How do we run our businesses, and how do they interact with their markets? A recent WSJ editorial cartoon has a manager reporting back to the CEO on the results of a new initiative: “Productivity is up twenty percent since your picture was installed on our screen savers.” And Murat Yetkin, a Turkish columnist, yesterday made an interesting comparison between the fall in 1991 of an “oppressive socialism unconcerned with people” and what he sees as the collapse today of “a spoiled, aggressive type of capitalism which ignores human concerns.”

Is that what’s going on? Are we just swinging from one extreme to the other in a competition over how best to exploit workers and consumers? Let’s take a brief look:

The law and leadership. This post by John Phillips includes a generous reference to this site. But I’m pointing to it here for his list of things that he says leaders should do. This is advice that could save a lot of attorney fees for everyone concerned – and that’s the least of it. Do you know business managers who do these things? Or, is it your impression that this advice is necessary precisely because they generally don’t?

Laying off of layoffs. Wally Bock has written recently about how to prove your vaunted faith in human resources during financial squeezes by avoiding automatic recourse to layoffs; he also addresses the costs of such layoffs on those who survive them – including your business. It seems that this important message is gaining in currency. Please see this New York Times piece about how more companies are, as Wally advises, cutting labor costs without layoffs. While you’re reading it, note the unfortunate opening illustration – how stirring, really, do you find it; what message does it really send? Don’t stop there, though; the examples get better.

Quantifying consumers cynically. The Economist has an excellent special section in this week’s edition containing a diverse range of thought-provoking essays. One is on the truly fascinating advances made by retailers in evaluating the customer experience in their stores and how to convert that into sales – in real time. This is a must read. How do you react to it – is it cold exploitation of crowds of faceless customers, or careful consideration and thoughtful addressing of their joint and individual needs and preferences?

Darwinian self-interest at work. Another essay from that section looks at a rebirth of the controversial concept of behavioral evolution, and what it suggests for social policy. With that perhaps chilling purpose in the back of your mind, the entire piece will gain new interest for you, but note especially the section entitled “A woman’s place” about women at work. This is a classic example of something you should consider carefully – certainly if you agree with its implications, but especially if you don’t.

Are we really so uncaring? Is that even the point? As is often argued by free-market liberals, those who pretend to care the most typically wind up doing the most harm. On the other hand, if there is a greater individual and common good achieved in the general economy by expressing selfishness through capitalism, might there not be the same attained in the workplace by employing selfless management practices?

Another recent WSJ editorial cartoon has two dogs gazing wistfully down into a bottomless chasm. One says to the other, “Sometimes you just have to let the stick go.” Might our tendency to cling to our favorite orthodoxies be denying us some fruitful opportunities in this new environment opening up beyond the current crisis? Perhaps the reading pointed to here will help in evaluating that proposition.

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Technorati Tags: business, market, WSJ, manager, CEO, initiative, Murat Yetkin, socialism, capitalism, competition, worker, consumer, John Phillips, leader, Wally Bock, human resource, layoff, New York Times, Economist, customer, exploitation, evolution, policy, women, work, free-market, liberal, economy, workplace, management

It has long been remarked that there is an oddly converse correlation between economic cycles and enrollment in MBA programs. When business is down, the business schools start filling up with managers seeking to pad their credentials. And so as we enter the current global crisis we can probably expect a boom in MBAs within a year or two – just in time to hop the next economic train through town.

But will they be driving the coming boom, as so many imagine, or setting up the following bust?

Increasingly, academics themselves are joining the ranks of those critical of the MBA degree. The most famous of them is Henry Mintzberg, a business professor himself, and author of “Managers not MBAs” (see review here). Mintzberg is concerned not only that such programs educate people in the wrong things, but that they promote the harmful impression of producing trained managers ready for positions of authority and responsibility, into which they should be placed over the heads of people who have put in the work learning the job.

The late Professor Sumantra Ghosal, of the London Business School, shared these concerns, and was specific about their scope. He chided management academics for allowing “physics envy” to develop into a caricature of science that produced pretentious theories that were actually, in his view, quite simply void of real knowledge.

