Thursday, December 20, 2012

The Leader's Role in Talent Retention-"We like you. You are doing good. We want you to stay."

Many years ago while still an officer in the US Army I came to know an Army doctor.  This particular doctor was an orthopedic surgeon who was treating a member of my family. He was all the things you would hope for in a physician...skilled, caring, dedicated, and an excellent communicator.

It's important to know that there is a huge differential between the salary a US Army doctor makes compared to his civilian counterparts.  Even with bonuses aimed at retaining critical specialties, an Army salary is a tiny fraction of what a surgeon can make in private practice.  The Army copes with this differential by offering scholarships that pay for medical school in return for some number of years of service, and specialty training in return for even more years service.  In some cases, this can add up to more than a decade of obligated service in exchange for education and training, but eventually the obligation runs out.

The surgeon who was treating my family member had reached the end of his obligated service and had taken the decision to go into private practice.  Because he was so good and we needed good people to stay...and maybe a little selfishly... I wanted him to keep treating us, I asked him "Is there anything anyone could do that would cause you to stay in the Army?"  His response still resonates over thirty years later.

He said, "Not now.  I've agreed to a practice near my original home with arguably the best sports orthopedist in the United States.  Those plans are too far down the road to change now.  But you know what? I would have stayed.  I love soldiers and their families. I like serving. Making a lot of money isn't the most important thing to me.  I would have stayed if someone had just said 'We like you.  You are doing good.  We want you  to stay'....that's all it would have taken...but no one did."

There are a number of different factors in play when it comes to talent retention.  Clearly competitive compensation is part of that.  Sometimes the opportunities for career development are important.  The opportunity to learn and grow in your discipline can also play a role.  These are all structural things that good HR departments and good companies help a leader manage.

In the midst of all those structural solutions, sometimes it's easy to forget the most powerful retention tool is a leader...someone who matters...simply saying "We like you.  You are doing good. We want you to stay."


Wednesday, December 12, 2012

Global Leadership: Grit and Persistence II: "The Hard is What Makes it Great"

Although I read a lot, I seldom read "leadership" books.  More often I read history or biography for leadership insights.  Most recently I've been reading Jon Meacham's excellent biography of the American Revolutionary and third President of the United States, Thomas Jefferson.  It's not the first one I've read about Jefferson, but Meacham manages to paint a much richer portrait of the man and his times than others.  I recommend it.

Writing in 1790 to a colleague during the French Revolution Meacham quotes a Jefferson letter:  "So far it seemed that your revolution had got along with a steady pace, meeting indeed with occasional difficulties and dangers, but we are not to be expected to be transported from despotism to liberty in a feather-bed"

It may seem an odd connection but one of my favorite movie clips is from the American movie "A League of Their Own" about an American Women's Professional Baseball League.  In this scene, actor Tom Hanks confronts actor Gina Davis who is preparing to quit their team.  A link to the short 1 minute 49 second clip is here.  The punch line of the scene comes at the 1:35 point:  "It's supposed to be hard. If it wasn't hard everyone would do it.  The hard is what makes it great"

For me, all these threads tie together.  Angela Lee Duckworth's definition of grit:  Persistence combined with sustained passion I discussed in my 29 October blog, Paul Tough's recent research on how children succeed referred to in the 20 November blog, Meacham's Jefferson quote and yes, a clip of a movie about American women playing baseball are connected.

Being a leader is hard. It always means influencing people to do what they wouldn't otherwise do on their own.  It often means overcoming challenges and resistance. It almost always involves risk taking with the ever present prospect of failure. It involves allowing and encouraging divergent views to surface and then the skill to converge those views for the good of the whole.  It's hard.

But it seems a truism in human affairs, from the profound events of political revolution that change nations, to the day-to-day affairs of ordinary people.....Everything worth doing is hard and the only way to a successful outcome is persistence combined with sustained passion

Tuesday, November 20, 2012

Global Leadership: Grit and Persistence

On 29 Ocotober I did a blog entry on the importance of persistence to success.  In it I highlighted Angela Lee Duckworth's research and work.

Just last Friday Professor Michael Roberto highlighted some additional recent published work on this subject this time focusing on how children succeed.  The author, Paul Tough, ultimately argues we aren't doing enough to encourage this quality in children.  Professor Roberto argues it's also true in adolescents and adults,.

Professor Michael Roberto's Blog: The Power of Grit: Paul Tough has written a thought-provoking new book titled, How Children Succeed: Grit, Curiosity, and the Hidden Power of Character .  

Monday, November 19, 2012

Leaders Don't Need to Add to the Excitement

In times of stress and uncertainty, staff need calm, confident leaders.  They don't need leaders who "add to the excitement" by emphasizing the urgency or criticality or the risk and uncertainty the organization faces.

This was certainly true in a military context where risk and danger are inherently part of daily life, whether  in garrison or deployed.  I found it was also true in the private sector.  There are a number of things that evoke stress in the private sector workforce.  Poor business results, reductions in force, projects that are overdue and/or over budget, mergers and acquisitions and reorganizations all have the power to paralyze a workforce.  Workers seldom need to be reminded of the seriousness or urgency of a challenge.

What they do need is calm, confident leaders who are open, honest and keep them informed.  Silence in times of stress can be just as corrosive to morale as emphasizing the urgency of a situation.  Everyone wants to be in control and some of the situations I've described above can make them feel out of control.  They look to a leader to help guide them through the uncertainty and turbulence,  even if the outcome isn't in their favor.  Keeping people informed when the rumors are swirling is especially important.  Staff will make up a story to fill an information vacuum based on prior experience or fragmentary data.  De-bunking rumors can become a full time job.

A leader cannot over-communicate in times of stress and change.

Friday, November 16, 2012

"The truth springs from arguments amongst friends"

The truth springs from arguments amongst friends-David Hume

Sometimes I think there is a mistaken belief that collaboration is all positive energy....visions of people enthusiastically building off each other's contribution to achieve some breakthrough solution.
More often, breakthrough solutions are the result of the creative tension that comes from disagreement.

Tom Crouch's biography of  Wilbur and Orville Wright, The Bishop's Boys iillustrates this point vividly.  He describes their journey to master manned flight in great detail.  His description of their search for a solution to propeller design is illuminating.  He quotes from an article they later published:

"With the machine moving forward, the air flying backward, the propellers turning sidewise, and nothing standing still, it seemed impossible to find a starting point from which to trace the various simultaneous reactions.  Contemplation of it was confusing.  After long arguments we often found ourselves in the ludicrous position of each having been converted to the other's side, with no more agreement than when the discussion started"

A witness to the discussions described them.  Crouch quotes Charlie Taylor "Both boys had tempers.  They would shout at one another something terrible.  I don't think they really got mad, but they sure got awfully hot."  

Crouch summarizes:  "The arguments that shocked Charlie in fact allowed them to explore every facet of a problem.  Their ability to defend a point of view with real passion, while at the same time listening to the other fellow's opinion, was an essential part of the process."

What does this story mean to a leader?  I think there are a couple of lessons.  One is disagreement among a team on complex issues is a good thing.  In fact, on a well constructed diverse team it should be expected.  When I was leading teams, if we closed down too quickly in agreement on a complex issue I intentionally kept it open.  Closing down too quickly is a warning sign you may have not fully explored every facet of a problem.  My blog of 15 October highlights the use of Devil's Advocates in this role.  Another lesson is that showing emotion and passion on an issue isn't to be's to be expected.    My last point, is the importance of the ability to respect the other person and listen, even when emotions are running high.

It's the leader's role to orchestrate the balance between agreement and disagreement, to tolerate the tension that emerges from passionate disagreement, and to ensure all points of view are aired respectfully.  Great teams are not characterized by a lack of conflict.

Thursday, November 15, 2012

Global Leadership "Every time you walk past a mistake, you have just set a new standard"

I'm not sure when or where I picked this truism up...clearly it was in the Army at some point.  There are a couple of important messages embedded in that slogan..

One is that what you do is more important than what you say as a leader.  In many organizations, leader development is so good that just about everyone says the right things.  Staff, however, watch a leader's behavior to determine what they really intend to enforce. If you tell everyone that wearing of Personal Protective Equipment(PPE) is mandatory, yet walk past someone not wearing a hard hat or reflective vest and don't say anything, your actions have just set a new standard...wearing PPE isn't important.  If you see someone smoking in a designated non-smoking area and don't say anything, you have just set a new standard.  If a driver gets in a vehicle on company property and doesn't fasten their seat belt and you see it and don't say anything, you have just set a new standard.

