Case in Point #1: What to Cut in Exec Ed programs?

A leading business school cut back on its (non-degree) executive education program offerings as their client base was cutting back on their executive education budgets. They cut what they considered the “soft” courses, like those on values-based leadership and organizational culture in favor of courses on finance reflecting their clients’ desires. Their clients’ rationale: “In tough times, it’s important that all managers understand finance better. We’ll tighten our belts, make wise financial decisions and weather the recession better.”

The problem is that business success is about more than just the financial side. Sure, we need to be extra attentive to cash flow in a recession. But with all eyes on finances, we take our eyes off other important resources, like employees and customers. Because so many companies do just that, a recession is a wonderful time to make huge strides on the people and customer dimension of your business. What you do in either of those areas will stand out in a time when so many companies withdraw behind their drawbridges.

Thus how ‘bout courses on Turnaround Management that emphasize these other important drivers of business success, and how to inspire and Lead people through a recession?

Case in Point #2: The Hidden Costs of Skimping on the Human Resource

In their efforts to maintain profit margins (and thus their standing with Wall Street and their shareholders), companies can unintentionally injure their companies. A young man I talked to recently, who works for a large financial services company, described the impact of his company’s intense focus on the financial side. As a result of this financial focus, they are reluctant to hire more staff even when customer demand warrants it. (This is why reported “productivity” goes up at the start of a recovery: Output goes up while the growth of human resources is restricted.) So, though their profit margins look good, a closer look shows they are shooting themselves in the foot.

This man normally handles about 60 clients, providing valuable client service in support of their companies’ financial services to corporations. Now he is handling more than 90 (at the same pay of course)! Not surprisingly, he is highly stressed. He shared with me that many of his colleagues feel the same pressure and are envisioning the day when they can move to a company that respects their employees. This is not an isolated case. Research shows that in a downturn, employees are actually more interested in looking elsewhere for better opportunities. So, while companies are squeezing out more profits, they are weakening their human resource, risking even losing their best people.

…And this also results in Tainting the Customer Relationship

He also shared with me that, with 50% more work, it’s impossible to be as careful and thorough as in “normal” times. Thus there are screw-ups in serving customers. These of course do not go unnoticed by customers, so customer satisfaction (and loyalty) diminishes.

Thus this company, to keep its profit margins up, is damaging two other resources – Human Resources and Customer Relationships.

How much to invest in Human Resources?

The above examples raise the question of just how much to cut back or invest in Human Resources, especially in bad times. Consider the following examples – two different routes; two diametrically opposed results.

1. A now defunct electronics retailer was facing hard times. Management went through the financial statement, and (in an effort to cut costs to raise profitability) decided to lower the pay of floor sales staff to Wal-Mart levels. The immediate result: Bingo, an increase in profitability! But the real impact of this move was to drive away knowledgeable sales staff. Guess what that did for sales? Customers went elsewhere to get guidance in buying complicated electronic equipment, and this company was soon history. This is not an isolated example of companies cost cutting their way out of business!
2. Now consider the story of Costco, a leading U.S. retailer. They have routinely paid their floor sales staff well above industry pay levels. They “make up” for this by spending well less than other retailers on marketing, believing that above average sales people will not only be effective sales people at work, but also will be great sales people in their communities, talking about Costco, thereby stimulating demand for their product, and increasing the pool of talented employees to come work at Costco. Wall street analysts howl that Costco is not spending enough on marketing and overspending on employees. But the company thrives.This is an example of how important it is to stop compartmentalizing business. Everything is interconnected!

Taking Proactive Action

What’s the bottom line for you? Only you can decide, but here are three steps I’d recommend:

1. Sure, go ahead and go through your P&L and identify ways to cut costs – but do it in a way that is holistic. For example, employ a “continuous improvement” approach that looks at major business processes and determines how to improve those processes. That keeps people focused on why we do certain processes and how to improve their impact. In the process, that can take out unnecessary costs.
2. Engage your people in doing #1. People want to contribute to their companies’ success. Engaged employees working on important company goals are more likely to be enthusiastic and innovative.
3. Also, engage them in exploring ways that your company can deliver even greater value to customers. Have them survey important customers to learn a) what they value about doing business with you, and b) what their challenges and problems are. From that, you may find ways you can provide more value to them (with little or no cost). Staying in touch with customers (in productive ways) is a great way to maintain or increase customer satisfaction and loyalty.

Doing any of the above three steps can strengthen your company while competitors may be just “waiting out” the recession. Doing all three can reap huge rewards. You’ll make great strides forward. And your competitors will also be surprised when they wake up and venture out into the market place to find that you are much farther ahead than they are.

