|By Madisyn Taylor|
When we rush through our days and lives, we fail to notice the simple beauty of living.
When we rush through our days and lives, we fail to notice the simple beauty of living.
Throughout our lives, we are taught to value speed and getting things done quickly. We learn that doing is more valuable than merely being, and that making the most of life is a matter of forging ahead at a hurried pace.
Yet as we lurch forward in search of some elusive sense of fulfillment, we find ourselves feeling increasingly harried and disconnected. More importantly, we fail to notice the simple beauty of living.
When we learn to slow down, we rediscover the significance of seemingly inconsequential aspects of life. Mealtimes become meditative celebrations of nourishment. A job well-done becomes a source of profound pleasure, no matter what the nature of our labors. In essence, we give ourselves the gift of time–time to indulge our curiosity, to enjoy the moment, to appreciate worldly wonders, to sit and think, to connect with others, and to explore our inner landscapes more fully.
A life savored slowly need not be passive, inefficient, or slothful. Conducting ourselves at a slower pace enables us to be selective in how we spend our time and to fully appreciate each passing moment. Slowness can even be a boon in situations that seem to demand haste. When we pace ourselves for even a few moments as we address urgent matters, we can center ourselves before moving ahead with our plans.
Embracing simplicity allows us to gradually purge from our lives those commitments and activities that do not benefit us in some way. The extra time we consequently gain can seem like vast, empty stretches of wasted potential. But as we learn to slow down, we soon realize that eliminating unnecessary rapidity from our experiences allows us to fill that time in a constructive, fulfilling, and agreeable way. We can relish our morning rituals, linger over quality time with loved ones, immerse ourselves wholeheartedly in our work, and take advantage of opportunities to nurture ourselves every single day.
You may find it challenging to avoid giving in to the temptation to rush, particularly if you have acclimated to a world of split-second communication, cell phones, email and overflowing agendas. Yet the sense of continuous accomplishment you lose when you slow down will quickly be replaced by feelings of magnificent contentment.
Your relaxed tempo will open your mind and heart to deeper levels of awareness that help you discover the true gloriousness of being alive.
From Simon Sinek’s “The infinite game”.
If there are at least two players, a game exists. And there are two kinds of games: finite games and infinite games.
Finite games are played by known players. They have fixed rules. And there is an agreed-upon objective that, when reached, ends the game. Football, for example, is a finite game.
Infinite games, in contrast, are played by known and unknown players. There are no exact or agreed-upon rules. Though there may be conventions or laws that govern how the players conduct themselves, within those broad boundaries, the players can operate however they want. And if they choose to break with convention, they can. The manner in which each player chooses to play is entirely up to them. And they can change how they play the game at any time, for any reason.
Infinite games have infinite time horizons. And because there is no finish line, no practical end to the game, there is no such thing as “winning” an infinite game. In an infinite game, the primary objective is to keep playing, to perpetuate the game.
If we listen to the language of so many of our leaders today, it’s as if they don’t know the game in which they are playing.
My understanding of these two types of games comes from the master himself, Professor James P. Carse, who penned a little treatise called Finite and Infinite Games: A Vision of Life as Play and Possibility in 1986. The more I looked at our world through Carse’s lens of finite and infinite games, the more I started to see infinite games all around us, games with no finish lines and no winners. There is no such thing as coming in first in marriage or friendship, for example. We can beat out other candidates for a job or promotion, but no one is ever crowned the winner of careers. Though nations may compete on a global scale with other nations for land, influence, or economic advantage, there is no such thing as winning global politics. No matter how successful we are in life, when we die, none of us will be declared the winner of life. And there is certainly no such thing as winning business. All of these things are journeys, not events.
However, if we listen to the language of so many of our leaders today, it’s as if they don’t know the game in which they are playing. They talk constantly about “winning.” They obsess about “beating their competition.” They announce to the world that they are “the best.” They state that their vision is to “be number one.” Except that in games without finish lines, all of these things are impossible.
When we lead with a finite mindset in an infinite game, it leads to all kinds of problems, the most common of which includes the decline of trust, cooperation, and innovation. Leading with an infinite mindset in an infinite game, in contrast, really does move us in a better direction.
The game of business fits the very definition of an infinite game. We may not know all the other players, and new ones can join the game at any time. All the players determine their own strategies and tactics, and there is no set of fixed rules to which everyone has agreed, other than the law (and even that can vary from country to country). Unlike a finite game, there is no predetermined beginning, middle, or end to business. Although many of us agree to certain time frames for evaluating our own performance relative to that of other players — the financial year, for example — those time frames represent markers within the course of the game; none marks the end of the game itself. The game of business has no finish line.
In a finite game, the game ends when its time is up and the players live on to play another day (unless it was a duel, of course). In an infinite game, it’s the opposite. It is the game that lives on, and it is the players whose time runs out. Because there is no such thing as winning or losing in an infinite game, the players simply drop out of the game when they run out of the will and resources to keep playing. In business, we call this bankruptcy or sometimes merger or acquisition. Which means that to succeed in the infinite game of business, we have to stop thinking about who wins or who’s the best and start thinking about how to build organizations that are strong enough and healthy enough to stay in the game for many generations to come. The benefits of which, ironically, often make companies stronger in the near-term as well.
