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Archive for October, 2013

When asked his reason for robbing banks, Willy Sutton said, “That’s where the money is.”

willie-suttonRight now our exponentially increasing federal government bureaucracy is where the money is and it worries the hell out of me.  I believe there is an increasing moral hazard here that is even more dangerous than innate governmental inefficiency.  I believe it may have implications for the future of US entrepreneurship and capitalism itself.

I started thinking about this a couple of weeks ago at the Inc. 500/5000 convention when I noticed an inordinate number of companies were focused on government business—how to get it, how to navigate it, how to penetrate it.  It seems to me this focus has enormous potential for skewing and perverting healthy capitalist business process.  This is purely anecdotal, but it seemed to me there was extraordinary concern with the ROI of government ass-kissing.

And why not?  “That’s where the money is.”  But what does this say about the societal efficacy of entrepreneurship?  It says to me that the creative focus of our enormously fecund money generating, job creating community may be being subtly shifted from building better mousetraps to inventing schemes for feeding at the public trough, like a lamprey eel sucking on a big blue whale.

This new bureaucratic bloat is leeching energy and incentives away from the practical problem solving of traditional darwinian capitalism, into a focus on firstly looking for ways to manipulate and win within imposed oligarchic rules.  Once again—“That’s  where the money is.”  It is a tax-payer funded moral and economic strangulation of healthy capitalist process.

For example, take the failure of the rollout of Obamacare.  From what I can see from Congressional hearings, it’s pretty clear government IT procurement procedures are idiotic.  The Obamacare IT work went to insider firms whose proficiency was in jumping through hoops of government rules.  Efficient companies like Apple and Google didn’t even bother to bid on it.  What passionate entrepreneurial company wants to vitiate their originality and energy fighting bureaucratic torpor—energy that should be going into creating the new?

Indeed, please note Nicholas Eberstadt‘s best-selling book of 2012 called A Nation of Takers:  America’s Entitlement Epidemic.  Eberstadt holds up Eric Conn as poster boy for a new, destructive sort of mutant entrepreneur/ legal con man.  Conn has established a whole new niche for legally snookering government into paying thousands of unworthy people disability benefits by effectively navigating the imprecise, easily abused strictures created by unaccountable and inept government rule makers with too much money and too much power.

EVOLUTION CONSERVATIVES 3So, not only is a bloated bureaucracy a burden on efficient government and the taxpayer, but it also obviates the civic logic of the entrepreneurial process.  The government does not have to be efficient, so it is not.

Journalist John Derbyshire says, “Ultimately, as the Austrian economist Joseph Schumpeter pointed out, a powerful bureaucratic class is in the same relation to commerce as was the scorpion in Aesop to the dog on whose back he crossed the river.  They will destroy commerce and establish socialism, even if it kills them, because it is their nature.”

Thanks, John.

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Attention!  Left face!  March!  Now drop and give me fifty!

jim_collins-1I’ve always been fascinated by the military.  Rather odd in an old hippie like me, eh?  Yet, of late, I find myself increasingly drawn to leaders with a military background.  In fact, two recent new clients of my company Corporate Rain are led by former generals.  I have been utterly dumbfounded by how little they conform to my or, dare I say, the common cliche of the military leader.  They are funny.  They are careful, sincere listeners.  They are fiercely focused, yet modest  to the point of self-effacement.  They seem eminently practical and open to the new.  They see themselves as servants of their companies and their world.  They are, in short, everything I admire and respect in a corporate leader.

They are anything but the command-and-control totalitarians of some fiction and popular imagination.  They are neither The Great Santini nor Captain Queeg.

Which brings me back to the Inc. 500/5000 Convention in Washington a couple of weeks ago.  I wrote last week about this excellent event (Culture, ROI, and Entrepreneurship) but did not mention the keynote speech given by Jim Collins—he of Good to Great and Built to Last fame.  Jim was just coming off two years of teaching leadership at West Point.  However, he reports he was the one taught leadership by his students.