I am continually awed by the power of freedom, both as a reality and aspiration of peoples and as a force for personal and economic development. Though we tend to think of freedom as a political and societal issue, it is also a business issue. At a macro level, without free markets, we have governments or monopolies dictating economic life. With individual firms and people making market decisions, we have vibrant economies that grow and that fuel higher standards of living. But freedom within companies is equally important – to both the individuals involved and the company itself. I address this at length in my recent book Noble Enterprise – Freedom within Structure is one of the five pillars of a Noble Enterprise.

We often think freedom is won through war, but whether or not war is the vehicle, it starts with a burning desire for freedom, shared with others and expressed. I’d like to share two personal experiences with how freedom has been cherished in two countries that lived under Soviet domination, and how the expression of that love helped bring about freedom. It is these personal experiences and the stories of people’s quest for freedom that remind us how precious and powerful it is. When we live in a country that has long enjoyed freedom, it’s too easy to take it for granted.

“Singing our Way to Freedom”

This spring I had the pleasure of singing with a new choral group in Maine – Vox Nova , a group of 28 singers who perform modern, mostly American music – without accompaniment.  Our recent concert also included Mongolian and Estonian songs. With Kate, a member of our chorus, being from Estonia, we took special interest in the music of her country. We opened the concert with Laula Algus (“The Beginning of Song”). The story behind this song is so moving and such an important part of the story of Estonia’s freedom that I’d like to share what Kate’s husband Matthew (also a member of the chorus) wrote for the program notes:

“Veljo Tormis wrote Laula Algus for the centennial anniversary of Estonia’s national song festival in 1969… integrating a melody from a song performed at the first national song festival in 1869. The seemingly innocent nostalgia on display here masks a potent and powerful message: to the government sensors of Soviet-occupied Estonia, lines about freedom and singing “my own song” conformed with the proletarian work ethic reflected in the Russian-language songs about Stalin and Lenin that made up the bulk of the centennial festival. To Estonians, the ability to sing their own songs “in the tongue of this land” represented a different aspiration and a different freedom altogether.

Two decades later, spontaneous “night song festivals” played such a significant part in the movement for political independence that at the most recent song festival in the summer of 2009, the country’s president remarked that the nation had “sung itself free.” A choir of approximately 25,000 singers proceeded to sing this very song.”

* * * * * * * * *

The Power of Candles and Prayers over Totalitarianism

Nine years ago, my wife and I visited our son and daughter-in-law in the former East Germany, where she was teaching for the year. Only a little over ten years before that, the Berlin Wall had fallen and East Germans gained their freedom. Leading up to that moment, a growing number of East Germans bore witness to their desire for freedom. We visited one of the birthplaces of East German freedom – the St. Nicholas Church in Leipzig.

Christian Führer and Christoph Wonneberger—two young pastors in Leipzig, East Germany’s second-largest city—began holding regular Monday evening prayers for peace at the St. Nicholas Church. In the mid- 1980’s, the numbers were small – only about ten people. But they kept coming each Monday night until there was a groundswell – hundreds of people, then thousands of people.

The Stasi, the secret police, had grown wary of these gatherings. After each service, people left the church and gathered outside.  They were carrying lit candles, hardly threatening to a totalitarian regime. It took two hands, one to carry the candle and the other to shield it to keep it lit. So nobody could pick up and throw a stone. Yet, the numbers grew to the tens of thousands, witnessing the power of numbers and unity – and a single-mindness of purpose. This movement was credited in part with the fall of the Berlin Wall. In fact, the feared Stasi secret police didn’t know what to do. They “were ready for anything – but candles and prayers!”

In their description of this remarkable story, the Wilson Quarterly concludes with:

“…opposition movements that don’t succeed immediately tend not to garner much lasting interest.   But talk to the people who risked everything to show up at St. Nicholas Monday after Monday, never dreaming of a night when there would be no need, and one thing becomes clear: In the places where it mattered—in Warsaw, in Budapest, in East Berlin—change took time. After the wall came down, Rainer Eppelmann (a pastor at an East Berlin church, who also helped the movement to free East Germany) spent 15 years as a member of parliament and now runs the government-funded Foundation for the Study of the SED Dictatorship. Looking back, he says revolutions can’t—and shouldn’t—be rushed. “No chancellor, no U.S. president, no British prime minister, could send in troops to Central Europe and liberate the people. It would have meant war,” he says.

“What happened was a self-liberation. Soft water breaks the hardest stone.”

