George Kohlrieser: An interview by Bob Morris

George Kohlrieser is an organizational and clinical psychologist. He is Professor of Leadership and Organizational Behaviour at IMD and consultant to several global companies including Accenture, Alcan, Amer Sports, Barclays Global Investors, Cisco, Coca-Cola, HP, IBM, IFC, Morgan Stanley, Motorola, Nestlé, Nokia, Roche, Sara Lee, Tetra Pak, and Toyota. He is also a Police Psychologist and Hostage Negotiator focusing on aggression management and hostage negotiations. He has worked in over 100 countries spanning five continents.

Kohlrieser is Director of the High Performance Leadership (HPL) Program, an intense six-day IMD program for experienced senior leaders and the Advanced High Performance Leadership (AHPL) for former HPL participants. He completed his doctorate at Ohio State University where he wrote his dissertation on cardio vascular recovery of law enforcement leaders following high stress situations. His research has made significant contributions to understanding the role self-mastery and social dialogue has in helping leaders sustain high performance through life long learning.

He is Associate Clinical Professor of Psychology, Wright State University, Dayton, Ohio, adjunct faculty member of Union Graduate School, Antioch, Ohio, adjunct faculty member of Fielding Institute San Francisco, California, adjunct faculty member of Zagreb University, Croatia. He is past president of the International Transactional Analysis Association, San Francisco, California and is also a member of the Society of International Business Fellows (SIBF). He has consulted for the BBC, CNN, ABC, and CBS and his work has been featured in the Wall Street Journal, the Economist, and other leading newspapers and magazines.

He is author of the internationally bestselling book, Hostage At The Table: How Leaders Can Overcome Conflict, Influence Others, and Raise Performance, and, more recently, co-author of Care to Dare: Unleashing Astonishing Potential Through Secure Base Leadership with Susan Goldsworthy and Duncan Coombe.

Here is an excerpt from my interview of him. To read the complete interview, please click here.

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Morris: Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, the resistance to change is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.” Your thoughts?

Kohlrieser: This is a very interesting and challenging point. In fact, research shows that people do not naturally resist change – they resist the fear of the unknown and the pain of the change. The human brain actually thrives on curiosity, innovation, new learning, challenge and change to create new neurons until the day we die. This has come to be known as brain plasticity. Followers with a secure base leader will be empowered to successfully navigate the uncertainty, ambiguity, and other unknowns associated with change. James O’Toole is correct: most people are hostages to the “ideology of comfort” and to the status quo. They do not dare themselves to do something new or different. The challenge for leaders is to build trust that enables them to drive change. If leaders are not driving change, they are not really leading. We must dispel the myth that people naturally resist change – it is simply not true.

Morris: Looking ahead what do you think will be the greatest challenge that CEOs will face?

Kohlrieser: The greatest challenge I see is the “paradox of caring” – being able to both care and also dare followers, teams and organizations to achieve their full potential and to be true innovators. How do leaders show enough caring and bonding, even with difficult people and those they don’t like? Giving regular feedback and conveying hard truths unlock the door to the highest levels of performance. Successful leaders challenge their people by inspiring them and building trust, not by coercion, control or threats.

Leaders must drive change. Without change organizations wither and die. Leaders who don’t drive change put their companies in grave danger. The challenge facing leaders is to explain the benefits that change will bring. I use the term ”secure base leader” to describe someone who gives a sense of safety as well as the inspiration and energy to encourage followers to explore and take risk. In other words, you must care enough to encourage daring by shutting down the defensive nature of the brain and invite the mind’s eye to seek opportunity and possibility. This combination is crucial, and it’s why my new book about unleashing astonishing potential is called Care to Dare.

Morris: In your opinion, why do so many C-level executives seem to have such a difficult time delegating work to others?

Kohlrieser: It comes down to focus and trust. Secure base leaders, referred to in my books, always look for underdeveloped talents and turn delegation into opportunities to stretch people. This means they have to trust people to learn, develop and possibly to fail. Letting go of control is often the most difficult thing for an executive to do. After all, their experience means they often assume they know how to do things better, which may or may not be true. Give people a secure base leader and they will achieve amazing things – delegating is one form of stretching another person to show what they can do. The executive must always be standing behind as a secure base. A good example is flight training. There is a moment when the flight instructor must relinquish the flight controls to the trainee.

Morris: When and why did you decide to write Hostage at the Table?

Kohlrieser: I have been held hostage four times. Early in my career it became clear that hostage negotiators have to establish a relationship with a very unlikeable, even despicable person. They must engage in a dialogue under high pressure and influence the hostage taker to give up their weapons and their hostages knowing that they will likely go to prison. The success rate of hostage negotiators doing this work is an extraordinary 95 per cent. When I described what hostage negotiators do to the executives and other professionals I work with at my IMD High Performance Leadership Program, they wanted to know if the secret of hostage negotiation can be applied to situations when one is being held a psychological hostage.

