What if the Corona pandemic is a once in a life-time chance to build something grander than we have ever seen?
What if the Corona pandemic is the chance to shape a new, more human world?
If so, what are we waiting for? – And where do we start?
Welcome to the Corona Dialogues
In late March 2020 Motivate2B has launched an online dialogue series called „Love, Life & Work in a Human World„.
It is a space where we share and grow questions, challenges, problems and ideas that have been triggered, caused or become evident by the Corona pandemic into concrete actions, initiatives and projects. We go beyond describing issues and co-create our future. Not by replicating the past but by sensing and leading from the emerging future. A future where the human being is at the center of life – may it be in our personal lives, in business or society.
If this entices you, you are welcome to join our weekly online dialogue in April.
This free online event takes place every Wednesday usually at either 9:30 or 10 AM EDT (3:30 PM CEST, 1:30 PM UTC +2). Registration is available through EventBrite.
Most of past events have been recorded and are available in our YouTube channel.
In an interview for my new book “Being Human in a Digital Age” (to be published in Germany in 2020) I asked Richard to share his insights about a human business, the Menlo Magic, their way of work, and how to develop an environment where joy and work fit together. In the interview you learn more about
the driver of Menlo Innovations,
how striving to end human suffering can motivate you,
why trying to scale Menlo’s model can be misleading,
the importance of a human and creative working space,
how Menlo communicates with its customers and end users,
how Menlo cultivates an environment of continuous learning and innovation,
why structure and discipline are prerequisites for creativity,
how a human touch can change the overall work atmosphere,
why and how joy and work fit together.
Thomas: What’s the driver of Menlo Innovations? What are you pursuing?
Richard: You know, I think, obviously, the word joy always enters into our world here, and, so, what we talk about is that we’ve created an intentionally joyful culture. To us, all of the words that people might ascribe to us like Agile or lean, that sort of thing, we look at those things through a lens of a simple question: what problem are we trying to solve? So, rather than pursuing Agile or lean as a goal, we look at it through this lens of problems we’re trying to solve and how this helps end human suffering in the world as it relates to technology.
And so, we look at the tools of Agile and the tools of lean as helping us do that. Certainly, people who come here who know us well could easily describe us as an Agile organization. Linda Rising called us the most Agile organization in the world. I appreciate Linda’s support when she says those things, but it isn’t the thing we are pursuing. We are pursuing this idea that we can one day delight the people we intend to serve — and that is our definition of joy — and we’re going to do it by ending human suffering.
Ending human suffering
Thomas: What do you mean by ending human suffering?
Richard: Part of this is born out of my own personal story. I’ve been doing Menlo now with my co-founder for 18 years. 2 years before that, James and I came together to reinvent a public company to something that looks like Menlo today. So, for the last 20 years, I have been living in an environment like Menlo. The 20 years before that, it wasn’t like that at all. I was suffering. I was personally watching projects I was leading miss deadlines, blow budgets, deliver poor quality, work their teams to death, you know, your 24-hour, around the clock, work 7 days a week, people pulling all-nighters, staying all weekend, only to watch projects be cancelled before they actually get delivered. Or if they ever did get delivered, the users would throw up their hands and say, “Well, why doesn’t it work like this? This isn’t what we needed. Why…?” and, of course, the engineering teams would say, “Well, they’re just stupid users. They don’t understand our beautiful designs.” I watched all of this pain for a good portion of my career, and I thought I don’t want that. I don’t want that for the people who pay for software to be built. That’s one form of suffering. People who don’t know technology, but they need it. And so, they pay a team like mine to build it for them, and, often, executive sponsors of projects get very frustrated with the work of software teams. We have a lot of code words in our world. When we something like, “Well, it’s done but it’s not done done,” and those kinds of things. So, I didn’t want that for them.
I wanted people who were paying for software to be built to feel like they were in control, that they had a voice, that they had a healthy interaction with the technical team that was building it.
So, that was the first form of suffering is for the, what I call, the sponsors of software projects.
The second kind of suffering we really took aim at is for the end users, the people we ultimately intend to serve with the work that we do. Too often, our industry has learned to call the people we serve stupid users. We thought, no, it doesn’t have to be that way. If we actually take a different approach to what the users’ experience will be, we can delight them. We can have software work the way they need it to work. Too often, software teams might be tempted to say, “You know, if you learn to think like me, the software will make sense,” and the question is, why would a normal, regular, non-technological human being need to think like the programmers? Why can’t we make the computer and the software that runs on it think like the humans? We want to end that kind of suffering, that suffering of the people who use software that teams like ours builds every single day.
And then finally we wanted to end the suffering for the people who do the work. Our industry, coined the term “death march”, 24/7, teams of people burning themselves out, and the trouble with that kind of burnout is, our fundamental view is, tired people make bad software. We don’t want to make bad software so we’re not going to have tired people.
So, those are the three pillars of suffering we wanted to end.
But we didn’t want to characterize it only as suffering. We wanted to characterize it in terms of a more noble goal. And this idea is of returning joy to technology for the people who do the work, for the people who pay for the work, and for people who use the work.
Thomas: What is the Menlo Magic? How does it work? And, why does it work every single day?
Richard: I think there’s two fundamental pieces to why Menlo works as well as it does. Number one, the people who come in our door every day, the people who work here, actually believe in how we approach what we do. This isn’t cow towing to a mantra or a discipline or methodology or process or, you know, a religion, if you will, that I think a lot of times software teams end up in. The team believes in the process we use here.
And then the second part is, and this will sound a little bit funny, the people who work here actually want Menlo to survive to see another day. They don’t want to go back out into the real world. They actually want to work here.
Scaling Menlo’s model
Thomas: Would it be possible to scale your model?
Richard: First of all, we’re about 60 people right now, and a lot of people look at us and say, “Oh, I see it works for 60 but it couldn’t work for 90 or 200 or 2000,” but we have found examples of companies that work a lot like us — … companies, for example, who work at a much larger scale but still quite decentralized, still very purpose-driven.