* * * * * * * * *

As we celebrate and give thanks for our own freedom, let’s take the time to send prayers and affirmations to those who seek freedom in the darkness of totalitarian regimes like Iran, North Korea, Venezuela, and on and on. Let’s also consider that this freedom starts in the soul, then connects with others, and takes many forms of expression – such as the songs of Estonia, and the candles and prayers of East Germany. And that it is patient and persistent.

Let Freedom Ring!

These are some of the questions I recently put to the students in an Accelerated Executive MBA program at a leading Northeastern business school where I spoke recently on Noble Enterprise. Though the sample is small (a little over twenty students), I found it interesting because these are all at least mid-level management people who have several years of experience, and who are looking to improve their management skills. They come from a wide range of industries (and even some from outside the “for-profit” world).

In just a short blog post, I can’t do justice to their many opinions and insights. I anticipate providing a more in-depth report on this survey in our next Leading in a New Light e-newsletter, so if you subscribe, you’ll receive that soon. (You can sign up at lower right.)

Here is just a sampling of what we heard from these students:

1. Human Capacity Utilization:  Low

Though the economy is recovering, these managers and professionals felt that their employers were only tapping a fraction of the capacity of the human resource. In fact, less than a third of the students believe their company is tapping at least 90% of the available human resource, whereas a full third felt it was below 80%.

Considering how much the human resource costs most firms, that’s a huge amount of untapped capacity! Just think of the competitive advantage you could create if you could tap at least half of the unused capacity!

2. The HEART: The Great Untapped Resource

When asked to estimate what percent of the Mind is being called on by their employers – and what percent of the Heart is being called on, nearly every participant reported that the Mind was being tapped at a far greater % of capacity than the Heart.

Hmmm. That may not be surprising. But just consider how much more these companies (and perhaps yours?) could achieve if they tapped more of the Heart. Now that’s a worthy avenue of inquiry. (You’ll hear a lot more about that later on when I tell you about the next book I’m working on.)

3. Spotting & Assessing TRENDS

I found it interesting what kinds of trends they saw that they anticipated would change business.  In brief

• The trends cited by the most participants were within their Industries, with Government/Societal shifts coming in a close second. Shifts in Technology were a solid third.
• Then it gets interesting. Asked to identify which trends represented a Threat and which an Opportunity, here’s what they said:
  * Changes within their Industries were seen more as THREATS, by two to one
  * (more) Governmental regulations were mostly seen as THREATS
  * Technology changes were widely viewed as OPPORTUNITIES

Yet unmentioned were any underlying, fundamental shifts in such areas as Human Evolution (and motivation), shifts in the perception of reality by science, or shifts in the underlying economics of the firm. (If you’ve read NOBLE ENTERPRISE, you’ll remember that it is just such shifts that are laying the foundation for Noble Enterprises built on a different reality.

4. Likely Changes in the “Business Model”
Asked what impact these shifts might have on the definition of a winning “Business Model”, the participants listed the areas they felt that companies would improve as a result of the anticipated trends.

• They provided a rich array of areas they thought would be improved in how companies operate, including
  * more efficient operations
  * better use of information technology
  * providing better value for the customer
  * utilizing technology to improve the product
  

• Only a few participants cited likely improvements in

* the human resource
* leadership

Yet, what if the major breakthrough in business over the next decade were about to happen in this second list? What if companies put as much energy into improving the management process (i.e., the management system) as they do in other business process redesign? What a payoff that could be. The companies cited in the book NOBLE ENTERPRISE that achieve far beyond the norm do attend to all of the above dimensions, but they also focus powerfully on the people and management dimension.

5. Desired Changes to their own Companies

I also asked them what changes they would like to see their companies make – to improve their performance. These included

• Changes in Strategic Direction, Operations & Technology
  but also
• Improvements in the Human dimension (integrity, team environment)
  plus
• Changes in Management – including “less structure”

What’s fascinating here is that the folks in the middle ranks, and these are rising stars, who want to learn more and want to find ways to manage as well as they can – these folks see that Management and the Management Process is one of the dimensions that needs improvement. If, however, you read surveys of CEOs and what they think are the major challenges they face, they list all of the other areas (revenue growth, technology, customer care, marketing strategy, efficiency, business process redesign, etc), but seldom do they cite management itself as an aspect of the company that needs improvement.

6.  How will Needed Change Happen?

Is it likely that there will be a major push to improve the management process in companies? Perhaps, but only

• Where there are inspired, enlightened CEOs who “get it”
• Where there are mid-level managers who are pushing for improvement in the management process
• Where competitors start winning – and their competitors figure out that it isn’t new products, or better service, or more efficient operations (though they are the “messengers” of change), but rather the underlying management system and leadership that is providing the new “high test” fuel that is powering their human resource and thus creating a resurgence in their business performance.

