Pondering Capitalism – Part 1

OK, I’m going philosophical on you today – and maybe a little political. But it’s for good reason. I want to discuss the capitalistic system under which most readers of this blog operate. And yes, this is prompted by the increased promotion of socialism by the political left in this country. 

The concepts of private property, and of exchanges between legally free individuals and companies, in a system where the market mechanism is the primary governor of production and distribution of goods, has evolved as the most effective (though not perfect) economic system yet devised. We call it capitalism.

It’s seldom mentioned that Adam Smith who wrote a seminal book on capitalism, Wealth of Nations, was a Scottish professor of philosophy. He claimed there was something in the nature of man that makes man interested in the fortunes of others, making their happiness necessary to him. (Surprised?) So, although he emphasized the societal benefits of the pursuit of self-interest, he was clear that the goal of commerce should be to grow the entire economic pie, to the benefit of all. Further, he saw an important role for government as it relates to commerce, a role that included national defense, justice and security under the law, infrastructure development, and public education. 

So what? 

Two things. First, don’t underestimated the attractiveness of socialism to your fellow countrymen. Don’t be caught off guard.

Second, take a hard look at how the American capitalistic system has adapted – and continues to adapt – to the reality that self interest can run amok. 

As CEO, you run the risks and reap the rewards of a system established generations ago. You may want to hold yourself responsible for understanding the total culture in which you operate – the local and federal governments which contribute to your business environment and the other institutions that support the capitalistic democracy in which you operate. Further, you might want to reflect on Adam Smith’s belief that there is something in your own nature that causes you to act on your concern for the welfare of others. Finally, the long-term health of our capitalistic system depends on your civic participation. Discern important public issues of the day. Ignore the petty political gamesmanship. Debate consequential public issues thoughtfully and with civility. Cast your intelligent vote when elections are held.

Sound like a lecture? Sorry. Intended as suggestions.

Agree or disagree? Have something to add? Leave your comments below.

Commodity?

there is no such thing as a commodityThree years ago, my wife and I moved to a small town, population 7500. New challenges included finding a barber, even though my hair needs are a bit of a joke…because I have no hair on top. Well, that’s not exactly correct. It would be more accurate to say that I have a countable number of hairs on the top surface, with the only remaining healthy crop having set up residence on the sides, in the back, and in my ears. But, unlike many follicly-challenged men who long ago decided to either shave their heads or to simply let those little devils grow indefinitely, I have pursued the path of clean-cropped. I get a haircut every several months, and I want those few topside survivors, as well as what remains on the sides and neck, treated with love and care.

When I first arrived in town I randomly selected one of several local shops. Carol (not her real name) did a nice job, but her hours were unpredictable and she didn’t work by appointment. I often arrived at 10AM, her posted opening hour, and she would arrive at 10:20, or not at all. Then I tried Tom (not his real name). He was at work most of the time, but he was…well, negative. He had a bumper sticker posted on the window opposite the barber chair, facing the customer, with large print that said, “I’m having a lousy day, thanks for asking.” So, to say that Tom was a downer as a conversationalist was to put it mildly.

I heard about a barber shop that had opened very recently, and I heard it was unique as well as expensive. I decided to check it out. We’ll call it Topp’s Barbershop (not its real name). Topp’s had an interesting decor – hardwood floors, a motorcycle suspended from the ceiling, sports memorabilia of all sorts on the walls, and a refrigerator with soft drinks and beer. And they worked by appointment, so you took your chances as a walk-in. As it turned out, they also offered a quality product.

I had heard particularly good things about Mike, one of the barbers, so I went online and made an appointment to have him cut my hair. After three haircuts, he is now my barber. Mike takes my head and hair seriously. And Mike reads his customer well. If I’m quiet, he’s quiet. If I offer a comment, he picks up on that thread and expands. We’ve had several really interesting conversations on subjects ranging from raising children to the trials of traveling west on the Oregon Trail. He has the personality of the salesman you wish you had hired.

I would guess that barbering dates back almost to the caveman era. It has all the earmarks of a commodity in today’s world. But Topp’s demonstrates that it doesn’t have to be. During my most recent trip there, Mike informed me that he was in the process of hiring two more barbers (in addition to the two that are already working there) in order to keep up with the demand. He is booked days in advance most of the time, as are his associates.

No product is inherently a commodity; the owner makes the choice.

Leadership Lessons from 2018

Leadership requires emotional maturity as well as intelligence.Have you noticed how valuable it can be to simply pay attention to what’s going on? As leader of your company, you can benefit from critically observing the good, the bad, and the ugly emanating from leaders in the limelight. It is my nature to highlight the positive lessons you can absorb from others. I’m going to deviate from that nature today. I simply cannot ignore the barrage of clear lessons of what not to do that have come our way recently. Here are my top picks:

  • Publicly belittling your perceived foes using childish language – not good.
  • Publicly berating key members of your management team – poison.
  • Falling in love with a project and refusing to let it die, even in the face of new developments that would compel a dispassionate observer to change course – not smart.