I remind organizations that even if you’re a large organization, you are typically composed of 50- to 100-person teams, no matter how big the company is, and so if you’re thinking of pursuing some version of what we’ve created here — which I would certainly encourage you to think about that — don’t think you have to change the whole world. You don’t have to change your entire organization. You can just change the part around you, because, in some ways, Menlo is much, much, much, much bigger than what first comes to mind because we are plugging Menlo as a company into some of the largest organizations on the planet. We’ve done work for Ford. We’ve done work for General Motors. We’ve done work for Pfizer. All of these enormous corporations are using our team. They didn’t have to change their corporation to work with us and we didn’t have to change how we worked in order to work with them. So, in some ways, you’re seeing the example of how a small cohesive team can create a particular culture and serve others who don’t necessarily subscribe to all those same cultural elements you do. And then I think this is scaling and we’ve seen this happen, too.
We have created our own interesting environment. It is interesting enough that people actually want to come see it. We get about 3000 people a year come through our doors from all over the world and they just want to see how we operate. We do about 1 to 3 tours a day here. And, so, now what happens is people come here and visit and they take some piece back with them. We don’t tell them we found the one true way that, you know, you should work like Menlo or it won’t work at all, but they’ll take something back with them and they’ll start to improve their lives, their world, their work world. Imagine if you were inside of a large corporation — pick your favourite large corporation — and your team within that company is operating differently, so differently that other people within the corporation are coming to visit you, see how you work, and you share with them what you’ve learned, and they start taking pieces and parts back to their organization to try it out.
I think this is one of the challenges of scaling where people think, “Oh we have to replicate it. It must be identical in every place you go,” and I just don’t think that’s true. Menlo doesn’t have to be the same even in every client project, and we certainly don’t have to have the same types of customers that we plug Menlo into.
What I don’t want to do is let your readers off the hook here. What I mean by that is they might come and look at Menlo or they read our interview or maybe they read my books and they say, “Oh, Rich and his team, they’re so lucky. I wish I could be them, you know, but I can’t be because our organization is too big, it’s too small, it’s too old, it’s too new, it’s too governmental.” I’m not going to let them off the hook because I have seen so many examples of big corporations that have taken some piece of what they have learned from us and bring it home for their teams and improve their work world. My challenge to your readers is, you can create change within your organization, you just have to choose to do it.
Thomas: So true. It’s also my philosophy. I believe in smaller projects rather than huge corporate programs which can easily become death march projects trying to save the world or the whole organization. Instead I’m proposing to do one project at a time. A project is like a microcosm which the team can control. We can shape it, we can design it the way we like it, and we can change it if we have to. It’s much more complicated on a corporate level with all the politics and bureaucracy. It’s a different story.
The meaning of a human working space
Thomas: How does your working space affect the team productivity? What kind of impact does it have on the atmosphere, the performance, and the results?
You know, we are in a former mall. Actually, the space behind me is a former food court. … It is in fact in the basement of a parking structure and there is no sunlight whatsoever. So it’s all electric light that lights the space. And so, maybe my challenge to your readers is if we can create joy in the windowless basement of a parking structure with concrete floors and so on, you can do it where you are too.
A lot of people ask us, “Oh, you didn’t want sunlight?” No, we wanted sunlight, but we wanted three other things more. We wanted one big open room. We wanted to be in the downtown Ann Arbor area because the physical surroundings we think actually improve our thoughts about work because people can leave the building, go out onto the street, go to restaurants and bars in the local area here. There are little parks nearby, and so on. So, there’s a lot of amenities to being in a downtown area, and we wanted to be able to afford it. And so we lost natural light in that process. But yet when people walk in our door for the first time, almost universally the first word out of their mouths is, “Wow,” because they can actually feel the human energy of our space. I think that is so important. They can hear laughter, they can hear conversations, they can see people working together. And suddenly it strikes them, oh my gosh, there are no walls, there are no offices, there are no cubes, there are no doors, and then they begin to question us. They’re like, “Oh, this is one of those open office environments, isn’t it?” and they say, “Those don’t work, you know. There’s research that proves that these environments don’t work,” and yet they’re confronted with this paradox because they can see it working, and they ask us, “Rich, why does it work for you and it seemingly doesn’t work anywhere else?” And I say, “well, it’s very simple.
We didn’t create an open office. We created an open culture. Our physical space is a reflection of some of our deepest held cultural beliefs about creating great teams: openness, transparency, collaboration, teamwork, work done together, flexibility and scalability.”
Everything we’ve done here says to the team, make the space work for you. You don’t have to go ask permission. You don’t have to go check in with the space police. You just simply make the space work for you. So, our space changes in small ways every single day. Every once in a while, the team just get bored with the setup and they tear the whole thing down and put it back together in a completely different configuration. And I will tell you those small changes, and sometimes those big ones, are energizing. You know, we become a product of our physical space after a while. I think it was a Churchill quote that said first we form our spaces and then our spaces form us.
And if we put all these walls and corridors up and doors that close, you can’t move them and then your organization gets stuck in a rut, and communication starts to fall down and, you know, mindsets set in concrete. We want people to always be in this adaptable mindset.
What if we move things around this way? How does that feel and could it change our energy? And I will tell you. I sit out in the room with everybody else. There’s no corner office for me, and every once in a while, they move me. I don’t actually choose where I sit. They put me somewhere. Right now, I’ve been in the same table spot for several months, which is a little bit unusual for me. So then they’ll move me. There’s usually an actual reason behind the move. They don’t just do it randomly. Then I come in the next morning and my table isn’t where it used to be, and I go to where my table used to be and my mind kind of like, “where did my table go?”, and I have to go find it, and probably for the next several days, I am going back to the old spot before I go to the new spot. And it’s literally bumping my brain, right? It’s creating what was this passive sort of beta thinking process into more of an alpha mode of just I’m now aware. I’m now very aware of my physical surroundings once again and I can feel it. It’s frustrating because I’m used to going to the same spot but it’s also energizing because I have to think differently. I can’t think the same thoughts I thought the day before because I’m now in a new space. I’m probably surrounded by different people, different interactions, different conversations that I’m overhearing by different people because I’m sitting near different people now. And that, I think, awakens our humanity when we do those kinds of things.
Customer and user interaction
Thomas: You talk about delighting your customers. Given that the prerequisite for doing so is understanding their true needs, how do you identify the true needs?
Richard: There’s kind of two conversations that go on here and I’m going to differentiate between two groups of people that often get put together.
One is customers. Now, Menlo is a custom software design and development firm. Customers are bringing big bags of cash and some ideas. We form teams around their ideas, and we design and develop software for our customers who are paying us to do that. The customer is the one who pays us to do the work.