Victorinox, the Swiss company that made the Swiss Army knife famous, saw its business dramatically affected by the events of September 11, 2001. In an instant, the ubiquitous corporate promotional item and standard gift for retirements, birthdays, and graduations was banned from our hand luggage. Whereas most companies would take a defensive posture — fixating on the blow to their traditional model and how much it was going to cost them — Victorinox took the offense. They embraced the surprise as an opportunity rather than a threat — a characteristic move of an infinite-minded player. Rather than employing extreme cost cutting and laying off their workforce, the leaders of Victorinox came up with innovative ways to save jobs (they made no layoffs at all), increased investment in new product development, and inspired their people to imagine how they could leverage the brand into new markets.
In good times, Victorinox built up reserves of cash, knowing that, at some point, there would be more difficult times. As CEO Carl Elsener says, “When you look at the history of world economics, it was always like this. Always! And in the future, it will always be like this. It will never go only up. It will never go only down. It will go up and down and up and down… We do not think in quarters. We think in generations.” This kind of infinite thinking put Victorinox in a position where it was both philosophically and financially ready to face what for another company might have been a fatal crisis. And the result was astonishing. Victorinox is now a different and even stronger company than it was before September 11. Knives used to account for 95% of the company’s total sales. (Swiss Army knives alone accounted for 80%.) Today, Swiss Army knives account for only 35% of total revenue, but sales of travel gear, watches, and fragrances have helped Victorinox nearly double its revenues compared to the days before September 11. Victorinox is not a stable company—it is a resilient one.
In the infinite game, the true value of an organization cannot be measured by the success it has achieved based on a set of arbitrary metrics over arbitrary time frames. The true value of an organization is measured by the desire others have to contribute to that organization’s ability to keep succeeding, not just during the time they are there, but well beyond their own tenure. While a finite-minded leader works to get something from their employees, customers, and shareholders in order to meet arbitrary metrics, the infinite-minded leader works to ensure that their employees, customers, and shareholders remain inspired to continue contributing with their effort, their wallets, and their investments.
Players with an infinite mindset want to leave their organizations in better shape than they found them. They play to keep playing. In business, that means building an organization that can survive its leaders.
By Emily Rose Barr
I recently read Parker Palmer’s book, Let Your Life Speak: Listening for the Voice of Vocation, a beautiful meditation on trusting our experience to guide the way to our true calling.
Rather than telling your life what you intend to do with it, Palmer suggests, you must “listen for what it intends to do with you.” Reflecting on his own encounters with self-doubt, deep depression, jubilant triumphs, and unrelenting inner inquiry, he paints a portrait of a personal journey that is far from easy but repeatedly rewarding.
Vocation is defined as, “a type of work that you feel you are suited to doing and to which you give much of your time and energy.” For many, this eschews our understanding of a true calling: something that we not only feel suited to do, but something that is worthy of our talents, values, and a greater sense of purpose.
While these two terms are often used interchangeably, one’s vocation may or may not be aligned with one’s calling. In fact, it’s not uncommon to arrive at a vocation only to realize after years of selfless devotion that we’re not on the path we desire: we discover that the work we’re doing is no longer fulfilling and depletes us of our energy rather than rejuvenates our spirit. Moreover, we frequently associate vocation with a competitive salary, robust benefits, and well-earned promotions, yet the definition makes no mention of these monetary domains.
So how do we reconcile our need for financial independence, or at the very least stability, with our desire to nurture our true calling?
Somewhere along our life’s journey, we were likely told to go after our passions with all our heart; that if we do what we love, we’ll never work a day in our lives; that by simply applying ourselves, we’ll go far. So we studied hard, worked odd jobs to make ends meet, got advanced degrees, and maxed out our résumés.
During this time, our passions might have shifted, or our dreams might have been deferred. We might have told ourselves that doing what we love would come after we’d proven ourselves, worked our way up the corporate ladder, achieved a certain net worth.
It’s so easy for our vision of vocation to become muddled by societal expectations and the harsh demands we place on ourselves. Suddenly, doing what we love each day is no longer enough. We must also make a name for ourselves, rise above the competition, gain an improbably high following, have the latest and greatest technology, and meet ever-increasing productivity standards until we no longer remember why we were called here in the first place.
Our vocation needn’t also be the greatest source of stress in our lives. If it is, it’s likely not our true calling. Work is undeniably stressful. It’s exhausting, time-consuming, frustrating, demanding, and at times, disappointing. But it should also be a means of frequent joy, hope, welcome challenge, vitality, self-growth, and uncompromising abundance.
If you’re fortunate to make your livelihood by answering to your calling each day, I am continually inspired by your dedication to your craft and your courage to meet the challenges that were inevitably a part of your path.
If you feel like your life’s work is at a crossroads with your values, your passions, your deepest motivations, and your undeniable gifts, I admire you also: for your bravery in recognizing that you are worthy of more and your commitment to devote yourself to work that is not always easy, sustainable, or enjoyable.
I encourage you to keep exploring how you can tap into your higher self through your work, be it a full-time job, a part-time job, a weekend gig, or a yet unborn idea. We are told frequently and loudly that our jobs are not the be-all and end-all; that as long as we have a roof over our heads and food on our table, we should be happy. While these are certainly blessings for which we should be grateful, clinging too tightly to this persistent narrative can put us on the fast-track to selling ourselves short.