In particular, he criticized certain concepts – still widely popular – developed by certain Harvard professors, that he argued were based on models of essentially negatively mechanical managerial behaviors. He feared that these models were not only false, but that they had the effect of producing the very negatively mechanical behaviors, and the consequences attendant on them, that they posited. As evidence, he ruefully noted the large numbers of executive graduates of such management-school educations that played prominent roles in the major business scandals of a decade ago.

Yet another academic, Professor Jeffrey Pfeffer, of Stanford, suggests that these two don’t know the half of it. He largely agrees with the source, nature, and shape of the problem, but is concerned that it might be behind a more systemically widespread undermining of managerial energy and integrity than we know. He has pointed to evidence of this in the form of an apparently positive correlation between MBAs in senior management and certain types of regulatory violations.

Undoubtedly, there are other sides to this story. Who knows, for example, how many MBAs from similar programs are in companies that are succeeding by dint of sheer hard work, intelligently planned and ethically executed? But then, who knows whether or to what extent such behavior originates in the degree or in the degree-holder?

So, when you hire a manager, perhaps you should ask more than just about educational background: Ask the candidate’s own views about the role of management in business and society, and of the part he or she expects to play in the real world, in your organization, among your staff.

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Today’s tip: For a current working student’s explanation of what he expects is going to be the value for him of an MBA, please see this introduction to an upcoming series on the topic in Business Week.

For a strong discussion of the broader question of whether business is more or less prone to ethical problems than society in general, you will want to see these essays, published on their jointly-authored blog, by Judge Richard Posner and Professor Gary Becker.

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Technorati Tags: MBA, business, manager, academic, Henry Mintzberg, professor, authority, responsibility, work, Sumantra Ghosal, London Business School, management, physics, science, knowledge, Harvard, professor, education, scandal, Jeffrey Pfeffer, Stanford, integrity, education, society, organization, Business Week, Gary Becker, Richard Posner

When times are tough, we talk tough. We sound the call to arms, announce the equality of all before the greatness of the challenge we face, and declare our devotion to everyone who helps shoulder the burden. It can be a thrillingly satisfying display of our great-hearted spirit, our boundlessly magnanimous condescension.

A classic example of this highly contrived concern and regard of “leaders” for their “followers” is effectively spotlighted by James Shapiro in his excellent work, “A Year in the Life of William Shakespeare.” In a famous and much quoted passage from “King Henry V,” Shakespeare has Henry addressing his troops before the Battle at Agincourt:

We few, we happy few, we band of brothers.
For he today that sheds his blood with me
Shall be my brother; be he ne’er so vile,
This day shall gentle his condition.”

The battle (1415) was a horrifically one-sided victory for the English. John Keegan tells the story with brutally close-up, blow-by-blow detail in his brilliant study, “The Face of Battle.” Despite being greatly outnumbered, the French suffered losses in the thousands, compared to perhaps a few hundred from the English side.

After the battle, Henry is handed a document reporting his losses. He mourns his fallen by naming the few nobles who died – only four, according to Shakespeare – commenting on each and specifying their rank. But, Shapiro notes, he concludes by rounding out the others as “none else of name.”

So much for his pre-battle promise of their being as brothers to him, raised from vulgar peasantry to a gentled condition. After they have served their purpose – and grandly – their principle remaining characteristic in this context (of their giving their lives for him in battle) seems to lie merely in their making up the remainder of the number of his losses.

How different is this, really, from the fuss, such as it was, made over the legions sacrificed to the folly and malfeasance of executives who involved their organizations in the various business leadership and accounting scandals of the late 1990s and early 2000s, and the financial industry scandals of today. And how different is it from the rather more elaborate fuss made over these same executives as the degree of their culpability and the appropriateness of holding them accountable was and is debated with a sudden, and elaborately wrought, concern for justice?

It’s no good to pretend we understand leadership if our expressions of it so relentlessly result both in these disasters and these disgraceful responses to them. Modern managers need to shed this hopelessly exploitative, instinctively feudal approach to leadership. Until we learn to draw a more honest connection between our behavior as we prepare for, and as we emerge from, our challenges – whether they conclude in awful victories or more terrible defeats – we will make little real progress in learning how to express true leadership.