A second point is that first line leaders play a primary role in work-place safety.  Yes, Health and Safety professionals play a role, and yes, compliance with regulations is important and yes, senior leaders show their commitment by personal involvement....all of that is true enough..  However front-line leaders are most likely to see mistakes and make the on-the-spot correction and enforce standards.

A final point is staff don't go around looking for ways to avoid standards.  They get in a hurry, they have multiple priorities, they've taken shortcuts before and nothing bad happened so they take them again.

Being the "standards police" isn't the most fun part of being a leader but it is part of looking out for the welfare of those you lead. 

Wednesday, November 14, 2012

Culture Change-"Act Your Way Into Being"

Long ago I became an adherent of systems thinking. One of the fundamentals of systems thinking is that "structure drives behavior".  The iceberg metaphor is often used to understand those structures that are both visible in an organization and those that are invisible..."below the water line".  I used this model some months ago when writing about diversity.  I offer it again in a slightly different context
In systems thinking theory, behavior follows these structures, both those above and below the water line.  Let's take organizational reporting lines as an example.  The reporting lines structure driver is basically  that the person who does your annual performance appraisal and determines your salary and bonus heavily influences your behavior.  Those reporting lines can be configured to optimize a function, or a region or a global strategic business unit.   Many global organizations try to mitigate optimizing one way or the other by creating a "hard" reporting line as well as a "dotted" line...just another example of a structure.  Likewise an organization's values..."honesty, integrity, respect for people" as examples, are drivers of behavior.  The process of resource flows...people and money...also drive behavior.  I'll not go through every element of the iceberg...just summarize by saying that systems thinkers believe that behaviours are driven by by those structures both above and below the water line.

When it comes to those things below the water line, I've come to believe there is more of a dynamic relationship between behaviors and structures.  It's just as important to behave your way into thinking differently as it is to think your way into behaving act your way into being.

The US Army of the early 1980's was in the midst of a huge transformation.  It had gone from a draftee Army to an all volunteer force; from an all male force to one with both men and women; it was on the way to recovery from drug and race problems that plagued it in the 1970's.  In addition, there was a new doctrine and strategy that called for changes to organizational structures, equipment, training and ways of leading.  One vestige of the "old Army" was the attitude towards alcohol.  Drinking at lunch in moderation was acceptable and 25 cent drinks at Friday night happy hours were common. Alcohol offenses were not condoned but handled at a local level with no career consequences.  Gen John Wickham, the then Chief of Staff of the US Army, realized the Army was no longer the domain of single men living in barracks and male career officers and non-commissioned officers but necessarily more family oriented.  He set out to change that attitude towards alcohol.  He chose to change the behavior and the above the water line structure, in order to change the underlying structure.  "One strike and you're out" became the standard for officer alcohol related offenses, discounted drinks at Army facilities were halted, drinking during duty hours was banned and to reinforce this behaviour, he severely punished a well regarded general officer early in the campaign to reinforce acceptable behavior.   Over time, those stories, norms and unwritten rules became the drivers....but he started with the behavior.

What's this mean to a leader?  It means you have to do both things.  Yes, you have to change the underlying structure to get lasting change but that can take a long time. You can influence the speed at which this takes place by expressing and reinforcing the desired behavior in the short term.  As examples changing behaviors related to Safety, Graft and Corruption and the proper balance between Deliver of Results and Values can be immediate.  Over time those changed behaviors will become the underlying structure.

Monday, November 12, 2012

Performance conversations: "Most Leaders are Wimps"

Not long ago I was having a conversation with a very experienced senior executive coach.  We were discussing common issues, one of which was a leader's unwillingness to confront under-performance.  As he said "I can't believe how wimpy so many leaders are".  For my international readers, "wimp" is a slang American English term used to describe a timid, cowardly or unadventurous person.

There's a recent Harvard Business Review blog with data to support this observation.  Over the last two years they have surveyed over 5400 upper level managers in the US, Europe, Latin America and Asia-Pacific.  46% of those surveyed are rated as "Too Little" when it comes to "Holds people accountable-Firm when they don't deliver".   As they say:

 "Remarkably, the result holds up no matter how you slice the data — by ratings from bosses, peers, or even subordinates. It holds up for C-level executives compared to directors and middle managers. It is about the same in different cultures too; although accountability is a bit more common in some countries than others, it is still the most neglected behavior within every region we have studied."

If I go back to the "Delivers Results, Values" matrix I introduced last week it would suggest there are a lot of people in the lower right hand corner of the matrix...Low Delivery, High Values.  It also might suggest why it is managers are so reluctant to confront the High Delivery, Low Values leader in the upper left quadrant....high delivery leaders are so rare it no one wants to really know the "how", even if they are suspicious of the means to achieve the result.

The HBR authors hypothesize a number of reasons this may occur.  In the end, no matter what the reason it leads to overall business under-performance and mediocrity.  In their words:

"The unfortunate consequence, however, is that no matter what short-term costs an upwardly ambitious manager avoids by not playing the sheriff, they are overshadowed in the long run by the creation of a culture of mediocrity and lackluster organizational performance. Add this up over time and across departments and business units and the aggregate costs of neglecting accountability can be staggering for everyone"

This is the time of year when many annual performance conversations take place.  In the best companies... the winners.... leaders will have the tough performance conversation.

Sunday, November 11, 2012

In Flanders Fields: Remembrance Day and Veteran's Day

When I was living in The Netherlands, my wife and I took the short drive to Ypres, Belgium to observe Remembrance Day ceremonies there on the 11th hour of the 11th day of the 11th month...the moment in 1918 when World War I officially ended.

The ceremonies honor the more than 300,000 British Commonwealth soldiers who died in the five major battles that took place in the Flanders fields nearby.  The ceremony itself is conducted under the Menin Gate, located at the east edge of the city at the beginning of the road that took Allied soldiers to the front.

On this gate are inscribed the names of 54,896 commonwealth soldiers who perished in nearby battles and whose bodies were never identified or found.  Another 34,984 names of the missing are inscribed in the nearby Tyne Cot Memorial to the Missing.  Each Spring during planting season, many of their remains emerge in the nearby fields, 94 years after the fighting stopped.

After a parade of military representatives of commonwealth nations and appropriate remarks, red paper poppies are released through an opening at the top of the gate while a bagpiper band plays "Amazing Grace".  Watching those poppies drift slowly in the autumn wind to the haunting notes of that hymn remain one of the most moving moments of my life.

Lieutenant Colonel John McCrae of the Canadian Forces wrote the poem "In Flanders Fields" in 1915.  It had long been observed that red poppies seemed to grow over soldiers graves.

In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.

Lt Col John McCrae-1915

Florence Green, the last surviving veteran of World War I passed away in February of this year.  No matter what you may call it, on this day, Remembrance Day in some countries, Veterans Day in others, let us all remember the sacrifices of those who have selflessly answered the call and those who continue to do so.

Thursday, November 8, 2012

Global Leadership: Values and how you treat people

"When you  are with your people, they will treat the product as you say.  When you are not with them, they will treat the product as you treat them".  Sign in Kansas City Ford Assembly plant circa 1999.

I saw this sign on a benchmarking visit with some other Shell Executives as we were exploring how best-in-class organizations shared successful practices.  I think the quote is especially relevant to those in global roles, primarily because almost by definition, you are not "with them" as they go about their daily tasks.

Yesterday, I introduced the Delivery vs Values matrix.  I've also seen it referred to as the "What gets done" vs "How it gets done" matrix.  Most businesses have well developed metrics, tools and reporting systems that provide routine data on what gets done...the degree to which business targets are being achieved and commitments are being kept.  There are seldom as many feedback mechanisms on how things are getting done...the values piece. That means the leader has to be especially pro-active to make sure he understands the "how".  The 360 evaluation, with anonymous feedback from peers, subordinates and managers is one such tool. 
Doing it annually in conjunction with the performance appraisal is one successful practice I've seen.  Some companies have an employee survey than can also be an important source of data when used properly.  A poor safety record or spike in recordable safety incidents is also often a sign of a leadership problem.  It's almost axiomatic that a well led organization is a safe one...and vice versa.  Excessive employee turnover or sudden departure of key staff is another cause for inquiry.  Good HR staff are usually very capable of conducting exit interviews with departing staff and debriefing the leader on the outcomes.  It's also almost axiomatic that people don't quit jobs, they quit supervisors.  Site visits can also be an important data point.  If the local manager appears anxious when you engage with his direct reports or insists on absolute control of the agenda, where you visit and who you talk to....alarm bells should go off.  Informal social events help inform what the overall working climate is.

