corporate ladder, the influence of peer pressure becomes even more entrenched than that we encountered as children. Surprisingly, in the business world, the concept of peer group pressure goes beyond the individual and even applies to the company itself. For many companies, peer group comparison becomes the thread that weaves through the entire fabric of business management, planning and measurement. This management mentality could be referred to as “suicide by imitation.” You will find this philosophy taught at Harvard Business School, Stanford, Wharton and many other “leading” business colleges. In fact, the fastest growing segment of the consulting industry promulgates “peer group comparison” as a leading management tool to measure and judge how well we are doing in business. Typical leaders are obsessed with comparing themselves and their organizations to others. The result of such endless and idiotic comparisons is to foster a despicable uniformity in the marketplace that often leads to the death of many businesses. Everyone looks the same, acts the same, and does the same. Businesses become a “herd of crowds” and no one knows whether the herd or the crowd is doing the right thing or the wrong thing because everyone is doing the same thing. Peer Group Analysis Intra-industry peer pressure is the most irksome. Peer pressure comparisons are now more prevalent than poppy fields in Afghanistan. Pick an industry – any industry – and you’ll find some trade group or analyst that has generated reams of comparative data to make peer group comparisons. The typical leader falls prey to this peer group analysis, because it allows them to measure their performance against the performance of others; which is akin to comparing yourself with the averages. Comparing the performance of your company with what others are doing is a futile exercise, because most of the time you are comparing apples and oranges. Why? Imagine the futility of saying “Our company has been rated the fastest growing widget manufacturer in America,” when sales doubled from 100 widgets to 200 but at the same time the competitor increased sales a “lousy” 25 percent—from 100,000 to 125,000 widgets. See what I mean? The ethical leader seeks to measure the performance of his company against its potential, not the performance of others. The performance of others may be below the potential of your own company or they may be doing what can’t or should not be done. Be Your One and Only Peer It’s always good to know what your competition is doing, but that’s so you can beat their brains out—not for judging the effectiveness of your 47 performance. Trying to determine what you should be doing by shadowing what other companies are doing is a bad idea. Instead, the ethical leader measures his leadership and the performance of his followers based upon the accomplishments achieved against the potential. Ethical leaders create their own peer pressure by constantly measuring the improvement over what they have done in the past. Are they getting better at what they do each year? They seek to measure against increasing productivity, selling more goods, answering more of their customers’ product needs with fairly priced goods and services they can use. Forget what others are doing. Ethical leaders resist peer group pressure by asking: Are we better off today and performing better than we did last year? Are we closer to achieving our objectives at the end of the year than at the beginning of the year? Is this too simple or too easy? No, it’s the type of peer pressure that can’t be manipulated and is just the right kind of peer pressure the ethical leader uses to motivate himself and his followers. It is a leadership philosophy that says, “We have met the competition and the competition is us!” The ethical leader has one objective when it comes to peer pressure – he wants to be the peer pressure against which others are forced to measure themselves. Not even once during my 22 years of managing a company from the CEO chair was I ever concerned about or swayed by the performance of a peer group company. My concern was for my personal performance and the accomplishments of our company. Yes, I received peer group comparisons, but the only peer being compared was the specific performance of our company this year, last year and the year before. I understand the argument made by the “management gurus” that it is foolish to be blind to the competition. I am not suggesting that we operate in a vacuum. But the ethical leader understands that decisions have to be made and take actions based on available resources, capabilities and experiences – not those of your competitors. So long as your team members are making their best efforts and the numbers are constantly improving, don’t give a squat’s notice to what other companies are doing. The ethical leader recognizes that he can control his own performance and that of his company or department, but he can have no impact, control or – for that matter – any real understanding of the performance of the other companies. So why try to chase or worry about them? Think Kaizen48 Resisting peer group pressure calls for the ethical leader’s greatest competitive effort, deepest complex comparison and most challenging motivation possible to be better than you have been before. Contrary to the typical leader, the ethical leader understands that when you are always better than you have been before, you never have to worry about peer comparisons. The Japanese have a word for that. It’s kaizen. And it means “continuous, incremental improvements” and that’s what ethical leadership aims for. Each day, each week, each quarter, each year the ethical leader strives to be better than before and if successful, then comparisons against the peer group competition will take care of themselves. Try to do your job, whether line employee or manager, a little better, a notch higher than the “accepted” ordinary. Slow and steady wins the day. If you stay focused on making your company better or making yourself better and don’t waste time worrying about what other companies are doing, you will be an ethical leader who will enjoy remarkable success. Why Peer Pressure is so Dangerous The trouble with peer pressure, whether you’re a senior in high school or a senior manager, is that it can sow the seeds of discontent that block true ethical leadership, just as it can engender downright unethical leadership. It is peer pressure – the relentless need to be like one’s peers regardless of how they behave – that provides the motivation for all manner of destructive and even unethical behavior. It may begin with simply “cutting corners,” performing some action in the quickest, easiest, or cheapest way. A good example of this is the banking industry and actions taken that almost destroyed the entire industry. For decades it was a standard joke about banks that, “You could only get a loan from a bank if you did not need one.” There was truth to the humor. One of the reasons that bankers could arrive at work at 10 a.m. and be home by three p.m. was because they were totally risk adverse. Loans were heavily underwritten and closely monitored. There was no such thing as a “subprime” loan. (That’s what finance companies were for.) Then, under pressure to achieve better performance against the peer group, bankers began to loosen their requirements and increase risk. As this began to show improved, short-term results, the pressure to keep up with their peers caused more and more bankers to begin to take increasingly greater risks. It was a vicious circle that caused typical banking leaders to make increasingly bad decisions, all driven by the pressure of the peer group. The bankers who lacked the strength of ethical leadership (virtually all of them) were pressured to follow the actions of their peers and 49 comforted by the idea that, since everyone was doing it, then it must be okay. And, the rest is history. As egregious as these corporate flaws may be, the more subtle leavening effect of peer pressure is to “sand down” what would otherwise be a leader’s exemplary moral values. A Wall Street Journal article a few years ago chronicled just the sort of nonsense that happens when leaders get sucked into dim-witted peer group comparisons. And if the story didn’t have such tragic consequences, it would have been funny. The subject of the piece was a marketing executive who worked for AT&T. Even though AT&T’s financial numbers were growing briskly, he was fired because AT&T had fallen behind the growth numbers of their primary peer group competitor. The irony is that this hapless soul kept writing memos to his bosses arguing that his marketing efforts should not be compared with the big competitor because their numbers just didn’t make any sense. “Something is wrong,” he pleaded. But each quarter the flashy competitor would report new dazzling numbers. With the marketing efforts at AT&T unable to keep up with the competitor’s reported voracious growth, peer pressure mounted and eventually convinced the powers in charge that the marketing chief had to be replaced. It was a terrible mistake. The company with whom AT&T was fruitlessly comparing itself was, of course, WorldCom. And WorldCom was faking the numbers by disguising its true operating performance using undisclosed and improper accounting methods. In short, it was a saga of income that never happened; a well-orchestrated ploy of deceit and corporate betrayal. When WorldCom filed for bankruptcy one of the darkest chapters in business history was written; an ignominious testament to the value of peer pressure comparisons. WorldCom management was guilty of unethical behavior. The marketing guy at AT&T was the victim of leadership ethics filed down from exemplary to ordinary. He was vindicated but that is akin to being found not guilty just after the execution. “Oops, we made a mistake” just doesn’t cut it. Unfortunately, AT&T is not alone in allowing peer pressure to undermine corporate self-determination. Technology companies, insurance companies, airlines, banks and corporations of every stripe and hue can get sucked into this vain pursuit of peer group comparisons and suffer the taint of run-of-the-mill leadership. Those who meekly succumb to group peer pressure spend at lot of time chasing everyone else without knowledge of what it is they are really chasing. Rather than becoming the competition to be chased, they fall in behind the herd trying to chase the competition. It is 50 difficult for most to avoid this fatal flaw in leadership because all their peers are doing the same thing and the highly paid consultants praise its value. The way to enhance your ethical leadership skills is not to chase the competition, but rather to create the competition. Make other people compete against you as opposed to you competing against them. Be Aware – But Don’t Copycat Earlier in this chapter I noted that ignoring group pressure does not mean that ethical leaders ignore the competition completely. Let me reiterate. It’s important to be aware of what your competition is doing, if for no other reason than to avoid some of their stupid mistakes. The ethical leader observes the competition with a jaundiced eye so as not to be pressured into doing the wrong thing simply because others are doing it. The first effect of following peer pressure is to inhibit your ability to exceed the group performance. This can lead to an even greater disaster and that is to follow the herd into disaster, as we so sadly witnessed during the financial meltdown. So what if You are Better? There is another danger when comparison with peer group companies is taken too seriously. You could actually be better than your peers. So what’s wrong with that? Wouldn’t you want to know if you are the best in your field? Doesn’t that confirm that you are doing the right things to be successful? Yes, of course, but there is a danger. The greatest risk to getting better is to think you are already the best. Just as peer group comparisons breed disinformation when you seem to be “falling behind,” so too can it lull the typical leader into complacency if peer comparisons are favorable. So what if you are twice as good as all the rest, but you are only half as good as you should be? Again, peer group pressure is a quicksand for suckers. Get lured into that quagmire and you’ll sucked down. Be your own peer pressure and measure your performance against your potential. It takes a certain amount of courage (or arrogance) to say, “I do not care what the rest of the companies are doing. I know we are doing the right thing and we are going to keep doing the right thing.” In the end, the ethical leader acts on the basis that doing the right thing is going to work – no matter how long it may take. The ethical leader has the courage to resist peer group pressure and do what they do best. The Moral of the Story is . . . To be an ethical leader means to understand that the easiest and yet the hardest thing to do is to resist the entanglements and risks that come with peer pressure. To do that means keeping your own counsel. The ethical 51 leader is a congenital bad listener when it comes to comparing his business, department or division, to others. If you have studied and understand the market, considered the right and wrong of actions, established proper rules of engagement, and if you have put all the major players in your business scenario on a parallel course, then the only thing that can cause your failure is submission to peer group pressure. The ethical leader is able to resist peer group pressure because he seeks to create an environment that recognizes the right thing to do and then consistently does the right thing. The ethical leader has the patience in himself and the confidence of his followers to know that doing the right thing sometimes takes time to play out. The ethical leader compares the progress made with the potential and effort of the organization, not the illusions of peers. They know that if they are successful in such an endeavor they soon will be the comparison by which others compare themselves. The ethical leader defeats peer pressure by creating peer pressure for others. 