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Today’s tip: And speaking of not learning our lessons from a decade ago to today, please see this WSJ article by Dennis Berman about how there may be none to be learned – or no willingness to learn them.

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Technorati Tags: leader, follower, James Shapiro, King Henry V, Shakespeare, Agincourt, English, John Keegan, French, executive, organization, business, leadership, accounting, scandal, manager, WSJ, Dennis Berman

One of the problems with traditional views of leadership is the tendency to confuse other characteristics with it. A common way we do this is by becoming so impressed by the seemingly powerful presence of one or another trait presumptively indicative of leadership as to uncritically assume that there is more behind it than there may actually be – sometimes even simply equating it with leadership, itself.

This tendency is important to our topic, today, of explaining why “followers” are typically not really followers at all. Because it is so large an element of this argument, we will restrict ourselves here to one example of it: idea generation.

People who do this are widely viewed, for that reason alone, as leaders. As it happens, however, we frequently make this connection – and the associated award of the title of leadership – after the fact, when we trace an accepted and important idea back to its source.

But it is not just an idea, but the adoption and adaptation of it to organizational purpose that combine to make up true, meaningful, corporate “vision.” And this is rarely accomplished solely by single – or singular – individuals.

It is a collective, collaborative effort in which various people play separate interconnecting roles. Some of these are more visible – but none are more important or vital than others to the overall process.

The thing is that lots of ideas are generated all the time throughout our organizations. But only some of them progress into actionable projects that become influential elements of our operations.

So, why do we only notice the people who generated ideas we wind up acting on, and refer only to them as leaders? Why aren’t the others who propose initiatives which turn out to be infeasible, or un-actionable for whatever reasons, also leaders?

Because, really, neither of them are leaders at all. Rather, all of them – including those in the latter group – are giving expression to organizational leadership.

And they’re not the only ones.

The rest of the organization evaluates the ideas simmering within it. Everyone tries them on for size, determines how they contribute to current ways of doing things, or improve outputs produced or received. They test them, generate feedback, and then drop or modify them, or send their architects back to the drawing board.

The idea generators, then – or, actually, their ideas – are like candidates waiting for the decision of the panel of judges. They – successful or otherwise – all note the results and the reasons for them, and proceed with their next efforts while bearing those lessons in mind. Often, but certainly not necessarily, the innovators and assessors alternate roles over time and as events dictate and dynamics evolve.

So, in a healthy outfit, leadership flows and reverberates throughout the organization. It is multidirectional, becoming richer and more informed as it acts upon itself in the course of pursuing organizational aims at all levels.

Leadership in an organization isn’t like a research demonstration in a laboratory, with scientists acting on experimental material to produce predictable results. In an organization, no one can introduce specifically calibrated stimulants downward into a container of otherwise passive preparations in order to generate particular outcomes. After all, in organizations, the objects “leaders” propose to act upon – well, they’re alive.

And they don’t live and breathe for the very thought of being able to follow you. They are there to collaborate with you. Best for you if you collaborate with them.

Tomorrow, we’ll conclude this series with a brief look at how you might do that. See you then!

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Today’s tips: A couple of days ago we referred in this section to a WSJ piece challenging commonly-held assumptions about the formidable and generally dreaded institution of the performance review. Wally Bock, the author of Three Star Leadership, noted the article, as well. His take, though, is to cut right through all the angst about the institution, and instead to go after inept instituters. Please be sure to visit his must-read piece about stepping up to the plate and doing your job as a manager – and as a developer of managers.

And speaking of ideas, please stop over to see Eric Brown‘s discussion of the various sizes they come in – and which of them may turn out to be the best fit.

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Technorati Tags: leadership, follower, leader, purpose, corporate, vision, organizational leadership, organization, feedback, WSJ, performance review, Wally Bock, Three Star Leadership, manager, Eric Brown

During the past week of panicked news about the latest turn taken by the cancerous credit crisis, stories of this one being potentially worse in some ways than the Great Depression have fanned concern. Of course, it only stands to reason that it would turn out to be the same week I found myself reading Cormac McCarthy‘s “The Road,” a physically and spiritually exhausting post-apocalyptic journey of a search for salvation and hope. A disorienting coincidence.