To be clear, I'm not suggesting a leader "go looking for trouble" or that any of the indicators I've listed above are sure-fire indicators of a problem....but they are signs that a leader needs to dig a little deeper into the work environment..  I am suggesting that most systems don't automatically provide the leader with all the data they need to come to an informed conclusion on how things are getting done...if the organization's values are being supported as results are delivered.

Wednesday, November 7, 2012

Global Leadership: Managing Performance-Delivery vs Values

One of the difficult challenges facing a leader is evaluating the performance of his direct reports.  In my experience there are two big dimensions to be considered .  One is  delivery....did the person deliver the results promised?  Second,  does the person lead consistent with the organization's  values?

When Jack Welch was CEO at GE, he had a simple framework to help him think through some of his more difficult people issues.  He described it in his 1991 annual report and it is further described in Noel Tichy's book, The Leadership Engine.  Tichy covers it in his section on "Edge"...  the ability to see reality and act on it.  It's not new and not complicated but I've used this framework a lot in talent conversations.

A 2X2 matrix showing these dimensions looks something like the one below.  Delivery is on the vertical axis, values on the horizontal.

 Welch placed his direct reports in one of the four quadrants.  The upper right, those who deliver and do so consistent with your values, are easy.  They have a bright future and should be sponsored for advancement.  Likewise, the lower left quadrant is easy but unpleasant....they must be moved on.  On the lower right are those who operate within our values but just don't deliver.  They deserve a second chance and a thoughtful but direct "how can I help?" conversation. They may need executive coaching, skill development, practice, resources, supporting talent...even a lateral change in assignment. They have to move at some point to the upper right quadrant.  You can't indefinitely carry good people who lead in the right way, but just can't get it done.  The urgency of the need to improve results to be part of the "how can I help?" conversation.

I think the most difficult quadrant is the upper left..."Delivers Results, Low Values".  As Tichy says: "This is the individual who typically forces performance out of people, rather than inspires it:  the autocrat, the big shot, the tyrant.  Too often, all of us have looked the other way, tolerated these managers because 'they always deliver'....on the short term."

Because it's so difficult, you don't have to look far to see how prevalent tolerating "High Delivery, Low Values" is.   From financial services scandals, to rampant college football recruiting and improper payment violations, to military officer misconduct... we see evidence every day.  My final two points are great leaders don't tolerate low values performance. They don't look the other way.  They ask questions when they know something isn't quite right.  They pay attention to employee surveys and do 360 evaluations when their instincts tell them something is wrong.
The last point is the low values leader is always exposed eventually.  It may come out after they depart or sadly, after they have been promoted, but it always comes out.   That's when the "If you knew about this, why didn't you do something?" questions start.

Monday, November 5, 2012

Global Leadership-Recognition and The Personal Touch

Last week I had the pleasure of re-visiting an organization for which I had previously exercised leadership accountability.   It was really pleasant to see so many people who are as much friends as they are former working colleagues.

During that visit a woman who had been a direct report of mine at one time told a story of how I had written her a short, encouraging note at a particularly difficult time.  The business she supported was making the transition from an autonomous country operation to a regionally-aligned global one; it was in the midst of a major acquisition; and it was growing dramatically through organic investment.  She had her hands full and was doing a fine job managing all the tensions that came with that kind of business turbulence.  After a series of site visits, I wrote her a short encouraging handwritten  "you're doing good, stay after it, call me if you need more help" kind of note.

Last week, she shared with others around the lunch table how much that note had meant at a particularly difficult old fashioned hand-written note that she posted with a stick pin over her computer screen.  It became a source of encouragement for her during a difficult time.  She's been promoted since then and undoubtedly will several more times in her career.

The purpose of blogging on this subject isn't to promote what a great leader I was.  It's to reinforce that the personal touch is an important part of leadership.  For me it took the form of a simple handwritten note in that case. There is something tangible and personal about a handwritten note that doesn't come through on email or a phone call.

Too often we think only of tangible rewards that accompany recognition...monetary awards, or time off or off-site celebratory activities.  Clearly those things have their place in the portfolio of reward tools in leader's kit bag.  However, a full kit bag includes the personal touch and can be far more impactful than any tangible reward. The colleague who got that note from me is still telling stories about it almost five years after the event.  

Friday, November 2, 2012

Global Leadership: Developing Leaders who can balance Global and Local

Leaders in global enterprises often find themselves in the middle....caught between global initiatives that often involve standardization....and local customized practices that work in a specific country or line of business.  Some of my earliest blogs covered several dimensions of the globalization, standardization, customization dilemmas leaders face.  The blogs of 13, 14, 15, 16, 20 and 21 March all explore the challenges in some detail.  If you haven't had a chance to read those, it might be worthwhile to spend a few minutes doing so. 

In this blog I intend to address how it is leaders develop the skills to deal with those dilemmas.  At the heart of it is the leader must be able to both amplify messages going up the hierarchy and rationalize messages coming down the hierarchy.  By that I mean that leader in the middle...somewhere between the field and the corporate center.... needs to be an articulate spokesman to the corporate for the challenges of local implementation AND an articulate spokesman of the corporate benefits of standardization.

So how does the leader develop the ability to sort out the natural resistance to change from legitimate concerns?  How does she acquire the ability to understand and articulate the business case for standardization?  I think the key issue is credibility with both audiences and the way that credibility is established is by service at both levels.  The leader needs to be able to say "I've been in the trenches like you...I know what it's like"  One of the most effective leaders I saw in Shell was an expert at this.  When he talked of the challenges in a refinery, everyone in the audience knew he'd been there... at 2 in the morning with a difficult, dangerous task in front of him.  You could see smiles and nods..."this guy gets it''.  Likewise, that leader in the middle needs to understand the pressures, challenges and politics of life in the corporate center.  It's all too easy to throw rocks at initiatives that are only remotely beneficial at the local level.

I believe the only real way to develop these skills is by assignments at multiple levels in the organization.  Professional development should start at the lowest levels of the organization whether it is a platoon leader in the Army, an HR manager in a refinery or a petroleum engineer in Oman.  Once leadership potential is identified then assignments should include both corporate center and field exposure and increasing levels. Stated another way, if you start out in the corporate center, you never develop a real understanding of the challenges in the field; if you spend all your time in the field you never really understand the unique and necessary challenges of the corporate center.  For those who would like to take a and meetings and increasingly sophisticated technology solutions don't cut's insufficient to bridge the gap.

My summary is a global company needs talent management processes that take into account an individuals background, their potential as a leader and ensures exposure at multiple levels for those destined to lead in the organization.  In addition, those aspiring to leadership roles need to understand there are mobility requirements that come with increased responsibility.  If one is to progress in the organization it's likely to demand more frequent movement of the household and the challenges that can create to family life.

Tuesday, October 30, 2012

Global Leadership- ExxonMobil-A summary of Leadership Insights

Over the course of the last six weeks I've done seven blogs on the leadership insights I believe emerge from Steve Coll's book Private Empire:  ExxonMobil and American Power.  Those blogs and their subjects include:

17 Sept-Operational Excellence and Project Execution

18 Sept-Sustaining Growth

19/20 Sept- Growth and Strategic Choices

21 Sept-Anticipation and the Time Horizon

26 Sept-Safety

16 October-Security

Monday, October 29, 2012

Global Leadership- The Importance of Persistence

Recently, I was I Vermont on a brief holiday admiring the autumn foliage.  Serendipitously, we passed through the tiny community of Plymouth Notch, Vermont. This small, farming community was the home town of Calvin Coolidge, the 30th President of the United States.  He was president from August 1923 to March 1929.  We stopped and toured the grounds and small visitors center there.  His politics are unimportant to me but the idea that a man could have such humble beginnings...there couldn't have been more than four or five families in this small community....and become President of the United fascinating.  A quote on one of the walls gives a clue to his character:

"Nothing in this world can take the place of persistence.  Talent will not; nothing is more common than unsuccessful people with talent.  Genius will not; unrewarded genius is almost a proverb.  Education will not; the world is full of educated failures.  Persistence and determination alone are omnipotent."-  Calvin Coolidge

This quotation isn't new to me but I think it bears reinforcing.  Persistence.... the will to continue steadily in some state or course of action in spite of opposition or a very important leadership quality.  It's very closely related to the issue of "Practice" which I covered in my 4 August blog entry and "Mistake Making" which I covered on 8 May

Dr Angela Lee Duckworth has taken this idea a step further.  She takes the idea of persistence and combines it with sustained passion to arrive at a quality she calls "grit'.  The video at this link explains it in greater detail.  Although it's longish....18 mins plus...and three years old... it's worth the few minutes invested.  She even makes links between mistake making and practice.  She and others have done solid research that confirms what Coolidge knew intuitively over 80 years ago. 