52 Chapter 9 The Ethics of Real Power If the Devil does wander the earth, he surely does so disguised as power. The quest for power permeates almost every interaction of humanity. Virtually every association, political institution or religion is formed to pursue power and establish control over others. Man has been willing to do almost anything (including selling their souls) to gain power over others and once tasted, will do even more to keep it. Most often, individuals seek to achieve positions of leadership because of a primordial drive for the acquisition and use of power. Typical leaders believe that power bestowed upon them is a clear sign from God (or the Devil) that they are better than others and do little to disguise their feelings. Power is the most potent aphrodisiac known to man. In our society, power is looked upon as a measure of self-worth and therefore, is the reason why control freaks seek to hoard power more than money. The Lust for Power The truth is that power is more sought after, stockpiled, used and abused by political and corporate leaders than virtually anything else. Power is seen as the reward for business leaders who successfully play and survive the system’s games. But typical leaders – those who seek power only to validate their existence – rarely garner respect or trust from those trapped in the system. This mind-set is compounded when the culture of an organization is bureaucratic and the leaders recognize that they have little power outside the regimented system of rules. The ethical leader approaches power from a different perspective. They see power as a tool for the achievement of an objective, not as the objective itself. The ethical leader understands that power in the hands of few is liable to be abused, while power in the hands of many is likely to be a unifier. The ethical leader believes that real power is revealed not by how much one has, but by how much one shares. While power struggles are an accepted and everyday occurrence in many organizations, they rarely occur in cultures managed by ethical leaders. The typical leader is the management equivalent of a celestial black hole with all energy and power flowing inward toward the center where it is concentrated. The ethical leader sees power flowing outward, believing that power is most effectively used when it empowers the group, not the individual. 53 It is not a sin to seek or achieve power. The problems surface when we worship at the altar of power as most leaders do so that they melt into the ultimate vice as described by the poet Shelley: Power, like a desolating pestilence, Pollutes whate'er it touches . . . Somewhere between the vice and virtue of power is fertile ground for ethical leaders to advance their visions and careers by learning the real secret to acquiring and using power. Power is Relative Power, of course, is relative. Power used here means having the ability to make a difference and have an impact on the performance of an organization. Accordingly, you don’t have to be corporate titan or political kingpins to wield power. Power can be wielded just as effectively or unmercifully by department heads, subsidiary VPs, or supervisors in the production department. Many leaders spend so much time scheming to gain more power and prevent others from obtaining it that they lose sight of the appropriate use of power, which is to achieve an objective. Moreover, power-hungry leaders tend to surround themselves with those they perceive as no threat to their power base. It is a philosophy that attracts the weak and drives away the strong. The typical leader does not understand that any attempt to amass and consolidate power is foolhardy, because concentrated power carves the very heart and soul out of an organization. Ethical leaders, not obsessed with power for power’s sake, are not intimidated by talent or strength and as a result tend to attract the best and the brightest, because of a willingness to share the power and the glory. Power Misused Strips Employees of Motivation The cruel irony is that because the typical leader is already the one with the power, they have the power to establish the rules dealing with the acquisition of power by others. Not surprisingly this makes it quite difficult for the "have-nots" to become the "haves." This environment creates an organization where most feel powerless because they are at the mercy of those in power and see no opportunity to make an impact on the objective to be achieved. When a business culture – through either bureaucratic design or actions of self-centered leaders – starves people of the power to make a difference, to feel they can add value, they lose all interest and motivation. It’s not bad enough that members of the organization become demoralized; the talented ones are driven away and those who remain are there only to collect paychecks. 54 Of course, many would not fault the power-hungry leader because he is just playing by the accepted leadership system rules—and playing them quite well. Unfortunately, if history is any lesson, in organizations where power is hoarded, costs will actually increase, efficiency will deteriorate and the value of the organization will erode as it sinks into the abyss of institutional bureaucracy. Then the leader who was all about power loses all power. The Secret is to Share the Power Ethical leaders have discovered the simple secret and believe deeply that the way to gain personal power is to empower others. They understand that the power they possess will be magnified and leveraged in incremental proportion to the power they given to others. Only one with power can grant power, so the more power ethical leaders bestow on others, the more power they gain. It also follows that when those in an organization are empowered to make a difference, the entire organization becomes geometrically more powerful. The bureaucratic system found in businesses led by the typical leader concentrates power in the hands of a few and this constricts the power of the organization to perform. Ethical leaders defuse power into the hands of the people in order to focus the efforts of the culture. How Ethical Leaders Share Power Sharing power is not difficult. Think of empowering people in the context of a “scavenger hunt.” If you are leading the game, you come up with the items to be collected, and the timeframe and limits of the search. Once these have been agreed upon and the tasks passed out, the teams are free to decide what course of action is needed to accomplish the objective. The same tactic is used by ethical leaders. Those playing the game are given the objectives, but the power to determine how they are achieved is left in the hands of the participants, your employees. The ethical leader believes that it is not only acceptable to allow others to make decisions, but preferable. The ethical leader is always involved in defining the vision, outlining objectives and delineating principles of engagement, but once these are in place, he has the ethical leadership philosophy to step back and allow others the power of making specific decisions. If the objective is to drive from Chicago to Atlanta and you are running out of gas, does it really make any difference which gas station you stop at to fill up? The ethical leader understands that very few decisions made in a business are life and death. For those decisions he recognizes his duty to make them himself or at least the right to review the recommended decision. For all others, he is willing to step back and empower others. The ethical leader is confident enough with himself and his trust in his followers 55 is deep enough to give him the freedom to give up the power to make decisions. The Power Structure Sharing Works An excellent example of this kind of power sharing is shown by Mike Rydin, CEO of HCSS, Inc., a leader in software consulting for the heavy construction industry. HCSS was recognized as one of 15 winners of The Wall Street Journal’s Top Small Workplaces in 2009. Rydin founded HCSS in 1986, literally in the bedroom of his home. Today the company is a fast- growing, profitable company that is recognized as one of the leaders in its field. In an interview with SMARTBUSINESS, Rydin credits the company’s success and its ability to compete successfully against larger competitors to his discovery of the power of sharing power with employees. He stumbled on this principle of ethical leadership after he had been out of the office and out of contact for three weeks. When he returned, he discovered that the company had survived without him. He recognized the employees had figured out what to do without him. He says, “From that point on I delegated more because I knew they could do that.” In the interview Rydin also pointed out, “Employees can help you more than you think if you make sure they understand the problem. Educate employees about how the business runs so they can come up with ideas on how to improve it to increase profits.” He continued, “Make sure employees understand how the money is made and how they get paid. We do cash profit-sharing at the end of the year and we are an ESOP company. That gives them a share in the long-term future of the company and the end of the year cash profit-sharing gives them short term interest in the company.” Rydin summed up his philosophy of power sharing this way, “If it’s a few people at the top making all the decisions, that’s not near as good as having dozens of employees trying to improve the business.” How You Can Build Power The willingness and confidence of the ethical leader to empower others is a multi-step process that among other things includes building communication, respect and trust between the leader and the followers. (See specific chapters in this book for details on each point.) Ethical leaders have learned that—no matter what level of power they have attained – their power will be enhanced and strengthened when they build a culture based upon the principles of sharing power with others. And the Moral of the Story is . . . Gaining power is among the most fundamental motivators of human interaction. With centuries of history as a base and generation upon 56 generation of effort, an almost genetically inspired system has developed regarding the acquisition, use and preservation of power. Most of the rules the system has developed for dealing with power were well-intended at the time of enactment. The trouble is they have been corrupted over time. Instead of being a path for others to follow, the rules have become bureaucratized in an effort to protect the authority of the typical leader, while keeping power away from those who may be perceived as a threat to capture that control. All too often, leadership training instills a philosophy toward power that suggests that the way to maintain power is to hoard it. The leader is taught to stockpile power for his use only. Unfortunately, this creates a false sense of power that may generate a feeling of status and privilege among those who believe this, but it destroys the interest and motivation of others and the power is in fact illusory. The secret to the ethical leader’s success is they seek ways to give power to the people—to empower the powerless. What's difficult for some leaders to comprehend is that if you take less, you will get more. A more cohesive, productive business, like rising tides, raises the boats of all employees. And it works on all business levels be it a sole-proprietor with three employees, the department manager with 25 employees or the corporate titan with thousands. The irony is that we are talking about stuff that is not rocket science. It is not hard to do when you make it a way of life. The ethical leader recognizes and understands exactly why it is important to give power to the people. The bottom line is that they know it ultimately is for their own benefit. 57 Chapter 10Ethical Leaders Don’t Even Know What CYA Means If you were to study the careers of any of our country’s most ethical leaders you would soon discover that, to a man or woman, the ethical leader is always willing to step out from the crowd and fully accept the responsibility for their actions. Harry Truman was considered ill-prepared and under-qualified to be president of the United States, but one of the first things he did when he walked into the Oval Office of the White House was to place a sign on his desk that said, “The Buck Stops Here.” This philosophy is emblematic of true ethical leadership. Truman may not have had the education or experience to be president, but he did have the ethical leadership skills that enabled him to be willing to make decisions and accept responsibility for the results. (Just ask Gen. Douglas MacArthur!) As a result, Truman is now rated by historians as one of our most successful Presidents. Unlike typical leaders, ethical leaders never, ever, try to duck responsibility for their actions or the performance of their organizations. Ethical leaders know that only when you are willing to step up and stand out, can the exceptional be accomplished. And that goes no matter what your level in the company, no matter how old you are, no matter your gender, race, or religion. In the end, being willing to make decisions and accept responsibility is what will enable you to develop the skills needed to lead ethically and effectively. Strangely, that’s not how much of today’s business operates. If you have a job, you know that the business landscape is awash with managers who not only avoid making a clear decision, but they hide like bats in a cave in order to avoid taking responsibility for their actions. Of course, they are very good at taking credit when things go well and at placing blame on others for anything and everything that may not work out as planned. They follow the classic management rule taught at Harvard: “When you make a mistake— blame someone!” 58 Pointing the finger at the other guy, denying culpability, and failing to accept responsibility, seem to be the way most businesses and employees operate today. We even have a name for this phenomenon. It’s called CYA —Cover your ass! Ask anyone in a corporate organization what the term “CYA” means and they can answer without hesitation. And my bet is that if employees were asked to list the most important rule for survival in the corporate jungle, at the top of the list would be, “the ability to effectively cover your ass.” It’s a rule so universal that employees learn it as soon as they walk in the corporate door. It’s as if the rule has a genetic legacy. Think of CYA as a type of mind game in which the players use all forms of bob-and-weave, now-you-see-me-now-you-don’t, yes-I-do, no-I-don’t techniques to play hide-and-seek with responsibility. For the CYAer, any tactic that can be used to confuse and delay progress is fair game. Whatever the tactic, the ultimate accomplishment for the CYAer is to accomplish nothing. Ethical Leaders Bristle at CYA For the ethical leader with a bent toward making things happen, the CYA philosophy becomes both an interminable frustration and a Godsend of a gold-mine-sized opportunity. Under the same physical rule that says a force leveraged against itself magnifies the power, the ethical leader understands that CYA turned back against itself magnifies his potential to get things done. Precisely because this rule is so universally accepted, people who ignore it will exercise power that is far beyond that of mortal men. Cover-your-ass mentality is based on the belief that, if you let your ass hang out, someone will bite it off. What the faint hearts of the corporate world fail to realize is that very little bad happens to people who are willing to make decisions and accept responsibility for the results. Contrary to the CYA premise that any business decision is a bad one and should be avoided for fear of the repercussions of failure, there are rarely clear black and white decisions that will individually impact the survival of the organization. Invariably, taking action in a corporation involves multiple options. Unless all options are followed (which would be impossible), there is no way to prove that the option selected is right or wrong. Those who have made a firm commitment to a course of action, any action, have, in fact, done the right thing. Remember, there is no need to hit a home run with each decision. Babe Ruth may be immortalized for his home runs, but in the process he won the American League title for most strikeouts six times. If he had been afraid to 