It is one thing to be a hostage with a gun to your head; it is another to be held hostage by a boss, spouse, situation or yourself. People wanted to know how hostage negotiations applied to everyday situations. So the “hostage” metaphor is a highly empowering concept that I wanted to describe in the book based on theory and actual stories. The fact is even when physically a hostage, you don’t need to feel a hostage. The techniques used to gain freedom in a hostage situation can be used by all of us in everyday life. Warren Bennis and Dan Goleman, my two wonderful mentors, colleagues and friends, encouraged me to formulate these ideas into a book, and I was honored to have Warren Bennis include it in his Leadership series.

Morris: Obviously, much of the material in the book seems to be based on what you learned from your extensive experience as a police psychologist and hostage negotiator. What were the most valuable lessons learned from that experience?

Kohlrieser: I have learned a number of lessons in my 40-year career. The most powerful lessons for me have been:

1. The power of bonding and the impact dialogue can have on an adversary, a hostage taker, or a person threatening violence.

2. The paradox of caring. Hostage negotiation succeeds because the hostage taker feels genuine care, interest and concern from the hostage negotiator.

3. The power of focusing on the goal and not on the danger or the problem. When facing a gun, the brain will naturally focus on the weapon unless you train your brain to focus on the person and the goal.

4. The power of language, dialogue and of asking questions.

5. Making concessions within a negotiation.

6. The power of loss in motivating people and in driving violence, especially hostage taking. There is always a loss that precedes a hostage-taking situation.

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To read the complete interview, please click here.

George cordially invites you to check out the resources at these websites:

His home page

His faculty page

His Amazon page

IMD “Big Think” interview

YouTube videos

John Kotter on Why “Management Is (Still) Not Leadership”

Here is an excerpt from an article written by John Kotter for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

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A few weeks ago, the BBC asked me to come in for a radio interview. They told me they wanted to talk about effective leadership — China had just elevated Xi Jinping to the role of Communist Party leader; General David Petraeus had stepped down from his post at the CIA a few days earlier; the BBC itself was wading through a leadership scandal of its own — but the conversation quickly veered, as these things often do, into a discussion about how individuals can keep large, complex, unwieldy organizations operating reliably and efficiently.

That’s not leadership, I explained. That’s management — and the two are radically different.

In more than four decades of studying businesses and consulting to organizations on how to implement new strategies, I can’t tell you how many times I’ve heard people use the words “leadership” and “management” synonymously, and it drives me crazy every time.

The interview reminded me once again that the confusion around these two terms is massive, and that misunderstanding gets in the way of any reasonable discussion about how to build a company, position it for success and win in the twenty-first century. The mistakes people make on the issue are threefold:

Mistake #1: People use the terms “management” and “leadership” interchangeably. This shows that they don’t see the crucial difference between the two and the vital functions that each role plays.

Mistake #2: People use the term “leadership” to refer to the people at the very top of hierarchies. They then call the people in the layers below them in the organization “management.” And then all the rest are workers, specialists, and individual contributors. This is also a mistake and very misleading.

Mistake #3: People often think of “leadership” in terms of personality characteristics, usually as something they call charisma. Since few people have great charisma, this leads logically to the conclusion that few people can provide leadership, which gets us into increasing trouble.

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To read the complete article, please click here.

John P. Kotter is the Konosuke Matsushita Professor of Leadership, Emeritus at Harvard Business School and the Chief Innovation Officer at Kotter International, a firm that helps leaders accelerate strategy implementation in their organizations. To read his other HBR articles, please click here.

Richard Florida, Second Interview, by Bob Morris

Richard Florida is author of the global best-sellers, The Rise of the Creative Class and Who’s Your City? A more recent book, book, The Great Reset, explains how new ways of living and working will drive post-crash prosperity. Other works include The Flight of the Creative Class and Cities and the Creative Class. His previous books, especially The Breakthrough Illusion and Beyond Mass Production, paved the way for his provocative looks at how creativity is revolutionizing the global economy.

Richard is senior editor for The Atlantic and a regular CNN contributor. He has written for The New York Times, The Wall Street Journal, The Washington Post, The Boston Globe, The Economist, The Globe and Mail and The Harvard Business Review. He has been featured as an expert on MSNBC, BBC, NPR and CBS, to name just a few. Richard  is Director of the Martin Prosperity Institute and Professor of Business and Creativity at the Rotman School of Management, University of Toronto. Previously, Florida held professorships at George Mason University and Carnegie Mellon University and taught as a visiting professor at Harvard and MIT. Florida earned his Bachelor’s degree from Rutgers University and his Ph.D. from Columbia University. His research provides unique, data-driven insight into the social, economic and demographic factors that drive the 21st century world economy.

