Blog Posts

The Power of Principles

Dear Friends,

Over the past year I have had increasing concern in regard to what I must call a crisis in leadership. It is not only in the U.S., but a global crisis. We desperately need to raise a generation of ethical, principled and positive leaders to move our institutions, corporate and governments, into the twenty-first century. I think it is time that we all examine our principles and call upon managers and aspiring managers and entrepreneurs to think deeply about those principles that will unite and not divide, that will uplift and not tear down, and that will energize the members of their organizations toward a worthy purpose.

For this reason I have created a new course, Leadership: The Transforming Power of Principle, to help leaders think about their own principles and to develop plans of action to institute a course of principled leadership in their organization. I would like you to have this course for the lowest possible price of $10.

I hope you will find this to be a helpful contribution toward what I believe is a critical need. I would love hear your thoughts about these principles or others that you feel are important.

I would love to hear your thoughts on both this course and the larger issue of the crisis in leadership that we are facing.

Thanks,

Larry Miller

The Ten Virtues of Leadership for a Collaborative World

Our political leaders present models of behavior that are likely to be imitated. Their example may be interpreted as defining the characteristics of success itself. For this reason, it is imperative that those of us who write about leadership give voice to the necessary virtues of success that will sustain our culture, companies and country, particularly when they are different from those on display today. Many Americans are losing faith in our nation’s leadership while those outside our country are losing faith in America’s ability to provide leadership to a world longing for those very freedoms we enjoy.

For this reason, I want to explStages of cultural integrationore the virtues of leaders, the principles and characteristics that are a necessity for a world that requires collaboration and suffers from conflict.  I won’t bother to point out the variance between current behavior of our leaders and these virtues. That will be obvious.

In its most simple form, leaders throughout history have created order and mobilized energy and effort of their followers in only two fundamental ways. The first is by authoritarian control, dominance and fear. The second is by creating trust and loyalty – the force of attraction. You could describe these as “soft power” or “hard power.” Every leader tends to rely more on one or the other and to some degree every organization requires a measure of each. The need for hard or soft power shifts with a transition from crisis to stability, from war to peace, and from the simple to complex systems of organization.

The flow of history demands a shift from authoritarian control and the motivation of fear to the virtues that lead to attraction, trust and loyalty. In a simple organization, such as the primitive hunting party, the family farm, or small craft shop, it was possible for a leader to rule by force or hard power. The members of that organization had few or no options. They could not put their resume on a website and search the “100 Best Companies” to work for. But, as the circle of human activity expanded to include more members, specialized organizations, and higher levels of skill, the options of the individual increased. Mobility increased with complexity and the virtues of soft power became a competitive advantage.

The Logic of Non-Zero Sum Behavior

The logic of human destinyRobert Wright, in his excellent book Nonzero: The Logic of Human Destiny[1] argues that a Darwinian selection process is hard wiring into our genetic code a capacity and requirement for cooperative behavior. The more complex the organization or society, the greater the need for inter-dependence, and therefore the greater the requirement for what he calls non-zero sum behavior. For much of human history wars were fought to increase the ownership of land, a fixed or inelastic commodity. The game was zero sum: if I captured half of your land I would be more wealthy and powerful and you would lose an equivalent amount of wealth or power. This zero-sum logic a pre-capitalist assumption. It is an assumption of capitalist economics that the ability to create wealth is elastic, not fixed. You may invest in my company and I may invest in your company and we may cooperate and both become more successful by capturing greater market share or even creating new markets that did not previously exist. This is a non-zero-sum assumption and it requires collaborative behavior. It requires trust or soft-power. Zero-sum assumptions and behavior are destructive of cooperative behavior and therefore of the creation of new wealth.

