13 June 2012

Owner Capitalism. The New Absentee Landlords

I’ve never quite subscribed to the fictitious idea that contemporary shareholders of public companies are truly “owners.” They may own the company’s stock, and by virtue of placing a bet on an arcane future outcome based on an alchemic expectation (and actual delivery) of future profits, relative degree of satisfaction or disappointment (irrespective of actual success), and what Apple or Google have recently announced (or perhaps literally, the price of tea in China), may be entitled to a financial reward from time to time. But that reward is more akin to a bet at the craps table in the casino called Bay Street, Wall Street, NASDAQ, or similar. The overwhelming majority of company stock purchases are simply about money making more money based solely on the movement of money. Aside from angel investors and venture capitalists investing in start-ups, long gone are the days when a so-called investor is authentically investing in the success of the enterprise, as opposed to the financial return of the supposed investment itself.

This premise is the basis of a new book by Yvan Allaire and Mihaela Firsirotu, A Capitalism of Owners, reviewed today in the Globe and Mail.
In an era where companies must be flexible and strive for change, the authors say corporate leaders face a stressful paradox. The more competitive the markets for goods and services, the more businesses need time to adapt, innovating and putting in place new strategies (as Ms. Nooyi was attempting) without speculators breathing down their necks.

“Yet, in these very times of a raging competitive battle, contemporary financial markets, the supposed ‘company owners,’ pile on widely held publicly listed companies, bullying them for short-term results and then exit the stock en masse, leaving the place to speculators, financial jackals, and buzzards,” the authors note.

Note the phrase “supposed” owners. Under capitalism, ownership belongs to the holders of shares. But the authors question whether today’s stockholders are share owners or share flippers, speculating on the market. They note that in the 1960s, a share was held, on average, for seven years by its owner. Today, on the New York Stock Exchange, shares are held for less than a year – roughly the level at the time of the 1929 market crash, the authors note. Other major exchanges have seen a similar transformation.
Exactly my point. Taking a more theoretically grounded approach to the analysis, I would argue that, according to Valence Theory, most shareholders are not even members of the organization; how on earth could they be considered “owners” qualified to participate in decision making? Indeed, the company’s customers have stronger, more pervasive ties to the organization and would theoretically be better qualified to contribute to good decision making on behalf of all constituencies.

We all know the problem with absentee landlords. Owner capitalism is equivalently problematic, and far more pernicious in its effects on society in general.

08 June 2012

And the Researcher Impact and Effectiveness Award Goes to: Marina Gutman!

Regular readers will know that when I refer to “effectiveness,” I specifically mean, “are we enabling and creating the effects we intend among our various member constituencies?” Effects occur along the various valence relationships—Economic, Socio-psychological, Identity, Knowledge, and Ecological. In my own work, I apply this guidance specifically towards the challenges of contemporary leadership and transforming the cultures of 19th and 20th century organizations to become organizations consistent with the 21st century. But similar reasoning can be applied towards any other functional aspects of an organization: finance, operations, sales, human “resources” (which I would reframe as “resourcefulness”), and most of all, marketing. In fact, marketing has always been more about effects than goals or specific outcomes (which are more accurately considered as emergent consequences of marketing effects). Marketing asks the simple question, what effects do we, as a brand, want to have on consumers—both those who currently are, and those who are not yet, “ours.”

Exceptional marketing goes one step beyond that, recognizing that valence analysis creates an equivalence between consumers “out there,” and employees - say brand managers, for instance - “in here.” This realization, in turn, necessitates turning great data analysis into great storytelling both inside and outside (because, in valence-oriented organizations, there is no inside or outside; we’re essentially all on the same ’side!). It is the rare marketer indeed who truly understands and embodies this realization. How rare you ask? So rare, that the Market Research and Intelligence Association has held the award for Client-Side Researcher Impact and Effectiveness open for three years since its inception waiting for just such a marketer.

