An “Unspeakable” Driver of Banking Culture

voldemort

In the Harry Potter books and movies, there is a character so evil, so foul, so corrupting that ordinary people refused to say his name.  Instead they referred to him as “he who must not be named”!  Of course that was the evil Lord Voldemort, the arch-villain of the series and the nemesis of the hero, Harry Potter.  He-Who-Must-Not-Be-Named-voldemort-vs-aro-21933014-495-660

Rather than just not liking him, the real reason people refused to speak his name was because a Taboo had been placed upon the name so that Voldemort or his followers would be able to trace anyone who utters it and destroy them.

In other words, don’t talk about him and you won’t get in trouble!

The “Unspeakable” in Banking

Corporate culture is a collection of accepted and habitual actions and behaviours that determine how employees at all levels conduct their work, how they treat each other and customers.  Many times these habitual behaviours are rooted in beliefs about the “way things are (or should be)” or “how to survive and get ahead in this company“. Many of these beliefs are almost invisible and rooted in the stories employees regularly hear in the workplace (and the bar) and the way their boss behaves towards them.

In the case of modern banking there are strong yet invisible beliefs that seem to be industry wide and not just limited to one particular bank. One of the reasons for this homogeneity of culture in modern banking is the ease at which bank executives and senior managers move from one bank to another. It is not unusual for a senior executive to have worked at two or three different banks in the space of 10 years.  Some even take their whole teams with them when they move.  So it is easy to see how beliefs and behaviours about how to get things done, make money and be accepted can quickly spread.  And these ways of acting are often fuelled by the behaviour of the senior leaders as well as the policies and procedures they put in place. A self-reinforcing system.

Those who tend to challenge these “accepted rules” or behave differently tend to experience considerable peer pressure to conform and if not, they get quickly ostracised by the subculture they belong to.  Sounds more and more like “he who must not be named”! Talking about “it” gets you in trouble.

And the biggest “unspeakable” in banking is compensation and bonuses. Traders and employees are often told by their bosses not to talk about their compensation and bonuses. Bonus negotiations for top managers seems to be a very closed-door affair, with often heated debates and shouting about how much I got versus how much I should get!

Even when pressed by the regulators to disclose compensation guidelines and bonus policies, senior banking executives resist and have a lot of reasons why large salaries and a secretive bonus system is necessary. The biggest reason is: “we need large salaries and big bonus opportunities in order to attract the best and the brightest, especially since banking is a very complex business and requires top intellects to manage and deliver”. And who created the complexity? Who created the unfathomable derivatives like the Credit Default Swaps that helped bring about the 2008 global meltdown? So is it these same best and brightest that are responsible for over $150 billion in fines between 2009-2013? In this case too much cleverness seems to be a liability!

The large compensation and bonuses may be justified in some way since investment banking is stressful and complicated, but it also drives certain types of behaviours, which then build a certain type of internal corporate culture. And here is where the banking establishment puts their head in the sand. They are unwilling to talk about the possibilities that their compensation policies (and other internal policies and procedures) may actually be driving the wrong types of behaviours.

For those of us who have spent the past 30 years studying and consulting on corporate culture, it is a proven principle that internal policies and procedures, and especially compensation policies, are among the top three ingredients that drive employee behaviours and determine corporate culture (along with the behaviour of senior leaders, hiring profiles and national culture elements).

parking wardensHere’s a Simple example.  Parking meter officers on a bonus system tend to write more citations than those on a salary. Those selling stocks tend to push those with the highest commission rate, whether or not they are good for their clients.  The list goes on and on.  It’s human nature. Why should banks be any different?

But at least some in the banking world are waking up to the principle of compensation Apple_barrelpolicies driving behaviour. Mark Carney, Governor of the Bank of England, recently spoke about the culture of banking this way: “it’s not a case of a few rotten apples. We’ve had PPI, Libor, forex and all the rest. The problem is probably the barrels”.

If we are going to reshape the culture of banking to bring back public trust and reduce the outrageous number of unethical activities and huge fines levied on banks, then we need to have a real open and honest debate about all the drivers of corporate culture in banking, especially compensation and bonuses.

Let’s face “He Who Must Not Be Named” head on.

 

Posted by John R Childress

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Big Banking’s Achilles Heel

Achilles dipped

What defines us is how well we rise after falling!