“The psychic unity of humankind is the reason that around the world, on every continent, cultural evolution has moved in the same direction. The arrow of human history begins with the biology of human nature…. The arrow, as I’ve noted, points toward larger quantities of non-zero-sumness. As history progresses, human beings find themselves playing non-zero-sum games with more and more other human beings. Interdependence expands, and social complexity grows in scope and depth.”[2]

The degree of non-zero-sum behavior varies by industry. If you are a real estate developer much of your success is based on single transactions. You deal in hard capital and hard labor. If you buy a property for a good price and build a building that you then sell, there are only two time bound transactions. One party may have little trust in the other, but they may be convinced that the “deal” is a good deal. On the other hand, manufacturing automobiles is entirely different. Success is based on building brand loyalty and developing a network of suppliers, a supply chain, that you can trust to partner in continuous improvement. That is not a singular transaction, but a marriage, an ongoing relationship that requires high levels of trust and years of close collaboration to succeed. Designing and manufacturing automobiles requires intellectual capital more than material capital. The real estate developer may learn to rely on zero-sum transactions and hard power where the auto executive must learn to rely on collaborative behavior and soft power.

The development of business organizations, from the family farm to public corporations and more complex diversified and multi-national organizations required the progressive development of collaborative behavior and systems. This development exactly parallels the development from tribes to city and nation states to international treaties and organizations. It should not surprise us that a leader drawn from a more primitive transactional business, a zero-sum mindset, would find himself uncomfortable in an inter-dependent global economic system. Retreating from the Trans Pacific Partnership and questioning other multi-national treaties and organizations has little to do with the reality of job creation or economic advantage and much more to do with a psychological insecurity brought on by complexity and the requirements of inter-dependence and trust.

Possibly the greatest asset of the United States is the two great oceans, the Atlantic and Pacific, that have provided a significant measure of security not available to a European nation. For this reason, European nations and the European Union, following two world wars that destroyed their continent, are more appreciative of the power of cooperation and inter-dependence than are Americans. It is a luxury of our geography to proclaim “America First” as if we did not depend on other nations. To a European ear, it sounds much too close to the sound of “Deutschland Uber Alles,” a rallying cry to cheering populist crowds that led to the death of fifty million people and the destruction of the continent. The Third Reich and the wars of Europe for several hundred preceding years were based on zero-sum thinking and the reliance on hard power. The European Union, as well as other international treaties, are all built on the assumption of collaboration and non-zero-sum logic. They are consistent with the seeming inevitable march of human destiny.

The nature of work itself has also transformed the requirement of leadership from hard to soft power and collaboration. The industrial age moved us to a new age of capital in which ownership was shared and traded on open markets and increasingly the essential labor became less manual and more intellectual or knowledge-based. The information economy has created a third stage of transformation that requires higher levels of intellectual capital, high levels of collaboration, and the ownership of the critical capital is neither money nor land, but the skills of software developers and engineers. This capital lies within the individual person who can move from one company to another with relative ease. This high personal control requires abandoning the motivation of fear or authoritarian control and demands creative means of building collaboration and trust into our organizational systems.

 

The Ten Virtues of Leadership in a Non-Zero Sum World

Every leader and every organization must decide what cultural attributes and what virtues of leadership will lead to success in a world of collaboration and interdependence. I suggest that if your organization and your leadership held itself to account for the pursuit of the following ten virtues, you would assure the creation of a high performing culture of collaboration that would attract the best possible talent.

Benjamin Franklin was famous for his self-improvement plan. Franklin was at the same time both self-assured and humble. He recognized his own weaknesses and set about the task of self-improvement in a systematic manner. He identified thirteen virtues and focused on only one each week. Each day he wrote in his diary whether or not he had behaved in a manner that reflected that week’s virtue. It is a good model of self-improvement and let me suggest you attempt the same. Some of his thirteen virtues are among those that follow.

  1. The Virtue of Worthy Purpose

The most fundamental form of motivation is a desire to be worthy, to have a meaningful life and legacy. We will sacrifice our time and energy, we will be attracted and loyal to an organization we believe to have a worthy purpose and to a leader who can communicate that purpose.

