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Saturday, January 09, 2010

Why Integrity and Values Matter in Business

Rosabeth Moss Kanter is a professor at Harvard Business School, where she specialises in strategy, innovation, and leadership for change. Here are her interesting views on the recent troubles of Tiger Woods:

'Golf champion Tiger Woods no longer represents global consulting and technology services firm Accenture, as of December 13. Accenture is the first of Woods' corporate sponsors to pull out of the relationship completely. A day earlier, Gillette announced a suspension of Woods' marketing appearances for an unspecified period.

For anyone missing two weeks of headlines, here's a recap. Golf champion Woods crashed his car near his Florida home after what appeared to be a major league (oops, wrong sport) fight with his wife over alleged infidelities. At first Woods denied any marital misconduct, using the first line of defense of many public figures caught in a sand trap, which was to lie about it. Then other women surfaced with firm evidence of Woods' affairs, for a total of 13, and Woods told the world that he had made mistakes. On December 11, he announced he is taking a mega-mulligan — a leave of absence from golf to repair his marriage.

Though Accenture doesn't sell anything to consumers, it put itself in the public eye with its "Go ahead, be a Tiger" ad campaign. Working for Accenture since 2004, Woods seemed a plausible long-term choice. His consistently stellar athletic achievements and mixed racial heritage symbolize the best of a global economy. Now his departure could mark a seismic shift in corporate branding and marketing approaches.

Some analysts see Accenture's announcement as purely pragmatic, not moral or ethical. Woods' indefinite leave of absence from golf would introduce too many uncertainties into Accenture's ad campaigns, one commentator told AP. Moreover, Woods is rapidly losing cachet. A poll reported by Bloomberg found that Woods has already dropped from 6th to 24th in popularity among consumers.

But I see the values dimension front and center. Accenture has made a strong commitment to values-based corporate citizenship. Its aspirations require disengagement from a tainted celebrity.

During the past decade, ethical misconduct of many kinds has caused the decline of the cult of the celebrity CEO and the fall of many a celebrity politician. Now we are watching thedecline and fall of the just plain celebrity. This is not just about the type of indiscretion — at least, some sports fans would say, Woods didn't take steroids. Instead, the significance of the Woods affair is the challenge it poses to a major marketing convention: use of celebrities to sell products and services instead of featuring the product or service's value for users (and the values that guide its production).

In Accenture's case, I know about its outstanding reputation and work for clients from former or future Accenture employees passing through my classrooms. (I recently gave a lecture to an Accenture group.) But I was puzzled about the little knowledge gleaned about that good work from ads in which Tiger Woods stands alone swinging a golf club. For one thing, Accenture professionals practice in teams, not as individuals, and promote teamwork in the organizations they serve.

Unlike Accenture, Nike makes a product that Woods and other athletes actually use — shoes. Green-values-oriented Nike is sticking with Woods for the moment, appearing to be rehabilitation-minded and comeback-oriented in other instances too. This fall, Apple, Excelon, and other companies dropped their memberships in the U.S. Chamber of Commerce in disagreement with what they saw as the Chamber's foot-dragging on climate change policy. Nike kept its membership while resigning from the Chamber board in order to work for change from within, executives said. But the Chamber incident, too, is evidence that companies increasingly see that their values must be reflected consistently in every decision they make, every marketing campaign they run, and every partnership they form.

I have no insider information about what Gillette will do next, just a guess. From my in-depth research on its corporate parent Procter & Gamble (P&G) and conversations with chairman and CEO Bob McDonald, I predict that Tiger Woods will not reappear. P&G takes its values very seriously. McDonald has said publicly that representing the company extends to ethical private conduct off the job, not just compliance during work hours.

P&G brand guardians should be glad P&G invented Mr. Clean. A cartoon spokesperson doesn't have a personal life involving ethical dilemmas. Mr. Clean eliminates messes rather than getting into them. And Mr. Clean speaks to consumers about what his product does for them, rather than how many tournaments he wins. That kind of communication about value and values could be the post-Tiger tiger to catch.'


New Leadership Styles Emerging from the Economic Crisis

Since September 2008, the leadership and management practices of financial institutions have been widely discredited. This has precipitated new thinking about organisations and leadership within financial-services — and in business in general. The new leadership styles that prevail, and associated changes in management and governance structures, will shape the development of business institutions generally. It isn’t yet clear what norms and values the new industry leaders will champion, but the pressures on them are evident, and the history of managerial culture suggests that we will see some major transitions, and some unexpected ones.