According to Greek mythology, when Achilles, the son of the goddess Thetis and the Greek hero Peleus, was born it was foretold that he would die young. To protect him, Thetis took the infant Achilles to the River Styx, whose water had powers of invulnerability. She dipped him in the river, except for his heel.  Achilles grew up to be a great warrior and hero of many battles, but towards the end of the Trojan War he was shot in the heel with a poisonous arrow by Paris and died shortly after.

The modern phrase, “their Achilles heel” is used to refer to one’s single vulnerability in spite foot_achilles_tendon_anatomy01of all their other strong capabilities. Football coaches invoke the Achilles heel analogy when talking about the weakness of their rushing game. In business, while efficiency, productivity and cost control may be Samsung’s core strengths, innovation is often talked about as their Achilles heel. In anatomy,the Achilles tendon is a particularly important part of the body used for walking and running, and inflammation or a torn tendon incapacitates us.

Large global banks have many strengths; scope, scale, talented and smart people, strong relationships with businesses and governments, multiple products, global brands, deep pockets and of course the highly profitable investment banking business model. But we all have an “Achilles heel” and in the case of large global banks there seem to be not one, but several significant vulnerabilities to their continued success and sustainability.

 Achilles Heel Number One: Patchwork Technology

Bank-consolidation-530x421Over the past 30 years the global banking industry has gone through wave after wave of consolidation, mostly through the process of merger and acquisition. Local banks merging to create regional banks. Big regional banks buying other regional banks in order to grow their balance sheets and expand their scope. Then regional banks merge to become super regionals and, with the help of deregulation, big banks started acquiring and merging with other national and international banks and financial institutions until the global banking industry is controlled by a few mammoth organisations. In the US bank consolidation has been extreme and a similar trend has occurred in the UK and even in Spain.

Bank-Consolidation-to-Big-4

While acquisitions bring expanded scale, scope and new customers, it nearly always means merging and integrating two different technology platforms, software and back office systems. Most of the major banks have duplicate and highly complex, inefficient back office technology systems. Since the cost of full technology integration following a significant acquisition is huge and disruptive, most bank leaders decide to go forward after the merger keeping the two separate systems and adding patchwork software on top to normalise the different data sets and the way they are presented.

ATM fleecingWhile this is the least costly option, it is far from optimal and requires more and more technology staff to “fix the fixes”, thus raising the overall cost of doing business, which is of course passed on to the customers, both retail and wholesale through various fees, etc.  And worse yet, too often the data extracted and integrated is less than accurate, thus making assumptions and modelling highly suspect.

At the beginning of December, 2013 all of RBS and NatWest’s systems went down for three hours on one of the busiest shopping days of the year. The group chief executive Ross McEwan described that glitch as “unacceptable” and added: “For decades, RBS failed to invest properly in its systems.” And it’s not the only bank to have had major interruptions in its online banking services.

Achilles Heel Number Two: Corporate Culture

“Risk professionals – on the whole a highly analytical, data driven, rational group – believe the banking crisis was caused not so much by technical failures (of risk analysis) but by  failures in corporate culture and ethics.” Risk Managers Survey, 2009

Public trust in banking as ethical and responsible institutions is at rock bottom, only barely above the score for politicians. The reason? Simple, a large number of fraudulent activities by almost all the big global banks with such actions as fixing the FX rate, rigging the LIBOR rates, mis-selling of pensions, money laundering for drug cartels, and developing highly complex derivative products to sell to unsuspecting customers. Since 2009 that total fines for unethical and fraudulent behaviour by banks has exceeded $ 150 billion and yet even with assurances that they are fixing the problem, recent scandals keep popping up.

Culture change is the replacement of one set of habitual and accepted behaviours for another.

Corporate culture is made up of the habitual and accepted behaviours, and work activities that employees use to solve problems, interact with each other and deal with customers and suppliers. While the culture of banking is definitely broken, it’s not that everyone working in a bank is a crook or dishonest.  In fact, just a few individuals are actually responsible for the actual fraudulent behaviour and wrong doing.

Yet we say the corporate culture is broken because even though people working with those few unethical individuals may have suspected or even known that negative activities were taking place (bankers and especially traders tend to brag a lot about deals and making money), few employees were willing to raise the issues to upper management. And in those cases where they did, managers routinely backed away from really investigating. Why? The internal subculture of that group, team or department had its own rules of “how to get along” and “how to be accepted in the group“.