59 pick up the bat, he would not have failed so many times, but also, this example wouldn’t be such a cliché. Sure, some egregiously bad decisions can cost you your job. John Casey’s decision to frantically expand Braniff Airlines after deregulation, for example, was wrong and earned him a pink slip. But most of our decisions, especially those made on the way up, are not nearly so life threatening. As ethical leaders move up the corporate ladder, they learn to relish making decisions – not because of their bravado – but because they know that making decisions helps them to learn how to make good decisions. As a consequence, they become like the magnet drawn through a pile of iron particles attracting employees who will follow them anywhere. People are attracted to, and are willing to follow, an individual who can, and will, make decisions – and accept responsibility for the results. These people are soon referred to as leaders. Such people, even if not always “right,” will find they are very popular and will not be unfairly penalized because of a few stumbles. The point is, as your career develops, if an anti- CYA philosophy is embraced, then by the time you are in a position to manage a division or all of a company, decisions will come easily and usually with very good results. But getting to that point means that you must understand the CYA rules and how to turn them to your favor. The CYA Strategies The CYA philosophy can manifest itself in many forms but all of them are designed for one purpose: To hold oneself blameless in the event a decision, an action or an event, turns sour. “I didn’t do it; John did it.” “I informed Marsha that her action was counter for company procedures but she did it anyway.” I was just doing my job; they undertook that action on their own.” You get the idea. Most often, these “hold harmless” statements are exchanged in the “memo” either written on in today’s digital parlance, the ubiquitous email. Most often it is used in the form of the corporate memo. And when you are in receipt of such a memo, it signals that the sender is weak. You know the person sending it will be no threat when it comes down to real decision time. It is possible to use CYA memos to your advantage. They are especially useful when you encounter someone who simply won’t move off the dime because they’re concerned about being blamed if the project goes wide of the mark. To these people the best response is, “I recognize the concern you have. Why don’t you just send me a memo?” You don’t have to say, “CYA 60 memo” because everyone knows what you mean. And when you read one of these missives, you will usually find language such as: “I told Bob . . . he should have cancelled . . .” “I also said he should have contacted us . . .” “I reminded Bob . . .” “I cannot believe that Bob still went ahead . . .” “I leave it to your judgment . . .” It’s obvious from the negative mea culpas couched in this kind of language that the writer is the consummate rule-knower, disseminator, and follower. As a classic CYA disciple, he leaves the real action to others and, once his ass is covered, exits from the scene. It’s interesting to note that most CYA writers take the position of only being a messenger. The actions he is reporting on are those of others, not his. He takes the position, “Why take a chance and put my ass on the line?” Always Be Accountable Ethical leaders are famous for being the subject of CYA memos. For them —it’s a red badge of courage. Be cheered by the fact that when CYA memos are targeted toward you, it is a clear indication that you are stepping out from the crowd and accepting the responsibility for your leadership. And that’s the kind of ethical posture that will propel you to the top. The ethical leader considers CYA to mean – Consider Yourself Accountable. When you are truly accountable, you can use CYA attitudes to accomplish your own objectives. Remember, people who write CYA memos are those who take no actions. They are no threat. If they took action, it would violate their basic CYA philosophies. On the other hand, the ethical leader, the man or woman who seizes the moment and steps from the crowd, is all the more visible and valuable to a management that thrives on moving forward. Their actions are brilliantly visible since they are viewed against a backdrop of do-nothings. Their CYA memos are most effective when gathering somewhere, collecting dust and growing like a tumor, but so long as we are successful (and usually even if we are not) these memos will never be seen again. The Ethical Leader Strikes Back Remember that the real value in the CYA memo is providing “cover” for people afraid to act of their own volition. Thus, a properly placed “reversed” CYA memo from you can provoke action from people who would not otherwise act. Offering up a memo taking responsibility for any action will inoculate these people with immunity from accountability and free them to help implement our plans. “I took it upon myself to institute this program believing . . . “61 “After carefully considering the options I decided to . . . ” “You’ll be happy to know that my plan resulted in . . . ” See what I mean? Taking responsibility for outcomes is essential for the ethical leader; hiding behind of the CYA memo doesn’t cut it. If the leader knows where he or she wants to be and is not especially concerned about how to get there, then you don’t need to have rules that reduce accountability, inhibit creativity, and cry out to be broken. Allow the doers of the organization to make the rules and you won’t have to worry about CYA attitudes infecting your future. The “Checking-Back” Rule Ethical leadership requires understanding of yet another variation of the CYA rule. It’s called the “checking back” rule. This rule requires that even after approval has been given for a project, you are compelled to stop several times to get continued approval. As with most rules, there is a rational basis for the implementation of this rule: Checking back allows others to provide input if the situation has changed. But such rules also give those who have cold feet multiple options to block your efforts. Gaining overall approval for a project is 90 percent of the effort to see it implemented, so why go through that process over and over? Avoiding the checking-back rule is not difficult because typical leaders rarely actually want you to check back. They want you to step up to the plate and take responsibility since that’s what you were hired to do. They don’t want to assume responsibility for what is ostensibly your job. By breaking the “checking-back” rule, you can keep your project on track and avoid the chance of it being killed. It is important to pick your spot and do it the right way, but circumventing the checking-back rules can provide some early and large benefits. Rosabeth Moss Kanter, writing for the Wall Street Journal’s “Manager’s Journal,” called those who violate the checking-back rule “lone rangers.” She wrote, “They have strong value orientation and are willing to battle the system for what they believe is right, even if they are alone in doing it. Outlaw as well as hero, these innovators may be ready to break minor rules to reach a greater goal. These people plunge ahead despite the roadblocks set-up by checking back.” A good example of this was IBM’s development of the 360 System. If there ever was a company that belonged in the Guinness Book of Rule Makers it would be IBM. But a research lab in charge of developing a critical part of the 360 System moved ahead despite direct and persistent efforts of headquarters to control the program. Ultimately, the success of this effort ensured the success of the entire 360 System. If the group had checked62 back they would have been stopped and IBM would have lost millions—if not billions—in sales. Before You Break the Checking-Back Rule As previously stated, ethical leaders “manipulate” the checking-back rule and they develop a career-long habit of doing so in order to achieve their envious success. But taking this approach and stepping out from the crowd includes one important caveat: Be Prepared. Always do your homework. Anticipate and prepare for objections, problems and snags since breaking the checking-back rule might leave your own ass uncovered and exposed in a way that could cost you your future if you don’t prepare properly. But once a plan has been approved—it has been approved. Move ahead. Don’t check back. It’s a sign of weakness and poor preparation. The Moral of the Story Is . . . The ethical leader in search of real, serious, and rapid success along with the development of a healthy corporate culture must be willing to break out from the prevalent CYA philosophy. This can be done with total impunity so long as when we do take responsibility and we have our “stuff” together. In cultures that properly assign appropriate accountability, with rewards equal to the risk, there is no need for CYA attitudes. Tolstoy never made it to a corporate boardroom, but with his attitude he could have probably would have been very successful. Over a century ago he said, “The people who bind themselves to systems are those who are unable to encompass the whole truth and try to catch it by the tail; it leaves its tail in your fingers and runs away knowing full well that it will grow a new one in a twinkling.” The true ethical leaders in business are those who are willing to step out from the crowd and fully accept the responsibility for their actions. When you’re willing to leave your ass exposed, you can accomplish a much. When your cohorts are running for cover, you need to run for the open. If you are willing to ignore the CYA rule and not worry about covering your ass—and if you are doing the right thing—then you are going to be very successful. Most people focus on the negative, as opposed to the opportunity. The paradox is that most people are trying to cover their ass from a downside risk that is virtually nonexistent. And that’s the whole point: the upside potential to be achieved by ignoring the CYA rule is so much greater then the spanking you might get for failure. Cover-your-ass attitudes prevent more good things from happening than they ever prevent bad things happening. That’s precisely the thought I discovered in an opinion piece in the Economics Press. “None of us likes to make a mistake,” it opined. “All 63 managers worth their salt want to avoid errors, but who can tell for sure whether a new idea will work until it has actually been tried? If the possible gains far outweigh the potential loss, it’s a mistake not to try it.”64 Chapter 11 Trust is a Residue Of Ethical LeadershipOn March 3, 1933, Franklin D. Roosevelt became president amidst the greatest crisis America had faced since the Civil War. The Great Depression was at its depths and the stench of fear for the future permeated virtually every American’s thinking. In such times, some leaders inspire trust while others heighten fear. The Depression had begun in 1929 and since then the words and actions of former president Herbert Hoover had only heightened the fear that gripped the nation. Roosevelt did not shy away or hide from the fear that most felt. Instead, he confronted it by telling Americans that, “The only thing we have to fear, is fear itself.” And with that he began to rebuild the confidence of the American people by reassuring them that they “had a rendezvous with destiny.” Roosevelt believed that the only way to lessen the economic and psychological pain of the people and to find a way out of the Depression was to fundamentally change the way government operated. With a firm understanding of the depth of the opposition he would face from entrenched power, Roosevelt set about to build a special brand of trust between himself and the American people. And he succeeded. The powerful hated Roosevelt and the powerless loved him. Only the power of trust bestowed upon Roosevelt by a preponderance of the American people allowed him to overcome the resistance from those he called the “economic royalists.” Many of the programs proposed by Roosevelt to relieve the pain of the Depression – Social Security, the Tennessee Valley Authority, the Works Progress Administration and Rural Electrification Administration – were foreign thinking to most Americans and an anathema to those in power. Those opposed to his reforms fought him with such a vituperative passion that they make the recent nasty furor over Obama’s health care reform seem like a tea party. And yet Roosevelt was able to push through the bulk of his vision for recovery and many of his programs and philosophy have become the backbone of American society. 65 Roosevelt succeeded even though most Americans may not have understood what he was doing or even agreed with him. Roosevelt prevailed for one reason: the American people trusted him and the power of that trust gave him the power to lead. Traditional leadership is based more on power and position than trust. While typical leaders give short shift to building trust among the followers, the ethical leader understands that the trust of the followers offers flexibility and freedom of action. One of the highest compliments a leader can receive is to have those who follow him say, “I would follow him blindly, anywhere, anytime.” But that type of trust must be earned and is not, by any means, an entitlement of leadership. The ethical business leader understands that no matter how transparent he may wish to be, no matter how much he communicates and explains things, there are going to be times when total disclosure is not possible and times when some are simply not going to understand his actions. It is at times such as these that the true ethical leader can move forward confidently and seamlessly knowing that his employees will not only follow, but support his decisions. The reason for this self-assurance is because the ethical leader understands the secret power of trust. In essence, trust becomes a license to lead. Trust bestows operational freedom on an organization that is never enjoyed by typical leaders. Trust in a leader is different from trust in a marriage or the trust we place in a pilot when we board an airliner. In fact, I would even disassociate the concept of leadership trust from ethical actions. Not that the leader can build trust without being ethical, but in this context trust has a different nuance. Trust in a leader is about many things, but mostly it is about being able to have faith in the consistency of the leader. Building Leadership Trust The secret to building leadership trust is consistency: being the same kind of leader today as you were yesterday and will be tomorrow. This is fairly natural for the ethical leader because he is focused on the vision of the objective and while techniques may be adjusted, the vision never changes. But consistency also applies to personal style. It does not mean that the leader has to be Sister Teresa, but it does mean that the leader can’t be a saint one day and the devil incarnate the next. Building trust starts with the leader being consistent, even if he is consistently a jerk. Developing trust does not mean the followers necessarily like they leader, but they learn that they can count of his consistency. This has even more practical application when it comes to managing a business culture. Ethical