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The Art and Magic of Making Joy the Driver of Your Business



Inside a Human Business.  An interview with Richard Sheridan, Co-Founder and Co-CEO of Menlo Innovations


Menlo Innovations is not yet another software development company in Ann Arbor, Michigan. It is unique in many aspects. Face this, every year more than 3.000 people visit this firm to watch how it works. They are inspired by the people, the environment and the way Menlo work. Co-founder, CEO and Chief Storyteller Richard Sheridan writes about this unique place in his bestselling books Joy, Inc.: How We Built a Workplace People Love (2015) and Chief Joy Officer: How Great Leaders Elevate Human Energy and Eliminate Fear (2018).

Richard Sheridan is co-founder and co-CEO of Menlo Innovations in Ann Arbor, Michigan, USA. Photo © by Menlo Innovations

I first met Richard in 2015 as we both participated in the Learning Consortium for the Creative Economy. We shared ideas and stories of how joy, happiness and humanity make huge differences in our world of work.- 

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,
  • Menlo Magic,
  • 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.

Menlo’s Driver

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.

Menlo Magic

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?

Richard: I think for us it’s, as Dickens would say, A Tale of Two Cities.

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.

Menlo’s office space in a former food court of an old mall in downtown Ann Arbor, Michigan. Photo © by Menlo Innovations

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.

At Menlo all software developers work in pairs. This is called “paired programming”. Not only makes it coding faster, it also improves quality and is more fun. Photo © by Menlo Innovations

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“.


Posted in: Agile, Book Recommendations, Creative Economy, Future of Work, Happiness, Human, Human Business, Leadership, Project Management, Uncategorized

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Purpose & Vision: Overcoming Trump’s Fear-Driven Capitalism, Part 2

Photo credits: „Eye“: http://tinyurl.com/y8gb8h4b. “Fear“: http://tinyurl.com/y8gtw3wj.

Photo credits: „Eye“: http://tinyurl.com/y8gb8h4b. “Fear“: http://tinyurl.com/y8gtw3wj.

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:

  1. 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.
  2. 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 stands for motivation, for visionand for practice.

For example, Johnson & Johnson’s company 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:

  1. Delight your customer(s)
  2. Take care of your employees
  3. 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

M2B Butterfly FBAt 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.

Posted in: Agile, Future of Work, Human Business, Leadership, Sustainability, Uncategorized, WEF

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3 dangerous pitfalls that keep conscious business leaders away from grasping the future of work in today’s digital age

Welcome to the future of work

Many of us know that today’s business world is changing. This is not new. It has always been this way. Alas, it is also a fact that due to digital change the pace of change in our business world, economy and even society as a whole has picked up tremendously. 5 years ago nobody talked about Tesla or Uber. Today not only lots of people heard about them and actually use their products and services, these products and services change the interactions and dynamics of business altogether. There may be some glitches, backlashes and opposition to new products and services as it has always been. But, this change, this uncertainty is here to stay. Who knows if, for example, Volkswagen will still be around in five to ten years? Remember companies such as Kodak, Blockbuster or Nokia who were so stable and strong?

Welcome to the VUCA world

We live in a volatile, uncertain, complex and ambiguous world – the so-called VUCA world – and this drives business leaders nuts. Gone are the days of certainty, control, plan and doing business as usual. The compass and direction of the established philosophy that businesses run like well-oiled engines are gone. What stays behind are questions, concerns, fears – and the understanding that businesses have to change if they want to survive and thrive in today’s Digital Age. But, what does it take? – There is no simple answer. However, what we can do is to identify the pitfalls, the backlashes, the viscious circles that keep us stuck in inertia. Here is a list of the top 3 pitfalls that keep conscious business leaders away from grasping the future of work in today’s digital age:

Pitfall #3: Fear of uncertainty

We may understand the need and value of change but we don’t like it and, even more, we hate uncertainty. We overcome this fear of change and uncertainty by planning and controlling processes. By securing a status quo. By the urge for perfection. Oh, yes we may actually embrace change but only as long as we can come up with quick fixes that yield immediate results.