But our primary thought process isn’t actually around the customers, even though we have to take care of them of course. Who we want to take care of are people we will never meet, people who won’t pay us for what we do, and people who will never know who we are, and those are the end users of that software. And this is very important.
Most businesses actually have this dichotomy between the people who pay them for what they do and the people who one day use the pieces and parts.
So, there’s often in this world of work, and especially when businesses work with other businesses, there’s this differentiation between customers and users, and we have to take that into consideration when we’re working on our projects.
I want to answer your question in two different ways. A customer, i.e. the people who pay us to often come in our door and they say something — you know, I’ll use it fairly generically — “Hey. We’ve heard great things about you guys. We think you could help us build an app for an iPhone.” We look at them and say, “Well, awesome. What problem are you trying to solve?” and they look at us funny. They say, “Well, the problem is we don’t have an app.” We explain then, “No, an app is a potential solution but no one in the history of mankind ever woke up and first thing on their mind this morning was, ‘You know what I need today more than anything else? I need a new app.’” So, we try and back them up into what problem they’re trying to solve, and this is a really curious little journey because often the thing they think is the problem isn’t actually the problem, and I can tell you, as an engineer, I can’t wait to start thinking about solutions. It’s the first thing on my mind.
Often what we do is we ask our customers — remember I’m differentiating between customers and users — could we go visit with some of the potential users of this solution?
We had this big logistics firm come to us, and they came to us and they said, “Hey, Menlo. We know you well. We think you could help us build a new CRM system — customer relationship management system.” I can tell you, for the size of this company, that would have been a very big project for us, maybe one of our biggest. Of course, we asked them, “What problem are you trying to solve?” and they’re like, “We need a new CRM system.” We said, “Well, why do you need a new CRM system?” They said, “Well, we’ve grown through acquisition. We’re now a nationwide firm. We used to be regional only. And because of all the acquisitions we’ve done, every separate company we acquired had their own CRM system. We want to create one unified CRM system across the whole organization so that our offices around the nation can all share customer information with one another.” Now, I would tell you, as an engineer, this made perfect sense to me. But we said, “Could we go visit your sales offices?” and they looked at us funny and said, “Oh, we know that’s what you’d like to do, but we know what the problem is so you don’t need to do that.” “Well, humor us. Can we go to at least two offices?” and they said, “Sure.” So, our anthropologists went out to two offices of this firm. They started observing them work and they started asking them questions about their work. So, they went to these offices and they said, “Hey. We’re going to watch you work. And what your management believes up in the central office is that you guys have trouble sharing information between offices if they need to transfer information,” and the people in the office smiled politely at us and said, “Oh, we would have never share information with another office.” We’re like, “What? You all work for the same company.” They said, “Yeah, we do. But you have to understand our annual bonus is calculated by how much we outperform the other offices. So, if they make us share information with another office, which they might, we’ll miskey something, we’ll type a phone number wrong, we’ll put in an address incorrectly, we’ll mess up their name so that in fact we will give no advantage to the other offices and then we will outperform them and get a bigger bonus.” The problem they had wasn’t the CRM system yet. It was their compensation system that was broken.
We think humans are rational, logical creatures, but in fact, you know, when we create the wrong incentives, we will create weird behaviours.
We went back to the management team and said, “Don’t do the project right now. Not yet. Fix your compensation system. Fix your culture first and then maybe a unified CRM system.”
Cultivating a learning environment
Thomas: How do you cultivate an environment of continuous learning and innovation?
Richard: I know you’re working on a book around humanity in the workplace. And I think it’s very important for all of us, as leaders, to consider what is it that actually makes us human. Like, what are the fundamental characteristics of humanity? And I think they revolve around that part of our brain, that prefrontal cortex, where our most human things happen such as creativity, invention, innovation, learning. All of those things are happening in this most human part of our brain. So, there’s an anti-part to learning. What should we as leaders not do to promote learning? What we have to remind ourselves is the part of our makeup that — actually steals our humanity and therefore our ability to learn — is fostered by fear. Fear releases chemicals into our bloodstream, adrenaline and cortisol. It shuts down this great part of our brain because this part of our brain is such a big oxygen consumer. So, literally with fear, if we learn to lead with fear, we will shrink our teams back down to reptile brain and no learning will happen whatsoever except pain-based learning, which is important, no question. We can learn something from pain, you know. All of us touched a hot stove at least once in our lives and we remembered never to do that again.
But the kind of learning I think organizations are seeking now is not “don’t touch the hot burner.” It’s how do we outperform our competition, how do we adapt to a changing world, how do we lead in that adaptation. And that’s the part where we need to be the most human.
So, number one, learn to eliminate, as much as humanly possible, fear as a tool in leadership and management.
And the other part is how do we create the environment within which learning can just easily happen? And for us, the physical space is important. It’s not just the open room, it’s the posters on the wall, it’s the bright lights. It’s that feeling, that wow feeling, when people walk in.
And then the other part is how we organize the humans on the team. No one here works in isolation. We work in pairs. That simple construct, you’re putting people together, letting them work together, giving them permission to collaborate, making it a standard of our workplace means no one is ever working in that fearful isolation of, “It’s all on me. It’s all on my shoulders. It’s what I can get done and done by me alone.” For us, this idea of putting people together creates safety that I don’t have to be complete by myself, I can lean on the person next to me, and I expect to be leaned on by the person next to me and I expect them to allow me to lean on them. That idea of ‘make your partner look good, help the person next to you succeed’, creates a kind of safety here where learning can flourish, creativity can flourish, and human energy can flourish.
Ensuring discipline, performance and delivery
Thomas: Learning is one thing. But, how do you ensure discipline, performance, and delivery?
Richard: There are two fundamental components of how we think here at Menlo.
One is we’re a very high structure environment. So, this isn’t laissez faire, do whatever the heck you want, you get some random idea, go off in a corner and start working on it all by yourself. We have a very, very strong structure here, but a very simple structure. So, everybody knows who they’re paired with for the week. There’s a little display as they walk in the front door and, you know, the first day of the week, and they say, “Oh, I’m paired with Thomas,” right, and then, you know, next week, I come in and, “Oh, I’m paired with Michael this week and Thomas is paired with Richard”. So, this construct starts to remove a lot of ambiguity and goes towards clarity. This is very important in our world, because ultimately, by the time the work is being worked on, you are in a very unclear environment because there’s invention that has to happen, there’s experimentation that has to happen. But if you know what you’re supposed to be working on, what your goals are, how you will be evaluated for how close you got to what was going on. This is a high-structure environment.