leaders know the simple secret of standards. If you 66 are going to set a standard, stand by it. You can’t engender trust in an organization when the leader announces, with great fanfare, the company “mission statement” and then immediately takes action contrary to the statement. Imagine announcing a “wonderful stock option plan” and then the employees discover the “big boys” got to cherry-pick their own option date that puts more cash into their pockets. What a horrible way to build trust among the rank and file. Is it any wonder that trust levels in business and government are at notoriously low levels today? Common leaders do not place a high level of importance on establishing trust with rank and file because they don’t think it is necessary. Why do they need trust when they have power? Typical leaders have a “why should I worry about employees trusting me?” attitude. The traditional leader’s idea of trust is expressed in an attitude that says, “The job of the employee is to follow my orders and I trust they will do it.” By contrast the ethical leader knows a secret: trust is a “get-out-of-jail- free,” card they can play when needed. When an ethical leader has established high levels of trust from his followers and asks them to do something, they will comply, even if they don’t understand the reason, because past experience tells them it is OK to follow—even blindly. The trust level in an organization ultimately boils down to the simple old axiom, “Fool me once, shame on you. Fool me twice, shame on me.” The Origins of Corporate Mistrust Naturally, corporate mistrust can occur in businesses of all sizes, but it is particularly prevalent in bureaucratic cultures. Bureaucratic cultures tend to accumulate power and information among the few, the “top brass,” so to speak. Bureaucrats think that by hoarding information they hoard greater power. The result is a vacuum of information among employees, a coin of the realm in building trust. Secrecy breeds suspicion. In a bureaucratic culture people don’t know who to trust. They don’t know from one day to the next what the “game plan” is and what rules will apply. This causes more rumors to fly than birds heading south in the winter. Ethical Leaders Build Trust The traditional rules of leadership do not require the building of trust between the leader and the followers because followers are supposed to simply follow and obey. People are being paid to do their job and trust is not an element deemed critical to doing a job. That philosophy is way outdated today and serves only to weaken the strength of the organizational culture. If employees are the operators of the “business machine” then the secret to keeping that system well-oiled and operating at peak efficiency is trust. The ethical leader understands that if he loses trust, then, no matter what the 67 objective is, others will be unlikely to follow. If employees who work for you trust you and believe that you really will take care of their best interests, they are mentally free to do the job that needs to be done. When one attempts to lead without simultaneously building trust from constituent followers it is the prescription for a difficult time. The Secrets to Building Leadership Trust Critical to building trust in your leadership is to recognize that it is a process not a procedure. True, deep-seated trust does not come overnight, it comes over time and it cannot be mandated. Sure, most of us humans are by nature a trusting lot. We are willing to give people the benefit of the doubt, but our depth of trust is limited to the first time it is broken. The leader starts the process by setting standards for the organization. These standards must be clear, concise and rigorously followed. These standards are components of the ultimate objective of the organization; a clear understanding of what is acceptable practice and what is not and how people can expect to be treated. The standards set by a leader are the front phalanx in the effort to build trust. The standards are a set of inviolate principles upon which the organization is managed and led. And by inviolate, I do mean inviolate; they do not change. The irony is that members of an organization do not have to agree with the standards in order to build trust. They only to know what the standards are and that they will be consistently enforced so at all times they know where to stand and how to behave. In a true ethical culture, everyone knows the rules and all employees know where they are and where they are going. They also know that in order to stay within a business’s culture they have to live by the standards and not outside them. That doesn’t mean that management is totally inflexible. An ethical leader is always flexible about how to do something but is never flexible about what to do. The Rules of Ethical Engagement To introduce flexibility into the management of an organization without violating the established standards, a set of “rules of engagement” must be established. We talked about such rules earlier. The rules of engagement are a set of guidelines about what the organization “will and won’t do” to achieve the objectives. Within these rules of engagement employees are empowered to make independent decisions and do what has to be done to reach the objective. And that is another secret to building trust that the ethical leader understands: the more the members of the organization are empowered, the more they trust the management.68 For example, let’s say you are running an insurance company with a vision to become the leader in providing products for retirement. In this case your inviolate standard is that the company will only market products that help people accumulate funds for retirement. That’s a standard that’s as simple as it is enforceable. So if someone develops a great plan to sell billions of dollars worth of term insurance—but only provides a benefit if policyholders die—then the response is always “no.” Selling term insurance does not mesh with the rules of engagement. But if you change your gears, if you stutter, backslide and give in to the pressures to change the plan, trust begins to break down because people in the organization can’t rely on the standards being standards. When true leadership trust is established, employees can rely on the guidelines remaining constant. Plus, by allowing them to decide how to make magic happen within accepted guidelines, mutual trust and respect is enhanced. How to Create Employee/Management Trust The most effective way to build trust in the workplace is to work together to generate mutual respect. It would be nice if trust could be built by simple gimmicks, but it cannot. Great company picnics are nice, and so is the company softball team, but they’ll fall far short of building the trust you need to be a true ethical leader. What is needed is true teamwork, honesty and fair play. So how do ethical leaders build that trust? It is a secret as simple as 1-2- 3: 1. The ethical leader clearly communicates what he is going to do. 2. Then the ethical leader always does what he said he was going to do. 3. Finally, the ethical leader does 1 and 2 again and again and again. For the ethical leader this translates into honestly seeking ways to be open and straightforward about all company operations and to be fair and consistent in his treatment of employees. And what are some of the techniques these leaders use to accomplish this objective? Trust is a two-way street. Ethical leaders not only want members of the culture to know about management perspectives, but they also want to know their thinking. To do so ethical leaders take many different steps such as:  Having an “open door” policy whereby employees have the opportunity to provide them with information, questions and suggestions.  Taking time to talk with your workers. Making it a point to get out on the “plant floor” to rub shoulders and ask questions. 69  Asking employees about how it’s going and what they're thinking.  Find out what information employees want to know and tell them whenever possible. These steps may seem simple and easy, but it is amazing how many typical leaders do not even make the attempt. Trust Does Not Develop Easily As mentioned earlier, the problem is that you cannot command trust. Leaders must earn it. Over time leaders, at least the ethical ones, discover that the most effective way to build trust with people is the simple process of communication and transparency. They are always totally open with others regarding the issues, challenges, objectives and plans of the business. Ethical leaders are willing take the risk to trust people with their future and the success of the company. In response, employees realize that and learn to trust management. The more the ethical leader trusts their people, the more they are trusted. It cannot be stressed enough that trust is engendered through openness, integrity, clarity of expression, and constancy. It’s a product of saying what you’re going to do, and then doing it, without changing course. And this goes just as much for bad news just as it does good news. If an ethical leader has some bad news he or she is open about it and doesn’t sugar-coat or gloss over the inconvenient truth. The ethical leader knows that part of building trust is assuring that when employees commit to a project, they will have the tools to complete it. If they are going to go out on a limb, they want to be comfortable trusting that their leader will be there with the safety equipment. Trust evaporates fairly quickly if employees accept an assignment only to discover that the tools to do the job are missing and the boss is off on the next project. The ethical leader sends a simple message to his troops, “Step out and do this for me and I’ve got your back!” While the members of the organization put their heads down and plow forward on the project, the ethical leader is there to provide support and cover. Should something go wrong, the employees are confident their leader will be right there with them to help. This is a natural relationship in an ethical culture that results in reservoir of trust. How Sharing Builds Trust There is another secret the ethical leader uses to build the bonds of trust within his organization. The leader conscientiously and consistently shares the success of the project with those who participated. In true entrepreneurial cultures – the kind universally managed by ethical leaders – victories are always shared. In fact, the ethical leader will often go out of his way to pass 70 credit along to those who did the work. At the same time the ethical leader will take upon himself most of the blame if the project fails. It’s not that the ethical leader ignores errors. On the contrary, the ethical leader uses these errors to instruct but not condemn. There is a difference between a project failing and the commission of errors. The leader accepts the failure (after all it was his project) and teaches from the errors. When a member of an organization is confident that his leader will clearly explain the job to be done, is consistent in what he wants, provides the support and tools needed to complete the project and then is willing to pass along the credit for success then a trust is established that allows the employee to confidently move forward. On the other hand, there is no faster way to lose trust and credibility than going back on your word or weaseling around commitments. And Moral of the Story is . . . Ethical leaders never discount the value of trust. Trust can be a powerful force that, when present, frees the culture to accomplish great things but its absence eats away at the very soul of an organization and paralyzes effort. Remember that old personality question: Would you rather be liked or respected? The ethical leader would always pick respect. The ethical leader craves the trust that respect generates. He or she knows that without it very little else can be accomplished. Run-of-the-mill leadership gives short shift to trust because common leaders don’t care if people trust them, only that they do what they are told. If you want to succeed as a true ethical leader you will start by being a trust builder. 71 Chapter 12 Ethical Leadership and IntimidationIt has been said that there are only two things certain in life, “death and taxes.” But, there is a third certainty – intimidation. From the very first time we have a sense of self; intimidation becomes a reality of life. Intimidation is such a pervasive influence in our lives that some people become intimidated by life itself. In order to be successful in life, business or as leaders, we need to understand, manage and control the influence of intimidation. It would be an intimidating task to tackle all the nuances and scope of intimidation here, so we will limit our discussion to the application of intimidation in the workplace. But, this limitation leaves us with more than enough fodder to work with when it comes to intimidation. Intimidation is a time-honored and trusted tool used by many a traditional leader to extract desired employee behavior in the workplace. Use of intimidation may be seen as brutish, but its use is not considered unethical and is still considered by conventional leaders to be one of the most effective management tools in their bag. However, intimidation is a management method that the ethical leader always rejects. By definition, the leader who relies on intimidation to manage others is not an ethical leader. Fear stokes the flames of intimidation by creating uncertainty, apprehension and paralyzing action. Only the fearless are immune to intimidation, but to be fearless is to be irrational. All of us have some level of fear in the workplace. We worry about not getting that raise or promotion; about being blamed for something or becoming the victim of downsizing. The typical leader will prey on the fears of the worker in order to gain control and compliance. Intimidation can be blunt and blatant or subtle and surreptitious, but the result is the same: intimidation robs its victims of the ability to perform at peak levels. This is not a game the ethical leader plays. In short, the typical leader will often exploit the fears of his followers, while the ethical leader will seek to dispel their fears. The ethical leader understands that the more he can mitigate and alleviate the fears of his 72 followers, the better they will be able to perform in achieving the goals of the organization. Ethical Leadership and the Power of Intimidation We’ve all found ourselves in a place where someone in a higher station controls the situation – and he or she knows it. That’s called intimidation. Whether your bosses aggressively apply it in a crude effort to influence or control our actions, or if we bring it on ourselves, it’s a formidable problem. For the ethical leader, intimidation is a surefire formula for tentative employee performance; for employees it an unmistakable sign you’re working for the wrong leader. The Problem with Intimidation Intimidation robs its victim of the ability to perform at peak levels and deprives the intimidator of the best the employee has to offer. Yet many traditional leaders pursue intimidation with disheartening vengeance. A St. Paul Travelers Insurance Company study recently reported that, all too often, hospitals and clinics are a festering source of intimidation. Doctors intimidate nursing supervisors. Supervisors intimidate line nurses. Nurses intimidate each other and those farther down the pecking order. The same is true in other businesses where CEOs intimidate VPs and VPs browbeat managers, and managers malign office staff and office staff beats up anyone in a lesser station. And everybody loses. Intimidation on any business level sacrifices quality productivity. Employee relationships become strained. Lines of communication are muted. Absenteeism and turnover rates rise. Effort diminishes. Customers get the short end of the stick (and if you’re the “customer” in a hospital, this kind of intimidation reduces the quality of patient care you need to stay alive). Intimidation makes cowards of the brave resulting in wasted time, talent, and opportunity. The idea that you, as a leader, can command people to do things because they’re afraid of you—and expect them to perform without having to convince them it’s the right thing to do—makes the use of intimidation a pretty tempting commodity. It sounds like it would be nice— efficient and easy—but there’s a problem with that. It doesn’t work. Ethical leaders understand that trying to intimidate others is one of the most self- destructive actions a leader can do. The intimated:  Become less valuable to everyone. To themselves. To the people they work with. To the success of the company.  