Tuesday, October 16, 2012

Global Leadership: Security in an unstable world

With so many companies operating on a global scale, increasingly leaders are confronted with security challenges that were previously unimaginable.  Steve Coll's book outlines some of the challenges for a company like ExxonMobil.

One problem is the theft of products.  In at least one country of which I'm aware, the scale of the problem is enormous.  In the not too distant past, the theft from just one company in one country was somewhere between 26 and 30 million barrels of oil per year with a loss of over a billion dollars in revenue.  This is clearly not the work of villagers driving spikes in pipelines and siphoning oil into 55 gallon drums.  It involves a fairly sophisticated technical capability to get the oil and supply an distribution network to move it and sell it.  Often the revenue this generates is used to fund insurgents with interests against the host nation.

Another security challenge is harm to ones employees.  Kidnapping for ransom is the most common experience.  Actual harm to expatriate workers is relatively rare.  More often they are held until a ransom is paid.  Coll claims the going rate for an expat in oil rich countries is a ransom of $250,000 which is routinely paid.  That said, the "they won't harm an expat" belief hasn't always been correct and companies must treat all these cases seriously.  Coll lays out in some detail different security challenges ExxonMobil faces in Indonesia, Chad, Equatorial Guinea and Nigeria.

This often leads to security arrangements with the police and military forces of the host nation.  Companies necessarily must respect the sovereign rights of states within which they operate and that includes security.  A complicating factor is that the same security forces that provide protection to commercial activities are the same forces accused,  or in some cases known, human rights abusers.  It's difficult to reconcile the dilemma of being protected by security forces who are also being used to oppress ordinary citizens.  In Exxon's case they chose to join the Voluntary Principles on Security and Human Rights Regime.  This regime commits corporate signatories to communicate their human rights standards to local security forces; authorize the use of force around their properties only in proportion to the threats and to vet local militias serving them for known rights abusers.

So what does all this mean to a leader?  First of all it means that you need to be choiceful about where you choose to operate.  Although many leaders are skilled and experienced in making business-case driven choices, security concerns and ability to implement the Voluntary Principles have to be part of that decision process.  Second, leaders must be aware that a lucrative business proposition can cloud their judgment and cause them to dismiss or minimize security concerns.  Third, leaders must be aware that circumstances can change quickly.  Coups and revolutions as well as peaceful political transitions can change the basis of key decisions and trusted relationships.

Monday, October 15, 2012

Devil's Advocates: Improving Information Sharing

On 12 April I published a tipsheet for leaders on how to get diverse views surfaced on a team.  I'd encourage you to go back to that blog entry and review it.  #1 on that list was to "Designate a Devil's Advocate" In this 9 October entry from Professor Michael Roberto's Blog: Devil's Advocates: Improving Information Sharing there is new research that devil's advocates play a key role in improving information sharing on teams. 

Wednesday, September 26, 2012

Global Leadership-Safety

 Usually one deals with safety, security and the environment together.  However,  I think all three deserve separate treatment, especially in the blog format.  I'll start with safety.  Coll spends a lot of time in his book focusing on the CEO's and high profile public positions on the environment and the lingering effect of the Exxon Valdez disaster in Alaska.  By his focus on the CEO's and those high profile public positions, I think Coll really understates what it takes to operate safely every day.

Coll does accurately describe how central ExxonMobil's Operations Integrity Management System(OIMS) is to its effectiveness.  I've again attached a link to it.  Element 6-Operations and Maintenance, of this system gives you some idea of their approach.  Every day in an integrated oil company, there are thousands of people, often in remote places,  doing dangerous things.  It's a challenge to ensure "nobody gets hurt".   Every day there are staff operating huge, constantly moving equipment in Canadian oil sands, drilling wells in 5,000 feet of water in the Gulf of Mexico, people  operating in countries with hostile insurgents, those in refineries working with combustible chemicals under great heat and pressure, and thousands who move people to work by air and ground and products to terminals by sea.  Another set of complications are organizational structures that include joint ventures and multiple contractors from different companies working together.....many of whom may not share the same safety emphasis.  It takes incredible leadership emphasis to make sure "everyone comes home" at the end of the work day.  That emphasis has to be every day, by every leader at every level.  In the company I worked in that included every meeting, even in office environments starting with a safety hazards, evacuation routes, alarms.  Since slips,trips and falls are among the most common lost-time injuries, holding on to the handrail while ascending or descending steps is another emphasis...even in urban office environment.  It's leaders who make a difference in ensuring all staff understand there is no trade-off between delivering results and trumps everything else.  There's more to it than just emphasis on safety but there is a fair amount of research that shows a high correlation between well led organizations and safety.

For the leader of a global enterprise, activity or practice there must be absolute clarity... no ambiguity or mixed messages... about safety.  Since by their nature global leaders are separated by time and distance, that clarity helps guide the actions of staff and first line leaders who must take decisions in the moment.

Friday, September 21, 2012

Global Leadership- Anticipation and the Time Horizon

One of my top leadership insights has been that the leader's time horizon extends as they go up the organization.  I also mentioned in yesterday's blog that the ExxonMobil CEOS(Lee Raymond and Rex Tillerson) mentioned in Coll's book were required to have a time horizon measured in decades.  I want to spend a little more time with this subject today.

The best, data driven work I know of in this area was done by Dr Elliott Jaques.  I'll not try to summarize his entire impressive body of work but focus on the different levels in an organization and the time horizons required to effectively function at each level.  He defines several organizational levels he calls "Stratum" and the time horizon associated with each.  A high level overview looks something like this:

Stratum I- Operators, salesclerks; introduction of new tasks requires supervision
Time Horizon: One day to three months

Stratum II-First line supervisors; small business owners
Time Horizon:  Three months to one year

Stratum III-Department heads; workshop managers, multi-site franchise operators
Time Horizon: One to two years

Stratum IV-Leaders of leaders
Time Horizon: Two to five years

Stratum V: VP of large company
Time Horizon-Five to ten years

Stratum VI- CEO of 20,000 employees or EV of a larger company
Time horizon- Ten to Twenty years

Stratum VII- CEO of > 20,000 person company
Time Horizon- Twenty to fifty years

If this subject interests you, I suggest Jacques books The Requisite Organization and Executive Leadership.  There is much more detail there about organizational structure and leadership requirements than I can share in this blog.

I want to make two final points on this time horizon subject.  I know there are a number of younger leaders who read this blog....Stratum I-III in Jacques model.  My message to you all should be reassuring....if you are a first line supervisor it is just fine to have a time horizon of three months to one year; or as a department head or multi-site leader of one to two years...that's the way a well designed organization works.  You don't need to think about issues twenty to fifty years out like Lee Raymond and Rex Tillerson. Conversely, if you are a leader at level IV or above and your time horizon is less than two to five years you may be putting your organization at risk.  I've seen far too many leaders at Stratum IV and above whose time horizon has never extended past the one to two year mark. Sometimes they can't...Jaques describes this as a "cognitive complexity" problem.  There are other times when longer term planning gets either "pushed" up(the tyranny of the urgent) or "pulled up"(micro managed) the organizational structure.  No matter what the cause, the "failure to anticipate" leadership failure can often be attributed to a too-short leadership time horizon.


Thursday, September 20, 2012

Global Leadership-Growth and Strategic Choices II

To be clear, I never intended this blog or series of entries to be about creating business strategy. The McKinseys and other large consultancies of the world are far better at analyzing markets, benchmarking, competitive position, one's portfolio of products and services, cost structures for services and general administration(SG&A), economies of scale opportunities and so forth.  I'll leave that to them.