  1. The Virtue of Unity

To be united, to have social bonds and trust, is a psychological need as old as our life in the cave. The development of trust in our group is one of the first lessons that is learned in the family and the failure of this learning is likely to result in lifelong dysfunction. All organizational systems require the creation of unified effort, pulling in the same direction, and it is the function of leaders to create this unity. All conflict and war is the result of leaders who sought power through division, retreating to contracting circles, the fear of others, rather than expanding the circle of unity. Cultures in retreat shrink the circle of influence, building walls that signify their loss of faith in their own future.

  1. The Virtue of Justice

Justice is founded on the twin pillars of reward and punishment. A just society is one in which reward and punishment are dispensed with equity, independent of gender, race, or other accidents of birth. When justice equitably follows behavior or performance the organization or society will elicit trust and loyalty on the part of its members.

  1. The Virtue of Empathy

We will follow a leader who demonstrates that she understands our condition and concerns. Great generals, from Alexander forward, have demonstrated genuine love for their soldiers. John Adams said that “There is something unnatural and odious in a government a thousand leagues off. A whole government of our own choice, managed by persons whom we love, revere, and can confide in, has charms in it for which men will fight.” Empathic leaders create affection and affiliation with their followers, while those lacking empathy instill alienation and distrust.

  1. The Virtue of Diversity

Diversity has become so associated with requirements and legalities that too many leaders have lost an understanding of its virtue. Give me a room of ten white male accountants discussing any problem and the matter will be decided quickly. Give me a room of ten individuals with different backgrounds, education and talents, and the discussion will take longer but the considerations will expand to include dozens of possibilities, and the result will be a creative solution with far more potential. Diversity of experience and talents is a competitive advantage in every group.

  1. The Virtue of Excellence

Those who achieve excellence in any field never consider themselves to be there. They are in motion. They are engaged in a pursuit that is never ending. They possess what I like to call creative dissatisfaction. This is the awareness of the gap between who I am, where I am and who I could be or where I could be. For every individual, or every company, there is always a gap between the current state and an ideal state in the future. Those who achieve excellence are dissatisfied and that dissatisfaction causes them to strive to close that gap. Leaders instill a sense of either complacency or excellence by engaging in continuous improvement and self-reflection.

  1. The Virtue of Inclusion

I will be loyal to that which I help to create. This is the fundamental law of democracy. Even a government with which we disagree, will gain our respect if we believe we had the opportunity to have our say, to register our vote. We will not gain the loyalty or trust of employees if they feel themselves to be mere labor, machines in somebody else’s sport. The purpose of creating an organization in which every member is on a team that contributes their mind as well as their labor is to instill this loyalty.

  1. The Virtue of Empiricism

Dr. Deming repeatedly called on managers to manage by the facts, to know the facts, to experiment and to observe changes in data. Empiricism is learning from what the environment is telling you. Science is based on empiricism, the discovery of what is true and what is not true by observing cause and effect relationships. All experiments are an exercise in empiricism. In the future managers and employees will be scientists. Rather than rely on someone “above” telling them what is best for them to do, they will be conducting experiments at their own work location to learn what will work and not work. They will then share this knowledge with others doing similar work.

  1. The Virtue of Integrity

Integrity is the foundation upon which must be built all other virtues and upon which rest the trust and relationship between individual and corporation. The ability to discriminate between what is honest and what lacks honesty is a skill that is critical to the establishment of the unity of people. We live in a society of law and legalism in which the lawyer has become the corporate high priest of right and wrong. That which is honest has become confused with that which is permissible by law. When managers are able to discern and act on that which is honest in spirit, trustful business relationships will be sustained.

  1. The Virtue of Humility

Arrogance is the enemy of improvement and the opposite of humility. To continuously improve, the practice the virtue of empiricism, one must be humble in one’s knowledge.  Arrogance suppresses the free expression of others, while humility invites free thought and creative acts.  “In a humble state, you learn better. I can’t find anything else very exciting about humility, but at least there’s that.” John Dooner. But, just that, is a very great deal and the root of all future success.