That’s my take! What’s yours?

Stay tuned for more insights about the coming shifts, as learned from this survey and elsewhere – in an upcoming Leading in a New Light e-newsletter. (Sign up for that distribution list at lower right.)

For information about NOBLE ENTERPRISE, click here.

To order, go either to Amazon.com or to www.CosimoBooks.com (especially for volume orders).

Yet when a business is shaped and led as a Noble Enterprise, it can actually achieve traditional business results far beyond the norm.

Given all those natural reactions to the concept of the Noble Enterprise – in a world of selfishness, cut-throat competition, mundane work, and struggle, I’d like to introduce you to an example of a noble enterprise that I learned about recently – one that serves pizza and beer. How, you say, could such a business be noble? “Let me count the ways,” as the saying go.

First, keep in mind the five pillars of a noble enterprise, for each one of these pillars is developed and stressed in this pizza and pub.

1. Serving a Higher Purpose
2. Acting with Ethical Values
3. Growing People
4. Providing Freedom within Structure
5. Thinking and Acting with a Holistic Mindset

Now for this inspiring example: The company is Nick’s Pizza and Pub (in Illinois).

It is likely one of the largest independent pizza companies in the country – and certainly one of the best, as you will see below. There are now several additional locations. It is also one of the most profitable. Industry profit levels run about 6.6% of revenue. Nicks’ runs about 14% – over twice the norm!

A NEW ATTITUDE: First of all, its founder, Nick Sarillo, started with a different view of business and people than the prevailing view. He observed, “Everyone who had a business told me, ‘No one cares like an owner.’ They said, ‘Watch out. People are going to steal.’ I set out to prove them wrong.”

HIGHER PURPOSE: Sarillo didn’t want to start just any pizza and pub company. He wanted to start, build and lead the best possible company. That intent is a great start. And what did he think such a “best company” would look like? He already had a good pizza recipe, since he grew up in his father’s pizza business. But he knew it would be about far more than just the pizza. Here’s how he puts it on Nick’s website:

OUR PURPOSE: “Our Dedicated Family Provides This Community an unforgettable Place; to Connect with your Family and Friends, to Have Fun and to Feel at Home”.

SERVING THE COMMUNITY: He wanted the company’s and his relationship with its customers to go beyond just pizza – i.e., beyond just the material dimension. It had to be much deeper. Here’s what he’s done about forming and nurturing this caring relationship

• Given these tough economic times, he has responded in an unusual way. A sign at the entrance to Nick’s says it all:
  “Kane County unemployment
       6.3% vs. 11.1%
  Sept 2008 – Sept 2009
  ½ Price Monday and Takeout
  Tuesday are here to stay until the
  unemployment lines go away”
• Nick’s restaurants host fundraisers usually each week. The company contributes 15% of its gross profit from the event. Also Nick’s sponsors several large benefits each year usually for families facing high medical bills. The company contributes 100% of its gross profits for the day and the servers often contribute their tips.

IT’S ALL ABOUT PEOPLE: How can one build a Noble Enterprise out of a pizza company? Now that’s a concept! After all, the typical employee is a teenager trying to pick up some extra cash as he or she goes through high school – and usually moving on after a short time. What do they care?  In fact, the typical turnover rate for pizza businesses is about 200% (that is, each job has to be filled three times a year), whereas turnover at Nick’s is about 20% (that is, only one out of every five jobs has to be filled each year!) – a remarkable stat, given that most of his employees are teenagers! Ninety-six percent of those hired stay at least a year.

How in the world did/does he accomplish that? It’s a long story, sprinkled with innovative people-centered ways of hiring, training, rewarding and advancing people – and of giving them scope to do the job on their own. It’s also about growing people, so (even at a pizza place) he has found ways for people to develop themselves and their skills. And it’s about creating a sense of community, of oneness.

People outside the business can hardly believe the loyalty and excitement the staff has for the company and their role in it. You probably won’t be surprised that only one out of every twelve applicants gets hired by Nick’s. One 25-year old server reflected, “When I come here, I really don’t feel like I’m coming to work” (sic). She works only on the weekend and has a full-time job at an advertising agency during the week. “My boyfriend doesn’t understand it. I just like to be here.” Wouldn’t you do just about anything to have employees who feel that way about your company and their role in it?

A MANAGEMENT STRATEGY OF “Trust and Track”

One of the ways he keeps staff is that he gives them authority and freedom. That’s such a foreign and scary concept in most traditional corporations. As he puts it, “All of our systems are geared toward creating a culture of trust. A lot of people would say trust is intangible. We’ve made it tangible by putting these systems in place. They allow you to see whether the trust is there and whether the way people behave is promoting or undermining trust.” And that’s just for starters.