I did intend to highlight how the growth imperative drives and in some ways defines the range of strategic options for a leader.  In the oil and gas business, it takes you to places(Nigeria, Equatorial Guinea, Chad, Iraq, Venezuela, Indonesia) that present challenges...serious challenges... to leaders.

Another dynamic in the oil and gas business that is a particular challenge is the life cycle of investments.  Exploration and production investments often involve billions of dollars and the returns are measured by the decade, not by the quarter or the year.  This requires the leaders in this business to anticipate....peer into the future.... very far in advance...10, 20, 30 years.

Two very interesting things emerge from Coll's book about anticipation.  One is that when Lee Raymond asked for a review of how well their strategic planners had been at predicting the future, two things emerged. One is that they were very good....a variance of < 1% predicting long term demand. Conversely they were not good at all at predicting price...just too may variables in global politics to make this work....Hence their strategy hinges on demand forecasts with a range of plausible price points.  The second really interesting thing is how thoughtful and deliberate ExxonMobil has been at anticipating disruptive technologies.  They looked at solar, wind, biofuels and hydrogen.  They ultimately concluded that biofuels and hydrogen posed the greatest plausible disruption to the liquids side of the oil and gas business. When I think about one of the things I consider to be one of the top three leadership "failures"...failure to is clear they have processes and the intellectual curiosity to challenge their own mental models and "anticipate" well into the future.

Wednesday, September 19, 2012

Global Leadership-Growth and Strategic Choices

Today I want to touch on the growth imperative and strategic choices a leader has to take.  I think the most important of those choices is what is in the portfolio of products and services?  A large integrated oil and gas company like Exxon, Shell, BP, Chevron or Total has choices to make on what kind of portfolio mix they want among liquids(oil), gas, unconventionals like oil sands, and renewables(wind, solar,hydrogen, biofuels).  The term integrated refers to control of the entire value chain from finding oil and getting it out of the ground,, transporting it(pipelines, shipping), refining it, and marketing/selling it at retail outlets.  Transportation fuel is the second largest segment of the worldwide energy market(power generation is #1) and it is the fastest growing.  Since it is almost exclusively an oil product this drives the big oil companies to those places where oil is found....deepwater Gulf of Mexico, the Arctic, and to countries like Nigeria, Equatorial Guinea, Chad, Indonesia, Venezuela, Iraq and others.   As I mentioned yesterday, the portfolio you choose is a more important driver in the oil and gas business than in other business.  Other businesses like a Wal-Mart or Coca Cola would likely be more driven by expanding markets for existing products and services or developing new products and services.  The point is a leader must understand what the growth driver is for their business and what choices those drivers may dictate.

Another strategic choice that is driven by growth is the make/buy decision.  In Coll's Exxon book he outlines two different choices Exxon made in different circumstances.  Although there were clearly efficiencies to be gained in common functions and economies of scale, the driver of the merger with Mobil was access to Mobil's reserve bookings.   When it came to the XTO acquisition, they were buying two things really.  One was access to gas leases.  Referring back to portfolio choices ExxonMobil  chose to shift to a more gas heavy portfolio. Why did Exxon make this portfolio shift? Because power generation is the largest part of the world energy market and environmental concerns are driving increasing preference for the cleaner burning gas than coal.  There was also an issue of expertise.  Fracking shale to get 'tight gas" involves different skill sets and approach to drilling.  ExxonMobil decided it was faster and better to acquire a company with the expertise than to try to develop that expertise organically in-house.  A note of caution.  The buying of expertise can be tricky.  Small companies and start-ups often operate on a low salary, high equity compensation scheme.  It's sometimes hard to retain staff who you've just made rich by buying their company.  Coll explains exactly how Rex Tillerson insured retaining expertise in the XTO acquisition.

My last point on growth and strategic choices has to do with when to say no.  ExxonMobil ultimately landed on using the Voluntary principles on security and Human Rights regime, compliance with the US Foreign corrupt practices act and technology transfer prohibitions.  They also categorized different countries as democracies, autocracies or "transitional" governments as a way of guiding choices.  The fact that most growth opportunities in oil lie in "transitional" countries makes those choices more difficult.  Nevertheless, leaders have to sometime say "no" to business opportunities on the basis or more than pure commercial interests. 

Tuesday, September 18, 2012

Global Leadership-Sustaining Growth

In any public company there is an imperative to grow the business.  Shareholders expect a return on their investment and the path to return on the investment is through growth. In a traditional commercial enterprise there are really three paths to grow a business...expand sales of current products and services, mergers and acquisitions(buy growth) or develop new products or services.  In the oil and gas business growth has a slightly different twist to it.

Sustainability of the business isn't really driven by expanded sales or development of new products and services in oil and gas.  Sustainability is determined by a term called reserves replacement ratio.  Simply this is a measure of the amount of proven reserves added to an company's reserve base compared to the amount of oil and gas produced in that same year.  If a company ratio is less than 100%....if they consistently produce more than they discover or acquire....they will eventually be out of business.

Coll does a good job of describing how important the reserves replacement ratio is to ExxonMobil and the other oil and gas companies.  Adding to the reserve base has been an important driver of  mergers and acquisitions in oil and gas...Exxon's  merger with Mobil...BP's acquisition of Amoco...Total/Fina....Chevron/Texaco.  Coll also outlines how much of a driver it was in Exxon's acquisition of XTO's gas assets.  Why all the M&A activity?  Because organic growth...finding new more difficult technically and more difficult in terms of those who own the resource.  The technical challenge has to do with the geology of where the prospects are for new discoveries.....the deep waters of the Gulf of Mexico and elsewhere...wells in over 5,000 feet of water and then another 25,000 feet or more below the seabed...or the arctic with the challenges of ice, a short drilling season and contingency preparations...or in the oil sands of Alberta.  Another dimension has to do with the governments who are the "major resource holders".  Coll does a good job of outlining the challenges ExxonMobil faces in places like Chad, Equatorial Guinea, Nigeria, Venezuela, Indonesia and Iraq.  Its not that the major oil companies like to go to dangerous places and deal with non-democratic governments who don't treat their people well or have high levels of's where they have to go for new growth prospects and if already there, it's where they have to stay to keep the reserves on the books .

What are the leadership lessons here?  One is that leaders at the enterprise level have to understand  both short and long term growth drivers in their business and industry.  Not only does the enterprise level leader have to understand those drivers, he also needs to build a strategy that is sustainable ten to twenty years into the future.   Last, it's important to recognize the role that the growth strategy has in framing other strategic choices.  My blogs of 19/20 Sept show how that framing played out for ExxonMobil.

Monday, September 17, 2012

Global Leadership-Operational Excellence and Project Execution

As I mentioned last Friday, I intend to use Steve Coll's book on ExxonMobil as a vehicle to explore some dimensions of leadership.  Coll's book isn't about leadership per se, but does tell the story of ExxonMobil and in so doing I think some important leadership issues emerge.

Although one can tell from my bio that I worked for a competitor to ExxonMobil, I don't come to this subject with any real bias one way or the other.  I really don't know the company well...just know them as tough competitors. In the industry they had a reputation for excellence in project execution and an insular, not-very-transparent, somewhat rigid culture....points Coll makes very well.

At the very heart of what makes ExxonMobil work is their Operational Integrity Management System or OIMS.   You can read it in full at the attached link.

There are eleven elements to the OIMS.
1.  Management, Leadership and Accountability
2.  Risk assessment and management
3.  Facilities design and construction
4.  Information/documentation
5.  Personnel and Training
6.  Operations and Maintenance
7.  Management of change
8.  Third party services
9.  Incident investigation and analysis
10.  Community Awareness and Emergency preparedness
11.  Operations integrity Assessment and Improvement.

Each element has an underlying principle and a set of expectations.  In addition to the eleven elements there is a requirement for each operating unit to establish a management system(the required elements of the management system are also enumerated) to ensure all expectations are assessed and measured.

The entire OIMS is subject to periodic internal and external evaluation to include a scoring system.

As I mentioned in my 24 July blog entry a system like Exxon's OIMS is an important systemic barrier to errors and misjudgments.  It's also key to consistent execution and delivery of results.  Those who operate a global enterprise...particularly one with the technical challenges and inherent risks in the oil and gas business...  have to have something like the OIMS. There are a couple of comments to make from a leadership perspective.

