Posts tagged ‘business’

After decades where we increasingly bought in to the idea that “what’s good for Wall Street is good for America,” the financial crisis is causing many people to question the nature of business. Is greed and corruption merely “business as usual?” Or can business be a force for good?

In the bubble, a lot of people got rich gambling with other people’s money. And when those bets turned sour, the losses were paid for, not by the people who made the bets, but by taxpayers and by millions who lost their jobs. When combined with the cases where big businesses have contributed to ecological devastation, Enron-style fraud, and childhood obesity, there’s a lot of anger about the way business is being done.

But here’s the thing. Capitalism is far and away the most powerful system ever developed for creating wealth and raising our standard of living. Over the last 190 years, the real per person income level in the US has increased from $1,200 to $31,000. Our level of wealth has increased so much that we now drive to our protests.

Capitalism creates wealth – enormous wealth – and this wealth pays for our homes, education, health care, social services, and the many non-profits we donate to.

The problem isn’t that business is bad. In its own way, business is already a tremendous force for good.

The problem is that most of this good is being done unconsciously. It’s being done almost by accident, rather than as part of a consciously defined purpose. Relentless, ruthless competition creates profits – lots of profits – but these profits come with a price.

As its most commonly practiced, traditional business has three core problems.

It’s short on purpose.

It’s long on fear.

And it’s unsustainable.

Purpose. A colleague of mine does a lot of work with boards of directors. These men (and yes, they’re almost all older, white men) have lots of grey hair. They’ve risen to the top of their competitive ladders. And yet their biggest question is usually, “is this all there is?” They’ve often sacrificed everything to their careers, only to find a sense of emptiness and a lack of fulfillment.

The reason for this is that traditionally, we’ve compartmentalized money and meaning. For-profits are supposed to make money. Non-profits are supposed to make a difference. And that has left many people in business feeling successful put unfulfilled.

Fear. At its core, traditional business is fueled by scarcity and stress – two polite names for fear. Why do people get corrupt and greedy? Because they’re afraid there’s not enough to go around. In daily life, we don’t get greedy for air. We don’t try to hoard it, or store it away, because we trust that there’s enough for everyone. But capitalism is based on relentless, ruthless competition over scarce goods and services – and that creates fear. Feeling stressed about work isn’t something special. It’s an automatic consequence of being part of this system.

Sustainability. Capitalism’s greatest strength is its unparalleled capacity for economic expansion. And capitalism’s greatest challenge is its addiction to that expansion. Our entire financial system is predicated on the assumption that GDP will always keep increasing. Stock markets, debt and retirement funds all depend on this. So does our monetary supply. But continuous exponential expansion is unsustainable, and we’re rapidly reaching its limits.

Capitalism is a system with tremendous strengths – and with equally tremendous challenges.

So the real question is not “can business be a force for good?” The real question is “how can business be more of a force for good?” How can it provide more purpose, less fear, and more sustainability? And how can it do this more consciously, rather than as something we try to just fit in the cracks?

Now, that’s a question worth investing in.

GM’s bankruptcy. Goldman’s bonuses. AIG’s collapse. It’s easy to look at what’s going on and say “How Stupid!” And this is true – but perhaps not in the way you think. This is because study after study shows that the core problem in business is not a lack of cognitive intelligence. It’s a lack of emotional intelligence.

Yet almost all of our focus, education and training misses this point.

Think about your work for a minute. What – or perhaps who – are the biggest challenges you face? What are some of the tactics you have tried so far to fix them? Do these issues seem stupid sometimes?

Well, they are. Not because the people involved are stupid, but because the core of these issues is usually emotional in nature, and can’t just be solved in our heads. People seem irrational sometimes because the roots of our issues aren’t rational.

The simple truth is this: at their core, 80% of unresolved issues are not intellectual or ideological, but emotional in nature. And while we receive many years of schooling for our minds, very few of us are ever given classes on how to work with our emotions and the emotions of others.