As the novel’s subjects struggle through their ash-strangled new world, they come upon pointless remnants of the one that is no more. Their travels are punctuated by horrific encounters with ghostly figures, like themselves, wandering through the devastation. “The frailty of everything revealed at last,” one of them observes.

It’s true: everything really is frail. It comes down to trust – the character to bear it honorably, the ability to have faith that others do so. Without that ashes could well be our legacy to our children.

So, how are we managers and our organizations doing? Let’s take a brief look:

No separate compartments. You will often hear private peccadillos of public figures dismissed as irrelevant to the work the person does. I don’t buy that. You may engage in different activities in your private and public lives, but you are the same person, and those separate actions are evaluated by the same personal judgement and executed by the same moral character.

In this light, please see this WSJ piece by Nathan Koppel about we high-speed low-drag business types and civic duty. Some years ago, in a highly charged, politicized case attracting tremendous national attention, a Marine was prosecuted for his role in a controversial executive branch initiative. His attorney struggled mightily to select a jury of people who were completely ignorant of the case. This was difficult due to the tremendous publicity it received, but he claimed that otherwise his client couldn’t receive a fair trial.

Members satisfactory to the defense attorney were seated in the jury, which nevertheless convicted the Marine. During the appeal process, he dismissed the jury’s verdict as the product of people whom he viciously belittled as isolated ignoramuses – the very type he insisted on having judge him. One thing at the least can be said for them: they did their civic duty.

Now, please take a moment to view this article by John Phillips at his eponymous blog which he uses to address legal issues in the workplace. It is well worth your time to see how he relates the stunningly unethical behavior alleged to have occurred within a major US government agency with concerns you should be sure to review about your own workplace. If business, trade, growth, and ever-increasing wealth and welfare depend, at bottom, on trust, what do we get in its absence? Who is responsible for its presence?

What about the private characters of the individuals referred to above has penetrated into their public performance to produce deleterious effects on their work – and the welfare of all of us?

The end of the era of the great leader? Speaking of trust, perhaps it is time to stop investing it irresponsibly in a false faith in superlative individual leadership – particularly in the persons of star CEOs. Please see this piece by Peter Galuszka, from BNET, about how boards in the financial industry need to step up to their duties. Peter emphasizes technical skill in this single complex field, but the matter extends beyond that issue and that industry to the ability and willingness to fulfil one’s fiduciary duty.

According to this WSJ article, companies are beginning to become more particular about ensuring that pay – including severance pay – is tied to performance. That’s great, but boards cannot reduce their supervisory duties to simple incentive programs. They have to understand and approve of what’s going on in their companies; they have to direct. Please read this and Peter’s pieces and see what you think.

We’ll be picking up the current leadership discussion again on Monday – see you then!

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Today’s tip: Speaking of supervising, according to another Peter Galuszka piece in BNET, CEOs need to do a better job of it with respect to their own senior management teams. Please read the piece, note what it reports (from an external study) as the specific strengths and weaknesses of these C-level teams. See if you agree with the assessments, or even with the assumptions about what these managers should be doing, and with Peter’s suggestions.

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Technorati Tags: Great Depression, Cormac McCarthy, trust, manager, organization, judgement, WSJ, Nathan Koppel, business, civic duty, Marine, executive, John Phillips, workplace, US, government, trade, growth, wealth, welfare, leadership, CEO, Peter Galuszka, BNET, industry, fiduciary duty, incentive, management

Never mind asking what leadership is – let’s start by asking what it does. We have enough people jumping into the pool trying to make the biggest splash over definitions of leadership and leaders – especially by setting up disparaging comparisons with management and managers. But how many people actually start from the beginning?

What, after all, is the demand for individual leadership? What do they do that really needs doing? And what about leadership itself? What are the functions that leadership performs uniquely for our organizations that otherwise would go begging?.