[1] Wright, Robert. NonZero – The Logic of Human Destiny. Vintage Books, New York, 2001.

[2] Ibid. p. 19.

New Manager Training – Leading People, Teams and Processes

The New Manager – Leading People, Teams and Processes

New manager training is a challenge for every company. I have just completed and published a new course to fulfill the need of training new managers (or those hoping to be) in the essential people and team management skills. It is based on principles and practices of lean culture. A lot of the material in this course is similar to my Team Leadership cour

new-manager-title-3

se, however, every lecture is new and hopefully improved. I have also included new topics specifically directed at the needs of the new manager. These include communication responsibilities, providing job instruction training, discipline and conflict resolution. It also include effective inter-personal communication, giving and receiving feedback, team facilitation, problem-solving (PDCA, A3, root cause) and process improvement.

blended-learningThe course includes thirteen action-learning exercises and quizzes. I also recommend to the student that they work with a coach within their organization who can give them feedback on their exercises and application of the material. I have tried to think of everything I would want to include if I were responsible for new manager training in an organization.

The course includes 82 lectures, 11 hours of material, plus the assignments and quizzes.

If someone else in your organization is responsible for new manager training please pass this on to them. If your company can use this on an ongoing basis for training new managers I will be happy to provide a discount for your company.

Please take a look and let me know what you think.

The Crisis of American Political Leadership

Over the past year I have had many thoughts on the political campaigns and their candidates, but to avoid becoming identified with political partisanship I have remained quiet in this space. But, now that the election is past and we know the outcome, I feel a need to speak out on what I believe to be a crisis in American leadership. This transcends party. I would be amazed if even one citizen believes that the political parties selected the two best possible candidates from our vast population of qualified and experienced executive talent. Both parties, and the American people, must reconsider how we go about selecting a candidate and the personal leadership qualities of those candidates.

My forty years working with many dozens of corporate executives does color my opinion. There are many highly ethical, wise and talented executives who could serve us well but who would not dream of entering the torture chamber of our political system. If we want the best talent, we must have a system that attracts that talent! The following are the key lessons that I derive from this election season.

The Power of Purpose

The Power of PurposeLeaders lead by giving to their followers an ennobling purpose and that purpose serves to create human energy and to unite that energy in a shared campaign to overcome challenge.  All great leaders since Alexander and probably before have understood this requirement of leadership. Following a leader is an act of sacrifice and we only sacrifice when we perceive the goal to be worthy.

The moment I saw Donald Trump’s slogan, “Make America Great Again” I had a positive reaction. That will sell! Without overlooking his faults, Donald Trump understood marketing and salesmanship. He knew that to attract followers, to sell himself, he had to have an emotional hook. He found it and it worked.

Most buying decisions are emotional, not rational. While we like to believe that we decide to buy car A versus car B on a rational or logical basis, our logic is often a weak justification for our emotions. Pride, prestige, and image are often the motivations that we mask as logic. Trump knew this and Clinton did not understand it or was incapable of creating an emotional hook.

I repeatedly asked my wife, as we watch campaign coverage, “But what does she want to achieve for us? What is her purpose? Why am I supposed to care about her election?” Only midway into the campaign did she start using the slogan “Stronger Together.” It is a nice thought, but it did not elicit the emotional response and create the attraction of Trump’s slogan. It sounds like a slogan created by committee. It didn’t recognize the pain of many that felt left behind in this economy and felt a loss of respect.  

It is indisputable that Hillary Clinton was more knowledgeable, had more relevant experience and would have been a safer choice. But her purpose was never clear. In our media culture of rapid fire Tweets and loud television arguments, most voters are not reading policy papers. They are digesting marketing messages.

Confronting the New World Order

With the inventions of the telephone, radio, television, microprocessor and the Internet, a “new world order” and a new economy was created. When the world confronted, and recovered from the tragic collapse of world order after World War II, a new world order was created with the United States at its center. All things change. History will not stop and the order of the world will continue to be recreated. No election will change that.