The real cultural question is: “Even though people know something wrong might be going on, why don’t they speak up?”

The other difficulty in understanding corporate culture is its complexities. There is no single, big overall corporate culture, especially in the global banks.  Instead, there are numerous subcultures, usually headed by an informal leader whom people either trust and respect, or fear. And since most employees want to keep their job and be accepted by the team and the boss, peer pressure to conform, play along, don’t rock the boat, is great. And the sad truth is, most bank senior executives have no clue what the “real rules” are within these subcultures, or even that subcultures exist.

If you don’t understand your corporate culture (subcultures), you don’t really understand your business.

Another part of the broken banking culture is the relationship between the front office (client facing and traders) and the back office, support functions. It is no real exaggeration to say that this relationship is analogous to the caste system or the feudal system of Medieval Europe.

The traders and client facing teams get the accolades and the bonuses. The back office teams get yelled at, blamed for systems problems, receive little positive recognition from upper management, and are paid poorly in comparison to the front office staff.  I am not saying they should have equal salaries since their roles are very different, but there is zero teamwork or respect between these two very important and highly interconnected groups. Back office work in banking is considered the “crap” job and unfortunately they tend to be treated that way.  And we wonder why there is a lack of overall respect for management and poor teamwork within banks and why many bank employees consider the culture as “toxic”.

An effective solution to creating a more aligned and productive bank culture is to tie both business teamworkgroups’ variable compensation together as important parts of a single value chain, instead of treating them as vastly different departments. Basing variable compensation and bonuses on the entire value chain rather than on separate functional expertise has radically shifted the cultures of many technology and service organizations. Why not banking?

Perhaps the biggest Achilles Heel of all: The myth of the best and brightest

After years of studying corporate culture and business performance, along with human behaviour in groups, we have come to the conclusion that there is one great myth, or untruth, that seems to be driving the culture of modern banking. That myth goes like this:

Unless we pay big salaries and provide large bonus opportunities, we won’t get the best and brightest to run our banks!

With over $150 billion in fines for fraudulent activities I would say it is time to rethink the “best and brightest” myth. If you want a high performing bank, plus high ethical standards, hiring those with high IQ’s and a maniacal focus on earning lots of money at a young age is not a good answer.  In fact, $150+ billion in fines says just the opposite.

What about hiring for values?  What about hiring for teamwork and customer service?  What about hiring for a mindset of professionalism instead of a mindset of “making lots of money?”

Where is the proof that highly ethical, customer focused, financial professionals are any less smart or capable at running a large complex bank?  Where is the proof that reduced salaries and realistic work bonuses would lead to poor performance?  Fact is, there is no proof, just a cultural myth that is self perpetuated by those in the industry.

When the leadership of banking begins to adjust their hiring profiles to focus on values and professional attitudes along with IQ and sales capabilities, we will see a more effective and more ethical culture emerge within the global banking industry.

The Real Question?

Which bank CEO is going to be first to show real courage and accept the challenge of sustainable culture change in banking?

Posted by:  John R Childress

Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

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The Best Investment . . .

mom and dad

My father began his career as a teacher, then became a Principal (Head Master) and later the Superintendent of Schools for a county in California.  He was an educator all his life and believed in education.  But he was definitely not a businessman. He wasn’t very good with money, although we never had much in the first place so there wasn’t any extra to invest.

However, he did have some good investment advice and to be honest, out of all the clever business people I have met over the years as a global management  consultant, his advice is by far the best.

The best investment you can make is in yourself!

The ROI (Return on Investment) is by far greater than any other type of investment; property, gold, stocks, bonds.  And it is an investment that improves with age (which is atypical of most other types of investments).

He singled out the four best investments to make in yourself:

your health, mind, reputation, and your integrity.

These are lifetime investments, but they are not one-time investments!  You must make an investment daily in all four of these areas.

The former Fidelity Fund manager Peter Lynch, in his book, Beating the Street,  recommends an investment strategy of finding a solid company with good management and not investing all at once, but on a regular schedule, no matter what the market conditions.  He believes this habit builds a greater ROI over time than does sporadic investing with large sums.

Another way to look at it. Investing in yourself is like practicing the violin.  We learned this from my daughter’s violin professor, who constantly reminds her that she can’t skip practice for a couple of days and then catch up by practicing twice as long in one day.  It doesn’t work that way.