Become afraid to speak up and to offer their ideas and share their concerns. 73  Become wary of taking the initiative and, accordingly, their doubts become self-fulfilling.  Become drones, mindlessly carrying out a sort of genetic blueprint cloned by the intimidating figure on high. Remember the words of Shakespeare: “Our doubts are traitors that make us lose the good we oft might win by fearing to attempt.” If a leader uses their position to intimidate people, those impacted are going to be afraid to act boldly and confidently. They’ll be too fearful to talk and too chary to tell the leader about roadblocks that are coming, known only to them. Don’t Let It Happen As an ethical leader, you never want your team, whether it’s a major corporation or the fellow staffers in your small business, to become intimidated. That is a bad situation to be in, but it’s one that many so-called powerful people bring on themselves by thoughtlessly, and unwisely creating an atmosphere that fosters intimidation. Thomas Jefferson recognized this problem when he wrote, “Men by their constitutions are naturally divided into two parties: (1) Those who fear and distrust the people and wish to draw all powers from them into the hands of the higher classes. (2) Those who identify themselves with the people, have confidence in them, cherish and consider them as the most honest and safe … in every country these two parties exist; and in every one where they are free to think, speak and write, they will declare themselves.” Breaking the Cycle of Intimidation The ethical leader makes it a priority to create an environment that stifles intimidation. This starts by identifying and understanding fears that your followers may have. If someone is in a new job and nervous about their ability to succeed, the ethical leader will assure them of the support and guidance that is available to help them. The fact is that when the leader uses all the tools of ethical leadership discussed in this book, intimidation is never given space to take hold in the organization. There are many ways an ethical leader will find to suppress intimidation in the workplace. Eliminating intimidation is not a single strategy, but rather a process and a way of operating. Each ethical leader will develop his own techniques to squelch intimidation. For example, if you had visited LifeUSA when I was CEO, you would have noticed the absence of the traditional corporate portrait of the CEO, but you might wonder who the guy is pictured in the silly bumblebee outfit. That was little ol’ me. And my office was not what most expected. No massive oak desk. No hand-carved credenzas. No sterling coffee server. Over to one side, you 74 would see a desk pushed up against the corner. There was no way a meeting could be conducted across the desk in this office. In the middle of the workplace was a casual conference table. Anyone who came into the office for a meeting would settle around it as if sitting at a kitchen table having coffee with a friend. Missing would be formal chairs and the executive couch. As any former LifeUSA owner will tell you, my office was filled with really weird stuff. (Some even included me in that grouping!) A small flock of pink lawn-ornament flamingoes peeked out from behind the potted plants. Bookshelves with souvenirs circled the office walls and bric-a-brac covered every surface. Most of it was cheap kitsch, gaudy, and basically silly. All of this was designed to make anyone visiting me feel at home, free to speak, ready to offer insight, and willing to join a team of equals. (That is as soon as they stopped looking around and laughing!) One thing about my office followed the pattern of other CEOs: The walls were covered with pictures of famous and important people I had met. The only difference was that in my office these were all pictures of LifeUSA owners. There were scores of pictures of LifeUSA owners working, having fun, and being with “Mac.” As LifeUSA grew to be a larger company, there was pressure to change my office décor. Many viewed it as inappropriate for someone in my position. I remember an interior designer who came in with a plan for new furnishings and a layout that was elegant, refined, tasteful, and, as you probably figured out by now, utterly opposed to what I wanted and needed. I’m not blaming the designer. Most CEOs follow the rules of intimidation they have learned and want the big desk they can stare over. Although this designer didn’t suggest it, some CEOs even recommend sawing the legs off the chairs placed in front of the desk, so they can loom like some kind of medieval inquisitor over everyone seeking an audience. All that’s missing is an iron maiden sitting ominously in the corner, a trap door, and a few muffled screams emanating from somewhere below. So why did I fight so hard over a bunch of yo-yos, squirt guns, snow domes and action figures? The reason is that most people, seeing this stuff, are going to drop their “sent-to-see-the-principal” nervousness and anxiety, and be their real selves. The general tendency on seeing a guy with a pinball machine in his office is not to feel too formal. People relax. They can think better, be more creative, and willing to make suggestions, accept challenges, and take chances. That’s what I want them to do. The sole objective for an office like this was to take the edge of being in the office. The goal was for people to be comfortable and natural—so they 75 could be at their best. No one should have felt intimidated coming into my office. One of the best tests to measure the success of this effort was that Owners (that’s what we called employees since they were owners of the company) always wanted—and felt comfortable enough—to bring their friends, spouse, and children by to visit the office. One thing you wouldn’t find, inside or outside my office (or anybody else’s office) when I ran LifeUSA was a secretary. We didn’t have them. I answered my own phone, I typed my own e-mails and I was responsible for organizing my own information. I had a PC on my desk and I used it, just like everybody else in the company. Not having a secretary is part of not being intimidating. Those new to LifeUSA had a difficult time learning how to obtain an appointment or meeting with me. The usual question to other owners was, “How do I set up a meeting with Mr. MacDonald?” Or, “Who arranges Mr. MacDonald’s schedule?” They could not quite accept that the way to meet with the CEO was to call him or stop by his office. All of this was planned —a hammer to knock down the barriers of intimidation. When people see you fetch your own coffee, open your own mail, and personally answer your own voice mail, they’re going to think, “Hey, this guy is just like me. He’s not some member of the ruling elite. I can trust him. I can work with him.” That’s what I’m looking for. Fighting Fire with Fire While that’s all well and good, many companies are still headed by average leaders who will use rules and positions of power to instill fear and intimidation in others in the company. Sad but true, these leaders haven’t learned that intimidation is a self-defeating proposition: the more you use it, the more everyone in your business loses. Remember that since, whatever your present station, you’re likely to lead others now or in the future. Learn now how to avoid this costly strategy. But what if you’re the recipient of intimidation? Then what? Remember the old saying, “Fight fire with fire”? Try turning the intimidation back on the intimidator. Like a mirror used to reflect and increase the power of the sun, intimidation reflected back on the intimidator magnifies its impact. The leader who consciously uses intimidation in an effort to gain control over you is like the school bully. He will keep pushing so long as he thinks he can get away with such action. On the other hand, as soon as the intimidator realizes you will not be intimidated, then the whole relationship will change. How to Survive Intimidation The key to surviving an intimidating situation is to recognize it for what it is: an attempt to browbeat and bulldoze you into submission. Once you 76 recognize who is doing that to you and for what reason, you are well on your way to thwarting its impact. In other words, when you can get outside the situation and recognize that the purpose of the setup is to intimidate you, not to stimulate your best performance, you can use that knowledge to rise above the intimidation and turn it against the intimidator. One thing you will soon learn is that, once the person who attempts to use intimidation to control you discovers that such tactics will not work, you have turned the tables and have the real power. The Moral of the Story Is . . . If you were to learn nothing else from this chapter but one thing, it would be this: Leaders who use intimidation as a tool to dominate and control others do so out of weakness and insecurity, not from strength of leadership. Avoiding that posture starts with you—no matter what your station, no matter what you’re calling. Whether you’re the CEO managing a major corporation or the head of a small department or business, you adopt an ethical leadership principle when you invoke the “No-Intimidation” rule. Just think: what if—instead of scaring everyone—you inspired and encouraged people to be brave? What if, instead of trying to make people feel small, you were able to make them feel big and powerful? What would happen is that you would begin to create an open society where people were comfortable coming to you with whatever was important to them. Communications would open up, new ideas would flow, and people would be willing to step up with their best efforts. The intimidation bully would be vanquished forever and for good! Looking for the best in your employees and coworkers allows you to break down the fears they may have and with it, the walls of intimidation. And, this benefits everyone. There are lots of things we can do to fight intimidation. When you encounter someone trying to follow the rule-by-intimidation theory, set yourself up to be better than this person—if only because they are trying to intimidate you. You may not necessarily be smarter, faster, or more knowledgeable, but you can certainly be better. The general rule in the corporate world is to make the intimidator appear godlike. There are many ways corporate titans assume a mantle of superiority. They ride around in limousines (if not helicopters). They have private parking spaces, personal entrances, executive lunchrooms, and offices as big as Utah with desks the size of Rhode Island. Even private bathrooms have their own zip codes. All of these trappings have a single purpose: to elevate the person who has them to a superior status, to promote the attitude to become better, more deserving, more powerful than the mere mortals who toil beneath them. 77 Accordingly, many still believe those on top should wield greater power to coerce both submission and better performances from the rank and file. You can be much more successful by doing exactly the opposite. The objective of the ethical leader should be to demonstrate to those we work with that we are there to support their efforts, not the other way around. The simple fact is that if people view you as an asset, not an ass, they are going to be much more comfortable working with you. And that’s the power you want. Depending on your station in corporate or business life, you have the power to arbitrarily fire, demote, punish, embarrass, humiliate, and intimidate those employees you work with and for. You can delight at the peril of your minions as you exercise your power in a vain attempt to coerce and control. Or you can use that power to invite and encourage more openness, honesty, hard work, and sincere support from those on whom your very success depends. The choice is yours. Intimidate the intimidator, and exorcise fear from the culture, and you become an enabler for the power of people, not a governor. 