You’d be surprised, perhaps, at how little serious discussion there is of this. It’s there, but you have to work to locate it amid all the dross. What you’re most likely to find tends to fall, in generally descending volume, into three categories.

1. Silly comparisons with traditional bosses and witless managers. For example, you will find some who believe that the best way to describe the need for leadership is to offer illustrations like this: bosses create fear, and leaders, enthusiasm. Or, the boss makes work dull, the leader makes it fun. Seriously, people make a living describing this sort of thing as the purpose of leadership.
2. Charismatic personal characteristics that invest an organization with vision, energy, and purpose – leadership’s function. In this view, individuals carry something that is inherently theirs, that emanates uniquely from them, into their leadership position atop an otherwise moribund organization, essentially breathing life into it.
3. Lists of functions that, upon examination, can be easily understood to really be quite ordinary administrative or management tasks. These vary widely. One source indicates that a leader accepts three functions that he or she must carry out: authority, responsibility, and accountability. Others more pertinently describe organizational benefits provided by leadership, running from vision through communication to execution. But these, too, can really be restated as management tasks with no violence at all done to their worth.

These sorts of stunts point to a real problem, here. The modern leadership movement starts from the presumption that leadership is not only distinct from, but superior to management. As a result, you see the three categories above, comparing it favorably to management, describing exalted personal characteristics that alone can give expression to it, or rephrasing the functions themselves in grandiose language that belies their fundamental managerial origin.

The proponents of this movement then climb right onto the latest bandwagon to pass by, or attempt to create the latest fad, about the personal characteristics you need to become a great leader yourself.

So that you can do what, exactly, again? Create fun? Give life? Appear and disappear in puffs of smoke, obscuring the real work being done by real managers?

This week, we’ll take our own humble throw at the task; we’ll begin to try to answer the question: Why leadership? See you then!

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Today’s tips: Speaking of plunging right past the real need for a service to jury-rigging up peculiar versions of it, please see this review by John Agno, at CoachingTip: The Leadership Blog, on how parting your hair indicates your leadership potential.

We discussed the difficulty of reconciling personal morals with business ethics a few days ago. Please see this excellent look at the topic from the perspective of microfinance, from The Economist.

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Technorati Tags: leadership, leader, management, manager, function, organization, boss, vision, energy, purpose, administrative, task, authority, responsibility, accountability, vision, communication, execution, John Agno, CoachingTip: The Leadership Blog, morals, business, ethics, microfinance, Economist

The “it can’t happen here” syndrome is persistent, and consistently defies experience. Why is that?

I recently read about a bridge in a developing economy that had been built too low for traffic to pass under it. The solution? Lower the road.

The question is, how long did it take them to realize they were building it too low? And, why did they finish it anyway?

But, of course, this can happen anywhere, and the developed world is filled with like examples. Terminal 5 is perhaps the most recent, but hardly a rarity.

And, events like these occur all over the world, at all sorts of levels, in all sorts of endeavors. From the military to politics to commerce, people seem to marry their ill-fated ventures, cross their fingers as tightly as can be, and simply hope that what they know will happen, won’t.

What’s at the bottom of this? Groupthink? The sense by an executive that too much personal credibility has been invested to back out? Shortsighted bootlicking by juniors? Starstruck “followers” who simply don’t think to examine what they’re being asked to do?

What sort of organizational cultures permit behaviors like those? What are your conjectures about this?

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Today’s tip: Speaking of following through on more or less obvious disasters, here’s a glacially unfolding one for you: Rob Jacobs, author of Education Innovation, has offered an insightful glimpse at how we likely are mis-organizing something as simple and fundamental as our classrooms.

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Technorati Tags: experience, developing, economy, developed, Terminal 5, endeavor, military, politics, commerce, ventures, Groupthink, executive, credibility, bootlicking, followers, organization, culture, Rob Jacobs, Education Innovation

One of the great dilemmas of the modern world of work – one that, one way or another, is reflected in much of the thinking and writing about management today – is found in the conflict between personal morals and business ethics.

Sure, the invisible hand of self-interest incontestably has done incalculable good. But we, as individuals who happen to be managers, may yet feel unsatisfied that our work might be invisible, or that, upon its discovery, it might be assessed as arising from narrow self-interest.