Practicing an instrument is actually building up a mind-muscle memory, or pathway, and it takes the time in between practice sessions for the biochemistry of your neural pathways to solidify the patterns of movement (that’s my layman’s version of how it happens).

The same is true for investing in your health, mind, reputation and integrity.  You must be working on it every day in order to reap the positive life-long benefits of your investment.

What’s your self-investment plan?

Thanks for joining the dialogue.

John R Childress

Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

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Hotel Fire, Business Processes and Customer Satisfaction

“Service isn’t something you can turn on and off.  It requires a great product, training and giving our associates the tools they need to serve our guests.”  -Bill Marriott

I don’t know of any frequent business traveller who likes leaving on  a Sunday.  It pretty much takes herculean self-control not to be in a slightly depressed mood.  Leaving at “zero dark thirty” on a Monday morning is fine, but not Sunday travel.  So, after a very long Sunday flight from London to Washington, D. C., a connecting flight to Burlington, Vermont, then renting a car and driving I finally arrived at my hotel, very tired and somewhat grumpy (missing my Sunday evening family time at home).

I pull into the parking lot of the hotel, one of the many Marriott chains, only to find that there had been a fire, in fact, the firetrucks were still parked around the back. The smell of smoke and wet carpet was overpowering.  My “Mood Elevator” is about to hit the basement. Just what I need!

But as I was getting out of my car, out of the corner of my eye I noticed a group of four couples having what seemed like a very good party.  But I was focused on my upcoming problem of where to find a room for the night, so i ignored their shouts to join them.  I had important issues to deal with and I WAS FOCUSED!

What could have been a customer satisfaction nightmare turned out to be a memorable and positive experience. The hotel staff had set up a small desk in the parking lot that served as the registration and information station.  A very friendly staff member guided me over, explaining about the fire but that everyone was okay and that I would be well taken care of.  As I reached the makeshift office I realised I was dealing with experienced and well-trained staff.  My name was on the list.

“We have been expecting you, Mr Childress.  Sorry for the inconvenience.  We have booked you a room at another Marriott property only a mile away.  And of course, the hotel costs will be fully taken care of by us. Again, we are sorry for the inconvenience”.   They even had a map for me and one of the staff was a mobile phone talking with my new hotel at that very moment, telling them I was on my way.

What could I do other than smile and thank them?  They had everything figured out in advance.  They obviously had a procedure and were well-trained.  I wondered; “If their disaster recovery processes is so meticulous and well executed, imagine what their normal customer service must be like?”

On the way back to my car I again was hailed by the group having a party at the other end of the parking lot.  So, seeing food and beer and people having fun, I walked over.  A cold and much appreciated beer was thrust into my hand. This group had been staying at the hotel for a week before the fire, and they decided to have a party as they waited for their new hotel assignments (individuals staying one night are easier to place than a group of ten staying a longer period).  But they had been treated well by the hotel staff and so a little party, complete with BBQ chicken and lots of beer seemed like a no-brainer to them.  I arrived about four beers behind.  They told me how well the staff of the hotel had taken care of them during the ordeal and how everything was going to be just fine (optimism among guests after a hotel fire?). And as things do at parties, the topic of conversation soon got around to fishing, but that’s another story for another time.

How well trained are your staff on all possible customer service scenarios?  It matters, big time, not just in emergency situations, but in the thousand points of customer service opportunities every day.

Here are Bill Marriott’s 12 Principles for Success in the Hotel and Service Business:

1. Continually challenge your team to do better.

2. Take good care of your employees, and they’ll take good care of your customers, and the customers will come back.

3. Celebrate your people’s success, not your own.

4. Know what you’re good at and mine those competencies for all you’re worth.

5. Do it and do it now. Err on the side of taking action.

6. Communicate. Listen to your customers, associates and competitors.

7. See and be seen. Get out of your office, walk around, make yourself visible and accessible.

8. Success is in the details.

9. It’s more important to hire people with the right qualities than with specific experience.

10. Customer needs may vary, but their bias for quality never does.

11. Eliminate the cause of a mistake. Don’t just clean it up.

12. View the problem as an opportunity to grow.

What positive hotel experiences in challenging situations have you encountered?

Thanks for joining the dialogue.