And then the other part that really informs how we think is systems thinking. Systems are at their best when there are short communication and feedback loops. And that’s what we appreciate so much about the Agile movement. Typically, in our world, we are working on a 5-day iterative cycle. Every 5 days, we check in with our customer through an event we call ‘show and tell’.
So, you know, this isn’t about creating the perfect plan. This isn’t about having the perfect planning process. This is about simply acknowledging we will make mistakes. We are human.The way to keep fear down is make small mistakes quickly.
So, let’s create a system and a structure that allows us to make small mistakes quickly so we can correct them while they’re still small, and if we have open and honest communication, which is critically important in this kind of environment, then we can deal with the things as they come up, and I think, that’s the essence of an Agile enterprise.
Caring for employees
Thomas: I remember you shared a story where you had one of your team members who became a mother, and you wanted her to return but she couldn’t find childcare. You said, “just bring your baby along and we’ll see what happens.” Do you still have this policy in case somebody can’t find childcare for the day? How did it change the environment?
Richard: Yeah. So, yes, that little girl … is now 12 years old and Elsie right now is coming in with George. Elsie is Menlo baby number 24 in the last 12 years.
This has been an awesome experiment for us, and it is delightful. And yes, over the last 12 years, we have continually improved the physical things we put in this space to allow the parents to have an easier time taking care of their child. But I want to say it very clearly, this is not a Menlo daycare. We did not open up a daycare facility. The baby is with the parent all day long or if the parent chooses, and they often do, the baby is also with the team. So, if you bring your child, you may say to Rich, “Hey, do you want to hold little Elsie for a while?” and of course I love holding little children so I might be caught on a tour carrying a baby around, but that’s always the parent’s choice.
We are thinking in terms of humanity in the workplace, if you want to bring humanity into your workplace, bring humanity into your workplace, especially little humans.
I mean, babies have such incredible human energy. They’re like little sponges. They want to hear all the noises and it’s really fun. Usually when they’re here for a couple of months, they start mimicking what they hear. Sometimes, I remember with little Maggie, one of the things that happened was, at a certain point, Maggie started making what we affectionately referred to as dolphin sounds. She just mimicked the sound. And it would be so loud that the whole team would hear it and they would just laugh. Then suddenly, at one point, Maggie realized she was the source of the laughter, and she just started making the dolphin sounds over and over and over again and the team just kept laughing. It was a wonderful interaction with a baby.
So, I will tell you, it’s a huge thing that we’ve done here, and I’m so delighted for the parents who have been able to make it work.
Joy and work
Thomas: How do joy and work fit together?
Richard: I think this idea of, as you would put it, chasing humanity, bringing our most human self to work, and we use the word joy here which we think is very human in that regard. I want to emphasize in this is that this is also real work. Joy is a neat thing to pursue and I think we get very close every single day, but we are not happy here every single day. This is hard work, hard work done together.
Our customers often have different expectations for us, so we have to always keep checking in with them about how things are going and how they’re feeling about things and so on. And they’re not always feeling great. Same for us who work here.
As leaders we have to remind us that,
if we really want to keep ourselves on this track towards increasing the humanity of the workplace, we have to recognize that the people who work here are 100% human.
They’re not just human at work but they’re human at home as well. If we start to recognize they have lives outside of work, I think we create a greater opportunity for empathy with others in our team. I can tell you, every family, every person has their stuff, stuff from their previous life, stuff from their upbringing, you know, stuff that happened in the world, stuff they’re worried about, all that kind of stuff. So, I would just simply encourage your audience to think about one thing. When they have conflict with somebody else in their team regardless of what their current environment is, before they get upset, before they get mad, check in with the other person. Look them in the eye and say, “Are you okay? Is everything going okay in your life?” Now, that person may be willing to share or maybe they’re not. That’s okay. This isn’t about bringing everything to work every day. But a simple human check-in of saying, “Hey, I noticed something wrong today. Are you okay? Is everything going okay in your world?” and if they say it is, but you notice they’re holding something back a little bit, then check in on you. Maybe whatever’s upsetting them is actually coming from you. So, be humble enough to say, “Am I okay? Am I okay with you? Is there anything I’ve done to upset you lately?” Because, in that case, we’ve got a chance to actually have a heart to heart discussion about maybe what’s going on. And, again, not everyone will feel right about that and that’s okay.
Let me share a story with you. Shortly after my first book came out, I was invited to be the keynote speaker at the Scrum Alliance Conference in Berlin. I spoke of joy and I spoke of Menlo and I spoke of the processes we use. I ended the talk with the baby story that we discussed a few minutes ago. After that talk I had male German engineers come up to me in tears, and I would describe tears of a different kind of joy, a joy that was not what they were experiencing today, but a joy of hope that they could experience it someday. And I thought to myself, “If I could get male German engineers to cry, I can get anybody to cry.”
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Note: The interview is part of my new book “Being Human in a Digital Age” which will published in Germany in 2020. If you are interested to learn more about the book, join my Facebook group „Being Human“.
What does it mean to develop leadership in such a way that it no longer chases short-term goals and is controlled externally, but instead has a deeper meaning? In other words, how can you develop purposeful leadership and start shaping the future?
Julia von Winterfeldt, SOULWORX
These were the questions I asked Julia von Winterfeldt. Julia is the founder and managing director of SOULWORX, a purpose & strategy collective for executives, teams and entire organizations. Julia’s and SOULWORX’s mission is to awaken executives to find and live their authentic selves with the higher aim of developing the world of work in order to work better for people and companies as a whole.
Thomas: What is purposeful leadership?
Julia: Purposeful leadership for me is the ability to follow what your heart’s desire is. Therefore it is leading something and attracting followers around something that is of meaning or has a meaningful direction. So you’re so infused by what you believe is necessary to be put into this world. You lead the way. And you may inspire others to partake in this meaningful direction,too.