Dealing with major economic shifts is always frightening and stressful, and leads to social and economic disruption. It happened when there was mass migration from agricultural areas of the US to the cities during the industrial revolution. No politician’s promise was going to change that. But, leaders must lead, and that often means educating their followers, not simply pandering to their fears.

Most Americans do not understand the emerging “new world order.” Many imagine some demonic conspiracy that must be resisted. In fear is the impulse to withdraw beyond walls. It is the same fear that propelled Brexit and other movements in Europe. The fact of global economic integration, the integration and globalization of supply chains, and the economic rise of so called third-world countries, is a positive reality that will not change, and if any country tries to force a trade war or build economic barriers, it will result in their own downfall. Great wars are most often preceded by restrictions on trade. The integration of the world economy and cultures is the single greatest assurance of peace and progress. The new world order iauto-productions not the prince of darkness; it is the prince of peace.

I believe in free enterprise and free markets. The assertion that the president is going to tell the CEO of Ford Motor Company where he can or cannot build a manufacturing plant is the ultimate contradiction to free enterprise and the greatest arrogance of “big government.” Ford Motor Company (just as an example) is not simply an American company. It is a global company and a global brand and its high growth markets are all outside of the United States. The same is true for most large companies. They have no choice but to both sell into those markets and to manufacture in those countries.

In 2014 U.S. manufactured automobile exports, yes, EXPORTS, rose to 2.1 million cars to Asia, the Middle East and even to Europe. Auto exports rose 73% from 2004, led by the U.S. manufacturing plants of Honda and Toyota. Do our politicians comprehend the meaning of this and are they willing to put all the thousands of jobs at risk that are supported by these exports? We are an “export economy” and that means trade agreements! This is part of the “new world order.” It is a lot more complex than the slogans would have you believe.

The auto industry is not the property of Detroit or Flint, Michigan (sorry, Michael Moore). U.S. auto production has moved to Greenville, South Carolina (BMW), Arlington, TX (GM) Alabama (Mercedes), Georgetown, KY (Toyota), and Marysville, OH (Honda). Free enterprise means companies move, change, experiment and this means workers must adapt to the changes and not expect politicians to keep things as they were!

We cannot go backwards, even if we try. The world is marching toward solar and other clean energies. We can pretend to live in the economic world of the 1950’s, but the rest of the world will leave us behind and we will be disadvantaged as a result.

There are close to ten thousand jobs in software development, writing code, that cannot be filled in the United States. Facebook has formed a company, Andela, that pays Nigerians to learn how to write code and then hires them to do web development. Why aren’t we training those in Appalachia to do the same?

If Donald Trump is going to be the great President he wants to be, he must have the wisdom to actually lead by informing his followers of the realities of the global economy and the new world order that is the economic reality of this age.

Successful Leaders Do Not Engage in Magical Thinking

If you are the CEO of a successful company, you have learned to be very skeptical of grandiose claims that are not backed up by detailed plans supported by data. They do not believe in magical thinking. Unfortunately, our media is saturated with magical fantasies.coal-production

There is a difference between selling or “making deals” and operating a company in a way that makes money. Donald Trump’s history is evidence that he is a great salesman and a terrible operator. After six bankruptcies, no major bank will lend him money. He opened the Taj Mahal Casino in Atlantic City just as the market was becoming saturated, and his new casino drained business from his other two casinos. They all went bankrupt.

A good executive knows how to make money from operations, not simply from “deals” or promises. A successful operation is measured by more revenue coming in than expenses going out, and this is a result of effective process management and customer satisfaction. The truth is that none of our current generation of political leaders have demonstrated the discipline to rationalize revenue to expenses. That includes both parties and both executive and legislative branches. We need the basic business sense of someone who has successfully managed business operations!

Many of Trump’s promises are not based on reality. Just one example: He did a great job of appealing to the coal miners of Appalachia. He has promised to put miners back to work by reviving the coal industry. Of course, they voted for him.