What’s so bad about it? – Change, the New, innovation – they all have one characteristic in common: they are uncertain at the present moment. How can we learn new things if we don’t try them out?! Yes, there is always a likelihood that we fail, that we make mistakes. This is the prerequisite for learning. Or have you ever seen a child who just stands up and walks without first having falling hundreds of times?!

Pitfall #2: It’s about me. I have to defend my realm and power.

We see the value of teamwork – as long as it doesn’t undermine our own sphere of influence and power. Teamwork is great if it serves our own political agenda, goals, aspirations. Or, we empower our subordinates to work in teams. But at the end of the day it is us who have to made decisions. After all, it is us who hold responsibility and accountability. And those at the top, they are there for a good reason and, by the way, organizational hierarchies have proven helpful for decades.

What’s so bad about it? – It is not about an individual somewhere in an organization but a whole business which consists of many parts interacting with each other. Hierarchies may be helpful for administrative purposes but rarely do they promote collaboration across functional fields. High performing teams share a common motivation, vision, goals and values. It is not about levels in hierarchies, it is about a team performing as a unit. Or have you ever seen a soccer team with 11 goals keepers or 11 strikers? The mixture of roles and moving in unison make all the difference.

Pitfall #1: Business is always #1.

Let’s face it, whatever new ideas or approaches fly around, the bottom line is profits and pleasing shareholder interests because, remember, shareholders give us the money. This is why we have to deliver quarterly results that are convincing and look good and we do whatever it takes to achieve this. Everything else comes second or third.

What’s so bad about it? – A business without customers and without a workforce doesn’t exist. It is not a question of what comes first, ‘chicken or egg!’. The purpose of a firm is to create value for the customer. And for this you need a functioning workforce. However, people are not resources or machines but human beings and want to be treated as such. Furthermore, giving them and sharing a motivation and vision of your business will carry your business a long way.

A journey to the future

I doubt it that these pitfalls are new to you. You have either experienced them by yourself, observed in organizations and companies, have read or heard about them. On the other side, you have probably heard of companies that have already arrived in the Digital Age, that don’t talk about or plan the future of work but practice it. There are numerous companies out there and the numbers are growing. The question is if you want to be among them or left behind. And, if you do want to follow suit, what do you want to invest and what are your immediate next steps?

If you are interested, Motivate2B accompanies you on this journey. May it be in workshops, seminars, coaching, consulting or business partnerships. Contact us to find out more.

Posted in: Creative Economy, Future of Work, Leadership

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Traditionelle Organisationsentwicklung führt in eine Sackgassse


Heute erklärte ich den Teilnehmern des HR Summit beim 12. Deutschen Corporate Social Responsibility Forum warum traditionelle Organisationsentwicklung in die Sackgasse führt, weil es auf den falschen Annahmen und überholten Management-Theorien basiert.  Stattdessen plädiere ich für einen agilen Ansatz der organisatorischen Potenzialentfaltung.  Ein entsprechendes Programm entwickelte bei und für Magna International.  In der Kürze der Zeit war es nicht möglich, näher auf dieses Programm einzugehen.  Einen kleinen Einblick gibt die Kopie meiner heutigen Präsentation; bitte hier klicken.

Posted in: Empowerment, innovation, Keynotes, Leadership, Uncategorized

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In Search for the Ideal Company


Over the last two decades I have worked for a number of companies, consulted even more. Some of them were outstanding, others were, well, less so. It is time to reflect and share what I believe are

3 characteristics of a well-run business and desired place to work and be

hand_thumbs_up_cuff_15176(1) Client delight

  • You don’t just satisfy, you delight your customers. You listen, understand and address their needs. It is a relationship, a dialogue. Not too surprising your customers not only come back to you but refer and recommend your company and its products and services to family and friends.
  • The products and services you provide are of high quality. Period. And it doesn’t end with the delivery of a product; it continues with an outstanding customer service. Want an example? Try Tesla Motors.
  • High quality of development of products and/or services. Whether you follow traditional best practices or practice lean and agile production methodologies and frameworks, the development of your product and/or services is committed to quality from the beginning to end, without compromises. This is faster, cheaper, safer and more rewarding to everyone involved.
  • You have an ear to the market and you deliver fast.
  • Your employees are committed to delight your customers because they know your and their customers. They understand and live quality and support company goals because they are shaping them, too.