Popular conceptions of what constitutes good business leadership will extensively influence this new style. Between the early 1980s and 2001, the “leader as hero” was a celebrated model. Exemplars like Jack Welch at General Electric Company and Sir John Browne of BP shook up old organisations that were weighed down by processes and committees, and, shining clear light from the top, transformed their performance. But after 2001, the dot-com bust and other factors pushed this individualistic model of leadership off the pedestal. That downturn revealed the flaws, failures, and even disgraceful conduct of some noteworthy individualistic leaders, including those of Enron, WorldCom, Tyco, and Parmalat.

The “leader as hero” model was superseded by enthusiasm for the concept of “leadership teams.” Better performance, the theory ran, came from combining a variety of management talents and styles into a single cohesive and mutually supportive group. Life at the top became more touchy-feely. The team-based model was well suited to a generation of CEOs who were less hierarchical, less schooled in the military, and more collaborative by inclination than those who preceded them.

Now we face another transition. The economic crisis and the entanglement of so many trusted financial-services firms have once again shaken our confidence in the prevailing leadership style. With apologies to Winston Churchill, never in the field of commercial business has so much been damaged for so many by so few. The failure of expectations has been widespread, severe, and rapid. That discredits past leadership practices — but what will replace them?

The quickest impact on business leadership in business will probably be felt at the board of directors level. Driven by fear of the risks that have been exposed, board leaders will start by changing their own behaviours. Directors want more visibility into corporate practices and risks, and more data to directly verify more dimensions of corporate performance. They feel their positions are much more on the line, and they are starting to ask for the staff and capabilities to do more checking up, probing more deeply even in areas historically left to management.

Boards will revise formal governance structures, adjust team composition, and reconsider the personality and skills of the people placed in top positions. As always, they will respond to prevailing interpretations of recent history. In seeking a new form of leadership, boards will start with the oldest truths: Those in authority must have foresight, and they must lead by example. They must motivate and inspire on a moral basis, through aspiration as well as rewards and punishments. It is precisely this calm, considered, and ethical leadership, required to lead large numbers of people when the economy is tough, that seems to have been in such short supply recently.

Guided by their boards, many institutions will recommit to public responsibility. Trust and simplicity, cornerstones of the Positive Leadership model, will become major selling points. Enterprises in banking or in business in general industry that can command greater trust or offer closer connections with their customers will enjoy substantial opportunities. There could be a renaissance of institutions with a tradition grounded in cooperatives or member-owned organisations, of which there are many in Europe (including some, like Rabobank Group in the Netherlands, that have weathered the storm in financial services reasonably well). Inevitably, a broader scope of alternatives to the shareholder-centric corporate model will be tested, and some will win favour.

Many companies will also need to find structures and processes, both formal and informal, that challenge thinking and retain productive dissent. The leadership team form will be left intact, but its potential will be tapped in new ways. Teams will be populated with more diverse personalities, whose challenge will be to work together to set some new directions and renew moral leadership while paying closer attention to day-to-day execution.

These leadership team members will have to learn to recognise the power of the unknowable. We have found out the hard way that conceptual financial models, which seemed for a time to provide a new means of rapid growth, can actually obscure the underlying realities of the economic system. We now have some catching up to do as we recognise the failure of these models to comprehend and control the complexity and interdependence of our world. Leaders in financial services might do better if they understood that we human beings are all limited, that our best course is to accept that we are intrinsically prone to get things wrong, that we need to keep our wits about us, and that to succeed in the arcane world of finance, we need most of all to stay grounded in day-to-day reality.

We must promote leaders for whom doubt and uncertainty are simply a part of the human condition, not the enemy of action or a sign of weakness. They must tolerate questioning and doubt within their own organisations, and apply it productively themselves. We must make it an organizational habit to regularly challenge even what seems to be most obviously true, to remain open to different types of data, especially including direct experiential and “feet on the street” observations. One wonders what would have happened if the boards of the banks had visited the neighborhoods whose homes they were financing.

The makeup and management of executive teams may have to change. The evidence is clear that the most productive teams contain diverse people. Teams composed of people from a range of backgrounds, including prosaic ones, outperform teams composed entirely of the so-called best and brightest, for example. The dynamics of team interaction often make it hard to preserve diversity, even though it is diversity that makes the team productive. The bright guys want to hire more bright guys, for example. Moreover, in a typical leadership team, the variety of personality types tends to make the team itself short-lived. People who want to get things done (and there are a lot of them in business) drive out those who want to stop and debate or who value perspective and understanding as much as action. As those latter individuals go, so goes the ability to challenge. And those who shrink from conflict or believe that only harmonious teams can be effective will also disapprove of the kind of open dissent that encourages better leadership and decision making. That is a different definition of productive teamwork than has been applied in the past.