I spent many years consulting in the energy industry and have some small understanding of the energy market. We are just about energy independent thanks to hydraulic fracturing technology. Vast amounts of natural gas have been made available and consequently the price of natural gas has not risen since 1998 when the pricoal-utilizationce was almost exactly what it is today. The world is awash with energy and prices will remain low. Oil and gas exploration is being cut back by the major oil companies because there is simply no market for new production.

No one burns coal in their homes. The market for coal is the electric utility industry and it competes with natural gas. The only way you put miners back to work, in any sustainable way is to double the price of natural gas. That would mean somehow creating a natural gas shortage. Exactly how is any President going to do that? It is not going to happen, and it is a disservice to those in coal country to create this false hope. In four years there will be more anger at one more politician’s failed promise.

One of the more insightful recent opinion pieces was by Tom Friedman who pointed out that since 1984 manufacturing output has doubled in the United States, contrary to popular belief. Auto industry production is near to all-time highs. We produce more manufactured goods now than ever before. But, manufacturing employment is one third of what it was. Jobs haven’t gone overseas. Jobs have gone to microprocessors! Anyone who works in manufacturing (and I do) knows that automated control systems, robotics and other computer controlled devices are what has replaced manufacturing jobs. But, few voters understand this.

export-agricultureManufacturing jobs are not going to increase substantially, regardless of any trade policy. However, imposing tariffs (like a proposed 45% tariffs on Chinese manufactured goods) would be a tax on the average American consumer. Every dollar of tariff imposed on goods coming from China is a dollar out of the pockets of Wal-Mart customers. It would also set off a trade war that would result in China not buying our debt (therefore, increased interest rates on the national debt and all other debt), and they would buy less agricultural goods from the U.S. and more from Canada and Latin America. How many voters from Iowa and Kansas understand that half of all agricultural production is exported and those exports depend on trade agreements? If Asian buyers stop buying our commodities the prices will crash and we would all lose. Trade wars never end well.

Slogans and emotions can get you elected but they do not improve economic conditions unless they are backed up by realistic planning that considers the fact that for every action there is a reaction. That is how economies work. But, the emotions of the slogans trumped the logic of rational planning. Magical thinking won the election battle but will lose the war.

The Failure of Empathy

Leaders have empathy and even love for their followers. There is that great scene when General Patton got out of his jeep and marched through the mud and rain alongside the privates of the U.S. Army’s Third Army as they marched to relieve the surrounded troops in Bastogne during the Battle of the Bulge. It was symbolic of Patton’s affection for his soldiers. Patton was mimicking Alexander the Great. He even thought he was the reincarnation of Alexander. He wasn’t crazy. In spirit, he was Alexander.

When leaders express their love and empathy for their followers, the emotion is returned in devotion and loyalty to that leader.

Whatever one thinks of Donald Trump, he intuitively understood that a large population of Americans needed to feel empathy from a leader. The cheering crowds at his rallies were not simply “deplorables” or racists, or ignorant. And, I am not excusing the racists among them. They were average Americans who felt that they had been ignored, and they were happy to respond to someone who expressed empathy for their situation. Make America Great Again meant that “you will be respected and loved again.”

Hillary Clinton expressed empathy for minorities, immigrants and women and she won their vote. But, that wasn’t enough.

A test of Donald Trump’s leadership now is whether he will be able to express empathy for those “others” who now fear his presidency. The recent protests are not by what he termed “professional protestors.” That demeans them and fails to understand their fears, just as Hillary’s comment about “deplorables” was a failure of her ability to empathize with Trump’s followers. They all have legitimate concerns to which a leader must respond.

This same requirement for empathy is no less important for leaders of corporations.

Corporate executives, as well as politicians, can learn from the leadership successes and failures of the past months. I honestly pray that this country can move forward and not backward, that our leaders can unite us, give us purpose, and help us confront the realities of the world as it is and will be.