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December 2010



As we count our blessings hopefully rather than our gripes during this season, there are certain ideas, insights and observations that I think are particularly intriguing, igniting and compelling. Here are some that I hope “grab” you in the same way.


The Economist ran a fascinating piece examining the raison d’etre for the centrally planned bureaucracies in which most people labor, called corporations.

If Economics is supposed to be about the “unconscious cooperation” of self-interested agents, what then do we say about what D.H. Robertson called these “islands of conscious power”?

Ronald Coase wrote “The Nature of the Firm” in 1932. Like many seminal insights, the article received the ultimate compliment: it was largely ignored. Mr. Coase went on to win a Nobel Prize at age 80, and is currently working on a book on Chinese capitalism as he approaches the ripe old age of 100!

His argument was that firms exist because going to market over and over imposes heavy transaction costs. You would have to continually hire workers, negotiate prices, create new contracts, etc. A firm therefore is a way to reap the benefits of long-term contracting with relatively known resources more efficiently.

However, by this logic, firms should just get infinitely bigger and therefore infinitely more productive. Mr. Coase came to the same conclusion anyone who has worked in companies will — these planned societies have transaction costs all their own, as they get larger, more hierarchical and more complex.

Emerging markets tend to have large conglomerates who operate in all kinds of businesses, and what they lack in focus they largely make up in credibility, management expertise and financial integrity and acumen. Think Tata in India or Koc Holding in Turkey. They reduce the transaction costs, the uncertainty, the inefficiency of having to establish yourself over and over in mercurial and relatively immature markets. So if capital and labor markets are not yet efficient, firms can invest in and deploy their own loyalists and resources.

As markets take over more of that role and the legal frameworks and flow of capital becomes more attractive, then firms produce better returns by not warehousing as many “assets” on their own balance sheet.

Of course, it’s not all down to costs. A firm can also be seen as a portfolio of resources, rather than just a collation of costs. And these resources include knowhow, proprietary methodologies and processes, focused talent, internal synergy and trust — let’s say culture and collective knowledge as canopies for these.

So value delivery can be organized over time, with lessons learned (hopefully) and applied, capabilities created and bets on innovative possibilities placed that can redefine rather than just satiate demand.

And human beings, properly mobilized, energized and synergized can embody the institutional potential we are seeking to maximize in this way. And so this leads us to our next idea.


Marshall Goldsmith is a thinker and coaching practitioner I have a great deal of respect for. One of his seminal articles in Strategy and Business tracks research his company led into the circumstances under which leadership development is most effective.

By “leadership development” here the focus is on the shift in behaviors, habits, attitudes and interactions that make leaders more or less effective.

Marshall has rightly pointed out, and I can only heartily and emphatically concur, that from certain senior levels in the organization onwards, what’s holding you back can hardly be a technical deficit. Surely at those levels, technical competence is a given. We all need to continually re-educate ourselves, but the strictures of the job and competition will drive that.

Personal paradigms, reflexes, modes of engagement, personal behavioral default settings and their ilk, are at these levels either healthy kindling for success or the powder kegs that have our eccentricities blow up in our faces (or in some cases, using a less “explosive” metaphor, to become the acid that corrodes our abilities).

Marshall’s research is fascinating. Unlike most leadership development efforts which are judged by the satisfaction of the participant or their level of happiness with a course, a speech or initiative, here the measures were boss, peer and direct report review. In other words, it was a “before and after” read-out from those who actually interact with and work with the person.

In short, the results were as follows. Whether you had an external coach, an internal coach, or frankly no explicit coach, when 360 “before and after” assessments were done, what made the most significant difference was the regularity and degree of follow up by the “coachee” with the group of evaluators!

There was a 50% or more demonstrated improvement in identified areas of improvement on this basis. Without this, any other effort, courses, coaching, mentoring, produced erratic and non-replicable benefits.

So, in short, if the coachee frequently was in touch, at regular intervals, with his “coaching community” (set up for this development effort, and drawn naturally from those who interacted with this person and had a “stake” in their improvement), to ask how she was doing and to request input and suggestions, the improvement curve spiked measurably.

There are three interpretations. One is cynical. The second is psychological. The third is potentially catalytic and I think most illuminating.

The cynical interpretation is to simply say the same people being consulted are giving the 360 marks. Therefore they would feel like saps if they gave suggestions, and if the suggestions were at all acted upon, to then say they made no difference! So we’re loading the dice here. There is no independent panel here. The advisors are also the judges.

Less cynically is the Hawthorne effect (documented when factory workers increased productivity knowing they were being observed, despite numerous changes to their environment). People knowing they are being observed tend to change their behavior, often in positive ways (when they care about the views of those observing anyway). So on this view, the person will actually take the suggestions better and apply them, knowing they’ll be reviewing progress with the very people who offered these suggestions. So it’s not just a perceptual improvement. Very likely, assuming the suggestions make some sense coming from those who interact with this person, there will be actual evolution from the ongoing feedback (past observed behavior) and feedforward (future-based suggestions).

Why I feel the cynical point is largely moot is that it ignores a fundamental thing that happens through all this consultation– score improvement or not. If you regularly and consistently check in with colleagues, ask for their input and suggestions and put at least some of those suggestions to work, what you are in short doing is building a relationship with them!