The FUTURE

After fourteen years of building and growing his company, he was asked whether he wants to open more Nick’s Pizza & Pubs. His answer: “Oh, yes, I feel more inspired to grow than ever. People really do want to have a meaningful place to work, and that is one thing I know how to do well. So how could I not want to keep doing it for more and more people? I mean, what could be a more fulfilling life?”

Bravo! We need more Nick Sarillo’s and Nick’s Pizza & Pubs – not only because of what they do for their customers and communities, but especially because of what they do for their employees (and their leaders)!

If you would like to learn more about Nick’s go to http://www.nickspizzapub.com/home/  and also to Fast Company, the source of the above information (an article “Lessons from a Blue-Collar Millionaire” in the February 2010 issue) – with more about the owner and his secrets of success.

For more about Noble Enterprise, go to http://www.noblebusinesssolutions.com/nobleEnterprise.html

and for information about the book on Noble Enterprise, go to http://www.noblebusinesssolutions.com/nobleEnterprise.html

What is your company’s business model – and how’s it working for you? I don’t mean its strategy – that’s different. The “business model” is the very core definition of your business – WHY it exists, to Serve WHOM – and what those NEEDS really are.

The traditional business model focuses on things like: 

-         Maximizing growth and return on financial investment – which is leftover from a time when it was financial capital that was the scarce resource and the driver of the wealth creation process. While that is an important measure of business performance (and certainly a motivator of those who provide the financial capital to a business – or own its stock), it’s not a great motivator of people in the business.

-         Finding a market need – and serving it better than anyone else. Most business models assume that the key to success is to pick the right market and then provide value to it at a cost below the price charged to the market. That is just one way of defining a business model, not the only way. Even those who subscribe to this business model need to see beyond the traditional model, which focuses on the market for your product or service. That’s not the only way to think of the market as we’ll see below

-         Filling material needs – traditionally, the economy has been about filling material needs, mostly with material products. Now there’s much more to a business model than that

What about a business model where… 

1. the primary resource we’re utilizing is not so much financial capital, but human capital – and even more specifically human spirit? Can we build a successful business model around that and prosper?
2. the primary focus is not so much on the customer, but rather on the supplier or employee? …and not just to raise their material standard of living but to raise their sense of self-realization and spiritual fulfillment? Can we build a successful business model around that and prosper?

I see more and more examples of an alternative business model built with that kind of mindset – or should I say “heartset”. This really turns the business model on its head.

Here’s an example: I received an email recently from Amber Chand, founder and head of a business with an alternative business model. She describes her (for-profit) business thus on its website:

“The Women’s Peace Collection is an enterprise that fully supports women in regions of conflict and post-conflict – as mothers, peace builders, entrepreneurs, and skilled artisans. We are a company that believes in the power of creative enterprise as a foundation for healthy and vibrant communities.”

So, her business serves its suppliers – and not just their material needs/desires, but a far larger vision. The market is mostly U.S. consumers reached through the Internet.

In a recent email to her customers, she shared this:

“As I think back on this year, I am reminded of those poignant moments which touched the hearts of so many – the weavers in Darfur who danced around their makeshift tent when they discovered that their Peace Baskets were appreciated by American audiences, chanting “We are artists not just refugees!”……”

In this one example are the seeds of a new “business model” – one that turns the traditional business world upside down. It might herald a major shift from a focus on the marketplace to a focus on the workplace. It also focuses not just on the material dimension of work and life, but on the non-material, or spiritual dimension.

The Bottom Line – What’s it Mean to You?

How might Amber’s example apply to you? Ask yourself these questions about your own business and leadership:

1. What is the ultimate purpose of your business – to do what for whom? Try answering it in as deep or global a way as you can. Why? Such a new perspective on the purpose of your business might just rekindle enthusiasm and focus in your company, making people – including yourself, more alive and motivated.
2. What is the non-material or spiritual dimension of this? I know – business is supposed to be rational and practical. But some of the most successful businesses, even big public ones, have at their core spiritual purpose and principles.
3. In what ways is your business currently inspiring people in the business and connected to the business? If you’re not, how might you be? Many people no longer want to have dealings with companies that don’t have a sense of higher purpose and noble values.
4. In what ways are you seeing and interacting with people not only in terms of their material needs and contributions, but also in terms of their highest aspirations and deepest contributions? Treating people this way can stimulate even greater contribution on that level.

