What the Best Leaders See

THE POWER OF NOTICING

Take Off Those Blinders and See the Truth
In many ways, The Power of Noticing, the latest book from the prolific Max Bazerman, will somewhat dishearten his readers — if not enrage them. In sometimes horrific and often damning detail, Bazerman exposes the disastrous consequences of having leaders with blinders on who fail to notice — or pretend not to notice — what is truly happening around them.

From Cheating to Tragedies

The litany of cases described by Bazerman involves many incidents barely known by the public, such as the story of a medicine whose price grew in a few years from $50 per vial to $28,000 — yes three zeroes— per vial; the Harvard professor who was faking his data; and the egregious misdirection used by politicians and marketers (and magicians) to fool the public. There are also some well-known cases:

  • Morton Thiokol and NASA scientists failed to notice the pattern of low-temperature failures of its O-rings and, as a result, went forward with a low-temperature launch of the Shuttle Challenger. Seven astronauts lost their lives in the ensuing mid-air explosion.
  • Penn State officials and staff, from the president of the university, to the famed coach of the football team, to other coaches, failed to take decisive action, not even calling the police, in the face of recurring reports of rapes of young boys by assistant coach Jerry Sandusky.
  • Enron’s Board of Directors, despite specific accusations from a whistleblower and a warning from the company’s auditors that Enron was “pushing the limits” of accounting propriety, did nothing to investigate the possibility of wrongdoing.

Solutions for Ending the Madness

Although based at both the Harvard Business School and Harvard Kennedy School, Bazerman is not an ivory-tower pundit criticizing from the sidelines. Instead, he travels the world, pushing for solutions to unethical behavior and decision-making. In this book, Bazerman offers concise suggestions for preventing the abuses and crimes he documents. Three of these suggestions include:

 

  • Ask for the data. Many decisions are made based on the data presented. Decision-makers need to determine if more data is needed and what kind, and then to request that data. NASA scientists could have received the cold-temperature test results from Morton Thiokol and prevented the loss of seven lives.
  • Attack motivated blindness. Often, leaders who look the other way in the face of wrongdoing have deep-seated motivations to do so — such as protecting their university (the Sandusky scandal) or the church (in the case of the Catholic Church scandal). The solutions are clear: leaders have the responsibility to fully notice the facts and to act when it’s appropriate. And those who fail to act on reports of wrongdoing must face clear consequences. Finally, leaders must provide decision-makers in their organizations with the incentive to speak up.
  • Systemic changes. Bazerman has been working for years to convince policy makers to reform the auditing industry, in which companies pay the auditors — thus creating an almost insurmountable incentive for auditors to please their paymasters. Industry blindness occurs in many other industries and must be equally addressed with reform.

As with most of his works, The Power of Noticing offers Bazerman’s uniquely qualified insight into how the world works and how it should work.

Business with a Purpose

Here at Soundview, we’re always looking for the latest trends in business. These trends are highlighted by the hot topics of the business books that are being published. Recently, there seems to be many books coming across our desk on Purpose.

One such title is The Purpose Economy by Aaron Hurst, which we are summarizing this month and hosting a webinar with in September. Like the Information Economy, which has driven innovation and economic growth until now, Hurst argues that our new economic era is driven by connecting people to their purpose. It’s an economy where value lies in establishing purpose for employees and customers through serving needs greater than their own, enabling personal growth and building community.

Part of the Do Books series, Do/Purpose is written by David Hieatt. In Do/Purpose, Hieatt offers insights on how to build one of these purpose-driven companies. You know, those rare brands we all fall in love with. The crazy ones that don’t just make something, but change something as well.

Another purpose-focused book is Black Hole Focus by Isaiah Hankel. As Hankel puts it, “Don’t get stuck on a career path you have no passion for. Don’t waste your intelligence on something that doesn’t really mean anything more to you than a paycheck. Let (me) help you define a focus so powerful that everything in your life will be pulled towards it. Create your purpose and change your life. Be focused. Be fulfilled. Be successful.”

When we talk about corporate culture, there is also A Culture of Purpose by Christoph Lueneburger. Building a culture of purpose is one of the greatest challenges facing modern leaders, as today’s best minds are looking for meaning, not just jobs. More than any other single factor, cultures of purpose power winning organizations, attracting the smartest, most creative, most passionate talent.

There are more, but I’ll stop with these four. Why the interest in purpose? I think there are several factors that have brought this theme to the forefront.