Emotional “blind spots” are often the most prevalent – and most crippling – at the top of the company. Think about Enron. The executives there were known as “the smartest guys in the room” yet they managed to do some remarkably stupid – and illegal – things. Now we could look at them and say they were bad, evil people, and we’d never do such things. But is that really true? In my experience, everyone is doing the best they know how to get their needs met. It’s just that sometimes, our best isn’t enough. And most of the time, this is because we haven’t yet developed enough emotional intelligence to deal with the challenges we face.

In Developing Management Skills, David Whetten and Kim Cameron summarize this research.
“A study of UC Berkeley Ph.D.’s over 40 years found that EQ was four times more powerful than IQ in predicting who achieved success in their field – even for hard scientists. A McBer study comparing outstanding managers with average managers found that 90 percent of the difference was accounted for by EQ. In a worldwide study of what companies were looking for in hiring new employees, 67 percent of the most desired attributes were EQ competencies. In a study of highly emotional intelligent partners in a consulting firm … the high EQ partners contributed more than twice as much revenue to the company as did the low EQ partners.”

Think about GM. From 1984 – 1999, GM was the #1 company in America. In 2009 it declared bankruptcy. For decades GM was able to hire from among the smartest graduates our schools had to offer. If we were to test the IQ of its people, it would surely be well above average. But over time, it developed a culture that was more and more dysfunctional. The conflicts between labor and management kept getting worse, escalating bureaucracy made change increasingly difficult, and a creeping sense of entitlement sucked away its competitiveness and creativity.

Because here’s the thing. Emotional problems breed. Once an emotional issue has taken root in a company, it grows. It spreads. It infects others. Like a cancer, it eventually metastasizes, to the point where it can kill a company. Saturn was created as a way of reinventing the way GM did business. For a while it worked brilliantly. But eventually the emotional diseases in the parent company took over.

This is why companies report such incredible returns from coaching. Great coaching is all about training people – in direct, pragmatic, applied ways – on how to increase their emotional intelligence. It supports companies in curing the root of their problems, instead of just focusing on the symptoms.

One study of 140 companies showed that they received $5 for each $1 spent on coaching. Another study measured an ROI of 600%. “Asked for a conservative estimate of the the monetary payoff from the coaching they got, these managers described an average return of more than $100,000, or about six times what the coaching had cost their companies.” – Fortune, 2/19/01

In my work as a coach, I’m regularly amazed by the level of hard results that occur when we focus on the “soft” side of the business. As Roger Enrico, a Vice Chairman of Pepsi stated, “The soft stuff is always harder than the hard stuff. Human interactions are a lot tougher to manage than numbers and Profits and Losses.”

So how do you work with this? In a series of upcoming columns I’ll be walking through 7 Secrets of Emotional Intelligence. Or if you want, please feel free to jump ahead and download the whole article.

Additional resources are available at http://www.corecoaching.org/resources.html.

Do you have any questions on this topic? If so, please feel free to send them to corecoaching@corecoaching.org and we may answer them in a future column.

In the wake of the financial crisis, there’s been a lot of talk about ethical reform. With the disgrace of so many of “the best and the brightest,” there’s a lot of soul searching going on in government, industry and business schools. Most of this discussion is focused on regulation and rules – it seeks to answer the question “what is good behavior and how can we mandate it?”

This line of questioning is important. But it risks missing the deeper issue, because meaningful ethical reform requires making ethics meaningful.

Meaningful ethical reform requires moving beyond just the “what” question and also addressing the “why”. It requires moving beyond creating lists of behaviors people should comply with to connecting them with values they freely choose to live their lives by. Not out of a sense of obligation, but because they get how these values create meaning. And because they’ve learned concrete tools to deal with the conflicts that inevitably arise as they seek to live a meaningful life.

“Why would people freely choose to live an ethical life?”