John R Childress

Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

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The Barometer and Leadership Effectiveness

barometer

Never cut a tree down in the wintertime. Never make a negative decision in the low time. Never make your most important decisions when you are in your worst moods. Wait. Be patient. The storm will pass. The spring will come.  ~Robert H. Schuller

A barometer is a highly useful instrument to measure changes in atmospheric pressure, which is tightly correlated to changes in weather patterns.  Although the invention of the barometer was really a collaborative effort over a period of years, with Galileo having his hand in the game, the discovery of the principle it is based on is conventionally attributed to Evangelista Torricelli, an Italian physicist and mathematician, around 1643. Today barometers are used on land, at sea and in airplanes as a key part of weather forecasting technology.

bad mood dangerblack-cloudThe interesting thing about the weather is that in some strange way it is closely correlated with our moods.  Sunny weather tends to heighten our spirits; we are in a “sunny mood”. And dark damp weather puts a definite cloud on our feelings. Like the weather, our moods change over time; sometimes light and bright, sometimes dark and angry.

We understand, thanks to Torricelli, the physics and principles behind weather changes (shifts in atmospheric pressure).  But what is behind our changing moods? Is there a principle that causes our moods to shift from high to low to high again? And what do moods and how we feel have to do with leadership effectiveness?

Moods and Effectiveness

We have all experienced times in high mood states (happiness, contentment, joy) zonewhen tasks, interactions with others and problem solving flows effortlessly.  We are creative, solution oriented, have access to enormous insight and compassion, and things work out well with very little effort. For leaders, dealing with business problems from a high mood state takes less time and solutions are not difficult to find. Professional athletes call this the “flow state” or “being in the zone” when their normal reaction times are heightened and their reflexes sharper.  Recent studies using brain imaging and biochemistry show that the “flow state” of mind is very different from the normal, and is indeed an enhanced state of mental activity and sensory awareness. A definite state of wellbeing.

Calvin_bad_mood_answer_1_xlargeOn the other hand, for a leader in a low mood state (worried, angry, depressed, concerned) problems seem to multiply and other people somehow appear as obstacles rather than helpers. We often call this “grinding on a problem” and solutions tend to elude us. Many people feel anxiety and inadequate when in a low mood state. The world and relationships don’t seem to work well; life is difficult and problems are huge.

Outside-In or Inside-out?

The first principle of cognitive therapy is that all your moods are created by your ‘cognitions,’ or thoughts. A cognition refers to the way you look at things – your perceptions, mental attitudes, and beliefs. It includes the way you interpret things – what you say. about something or someone to yourself.  ~David D. Burns

The majority of people believe that their moods are caused by external events. Get an A on a test, happy as a lark. Get a C- on a test and we feel upset and mildly depressed. Get a promotion, the world is a great place.  Get passed over for a promotion and suddenly the world and other people become very annoying and our mood turns bitter and resentful.

This “Outside-In” view of personal feelings and thus effectiveness is the standard understanding by most people of how feelings are generated and how external events create certain behaviours.

It may be universally believed, but it is wrong.

We now know for a fact that moods (how we feel about ourselves, the world and others) are controlled from the Inside-Out, not the Outside-In. And it is our thinking, our thoughts, which we initiate either in response to an event or without any external stimulus, which shape our moods. Have you ever been in a bad mood without any external reason? Check your thinking. Ever suddenly just felt good about everyone and everything? Check your thinking.

Here is an illustrative example: Two women are walking home together after the theatre downloaddown a deserted city street. Suddenly a man lurches out of the alley right in front of them. One woman screams for help, shaking with the fear of being attacked by a mugger. The other woman says, “Are you hurt? Can we help you?”  Same event, two different responses based on different thoughts. It’s not the external event that creates the feeling of fear or compassion, but your thoughts about the event.

And nobody controls your thoughts but you (thank goodness).

Therefore, the process of how moods and resulting behaviour really works is not only simple, but empowering as well. Our thoughts create feelings (mood state) which in turn drives our reaction (behaviour) to events and people. With thoughts of fear and concern we feel frightened and tend to react with aggression or defensiveness. With thoughts of compassion we feel empathy and react with acts of kindness. With thoughts of gratitude we see people and the world around us with optimism.

And now we get back to Torricelli and his barometer.

What if our moods (inner feelings) were a barometer of the quality of our thinking?

