In this issue:

– Inspiring Your Team – You Can Too
– Jack Welch Renounces Increasing Shareholder Value: Pigs Fly
– 13th Annual Wharton Leadership Conference
– The Ultimate Inspiration

Read it at here

Most Leaders fail, because they have not found an answer to the single-most important question:

What on Earth Am I Here For?

But how can we inspire and lead others if we can´t even explain the reason for our own existence in the first place?

“Most people are on the world, not in it, have no conscious sympathy or relationship to anything about them, undiffused, separate, and rigidly alone like marbles of polished stone, touching but separate.”
– John Muir, John of the Mountains

“Goodness is the only investment that never fails.”
– Henry David Thoreau

“I can affect change by controlling the only thing that I ever had control of in the first place, which is myself.”

– Deepak Chopra

David Brooks, as he occasionally does, knocks it out of the park in The End of Philosophy, in last week’s NY Times. The subject: moral reasoning.

Wait wait–don’t run away! It’s interesting–I promise!

We often think of morality as principles-driven. Whether religious or philosophical, if we hear “moral,” we’re inclined to think rule-following or deductive reasoning of some kind.

Not so, says Brooks, surveying current literature. Moral reasoning is much more emotional and intuitive than we think. It evolves evolutionarily, as part of our social development. Which, interestingly, puts it on a par with competition.

Evolution isn’t just survival of the fittest. Evolution also favors those groups who have learned to cooperate—competition isn’t just individual, it’s between collaborating groups.

Which means the urge to collaborate is about on par with the urge to compete. Both come from the same parts of the brain, the emotional centers.

This makes common sense on several dimensions. One is that ethics is fundamentally about relationships—not about rules. Even Immanuel Kant—about as principles-based a philosopher as they come—agrees with this (ethics consists in treating others as ends, not means).

Quick cut to business ethics programs. Sometimes phrased as “ethics and compliance” programs. Which leads us to oxymoron number 1: if you’re talking about complying with the law, you’re probably not talking about ethics.

When Harvard Business School started its ethics program in 2004, here’s how the new course (Leadership and Corporate Accountability) was positioned:

“LCA stems from a belief that business leaders play a crucial role in society. They and the companies they build and lead are expected to deliver strong financial results for investors, superior goods and services for customers, attractive work environments for employees, and innovative ideas for the future. At the same time, they are expected to observe the laws of the countries in which they operate, respect society’s ethical standards, and contribute to the communities of which they are part.”

It’s hard not to see this as a course about the art of balancing. Balancing competing demands is something at which HBS does a wonderful job. But the course sounds no different at root from other courses that describe balancing competing constituencies in marketing, or production, or business strategy.

Corporate ethics, by this view, is far more corporate than ethical. It is about navigating a company through a minefield of, among other things, people who believe in something called “ethics.”

This view of ethics is to real ethics as a professor of religion is to a churchgoer. Oxymoron Number 2 is “corporate ethics.”

Programs like this almost always still have one assumption at root: the survival of the corporation in a complex, often hostile world. That is the same assumption at the heart of a course in corporate strategy. Proof? How many ethics courses contemplate the dissolution of the company? About as many as strategy courses envisioning the same. Zilch.

Just as Machiavelli linked war and negotiation as alternative means to the success of the State, this view links strategy and ethics as alternative means to the success of the Company. In this environment, cooperation is not about ethics–it’s about negotiation to achieve competitive aims. It’s cooperation as means, not ends. It’s not ethical.

No surprise. Machiavelli doesn’t come to mind as a foremost ethicist.

The continued existence and prosperity of a Corporation or a State is very much what competition is about. It is not at all what ethics is about. In an increasingly connected world, a course about ethics would talk about the value of collaboration across and between companies, and how to manage based on it. I don’t see that happening.

Competition and ethics may both derive from evolutionary, emotional sources. But as long as one is subordinated to the other—as long as they’re teaching ethics down the hall from competitive strategy, with a common philosophical goal of corporate competitive success–the winner will be competitive strategy, and the loser will be ethics. No contest.

Too bad, because old-think in a new world is not what we need.

Charles H. Green (Founder and CEO of Trusted Advisor Associates; read more about Charlie at http://trustedadvisor.com/cgreen/)

“The grass is not, in fact, always greener on the other side of fence. No, not at all. Fences have nothing to do with it. The grass is greenest where it is watered. When crossing over fences, carry water with you and tend the grass wherever you may be.”
– Robert Fulghum

Charles H.Green recently added a most interesting article to his blog on Shareholder Value:

First it was Saul on the road to Damascus. More recently, it was Alan Greenspan. Yesterday, Jack Welch seems to have had a conversion.

Speaking with the Financial Times, Welch said:

Jack Welch, who is regarded as the father of the “shareholder value” movement that has dominated the corporate world for more than 20 years, has said it was “a dumb idea” for executives to focus so heavily on quarterly profits and share price gains…

…“On the face of it, shareholder value is the dumbest idea in the world,” he said. “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products…”

…The birth of the shareholder value movement is commonly traced to a speech that Mr Welch gave at New York’s Pierre hotel in 1981, shortly after taking the helm at GE.

What they’re talking about is the commonly held belief that “the purpose of business is to increase shareholder value.” That belief is variously attributed to Milton Friedman, Adam Smith, and “obvious commonsense,” none of whom are guilty as charged (though Friedman probably came close).

But no matter: it was what people heard, and used to justify all kinds of behavior for several decades. And Welch, whether he ever said specifically those words, has a great deal of responsibility for having advanced the idea. The FT is right to headline the significance of this conversion.

In any case, the newly converted Welch, to judge by the above quote, really does now get it right.

Profitability, shareholder value, even measures like EVA profoundly miss a point that Welch now articulates. Namely, ‘shareholder value is a result, not a strategy.’

I think what Welch means is that all economic results are properly viewed as outcomes, not as end-state goals or objectives.

This would be quite right.

Imagine two companies. One is devoted to increasing shareholder value (and EVA, etc.) by carefully finding out what customers want, and giving it to them.

The other is devoted to giving customers what they want—which results, among other things, in increased shareholder value, etc.

I suggest company #2 will do better in the not-very-long run. Because the company is being run for someone other than solely the financial stakeholders and managers.

Jack Welch is obviously no dummy. So it looks to me like his conversion experience has been thorough, and well thought out. If he can contribute to articulating this new view, it will go a long way to changing a deeply entrenched, increasingly dysfunctional and destructive ideology.

Let’s hope he does.

Charles H. Green is founder and CEO of Trusted Advisor Associates; read more about Charlie at http://trustedadvisor.com/cgreen/