Not out of a fear of punishment. A choice made out of fear isn’t a free choice. It breeds surface compliance and hidden rebellion. It creates preachers who rail against sex while having affairs. As Joan Borysenko puts it, “Punishment is an effective way to change behavior, but usually not in the desired direction.” When motivation comes from a place of I should or I must, it’s sourced from fear and guilt. This can keep us from doing something awful, but it can’t inspire us to authentic ethics or authentic leadership, which come from a place of I choose.

Similarly, authentic ethics can’t come just out of a desire for approval. Do you remember the petty cliquishness of high school? That’s what happens when a group of good but insecure people seek to define their self worth according to others’ opinions. A life based on approval seeking quickly degenerates into an empty race for money and status. While our desire for approval can be a force for good – the shaming of investment banking’s excesses is creating a major drive for change – the whims of the crowd are fickle and can reward vice just as easily as virtue.

The primary, enduring reason to freely choose an ethical life is that a meaningful life is an ethical life. The meaning of life comes from growth, giving and connection – three of the primary forms of mature love. Mature love is the foundation of all ethics (i.e. “do unto others as you would have them do unto you”) and a meaningful life is also an ethical life.

If we simplify human needs down to their essence, we all have three basic levels of needs: survival, success and fulfillment (i.e. meaning). We all crave meaning, particularly once we’ve met our basic needs for survival and success. Because of this, we don’t need to convince people that they should live an ethical life. We just need to help them understand – in their whole being – how authentic ethics are an essential aspect of creating the meaningful life they crave.

But – and this is key – ethical behaviors do not necessarily create a meaningful life. This is because authentic ethics are determined not just by what we do, but also by where we do it from. When we do ethical behaviors from a place of fear, guilt or approval seeking, the result is fragile and empty. It’s only when our ethics come from a genuine place of mature love that they create a lasting, meaningful foundation for life.

Yet how many business textbooks talk about love? How many college courses teach authentic leadership? How many high schools teach students practical tools for how to be more loving?

Not nearly enough.

In the past decades, we’ve increasingly bought into the idea that “separation of church and state” means “separation of heart and mind.” Church is where we’re supposed to learn how to love, and school is where we’re supposed to learn how to achieve.

This divorce is at the heart of the current crisis. It’s contributed to a compartmentalization between our personal and professional lives, and to an attitude in business where “anything goes unless it’s forbidden or unprofitable.” So if we want to address the roots of this crisis, we need to learn how to integrate money and meaning – both in our lives, in our businesses, and in our schools.

The practice of integrating money and meaning automatically and consistently brings up inner conflicts. It brings up challenges that can’t be solved just in our heads. It brings forward dilemmas that can only be resolved through deep personal and spiritual growth.

Because of this, there is no such thing as a theoretical class in authentic leadership. Authentic leadership requires integrating body, mind, and spirit. It requires learning how to integrate success and fulfillment, sales and service, money and meaning. It requires learning how to embrace the conflicts in life, and how to use everything as opportunities for learning, upliftment and growth.

This doesn’t mean that our schools need to become more religious. It means they need to become more loving.

Over the past decades, business schools have sought to become ever more scientific. But by increasingly basing their existence solely on the cult of reason, they’ve been feeding the divorce between heart and mind, rather than healing it. In doing so, they’ve been failing our students, failing our businesses, and failing our society.

If we wish to create meaningful ethical reform in business, it requires bringing meaning and love back into education. In particular, it means bringing meaning and love back into business schools. It requires teaching students practical, concrete, psycho-spiritual tools for how to work with their inner conflicts. It requires teaching them how to embrace the challenges that automatically come up as we seek to build businesses that create both money and meaning. It requires renouncing the fundamentalist dogmas of the cult of reason and of the single bottom line. And it requires evaluating our schools not just on whether they produce smart and successful students, but also on whether they produce wise and fulfilled ones.

P.S. Have you checked out the free $100 practice building kits we’re giving away yet?  While they’re particularly focused on practice builders, the first CD in particular contains some of the leading, practical tools for how to create a business that embraces both money and meaning.