Headquarters Company | 1
Lesson 4: Cultivating a Positive Command Climate
Start with Why
What gives the great leaders their edge? Why were Martin Luther King, Wright Brothers, & Steve Jobs successful when others have access to similar resources and conditions? The thing these leaders have in common is summarized in the ‘Golden Circle’.
- What: (The Result)
- How: (The Process)
- Why: (The Purpose)
The best organizations can explain and sell the ‘why’ first, and use this to inspire others. People don’t buy what you do, but why you do it. Using Apple as an example, their sales statements starts with their “why” – they design differently to push the boundary. Once you accept their why, you trust them to build anything for you – a computer, an MP3 player, and phone. Other quality electronics companies known for 1 product (e.g. Dell computers) struggle to sell anything else, because they are only known for what they make not why.
The most central parts of the brain control behavior – this is what people speak to when they answer ‘why’. Answering ‘what’ deals with fact, figures, but still might not feel right on gut feeling.
Let’s consider the situation of the Wright brothers against Samuel Pierpont Langley. Samuel had all the usual recipes for success on his side – money, market conditions, and a well-educated and connected team. But while Samuel was driven by wealth and power, the Wright brother’s team were motivated by the idea of changing the course of history with powered flight. The Wright brothers achieved flight first, and Samuel immediately quit once the goal of being first was out of reach.
Different people are comfortable to adopt new technology at different times. The early adopters take up the first 15-18%, with the mainstream being the next 68%. The mainstream need the early adopters to try it first, on gut instinct. This makes hitting 20% market share vital – hitting the tipping point where the mainstream will start to take up quickly. Early adopters are sold everything on the ‘why’ – they will adopt a poor quality product if they like the idea behind it.
People don’t buy what you do, they buy why you do it. – Simon Sinek
Manipulation vs. Inspiration
Price: A highly effective manipulation. Drop your price low enough and people will buy from you. Playing the price game, however, can come at tremendous cost and create a significant dilemma for the company. As a seller, the more you do it, the harder it becomes to kick the habit. The list of commodities created by the price game goes on and on. Home computers. Mobile services. Insurance. In nearly every circumstance, the companies that are forced to treat their products as commodities brought it upon themselves. Price always costs something. The question is, how much are you willing to pay for the money you make?
Promotions: Whether it is “two-for-one” or “free-toy-inside,” promotions are such common manipulations that we often forget that we’re being manipulated in the first place. In the B2B world, promotions are called “value-added.” But the principles are the same – give something away for free to reduce the risk so that someone will do business with you. And like price, promotions work. Rebates are promotions too. However rebate process remains cumbersome and that means free money for the seller. But at what cost?
Fear: “No one ever gets fired for hiring IBM,” goes an old adage, describing a behavior completely borne out of fear. When fear is employed, facts are incidental. This is how terrorism works. We use fear to raise our kids. We use fear to motivate people to obey a code of ethics. Fear is regularly used in public service ads (No Smoking, AIDS, Seat Belts?). Or even by Politicians who says their opponent will raise taxes. If anyone has ever sold you anything with a warning to fear the consequences if you don’t buy it, they are using a proverbial gun to your head to help you see the “value” of choosing them over their competitor. Or perhaps it’s a banana. But it works.
Aspirations: If fear motivates us to move away from something horrible, aspirational messages tempt us toward something desirable. “Six steps to a happier life.” Though positive in nature, aspirational messages are most effective with those who lack discipline or have a nagging fear or insecurity that they don’t have the ability to achieve their dreams on their own (which, at various times for various reasons, is everyone). You can get someone to buy a gym membership with an aspirational messages, but to get them to go to gym three days a week requires a bit of inspiration. This short term response to long term desires is alive and well in the corporate world also. A management consultant friend of mine was hired by a billion-dollar company to help it fulfil its goals and aspirations. The problem was, she explained, no matter the issue, the company’s managers were always drawn to the quicker, cheaper option over the better long-term solution. Just like the habitual dieter, “they never have the time or money to do it right the first time,” she said of her client, “but they always have the time and money to do it again.”