Wherever you are in your vocational pursuits — just entering the workforce, considering a career change, returning to full-time work after a sabbatical, preparing for retirement, balancing three part-time jobs, transitioning to a new role, celebrating a recent promotion — the following is offered as a guide to help you navigate the often-complex, always worthwhile course of discovering or rediscovering your authentic livelihood.
Know who you are.
Understanding the type of work to which we’re not only drawn but that aligns with the mark we want to leave on the world can only be achieved by intimately understanding ourselves..
Knowing who we are (and who we’re not) is critical to knowing what we want to do and how we want to do it. We also have to be prepared to come to terms with some things we may not like about ourselves. The journey into self is incomplete if we fail to take inventory of both our light and dark sides.
Drown out the noise.
There’s a lot of superfluous noise that infiltrates our perceptions of success. The more you try to squeeze yourself into a vocation that amplifies the voice of society and ignores your own, the more you’ll struggle to find balance, engagement, and fulfillment.
Get creative, don’t compromise.
Perhaps your dream of running a wildlife sanctuary isn’t feasible, or your freelance photography gig won’t pay the bills. This doesn’t mean that you should dismiss these pursuits. Life has a funny way of bringing us back to our calling despite our attempts to ignore it.
No one said that identifying what makes your heart sing was easy and seeing it through can be even harder. But we’re often presented with opportunities to incorporate our passions in other ways, ones that may not appear how we desire on the surface. Be open to letting your interests take on a different shape than you originally intended, at least temporarily. You might be surprised at what you discover.
Pay attention. How many times have you heard someone talk about there being “signs” along their vocational path?
These messages may seem small, but they have a monumental point to get across. When you experience them, listen to them; hear them out; talk about them with someone who knows you well and ask for their insights. These signs aren’t random but filled with purpose and potential. Don’t wait to act on them.
Learn to trust yourself like you do your closest confidante. Know that you have your best interests at heart and that you will make every attempt to see your dreams come to fruition. If it feels scary, keep going. If you’re uncertain, dig deeper. If you want to give up, give it one more day.
You are wholly, unapologetically worth every ounce of your effort. There are countless people who will benefit from your bringing your true vocation to life. Don’t abandon that gift.
|Not everybody has to be a boss. Not everybody has to be an entrepreneur or a CEO or a billionaire or a celebrity.|
But eventually everybody, I believe, needs to set an example. Either to your kids or to your friends or to your spouse or to your peers or to the world in general.
Everybody needs to stand for something. Something that matters.
That’s what real leadership means. Not a rank, not a job title, not a diploma. But a decision inside us.
“Leaders are more powerful role models when they learn more than they teach.”
~Rosabeth Moss Kantor
Somehow, we think that, as leaders, we need to know everything, and then bestow this wisdom on those around us. We are afraid to show our foibles and concerned that others might think less of us if there is something we’re not sure of. We struggle to look good (and smart) at most, if not all, times.
But I think, and I’ve noticed through my own experience as well as through observing clients for quite some time now, that we are actually stronger leaders when we do just the opposite. When we show our foibles, let others know that there are things we’re not sure of, and let ourselves look not so good (or smart) at times, we become more powerful role models because we’re role modeling learning. And learning – and being open to learning – is a tremendous leadership skill.
When we admit our humanness and are willing to show that we’re willing to make mistakes, to learn and to grow, we offer those around us the opportunity to admit their humanness as well. When we push back against the misconception that a leader must be all-knowing and must have an answer in every situation, we make it okay for those around us to not have answers as well. And when we can admit that we might not have all the answers, we are more open to perspectives and solutions that might have been closed off to us.
I practice this willingness to not know with my clients as well. There are times when my clients ask for my opinion on a situation or my thoughts on what they should do, and while I may give them my perspective and thinking, I always preface whatever I say with the acknowledgement that I do not know their best answer and that I most likely could not know their best answer. I am not them. I am not as close to the situation (or people) as they are.
Being willing to not know – being willing to not have the ultimate answer – opens us up to curiosity, and curiosity opens us up to innovative approaches to complex situations and compassionate interpretations of tense relationships.
And when we can model this innovation and compassion to those around us, we model a powerful way to lead and a thoughtful way to be.
How have you expanded your leadership by being open to learning?
Businesses put an awful lot of effort into meeting the diverse needs of their stakeholders — customers, investors, employees, and society at large. But they’re not paying enough attention to one ingredient that’s crucial to productive relationships with those stakeholders: trust.
Trust, as defined by organizational scholars, is our willingness to be vulnerable to the actions of others because we believe they have good intentions and will behave well toward us. In other words, we let others have power over us because we think they won’t hurt us and will in fact help us. When we decide to interact with a company, we believe it won’t deceive us or abuse its relationship with us. However, trust is a double-edged sword. Our willingness to be vulnerable also means that our trust can be betrayed. And over and over, businesses have betrayed stakeholders’ trust.
Consider Facebook. In April 2018, CEO Mark Zuckerberg came before Congress and was questioned about Facebook’s commitment to data privacy after it came to light that the company had exposed the personal data of 87 million users to the political consultant Cambridge Analytica, which used it to target voters during the 2016 U.S. presidential election. Then, in September, Facebook admitted that hackers had gained access to the log-in information of 50 million of its users. The year closed out with a New York Times investigation revealing that Facebook had given Netflix, Spotify, Microsoft, Yahoo, and Amazon access to its users’ personal data, including in some cases their private messages.