Thomas: Okay, so let’s say I’m leading a team or a business unit and I have been working for this company for twenty years and everything so far worked out fine. Does this mean I have been practicing purposeful leadership?
Julia: Well I would add the notion of what is the meaningful direction in that? So what are you actually leading towards? What is the reason that you’re taking yourself and others towards this? So, if you just say I have been leading a team and I have done that in a great way, that wouldn’t be sufficient for me. I’d like to then understand what it is that you and your team are contributing to? What’s their reason for them to believe as a team that they want to join and go towards what?
Thomas: If a leader has always been results-driven and has actually delivered on his promises, in other words he has been very successful, helped generate huge EBITs, would you say that this traditional leadership model is outdated? If so, what has changed or what hasn’t changed?
Julia: Yes. See, EBIT is not the reason to do something. It’s the result of doing something. What has changed I think is that we’re recognizing different dynamics happening, whether there’s digitalization, whether it’s interconnectivity, globalization, whether there’s climate change that we need to have a stronger stand for, how we can participate in serving or solving these global dynamics. What has changed in my view is that leadership is or needs to become still more synchronized with a larger dynamics than just what is happening within their organization beyond EBIT or financial results.
Thomas: Let’s say I’m interested in purposeful leadership even though I am sowmehat skeptical, but still want to try it. Where do I start?
Julia: With yourself. I would first want to understand what are you skeptical about? Do you think purposeful leadership is a message? No. Is purposeful leadership a thing to believe in? Yes. So, if you are skeptical because you do not know what it is then the first question that you could deal with is to understand why you’re in this role that you have today, what is driving you in this role? For example, you might say, “I’ve been in the automotive business now for twenty years, so that’s what I’m good at.” Okay, that’s great. Now let’s go one step further: why did you stay there for twenty years? “Because I know the industry quite well.” The next question could be, why you are staying in this industry for so long. You might explain that this is so because you are good at it or because you like the people or you have now reached a position where you could have more power. Then I could pick up the point you made of having more power. A question could be, what’s the impact that you are actually having with this power? What do you think your able to do in this place or in your position of power? If the answer is, “well, we’re making more money”, or, “I’m helpng the company become bigger, larger, more influential”, I would challenge you and ask which stakeholder you are actually doing this for. If you explain it is basically for the financial stakeholders, I would that’s not enough.
I think that it’s time now to take your mind in that power of position towards further stakeholders and to know how your actually impacting not only your clients, not just your customers, not just your financial stakeholders but maybe the communities, obviously the employees but the community beyond that or even maybe the general public. What is it that your are contributing to that could potentially give the starting point to think about the role that you have and the benefit of that role and how you could have even more power in a positive way to have an impact in what you are doing?
Thomas: Let’s say I have found my purpose or personal driving force, but I cannot change my role. How can I change the environment when I’m practicing purposeful leadership? What impact can I expect from this or what impact can other people expect from this? How can they see if it’s any different?
Julia: Well my assumption would be what generally happens is when you’re in sync with your purpose, you either want to talk about it more or start leading your life differently.
Let’s keep it to your working environment, you start to lead from the perspective of your purpose. You know what you really believe in, what you bring into the world. The first thing that you should be changing is the way that you’re talking about yourself and the reason why you’re in this role.
The second thing is that you align not only the goals of your role around this purpose but also the goals of the team. You seek to answer, why you are doing something and how you are able to impact that, what goals you want to set for yourselves to get to the larger why, or to the higher reason for doing this. So that could be a second change within the working environment.
The third thing could be the way that you work based on the purpose that you as an individual and then hopefully your team are also starting to follow. Then maybe the values that you’ve held so far may change, too, and align with the purpose.
Let me give you an example. The value of having more courage, the way you execute on this courage becomes a different, has a different finality or has a different sense. So maybe the values don’t change as much as the you execute on these values.
And, last but not least, maybe the way you actually create the products in start to change.
So I think what I’m trying to convey is it’s not going to be something that’s suddenly now that you’ve found your purpose the next day it’s going to be completely different. I think it starts to manage itself in and the first definitely way of recognizing this is in communication. The way that you hold yourself, the way that you describe yourself will change because you have now come to recognize ‘wow, now I know why I am here in this role, how I can contribute in this role and I’m going to start to talk about in a different way than I have been leading or working my role up until now.
Thomas: Okay one of the questions, a personal question is how did you find your purpose?
Julia: I actually joined the True Purpose Institute in San Francesco and let myself be coached in finding my purpose. It was an eight month journey and I’m basically took myself both from an ego and an intuitive perspective though this process. I knew that if I have the answers from an ego perspective and then from an intuitive perspective I will be able to clarify both in my logical mind as well as in my intuitive mind what my purpose is.
What you need to go through during this process is to undo all of the conditioning, all of the limiting beliefs that you have or the fears that you have to go through, that pain and shadow work, in order to let emerge what is really in you that you have covered up or don’t want to look at anymore or never realized you had, to allow what’s in you to really come out and express itself.
Note: This interview is part of my new book “Being Human in a Digital Age” to be published in 2020 in Germany. If you like to read excerpts of the book join my “Being Human” Facebook group.
The digital transformation was one of the buzz words at this year’s World Economic Forum in January 2019. Walking the streets there were numerous signs for special events, receptions, panels, speeches or forums on the topic. All of them had in common that there was an atmosphere of excitement about the technological advances of the 21stcentury, the huge potentials and promised ahead of us. Or so it seemed.
Fact was that this appearance was deceiving and possibly misleading.
I had the privilege and honor of having been a member of the panel „The Art of New Business: Body, Mind and Soul of Digitization“ in the FQ Lounge. When asked about my opinion about the prospects of the digital transformation in my native country of Germany I cautiously mentioned that, first of all, not everyone is super excited about digitization. Indeed, I have observed that a lot of people (who knows, possibly the silent majority?) do have concerns and fears about the digital transformation. When I shared my observations I had expected that at the outset of my remark people in the audience would roll their eyes or shake their hands in disbelief about my skeptical opening statement. Interestingly, none of it happened. The opposite was the case. Indeed I sensed that the audience was relieved that finally there was a panelist who talked about their silent fears, the downsides of digital transformation in contrast to the many other events in Davos this week. I admit that the audience’s reaction surprised me. And at the same time it confirmed my impression that people hesitate or avoid speaking about their concerns and fears, at least in public. So, what’s true? Is digitization a blessing or a curse? My answer is that it can be both.