He recounts noticing several important things about his cadets.  One, despite their overwhelming workload in a highly competitive environment, they went out of their way to support each other as colleagues.  And they seemed much happier than students with more cosseted, free-wheeling lives that Collins had observed in elite civilian universities like Stanford, where he had taught for seven years.

the-commando-way-front-cover-2Bo Burlingham, in a collateral article to Collin’s speech, finds this ambient happiness quite counterintuitive.  He states, “After all, West Point cadets lead extremely demanding lives.  Nearly every minute of every day is programmed, and ever aspect of their lives is regimented, down to the color of their socks and the way razors must be positioned in their medicine cabinets.  Meanwhile, they are constantly being tested both physically and mentally—and they often fall short.  This goes on for four years with almost no let up.”

But Collins also reports qualities deeply imbued in the West Point cadets that make for their success as leaders (and potentially as business leaders).  There is a universal sense of inadequacy brought on by a system that is designed to have them repeatedly fail.  The system is set up so they cannot not fail.  Failure is part of the process, like for most entrepreneurs.  Additionally, Collins notes there is a predominant trope of service at West Point—service to their country and to their fellow man.

All this builds what Collins calls the success-growth-service triangle of leadership, whose three legs are:

  • Service to a cause greater than themselves.
  • The habit of challenging and encouraging people to stretch and grow.
  • Dedication to communal success and collegiality.

Not unideal qualities in a modern business leader, as well as a military officer.

Collin’s intuitions about military leadership are buttressed by The Commando Way, a recent book authored by Damian McKinney (LID Publishing, U.K.,September, 2012).  McKinney is CEO of McKinney Rogers and a former top commando officer in Britain’s Royal Marines, roughly equivalent to our Navy Seals or Army Rangers.  McKinney points out that the command-and-control executive, traditionally idealized in business pedagogy, is simply old-fashioned and outmoded in our fast-moving, business world.  McKinney points out that the military realized this long ago and opted for a much more flexible “mission control” approach, which directs field officers in the “why” and “what” of their mission, but leaves the “how” specifics to them.  McKinney’s book is a compelling, accessible read, steeped in both military history and its business applications from Sun Tsu to Carl von Clauswitz.

general-george-s-patton-jr-1885-1945-everettBefore I leave off my bon-pensant for our military brethren and their paradigm of military leadership for contemporary business, let me suggest that business schools, who claim to teach entrepreneurship, ethics, and leadership (they emphatically do not and cannot), might well profit from Collins’ and McKinney’s deep understanding of the modern military’s perspicacity and wisdom in creating a flexible and fulgent contemporary executive leadership model.

General George Patton said, “It is a proud privilege to be a soldier—a good soldier…[with] discipline, self-respect, pride in his unit and his country, a high sense of duty and obligations to comrades and to his superiors, and a self-confidence born of demonstrated ability.”  Patton also said, “Lead me, follow me or get the hell out of my way.”  Thanks, George.

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Corporate culture is money.

PaulI have always maintained that my associates and colleagues at  my firm Corporate Rain are more important to me than my clients.  Yup.  I even say it to clients.  After 18 years, my employee colleagues are my PR department, my marketing department, my branding, my essence.  I feel very confident that any of the 25 persons in my boutique executive sales firm would describe our tone, service and ethics quite as I would.  It’s a very secure and happy feeling as a business owner.

Last week I attended the Inc. 500/5000 Convention in Washington D.C.  I dropped in on a speech by Paul Spiegelman, Chief Culture Officer of Stericycle and former CEO of The Beryl Corporations, recently acquired by Stericycle.  He is also the Founder of the Inc. Small Giants Community, an organization focused on values-based business principals and inspired by Bo Burlingham’s wonderful best-seller Small Giants.  (2007, Portfolio Trade)

Paul feels that treating your employees with respect and care isn’t just the right thing to do, but the practical, profitable thing to do.  At The Beryl Companies he states, “Our company and our philosophy was built around the idea of employee engagement.  We created an environment where people enjoy and share commitment to what they do every day”.

untitledSpiegelman expresses confidence that a large part of his success in dominating his corner of the outsourced hospital call center market place was because of his commitment to his employee’s happiness  in an employee-focused culture.  He states his was not the cheapest outsourced service by a long shot, sometimes charging up to 60% more than his competitors.  But when clients visited his call-center or spoke with his people, the happiness and unanimity of esprit de corps was palpable.  Clients noticed and bought into it.  Speigelman’s 400 person, single-site company and his creation of ambient concierge service molded a core for long-term ROI, as well as healthy and sustained growth, through carefully nurturing the everyday happiness of his employees over a long period of time.