If people recognise this, we should see improvements in the organisation and management of executive teams and boards. In composing teams, boards will tend to favour a diversity of characteristics, and they should guard against the drift toward homogenisation. Further, power and control will be separated more actively and structurally. There may be a segregated, internal governance structure in some organisations — beyond the CEO’s control, but reaching down into the company — whose role will be to audit and hold to account those with primary decision-making authority. Rather than accepting conventional wisdom and existing policies, they will need to look for disconfirming facts and contrary evidence.

This type of governance structure is made even more necessary by the fact that only 25 percent of new CEOs today come from outside the company. Consequently, the outsider’s perspective is not coming from top executives. Many corporate leaders will thus need organisational innovations that provide visibility and challenge to management at quite detailed levels. The financial control function at most companies is an excellent and well-established example; this oversight arrangement can be extended to other corporate functions.

We see this already in a few companies. It has helped some institutions avoid or mitigate the effects of the crisis. Central corporate leadership at the financial-services firm Barclays PLC is entirely devoted to governance, leaving day-to-day and even month-to-month management to the divisions. The centre has a strong risk control function, but also governance roles across many other areas of the business. And despite Barclays’ extensive involvement in the debt market and other troubled markets, it has avoided many of the problems facing other banks.
Of course, there is a risk that such governance models will simply re-create the old bureaucratic staff structures that hobbled companies in the 1960s and 1970s.

What we will need is tightly limited roles and processes, a separate voice and perspective, and a smaller number of resources and processes. This spare, collective, and relatively informal approach will require leaders who are unusually holistic, integrative, and dispassionate in their character and thinking. This is not a time for leaders who will be waylaid by details, nor for those who are convinced they see the future clearly and want their organisations to fall in line. Rather, they must see the general patterns, and see them better than others, while recognising, not suppressing, the risk and uncertainties.

The most successful leaders of these newly transformed organisations will do one more thing distinctively well. They will set the overall purpose and mission of the organisation, not just its strategy. Indeed, they will often concentrate on corporate purpose or mission, leaving strategies to the executive team. We already know that companies with an articulated purpose that goes beyond simply the expediency of “making more money” have fared much better in the downturn. They will also fare better in the recovery. But this will depend on the temperament of leadership.

If we are fortunate, the leaders who emerge this time will be honest, robust, and farsighted enough that their prevailing style will last for some time.


Building Your Own Business

Building a business involves a lot of strategic planning, financial planning, and goal setting if you are going to be successful. What a lot of aspiring entrepreneurs do not realise is that it is also important to maintain certain mental attributes and leadership skills that will help to motivate planning strategies and goals.

There are certain attributes that entrepreneurs possess that determine how successful they will be as a business owner. These are success principles that entrepreneurs live by which ensure that they will overcome obstacles and achieve success.

Take Control of Your Life

Making the decision to transition into entrepreneurship means that you have decided to take control of your life. This means that you must maintain a mental attitude of being in control instead of blaming everything on other factors. Not taking control and placing the blame elsewhere does not get you where you want to go as an entrepreneur and holds you back from moving forward with your business.


Successful entrepreneurs realise that persistence is one of the attributes that will ensure your success. If you maintain a winning attitude, the obstacles that are bound to crop up will only be seen as temporary setbacks and part of the journey to reaching your goals.

Planning With an End Goal in Mind

Part of good leadership skills is the ability to plan with an end goal in mind. Successful entrepreneurs know how to look at the big picture and then set measurable goals that will ensure that they reach the end goal. Without the ability to set goals, you are navigating the high seas without a compass and ensuring that your business will fail.


Successful entrepreneurs are strong leaders because they are willing to take the bull by the horns and get involved with their success. While others are waiting for what they want to come to them, entrepreneurs are going out and getting it.


Instead of allowing fear to paralyse their actions, successful entrepreneurs recognise fear as a natural part of the process and forge ahead anyway. If you let fear overcome you, the chances of achieving success with your business will be reduced.

Risk Tolerance

Successful entrepreneurs and leaders already know that failure is part of achieving their goals and are willing to take the calculated risks anyway. If you take calculated risks wisely you will help your business to forge ahead as well as learn from your failures.


Successful entrepreneurs get to where they are going because they maintain a positive mental attitude and believe in their abilities to achieve their goals.

Hard Work

Successful entrepreneurs are willing to work hard and do not give up as soon as something is difficult. Instead they realise that to get to their dreams they also have to endure the hardships and obstacles that are a natural part of the journey.

These are a few of the attributes that are important to becoming successful with your own business. Without these attributes it does not matter how well you have planned your business. It will not succeed if the person behind the planning is not motivated and goal-oriented.

If you do not have all of these attributes you can always work on developing them by surrounding yourself with people that have an entrepreneurial mindset. If you have already decided to take the leap, you have already taken an important step toward becoming a successful entrepreneur.