78 Chapter 13 Leadership in Stealth ModeShortly after becoming president, Richard Nixon (someone who could never be confused with an ethical leader) decided that the uniforms of the White House guards did not properly radiate his role as the leader of the Free World. He had seen the uniforms of the famous Beefeaters, the guards who stood outside the official residence of the queen in London. As he traveled the world of the early 1970s, he noticed that other heads of state all had guards in brightly colored uniforms – many with tall fur hats. When he returned to the White House he would see those who guarded the “most powerful man in the world” wearing plain, dark, uniforms. For Nixon, such dress was not befitting a man of his stature; he became envious of other world leaders. To correct this sartorial deficiency, Nixon personally became involved in the redesign of White House guard uniforms. What emerged were gold- trimmed tunics and rigid, peaked hats that reminded people of 19th century Prussian army uniforms. Fortunately, except for a few royalists in the country, the new uniforms did not go over very well; but they did give the comedians much appreciated fodder for their shtick. This may seem like an absurd way for a leader to demonstrate his power and status (and it was), but it is symptomatic of the actions of many leaders. It is expected and accepted – especially by the typical leader – that the leader is entitled to the trappings and perks of his position, even if sometimes they think those should be as a potentate. The typical leader does not like to operate in “stealth mode.” He is blatant about his position and power. He wants everyone to see, know and understand that he is the boss and to properly recognize his power. That’s why you see the oversized, lavishly furnished offices, the stretch limos, private planes and entourage of sycophants that often surround a leader. Even many on lower levels of leadership will often seek out ways to show a clear distinction between themselves and their underlings. For the typical leader, the trappings of power are as important (maybe even more so) as the power itself. For some, this is true because often leaders (aka Richard Nixon) are fundamentally insecure in their position of power. For them, the accoutrements of power offer a veneer of confidence and send a message of their potency. This type of leader needs their presence79 and power seen by all; it gives them a credibility of leadership that their actions do not. For others, the barefaced display of their position and power is considered by them to be an entitlement of office. A right and reward for achieving a place of power. Nixon and others should not be castigated too severely for this attitude, because they have been raised and socialized on the time-honored images of leadership. Sifted through eons of history, we have come to recognize the standard-bearer of leadership as one who is out front and visible. This vision urges us to believe that leadership is provided when the boss is in the limelight; the focus of attraction and attention. After all, followers can’t follow if the leader is not out front leading, can they? The image of the leader out front heroically showing the way is a romantic idea, but it has lost its effectiveness in the modern world. No longer does the imperial, distant, aloof, infallible and tyrannical approaches to leadership work – if ever they really did. The ethical leader recognizes this new reality of leadership and displays a style that is the exact opposite; he attempts to lead in a type of “stealth mode,” where his presence and power are sensed, but not seen. The ethical leader seeks to impress his followers with his performance, not his perks. Will the Real Leadership Please Stand Up? When the ethical leader seeks to operate in “stealth mode,” it does not mean that his responsibilities to be out front, to set the tone, and to be involved, are abdicated. Rather, what the ethical leader does is change the traditional dynamic of focus that says it is all about the leader. Instead, the ethical leader puts the objective and the people center stage. What “stealth mode” does mean is that leadership is not all about the leader. Ethical leadership, the kind that enables businesses of all sizes to succeed and grow, is about showing others the way to be what they always wanted to be but never imagined they could be. The ethical leader does not believe that leadership is exhibited by the size of his office or the speed of his jet. He understands that leadership is rarely demonstrated by a single, dramatic episode. Instead, through an intricate series of actions and events he fuses his followers into a dynamic and focused force. This force, in turn, is targeted to achieve the objectives of the leader. And the target can be achieved because the objectives of the organization have been adopted by the members as a whole. In reality, the best leaders lead best when they appear to follow. While most leaders do tend to be somewhat flamboyant in public (even some ethical leaders) what differentiates the ethical leader from others is that in 80 private they have a propensity to be detailed, diligent, consistent, concerned and sharing. Leaders Leading in Stealth Mode You have probably never heard of Barney McNulty, but if you (or more likely your parents or grandparents) were ever entertained on television by Bob Hope, Lucille Ball, Groucho Marx, Jack Benny, Carol Burnett and scores of others, then you have benefited from his work. In 1949, while working for CBS, Barney McNulty invented the concept of “cue cards.” As you know, these are large cards with script written on them to help actors and speakers remember their lines. They have been most often used on television broadcasts where the cards are held off-camera and unseen. But, even Hubert Humphrey had McNulty kneeling on the stage holding cue cards for him at a political convention. The cue cards are still used today on shows such as Jay Leno, David Letterman and Saturday Night Live in order to guide the performer, keep him on track and make sure they look good. (The cue cards are used due to their mobility, as a teleprompter requires the reader to be stationary and look directly into the camera.) In essence, the ethical leader is the contemporary business equivalent of the cue card man. He allows the others to take center stage, but is never far away and is constantly offering cues to keep them on track and make them look good. When all goes well, he is happy to let the others take the bows. Cues from the Ethical Leader The cues from the ethical leader are consistency of purpose, the building of trust, wide dissemination of information, thinking about the future but acting in the present, creating a sense of urgency and building consensus. In reality, the ethical leader becomes a walking cue card; constantly reminding, encouraging and prodding his followers to be focused and achieve the objective. Those who work for an ethical leader understand this; appreciate the help and become motivated to achieve the leader’s vision, because they know that all of them will bask in the applause that success brings. The ethical leader puts the mission and the people out front and by his actions is constantly holding up the cue cards that remind and help followers focus on and achieve the objective. The spotlight is on what is to be accomplished, not how accomplished the leader may be. And the Moral of the Story is … The leader as a “demigod” out front and hell-bent-for-leather may have been an effective image in the past, but leadership in today’s world calls for a new approach. Ethical leadership in new times is defined by the appearance of leaders seeming to follow the followers to achieve the objectives. The traditional 81 concepts defining leadership and the rules for its practice have been in place for centuries, but many of them have outlived their usefulness and should be replaced. Those who seek to offer ethical leadership will gain their following, power and success when they create new rules for a new way to lead. Their power will come from understanding that:  When the old way says be out front: Allow others to ride the horse.  When the old way says be the hero: Let the others carry the flag.  When the old way says retain power: Make sure power is shared.  When the old way says know it all: Make sure others learn more.  When the old way says be above it all: Be accessible and in the trenches.  When the old way says tell people what to do: Teach people how to do it.  When the old way says have all the answers: Look for answers from others.  When the old way says put your portrait on the wall: Put others up first.  When the old ways says take all the credit: Give all the credit away.Putting it all together, to be an ethical leader today means being more in stealth than star mode. This does not mean that the ethical leader is not without ego. In fact, the ethical leader exhibits a stronger ego than that of the typical leader, because, while the typical leader has a need to soak up the success, the ethical leader is confident enough to allow others to share in the success. Certainly it feels good – for most anyone – to be in the spotlight, ethical leader included. What makes the ethical leader so effective and different from the typical leader is his understanding of this and his willingness to share the spotlight. Instead of always needing to be at the center of attention, he recognizes the benefits of standing offstage – still visible to the followers – but being the best cue card man since Barney McNulty. 82 Chapter 14 Don’t be Like Mike!Have you seen the hit NBC television series The Office, starring Steve Carell? The program is a (slightly) exaggerated parody of the office culture created by the typical leader. While Michael (Steve Carell) feigns interest and concern for members of his “team,” he is, in reality, blinded to their needs by his single-minded focus on himself. If you have seen the show, you wince at some of Michael’s antics, but what makes them so poignant is that we have all seen bosses act exactly the same way. To compound matters, Michael goes out of his way to “ass-kiss” those above him and expects his employees to do the same. You really can’t blame those who do act this way, because the traditional leader has been taught, conditioned and has risen in an organizational hierarchy designed to focus on and satisfy the wants of those at the top. Picture in your mind the classic organizational chart. What shape does it take? Yes, that of a pyramid. Were the pyramids of Egypt built for the people or the potentates? A pyramid suggests all power emanating from the top and all below with only one function, and that is to support all those above them. Most are so indoctrinated with this approach to management and false flattery that by the time they make it to a leadership position, they only know this way of management behavior. Worse yet, typical leaders seem to have a deep-seated belief (validated by the way their bosses operated) that the way for them to move up the ladder is to kiss-ass to their boss while stepping on those lower in the pecking order. The presumption is that if we kowtow to our superiors often enough, we will be pulled up the ladder from above, and enjoy the fruits of this higher position while we leave our compatriots below to fend for themselves. While there may be the appearance of winning short-term benefits from this activity, as a practical matter it just doesn’t work over time. Once one has clawed their way to the top of the pyramid – even if it is a small one – it is not unethical or surprising to act the way Michael does in “The Office”, but it is wrong. The ethical leader recognizes this and takes exactly the opposite approach. Ethical leaders come to understand that their real power to achieve career goals and accomplish remarkable success comes from the power of those below them on the pyramid. The ethical leader understands that those in a superior position deserve respect (at least respect for the position). But, they recognize that the pathway to ultimate and lasting success is by helping those below them on 83 the pecking list become successful – not by ass kissing or feigning false loyalties. The ethical leader looks down the organizational pyramid, instead of up, and helps the people below to be successful; knowing in return that their success will push him up. One of the great leaders in American history understood this point completely. As Bruce Chadwick wrote in George Washington’s War, “ . . . and [Washington] completely understood that the function of all good leaders was not to make the men under him . . . care about what happened to him, but what happened to them. His political genius was to understand that the successful leader . . . gains power and status not by assuming his own success, but the success of others.” Ethical leaders have learned that achieving business goals requires the “power of numbers.” There is a limited amount that a leader can do alone. But if the leader can motivate his followers to join the effort, then a lot more can be accomplished and the fortunes of the leader will rise with their tide. Ethical leaders make (and keep) a promise to their troops: If they will work honestly and productively for him – he will be loyal, honest and fair with them. The ethical leader embraces the philosophy that his job is to make it possible for those who work for him to concentrate on their job. People working for an ethical leader don’t have to worry about protecting their ass— that’s his job. They don’t have to constantly worry about the next promotion, because the ethical leader has shown that he is constantly looking for ways to help them advance. Those working for an ethical leader never seem to worry about the next raise, because they trust their leader will get them what they deserve. They don’t have to fret about working hard only to have someone else take the credit—they’ll get all they deserve. And, if something goes wrong, the ethical leader is ready take the blame. Great success can be achieved when ethical leaders make it their job to create an opportunity and environment where others are free to do the best job possible. Employees of ethical leaders come to understand that their boss will spend his or her time looking out for their best interests, not just his. That approach breaks not only the kiss-ass syndrome – it works to make a business more productive, more successful! If the people who work for you trust you and believe that you really will take care of their best interests, they are not only freed up to do the job that needs to be done, but they will be grateful to you and push you up the ladder ahead of them. It’s possible to achieve high levels of success by allowing others to share in the dream. Even if you are in a culture that tolerates or even encourages professional ass kissing, you can avoid it. The bottom line is that if you are 84 in a situation where ass kissing works, then you are working for the wrong kind of leader. If you work for a company with a culture that allows success only by ass kissing then kiss the company good-bye. Instead, look for a business where the ethical leader builds a culture that recognizes the power of people who are supported from above and are rewarded for accomplishment, not accomplished ass kissing. Ultimately, the ethical leader will move up the ladder of success faster and farther by looking out for the best interests of those below him. Looking Down to Move Up There are a number of actions – both specific and psychological – that an ethical leader can take to differentiate his approach from that of the typical leader and show that he is focused on the support and advancement of his followers. Often, when the typical leader has a talented hard-charger under his control he will attempt to stifle any advancement. He will claim the person is too important to the department to be allowed to move elsewhere. A great example of this attitude was mocked in the 1985 John Landis film, “Spies Like Us.” The film starred Dan Aykroyd and Chevy Chase. In the film Dan Aykroyd plays Austin Millbarge, a geek computer expert who effortlessly breaks codes for the Pentagon and in turn, makes his boss look good. Austin Millbarge has a desire to become a secret agent, but clearly fearful of losing Austin’s talents – and being exposed for his lack thereof – his boss keeps him locked away in the basement of the Pentagon. It may seem an exaggeration, but all too often the typical leader adopts the same approach with his best employees. This does nothing but create disrespect for the leader and frustration on the part of the employee who often responds by leaving the company. This is an approach the ethical leader shuns. First and foremost, the ethical leader becomes the head cheerleader for the talents and potential of his people. The ethical leader encourages the development of his people and their opportunity for advancement. When the employee is confident that his boss has a sincere interest in his future, he is then much more likely to concentrate on the job at hand, rather than always on the lookout for something else, something better. Certainly, there are times – and there should be – when the ethical leader will