2010 is a great opportunity to shift your thinking to this new Business Model. You will join a wonderful “crowd” of people who are already shaping and leading such businesses as you make this shift – and may well supercharge your business model in the process.

Earlier this year (May 21^st), I wrote a blog on “Managing Through Difficult Economic Times: Nine Lessons for Leaders.” A number of people reported that these lessons were helpful as they wrestled with the challenges of managing in an economic downturn. Now that companies have succeeded in weathering the cold economic winds, they face the challenge of deciding when to venture back out into the market in a more aggressive, pro-active way. The tendency is to wait too long, and then have to play catch up with competitors who have already begun re-energizing their organization, rebuilding their business and strengthening their market position.

Whatever actions you take now will get more attention and traction – both from outside the company and from within. You and your company will stand out while others still wait until it’s safe, until the coast is clear, before they shift back into a more pro-active mode. By waiting, they may be actually putting their companies behind the eight ball, leaving competition to surge ahead while they are in neutral.

Thus, now’s the time to dust off those growth plans, resume investing in your people – and build some momentum that you can ride as the economy does recover. It’s like “riding the wave” rather than getting drowned by the wave. To ride a wave, you have to start swimming before the wave arrives. You can’t just instantaneously switch into the “On” mode.

This means revisiting those pro-active plans for new product development, new market development and the building of company strengths and resources that were shelved when you went into a defensive financial mode last year.

 The new industry leaders will be those companies that begin at least to plan those actions now. In a volatile time like this, there is great opportunity for those companies that do this planning now and begin taking action to implement their plan.

We have designed a program for the senior management team of companies that want to re-energize their companies now and position them for profitable growth. Those executives who have already gone through the program have given it high marks. If you’d like to learn more about this program, we’d be happy to send you information. Just write us at dgillett@noblebusinesssolutions.com

In one document, the Declaration of Independence, the American colonists declared the right to “Life, Liberty and the Pursuit of Happiness” and their God-given right to govern themselves. The day after the delegates approved the document, John Adams, one of the Founding Fathers and later President, wrote this to his wife, Abigail, “The Second Day of July 1776, will be the most memorable Epocha, in the History of America. I am apt to believe that it will be celebrated, by succeeding Generations, as the great anniversary Festival. It ought to be commemorated, as the Day of Deliverance by solemn Acts of Devotion to God Almighty. It ought to be solemnized with Pomp and Parade, with Shews, Games, Sports, Guns, Bells, Bonfire and Illuminations from one End of this Continent to the other from this Time forward forever more.” And so we do to this day.

In the other document, “The Wealth of Nations”, also published in 1776, the Scot Adam Smith argued that when people are free to take economic actions that benefit themselves individually, then they not only increase their own economic wellbeing, but also (through a kind of “Invisible Hand”) the overall wealth of their countries.

Freedom within COUNTRIES

In the mid-1990’s, the Heritage Foundation created an index of economic freedom based on ten dimensions. Tracking about 180 countries, including not only their economic freedom, but also their relative economic success, they see an advancement of freedom in recent years. www.heritage.org/Index/About.aspx.

Their research also shows that countries with a high index of economic freedom have higher economic standards of living and higher growth rates, as explained in a press release earlier this year: “Economic Freedom Still Key to Growth and Prosperity, 15th Index of Economic Freedom Shows. Freer Economies Lead in Income, Poverty Reduction and Protection of the Environment’ – www.heritage.org/press/newsreleases/Index09f.cfm.

Despite the overall advancement of economic freedom, some countries have slipped last year in their economic freedom score, including the U.S., which dropped to sixth, behind Hong Kong, Singapore, Australia, Ireland and New Zealand.

Freedom within COMPANIES

While we accept the importance of freedom in the market place, we don’t normally think of freedom within companies as an important quality for increasing prosperity. In fact, many managers recoil at the very thought. But we have found that when employees have some freedom to make decisions and implement them, they are more motivated, more innovative – and often more successful than when merely following procedures. Perhaps that’s what Thomas Edison, the great inventor, was driving at when he exclaimed, “There ain’t no rules around here! We’re trying to accomplish something!”

“Individual Freedom within Structure” is one of the five Pillars of a Noble Enterprise – a company that generates success by honoring and empowering its people and serving all its stakeholders – as described in my book NOBLE ENTERPRISE: The Commonsense Guide to Uplifting People and Profits - www.noble-enterprise.com.

Freedom within INDIVIDUAL Hearts and Minds

We know that those who claim and act from their own sense of freedom can accomplish miracles. But what about those people who have never known freedom, who lack the sense of their own power and who have lived in fear their whole lives? Can they claim their freedom and act from it?