group_jumping_up_400_clr_12574(2) A happy workplace

  • Your employees are not human resources, they are people and you treat them as such. Consequently, there is no “Human Resources” department; you call it “People Services” or “People Centre”. It not just a term, it is a philosophy and practice.
  • Your employees are inspired, motivated and performing, they enjoy their work because they can identify with the purpose of the company, love working with their colleagues and serving their customers, are passionate about their work and enjoy a safe, secure workplace.
  • The workforce is one big functioning organism. There is no place for static organizational hierarchies and distance between management and “the rest”. The communication style is open, transparent and conversational (vs. top-down and hierarchical).
  • You have and support autonomous teams with clear visions, objectives, roles & responsibilities.
  • Corporate leadership doesn’t cling to external “power and authority” but actively build future leaders and empowers their workforce.
  • Your company is the place to work. Not too surprisingly, turnover and sick days are low, very low.

Growth curve(3) Business value

  • You understand that short-term profits (EBIT) are the means and not the purpose of organizational performance. Instead you focus on long-term business performance parameters such Returns on Assets (ROA).
  • Your company has a positive business outlook. This is reflected in a positive, expected revenue stream, forecasted ROA, outstanding quality of the development of your products and/or services and, last but not least, a happy workplace (see above).
  • You continuously strive to become better, better and better. Innovation spans products, services, processes and your own people.
  • Innovation is not limited to a closed and exclusive „innovation department“. Innovation is open and everyone in the company is involved and participates. You encourage and empower your people to think outside the box. You don’t punish mistakes and failures but take them as learning opportunities. Hence, you recognize people’s ideas and celebrate successes together.

Excite! – Build your own ideal company

neutral Leadership Cycle of Organizational ExcellenceOver the last 18 months I have developed a comprehensive toolkit to evaluate and unfold the organizational potential and performance. It is simple, practical and applicable for short-, mid- and long-term organizational needs. It helps deliver measurable business results for client delight, a happy workplace, and business value. It does not create administrative effort without any sustainable value. As a matter of fact it fosters self-organizing, scalable best-practice sharing.

I call this toolkit and approach “Excite!” because unfolding organizational potential can and is exciting indeed. But, and this is a big “but”, it requires an open mind and common intent to unfold organizational potential and performance.   Not every company has this mindset. But then, not every company is the ideal company, the best place to work and be. It is a matter of choice.

Have I always worked for an ideal company? Well, no, not always; but, yes, I have worked for companies and teams that followed the principles outlined above (one of them was (during my times there) Cambridge Technology Partners and Vail Resorts). And if a company I work for is not ideal I always have a choice: I leave the company or help unfold its potential and performance. The latter is what motivates me.

Posted in: Centeredness, Creative Economy, Happiness, innovation, Leadership, Tools, WOW projects

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How to achieve organizational excellence: Appreciate your performance to unfold your potential

“Kumbaya” – or practicing traditional organizational development

About a year ago I told a friend of mine that my new project was in organizational development. He congratulated me and then asked, “so you are sitting in a circle around a bonfire and sing Kumbaya?” and smiled. He continued to explain that organizational development (OD) is often considered a theoretical, abstract, academic and sometimes even esoteric activity with no immediate, tangible or sustainable results. Nothing people and even less organizations can relate to. He claimed that that traditional OD often focused too much on processes and procedures. It didn’t adequately address the potential of people innovation in addition to product and process innovation. Furthermore, traditional OD activities often added administrative effort absorbing already scarce resources – without generating value for clients, people in the organization or the business. – Wow, that was a statement! And it kept me thinking for awhile. What if he was right?! What was I up against?!