If we enter the field in order to engage in collaborative enterprises enabling us to be a constructive part of worthwhile endeavors larger than ourselves, then we sure don’t want to learn, at the end of the day, that it was all about us after all. We really do want to do good.

We want to make a positive impact on the world, our communities, our co-workers. Finally, we want to find ourselves having become better people for the effort.

Of course, the dilemma is made all the more fascinatingly excruciating by the fact that our individual determinations of how to resolve it are themselves ultimately revealed to be self-serving rationalizations. They inescapably violate either or both of our personal morals or our obligations to our particular business ethics.

So, here are some questions for you:

• When a business donates shareholder money to charity, what is it really doing, and how does it justify it?
• What is really behind the recent “sustainability” campaigns?
• Where (if anywhere) are the morality and ethics located in out-sourcing – particularly off-shoring – of work?
• How do you respond if a segment of society adjudges your product/ service, business model, marketing practices, community/political involvement, etc. to be morally or ethically objectionable?
• What do you do if you are promoted over someone who you assumed to be more qualified than you?
• How much of your time or other organizational resources will you continue to devote to a struggling junior who has, perhaps, the deepest good intent, makes the most profound effort, and has the greatest personal need to succeed, but just isn’t getting it? How many of those factors should really influence you, and which ones?

Imagine yourself to be the decision-making manager in each of these situations. A good person, wishing earnestly to do good through good work on behalf of all who are touched by that work.

How do you most morally, most ethically, give expression to your good intentions?

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Today’s tip: Speaking of the struggle with ethics and morality, how about trying to figure out what they even are or how they ought to be expressed? Please see this piece by William Baker, of BNET, on the topic.

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Technorati Tags: work, management, conflict, morals, business, ethics, invisible, self-interest, manager, enterprise, endeavor, shareholder, charity, sustainability, morality, out-sourcing, off-shoring, society, product, service, organization, resource, effort, decision, intention, William Baker, BNET

Remember that saying from the old mafia movies? Both sides knew and accepted that events had developed to the point where one wiseguy was going to have to deal with another. Nothing personal. Just business.

Over the past two days we have reviewed the preparation and conduct of a negotiation that popped up regarding the organization of a prominent speaker’s inclusion at a conference. A woman was initially contacted to accomplish this, but then a man who believed he better represented the industrial field of interest insisted on taking it over or, failing that, on being accorded a major part of it. It was that demand of his that led to the negotiation.

As we have seen, the woman defended her position by staying focused on the overall goals that each party – her, the expert speaker, and the man – were dedicated to (perhaps, to varying degree). She added to this how achievement of those goals was effected by the late intrusion into the process of the man, his demand for recognition, and the expert’s prudent desire to maintain – inasmuch as the issue had come up as a potentially contentious matter – comity in the industrial subcommunity.

But the fact remained that both parties in this negotiation wanted something that had progressed beyond the point where it could honestly – or even just realistically – be parcelled out. The woman had done the work and had earned the right to be recognized for it. The man acknowledged that the work had been done, but tried to claim the lion’s share of credit anyway (an apt metaphor, given that it is typically female lions who hunt and bring down prey, and male lions who then saunter up to take the prime parts of the meal).

So her goals were as follows:

1. Retain control up through and during the event to keep it on focus
2. Find a way to accommodate the man’s demands that would not interfere with goal one
3. Do both of those in a way that properly addressed the larger community’s interests as well as those of each of the three parties.

His goal as evidenced by an external view of his behavior appeared to be entirely and unreasonably selfish. Moreover, it cannot be denied that he seemed to be attempting to gain that goal by trying to bully or intimidate the woman into simply yielding points, power, or authority that she had no need to surrender.