I am so very proud of my dear friend (and dance partner), Marina Gutman, who is the very first recipient of this award. In creating and awarding this honour, the Association
recognizes a member, employed at a client-side researcher corporate member of the Association, for outstanding achievements over the past year which have served to elevate the stature of marketing, survey and public opinion research and market intelligence at senior decision-making levels of his or her own organization. The nomination received for this award this year was absolutely compelling in terms of the nominee’s stellar impact and effectiveness within her organization, and the respect and influence she has garnered for the research function at senior decision-making levels. A brief excerpt from the nomination tells the story well:

Through strategic guidance, research prowess, outstanding relationships with research partners, and sheer will and passion, this individual has been able to elevate the stature of marketing research and decision-making from only very basic key performance indicator tracking to best-in-class levels. Her work is now being held up as an example for the other two business units at Coca Cola Canada [!], and is being widely used in organizations such as Nielsen and Millward Brown as best demonstrated practice and in training materials for developing researchers. She excels at identifying and focusing business questions, then building comprehensive research plans to operationalize them. She is an expert project manager capable of managing a huge workload with a limited budget and often even more limited timelines. Her exceptional relationships with her research partners enable her to pull off miracles regularly. Perhaps her most differentiated skill, however, is her ability to “tell the story” simply and concisely in plan business language, not “research-ese.”
I’ve seen the entire nomination brief and it left me in awe. Among the things that impressed me was Marina’s ability to market to brand teams with true effectiveness, creating the desired effects of transformative change in the way the organization and its managers think about, and act on their brands, resulting in satisfaction ratings for decision analyses catapulting from 40% to 100%. This translated into stellar brand performance and repositioning (against a well-entrenched competitor), highly successful new product launches, and perhaps most near and dear to the heart of an old OD pro (and prof) like me, “a critical strategic thinking partner to the business teams offering an unparalleled level of strategic thinking which both challenges and inspires them.” I really like that “challenges and inspires” part!

Congratulations, Marina! Well done, and so well deserved!

05 June 2012

How - Not Who - Do You Hire?

Like most people whose digiSelf has a presence on LinkedIn, I receive the periodic “Jobs You May Be Interested In” email. Not that I’m actively looking to relocate at the moment (fans of the proposed M.LODC program can breathe again!), but there’s the whole “make me an offer that I can’t refuse thing,” too. In this week’s edition, there was a notice for a “Senior Manager, Leadership Development Strategy” position at Scotiabank. Reading through the description, I came to the conclusion that I would be eminently qualified, and completely unhireable for that position.

Let me explain: First, I lack the number one desired qualification, namely, “at least 5+ years experience within the financial services industry.” Reframing this qualification suggests that leadership within the financial services industry is somehow uniquely different than leadership within any other industry segment. In other words, according to Scotiabank’s standpoint, leadership is fundamentally instrumental in nature as opposed to transcending the instrumental to become – as I argue – environmental. Moreover, this Scotiabank position is intended to, “oversee the Bank´s approach to Executive Recruitment.” (As an aside, I think their choice use of capitalizations is interesting in the way it transforms certain abstractions into proper nouns; but I digress.) It is clear that the “Bank” considers hiring somewhat more traditionally, as an instrumental exercise to find the right candidate who best meets the job description and requirements. Or, expressed another way, an exercise to find the machine component whose specifications most closely match those preconceived by the industrial machine itself.

Clearly, I would be a disaster in that role. For me – and for UCaPP organizations – recruitment and hiring is far less about the candidate directly, and much more about the aspirational intentions of the organization itself.

Say what?

Let’s unpack that last idea: According to Valence Theory, organizations are fundamentally emergent entities that arise from the relationships (of which there are five) among the people (or more generally, the member constituencies). Change the people and you necessarily change the nature and quality of the relationships. Therefore, each new hire irrevocably changes the organization. Although it seems relatively obvious that if you change, say, a major persona at a relatively higher hierarchical level in the organization – the CEO or a senior director, for instance – you’ll create a change in the organization, it is also true that introducing any personnel change effects emergent, transformational change – most often subtle change – in the organization. The so-called ripple effects of changing even a hierarchically low-level position introduces the potential for large systemic transformation throughout the complex system that is the organization.

Here’s a somewhat, but not entirely, contrived example that illustrates the point: An organization hires someone for an entry-level position who happens to be really enthusiastic about softball, or cycling, or possibly even salsa dancing. That person takes the initiative to organize social events that feature their interest which, in turn, brings people together in a social environment who previously may never have directly interacted. That recreational interaction in turn recreates the nature and quality of their workplace interactions and stuff happens that enables new, and unexpected, business-related effects. As I said, the so-called ripple effects of changing even a hierarchically low-level position introduces the potential for large systemic transformation throughout the complex system that is the organization.