You wouldn’t be running an organization if you weren’t at least sensitive to these exhibitions of incompetence. Continue to observe what eventually comes from possessing healthy grey matter but lacking emotional maturity, and learn from it. 

Hold on! I almost forgot two of the most important lessons to be learned from last year.

  • Do not use social media of any type to communicate anything serious about your organization – totally inappropriate. 
  • Lying is bad form – period.

Take Stock

Year-end summary; strategic plan; year in reviewAs a coach of entrepreneurs and small business owners, I’ve encouraged my clients to create a “Letter to Stakeholders” that concisely summarizes each year. The letter consists of three short paragraphs: highlights of accomplishments; comments on the disappointments or shortfalls; and a statement of the most important objectives for the upcoming year. More recently, I’ve broadened my recommendation to include additional lenses through which to view the past twelve months. 

One such lens is Personal Accomplishments, a list of personal milestones that don’t directly apply to your role leading your business. This is normally a short list – sometimes a single item. But that single item can be significant. 

Examples range from guitar lessons to starting a vegetable garden; from taking up cycling to becoming treasurer for your place of worship; from coaching your child’s little squirts team to learning to prepare Swedish meatballs. 

As with your Letter to Stakeholders, it’s worth taking the time to write down your personal accomplishment(s) and ponder them. It will not take you long to record them, and only a little longer to also record why each accomplishment is important.

The audience for whom you are writing is…you. The thinking that goes into your list creation will inspire your ongoing personal growth.

I’m still passionate about the value of your Letter to Stakeholders, but the Personal Accomplishments list can be just as powerful for a workaholic like you. It provides a reminder that you are more than your business. 

Dachshund Leadership Lesson

CEO Leadership, Motivation

Oscar following nose

Oscar is eleven-going-on-twelve, sweet of disposition, good with other dogs, tolerant of all people, and about as easy to lead as a chicken. We often walk the Indian Creek Trail just below our home, and I’ve finally decided to take him off the leash – to cease pulling him away from every malodorous scent, and to let him move along at his own pace while I walk ahead, stopping every few strides to encourage him to catch up.

During a recent meander with Oscar, thinking about how poorly I was performing as a leader of a dog, a book I read a few years back (Drive (by Daniel Pink), popped into my head. I remembered that at the heart of Pink’s book was the theory that, for work that requires any form of creativity, intrinsic motivation is far more effective than extrinsic motivation. He further argues that the three nutrients for intrinsically motivated work are autonomy, mastery and purpose.

Not surprisingly, research reveals that most of us really want a high degree of autonomy in our work. We don’t want to be told exactly what to do and how to do it and when to do it. We generally want to understand the desired result and then, after considering how other successful people have approached it, have the freedom to use our own thinking and skills to improve on that process. Taking Oscar off the leash gave him increased autonomy. He got a little better at moving down the trail, and our walking relationship became less antagonistic.

Most of us want to grow in the mastery of our work. This begins with mindset, a belief that we can get better. Mastery requires effort along with the realization that, no matter what the challenge, we can always get better. I’ve concluded that mastery is at the core of my disconnect with Oscar. He simply doesn’t see a reason to master trail hiking.

Finally, intrinsic motivation is enhanced when our work has purpose. Studies have shown that, when one’s job is intrinsically meaningful, the bouts of anxiety or depression are generally few or nonexistent. You can be the judge, but Oscar doesn’t look anxious or depressed to me.

OscarPortrait

Using Oscar as an example (which makes me shudder), one may conclude that, if the only goal is to avoid Oscar becoming depressed, then it doesn’t matter that my purpose (getting to the end of the trail and back) and his purpose (smelling every stick, leaf, bug, and rock) are not aligned. 

But these contrasting purposes are not quite what Pink had in mind. And while he may not argue for perfect alignment of purposes, he would certainly argue that he is using “purpose” in the sense of “meaningful”; that, while autonomy and mastery will foster intrinsic motivation, adding a higher purpose to the mix will inevitably optimize the results of that motivation. This third leg, the sincere belief that our work is, in some way, bigger than us, completes a strategic triad that undergirds the human behavior most employers are seeking.

So, as CEO, you may want to think through how your organization supports intrinsic motivation. And then, if you want a more complete view, ask your employees.

Want What You Have

Attitude is everything in business.Having spent over four decades in the world of business, I find it particularly interesting to observe general philosophical truths playing out in that world of commerce.

I recently bought a copy of a book based simply on its title: I Love Capitalism!  I was not familiar with the story of Ken Langone, the author, and I was ripe for a stout defense of capitalism, in an era where I seldom here much praise for our democratic capitalistic system.

While I enjoyed the stories Ken laid down during the first half of the book, I was concerned this might simply be another “let me tell you how smart and wealthy I am” autobiography. But I kept reading and, although Ken is neither shy nor particularly humble, his stories eventually drove home some valuable life lessons. 