The futility of organizational development

Today, a year later, I admit that my friend was (for the most part) right. What do you need organizational development for in a company that has been successfully in business for several years? To me it seems arrogant and ignorant approaching a business stating that you will help it develop its organization. I mean, what has this company been doing the last couple of years?

And yet, just because a company has been successfully been in business it doesn’t mean that it cannot improve its organizational performance and excel to the next level (see my previous post on organizational excellence here). The question is how to get there.

You are great already!

In my experience it is best to invite a company to first appreciate its existing performance. Where does it perform, how and why? What makes it so special? By focusing on the positive, on past accomplishments and present performance you create an environment that invites people to think of additional ways and means to improve their performance, taking it to the next level. The cool thing is that it is not rocket science. Just the opposite! All you need to do is find people who can talk about their experience and are willing to share stories. And this shouldn’t be too difficult! Putting this into the context of organizational excellence, the following questions serve as a guideline:

  • What is your understanding of client delight, a happy workplace, business value and continuous self-improvement? What story can you or do you want people to tell about your group / division with respect to client delight, a happy workplace, business value and continuous self-improvement?
  • What are the critical success factors for client delight, a happy workplace, business value and continuous self-improvement?
  • How do you secure client delight, a happy workplace, business value and continuous self-improvement ? E.g., through what products (portfolio, innovation, customer, etc.), people (individuals, leadership development, org. structure, etc.) or processes (strategies, policies, tools, etc.)?
  • How do you measure client delight, a happy workplace, business value and continuous self-improvement?
  • What do you invest to achieve client delight, a happy workplace, business value and continuous self-improvement?
  • What benefits do you get or expect from investing in client delight, a happy workplace, business value and continuous self-improvement?
  • What do you value most? Client delight, a happy workplace, business value or continuous self-improvement?

I have posed these questions in both workshop settings as well as online questionnaires. Workshop settings are more productive because they are more interactive and you get feedback immediately and this in return can generate new input, ideas and inspiration.

Appreciating your performance is setting the stage for continuous improvement

What I have found out is that once you have a group of people talk about their past accomplishments and present performance people can easily point out areas they want (or need) to improve. Hence, in a second question round, using the same questions as before, I am asking the group what they would like to improve and what possibly holds them back from doing so.

The third step is to plan concrete activities to overcome the impediments, draft a plan for any improvement activities, prioritize them (this is one reason why we asked the question, “What do you value most?”), identify owners and agree on an action plan and schedule.

Note that this process is not pre-determined or defined top-down. It comes from the people present. They identify their areas of improvements. And it is set in the context of past and present performance which fills them with pride and a sense of accomplishments. These are ingredients for motivation and the drive to excel.

The role of mindful leadership in unfolding organizational potential

What is my role in this process? I am not creating or defining activities for organizational improvements. The people do this by themselves. All I do is to facilitate. I help set the stage, invite people to this workshop or exchange of stories and kick off the dialogue and then let go. My role is more that of a conductor, you can say. But once the orchestra starts playing and has built momentum I step back, offer help only if needed or asked for. This is what help for unfolding organizational potential is all about. It is not an active, pushy part. It is an act of generative listening. Sounds simple; and it actually is.

Generative listening helps unfold organizational potential

And yet, listening, from all leadership capacities, probably is the one that’s most underrated. Everyone talks about vision, project objectives, project management technical skills, etc. But listening is really at the source of all great leadership. Listening ensures that leaders connect with the situation at hand. Any lack of listening skills therefore leads to a disconnection between leaders on the on the one hand and reality on the other. This can be fatal in a project setting that aims to improve the performance of an organization.