Furthermore, Spiegelman has recently helped found the Return on Value (ROV) research project at Benedictine University in Chicago.  This is a $1 million dollar, three year initiative which asks the question, “In small and mid-size businesses, what is the relationship between culture and profit?”  ROV seeks to show the monetizing proof of a generous, employee-focused corporate culture.  (If you want to read more about Paul’s point of view, try

Howard SchultzAs I see it, Paul Spiegelman’s approach is basically an attempt to institutionalize goodness, decency, and happiness.  His intuitions and practical business beliefs about corporate culture, which I certainly share, are buttressed by implication in some of the recent research of Dr. Adam Grant at Wharton on creating a “giving” culture.  His research will be published soon in a new book called Give and Take.  (Note my previous post of April 30, 2013, “Adam Grant, Goodness, and Entrepreneurship”)

Certainly healthy corporate longevity means through-branding  a long-term commitment to corporate mission and culture.  Howard Schultz says in Pour Your Heart Into It:  How Starbucks Built a Company One Cup at a Time, “To be an enduring, great company, you have to build a mechanism for preventing or solving problems that will outlast any one individual.”  Thank you, Howard.

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modlibrkaramazovHere’s a novel idea.  If you want to improve your efficacy as an executive salesman or empathetic leader of your company read more literary fiction.

Such is the implication of a study that came out of an article in Science last Thursday, October 3rd.  The piece was published by David Comer Kidd and Emanuele Castano, out of New York’s New School For Social Research.  Without going into heuristic detail, their study compared control groups which read different types of books for three to five minutes:  popular fiction, non-fiction, and literary fiction.  It found that people performed much better on tests measuring empathy, social perception, and emotional intelligence after reading literary fiction.  These are the very values increasingly valued in business leaders.

Louise Erdrich, whose novel The Round House was used in one of the experiments, says, “This is why I love science.  [The researchers] found a way to prove true the intangible benefits of literary fiction.”  (Pam Belluck, NY Times).  After reading (or in some cases reading nothing) the subjects of the study took computerized tests that measured ability to take in and understand emotions or predict a person’s point of view in a particular scenario.  The readers of good literature exceeded in the tests of general empathic perception.

Dr. Nicholas Humphrey, of Cambridge University, say’s he would have expected that reading generally would make people more empathetic and insightful, “but to separate off literary fiction, and to demonstrate that it has different effects from other forms of reading is remarkable.”  (Ibid)

To my mind, there are practical take-aways for the entrepreneur here.  Before any of us enter a meeting—whether it be with our board, a prospect, or an investor—activating our passion, human wisdom, and metaphorical intuition is as helpful as our data-driven presentation of facts.  This is what people respond to whether they be our employees, our clients, or the general public.  This is what quickens the heartbeat of our communicants and enlivens their warmth and human responsiveness.

breneniceNot just literature but all of the liberal arts are crucial for developing skills of empathy.  This is not much emphasized in the increasingly technical, data-centric way much of present business pedagogy is oriented.  I would say that in the long-term, a broad education in thinking and the cumulative wisdom of the ages buttresses skills of resourceful human resiliency and flexibility that supports an increasingly vital intuitive entrepreneurial nimbleness, supporting good understanding of the long-term strategic forest, as well as near-term technical trees.  In addition to understanding the emotional nuance of our colleagues, they assist us in seeing historical patterns and intuitively adjusting to the quick-moving future.  It helps us to hear and truly understand other people’s stories and tell our own stories in an accessible manner.  (More on this see posts of 10/30/12 and 7/2/13.)