So, in the middle of last year, when Zuckerberg announced that Facebook would launch a dating app, observers shook their heads. And this past April, when the company announced it was releasing an app that allowed people to share photos and make video calls on its smart-home gadget Portal, TechCrunch observed that “critics were mostly surprised by the device’s quality but too freaked out to recommend it.” Why would we trust Facebook with personal data on something as sensitive as dating — or with a camera and microphone — given its horrible track record?
SANDRA J. SUCHER AND SHALENE GUPTA
Sandra Sucher has always been fascinated by the dynamics of trust, whether she was watching them unfold on the job or studying them through the lens of academia. One moment in particular stands out from her days as the chief quality officer at Fidelity, where she worked before teaching and doing research at Harvard Business School. To explore potential improvements to customer service, she asked her colleagues in market research to study what happened when a customer experienced a problem at the company. Their counterintuitive finding: Trust actually increased when something went wrong and the company fixed it to the customer’s satisfaction. “This is so different from how we normally think about trust,” she says. “It’s not as fragile as we believe. Trust can actually be regained, and it may not be lost forever.”
Before becoming a research associate at Harvard Business School, Shalene Gupta worked in a variety of industries, from government to education to journalism. In each she was struck by how critical trust was to simply making things work on a day-to-day level. During her public sector days, she saw the plethora of rules, checks, and balances in place because taxpayers didn’t trust the government to spend money wisely. When she taught English in Malaysia as a Fulbright Scholar, she needed to gain the trust of students and parents from a different culture to be effective. As a journalist at Fortune, she had to earn the trust of her sources so that they would talk to her, while also ensuring that readers trusted her objectivity.
All of this, plus her work at HBS, made clear to her that business is really a series of relationships that have to be fostered by trust. “The dialogue tends to be more about numbers, profits, and growth,” she says, “not about the underlying context that allows numbers, profits, and growth to happen.”
Currently, Sucher and Gupta are cowriting a book on trust, Trusted: How Companies Build It, Lose It, and Regain It.
Volkswagen is still struggling with the aftermath of the 2015 revelation that it cheated on emissions tests. United Airlines has yet to fully recover from two self-inflicted wounds: getting security to drag a doctor off a plane after he resisted giving up his seat in 2017, and the death of a puppy on a plane in 2018 after a flight attendant insisted its owner put it in an overhead bin. In the spring of 2019 Boeing had to be forced by a presidential order to ground its 737 Max jets in the United States, even though crashes had killed everyone on board two planes in five months and some 42 other countries had forbidden the jets to fly. Later the news broke that Boeing had known there was a problem with the jet’s safety features as early as 2017 but failed to disclose it. Now, customers, pilots and crew, and regulators all over the world are wondering why they should trust Boeing. Whose interests was it serving?
Betrayals of trust have major financial consequences. In 2018 the Economist studied eight of the largest recent business scandals, comparing the companies involved with their peer groups, and found that they had forfeited significant amounts of value. The median firm was worth 30% less than it would have been valued had it not experienced a scandal. That same year another study, by IBM Security and Ponemon Institute, put the average cost of a data breach at $3.86 million, a 6.4% increase over the year before, and calculated that on average each stolen record cost a company $148.
Creating trust, in contrast, lifts performance. In a 1999 study of Holiday Inns, 6,500 employees rated their trust in their managers on a scale of 1 to 5. The researchers found that a one-eighth point improvement in scores could be expected to increase an inn’s annual profits by 2.5% of revenues, or $250,000 more per hotel. No other aspect of managers’ behavior had such a large impact on profits.
Trust also has macro level benefits. A 1997 study of 29 market economies across one decade by World Bank economists showed that a 10-percentage-point increase in trust in an environment was correlated with a 0.8-percentage-point bump in per capita income growth.
So our need to trust and be trusted has a very real economic impact. More than that, it deeply affects the fabric of society. If we can’t trust other people, we’ll avoid interacting with them, which will make it hard to build anything, solve problems, or innovate.
Building trust isn’t glamorous or easy. And at times it involves making complex decisions and difficult trade-offs.
In her 15 years of research into what trusted companies do, Sandra has found — no surprise — that they have strong relationships with all their main stakeholders. But the behaviors and processes that built those relationships were surprising. She has distilled her findings into a framework that can help companies nurture and maintain trust. It explains the basic promises stakeholders expect a company to keep, the four ways they evaluate companies for trustworthiness, and five myths that prevent companies from rebuilding trust.
WHAT STAKEHOLDERS WANT
Companies can’t build trust unless they understand the fundamental promises they make to stakeholders. Firms have three kinds of responsibilities: Economically, people count on them to provide value. Legally, people expect them to follow not just the letter of the law but also its spirit. Ethically, people want companies to pursue moral ends, through moral means, for moral motives.
Of course, expectations can vary within a stakeholder group, leading to ambiguity about what companies need to live up to. Investors are a prime example. Some believe the only duty of a company is to maximize shareholder returns, while others think companies have an obligation to create positive societal effects by employing sound environmental, social, and governance practices.
HOW STAKEHOLDERS EVALUATE TRUST
Trust is multifaceted: Not only do stakeholders depend on businesses for different things, but they may trust an organization in some ways but not others. To judge the worthiness of companies, stakeholders continually ask four questions. Let’s look at each in turn.
Is the company competent?