First, creating such a framework in a company with over 100,000 employees and several hundred thousand other contract workers is no small task.  I don't know the history of OIMS in ExxonMobil.  I do know how hard it is to create a single, global standard that works in every business unit and every country.  Varying regulatory regimes and standards in different countries is one challenge to standardization. Increasingly global companies find themselves in joint ventures with multiple partners with divergent views on a standard.  Last but not least, it takes strong, confident leaders to overcome the "we're different... it's different here...those-in-Headquarters-don't-know-what-it's-like-down-here" resistance to change.  Creating a standard that is specific enough to be meaningful and flexible enough to work in all circumstances isn't's tough to find that balance and the difficulty cannot be overemphasized.

Second, you may wonder if such a system is so valuable, why a company like ExxonMobil, with their well earned reputation for secrecy,  would publish it in a public domain?  The answer is the value isn't in the's in the disciplined execution of the system the document describes.  I suspect they'd say, "We're happy to share it because we know we can execute it better than anyone else".  The competitive advantage is in disciplined execution and disciplined execution is a function of leadership.  Making sure the system is implemented and leaders at every level are held accountable is key to its effectiveness.

The bottom line is you have to be really good at whatever it is that you do, and you have to have a systemic approach to ensure you can do it every time, in every country, in every circumstance.

Friday, September 14, 2012

Leadership and the Global Enterprise

I recently finished reading Steve Coll's book Private Empire: ExxonMobil and American Power.  Although it's long(624 pages on my Kindle) and by its nature is focused on the oil and gas business(and a specific company)  it's loaded with some great leadership insights that are generalizable to a global business.  Although the book isn't a "leadership book" per se, I intend to take the next few blogs and explore the leadership issues it illuminates.

The leadership subjects I intent to tackle include:

Operational Excellence and Project Execution-The importance of being really good at what you do
Sustainability of the Business-The growth imperative
Strategic Choices- Make vs Buy; Balancing the Portfolio; When to say "no" to an opportunity; Anticipating Game-changers
Safety and the Environment-
Ability to Influence-Regulatory environment, Sanctity of Contracts, Defining those issues exclusively in the domain of sovereign governments and those shared with a corporation.

I don't intend to review the book, but use the content to explore the some of the challenges facing leaders of global enterprises.

Tuesday, September 4, 2012

Developing Leaders-The Importance of Practice

In this blog I want to discuss the role of practice in developing leadership skills.  Quoting from the Random House dictionary by "practice" I mean the "repeated performance or systematic exercise for the purpose of acaquiring skill or proficiency."

In the practice of leadership, leaders learn how to develop trust, build teams, set priorities, inspire confidence, engage with key stakeholders and allocate scarce resources. If you want to be good at leading, you have to lead and you have to lead often at increasing levels of responsibility and complexity to grow as a leader. Leaders learn by doing, getting feedback and improving their performance

In Malcolm Gladwell's book Outliers, he explores the idea that "excellence at a complex task requires a critical minimum level of practice." Studies over and again in a variety of fields pegs 10,000 hours of practice as the minimum level required for excellence.

Whether or not 10,000 hours is the right number or not is really not important to me.  What is important is the role of practice in developing skill.  I believe that applies to leadership as well.  For many years, in both the military and large civilian organizations the role of practice in developing leaders was well understood.  Young staff with potential were placed in leadership roles early and often.  Talent development systems and processes integrated progressively challenging leadership experiences with formal development programs.  In some ways these opportunities were "automatic".  By automatic I mean the talent development systems in organization steered individuals or cohorts of individuals through the system providing thsoe development opportunities at the right time.

A number of factors over the last 15 years have eroded both organizational ability to develop leaders through practice and an individual's  ability to develop their own skillThese opportunities aren't "automatic" anymore.  Organizational structures have flattened, been de-layered and spans of control have increased.    This means fewer opportunities for progressive development.  Increasing specialization and the requirement to develop deep technical expertise leaves less time to develop generalist skills.  Global organizational structures and virtual teams make it difficult to mentor and observe the leadership practices of others.  As a result many people might be individual contributors for their first 10 or 15 years in a company.  They only get that first formal leadership opportunity at that point.  I've seen a lot of leaders make "rookie mistakes" in significant roles simply because of the lack of practice.

So what's to be done? How do young leaders get the opportunities to practice?  Quite simply both organizations and individuals have to work harder to provide those opportunities...they aren't automatic anywhere, anymore. One strategy is to put them in charge of projects addressing key business challenges.  These projects need to have resources allocated, deliverables and deadlines.  Another is to assign them roles on standing committees.  At an individual level, someone seeking to develop as a leader might need to get those opportunities outside work; as volunteers in their community, helping local schools or other forms of community service.  I also think business leaders and senior HR staff need to challenge their own thinking on who is deemed "ready" for leadership roles.  If you ask any senior leader in any company what their most meaningful leadership experience was, they will almost always point to a time when they were figuratively "thrown into the deep end of the pool"...when they didn't already know everything they needed to know to get the job done...when they had to learn really fast and the possibility of failure was very real.  I'm not suggesting that its smart to routinely throw people in jobs for which they are totally unprepared.  I do propose that senior leaders could take more risk with young leadership talent.

Thursday, August 30, 2012

Errors, Misjudgments, and Dishonesty-A Summary

I've stayed with this subject for almost two months.  Before moving on, I want to summarize the ground we've covered in these eleven entries.

Subject                                      Blog date

"Impact on those left behind"-  7/6
"Picking up the pieces"          -  7/10; 7/30
"Distinguishing among blameless error, blameful error, and dishonesty"-  7/17
"Human Frailty"                     - 7/19
"Creating a High Reliability Environment"- 7/23; 7/24; 7/26; 7/27
"Dishonesty:  Lessons from Locksmiths"- 8/7
"Black Swans-High Impact, Low Probability Events" - 8/27 

Monday, August 27, 2012

Errors, Misjudgments and Dishonesty- "We are all prisoners of our own experiences"

There is one more kind of error and misjudgment I want to cover before closing out this extended discussion of an important topic.  This last topic is what I'll refer to as "the Black Swan".  I take this type of misjudgment from Nassim Nicholas Taleb.  In his books "Fooled By Randomness" and "The Black Swan" Taleb deals with our overestimation of causality in general and specifically in our tendency to ignore the possibility of events for which there is no data to support that possibility.

In Taleb's words

 "What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."

The metaphor is simple.  Up until the late 1600's all swans in the Western world were known to be white.  For hundreds of years, observations of generation after generation revealed no evidence of anything but white swans.  the conclusion then was that all swans are white and there can be no such thing as a black swan..  Then in 1697 Dutch explorer Willem de Vlamingh discovered Black Swans in Western Australia.

Another example comes from the book Isaac's Storm.  In this book author Eric Larson tells the story of the 1900 Galveston hurricane from the point of view of the National Weather Service forecaster Isaac Cline who was based in Galveston.(as an aside I find it highly ironic that the hurricane currently threatening the US Gulf coast is named "Isaac").  An important contributing factor to the lack of preparation for the 1900 storm was a belief among US weather forecasters that hurricanes could not enter the Gulf of Mexico.  Why did they believe this?  Because no hurricanes in the 19th century had entered the gulf; as they approached Florida they inevitably turned north up the US East Coast.  Although they didn't know exactly why this was so, all their available data suggested no hurricane could cross Florida or Cuba and enter the gulf .  The Cubans knew otherwise based on their own long history and tried to warn US authorities of the path of this storm.  A combination of arrogance and racism caused the US authorities to ignore their warnings.  Somewhere between 6,000 and 12,000 people(most likely 8,000) died as a result.

So what's a leader to do?  The top 10 leader behaviors I listed in the 27 July blog still hold.  To those ten I would add be especially cautious when you are most certain....slow down.  Challenge your own assumptions.  Ask the question, "What if we're wrong...then what?"

Last, recognize randomness rules our lives and we are often not in as much control as we think we are.  How you react to those unexpected events will often be the final measure of success.


Tuesday, August 7, 2012

Errors, Midjudgments and Dishonesty- "Lessons from Locksmiths"

"Locks don't protect you from thieves.  A professional thief can get in your house if they want to.  Locks only protect you from mostly honest people who might be tempted to try your door if it had no lock."  The locksmith Dan Ariely quotes in "The Honest Truth About Dishonesty" goes on to assert that "1% of people are always honest, 1% are always dishonest, and the rest are honest as long as the conditions are right".