It is a fact that technology has brought, brings and will continue to bring many advancements that improve our well-being overall and offer huge business opportunities. On the other side, we will see lots and lots of jobs, businesses and even industries being eliminated or disappear. This is certainly one ingredient for being somewhat skeptical about the digital transformation. But we don’t even have to look so far into the future to identify an even more obvious drawback. Fact is that rates of disengaged workers, sick days and depression and burnout rates have been on the rise and have reached record numbers. A clear sign that the so lauded world of the digital age is not so bright after all. People complain about endless work, increased pressure and expectations at work. They are often either stuck in a hamster wheel or have become themselves addicted to the ever-accelerating race of infinite growth and corporate greed and cut-throat competition. They have become pawns in the grand chess game of modern business. They are functional, efficient, productive, and effective. And yet, they don’t behave or act like humans anymore but have become replaceable resources in a big machinery. Replaceable like machines because there is no space for burnouts, sickness or alike.
Corollary, the excitement about the digital transformation can and does co-exist with fears and concerns. Both are real, though not equally desirable or sustainable. I am convinced that fears and concerns cannot be resolved unless we take them seriously and deal with them. They have a common denominator. It’s the lack of humanness. In other words, being human often only matters in as much as a human resource, as one cost factor out of many. While resources in general and human resources in particular can be replaced the principal lack of appreciation of humanity at the core of our business activities sheds a long shadow on the wonderful promises and opportunities of the digital age.
In my 20+ years in professional project management I can say that projects rarely, if ever, fail because of faults in the products or some suboptimal processes. The number one cause of failure is ‘people’. Not because we make mistakes (of course, we do) but because we don’t recognize and value each other as who we are: human beings. Our personal motivations, visions and goals are appreciated only in as far as they benefit the project or product. There is no space for more, say, our belief systems, inner drives or purposes other than our relation to the jobs themselves. It’s like driving a car with a pulled handbrake and a weak battery. The human potential is left untouched. No wonder that so many projects still fail or struggle and are characterized by waste.
I have found that projects that create the space for individuals to uncover, explore, unleash their individual potentials and share it with fellow team mates turn into co-creation wonders that help delight customers, generate sustainable business value and develop happy and joyful workplaces while nurturing the thirst for continuous self-improvement. In other words, putting humanness at the core of business is the seed for mastering the challenges of the digital age and succeeding in the business world. It is time to acknowledge, explore and unfold our human potential to shape the present and future we truly want and need. Let’s be human in the digital age. Technology and digitization are welcome and valuable tools to serve this purpose and goal. Tools, but no more and no less.
January 20 & 21, 2019, 10 AM – 3 PM
Parsenn Ski Resort, Davos-Klosters, Switzerland
Join us for a day on the slopes and share your stories stories about digitization and existing scenarios people can relate to for hope and orientation. Once we are on a lift we start our dialogues and capture your stories on film or camera as input for our panel in the FQ Lounge on January 24, 2019 at 3 PM as well as social media channels.
Audience: Anyone interested in digitization channels. Price: Free. But you have to buy your own ski pass and food. Registration via Eventbrite.
January 24, 2019, 3 PM FQ Lounge in the Panorama Hotel Promenade 80, 7270 Davos Platz, Switzerland
Digitization is changing how companies engage with their customers, organize work and, fundamentally, the way they do business. If the body of digitization is the output and generated value, the mind is the organization’s process and the way of work, and the soul is the values, at the heart is your why or purpose. Leaders share why culture and mindset are keys for digital transformations, and why people — rather than technology — will drive success.
As much as the title sounds like an oxymoron; it is not. The opposite is the case. I believe that being human in the digital age is ever more important and, thanks to technology, feasible.
Digitization is “taking over our world”
No doubt digitization is “taking over our world”. At least, at first sight and from a traditional perspective. A perspective that tells us that we as humans are mere subjects in the big, big world and economy. We are ‘human resources’; we are a cost factor with which we can calculate. This is, more or less, a common understanding. It is based on an old paradigm depicting organizations and companies as machines that can be planned and controlled. This old Taylor’istic and mechanical paradigm has been the foundation for economic thinking for more than 100 years. It allowed us to get a better understanding of the economy and overall has served us well. However, in a world that is becoming more and more volatile, uncertain, complex and ambiguous the old paradigm has reached its limits. The old paradigm was a good fit and served as a helpful orientation in situations with little or no change. ‘Ceteris paribus’ is what economists call this. Well, you don’t have to hold a university degree to acknowledge that this old, mechanical and simplistic world is over.
The rapid digital transformation is overburdening people, companies and organizations, fueling fears of the future. New developments in technology, society, and environment are met with suspicion and skepticism. It seems that digitization is taking over our lives.
The dead end of traditional economic thinking
Traditional business models don’t provide answers to today’s challenges. Indeed, there is conclusive proofthat traditional management has been failing for a number of years now. The annual ‘The Shift Index’ report of the Deloitte’s Center for the Edge has revealed that
The rate of return on assets has fallen by 75% since 1965
The life expectancy of Fortune 500 firms down to 15 years, and is heading towards 5 years.
Only 1 in 5 workers fully engaged. Gallup estimates that the 20% group alone costs the US economy around half a trillion dollars each year
Absence and sickness levels are rising continuously
Companies are fighting a losing war on skills and talents
Asking the right question about our future
Reading these numbers can scare the heck out of you. It quickly raises the question, how will the future look like? And yet, this question is as misleading as it can be. Misleading because it puts us in the position of being victims of a future development. Instead, I want to reframe the question and ask, how do we want to live? An alternative question is, How do we want to shape our present and our future? I believe that this reframing makes a huge difference. We move from a passive to an active position, from being victims of volatile, uncertain, complex and ambiguous (vuca) world to being shapers of our world.
I am not saying that I am the world leading example. I, too, still fall victim to the old thinking. Why? Because I was raised this way and have been or let me being influenced by conventional thinking. Asking the questions, ‘How do I want to live? How do I want to shape my present and future?’, and being led by them is like an opening process. It opens doors of opportunities which are in my own sphere of influence. And it starts with me. Simple? Yes. Easy? Honestly, no. But then, this is life. It is full of surprises. This is the beauty and wonder of it. And I love it.