At the most fundamental level companies are evaluated on their ability to create and deliver a product or service. There are two aspects to this:
Technical competence refers to the nuts and bolts of developing, manufacturing, and selling products or services. It includes the ability to innovate, to harness technological advances, and to marshal resources and talent.
Social competence involves understanding the business environment and sensing and responding to changes. A company must have insight into different markets and what offerings may be attractive to them now and in the future. It also needs to recognize how competition is shifting and know how to work with partners such as suppliers, government authorities, regulators, NGOs, the media, and unions.
In the short term technical competence wins customers, but in the long run social competence is necessary to build a company that can navigate a constantly evolving business landscape.
Consider Uber. The company has weathered an avalanche of scandals, including reports of sexual harassment, a toxic corporate culture, and shady business practices in 2017, which led to CEO Travis Kalanick’s departure. Uber’s losses that year came to $4.5 billion. And yet, by the end of 2018, Uber was operating in 63 countries and had 91 million active monthly users. We love Uber, we hate Uber, and sometimes we leave Uber.
We keep using Uber not because we don’t care about its mistakes but because Uber fills a need and does it well. Consumers trust that when they put an order into Uber a car will arrive to pick them up. We forget how difficult that is to do. In 2007, two years before Uber’s launch, an app called Taxi Magic entered the market. Taxi Magic worked with fleet owners, and drivers leased cars from the fleet owners, so there was little accountability. If a cab saw another passenger on its way to pick up a Taxi Magic rider, it might abandon the Taxi Magic customer. In 2009, another start-up, Cabulous, also created an app that people could use to book rides. However, that app often didn’t work, and Cabulous had no means of regulating supply and demand, so taxi drivers wouldn’t turn on the app when they were busy. Neither business achieved anything on the scale of Uber. We might have mixed feelings about Uber’s surge pricing, but it helps make sure there are enough drivers on the road to meet demand.
Meanwhile, on a social level Uber has managed to transform the taxi industry. Before Uber, cities limited the number of taxis in the streets by requiring drivers to purchase medallions. In 2013, a medallion in New York City could cost as much as $1.32 million. Such sky-high prices made it difficult for newcomers to enter the market, and lack of competition meant drivers had little incentive to provide good service. Uber brought new drivers into the market, improved service, and increased accessibility to rides in areas with limited taxi coverage.
Still, we use Uber with mixed feelings. Uber achieved much of its growth by quickly acquiring capital, which allowed it to develop technology for fast pickups and to offer drivers high pay and riders low fares. At the same time it was a ruthless competitor that reportedly was not above using underhanded tactics, such as ordering and then cancelling Lyft rides (a charge Uber denied) and misleading drivers about their potential earnings.
We don’t trust Uber to treat its employees or customers well or to conduct business cleanly. In other words we don’t trust Uber’s motives, means, or impact. This has consequences. Although Uber was projected to reach 44 million users in 2017, it hit only 41 million. Since then Uber’s growth has continued to be lower than expected, and the company has ceded market share to Lyft. This year Uber’s much-anticipated IPO underperformed after thousands of Uber drivers went on strike to protest their working conditions. The company’s stock price fell by 11% after its first earnings report for 2019 revealed that it had lost more than $1 billion in its first quarter.
Is the company motivated to serve others’ interests as well as its own?
Stakeholders need to believe a company is doing what’s good for them, not just what’s best for itself. However, stakeholders’ concerns and goals aren’t all the same. While many actions can serve multiple parties, companies must figure out how to prioritize stakeholder interests and avoid harming one group in an attempt to benefit another.
To determine whether they’re doing right by all of their stakeholders, companies should examine their own motivations — by asking these three questions:
- Do we tell the truth?
- On whose behalf are we acting?
- Do our actions actually benefit those who trust us?
Honeywell is an example of a company that works hard to serve — and balance — the needs of all its stakeholders. Let’s look at what happened there during the Great Recession, when it needed to reduce costs but wanted to keep making good on stakeholder expectations. Dave Cote, Honeywell’s CEO at the time, explained how the company thought about that challenge: “We have these three constituencies we have to manage. If we don’t do a great job with customers, both employees and investors will get hurt. So we said our first priority is customers. We need to make sure we can still deliver, that it’s a quality product, and that if we’ve committed to a project, it will get done on time.”
For investors and employees, he continued, “we have to balance the pain, because if you’re in the middle of a recession, there’s going to be pain….Investors need to know they can count on the company, that we’re also going to be doing all the right things for the long term, but we’re thinking about them. After all, they’re the owners of the company, and we work for them.…But at the same time we need to recognize that the employees are the base for success in the future…and we need to be thoughtful about how we treat them. And I think if you get the balance right between those two, yeah, investors might not be as happy in the short term if you could have generated more earnings, but they’re definitely going to be happier in the longer term. Employees might not be as happy in the short term because they might have preferred that you just say to heck with all the investors. But in the long term they’re going to benefit also because you’re going to have a much more robust company for them to be part of.”
During the recession, Honeywell used furloughs, rather than layoffs, to lower payroll costs. But it limited the scale and duration of the furloughs by first implementing a hiring freeze, eliminating wage increases, reducing overtime, temporarily halting the employee rewards and recognition program, and cutting the company match for 401(k)s from 100% to 50%. The company distributed a reduced bonus pool as restricted stock so that employees could share in the stock’s post-recovery upside. And Cote and his entire leadership team refused to take a bonus in 2009, reinforcing the message of shared pain.