If so, then when in a low mood the quality of our thinking is probably contaminated with thoughts of fear, anxiety, concern, suspicion and mistrust. Have you ever made a decision in a low or bad mood that turned out to be a poor decision? In low mood states our decisions and behaviours are often poor and can do more harm than good. Have you ever said something to someone while you were in a bad mood that you wish later you hadn’t said?

In a higher mood state the quality of our thinking is much freer, more spontaneous, more open to insights and new ideas, less critical. Somehow the right words and appropriate decisions are clearer.

Your thoughts create your personal “psychological reality”.  ~George Pransky

Change your thinking, change your behaviour

What is also enlightening about the way thoughts, feelings and behaviour are connected is that once we tend to relax our body and mind and let go of negative or fearful thoughts, the barometer of our moods tend to rise. We suddenly begin to feel better, often for no real reason at all. Studies have shown that body relaxation, often brought about through deep breathing or light forms of meditation, tends to substantially shift our thought patterns from tense and fearful to calm and wellbeing. Even a few deep breaths or a walk around the block helps change the barometer of our moods because our thinking has shifted.  There is even a growing point of view among scientists and philosophers that human beings are hard-wired for higher mood states and it is nothing more than negative thought that causes us to lose that default state of natural wellbeing.

Moods and Meetings

There is a perfect application of this “Barometric” Principle of Thought and Moods in the business world.  Staff meetings and senior team meetings. When the mood is low or people are worried, upset or angry, the meeting feels like a grind and the quality of the discussion is pretty uninspiring. Problems tend to get talked about, rather than solved.  Some people don’t even participate they are so lost in low mood thinking.

A good leader will recognise the current mood of the meeting and either press on if the mood is light and creative, or take a break or change the topic if the mood is low and heavy. But by all means don’t continue to “work through the problem” when the mood in the room is low. It just doesn’t work. When a senior team understands the principle of mood and effectiveness, they can monitor the overall mood as well as take accountability for managing their own mood state. There is an excellent little book in this very same subject by Robert Kausen, We’ve Got to Start Meeting Like This.

Just as the barometer and the principles behind it have found useful applications in all sorts of situations to improve modern life, an understanding of the Principle of Thought can have a profound impact on personal and team effectiveness. And it should become one of the key principles used by leaders to guide their teams and organisations to improved performance and wellbeing.

(Note: More on the Principle of Thought and its implications for wellbeing and effectiveness can be found in the writings of Dr. George Pransky – The Renaissance of Psychology and the teachings of the late Sydney Banks.)

Over the next few weeks I will be presenting more insights and implications for business and leadership (and parenting as well) from the Principle of Thought.

Thanks for joining the dialogue.

John R Childress

Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

 

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1,000 piece jigsaw puzzles and corporate culture

People doing a puzzle

There are no extra pieces in the universe. Everyone is here because he or she has a place to fill, and every piece must fit itself into the big jigsaw puzzle. ~Deepak Chopra

My wife and daughter are addicted to jigsaw puzzles, usually the 1,000 to 2,000 piece monstrosities that look like a kaleidoscope of colours and shapes. I must confess I don’t have the patience or the desire to sit for hours hunched over a table putting a puzzle together. But they love it and every Christmas holiday a new mega-puzzle appears and takes over the sitting room table.

Whether you like, love or hate mega-puzzles, they do present an excellent analogy to better understand corporate culture.

The Important Pieces?

Which pieces of a jigsaw puzzle are the most important? Or are they all equally important in getting to the finished product?

Naturally, all the pieces are important since an almost finished puzzle with one missing is missingvery unsatisfying.  Like a company that makes a good profit, has killer products, and yet employees hate working there. Very unsatisfying.

The good news about those who love jigsaw puzzles is that no one wants to walk away from a 1000 piece almost complete puzzle with one missing. Those who love puzzles are striving for excellence, not “almost complete”.  Everyone starts looking around, on the floor, under the sofa, in the corner of the box, everywhere to find the missing piece to make the effort worthwhile.

Much of the stress and angst we feel inside companies is the willingness of management unhappy at workand leadership to stop striving for excellence just because goals are met or the profit margin in good. The P&L looks good, but we know the picture isn’t complete. Something doesn’t feel right.  We are missing some of the pieces of excellence. Perhaps it is innovation, perhaps trust and respect. In the case of modern banking, huge profits are made while tolerating overly risky and even unethical behaviour. Success somehow feels hollow and unfulfilling.