MIT senior lecturer Otto Scharmer distinguishes between 4 levels of listening (see Scharmer, C. O., & Kaufer, K. (2013). Leading from the Emerging Future: From Ego-System to Eco-System Economies. San Francisco: Berret-Koehler Publishers.). Level 1 is superficial listening. It basically serves the function that the listener wants his or her opinions or judgments to be reconfirmed. In level 2 the listener notices and acknowledges differences and captures new information from the other side. Scharmer calls this level ‘factual listening’. In level 3 the listener is not only aware of the other person but actually sees things from the other perspectives, walks in the shoes of the other person. The deepest level of listening, ‘generative listening’ as Scharmer calls it, allows the people connect with each other.

It is this generative listening what you need to practice if you want to help unfold organizational potential and performance.

Hence, forget traditional organizational development!

My friend and colleague I mentioned at the beginning of this post was right: Traditional organizational development is a dead end street.

Posted in: Centeredness, Creative Economy, innovation, Leadership

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2016: what’s to BE


Yes, I do have a number of new year’s resolution.

colored_custom_year_text_11844Here is a list of topics I would like to write about:

  • Building a Happy Workplace
  • Forget HR: Why “HR” is detrimental to organizational health and business growth (and what we need to do instead)
  • The forgotten dimension of innovation
  • Who ought to be the real business enabler in an organization
  • 1+1+1 = x.  Measuring organizational performance
  • Shareholder value is the dumbest idea in the world
  • Innovation: it’s all about people
  • Leadership in the Creative Economy
  • HIP Camp 2016 – Driving Performance, Inspiring Innovation
  • What we can learn from Social Businesses
  • Myopia of traditional economic theory

Conferences I will speak at or plan to attend are the following:

  • KAS meets WEF, Davos, Switzerland (Jan 20-24, 2016)
  • Corporate Social Responsibility Forum, Ludwigsburg, Germany (April 5-6, 2016)
  • Global Scrum Gathering, Orlando, Florida, USA (April 18-20, 2016)
  • PMI Global Congress EMEA, Barcelona, Spain (May 9-11, 2016)
  • PMI Global Congress North America, San Diego, CA, USA (Oct 2016)
  • Global Peter Drucker Forum, Vienna, Austria (Nov 2016)
  • HIP Camp 2016 – Driving Performance, Inspiring Innovation (location and date tbd)

It’s not all about work.

This is why I am looking forward to

  • Family time
  • Mindfulness. Being and motivate to be
  • Music: picking up my saxophone and clarinet again
  • Sports: skiing and snowboarding, taekwondo (3rd Dan?), running, hiking
  • the great outdoors

In other words, there are a lot of people, activities and things to look forward to in 2016.

I wish you all a Happy New Year!

 

Posted in: Centeredness, Company News, Creative Economy, Empowerment, Happiness, Institute, Keynotes, Leadership, TJEP company, Upcoming Events

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Principles for Organizational Performance


In my last blog post I explained that organizational performance and excellence requires strong leadership with a particular mindset to prosper. What does this mean? There are 5 principles that provide guidance for this philosophy and practice to emerge.

  1. Leadership Mindset
  2. Organizational Structure
  3. Commitment & Discipline
  4. Continuous Self-Improvement (CSI)
  5. Operational Stability & Quality Delivery

(1) Leadership Mindset

You can use tools, technology, approaches, etc. for a given purpose. However, if your heart is not in it, it is not only inauthentic but your practice remains hollow and an empty shell. Organizational performance and excellence requires a holistic, disciplined and committed servant leadership style. Holistic leadership in this sense means that all four drivers of organizational excellence are understood, supported and practiced day in, day out. Disciplined and committed leadership means that it is understood that organizational excellence and performance takes time to develop. Corollary, leadership understands the importance of long-term thinking. It knows the motivation of the organization and where it comes from, it has a deep understanding and appreciation of its customers and their needs. Based on this motivation leadership helps develop a vision for the organization as a whole and secures common understanding and support of this vision. The vision serves as guidance and orientation for everyone working in and for the organization. It thus helps people derive concrete long-, mid- and short-term goals and practices for the organization.