To protect customers’ interests during the downturn, Honeywell came up with the idea of placing advance orders with suppliers that the company would activate as soon as sales picked up. Suppliers were happy with the guaranteed production, and Honeywell stole a march on its competitors by filling customer orders faster than they could as the recovery began.
In the long run, those moves paid off for investors. During the recovery, from 2009 to 2012, they were rewarded with a 75% increase in Honeywell’s total stock value — which was 20 percentage points higher than the stock value increase of its nearest competitor.
Cote also built trust with the public by moving from a previous approach of litigating claims for asbestos and environmental damage to settling them. Honeywell began to issue payouts of $150 million for claims annually, making its liabilities more manageable and easing investors’ worries about future litigation costs. Cote also systematically went about cleaning up contaminated sites. That kind of attention to the interests of stakeholders gave people faith in the company’s good intentions.
Does the company use fair means to achieve its goals?
A company’s approach to dealing with customers, employees, investors, and society often comes under scrutiny. Companies that are trusted are given more leeway to create rules of engagement. Companies that aren’t face regulation. Just ask Facebook.
To build strong trust, firms need to understand — and measure up on — four types of fairness that organizational scholars have identified:
Procedural fairness: Whether good processes, based on accurate data, are used to make decisions and are applied consistently, and whether groups are given a voice in decisions affecting them.
Distributive fairness: How resources (such as pay and promotions) or pain points (such as layoffs) are allocated.
Interpersonal fairness: How well stakeholders are treated.
Informational fairness: Whether communication is honest and clear. (In a 2011 studyJason Colquitt and Jessica Rodell found that this was the most important aspect for developing trust.)
The French tire maker Michelin learned how important it is to have fair processes in 1999, when it decided to cut 7,500 jobs after posting a 17% increase in profits. The outrage in response to that move was so great that eventually the French prime minister outlawed subsidies for any business making layoffs without proof of financial duress.
So in 2003, when Michelin realized it would have to continue restructuring to remain competitive, the company decided it needed to find a better way. It spent the next decade developing new approaches to managing change in its manufacturing facilities. The first strategy, called “ramp down and up,” focused on shifting resources among plants — closing some while expanding others — as new products were brought on line and market needs evolved. Under this strategy, Michelin made every effort to keep affected employees in jobs at Michelin. The company would help them relocate to factories that were growing and provided support for the transition, such as assistance finding housing and information on the schools in their new towns. When relocation was not an option, Michelin would provide employees training in skills needed for jobs that were available locally and offer them professional counseling and support groups.
Success with the ramp-down-and-up approach led Michelin’s leaders to later devise a bolder “turnaround” strategy, under which the management and employees of factories at risk of being shut down could propose detailed business plans to return them to profitability. If accepted, the plans would trigger investment from Michelin.
In carrying out these new approaches, the company demonstrated procedural, informational, interpersonal, and distributive fairness. In total it conducted 15 restructuring programs from 2003 to 2013, which included closing some plants while growing others and changing the mix of production capabilities among plants. But those reorganization efforts didn’t get a lot of flack from the media, because the public didn’t sound the alarm. In 2015, Michelin’s first plant turnaround won the support of 95% of the factory’s unionized workers. Michelin had demonstrated that it would use its power to treat employees fairly.
Does the company take responsibility for all its impact?
If stakeholders don’t believe a company will produce positive effects, they’ll limit its power. Part of the reason we have trouble forgiving Facebook is that its impact has been so enormous. The company might never have imagined that a hostile government would use its platform to influence an election or that a political consulting firm would harvest its users’ data without their consent, but that’s exactly what happened. And ultimately, what happens on Facebook’s platform is seen as the responsibility of Facebook.
Wanting to generate beneficial effects isn’t enough. Companies should carefully define the kind of impact they desire and then devise ways to measure and foster it. They must also have a plan for handling any unintended impact when it happens.
Pinterest, the social media platform, offers a good counterpoint to Facebook. Pinterest has very clearly defined the impact it wants to have on the world. Its mission statement reads: “Our mission is to help you discover and do what you love. That means showing you ideas that are relevant, interesting, and personal to you, and making sure you don’t see anything that’s inappropriate or spammy.”
In extensive community guidelines, Pinterest details what it doesn’t allow. For example, the company explains that it will “remove hate speech and discrimination, or groups and people that advocate either.” Pinterest then elaborates: “Hate speech includes serious attacks on people based on their race, ethnicity, national origin, religion, gender identity, sexual orientation, disability or medical condition. Also, please don’t target people based on their age, weight, immigration or veteran status.”
The company trains reviewers to screen the content on its site to enforce its guidelines. Every six months it updates the training and guidelines, even though the process is time-consuming and expensive.
In fall of 2018, when people in the anti-vaccine movement chose to use the platform to spread their message, Pinterest took a simple yet effective step: It banned vaccination searches. Now if you search for vaccinations on the platform, nothing shows up. A few months later, Pinterest blocked accounts promoting fake cancer treatments and other nonscientifically vetted medical goods.
The company continues to work with outside experts to improve its ability to stop disinformation on its site. Pinterest understands that, given its estimated 250 million users, its platform could be both used and abused, and has taken action to ensure that it doesn’t become a vehicle for causing harm.