One key factor is generational. The younger generations in the marketplace are looking for more than the Traditional and Baby Boomer generations when it comes to purpose. It’s no longer about making money to retire and enjoy life. It’s now about enjoying life along the way, and believing that what you do matters.

Another factor is the ever faster pace of life. As work spills over more and more into life, people want to know that what they’re doing has a purpose that is worth the sacrifice.

And perhaps a third factor might be a greater interest on the part of younger generations in the environment around them. They want to know that the company they work for is focused on the health and safety of people, and on the preservation of the environment. Again, this is purpose-driven living.

Perhaps you see additional factors at work that are causing this focus on purpose. We’d love to hear what you think. Post your own thoughts in the comments section of this blog for others to consider.

Making an Ethical Difference

Quandary #1: Speed Kills

The company you work for is deciding whether to build a super-fast car for street use. There is a demand for the car and your company needs the boost this signature product would give it. But you wonder if it is right to produce a car that capable of travelling at two or three times any posted speed limit.

How to Think This Through

Consider the interests of the parties to this situation. While the interests of your company are clear enough, you have to consider the interests of those who might be affected if the car is built and sold. It is not only the drivers of superfast cars that are injured by them. On the other hand, if your company does not build the car, won’t some other company make an equally fast car? Does this make a difference?

Quandary #2: My Back Yard

A developer wants to build a casino immediately adjacent to your neighborhood. You recognize that the casino will benefit most of the community – except for those who live adjacent to it. You wonder if it is right to oppose the casino based on your interests and the interests of a few others in the community.

How to Think This Through

While you are correct to consider the benefits to all concerned, there is more to the story. You also need to consider the benefits of having a system of property use that protects property holders. So it comes down to whether the benefits to the community outweigh the benefits of protecting the rights of property holders. Be sure to factor in your own bias as someone directly affected by the casino.

Many such ethical quandaries come up in the daily life of those of us in business. When faced with such ethical challenges, how do you work them through and how do you respond when the ethics are doubtful?

In our next Soundview Live webinar, How to Make an Ethical Difference, Mark Pastin will argue that we all have an innate ethical sense—what he calls an “ethics eye.” He will offer tools for sharpening the ethics eye so we can see and do the right thing ourselves, particularly in the workplace, where our decisions can affect not just ourselves but coworkers, clients, customers, and even an entire organization.

With examples drawn from his decades of experience advising governments, corporations, and NGOs, Pastin will show how to identify competing interests, analyze the facts, understand the viewpoints, measure the benefits of different outcomes, and build consensus. You’ll gain confidence in your ethical sense, make better leadership decisions, and take actions that elevate the ethics of the groups and organizations you belong to—and society as a whole.

Join us on May 6th to learn about the tools that will help you with your next ethical dilemma, and bring your most challenging quandaries for Pastin to unravel.

The Truth About Trust

New Revelations About Trust

Whether to trust or not trust someone is a recurring dilemma in our lives. One of the fundamental lessons of The Truth About Trust, a new book from psychologist and researcher David DeSteno, is that there are no easy answers. One might think that the integrity of another person might be a deciding factor, but what about competence? We are obviously only going to trust a doctor if we feel he or she has both. And how do we judge such factors? Research shows, DeSteno writes, that we are not necessarily very good at judging the integrity of others.

The Unexpected Factor

One of the earliest of the many academic experiments that pack this book reveals the surprising complexity of why we might trust people. The experiment was designed to show whether someone trusts a person they are partnered with. The results showed, not surprisingly, that when the partner had previously helped the other person — by recovering lost documents on a computer, for example — the other person was more likely to trust the partner. This result falls into the easy assumptions one might make about trust: The Good Samaritan partner, after all, demonstrated his integrity. However, the results also showed that grateful participants also trust their partners more even if the partners were not the ones who helped them. In other words, simply being in a state of gratefulness — that someone had come to your rescue — will make you more ready to trust people… anyone.

Opening Insights

The Truth About Trust reveals the full complexity of trust, which encompasses biological instincts, societal guidelines, unconscious emotions, conscious calculations of self-interest and more. DeSteno’s crystal-clear writing in explaining the research and its implications makes this a fascinating read, helped along by the short lists at the end of each chapter that summarize the learnings of the chapter. For example, he brings his first chapter into focus with these insights:

1. The competing elements in trustworthiness are not good and evil, but short and long term. Being untrustworthy can bring short-term benefits but long-term pain, and the choice is not easy.

2. Reputation is overrated: Everyone cheats.

3. Trusting others is always better on average, which doesn’t mean a whole lot if you lose your life savings to a con man.