lose a good employee to advancement, but that can be a victory as well. When the leader encourages and pushes for the advancement of his followers it sends a strong message to others in the department. In addition, when an employee is promoted in this way, he or she spreads the good word 85 about how the ethical leader supported and helped him. The result is that the ethical leader’s power and influence are enhanced. Believe it or not, the ethical leader will at times even endorse the idea of an employee leaving to find opportunity at another company. It is not that the ethical leader wants to lose a good employee, but he understands that if an employee is ready to advance, but there is no opportunity within the existing organization, it is ultimately better to support such a move. Face it, the employee would leave anyway, so turning this situation into a positive further enhances the respect and loyalty those remaining have in the leader. In reality, very few who work for an ethical leader will ever seek to move elsewhere. When they trust and understand that the leader really does have their best interests in mind, they are willing to wait for the right opportunity. Another way the ethical leader shows he is looking down and not up the pyramid is in the work effort itself. The typical leader will pass out an assignment and go on his way. Often it is left up to the employee to fail or succeed on his own, with little help from the leader. If the employee fails, then all the blame will fall on him with the boss saying, “I told him what to do and he failed.” If the employee is successful, then like Austin Millbarge, the boss takes all the credit. The ethical leader has a different philosophy. He believes that his primary responsibility as a leader is to create a work environment that gives the follower the best chance to be successful. This means making sure the employee fully understands the task at hand, has the tools necessary to do the job, has the full support of the leader and knows that if successful he will receive credit for his efforts. The ethical leader does hold people accountable for their failures, but unlike the typical manager, the ethical leader uses failure as a learning, not blaming experience. Those who work for an ethical leader know they are allowed to fail, so long as it is a learning experience. This allows the worker to reach out and try things to accomplish more. Those working for the typical leader become fearful of failure on any level and as a result are constrained from making the effort to achieve. The Moral of the Story is … What separates the ethical from typical leader is a belief that the way to move up is to be pushed up, not pulled up. The ethical leader clearly believes that the power to assure his ultimate success emanates from those below him on the pyramid, not those above him. He understands that when pushed up by the masses there is a wide, solid foundation of support. If you fail you don’t fall far because there is support below. If, on the other hand, 86 one is pulled up from above, if those above let go, there is no support and a long way to fall. The ethical leader offers respect for those above him, but gives commitment to those below him. The typical leader believes the simple philosophy that if he takes care of those below him, then those below him will take care of him. By being concerned about the well-being and success of those below him, the ethical leader builds a wide and solid base of loyalty, effort and support that is never achieved by those who look only to the top for power. This philosophy creates, in effect, a parallel relationship of success. The ethical leader, who creates this relationship, will find those who follow him rising to the occasion and elevating him to the success he desires and deserves. Chapter 15 Living with Success Ask anyone embarking upon a career what they dream to achieve and most often the answer will be, “I want to be successful.” That’s great – everyone wants to be successful. Being successful is a goal for people to focus on and work hard to achieve. But, there is a problem with that attitude. Too often, people think of success as the ultimate goal – the prize at the end of the road. In reality, success is often just a way station along the road of a long career. Traditionally people are taught leadership skills that will enable them to achieve success, but rarely are they taught the skills needed to maintain success once it has been achieved. The secret to maintaining success is to keep alive the burning desire to attain success and yet often the achievement of success extinguishes the flame of desire. Many people are dedicated to achieving success, but fail to be dedicated to maintaining it. And, that’s where the value of learning ethical leadership really comes into play. 87 Ethical leadership is one of many attributes that are important to achieving initial success, but it stands alone when it comes to the concept of creating lasting success. To have realized success means you have outflanked the competition, challenged the established order, confounded skeptics and proven all of them wrong. You and your company have the right to bask in the limelight as leaders, innovators and the stuff of success stories that few accomplish. But I also caution you to realize that, as difficult as scaling to the pinnacle of success might be, that’s the easy part. If you thought it took a yeoman effort to get to the top, this is nothing compared to how difficult it is to stay there. If you need any evidence, just compare a list of the top 25 market-cap companies of today with the same list 10, 15 and 25 years ago. You’ll discover a very high rate of mortality for companies from one period to another. Excluding the anomaly of the “dot- com” bubble of the late 1990s, the companies that have disappeared from the list were not fly-by-night organizations. Oddly enough, the fallen companies were large, successful, profitable, well known and (for the most part) respected. Few are surprised by the high failure rate of small, under-capitalized firms led by inexperienced management. But who would expect that a high percentage of well-established, highly-capitalized and respected companies also fall by the wayside? Success in business brings with it many changes, but none more powerful than the onset of a bureaucratic, rather than an entrepreneurial mindset. When traditional leaders achieve success they tend to begin to resist change – the very change that allowed them to become successful in the first place. Success, in other words, has its own way of weakening the very behavior that achieved it. Any organization or anyone who achieves success must be willing to ignore the success achieved. Only by doing so is success maintained over time. It’s a fact that more people rise from failure than survive success. That’s because it is more difficult to survive success than failure. Fail and it is over – no one expects more of you! You’ve followed the rules, crashed and burned. Big deal. It happens all the time. All of us grow up being conditioned for rejection and learning to cope with failure. (I think that’s why God invented singles bars!) On the other hand, when you’re different, when you succeed, you have to live with that success. The challenge becomes to stay on top. And that causes what some call the “agony of success.” Understanding and practicing ethical leadership enables one to understand what it is and how to avoid it. 88 Success is a rare commodity that few are prepared to deal with. When you are successful, you step out from the crowd and accomplish what many talk about but few do. That is well and good, but when you do succeed – you have to deal with the consequences of success. It’s Lonely at the Top Unfortunately, your effort to survive success is not going to get much help from others, because most people don’t want you to succeed. They want to revel in your failure. They want to see you get knocked off the perch of power because it offers them an excuse, a justification for their failure. The world is full of those who speak of success, but for most success is only a dream – it is failure that is the reality. The question you ought to be asking yourself is this: Why is it that so many successful companies manage to fail the test of long-term success so consistently? It seems every self-anointed “management expert” is willing to offer a reason why successful companies fall sick and die. Some say changed markets are to blame. Others point to increased competition, technology advances, reduced productivity, product obsolescence, even government interference as the source of the corporate tailspin. But, these are superficial excuses offered by traditional rule followers and they highlight only the symptoms of the real illness. After eliminating the suicidal acts of greed, blatant fraud and inbred incompetence from the list of culprits, there is a simple explanation for the failure of successful companies. Successful companies often become encased in the very rules the company broke to become successful. Successful companies start to die when they stop doing the things that made them successful companies in the first place. Successful businesses and the executives who run them become comfortable, lazy, complacent and less tolerant of risk and innovation. Many typical leaders fall prey to the illness of entitlement. They lose the very culture that produced their initial success: Doing the right thing at the right time, and doing it first, fast and often. Building on a Culture of Success Chances are high that when a company achieves remarkable levels of success it did so as the result of a unique “spirit and culture of success” that developed within the company. It is this distinctive spirit and culture that drives, fosters and feeds achievement. However, this “spirit of success” is fragile and will exist only so long as it is allowed to exist. To thrive, the ethical leader must nurture and protect the very élan that made success possible. If you fail to do that, not only will the spirit that drives your 89 success break down, but you will also lose the soul of what you and your company are all about. Your culture of success is actually more important today than it was in the past, because once an organization attains a critical size and mass, it is more important to constantly improve the level of performance than to get bigger. The company culture is the key to continued achievement because, as the culture developed, it created the environment that allowed and stimulated constant innovation. Success is the child of audacity. Decline of a leader or successful organization is the offspring of a failure to innovate. The ethical leader understands that without constant renewal, the ideals of the past fade, to be buried by the present and forgotten by the future. In the Beginning At the start of any career or enterprise, individuals and organizations are both threatened and motivated by the specter of failure. Fear of failure is a strong motivator. In the beginning, we knew that if we did not conquer failure, we would disappear. There is an even greater challenge to success – yet the consequences are the same. If we do not conquer the challenges of success – we will disappear. The ethical leader has two simple rules to help avoid losing a grip on success. These rules are: 1. You begin to lose when you begin to be afraid to lose. 2. You continue to win when you are never content with what has been won. Look at it this way. In a competitive environment if the objective is to avoid failure, as it is with many typical leaders, this attitude may actually induce failure since it seeks only to maintain the status quo. The only realistic option for a victory over the agony of success is an ethical leader with a constant, concentrated, passionate quest to challenge complacency and strive for more success. Enterprises are rewarded for creating wealth, not for preserving the status quo and certainly not for controlling costs. The commitment to win with refreshed innovation, rather than positioning to preserve, becomes an antidote against the malady of organizational obsolescence and corporate decline. For example, take a good look at the corporate structure of Google. In an issue of The Economist (September 2009), Google was cited as a company taking steps to keep its main product innovation flowing and resisting that notion of resting on your laurels. “For years,” the article notes, “Google has had a fairly informal product development system. Ideas percolated upward from Googlers without any formal process . . . Teams working on innovative stuff were generally kept small. Such a system worked well while Google was in its infancy. But now 90 that it is a giant with 20,000 employees, the firm risks stifling potential money-spinners with a burgeoning bureaucracy.” Google’s response to this challenge has been to hold regular meetings at which employees are encouraged to present ideas directly to the CEO and co-founders of the company. That might be scary stuff for fledging innovators, but remember this: Google doesn’t punish these brave souls from embracing new ideas; they encourage this dialogue. Google has also increased the resources and the independence of groups designed to create new innovations and products. It is not certain that this action will keep Google on the cutting edge of their industry, but the management certainly should be given credit for recognizing that the environment is not static and for making the effort to ward off the conservatism that can set in as companies mature. The chief reason people stop learning is the assumption that they know all there is to know; the chief deterrent to doing more is the assumption that one has done all that can be done. The ethical leader never accepts this because you never know where the next competitor – and there most certainly will be one -- will come from. Guarding Your Precious Success Ethical leaders understand that maintaining success starts by being constantly vigilant to the health, vitality and cultural spirit of success within the organization. The ethical leader is relentlessly on guard to look after the health and well being of a culture of success. This will come as much from feeling as from knowing. As a passenger on an airliner you can’t see the instruments in the cockpit to tell you if the aircraft is turning, ascending or descending, but you can feel it. The ethical leader learns to be sensitive to the same feeling in their organizations. Is it straight and level, rising or descending? This sense of cultural feeling is achieved by constantly observing all elements of the organization and making sure the organization continues to do what it did to become successful. Feel For Signals – Find Actions There are questions, feelings and signals – both good and bad – to help ethical leaders determine the temperature of the culture. Ethical leaders are more likely to survive success because they are willing to take a fearless and searching review of their business. They constantly ask:  Do we spend more time talking about how good we are today rather than how good we can become tomorrow?  Is change resisted, tolerated or welcomed?  Is experimentation encouraged, important and constant?91  Is risk regaled or reviled?  