One such lesson concerned a large U.S. company where Ken was a board member, and a horse race at that company among three top executives seeking to become the next CEO. Ken decided to recruit one of the “losers” in that horse race to take the reins of a company whose startup financing Ken had arranged years earlier and where he still sat on the board. Ken’s company, by the way, was producing revenues of $90 billion at the time, so this was a big job for whomever he recruited as CEO. He eventually brought one of the “losers” on as CEO and Ken’s company performed well financially for the next several years. 

The “loser” was very well compensated in the form of both stock options and annual salary. At a time when the Enron and Worldcom scandals were making headlines and the media was shining bright lights on all boardrooms with regard to excessive executive compensation, Ken and the board started looking at creative ways to improve the appearance to the outside world of that generous compensation package. When they attempted to discuss some of those variations with the “loser”, he would have none of it. Ken eventually tumbled to the fact that the “loser” had never gotten over losing. In spite of his hard work and accomplishments at Ken’s company, he could not get past having lost the CEO race at his prior company. In the words of Ken, “He lived in a permanent state of feeling ripped off. Just like a guy who can’t get over being dumped by a girl…” Probably no pay package would have been generous enough for him to put that past behind him. 

I can think of a couple times in my career when I didn’t really want what I had. How about you? Consider the following possibilities.

Maybe, in spite of having great operating people, you decide it’s time to recruit a high powered Chief Operations Officer, and you find the perfect candidate, and you think you have sold that candidate on joining your organization only to be turned down at the eleventh hour. Then you lick your wounds, bemoaning the fact that you’ll never find another perfect candidate, and you totally ignore the long-term, high-performing, loyal operations staff who have helped you build the company.

Or maybe you invest hours and hours pitching a huge potential customer, only to lose to a competitor, and now you’re burning hours in recriminations of what you could have done differently – all this while your present loyal customers are suffering from lack of your attention.

Or maybe you sell your company for enough money that you no longer have to work and you can spend your time and money doing almost anything you want, but, looking in the rearview mirror, you find yourself pining away because you think you should have held out for a higher price.

Can we agree that none of these scenarios is healthy…or even rational?

Strive to want what you have. Attitude is everything.

Gooch

AutoHoodUp

In the old days you could actually do something under your own hood.

He was 58 and I was 24. He was a senior application engineer in the Dallas office of GE’s Industrial Sales Division, and I was a neophyte sales engineer. We became fast friends.

With short cropped gray hair, straight and thin frame, squinty eyes above the ever-present cigarette, and the ability to focus like a laser on an electrical system challenge, Bob Gooch represented his employer well. He used his name as his calling card. “People just call me Gooch,” he would say. And they did. It was comfortable, and the name, the manner, and the intelligence drew our customers to him.

Gooch and I both had company cars. All expenses related to maintaining and driving the cars were paid by the company. Most employees with company cars took them to the dealer regularly for oil changes, lube jobs, and tuneups. Not Gooch. He preferred to do his own work.

Shortly after I met him, Gooch suggested I might want to join him on a Saturday morning and service my car while he was servicing his. I had done these tasks on my own car before and really had not planned to continue the practice with my company car. But I liked talking with Gooch and the offer sounded interesting, so I agreed. It went well, lots of good conversation while doing our own service work, and we saved ourselves the inconvenience of dropping our cars off for service someplace else. 

We continued our DIY car servicing on a regular schedule and one Saturday morning we ran into a problem. The details have faded from memory, but the essence was that we were attempting to remove a component under the hood of my car, and the bolted connections were so rusted we could not budge them. I was prepared to take it to the dealer and let them wrestle with this snake. Gooch commented something like, “You know, we can do this if we’re willing to spend the time.” He went on to explain that a little oil and a lot of time would probably work. So, we proceeded to squirt oil on the rusted threads approximately every 15 minutes. After waiting fifteen minutes we would apply the wrench, attempt to loosen the nuts and, failing that, apply more oil and wait another 15 minutes. We must have gone through that cycle for about two hours before the nuts finally broke free. In between nut-loosening attempts, we took our time fiddling with other minor maintenance issues, and talking about all things under the sun. At the end of the day I had learned a lesson of time and patience.

As CEO, you face a variety of difficult tasks continuously. Some are intellectually demanding, some emotionally demanding, some even physically demanding. But today I’m writing about those that are time and patience demanding…tasks like carefully reviewing that government contract, and the numerous detailed changes your attorney has recommended; challenges like researching and understanding the variety of benefit packages that you might offer your employees as you grow your organization; time drainers like preparing a few slides for that next strategic planning staff meeting – visuals that can make the meeting so much more productive than merely winging it, but that require the discipline to block off the time to ponder and prepare.

There’s the key – discipline. We’re not talking about lacking the ability to do something important. We’re talking about the willingness to invest the time and emotional energy into an important task that will take a chunk of your limited time.

I’ll bet you have an important challenge right now, one that you’ve set aside. You have other more interesting and less time-consuming projects you’re working on. That important one you filed in your “future” file may remain there indefinitely. 

Let this be your springboard to jump on it.