But her insight here was fivefold:

1. Despite appearances, the man was probably either genuinely as dedicated to the larger group’s goals as anyone else, or at least vulnerable to the need to pretend to be. As a result, in the end, he would have to show some deference to them.
2. His unprofessional and unattractive behavior was probably generated by sincerely perceived (albeit poorly represented) professional and/or personal needs.
3. If she reacted to his superficial behavior and battled him point by point regarding that, she would have accelerated the descent of the discussion to a personal disagreement in which she had no easily detectable greater standing than him.
4. By working, instead, to try to discover and address the degree to which he had any useful or legitimate claims, she did not merely maintain, but elevated her standing in the issue with respect both to him and the expert, further enhancing her control of the event and ultimate position in the community at large.
5. Maintaining a focus on the issues that offered to motivate the man’s responses, and disciplining herself to ignore those that threatened to diffuse her own, were the keys to finding a successful resolution of the quandary.

So, there may be something to the old saying after all: even when it seems personal, it may really just be business. And if you can stay focused on business, perhaps the others will give up on trying to make it personal.

But that’s just my assessment of what happened here. What’s yours?

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Today’s tip: Making things personal isn’t the only way to cause business to go bad; making things too easy can, as well. Please see this item from BBC News about how scientists are learning to predict when dull jobs are about to lead to mistakes – and the peculiar precautions they are suggesting to prevent that.

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Technorati Tags: business, negotiation, organization, conference, goal, achievement, comity, work, control, focus, bully, intimidate, power, authority, surrender, insight, unprofessional, professional, discussion, disagreement, expert, focus, success, resolution, assessment, BBC News

A discussion of the importance of values in the context of business and management can be conducted across a wide range of domains occupied by the individuals, formal and informal communities, organizations, societies, and cultures that are affected by them. Each has its own values, which influence and are influenced by all the others. As a result, an organization, to be effective, must comprehend this environment, achieve an understanding of its own place in it, and integrate that awareness consciously into its corporate goals.

But there is another fundamentally related issue, here: trust. At bottom, that is what makes the modern world of organizations work. No amount of legislation or regulation, no contractual obligations – and certainly no ostentatious professions of corporate values can take its place. No matter how many such formal structures there may be, if we don’t trust each other simply to do what we say we will, we cannot conduct business as we do in the modern world.

So, how do we know we can trust each other? Well, of course, the presence of shared values is a strong indicator of our ability to do that. But it doesn’t always take the form many of us expect.

Consider this description of a conversation Michael Cobb – a businessman, and political and cultural blogger – once had with a colleague from Hong Kong who was visiting Los Angeles:

I asked him what was the great difference between the way business was done in China and what he told me, I will never forget. In his clipped English he explained that in the US, we have a class of people who do business and an extraordinary system of openness and trust – that you don’t have to know your banker to know he won’t steal your deposits. In China conversely, you don’t do business with strangers.

One might think that the suggestion implicit in this story, which is encountered often, is that Western values make modern business possible to a degree that is not experienced elsewhere. Moreover, it is often greeted with amazement and a sense of liberation by those from other cultures who see it at work for the first time.

And in fact, that is how it is often interpreted, and by both Westerners and others. But actually the conversation reveals a deeper truth: both environments find ways to get business done in their own ways. And they way they do it has a lesson for all of us.

One generates trust arising from the peculiarly intense group dynamics of close networks, typically but not exclusively based on the family, which are fundamental features of collectivist cultures. The other produces an atmosphere of trust from the system of shared values often consciously formed in individualistic cultures which enable their members to interact safely and productively while maintaining their individualism.

The key issue here for us as managers and for our organizations is to recognize the uniquely secular role played by values for our purposes: it produces trust. It expresses our trustworthiness in ways that are recognizable to the individuals, networks, and organizations in the seas in which we swim, so that we can do business with each other to our mutual benefit.

The ultimate ambition of any organization is to accomplish its goals. But in order to do that, it must establish its trustworthiness among those with whom it must interact in order to reach those goals. And in order to do that, it must consciously, meaningfully, honestly – and genuinely – integrate trust-generating values in appropriate ways into its goal-generating activities.

Who would have thought that trust and values had such strategic import?

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Today’s tip: Speaking of the strategic importance of frankly addressing corporate values in cross-cultural circumstances, generating trust, and accomplishing organizational goals, please see this piece from Business Week about the increasingly desperate mess created by one European firm that may have paid insufficient attention to this.

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