Are we satisfied with what worked yesterday, rather than trying to find new things that will work tomorrow?  Are we still one group trying to accomplish one goal or are we now many ones – I, we, they and them – with sometimes conflicting rather than parallel objectives? Champion figure skaters know that the key to victory is keeping their skates on what they call “the edge.” It is grueling work, but only by keeping on the edge can skaters perform to their full level of potential. The same is true with a business where performing to full potential means keeping its competitive edge. Even the most talented skater can lose the edge if they become a little complacent or lazy. When this happens, skaters lose medals. But remember, in the leadership game, the complacent and the lazy lose their future. Is there a way for ethical leaders to recognize they are sliding down the slope of success into complacency or maybe getting just a little bit lazy, causing the culture to be at risk of losing its edge? Yes! We may be getting lazy and losing our edge when:  We find we are too busy to take the time to do the little things we took the time to do in the past.  We find it easier to hire more people from the outside (from cultures that failed) than we grow from the inside.  We begin to define our success predicated on what we have done rather than what we could do.  We begin to feel that getting better is not as important as keeping what we have.  We discover our actions formerly threatened competitors but now the actions of competitors threaten us.  We become more concerned with what we get for ourselves than what we can give to others.  We begin to view process and procedure as more important than performance and progress. These are the telltale clues that the ethical leader recognizes as a sign that the organization has become more concerned with keeping the status quo than pioneering new pathways to success. The next stop could be the agony of success. Continued success is quite the opposite. The ethical leader exhibits an attitude that allows them to stay on top, preserve, protect and enhance success:92  Always have an enemy to be conquered. (Just make sure it’s not you!)  Always act like the leader but feel like the underdog.  Don’t be satisfied with success – be terrified of its loss. Never lose sight of this one thought – If you are not making history – you are history! Getting There From Here What does the ethical leader do to survive the agony of success and create even more of the same? They never forget that people are the only legitimate drivers of a company’s success. They never forget that an organization should be led in a single, simple focus to commit, concentrate and drive passionately to maintain a unique place where success will thrive and survive over time. Remember, the objective is to maintain an environment that encourages people to understand that success is not an end, but a signal that the right things are being done. And how do ethical leaders do that? No matter how much success has been achieved, ethical leaders continue to focus all their strength and effort to maintain a culture with transparent, free-flowing communication that encourages all members to participate in and benefit from the success achieved; if risk is encouraged and accomplishment rewarded; if ethics are solid, objectives are clear, priorities are maintained and support is constant – then the organization will maintain a cultural hothouse for success. And the Moral of the Story is . . . The ethical leader sees success as something to build on – not rest on. The ethical leader does this by constantly creating an environment where success is respected, fostered, protected and shared. When a leader does this, the people of the organization will always be challenged and motivated to continue to grow and build on the success they have achieved. For the ethical leader, success becomes a nagging voice in the back of their mind that reminds them of how difficult it was to achieve and how much will be lost unless they continue to do the things that allowed them to come out one top, again and again in the future. The ethical leader uses this mind-set to continue to make history. They recognize the responsibility they have to build on the success achieved. They know their methods have allowed them to make history in the past and that gives them the opportunity to make history in the future. If you as a leader adopt this philosophy, then you will accomplish what few typical leaders have done. You will have achieved success; survived the agony of success and perpetuated it for the generation to follow you. You can leave no more valuable legacy!93 94 Chapter 16 The Secret Shortcut to SuccessThe only thing more searched for than the Holy Grail is the shortcut to success. More effort is wasted seeking out shortcuts to success than the time spent achieving it. We have seen all too many examples of the typical leader ending up at a dead-end (or in a jail cell) because of an obsession with finding a shortcut to success. The ethical leader understands that when it comes to building a culture and a business that achieves lasting success, a shortcut is in reality the longest distance between these two points. Yet, there is indeed a shortcut to success, but it is completely contrary to the thinking of the traditional leader. Most think of a shortcut in terms of discovering how to do less in order to achieve more; faster and easier. The ethical leader has discovered that the real shortcut to success is to do more, not less. We have learned that “ethics” is doing the right things that are required to be done. The typical leader does seek to be ethical and do the right things, but the ethical leader knows that the true shortcut to success is going beyond just doing the right things and doing the right things that are not required to be done. The philosophy of ethical leadership boils down to very straightforward concepts and uncomplicated beliefs:  Learn from where you have been.  Understand where you are today.  Know where you want to be tomorrow. In the process, always seek to do more than the right thing—even if that might mean, from time to time, taking what seems like a step or two back. If doing the right thing is the right thing to do, how much better is it to do the right things that are not required to be done? Such a philosophy is the real shortcut to success. It won’t always be easy to do more, because in the course of reaching for your own personal vision of ethical leadership, you will encounter innumerable rules designed to delineate traditional ethics and leadership. These insipid conventions of action are often referred to as can’t-dos, must- dos, should-dos, always-dos, and way-we-dos. Ordinary business cultures present them as a way to “help” you along the way and to “keep you out of 95 trouble.” The problem is that these often straightjacket the principles of ethical leadership, and accordingly, they can become road blocks rather than Yellow Brick roadways to success. History has proved that ethical leaders win big because of their ability to identify and resist the rules of routine leadership and they combine this with the creativity and courage to break from the mold and write new rules of leadership. The best way to become a part of this select group of successful leaders is to seek out those right things that are not required to be done and then always seek to do them! During the course of your career, you will likely encounter many individuals who seem to have better opportunities, significantly higher intelligences and deeper talent than yourself, yet over time your achievements can far surpass what most of these individuals accomplish. Why? Because sometimes the advantages other people seem to have over us turn out to be their own personal curse. Most of these people were so intelligent and talented they seemed to feel “entitled” to find the “secret shortcut to success.” Opportunities right in front of them were missed because they were looking for the easy way and “the one big score,” like winning the lottery. But basing what you do in life in anticipation of the big hit is more than a bit risky, since in all likelihood you’re waiting for a ship that might never come in. Along the way to your success, you’ll discover that the secret shortcut to achieve your objective will be to do more than others are willing to do. It is hoped that, after reading this book, you will recognize that you do have the talent, opportunity, and ability to be an ethical leader. The good news, and the exciting part, is that what you have to do is not that difficult. If you do the right things that are not required to be done —and do them all the time — while you may appear to fall behind the group looking for the shortcut, you will invariably finish well ahead of those trying to cut corners and looking for the fast track to success. What You Have Learned The ideas outlined in this book have, hopefully, convinced you of the wisdom buried in the philosophy of ethical leadership. You have learned that adopting this leadership approach will invariably help you achieve the success you desire; to get up and make the circumstances of the life you encounter work for you by using these principles in your life and profession. If I’ve done my job, you can now readily see that many of today’s governing rules of businesses have long since lost their relevance, yet continue to be invoked year after bureaucratic year simply because “We’ve always done it that way.” 96 What is important is the personal philosophy and way of thinking that we apply to the critical issues we face in life and business. Operating from a solid, trusted, and sound ethical leadership philosophy will provide the necessary foundation to build a lasting success in your personal and business life. Perhaps a recap will more clearly reveal the components of the ethical leadership lifestyle:  Build parallel interests with all parties.  Know what you want to be and do and why.  Reminisce about the future.  Understand that the future belongs to those who get there first.  Share success and accept responsibility.  Seek and deliver open, honest, and constant communication.  Exhibit core beliefs that are not compromised, qualified, or abandoned.  Never be afraid to do more than the right thing.  Have the strength to be consistent.  Revel in change and welcome challenge  Make things simple, not complicated.  Do simple things but simply do them till the big things are done.  Make bunk of bureaucracy.  Never rush, but always have a sense of urgency to get there.  Differentiate, don’t copy.  Never volunteer to play on the competitor’s home field.  Support those who can push you up, rather than rely on others to pull you up.  Motivate, don’t intimidate.  Do what others won’t or can’t do.  Make new rules for the game and force your competitor to follow them.  Concentrate more on what you are doing than what your peer group is doing.  Seek input, help, and participation from others, but never equivocate on the ultimate objective.  Cultivate an environment whereby you become great by allowing others to grow to be great.  Set simple, measurable standards of performance and ethics for 97 yourself and others—and stick to them.  Avoid gambles, seek risk, learn from failure, and share rewards.  Build your power by empowering others.  Build your wealth by sharing wealth.  Be surprised if you win the lottery, but not by the results you achieve.  Always be wary of success and at war with failure.  Never stop thinking about tomorrow.The first step toward setting yourself free from the rules of traditional leadership techniques is to examine your life, your business, your job to see how, and to what degree, the above principles contribute or detract from your way of business life. Once you realize how ruinous it can be when you break these principles, you’re well on your way to becoming the ethical leader And the Moral of the Story Is . . . Across a broad spectrum of human endeavors, ethical leaders have routinely come out on top. The individual who breaks free of the mold—that straightjacket of outmoded conventions that rule most leaders – becomes more productive and, ultimately, earns the appreciation and respect of those who lack the right stuff to break free on their own. By setting an example of true ethical leadership these winners have an aura of success about them that is transferred to their followers. This work was written to demonstrate that it is not only possible for the individual to survive, but to thrive in a new framework of ethical leadership. It has shown—not the path to success—but how to make your own path and has encouraged you to adopt the new, ultra-ethical rules demanded by new times. It is hoped this book has helped you develop the critical awareness to begin your program of personal and professional assessment to determine where you are and what you want to accomplish. As noted earlier, the individual who develops an awareness of the guidelines that bind others almost subconsciously and irresistibly develops an interest in charting a new, more successful course of ethical leadership. The Secret to Learning These Principles The important thing to remember in putting these principles to work in your life and leadership style is that together they present a cohesive philosophy for being an ethical leader. By “philosophy,” we mean that these strategies are a way of thinking and a way of behaving; as such, it’s extremely difficult98 to distill them into a series of steps the ethical leader can invoke like a “some-assembly-required” Christmas toy. The reality is that these principles do not stand alone. They are interdependent. It’s not like you can accept five of the ethical leadership principles and ignore the others. It really is an all-or-nothing proposition. A little like constructing a building. Each of the beams used in a building are strong and in and of themselves, important. However, no one beam or even several are enough to support the building. They all need to be used and put in their right place. And when in place they support each of the other beams. Using these concepts to become an ethical leader and build an ethical culture is much the same. And that’s the bottom line for this book: If you’ve come away from this work with the feeling that following the rules of simple ethics and typical leadership techniques are not enough to be a successful leader in these new times, then you’ve gained a valuable adjunct to your definition of personal excellence. If you’ve already started to make changes, terrific! Keep it going. And if you’re still standing on the sidelines, get started—right now, today—and stick with it! Ethical business leadership can make a crucial difference in your life and the lives of those you touch and lead. Implementing this philosophy means adopting a lifestyle aimed at being the best you that you can possibly be, and just as important, helping others to be as good as they can be. It takes willingness on your part to redefine the very concept of true ethics and leadership, and that calls for a good dose of confidence, guts, and some basic wisdom. Oh yes, and it takes one more thing . . . It takes you to decide—right now—to do it. Now it’s up to you! R.W.M.99

New Times Demand New Leaders

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