This dark assessment is at the heart of Ariely's book about dishonesty.  His core theory, backed up by multiple experiments, is  that our behavior is driven by two opposing motivations. First we want to be viewed as honest , honorable people.  Second we  want to get as much as possible out of any situation, which often leads to cheating.  Along the way he addresses the Simple Model of Rational Crime(SMORC) which is simple weighing the benefit of the offense against the likelihood of getting caught and the penalty for getting caught.  All of his research and experiments lead to the conclusion that "cost benefit forces often do not drive dishonest behavior.  Longer prison sentences and more police don't necessarily lead to less crime."

He explores such varied settings as hourly billing by lawyers, writing time to projects in consultancies, golf, university honor codes, filing taxes, fishing, story-telling, creativity, and the effect of wearing counterfeit designer merchandise.   I found his section his section on conflicts of interest..."Blinded by Our Own Motivations"  particularly important and relevant in the business setting.

One important conclusion on the positive side is that when we are reminded of ethical standards we behave more honestly.  Those reminders are especially important when they are provided "close to the moment of temptation."

It is easy enough to say that a company's values...honesty, integrity and respect for's business principles... and its code of conduct are important. The consequences for violations should be severe. It's also important to note that there are shades of grey below the level of egregious misconduct.  People need to make the right choices over and over in the face of ambiguity and mixed messages.  It reinforces the idea that ethics training needs to be frequent, customized to the circumstance and embedded in all formal leadership curricula.  Great leaders create an environment....and structure to provide "reminders" close to the moment of temptation where those right choices can be made.  Most importantly, great leaders model ethical behavior in all their decision making....they lead by example.

Monday, July 30, 2012

Errors, Misjudgments and Dishonesty-Picking up the Pieces Part II

In this blog I want to return to the subject of  "Picking up the Pieces" segment I wrote about on 10 July.  One of the points I made earlier was that blog was that leader behaviors over time must reinforce the values and norms that are expected.  I want to focus on what is it exactly that leaders DO...what are those behaviors that reinforce the norms and values?  I think they fall into four simple, be direct, be unambiguous and be visible.

I'll start with simplicity.  When an organization has endured a leadership crisis where senior leaders have been removed or resigned, the people who are left behind are almost aching for someone to lead them out of the crisis.  They need to know there is a way forward and there are concrete actions being taken to move forward.  One of the best examples I personally witnessed once again refers to Jeroen van der Veer who became CEO of Shell after his predecessors were found to intentionally misstated the oil reserves of the company.  In Jeroen's first big leadership event of his top 80 or so executives he used a single handwritten slide he titled "The Basis for Success".  It had four blocks.  Those were "beliefs", "principles", "strategy" and "priorities". Each of those blocks had three no more than four bullet points ....handwritten, dated and signed.  No multi-colored PowerPoint, 60 slide slide, handwritten with a very complex, global business reduced to four blocks.  This single slide, both in words and symbol reinforced the notion that the way forward required day-to-day head down heavy lifting by every person in the company every day....nothing fancy...deliver results consistent with our beliefs and principles.

When it comes to being direct, leaders need to be clear and candid about wrongdoing but not dwell on it.  This means being fully cooperative with investigations and audits and insure compliance with directives to preserve relevant documents.  It also means acknowledging the many thousands of honest hardworking staff who had nothing to do with the wrongdoing.

Be unambiguous about core values, ethics and compliance.  Laws like the US Corrupt Practices Act or Technology Transfer prohibitions and other regulatory guidance need to be known and adhered to.  This may require mandatory training or retraining.  Global companies encounter a lot of "grey area" situations....especially in the developing world.  Corruption and graft are seldom the "cash-in-an- envelope" type but more often are disguised as "commissions", "transfer payments",  "agent fees" or "padded invoices" and can be buried deep in  complicated contracts or agreements.  Leaders sometimes need guidance to alert them to situations they may encounter and guidelines established for proper behavior

Be visible.  Communicate frequently at multiple levels and in multiple channels.  The best of these I've seen involve a matrix with potential audiences on one side of the matrix, and key messages on the other.  the key messages block might also include the channels....face-to-face, newsletter, web cast, focused email to certain audiences.

Friday, July 27, 2012

Errors, misjudgments and dishonesty-Top 10 Leader Behaviors that Create a High Reliability Culture

A couple of days ago I outlined systemic barriers leaders can create to minimize error and associated risk.  Yesterday I also outlined processes leaders can implement that can help create a high reliability culture.  The US Army's After Action, Review, Root Cause Analysis and the teaching hospital's Morbidity and Mortality conference are examples.  Embedding these processes as a way of doing business over a long period of time can help create the culture.  In addition to systems and processes there are individual and team behaviors that help create the culture.  I mentioned some of these back in April when discussing how to make a diverse team effective. My top 10 leader behaviors that create a high reliability culture are:
1. Designate a "devil's advocate". A very senior person told me not long ago that in his board meetings he designates a devil's advocate to present a challenge to an emerging convergence of opinion.  A retired US Army three-star general told me last week he successfully used the same technique
2. Know the style preferences and cultural nuances of your team members. Rather than open dialogue, designate someone to lead the conversation who might otherwise defer to an assertive, first mover.
3. "Listen for silence". This is especially important in teleconferences. If you haven't heard someone for some time on a conversation, invite their voice in.
4. Know your people well enough to detect non-verbal signs of discomfort. "Tom, I can tell you aren't comfortable with the way this conversation is headed. Can you share with us what you are thinking?"
5. Master the engagement skills of Inquiry, Advocacy, Mental Models and the Ladder of Inference. A short reference is at this link.
6. Daniel Kahneman even suggests team members write out their point of view on agenda items before dialogue starts. It's not practical for every agenda item in every meeting but for certain issues it is quite useful.
7. Be choiceful about when you express your point of view. If you truly are seeking divergence on an issue, guide the conversation but also let it flow. If you have a strong point of view, acknowledge it up front and invite challenge. How you handle the challenge is will determine to the degree to which people are later willing to do so. If you hammer dissenting views into submission, don't expect challenges to your thinking in the future. If you do have a strong point of view, withhold it and then later hammer disagreement into submission, don't expect much conversation in the future until you have spoken.
8. Watch for weak signals that challenge your own mental models. This can be especially important in mature teams where the leader's attitudes and views are well known and shared. This makes it even harder to surface a dissenting view.
9.  Be careful not to dismiss the message because of the messenger.  I call this the "chicken little' problem.  For those  who don't know, there is a fable in which a chicken gets hit in the head by an acorn and concludes the sky is falling.  Chicken Little convinces others the sky is falling and, depending on the version of the fable, everyone meets an unpleasant end.  It's central lesson is that some people are unreasonably afraid and try to incite unreasonable fear in others.  There are "chicken littles" in every organization who see every challenge, barrier and risk.  The problem is, sometimes they are right.
10.  Pay attention to the "been there, tried that, didn't work" curmudgeon at the end of the table.  There was a time when I resented the "curmudgeon"..."they slow things down", "they are risk averse", "they are living in the past" .  There is a temptation to dismiss their contribution, however they are often the institutional source of organizational learning.  They can help the leader keep from "reinventing the wheel.'

The point is there are individual leader behaviors and team behaviors the leader can encourage that generate the trust that....combined with systems and processes leads to a high reliability culture.

Thursday, July 26, 2012

Errors, Midjudgments and Dishonesty- Creating a High Reliability Culture

Yesterday, I touched on four systemic barriers that leaders can establish....disciplined execution of standard operating procedures, sound project management methodology, simulations and emergency management/crisis management plans.  The effectiveness of these barriers is very dependant on the culture in which they exist.  This leaves open the question of what is it leaders can do to create a high reliability culture?
In his book, Complications:  A Surgeon's Notes on an Imperfect Science surgeon Atul Gawande describes the Morbidity and Mortality conference that is conducted weekly in most teaching hospitals in the United States.  Laws in most states protect the proceedings from legal discovery, encouraging absolute candor.  In these meetings "surgeons gather behind closed doors to review the mistakes, untoward events and deaths that occurred on their watch, determine responsibility and figure out what to do differently next time."  Gawande gives a compelling account of one such conference involving one of his cases on p. 58 of the book.