Brene Brown, Professor of Social Work at the University of Houston, says, “Maybe stories are just data with a soul.”  Yes

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SusanCainPortrait_250px_20120305I’m an introvert.  I like to write.  I like to read.  I like to think.  I like to listen to music alone.  While I can network socially, I need down time afterwards to renew.

I read a book called Quiet last week.  I closed it on Sunday and wept.

Quiet:  The Power of Introverts in a World That Can’t Stop Talking by Susan Cain (Crown) was published last year.  A friend sent it to me.  It has taken me till now to get to it in that Mt. Everest of books I keep by my bed.  Worth the wait.  Particularly useful to introverts forced to be in the public eye, like entrepreneurs.  Like me.

We live in a nation that rewards the outgoing.  From the testosterone-fueled culture of the Harvard Business School case study process to the bigger than life personalities of Donald Trump, Jack Welch, Richard Branson, Russell Simmons et. al., extroverts are accepted as the ideal of business leadership.  We are a country that increasingly idealizes and rewards a type-A personality leadership of overbearing public positivity, dominance, and back-slapping ebullience.  On the other hand, Susan Cain describes the view of the introvert as “a second-class personality trait, somewhere between a disappointment and a pathology.”   Society values an “extrovert ideal–the omnipresent belief that the ideal self is gregarious, alpha and comfortable in the spotlight.”  (p.4)

Cain feels this is dangerous for our country and for the future of business.  She reports we have evolved from a Culture of Character to a Culture of Personality.  “If Abraham Lincoln was the embodiment of virtue during the Culture of Character, then Tony Robbins is his counterpart during the Culture of Personality.” (p. 42)  (Cain devotes quite a harsh chapter castigating ol’ Tony.  You might want to balance it with a look at Glenn Plaskin‘s more sympathetic interview of Robbins in September’s Playboy.)

peter_druckerYet, contrary to the HBS ideal of vocal, out-there leadership, the ranks of effective introverted CEOs are legion.  Cain turns to Peter Drucker for support.  Drucker says,

“Among the most effective leaders I have encountered and worked with in half a century, some locked themselves in their offices and others were ultra-gregarious.  Some were quick and impulsive, while others studied the situation and took forever to come to a decision….The one and only personality trait the effective ones I have encountered did have in common was something they did not have:  they had little or no ‘charisma’ and little use either for the term or what it signifies.”

Cain notes Brigham Young professor of management Bradley Agle, who studied CEOs of 128 major companies and found that those considered charismatic by their top executives had bigger salaries but not better corporate performance.  (Does CEO Charisma Matter?  Academy of Management Journal 49, p. 161)  Among these introverted CEOs are Charles Schwab, Bill Gates, Brenda Barnes (Sara Lee), and James Copeland (Deloitte).

My unsolved conundrum, as an introvert entrepreneur, is how to honor my own authenticity and originality without being comfortable with the expressive norms of an extroverted society.

This blog is going on a bit, so I’ll just stop.  But note the grave danger of what Cain calls “The New Groupthink–a phenomenon that has the potential to stifle productivity at work and to deprive school children of the skills they’ll need to achieve excellence in an increasingly competitive world.” (p. 75)

Mohandas Gandhi was a shy man, an introvert.  Here’s what he said:  “I have natually formed the habit of restraining my thoughts.  A thoughtless word hardly ever escaped my tongue or pen.  Experience has taught me that silence is part of the spiritual discipline of a votary of truth.  We find so many people impatient to talk….My shyness has been in reality my shield and buckler.  It has allowed me to grow.  It has helped me in my discernment of truth.”

Alexis_de_tocquevillAnd one more wonderful quote, if you will indulge me, dear reader.  This is Richard Hofstadter (Anti-Intellectualism in America) on the miraculously prescient Alexis de Tocqueville.

“Tocqueville saw that the life of constant action and decision which was entailed by the democratic and businesslike character of American life put a premium upon rough and ready habits of mind, quick decision, and the prompt seizure of opportunities–and that all this activity was not  propitious for deliberation, elaboration or precision in thought.”

Thanks, Alexis.

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