Peer Pressure: “Four out of five dentists prefer...”. “A million satisfied customers and counting ...”. Celebrity endorsements. Peer pressure works because we believe that the majority or experts know more than we do. Peer pressure works not because the majority or the experts are always right, but because we fear than we may be wrong. Have you ever had a sales rep try to sell you some “office solution” by telling you that 70% of you competitors are using their service, so why aren’t you? But what if 70% of your competitors are idiots? Or what if that 70% were given so much value added or offered such a low price that they couldn’t resist the opportunity? The practice is designed to do one thing and one thing only – to pressure you to buy. Better to go with the majority, right?
Novelty (aka Innovation): Aircraft grade metal, hidden antenna, etched keypad etc made Motorola Razr sell well. Less than four years later, CEO was forced out and stocks tanked. Like so many before it, the company confused innovation with novelty. Real innovation changes the course of industry or even society. The light bulb, microwave oven, iTunes. Novelty can drive sales – but the impact does not last. If a company adds too many novel ideas too often, it can have a similar impact as the price game. It all ends in a downward spiral.
The Price You Pay for the Money you Make
Manipulations work. But there are trade-offs. Not a single one of them breeds loyalty. The gains are only short term. And they increase the level of stress for both the buyer and seller. Loyalty is not easily won, Repeat business, however, is. All it takes is more manipulations.
Manipulations lead to Transactions, Not Loyalty
Manipulations are a perfectly valid strategy for driving a transaction, or for any behavior that is only required once or on rare occasions. In any circumstance in which a person or an organization wants more than a single transaction, however, if there is hope for a loyal, lasting relationship, manipulations do not help.
Knowing you have a loyal customer an employee base not only reduces costs, it provides massive peace of mind. Like loyal friends, you know your customers and employees will be there for you when you need them most. It is the feeling of “we are in this together,” shared between customers and company, voter and candidate, boss and employee that defines great leaders.
In contrast, relying on manipulations creates massive stress for buyer and seller alike. It’s not an accident that doing business today, and being in the workforce today, is more stressful than it used to be. Many of the ills that we suffer today have very little to do with the bad food but in the way Corporates developed that has increased our stress to levels so high we’re literally making ourselves sick because of it. We are suffering ulcers, depression, high blood pressure, anxiety and cancer at record levels. All those promises of more, more, more are actually overloading the reward circuits of our brain. The short term gains that drive business in the World today are actually destroying our health.
Just because it works doesn’t make it right
The danger of manipulation is that they work. And because manipulations work, they have become the norm, practiced by the vast majority of companies and organizations, regardless of size or industry. That fact alone creates a systemic peer pressure.
The economic crisis that began in 2008 is just another example of what can happen if a flawed assumption is allowed to carry on for too long. The collapse of the housing market and the subsequent collapse of the banking industry were due to decisions made inside banks based on a series of manipulations. Employees were manipulated with bonuses that encouraged short-sited decision making. A free flow of loans encouraged aspiring home buyers to buy more than they could afford. There was very little loyalty. It was all a series of transaction decisions – effective, but at a high cost. Few were working for the good of the whole. Why would they? – there was no reason given to do so. There was no cause or belief beyond instant gratification. American car manufacturers conducted themselves the same way for decades.
The Circle of Safety & Our Need to Feel Safe
Protection from Above
Though we may not be asked to risk our lives or to save anybody else’s, we would gladly share our glory and help those with whom we work succeed. More important, in the right conditions, the people with whom we work would choose to do those things for us. And when that happens, when those kinds of bonds are formed, a strong foundation is laid for the kind of success and fulfillment that no amount of money, fame or awards can buy. This is what it means to work in a place in which the leaders prioritize the well-being of their people and, in return, their people give everything they’ve got to protect and advance the well-being of one another and the organization.
Exceptional organizations all have cultures in which the leaders provide cover from above and the people on the ground look out for each other. This is the reason they are willing to push hard and take the kinds of risks they do. And the way any organization can achieve this is with empathy.