Likewise, the US Army's use of the After Action Review is a well documented example of another tool aimed at not fixing blame but identifying opportunities for improved performance.  Gen(ret) Gordon Sullivan, former Chief of Staff of the US Army describes this process, it's evolution and its importance in creating a high performance culture in his book Hope is Not a Method. This process  can be formal or informal and scaled to either large or small groups.    Key elements include an identifiable event, a statement of what was supposed to happen, a conversation about what actually happened, and why, and what will be done differently next time.  Key characteristics of a good AAR are that the environment is nonthreatening and participants are willing to take personal risk for  the team to learn and grow.  In the best ones I participated in, early in the AAR, senior officers admitted their own misjudgments, error and what they'd do differently.  This was a key step in creating the safe environment.

Root Cause Analysis is another such organizational process I observed in the oil and gas sector with the same goal of discovering "ground truth" and addressing.

The peer review process is common among many professional fields and is dominant in the field of academic journals.  I've also seen this process used in the oil and gas business.

Great leaders embed one or more of these processes into work and in so doing demonstrate to everyone in the organization that they recognize the possibility of failure.  These processes condition the work force to recognize and recover from errors and look for systemic fixes that prevent recurrence.  Repeated execution of these processes.....every day, every week, every month, every year, year after year after year.... are an important component of building a high reliability culture.

Tuesday, July 24, 2012

Errors, Misjudgments and Dishonesty- Building Barriers and Safeguards against Error

Accepting the premise of Reasons' work...that there are both personal and systems categories of error... what is it exactly that great leaders do to build defensive barriers and safeguards...the layers of Swiss cheese in his model?
Well documented standard operating procedures and discipline around execution of those procedures is a great place to start.   ExxonMobil's Operations Integrity Management System(OIMS) is a great example of just such a set of standard operating procedures and they have a well known record of discipline around execution of this system. Another is simply good project management/stage gate methodology...conducting appropriate reviews, challenge sessions and taking incremental decisions in the life of project development..  A third barrier would include simulations.  There are many different kinds of simulations from individual to team to large scale computer driven "war-games".  Flight and driving simulators are well known and widely used at the individual level .  There are also drilling simulators in the oil and gas field where operators can simulate the drilling of a well and the various circumstances that a driller can encounter.  The essence of all simulations is to place individuals or teams in an environment where they can practice without the risk or expense of actual error.  Good simulations can also allow for the introduction of low probability, high risk events.   Last, good emergency response/crisis management plans that are practiced, critiqued and refined is yet a fourth barrier.

All of these barriers exist in the context of a company culture.  Great leaders create not only the systemic barriers but the culture that leads to high reliability.

Monday, July 23, 2012

Errors, Misjudgments and Dishonesty-"Error is not the monoply of the unfortunate few"

I want to stay with this subject of how capable, experienced, professional people who know the consequences of their errors, still make them.

James Reasons article in the British Medical Journal sheds as much light on this subject as any.  Reasons is the originator of the "Swiss cheese model" of risk management.  It's worth a read in its entirety at the attached link.

Reasons' approach is to divide error into two broad categories.  One focuses on the person and fixes accountability/blame on forgetfulness, inattention or other weakness.  One of the flaws he identifies in the person approach is it de-couples the person from the context of the error and ignores two important facts....often the best people make the worst mistakes and there are recurring patterns of error in the same system.  The other approach is to focus on the system...the conditions under which decisions are made.  He further subdivides system errors into active(those made by people in the system) and latent(those inherent in the design of the system).  Reasons argues for the systems approach, recognizing that good, capable people, ......experienced professionals.... still make mistakes.  Creating defensive barriers and safeguards is a key element in the systems approach to error prevention.  The "Swiss cheese" metaphor refers to the fact that every barrier has a weakness...a hole in the cheese....and that successive barriers need to be created in the system.  He calls organizations that employ the systems approach "high reliability organizations"...those that have "less than their fair share of accidents."

Quoting from the article "Perhaps the most important distinguishing feature of high reliability organizations is their preoccupation with the possibility of failure.  They expect to make errors and train their workforce to recognize and recover from them.  They continually rehearse familiar scenarios of failure and strive hard to imagine novel areas. Instead of isolating failures, they generalise them.  Instead of local repairs they look for system reforms"

Great leaders create a "high reliability" environment where, in spite of multiple barriers and best intentions, mistakes are expected.  They generate trust by their ability to distinguish between "blameworthy" and "blameless" error.

Friday, July 20, 2012

Errors, Misjudgments and Dishonesty-"No one sets out to take wild risks"

A few days after the Deepwater Horizon oil spill began, I had a conversation with a friend at NASA.  All of us in the oil and gas business were eager to not only understand the technical flaws that led to the accident, but also understand some of the human factors that can result in errors in large scale, complex engineering accidents.  Since NASA has had a couple of those accidents with disastrous consequences and my colleague was in a senior position, I explored the subject with him.

One comment he made that day has stuck with me.  "No one sets out to take wild risks in these ventures", he said.  "You are talking about capable, experienced professionals who know the consequences of their mistakes.  I think errors in decisions are made when there is some combination of time pressure, money pressure, political pressure and previous success."

The time pressure issue seems obvious to me.  If I reflect on my own behavior, I'm most likely to take risks when time is a factor...I'm more likely to speed when driving.  I'm more likely to enter a crosswalk after the "red hand" light has come on...gambling a little on the time lag between when that hand lights up and when the traffic light actually changes.  Time pressure equally effects our decision making in more complex business activities.

Most interesting to me among these is the role of confidence that comes from previous success.  Basically the inner voice of the leader is saying "I've taken this risk before and nothing happened"  or the self referential "I've got a long track record of decision making  under pressure and I'm usually right".  Another way I've explained this it is unlikely the person who has an accident or is arrested while driving drunk, is driving drunk for the first time.  I've driven after drinking like this before and nothing happened.

Here are couple of tips for leaders who have to make complex decisions under pressure.   First, recognize that how data are presented makes a difference...are you looking at performance data or failure data...or both?.  Second, recognize that under pressure we tend to make go/no go decisions.....are there options other than go/no go?  Is it feasible to gather more data?  Third, have you framed the decision properly?  What assumptions am I making?  What mental models am I using?  What biases might be in play(see Kahneman again.)

Most importantly be aware that in spite of your previous success when time, money, or political pressures are high, your risk of making a poor decision are greatest.  You can't let it paralyze you, but in Kahneman's terms, it's time to Think Slow. 

Thursday, July 19, 2012

Errors, Misjudgments and Dishonesty- Human Frailty

There are two big categories of errors and misjudgments that people make in organizations.  One category has to do with errors and misjudgments that are individually based.  The other category deals with errors of process or system.  Today I'll deal with individual errors and misjudgments.

One of the kinds of individual errors has to do with one of the  "unforgivable" errors...violations of company values(honesty, integrity, respect for people as an example), violations of company business principles(rules, standards, expected behaviors) or some types of health, safety and environmental policies.  As I said in my last blog,  a violation of any of these values, principles or policies, in any organization should be grounds for dismissal.  Given the seriousness of the consequences, it's important that leaders are explicit about the absolute nature of these values, principles and some policies.  They need to be reinforced with training at least annually and embedded in all formal leader development training.
Other kinds of errors and misjudgments are made by honest people of good intent...really a product of human frailty.  Daniel Kahneman's book "Thinking Fast and Slow" is probably the best single volume reference to the research of the last several decades into why we all make errors of judgment.  I'll not go into a summary of his work...just simply state that a lot of errors can be attributable to how our brains work. Cordelia Fine's A Mind of its Own, Kathryn Schultz' Being Wrong, and Jonah Lehrer's How We Decide all contribute to a deeper understanding of how highly capable people of good intent make serious error.

An important part of any leader's toolkit is  understanding mental models and mastering the skills of inquiry and advocacy to both challenge her own thinking as well as the thinking of others..  Reveal your own thinking by the use of some key phrases..."I came to this conclusion because...", "This is the experience that leads me to conclude..." and invite challenge  "Do my assumptions seem valid?"  "What's your reaction to what I'm saying?".  When inquiring,  key phrases might include "What causes you to conclude....?"..."The reason I'm asking the question is...."  "Help me understand, can you give me an example?"   Mastery of dialogue skills can help both the leader and others minimize those errors honest people of good intent can make.