In our recent newsletter Leading in a New Light, we interviewed one entrepreneur, Amber Chand, who is helping women in war-torn areas of the world become entrepreneurs themselves, claiming and exercising their economic freedom in the process to create prosperity for themselves and their families.

To learn more about Amber and her work, go to www.amberchand.com.
To read/listen to my interview of her from the newsletter, click here.

Let us celebrate freedom this week – both political and economic!
And let us ask: How am I fostering freedom – in myself, my enterprise, my children – and my country?

The conference, held at Bentley University in Waltham, Massachusetts, featured numerous authors, consultants, business professors and business leaders, including John Mackey, CEO of Whole Foods.

As defined by the conference conveners, “conscious capitalism has three key elements:
• companies have a purpose that transcends profit maximization;
• companies are managed for the benefit of all stakeholders in their ecosystem, not just shareholders; and
• companies are led by spiritually evolved, self-effacing servant leaders.”

More at http://www.bentley.edu/conscious-capitalism/.

The phrase “conscious capitalism” derives from the work of Fred Kofman, author of the book CONSCIOUS BUSINESS: How to Build Value through Values – see http://www.axialent.com/eng/publications_details.asp?codigo=29
The definition builds on the “multiple stakeholders” approach – and work by many to bring a greater sense of purpose and values into the business model, and also those who have espoused “servant leadership” for over a decade.

I remember actually an earlier appearance of the term “Conscious Capitalism” by David Schwerin, who wrote a book by that name in the mid 1990’s, and then interestingly was invited by the Chinese to come lecture and meet with leaders in China to discuss Conscious Capitalism with them.

All the conference presenters provided perspective on what conscious capitalism means to them and also delved into particular aspects that they are focusing on – marketing, leadership, organization, economics, etc.

One of the books that exemplify the conscious capitalism movement is Firms of Endearment: How World-Class Companies Profit from Purpose and Passion (2007) by Raj Sisodia, Jag Sheth and David B. Wolfe, each of whom presented at the conference. See http://www.amazon.com/Firms-Endearment-World-Class-Companies-Passion/dp/0131873725.

As I listened to the presenters and watched the slides going by, I marveled at how so many people from diverse backgrounds were coming together under one banner with a sense of urgency to rethink the “business model” – so that it becomes more in step with the times to serve not just financial shareholders, but all stakeholders – and so that it operates in a way that respects and honors all those involved in – and affected by the company.

My own work for years has also been about rethinking the business model, including delving into “human economics” nearly ten years ago, and setting up a website to provide a more humanistic view of economics – see www.humaneconomics.org.

Even before that, I began developing the concept of “spiritual capital” – speaking about it and developing a booklet on it.

NOBLE ENTERPRISE: The Commonsense Guide to Uplifting People and Profits (2008) incorporates that “human economics” thinking and is my contribution to envisioning a new business model that is built on five pillars, the first of which is Greater Purpose (than merely profit maximization), and which are led by Noble Leaders. My good fortune was to meet such a noble CEO, who had just transformed a near-death company – thus whose story is told in NOBLE ENTERPRISE. (We now collaborate in providing seminars on the Noble Enterprise approach for leading – and revitalizing companies.)

Congratulations to Bentley University for hosting this conference, and to the organizers, such as Raj Sisodia for planning and running such an informative and inspiring conference.

Roughly 80% of the participants in these recent seminars and presentations reported that their revenues were either declining or stagnant. Yet nearly 100% reported that they were cost-cutting and reducing staff.

Most interesting to me is that the vast majority of these managers reported that their companies were doing little else besides cost cutting to deal with the downturn. In my experience, that not only leaves a lot on the table, but can leave them vulnerable to competitors who are more proactive. And it can demoralize their workforce and thus weaken their companies.

Here in a nutshell are the lessons I shared with these groups based on the turnaround situations that I’ve been involved in (and written about, most recently in Noble Enterprise: The Commonsense Guide to Uplifting People and Profits):

Lesson #1: Don’t overdo cost-cutting.
Running a tight ship is good, but in the rush to get costs in line with revenues, some companies go so far that they impede revenue generation and weaken their companies. So be careful to assess what the impact on the health of your business will be of the cuts you intend

Lesson #2: Be proactive – not just defensive.
Cost-cutting is just one strategy for getting through difficult times. There are other important things to do to manage through these difficult times, which are positive and proactive. See the next four lessons.

Lesson #3: Continually improve your business or operation:
This pays dividends, especially in lean times. By improving your business or operating processes, you will find ways to cut costs that do not hurt your business, and you will be improving value to your customers (which could make you stand out in a time when your competitors may not be doing this).