4. Competence is as important as integrity.

5. If you think you can trust yourself, think again.

Rules for The Trust Machinery

Every chapter is rich in detailed research and revealing insights that, in the end, help us understand what DeSteno calls our “trust machinery.” To effectively operate this trust machinery requires following some important rules. First, he writes, “trust is risky, but necessary, useful and even powerful.” Our minds are constantly weighing the risks and benefits of trustworthiness, although DeSteno emphasizes that our ethical principles may sometimes require us to override our instincts.

The second rule is that we must remember that trust permeates every area of our life from the moment we are born. It’s not just about the big contract or the wedding vow. A third rule is that reputation is situational, meaning that past behavior is not a good measure of trustworthiness. Rule number four is to pay attention to your intuitions. Don’t follow them blindly, DeSteno writes, but don’t ignore them in favor of simplistic and misleading signals (e.g., the averted gaze).

A fifth rule is to allow some “bumps in the road” — to keep a trusting relationship alive even though there might have been a slip, perhaps unintentional, in trustworthiness. Finally, DeSteno warns that helicopter parents who try to shield children from all feelings of shame or guilt may in fact be hurting their ability to trust in the long run. There are inevitably, after all, success and failures in the journey.

With every chapter offering new revelations about trust — from the complexity in children’s calculations of trustworthiness to the rigorously tested and confirmed conclusion that upper-class people are to be trusted less — this brilliant addition to the trust literature is almost an anomaly: a deeply researched, learned treatise that reads like the best of novels, keeping us wondering what is going to happen next.

Jeff Bezos and the Age of Amazon

THE EVERYTHING STORE

Jeff Bezos’ Dream Come True

While the face may be somewhat familiar and everyone knows his company well, Amazon founder Jeff Bezos has not enjoyed the iconic status of a Bill Gates or the ubiquitous (at least in business literature) Steve Jobs. And yet the Amazon story, as told in a new book from Bloomberg BusinessWeek writer Brad Stone called The Everything Store, reflects foresight, courage, vision, hard work and innovation that matches the story of any other major Internet or Information Age startup.

The company was started in a garage, although it stayed in the garage only for about three months. And it was not fresh, just-out-of-school whiz kids who started the company but a Wall Street veteran who decided that he, rather than the hedge fund company he worked for, should control his dream: to sell books over the Internet.

Bezos’ New York employer, a technology-driven hedge fund firm called D. E. Shaw, had already invested in several Internet ventures, and it would have been ready to finance an online retailer. But Stone describes how Bezos’ growing desire to strike out on his own was confirmed by his reading of the bestseller Remains of the Day — a brilliantly subtle but ultimately devastating novel of regret.

Much of the outline of the Amazon story is well-known, from its first focus on books and then a few other categories (e.g., movies and toys) to its current status as the behemoth of online retailing for just about any product, a giant in the e-reader space, and more recently, a major player in cloud computing with Amazon Web Services. Today, the company is headquartered in a campus of a dozen buildings and reached $61 billion in sales in 2012. Most people watched as new initiatives came online — Search Inside This Book, Super Saver Shipping and, more recently, Amazon Prime are three examples — and quickly became expected features. In fact, it is almost surprising to learn that Amazon is only 18 years old. The first book ordered on Amazon was Fluid Concepts and Creative Analogies by Douglas Hofstadter; the date was April 3, 1995. The buyer was a former colleague of Shel Kaphan, a founding employee of Amazon.

The Stories Behind the Story

Although the overall plot of the story might be well known, The Everything Store is filled with the unknown stories and the vital but often anonymous people who made the Amazon success possible. Kaphan is an example. A veteran programmer when he was hired, Kaphan, who Stone calls Amazon’s “primary technical steward,” was responsible for turning the dream into a functional reality. Promised that he could stay with the company for as long as he wanted, Kaphan lasted five years before, as described by Stone, he was made less than welcome by Bezos.

Bezos, of course, is the star of the story. The portrait offered by Stone is of a complex, driven, hands-on, creative entrepreneur, which is no less than expected. It seems that there is an archetype for the successful entrepreneur and one that seems to run counter to the generally accepted view that respectful, team-oriented leadership works best.

According to Stone, one mention of work-life balance in a job interview at Amazon during the early growth years would kill your chances. Bezos, however, has had some formidable sparring partners, including Barnes & Noble and the New York publishers, not to mention the challenge of a dot-com bust, all of which would have conquered a less confident — and visionary — opponent.

The Everything Store is a fascinating exploration of a unique company and its equally unique founder.