I call the interacting balance of motivation, vision and practices of an organization the MVP of an organization. It is crucial for organizational performance and excellence to develop that leadership knows, supports and communicates the MVP of the organization. The MVP of the organization help put short-term goals into perspective. No doubt, quarterly results are important. But they have to be seen into perspective. Not short-term profits (EBIT) are the drivers of business but the health of the organization which encompass its clients, people and the business as a whole.

(2) Organizational Structure

Last year I conducted a workshop for an organization where the leadership team told me that their employees were complaining about a heavy workload, resulting overtime and a deteriorating work-life balance. I was asked to conduct a ‘Happy Workplace Workshop’ to develop mitigation activities. (I will explain the setup of such a ‘Happy Workplace Workshop’ in a future post.) The results were surprising: It was not really the workload that caused the addressed issues. It was the structure of the teams and collaboration rules that caused the imbalances. While individuals more or less knew their specific responsibilities, the teams lacked a clear vision and common goals. There were no standard procedures for synchronizing the efforts in and between teams. This lead to inefficiencies, redundancies and overtime.

Together the workshop participants revisited the organization’s motivation, vision and practices and found ways to translate them for their own realm of work. Roles and responsibilities were qualified and adjusted to the needs of the customers and the teams. Rules for open, transparent and conversational communication were defined and confirmed by management. – Within 3 weeks following the workshop the issues of a heavy workload, resulting overtime and a deteriorating work-life balance ceased to exist. Interestingly, it was not management that came up with these changes. It were the teams themselves that developed and realized relevant mitigations.

The workshop clarified that it is important to build and nurture autonomous teams with clear, commonly understood and supported vision and goals, roles and responsibilities. Communication in and between teams has to be open, transparent and conversational (vs. top-down and hierarchical).

(3) Commitment & Discipline

Leadership is not limited to one or two people “at the top” of an organization. Leadership can be practiced by everyone regardless of his or her role. On this token the principles for organizational performance ought to be understood, supported and committed by the complete staff. This requires discipline on all organizational levels. There is no textbook for practicing the principles in a precisely defined way. Principles serve as guidelines and orientation. Rather than following a strict procedure, encourage sharing of practical experiences of the principles in form of personal stories so that people can relate to them in their daily work.

Performance merits recognition. Some organizations have a bonus system in place. This can work and promote organizational performance as long as it is transparent, fair and objective. For example, it can be based on commonly defined key performance indicators (KPI’s). Since teamwork is crucial in more or less every modern organization team performance should be rewarded (vs. individual performance in a group). This fosters team spirit and accountability.

Processes, tools, procedures and policies can make work runs smoother. But, and this is a big BUT, they are only tools and serve a purpose. In other words, make smart use of them. It doesn’t add value to use a tool for the sake of the tool. Standardized work can be a great help and serve to make work more efficient and productive yielding better quality and hence value. However, standardized work, too, is just a tool and hence should remain a servant and not become a master.

(4) Continuous Self-Improvement (CSI)

It is funny and frustrating at the same time, when companies claim to be innovative; yet, when you talk with employees they tell you that mistakes are punished and that innovative activities are tightly planned. What an oxymoron! If you want to be innovative you have to be willing to try new things, make mistakes and learn from them. Innovation happens at the border between known and unknown. You may set up organizational structures for innovation but you cannot specify innovation in advance. Instead, make sure that you build an open, transparent, collaborative and engaging environment for continuous self-improvement. Recognize and encourage small and not just big improvements. Sometimes little changes can make a big difference.

In an open innovative environment there are no organizational boundaries. I witnessed the opposite in one company where people were asked to submit their suggestions for improvements. Unfortunately, the process was not open and stifled the innovation process at the bottom. Shopfloor workers first had to ask their supervisors to evaluate and then forward their ideas to the next higher level. Not too surprising, engagement for innovation on the shopfloor was more or less non-existent.

If you are faced with redundant, inefficient processes, procedures, tools or practices – eliminate them if they are waste and do not add value.   The suggestion program mentioned above would be an example of such waste.