The only variable are the conditions inside the organization, and that’s where leadership matters, because it’s the leader that sets the tone. When a leader makes the choice to put the safety and lives of the people inside the organization first, to sacrifice their comforts and sacrifice the tangible results, so that the people remain and feel safe and feel like they belong, remarkable things happen.
When we feel safe inside the organization, we will naturally combine our talents and our strengths and work tirelessly to face the dangers outside and seize the opportunities.”
Leadership is a choice. It is not a rank. Many people at the senior most levels of organizations who are absolutely not leaders. They are authorities, and we do what they say because they have authority over us, but we would not follow them. Many people who are at the bottoms of organizations who have no authority and they are absolutely leaders, and this is because they have chosen to look after the person to the left of them, and they have chosen to look after the person to the right of them. This is what a leader is.
We call them leaders because they will choose to sacrifice so that their people may be safe and protected and so their people may gain, and when we do, the natural response is that our people will sacrifice for us. They will give us their blood and sweat and tears to see that their leader’s vision comes to life, and when we ask them, “Why would you do that? Why would you give your blood and sweat and tears for that person?” they all say the same thing: “Because they would have done it for me.” And isn’t that the organization we would all like to work in?
Employees Are People Too
Being a leader is like being a parent, and the company is like a new family to join. One that will care for us like we are their own . . . in sickness and in health. And if we are successful, our people will take on our company’s name as a sign of the family to which they are loyal.
Leaders of organizations who create a working environment better suited for how we are designed do not sacrifice excellence or performance simply because they put people first. Quite the contrary. These organizations are among the most stable, innovative and high-performing companies in their industries.
To see money as subordinate to people and not the other way around is fundamental to creating a culture in which the people naturally pull together to advance the business.
Belonging
By creating a Circle of Safety around the people in the organization, leadership reduces the threats people feel inside the group, which frees them up to focus more time and energy to protect the organization from the constant dangers outside and seize the big opportunities. Without a Circle of Safety, people are forced to spend too much time and energy protecting themselves from each other.
It is easy to know when we are in the Circle of Safety because we can feel it. We feel valued by our colleagues and we feel cared for by our superiors. We become absolutely confident that the leaders of the organization and all those with whom we work are there for us and will do what they can to help us succeed.
The Courage to Do the Right Thing
The responsibility of a leader is to provide cover from above for their people who are working below. When the people feel that they have the control to do what’s right, even if it sometimes means breaking the rules, then they will more likely do the right thing. Courage comes from above. Our confidence to do what’s right is determined by how trusted we feel by our leaders.
If good people are asked to work in a bad culture, one in which leaders do not relinquish control, then the odds of something bad happening go up. People will be more concerned about following the rules out of fear of getting in trouble or losing their jobs than doing what needs to be done. And when that happens, souls will be lost.
Abstraction Kills
Abstraction is no longer restricted to physical space; it also includes the abstracting nature of numbers. The bigger our companies get, the more physical distance is created between us and the people who work for us or buy our products. At such scale, we can no longer just walk into the aisles and count the cans of soup on the shelf either. Now we rely on documents that report the numbers of what we’ve sold and how much we’ve made. When we divorce ourselves from humanity through numerical abstraction, we are capable of inhuman behavior. The more abstract people become, the more capable we are of doing them harm.
Modern Abstraction
When our leaders give us something noble to be a part of, offer us a compelling purpose or reason why we should come to work, something that will outlive us, it seems to give us the power to do the right thing when called upon, even if we have to make sacrifices to our comfort in the short term. And when a leader embraces their responsibility to care for people instead of caring for numbers, then people will follow, solve problems and see to it that that leader’s vision comes to life the right way, a stable way and not the expedient way.
Managing the Abstraction
Rule 1: Keep It Real - Bring People Together.
Real, live human interaction is how we feel a part of something, develop trust and have the capacity to feel for others. It is how we innovate.
Rule 2: Keep It Manageable - Obey Dunbar’s Number.
Professor Dunbar figured out that people simply cannot maintain more than about 150 close relationships.