Lesson #4: Grow or Die!
Though it may not be easy or even possible to grow revenues in these times, you don’t want to become captive to negative thinking. Dedicating time, and asking your people to work on this, keeps the positive juices flowing – an important thing for the health of your business.

Lesson #5: It’s ALL about People!
– Especially in difficult times. Why? Because without attention on people during difficult times, morale, motivation and energy all naturally droop. When people are worried about the company and their jobs, they can easily become paralyzed by fear. By keeping them focused on the positive, proactive things mentioned above, you can help keep that morale high.

Lesson #6: Improve Management.
Good leaders and a good management system are obviously important to an organization’s success. This is even more critical in a tough economy. With good leaders and a powerful management system, companies can achieve miracles, even in a tough economy. Yet, this ingredient is often overlooked.

Lesson #7: It’s not just about the DOING!
Executives typically ask, “What do we DO to lead our company through the difficult economic times?” While the actions taken are important (and are the visible part of the answer), it’s often what’s going on inside people that makes the big difference between a company that declines and one that rises to the challenge. That’s the all-important BEING aspect, as further described in the last two lessons.

Lesson #8: Get into the right Mindset.
This is the first Being aspect that needs to be shaped and strengthened. What’s our vision and mission? What’s our strategy? Where are we headed? People need a vision and a compass. This is a time for leaders not merely to tell people what the problems are, but rather to paint the vision of the company we are “building” – even through these times – to stimulate the desire to get there and the belief that it is possible.

Lesson #9: Get some Attitude!
This is about stoking a sense of purpose – both of the organization and of people involved in it. When people believe strongly in their organization and its purpose, they have the motivation to fully invest themselves in the endeavor. It’s also about passion. When people are engaged in activities that they enjoy and that bring out the best of their talents, this passion is triggered. Even in the darkest of times, winning companies have “attitude.”

How are you and your company doing on these nine lessons? If past experience is any guide, it will be the companies that heed these nine lessons that will build the muscles of their companies and that will come out of the downturn with flying colors.

She writes, “Wall Street is a stage, a platform on which men and women can each day take actions that are ethical or not, constructive or not. When their actions are marked by high moral principle, they heighten their calling—they are not just “in business” but part of a noble endeavor that adds to the sum total of human happiness.”

Turning businesses into noble endeavors can do even more than “add to the sum total of happiness”. Such an approach can also turn them into highly prosperous endeavors. This is the theme of my recent book NOBLE ENTERPRISE: The Commonsense Guide to Uplifting People and Profits. The Noble Enterprise approach can turn companies from trending down to thriving by revitalizing them, from their people to their profits.

In fact, just this past week, I had the pleasure of addressing three groups of people on the Noble Enterprise approach companies can use not only to get through the downturn “in one piece” but also to get stronger and poised to thrive by tapping both the wisdom and spirit of organizations and their people. These groups included:

• Human resource professionals attending a meeting of the Human Resource Association of Southern Maine. These people of course already see the human dimension as the key and precious resource of business, but now have the Noble Enterprise business model and an illustrative case example to use in helping their management lead their companies as if people truly are their “most valuable asset.”
• Senior-level executives in an Olin Business School at Washington University in St Louis one-day seminar that I and two colleagues lead for Olin’s highly regarded non-degree executive program. Our seminar this year, “Revitalizing Performance and Motivation During Difficult Times – the Noble Enterprise Approach”, featured the case example of a company (led by Bill Catucci) that rose from near death to become one of the top companies in its industry by using principles of Noble Enterprise.
• Mid and senior-level executives in a Turnaround Management class at Fordham Business School’s highly regarded Executive MBA program, which provides students with copies of the Noble Enterprise book. I lectured on “Leadership in Challenging Times – the Noble Enterprise Approach” and found participants open to the Noble Enterprise model and eager to discuss strategies for implementing it.

With people like Peggy Noonan writing in the Wall Street Journal about business as a “noble endeavor” and our book on Noble Enterprise getting out there, as well as our presentations at leading business schools, those executives who are learning about the Noble Enterprise approach are eagerly exploring it and beginning to run with it.

If this way of doing business calls to you, you can find more information about the Noble Enterprise business model (and the book about it) at: www.noble businesssolutions.com/NobleEnterpriseBook.html .

If you have a story of Noble Enterprise you’d like to share, please either post it in the Comment section or write us directly at info@Noble BusinessSolutions.com.

If you’d like to learn more about our seminars and keynotes on Revitalizing Companies using the Noble Enterprise approach, go to www.noblebusiness solutions.com/keynotes.html.