Trump’s economic policies are starkly different from his predecessors and deviates from mainstream economics and political thinking. Take, for example, his massive tax cuts for the corporate world or his initiated trade wars. Just by looking at recent economic numbers and the booming stock market his policies seem to pay off and open a new era of economic prosperity. But do they really?
Long-term market performance indices and forecasts tell a different story. Shareholder buybacks and alike contribute nothing to building a solid foundation for future business success. They yield short-term benefits and the party is on. But, for how long? Where does it lead to? Has big money finally succeeded and overtaken economic and political thinking? How sustainable is this short-term growth? Who benefits, who loses? And, last but not least, what kind of answers does it provide to today’s global challenges that are becoming more and more volatile, uncertain, complex and ambiguous? What if Trump’s favored form of capitalism leads to a dead end?!
As explained in a previous post, I am more than skeptical about the outlook of traditional capitalism.
Fact is that traditional capitalism does not answer today’s challenges in a VUCA (volatile, uncertain, complex, ambiguous) world, widens the gap between rich and poor, exploits and threatens to destroy our environment and thus our own planet. What we need is a different, a new business paradigm that not only helps find solutions to today’s problems but can also serve as guidance to sustainable business in the 21stcentury.
In this article I explain why and how purpose-driven human business can make a huge difference. It differs significantly from the classical business paradigm. At the same time it has built-in bridges every business can cross to build a sustainable future.
Maximizing Shareholder Value: Engine for Growth?
„There is one and only one responsibility of business: to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.“
– Milton Friedman
No doubt, Milton Friedman and shareholder value theory has shaped Western business since the 1970s. It has led to tremendous wealth of companies as well as societies, even though the fruits of this growth have not been distributed equally.
And, Milton is still very much alive as Steve Denning points out in a Forbes article. He explains that “in 1990, an article in HBRby Michael Jensen and Kevin Murphy, gave shareholder value thinking a new push. The article, “CEO Incentives—It’s Not How Much You Pay, But How” suggested that CEOs were being paid like bureaucrats. Instead, they should be paid with significant amounts of stock so that their interests would be aligned with stockholders. Thereafter, the use of the phrase ‘maximize shareholder value’ exploded and CEOs became very entrepreneurial — but in their own cause,not necessarily their firm’s cause.”
Denning continues stating that “by 2017, shareholder value thinking was everywhere. Joseph Bower andLynn S. Paine reported in Harvard Business Reviewthat shareholder value thinking “is now pervasive in the financial community and much of the business world.” It had led to a set of behaviors by many actors on a wide range of topics, “from performance measurement and executive compensation to shareholder rights, the role of directors, and corporate responsibility.”
Acknowledging shareholder value thinking is prevalent in today’s business world, and a booming stock exchange market, what’s so wrong about it?! Why change a winning formula?!
„On the face of it, shareholder value is the dumbest idea in the world.“
– Jack Welch
Jack Welch, former CEO of General Electric, had been heralded as one of THE proponent of maximizing shareholder value. This is in contrast to what he has been preaching since he left GE, stating „On the face of it, shareholder value is the dumbest idea in the world.“ Welch also pointed out several times that „shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.“
So far so good. But what about business performance in the market place?
According to the 2009 Shift Index of Deloitte’s Center for the Edge there is conclusive proof of failure of traditional management. Accordingly
The rate of return on assets has fallen by 75% since 1965
The life expectancy of Fortune 500 firms is down to 15 years, and is heading towards 5 years.
Only 1 in 5 workers fully engaged
Preserving the performance of a status quo may be laudable. Yet, it doesn’t secure lasting, sustainable business. The opposite is true. Mariana Mazzucato explains that „shareholder value theory – the destructive idea that companies should be run solely for the benefit of shareholders – has led to financialized businesses that do not invest in the areas that will lead to future growth or the invention of useful new products.“
In short, traditional businesses infiltrated by shareholder value theory not only ignores long-term perspectives, they also risk their own future existence. Myopia at its best.
Stuck in the past
In face of this evidence why do so many companies still stick to a business paradigm of the past?
There are lots of reasons for clinging to this pastime. Let’s have a look at two of them:
For one, it is convenient. Governance in most businesses still built on the old business paradigm, along with complicated incentive system for individual and company performance at the stock market. Changing these processes and culture takes ages. Why change it given that those who would have to make the call for a change personally benefit from the old system?
Linking maximizing shareholder ‚value‘ to personal compensation blinds managers from the real world – and most of them don’t even realize it because they were born blind or lost eyesight early in their childhood (or education). From this perspective, they live out their DNA. I guess, you can’t even blame them for their upbringing shaped their belief system. They were indoctrinated.
A second reason for favoring existing belief systems is that proponents of the status quo simply don’t see any real alternative at hand. Thinking in complicated, elaborate governance structures and processes implies that there needs to be an even more complicated system? There is simply no time to address this, even less so, coming up with new ideas that improve existing processes.
As long as this reasoning prevails, it is difficult to change anything until it may be too late. Alas, it is not that complicated at all. Let’s have a look at the opposite of the traditional business paradigm of short-term profits and shareholder value theory. It’s called purpose-driven business.
MVP’s for doing business in the 21stcentury
A purpose-driven business follows a compass that gives a clear direction for the future of the business. The compass also indicates where the business is coming from, i.e., why it is business in the first place. Both, the motivation and the vision of a business constitute the credo of its practice. I call this the MVP of a purpose-driven business whereas M stands for motivation, V for visionand P for practice.
For example, Johnson & Johnson’scompany credo is engraved in granite at the entry to company headquarters, which makes crystal clear that customers are first, then employees, and shareholders absolutely last.
Another example is Procter & Gamble which declares in its purpose statement: ‘We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper.’
On this token, a business that has forgotten or neglects its motivation or vision for short-term gains, such as maximizing daily stock prices, may just as well be digging its own grave in the long-run. It is anything but a purpose-driven business.
Human business is purpose-driven business
Facing the increasing number of challenges in our volatile, uncertain, complex and ambiguous (VUCA) world, Human Business addresses today’s challenges. It focuses on serving and delighting its customers, workforce, business, and society. And it does so holistically and puts us as humans in its center. That is, it constantly seeks ways and means to generate and add sustainable value to its customers, workforce, business, and society. From this perspective human business follows three elementary principles:
Delight your customer(s)
Take care of your employees
Build sustainable business value
(1) Delight your customer(s)
Having a customer focus is not new. Peter Drucker, father of management thinker, explains that
“There is only one valid definition of a business purpose: to create a customer.”
