Friday, October 15, 2010

Mid-terms elections and organizational excellence

Back in January, I wrote about Wall Street’s well-documented institutional failures
and the bad mindset that contributed to the recent recession. Our thoughts then, regarding how organizations and sectors of the economy can be dysfunctional but can be dramatically improved just by adopting a new mindset apply every bit as much to our political sector, which is now moving toward the mid-term elections. Politics as usual shows the same self-serving inward focused mindset. We talk here about improving that behavior so that the public interest is best served.

The problem for corporations, at its root, is short-term, inward-focused thinking that concentrates largely on how the quarterly report looks to investors and shareholders, to the detriment at times of the organization’s long term maximum value. The solution is the same now as it was when Adam Smith wrote in the late 1700s and Milton Friedman wrote in the second half of the 1900s about maximizing value in a firm and an economy, a society. This solution is a long-term, outward-focused outlook that concentrates on optimizing a company’s value for everybody it affects: customers, employees, and, yes, shareholders. - all stakeholders.

The imperative is to drop this bad mindset and replace it with a new millennium mindset. A bad mindset is inward-focused with the short term as the relevant time frame. It is also usually win-lose. The good “new millennium” mindset that we all must strive for is outward-focused (stakeholder-focused) with the long term as the relevant time frame. And, rather than a win-lose inclination it zealously works to optimize the value it provides between and among its stakeholders.

The free enterprise, capitalist economy in the United States, conducted the way it
should be conducted, is an economy that all can embrace, left, right, liberal, conservative and so on. But when it is not conducted properly, bad things happen. The financial crisis and its strongly lingering effects, the “real” economy dysfunctions including the auto industry (GM, Chrysler) and others all are infected with these bad mindset-based and leadership-allowed culture and behavioral practices. We all should want to fix this systemic problem. And, those in Congress, no matter their party affiliation, who attach themselves to this bad mindset are as culpable as the organizations themselves. In fact, their acquiescence and involvement in it is the “inside the beltway “problem we hear so much about.

As we approach the Nov. 2 mid-term elections, it’s good to revisit these ideas and
look at how they apply to politics. It’s easy to confuse legitimate philosophical and political differences—Democrat vs. Republican, conservative vs. liberal—with bad, short-term-driven behavior.

As the inward-focused corporation focuses too narrowly on quarterly and similar short
term results, the inward-focused politician focuses primarily on his or her public image – and re-election. Indeed, no longstanding political party and no ad-hoc movement—like the Tea Party—is immune from this dysfunction, nor has any one party figured out how to be consistently and truly outward-focused statespersons, communicate this wisdom and earn the voters’ approval. What tragic irony. The American people are far wiser collectively and at kitchen tables around the nation than these inward-focused short term office holders. As a note too tempting to pass up, the extreme liberal and conservative radio and TV political talking heads, of course, fan the flames because they are the essence of inward-focus and short-term behavior – and they want to win the ratings battles.

I served two terms as a citizen legislator in the Montana State Senate in the 1980s. My colleagues included ranchers, farmers, people in the crafts, main street business people, attorneys, physicians and teachers from across the state. In other words, we weren’t career politicians. We went to Helena to represent the interests of Montana and Montanans collectively, and of the communities we came from. We were not focused on having and retaining a position of power.

Don’t let me mislead though. Politics could get just about as dysfunctional then
as it does now, but most of the legislators and other elected leaders—and the voters—
didn’t seem as content to settle for sound bites and stereotypical political posturing. Today,there is but a glimmer of such enlightened, wisdom-based conversation in some races, but most seem to have an inability to lift their minds and their rhetoric to this higher level.

Our words from January help us present the prescription for resolution, and we encourage all candidates to think deeply and act courageously on the matter. There is a “beltway” mindset that needs fixing, and I believe it is wrapped up in the same dysfunction we talked about innJanuary. The courage to rise above the fray is precisely what real leaders need. It is indeed possible, though unlikely given the present polarized and immature campaign dialogues.

We encourage a step back, a deep breath and a call to wisdom from any candidate willing and able to do it. Voters will listen and will support such candidates. Voters are wise and see right through the charades. As of now, though, they do not see much real courage, much real focus on the long term - jobs and all other public interest matters. As a result, they see no real, well-grounded hope for a better future—just more immature, inward-focused waddling.

And it is this selfless outward-focused, truly servant-leader mindset from politicians, and from organizations and their leaders, for which there is an urgent clarion call to embrace and adopt.

Thursday, October 7, 2010

The 'foundation' of happiness

I had the opportunity to lead a session with the founders of the Anaconda Community Foundation and some of the organization’s board members. The Foundation raises money for charitable causes in Anaconda and the nearby area.
            As I reflect back on the session, which occurred Sept. 24, I’m reminded why I enjoy working with foundations. By their very nature, foundations operate at a higher level of happiness than many organizations—and even than some individuals.
            When giving a presentation, among other basic foundation subjects, I talk about the different levels of happiness. This concept is well known and truly useful in a dialogue about pursuing excellence.
            We discuss the four levels of happiness. All four of them are good, and all but one are or can be readily achieved. The levels H1 through H4 are best described the following way:
H1: Instant gratification. Eat a cheeseburger. Drink a pint of Guinness. Watch a re-run of “Seinfeld.” These will bring you the H1 level of happiness, or short-term happiness.
            H2: Achievement. Beat someone at racquetball. Win the NCAA basketball pool at the office. Lose 10 pounds. It’s a feeling of accomplishment that makes you happy. While H2 can involve the perverse pleasure of seeing your opponent fail, its focus is the thrill that comes with victory, on achievement, not causing another the agony of defeat.
            Both H1 and H2 are positive, but both are inward focused.
            H3: Contributive. This is the level of happiness that companies should strive to attain—and where the Anaconda Community Foundation finds itself. Individuals should shoot for it as well, but for our purposes, we’ll focus on organizations. With H3, an organization concerns itself primarily with how its activities benefit others. In business terms, this translates to being focused on the value of services and products realized by customers and the other main stakeholders of a business or organization of any kind.
            H3 or contributive (other-focused) happiness can and should produce, as a by- product, maximized value for any organization.  An organization that does its best to benefit others can achieve its own long term maximum value as a direct result. With H1 and H2, inward focused happiness is the end goal and the end result.
H4: Transcendental focus. This involves being H3 24 hours a day, seven days a week, and giving your total self in service to others. We’re talking about Mother Teresa-caliber stuff here. Living this way tends to be, but should not be, about as difficult as walking to the summit of Mount Everest on your hands with no oxygen. It’s good to shoot for, but nearly impossible to accomplish. Still, it is a great calling, a great gift.
The Anaconda Community Foundation is operating at a solid H3 level of existence and happiness, because by its own mission statement, its own reason for existence, it is other-focused. We spent our time together honing the organization’s mission statement and vision statement.
The Foundation is one kind of organization whose purpose is obviously stakeholder or other-focused. The real lesson here, though, is that every kind of organization can and will in fact maximize its own long term value ( for its owners, for example, in a for-profit organization) if it exists and acts in this stakeholder, other-focused H3 manner – and it will in fact be happy.
The Foundation’s founders, Bob and Joan Morris, expressed their gratitude for the planning session and suggested the organization might bring me back again. I will continue to monitor their good works in the Anaconda area and root for their success.
Joan put the following note on my Facebook page: “Jack Haffey (without associates) assisted our board in clarifying our mission and vision. He did a great job with us, helping us say clearly what we were all about and where we thought we were headed. It will help our board stay focused and better achieve our goals. Thanks, Jack. Your help is beyond valuable!”
Reading that, I felt like I achieved an H3 level moment myself.