HOW TO BUILD AND REBUILD TRUST
Trust is less fragile than we think. Companies can be trusted in some ways but not others and still succeed. And trust can also be rebuilt.
Take the Japanese conglomerate Recruit Holdings. Its core businesses are advertising and online search and staffing, but its life-event platforms have transformed the way people find jobs, get married, and buy cars and houses, while its lifestyle platforms help customers book hair and nail appointments, make restaurant reservations, and take vacations.
From the beginning, Recruit designed its offerings around the principles of creating value and contributing to society. At the time it was launched, in 1960, large Japanese companies typically found new hires by hosting exams for job candidates at the top universities. Smaller companies that couldn’t afford to host exams and students at other universities were shut out of the process. So Recruit’s founder, Hiromasa Ezoe, started a magazine in which employers of all sizes could post job advertisements that could reach students at any university. Soon Recruit added such businesses as a magazine for selling secondhand cars and the first job recruitment magazine aimed specifically at women.
However, in the 1980s, disaster struck the company. Ezoe was caught offering shares in a subsidiary to business, government, and media leaders before it went public. In all, 159 people were implicated in the scandal, and Japan’s prime minister and his entire cabinet were forced to resign. A few years later one of Recruit’s subsidiaries failed, saddling the company with annual interest payments that exceeded its annual income by 3 billion yen. Not long after that, Recruit suffered another major blow, when a main source of revenue, print advertising, was devastated by the rise of the internet.
This sequence of events would have easily felled another company, yet in 2018 Recruit had 40,000 employees and sales of $20 billion and operated in more than 60 countries. Today it’s an internet giant, running 264 magazines (most online), some 200 websites, and 350 mobile apps. Despite its setbacks, Recruit continued to attract customers, nurture the best efforts of committed employees, and reward investors, and regained the respect of society.
To many executives, what Recruit pulled off sounds impossible. That may be because they subscribe to five popular myths that prevent people from understanding how to build and rebuild trust. Let’s explore each of those myths and see how Recruit’s experiences prove them wrong.
Myth: Trust has no boundaries.
Reality: Trust is limited.
Trust has three main components: the trusted party, the trusting party, and the action the trusted party is expected to perform. It’s built by creating real but narrowly defined relationships.
Recruit was respected for its competence and, in particular, the way it trained its advertising salespeople to actively observe customers and come up with ways to make their businesses more successful. In the wake of the scandal, Recruit kept focusing on delivering the same high level of service. Because the stock violation didn’t alter the company’s ability to meet customers’ expectations of competence, customers were willing to overlook it, and Recruit lost very few of them.
Myth: Trust is objective.
Reality: Trust is subjective.
Trust is based on the judgment of people and groups, not on some universal code of good conduct. If trust were a universal standard, Recruit’s scandal would have led to its demise. However, even if society was outraged by the founder’s actions (employees recalled that their children were embarrassed by their parents’ jobs), customers still believed that Recruit’s employees had their interests at heart. In time customers’ trust led to increased profits, which made Recruit attractive to investors and society.
Myth: Trust is managed from the outside in — by controlling a firm’s external image.
Reality: Trust is managed from the inside out — by running a good business.
All too often managers believe that improving a company’s reputation is the work of advertising and PR firms or ever-vigilant online image-protection platforms. In actuality, reputation is an output that results when a company uses fair processes to deal with stakeholders. Be trustworthy and you will be trusted. Recruit had not only a track record for delivering good products and good service but a salesforce that was willing to work to save the company. Why? Because it had created a culture and systems that engaged and motivated employees. Employees wanted to save Recruit because they could not imagine a better place to work.
Recruit was built on the belief that employees do their best work when they discover a passion and learn to rely on themselves to pursue it. The company’s motto is “Create your own opportunities and let the opportunities change you.” Managers ask employees “Why are you here?” to help them invent projects that link their passions to a contribution to society. Here’s how one employee in Recruit’s Lifestyle Company recently described his project: “I’m involved with the development of a smartphone app…which helps men monitor their fertility and lower the obstacles they face in trying to conceive.…It is a real challenge to envision products that do not yet exist and make them real, but I am confident that in some small way my creative abilities can provide a service that will help people.”
To ensure that all employees feel inspired by their work, Recruit makes them a unique offer: Once they reach the age of 35, they have the option of taking a $75,000 retirement bonus, providing they’ve been at Recruit at least six and a half years. The amount of the bonus increases as employees grow older. This offer is accompanied by career coaching that helps people make the right choice. People who have other dreams use the bonus to transition to different careers, making way for new employees with fresh perspectives on the needs of customers and society.
Myth: Companies are judged for their purpose.
Reality: Companies are judged for their purpose and their impact.
Recruit’s purpose had always been to add value to society. However, that did not protect the company from fallout from the scandal. Recruit was forced to take responsibility for the impact it had on the country before it could regain people’s trust. Because its senior managers understood this, they disregarded PR’s dictate not to discuss the scandal and told employees they could too. Kazuhiro Fujihara, who was the head of sales at the time, explains: “I gathered my employees and told them we could criticize the company for what it had done. PR said we couldn’t criticize the company, but I ignored that.” Today, Recruit has a section on its website describing the scandal, what it learned, and the actions it took to ensure that it would not let something similar happen again. Recruit was well aware that even though the scandal was caused by its founder, Ezoe’s actions were still its responsibility.