(5) Operational Stability & Quality Delivery

At the end of the day, the bottom line, the organization has to deliver. Not once but in a consistent and stable manner with high quality and reliability.   You can say that the previously mentioned principles for organizational performance are organizational prerequisites for operational stability and quality delivery. However, it does not mean that one principle is more important than another.   Instead you have to take on a holistic, systemic approach, take all principles into account and take discrete steps toward your organizational vision and goals. Discrete steps have to be part of a larger picture. For this to work, there is a need for long-, mid- and short-term organizational as well operational priorities. And they have to be transparent, i.e., known and supported by the whole workforce. A plan by itself may be of little value. As part of a bigger, long-term plan and vision it can give people the necessary direction and orientation. If reviewed regularly to check whether or not it still serves its purpose for leading an organization toward its vision, this plan is a cornerstone of operational stability and quality delivery.

Leadership Principles for Organizational Performance

While these 5 principles for organizational performance are primarily based on my own experience and insights, they are also examples of the modern leadership style required in the Creative Economy. If you are interested in learning more about this leadership download the free Report of Learning Consortium for the Creative Economy.  Plus, I will share about my personal experiences and findings with the Learning Consortium in a future post.  Stay tuned.

 

Posted in: Creative Economy, innovation, Leadership

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The Heart of Organizational Excellence


In times of increasing competition in the marketplace, organizational excellence or performance is ever more important. But what does ‘organizational excellence or performance’ actually entail? What does it mean? And how can it be achieved? And, even more important, why does it matter?

I believe that there are three drivers for and to organizational excellence and performance. (1) delighting your clients, (2) building a happy workplace, and (3) sustaining business value. Let’s have a look at each one of these drivers to get a better understanding of what’s behind them.

The three drivers of organizational excellence

(1) Client delight

hand_thumbs_up_cuff_15176Say, you have been staying at a hotel. The hotel was decent, your room was clean and spacious, breakfast was good and they even served some fresh fruits. On a scale from 1 = bad to 10 = excellent you may give this a hotel a 5 or 6 rating. You were satisfied. But you were not fascinated or delighted in a way that you would recommend this hotel to your peers, closest friends or family members.
The next time you visit the same city you are staying in a different hotel. This time it is a completely different story. The check-in runs smoothly, everything has been prepared for you, the room is just as clean as it was in the other hotel. But there is something special about this hotel. It could be the location, the architecture, the furniture, the people working there and serving you.   No doubt, you are willing to return to this hotel. And even more so, you will probably recommend this hotel to your peers, closest friends and family members.

In the first example you were a satisfied customer. In the second example you were delighted. Which hotel do you think will have a better business outlook?

When running a business you have a choice. You can do the bare minimum to satisfy your customers or you decide to go the extra mile and delight your customers. In either case the prerequisite is that you know who your customers are. As self-explanatory as this is, there are a lot of companies that seem to have forgotten whom they really serve.

Another question every business should be able to answer is whether or not it wants to build customers for life or only for the short-term. What is more important quick, short-term profits or a long and outstanding customer relationship with long-term, sustainable profits which may yield less quick wins but greater pay offs in the long run?

And what about the customer’s perspective? Which company do you want to do business with. One which treats you like a number, a resource or a sole revenue source. Or a company that reaches out to you, seeks to understand and satisfy your needs, communicates with you, walks in your shoes and shows a sincere interest in you? – Client delight is about the second company.

(2) A happy workplace

group_jumping_up_400_clr_12574Most companies speak of their employees as assets. This sounds good and wonderful. But then, ‘assets’ for what? Are the employees just resources that add up to a bigger picture, the companies outcome, products and services? Unfortunately, most average companies fall into this category. This is not to say that treating people as human resources or human machines is advisory. Especially not if you are interested in organizational excellence and performance. Yes, you can train and treat them like machines, push them to their limits, get the most out of them – for some time, until they are either burnt out or leave your company. You replace them and start the process anew.   You may be interested and actually achieve employee satisfaction. However, this is not to be mistaken with inspired, motivated and performing employees who enjoy their work because they can identify with the purpose of the company, love working with their colleagues and serving their customers, are passionate about their work and enjoy a safe, secure workplace.