Corporate culture, like the mega-puzzle, is made up of many elements; leadership behaviours, customer service behaviours, employee engagement, subcultures, routine work behaviours, trust, accountability.  The list goes on.

And they are all important in building and sustaining a successful company. Successful for employees, customers, shareholders, communities, the planet.

But not all the ingredients of corporate culture are equally important at any one given time. Custom-Jigsaw-Puzzle Coming back to the jigsaw puzzle analogy, early on the most important ingredients in getting the puzzle started are the edge pieces. The first task of any real puzzle person (not puzzling person) is to get the border finished.  Thus finding and fitting the edge pieces becomes the critical task for eventual success. Completing the border gives the puzzle structure, definition, dimension, shape, a boundary within which to work. Later on, the pieces that connect one set of shapes to another become critical to the overall development of the finished picture.

In the early days or years of a company, not all elements of corporate culture are equally important. Obviously the business model is critical, but the less tangible culture elements of purpose, mission, hiring profiles, ambition, training, brand identity, leadership values and behaviours are vitally important in setting in place a strong and sustainable foundation for success. Later, as the company matures, other elements of the culture, such as innovation, respect for diversity, open communication and trust play an important role in sustainability and performance.

What are the critical elements of your corporate culture at this time in your business life-cycle? Sustainable success comes from a strong culture foundation.

Thanks for joining the dialogue.

John R Childress

Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

 

 

 

Posted in corporate culture, Life Skills, Organization Behavior, strategy execution | Tagged , , , , , , | 1 Comment

Living “Heuristically” and Strategy Execution

lifes-a-dance

The unexamined life is not worth living. -Socrates

The unlived life is not worth examining. -Sheldon Kopp

After 60+ years of bumping through life I subscribe 100% to the latter quote.  If you haven’t embraced a life of stretching outside your comfort zone, choosing risk rather than certainty, loved even though it hurt, took the road less travelled, then there’s not much to examine.  We don’t learn much about ourselves or others by playing it safe or taking the easy way out.  You can’t build muscles unless you confront weight resistance and you can’t build experience or capability unless you embrace the resistance and challenges of life.

There is a term I like to use for this type of behaviour (some would say it’s reckless).  The term I use is “heuristic“.  In the classical definition, a heuristic is a mental or method shortcut that allows one to quickly make judgements or solve problems.  In other words, a heuristic shortcut is an educated guess or set of hypotheses used to quickly attack a problem.  The approach taken may not be totally correct or precise, but in applying a heuristic shortcut one engages with the problem quickly, get a small amount of insight about the problem, which adds to our knowledge base and allows us to formulate an even better approach.  Successive applications of a heuristic shortcut, each one more informed than the last, quickly allows us to zero in on the solution.  While an algorithm is precise, a heuristic is approximate.  Sort of like “fuzzy logic“.

The lesson for me in the above is that by engaging in life fully, even though I don’t know fully what I’m getting into, I “learn as I go”.  In other words, through direct experience I  gain insight and (hopefully) some wisdom faster than if I sat around and studied all the options, risks and possible approaches.

“Action often leads to results, even if I don’t know what I am doing!”

your_plan-realityI believe the same is true as an approach to effective strategy execution.  First of all, there is no perfect strategy.  All strategy is based on assumptions and besides, as soon as that great strategy is formulated, the business world changes, new competitors emerge, technology takes a leap forward, and the game changes.  So rather than opt for crafting the perfect strategy with massive analysis,  detailed spreadsheets and mountains of market intelligence, get it 80% good then get on with executing.

As soon as you get out in the market place and start executing on your strategic initiatives you immediately begin learning what works and what doesn’t.  Now you can use that insight and learning to improve and refine your strategy.  Then get back out in the marketplace and learn some more, refine some more, etc.  I call this using “strategic incrementalism” rather than trying to achieve strategic perfection up front.  Your strategy is now heuristic and you are fully engaged with your market and your customers.

“In preparing for battle, I have always found that plans are useless but planning is indispensable.” ~ Dwight D. Eisenhower

Thanks for joining the dialogue.

John R Childress

Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

Posted in consulting, Human Psychology, John R Childress, leadership, Life Skills, Organization Behavior, Personal Development, Psychology, Self-improvement, strategy execution | Tagged , , , , , , , , , , | 1 Comment