Myth: Trust is fragile. Once lost, it can never be regained.
Reality: Trust waxes and wanes.
More than three decades later, Recruit’s stock scandal is still infamous, but the company is thriving. The fall from grace was, Recruit says on its website, “an opportunity to transform ourselves into a new Recruit by encouraging each employee to confront the situation, think, make suggestions, and take action with a sense of ownership rather than waiting passively based on the assumption that the management team would rectify the situation. All proposals were welcomed, including those concerning new business undertakings and business improvements, provided they were forward looking.” That approach helped Recruit evolve and grow. It has expanded so much internationally, in fact, that 46% of revenues now come from outside Japan (up from 3.6% in 2011).
. . .
Now that we’ve broken down what trust is made of, let’s put it all together.
Building trust depends not on good PR but rather on clear purpose, smart strategy, and definitive action. It takes courage and common sense. It requires recognizing all the people and groups your company affects and focusing on serving their interests, not just your firm’s. It means being competent, playing fair, and most of all, acknowledging and, if necessary, remediating, all the impact your company has, whether intended or not.
It’s not always possible to make decisions that completely delight each of your stakeholder groups, but it is possible to make decisions that keep faith with and retain the trust they have in your company.THE BIG IDEA
Your business needs it, you ask employees for it, you incent them to deliver it, but in the end, do you really get it? I’m talking about innovation. When the Conference Board queried CEOs in 2018, it found that one of their most important concerns was “creating new business models to adapt to disruptive technologies.”
Unfortunately, many companies, even those with innovative histories, struggle to keep up with the torrid pace of change in their industries. This past fall, for instance, Starbucks, an organization widely regarded as nimble and forward-looking, announced a restructuring, with CEO Kevin Johnson emphasizing the need to “increase the velocity of innovation.” Established businesses have trouble innovating for many reasons, including siloed structures, fuzzy strategies, inadequate talent, and not enough funding. “Softer” factors also come into play, for example, a team or corporate culture that fails to give employees the time and space they need to think creatively.
How do effective leaders overcome these hurdles? I’ve spent the past decade studying creative bosses, such as filmmaker George Lucas, hedge fund guru Julian Robertson, and fashion magnate Ralph Lauren, who not only innovate but also create work environments in which everyone else does too. When I advise leaders on how to bring some of the same behavior into their organizations, I emphasize that it’s OK to start small. And one of the first tools I recommend is a group exercise I call the “change notebook.”
Here’s how it works: At your next team meeting, pull out a pad of paper, turn to an empty page, and divide it into three columns. Each one corresponds to a question relevant for innovation:
- “What is the existing practice/the recipe for success/the way we’ve always done it at our organization?” Jot your thoughts down in the left-hand column, including the key beliefs or assumptions underlying the practice. Then look critically at each of them and ask yourself if any are on the verge of becoming anachronistic or obsolete.
- “What market shifts, external forces, or technologies might threaten the elements of our operational status quo?” List these in the middle column.
- “What can we do about these impending disruptions you’ve uncovered?” For each one, use the right-hand column to note some preemptive action you could take. Sometimes you’ll want to tweak an existing practice to render it “disruption-proof.” Other times you’ll need to toss it out and start from scratch.
When a team at one of my client companies, a midsize insurer specializing in the automobile market, ran through this exercise, employees identified a number of operational “sacred cows” — practices like designing policy parameters based on past experience, selling to customers through independent agents, subcontracting with insurance adjusters to work with customers after an incident, and putting premiums into secure investment options. Threats to the business noted by the team included self-driving cars, the growth of Uber-type services, the rise of larger insurance companies offering “one-stop shopping,” the digital customization of policies for customers, a volatile investing climate, and the company’s increased vulnerability to bad publicity on social media.
Brainstorming actions to take, executives came up with a range of options, including studying self-driving cars and their implications more closely, creating new products and services for gig-economy workers, seeking out ways to tighten relationships with existing customers, scouring their network of independent brokerages for digital innovations they might exploit, and reevaluating the company’s investment portfolio for its resilience in the face of volatility. Whether or not all of these ongoing initiatives succeed, the exercise spurred team members to break out of entrenched mindsets, leading to far more innovative results than if they had remained passive.
As you experiment with the change notebook, you’ll find that your team members become progressively more comfortable exploring new ideas, including those that conflict with the status quo, and taking action to deal with looming change before it catches them unawares. Don’t just do the exercise once and forget it; make it a regular part of your team’s workflow. Devote 15 minutes to it at a weekly team meeting, filling in a new page of the notebook each week. Remind yourselves of potential disruptions you’ve identified in the past, and then work on spotting new ones.
Over time your team will gain more facility in the exercise. Due to the structured nature of these conversations, change will come to seem less chaotic and scary, and team members will become accustomed to talking through disagreements and tough issues. If my experience consulting with teams is any indication, you’ll also get group members in the habit of pulling themselves away from daily concerns to focus on the big picture. You’ll help them internalize the notion that change, not stasis or stability, is a fundamental quality of business; eventually, this sensibility will color everything they do.
It’s easy for teams and organizations to fall into a pattern of reacting to change. But why can’t you be the aggressive, proactive ones? You can. Follow the example of the world’s greatest bosses, and take an important step toward instilling a culture of creativity, growth, openness, and innovation that your team or organization so desperately needs.
By Sidney Filkenstein