Companies can build such a workplace. Just as knowing the needs of their clients they have to show 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.

A happy workplace does not mean that you have to do everything just to please your employees without expecting anything in return. Of course not. But you have to provide or at least build an environment where they can prosper and perform at their best. A first start is that you don’t treat employees as resources but as people, as human beings.

(3) Business value

Growth curveThe former CEO of General Electrics, Jack Welch, describes the call for maximizing shareholder value as the dumbest idea in the world. Other describe it as corporate cocaine. In either way, the bottom line is that shareholder value is not identical to business value.

Think about the following: you want to invest into a company, or even better, you want to acquire a company. What do you look at? Just the present stock price and its outlook? Of course not. You take a number of factors into account: 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. But how come most companies these days just talk about satisfying shareholder interests and maximizing shareholder value?! Shareholder value is the result of a well-run business and not the other way around. Hence, treating shareholder value as the purpose and driver of your business is not smart but myopic and can even be detrimental to the value of your business. From a business perspective, it is plain stupid.

The sweet spot of organizational excellence

The sweet spot of organizational excellence is where all three drivers outlined above come together. If you depict the three drivers as three circles, it is the area where all three drivers overlap that you can spark organizational performance and excellence.

Venn Diagram - Org. Excellence

 

This is not a one-time effort. You have to continuously improve your own performance to stay in this sweet spot. In this sense, continuous self-improvement can be considered a fourth driver of and for organizational excellence. It adds a dynamic dimension to organizational excellence. Rather than a static Venn diagram with three circles we can depict this as a Möbius circle.

neutral Leadership Cycle of Organizational Excellence

 

The bigger the overlapping areas of all three drivers, the better organizational performance is. This implies that in order to develop organizational performance you have to take all four drivers into account. This holistic view requires leadership, a specific mindset, philosophy and practice. It is not solely driven by short-term gains but balances long-, mid- and short-term needs and goals. It is has a clear customer and people focus and nurtures an open innovative culture.

It is this leadership which I will write about in my next blog post. Stay tuned.

Posted in: Creative Economy, Leadership

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Business 7.0 – An enlightening, inspirational, motivational book for tomorrow’s leaders


the next wave in businessThere are countless books on leadership and change management. Most of them have in common that they propose a specific way how to achieve performance and accomplish change. Alas, our world around us, business and we, ourselves, have changed.

The traditional linear mechanical model of leadership has become outdated.

In order to understand the leadership we need today and tomorrow, begin by grasping the now, the present, accept it and let go and thus create the necessary space for things to unfold. Tomorrow’s leadership is not so much steering as creating, unfolding and shaping the space for potential development of individuals, teams, organizations and businesses.

A journey to a holistic, fresh leadership culture

In his new book “The Next Wave in Business” Stefan Götz outlines the pitfalls and blind alleys of old mechanical leadership philosophies. He takes his readers on a journey to a holistic, fresh leadership culture.

The book begins with a snapshot of the many ills in our economy and environment which stifle innovation and long term development opportunities. Stefan Götz guides the reader on the way to business 7.0 which focuses on unfolding our true potentials.

The book is enlightening as well as sobering because of its honest and unsparing description of traditional business. The book’s clear structure and orientation towards holistic management and business 7.0 makes it inspiring and motivating. It is a must-read for everyone who doesn’t understand leadership as a blind, Machiavellian posturing, but want to make and leave a positive impression in society and in the economy.

Share the message and become a fan

Stefan Götz’ book is available as an eBook in English and a print-edition in German.  In order to reach a wider audience Stefan Götz wants to publish a print-edition in English, too. For this purpose he wants to start a crowd funding campaign raising money to launch the print-edition.  The money will be used for typesetting, editing, cover design, PR work and marketing.  For the crowd funding campaign to start he needs at least 100 fans.  Please visit https://www.startnext.com/en/the-next-wave-in-business-book for details and support this unique project.

 

 

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