Thus, the question of hiring becomes (among other things) a question about what we, as an organization, want to become. Into what do we aspire to transform and evolve? What effects to we intend to create and enable among our member constituencies and how will that new person contribute that creation and enablement? Or, more succinctly, what is our tactility? Hiring decisions are, in effect, organizational evolution and tactility decisions—how will we touch the person we are inviting into organization, and how will that person will touch us? The hiring process is about enculturation—how will that individual assimilate and embody our organizational culture, and how will our organizational culture embody the effects introduced by that individual?

So, hiring me, for example, into an organization means that the organization has some pretty inspired, far-thinking, and unconventional aspirations for the future of its leadership. Just the sorts of things we’re playing with here in the Faculty of Leadership and Organization at Adler Graduate Professional School.

01 June 2012

In the Best Interest of the Students

An education-related story caught my attention yesterday, as a textbook example of how a bureaucratic mentality precludes reflective leadership and organizational learning—precisely the attributes required for being effective in the contemporary world. The details of the case are pretty straight-forward:
Lynden Dorval has been a … teacher in the Edmonton Public School system for 35 years. Last week, he was suspended indefinitely for what he says was insubordination for disobeying an order not to give zeros to students. [He says,] “…if [students] don’t hand in work or show up to write an exam … we have a comment policy where we’re supposed to put in comments indicating what they haven’t done. The problem with that is the marks program doesn’t count that for anything, so if a student had only done half the work then their average mark would be based only on that half the work. The average is calculated by whatever marks are in there.”
In other words, if a student does only one or two assignments on which s/he receives passing grades and does no other work through the term – including not taking the exam – the student will nonetheless receive a passing grade according to the Edmonton School Board policy. Mr. Dorval objected to this policy, ensuring that a student would receive a final mark that reflects both the work done and not done. The Board superintendent suspended Dorval for insubordination (notably only three weeks before the final exams when the students are most in need of a teacher familiar with what had transpired through the entire school year).

Seems pretty dumb on the surface, doesn’t it? Despite the seemingly ill-advised policy and inappropriateness of the suspension timing, what does this story have to do with leadership, and the problematics of a bureaucratic mindset? Well, have a listen to what the Board’s official spokesperson, one Cheryl Oxford, has to say about the superintendent’s decision:
“A student is to be assessed on their overall learning outcomes,” she told reporters. “So as opposed to being assessed on what they don’t know, they’re being assessed on what they do know. … All the decisions that we make are in the best interest of students. If the superintendent did not feel that this decision was not in the best interest of the students he wouldn’t have made it.”
Did you catch that? First, counting only those assignments that were done seems to ensure that students are evaluated on “what they do know,” presumably because what they haven’t done, they don’t know (as opposed to, say, simply not doing the work for whatever reason). To a system that is designed to purge human judgment – in other words, a bureaucracy – that sort of comment technically makes sense.

More significant, however, are the effects of the bureaucratic mentality. In his book, The Rise of the Network Society, Manuel Castells describes bureaucracies as, “organizations for which the reproduction of their system of means becomes their main organizational goal.” This means that a bureaucratic system cannot afford to be demonstrated to be wrong: If it was wrong, it would impede its ability to reproduce its system of means. This underlying mentality often translates into bewildering and often arcane public explanations that seem to ignore what to those outside of the system would be simple, common sense. It is the reason why so many bureaucratically minded leaders choose to “stay the course,” rather than admit that a decision was ill advised (because that would be tantamount to admitting that the system which vested in them decision-making power made a mistake). Case in point: Ms. Oxford’s comment that, since all decisions are made in the best interests of students, the specific decision to suspend Lynden Dorval must have been in the best interest of students, otherwise the decision would not have been made. It is a circular (il)logic that steadfastly defends a bureaucratic system over any potential reflection on the usefulness of the policy, practical problematics of its implementation, or – heaven forefend! – unintended consequences like depriving students of their teacher right before final exams which, according to the unique bureaucratic reasoning of the Edmonton School Board, must, by definition, be in the best interest of the students.

Besides, by creating an incentive for students to only submit assignments on material that they know and ignore everything else, we can be assured to create good bureaucrats to fill the cubicles of both public and private sector corporate bureaucracies. After all, bureaucracies exist to reproduce their systems of means, and what is the purpose of the traditional education system if not to serve that bureaucratic objective?