In fact, very often, they will reciprocally ask for your ideas and suggestions (particularly if they see you acting on theirs). The act of building a relationship with a variety of personal stakeholders transforms effectiveness.

Certainly in Coase’s terms, it reduces transaction costs and increases abilities and resources — which come into being when we effectively cooperate and collaborate.

If the act of coaching and being coached can also build a relationship, then you get bedrock, platform and launching pad all in one!


Here’s an interesting question. Could you say your workplace is one where you can give your full throttled passion, commitment and heart to? If not, why not? And why would any workplace not want that, or settle for less?

I’ve written a whole book on passion liberators and passion killers. But in a more narrow way here, let’s explore the following. If the Holy Grail is getting the discretionary passion and commitment of our people focused on our most critical strategic priorities, by definition these must be volunteered.

How can we possibly get people to volunteer so emphatically and whole-heartedly if they’re holding back a part of themselves?

Let’s ask it another way. It’s really depleting and enervating to try to appear to be someone you’re not, to put on a pose, to wear a mask, to go through motions and to withhold some of what most excites you and vitalizes you.

All that energy could be going into making things happen! Instead, it’s going into self-monitoring, self-editing and self-control. No wonder engagement scores in companies are often so low!

One suggestion that’s fascinating is for leaders to privately and then publicly inventory and share their values. And to look at in what way the workplace is currently an expression of those values and in what ways it needs to be better catalyzed in order to be. Also to what extent we are living those expressed values and in what ways we’re potentially suppressing or nullifying them.

A definition of terms is required. By “values” here we don’t mean morals. Far from it. What we mean is: “Those things we personally value and care about and which most drive us, motivate us and fulfill us.”

Senior leaders will need to be the source of some overall value boundaries initially. Eventually all leaders will need to throw their values into the ring, and first actually define them, and then find ways to integrate them, rather than compromising them.

If one leader says they value “freedom” — defined as being able to redraw the lines of convention, take risks and experiment; and another says they value “continuity” — defined as building on what has worked, respecting institutional knowledge and perfecting the knitting so to speak, there is quite a conversation to be had. But imagine the conflict if both operate on auto-pilot, don’t have the conversation and assume anyone who disagrees is either a dud or a crackpot.

If, say, the “freedom” champion is the titular leader, their values may have to set the primary and overall tone — albeit fleshed out and interpreted for the team context. But if they’re wise, they’ll invite these other values in and let them provide guard-rails. A smart conversation, if conducted openly and in the spirit of genuine exploration, would be about where each of these values will provide the best contribution, and where taken to an excess, each can be dangerous.

An expansion of self, rather than a contraction of self, is what we’re after. It’s also fascinating to look at what the strategic vision requires in terms of attitudes, communication, interaction and behavior. And then we have to build a bridge from personal values to those needs and priorities. Imagine the exciting difference of a real exploration into this at an “on” site rather than the typical “off” site in terms of return-on-energy and time versus the prototypical PowerPoint deluge and the cerebral inanities that usually attend it.

Certainly, tapping that most personal of energy sources — what we value — makes so much more sense, and may indeed be the most viable as well as humane approach, as we ask people to bring the best of themselves and give the best of themselves at work.

Let work become another vehicle for fulfillment and actualization and we’ve solved one of the most intractable riddles of organizational effectiveness.

By the way, the biggest concern usually shared about a values approach is that people will head off onto private agendas. That’s why companies so often seek to impose values and norms so stridently and uniformly.

It’s a complete and noxious misunderstanding of the human psyche and the human heart. In fact, feeling valued at their core, and encouraged to express and fulfill what really matters to them, makes people commit to the environment that enables that, and actually drives them to help that environment blossom and succeed.

You see that in great athletic teams, in the military, in great theatrical companies and symphonies and everywhere else where culture, along with talent, best incubates peak performance.


So, in closing, or should I say “opening” (as a New Year beckons), lower the family transaction costs this season. Give others a break. Help to make as many in your ambit happy and to feel as valuable as you can. Build up the family capability to enable joy and celebration. Don’t wait for fun…make some!

Follow through with each other. Do what you say, and come through on what you promise. And be there, in terms of attention, with each other. Be in the consciousness raising rather than consciousness dissipating business. There are fragile, vulnerable human beings, out there craving to be seen and appreciated.

By the way, you and I are among them.

Don’t pontificate about values as codes for others to follow. This is what lights you up. It’s sharing, not evangelism.

Share yours in joy, and with the courage to confess where we so often fall short. Karen Armstrong (author of numerous monumental religious biographies and almost a biographer of religion and the concept of God) who didn’t enjoy her training in religious orders (where she said she learned more about the Devil and Hell than about God), says she really understood the appeal of spirituality, when in her writing she found something she could completely give herself to…without reservation.

So let’s give ourselves to each other this season with both enthusiasm and humility…and if we do, the frailties and vanities will be absorbed and will be sent out refreshed and renewed as distinctiveness, personality and possibility.

The great Jesuit theologian philosopher, paleontologist and biologist, Teilhard de Chardin said so unforgettably: “One day, after we have mastered the winds and the waves, the tides and gravity; we will harness for God the energies of love. And then, for the second time in the history of the world, man will have discovered fire.”

Happy Discovery to us all!