Alas, delighting a customer goes beyond creating or satisfying a customer. Delighting a customer implies that a business has a deep understanding of the needs, expectations and wishes of its customers and strives to fulfill and exceed them. It seeks to build customers for life. It reaches out to its customers, communicates with them, walks in their shoes and shows a sincere interest in them. There are no quick fixes for this approach. It is an attitude and belief system.
(2) Take care of your employees
Employees are not resources like products. They are human beings and want to be treated as such. A human business understands and practices this. It shows
a sincere interest in the needs of their employees. It starts with a safe, secure and environmentally friendly work environment. For employees to follow a direction you have to set it, share it and let your employees contribute to it. Let them become a part of it.
Dov Seidman states that „working with passion is an engine that is unbelievable. A person with drive and passion does three times the job of another person. But it is not so much the quantity of the job; that is not the point. The point is that they draw crowds; they have followers; they push, and lead, and so achieve much more.“ (Dov Seidman (2011). “How: Why How We Do Anything Means Everything”, p.295, John Wiley & Sons)
(3) Build sustainable business value
Shareholder value is not identical to business value. Business value comprises short-, mid- and long-term business concerns, interests and investments. Business value is made up of a number of factors: the overall business performance and outlook, customer satisfaction ratings, market position, innovation performance, the skillset and turnover rate of the workforce, the attractiveness of the company as an employer of choice and many other factors.
Whereas the daily stock price is heavily influenced by quarterly results and a relative short time horizon into the future, business value is more than quarterly results. Jeff Bezos clarifies why holding a long-term perspective is so important: “If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavours that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow—and we’re very stubborn. We say we’re stubborn on vision and flexible on details.” (Source: „Jeff Bezos Owns the Web in More Ways Than You Think“. Interview with Steven Levy, www.wired.com. November 13, 2011.)
Last but not least, business value doesn’t only look at business numbers but includes corporate social responsibility, too. Klaus Schwab, founder and head of the World Economic Forum, explains that “corporate social responsibility is measured in terms of businesses improving conditions for their employees, shareholders, communities, and environment. But moral responsibility goes further, reflecting the need for corporations to address fundamental ethical issues such as inclusion, dignity, and equality.”
Human business as a compass for organizational excellence
Klaus Schwab’s wide view on business value summarizes what it means when we say that human business is holistic and human-centered and focuses on generating and adding sustainable value to its customers, workforce, business, and society. It serves as a business compass that helps optimize daily operationsand build and sustain organizational excellence.
Walking the Talk. Building a Human Economy
At Motivate2B and the Human Business Architects we are witnessing businesses that have made the transition to a human business. And, we too, follow the principles of human business by ourselves. What else can we do?! We walk the talk and invite you to do the same. Please join us and share your stories.
This is not another attack on Trump. Actually, I don’t really care too much about Trump. What I do care about are the implications of his policies, ideology, worldview, decisions, moods, and, believe it or not, at times his tweets. And yet, it is not about Trump as a person. Last week, former President Obama rightly stated that Trump is not the cause but a symptom for a lot of things that have gone array these days in business, society and the world. And, indeed, Trump is a strong symptom, an excellent and exemplary figure to represent capitalism of the old ages. The problem is, we no longer we live in the 19thor 20thcentury that were heavily shaped by traditional capitalism Trump loves so much.
Traditional capitalism at its “best”
Traditional capitalism rewards those who seek short-term gains, maximize profits regardless of whether or not business generates value to customers, workforce, business or society. This capitalism treats humans and the environment as resources, cost factors and numbers in balance sheets. It thrives in an atmosphere of mistrust, tension, fierce cutthroat and winner-takes-all competition, selfishness and anxiety. Exploiting or polluting the environment is considered collateral damage and, hence, not evil. The dividing and widening gap between rich and poor is dismissed as a distraction that can be fixed – by the free market. While proponents of traditional capitalism don’t negate the fact the world is becoming ever more volatile, uncertain, complex and ambiguous they are not really concerned about it because they believe that the established business principles, processes and rules can handle these challenges, too. And, if there were a problem it is probably because some people, organizations or governments neglected these established principles.
Capitalism is not dead. It is outdated in its traditional form
I am not a critic of capitalism per se (how could I, having been trained as an economist?). Fact is that traditional capitalism leads to a dead-end, does not answer today’s challenges in a VUCA (volatile, uncertain, complex, ambiguous) world, widens the gap between rich and poor, exploits and threatens to destroy our environment and thus our own planet. This is not a call to end capitalism – this would this too simplistic. And it would be plain stupid for capitalism is a core element of business which we, people, need to survive and thrive. What we need is a different, a new business paradigm that not only helps find solutions to today’s problems but can also serve as guidance to sustainable business in the 21stcentury.
The Human Business Paradigm
The good news is such business principles already exist. They constitute the Human Business Paradigm. These principles can serve as a new compass for doing business in the 21stcentury. Let me summarize its key principles:
The Human Business Paradigm
1. Human business is holistic and human-centered, i.e., it focuses on serving and delighting its customers, workforce, business, and society.
2. The purpose of human business is to generate and add sustainable value to its customers, workforce, business, and society.
3. Human business promotes diversity in the workforce, reflecting an open society.
4. Human business advocates cross-functional and self-organizing teams.
5. Human business nourishes joy and happiness in its daily operation.
6. Human business practices and nurtures conscious leadership of enablement and empowerment.
7. Human business cultivates open and learning organizations that embrace change and thrive for continuous self-improvement of products and services, processes and people.
8. Human business provides and shares guidance for responding to rapid change in business and society.
9. Human business understands profits as a means to fulfill its business purposes; i.e., human business is purpose-driven and not profit-driven.
10. Human business advocates a circular economy, in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life.
Walking the Talk. Building a Human Economy
During the next couple of weeks I plan to dwell into each of these principles and share concrete stories of companies, organizations and projects that practice these principles. At Motivate2B and the Human Business Architects we walk the talk; and there are many other businesses that do so already. I invite you, too, to join us and share your stories.