His latest book is The Rise of the Creative Class, Revisited: 10th Anniversary Edition–Revised and Expanded, published by Basic Books (June, 2012).

Here is an excerpt from my second interview of him.

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Morris: To what extent is The Rise of the Creative Class, Revisited a sequel? To what extent does it plow entirely new ground?

Florida: A great deal of the book has been rewritten or rearranged—this is not so much a revision as a full-blown revisiting of the original book. My team and I brought all the statistics up to date, provided new ones, and incorporated a decade’s worth of new research. I took advantage of the opportunity to address my major critics, too. Finally, there are five completely original chapters, covering the global effects of the Creative Class, quality of place in our cities and suburbs, the widening—and increasingly damaging—role of class and inequality in society, and the political challenges and opportunities that the rise of the creative class represents.

Morris: Were there any head-snapping revelations while writing the book? Please explain.

Florida: One big insight is the worsening inequality and underlying class divide that plagues not just nations but cities and metro areas.  You can see it in US cities and metros and also in London and even in Toronto where I now live.  That said, the rise of the creative class and post-industrialism needn’t exacerbate wage and income inequality. In fact, the wages and salaries for working and service class members are higher in metros with greater concentrations of the creative class.  Interestingly enough, the US is something of an outlier when it comes to post-industrialism and inequality across the advanced nations. In many of them, especially in Scandinavia and North Europe, post-industrialism and the rise of the creative economy has been accompanied by higher living standards and far less inequality that in the US.  In the revised edition, I look in detail at inequality across US metros. I find that the class divide accounts for about 15 percent of income inequality, a significant amount for sure, but more is at work. Income inequality across US metros has a lot to do with entrenched poverty, race, weakened labor unions, and an unraveling safety net than it is the result of the Creative Class’s relative prosperity. The solution, in other words, isn’t to roll the Creative Class back—it’s to lift up the classes that aren’t doing as well.

Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?

Florida:  Books always turn out different than expected. When I started the idea was to update the data (which was ten years old) and revise and update the existing chapters.  But that’s where my research and thinking took me.  I certainly did not expect to write five entirely new chapters The whole issue of the creative class going global and the need to include more data and information on the creative class around the world; and also widening inequality and the growing class divide – those are things that needed to be treated in detail.  The last chapter – “Every Single Human Being is Creative”— discusses the need for a new Creative Compact based on harnessing the creativity and talent of every single human being. We are at such a critical turning point: our society is changing as fundamentally as it has since the shift from agriculture to manufacturing. The old industrial order of relentless production and consumerism, of brute growth, has proven itself unsustainable; it’s left us with a degraded environment, a broken financial system, and a sclerotic political culture. We have an incredible opportunity to remake ourselves in a better way—for maybe the first time ever, to align human and economic development. But to do that, we need to create new institutions that will both help to develop and utilize everyone’s innate creativity.  It won’t happen by itself, and no Invisible Hand is going to guide it.

The University of Chicago economist Raghu Rajan said it well: “The advanced countries have a choice. They can act as if all is well except that their consumers are in a funk, and that ‘animal spirits’ must be revived through stimulus. Or they can treat the crisis as a wake-up call to fix all that has been papered over in the last few decades.” I’m trying to sound that wake up call.

Morris: Please explain the reference to “the key underlying forces that have been transforming our economy and culture” for several decades.

Florida: Our economy is shifting from an industrial to a post-industrial basis—our most valuable products are no longer the natural resources we scour out of the ground, or the durable goods that we manufacture in factories but the things that spring from our creativity: software, movies, medicines, applications. Human beings have always been creative, of course, but now creativity itself—“the ability to create meaningful new forms,” as Webster’s Dictionary has it—is what powers our economy.

As creativity has become more fundamental, it’s given rise to a whole new social class that works in creative fields (the sciences, education, medicine, technology, media, the arts). Many of them have embraced a new ethos and a new set of meritocratic norms that in turn have shifted our whole society.

If anything Creativity is an even more powerfully transformative force than it was a decade ago. The Creative Class has come through the last decade—and through the economic crash of 2008—stronger and more influential than ever.

Morris: In your opinion, why have we not as yet unleashed “that great reservoir of overlooked and underutilized human potential”?

Florida: If a third of our most fortunate workers belong to the Creative Class, the other two great classes are not faring anywhere near as well. The working class, our blue collar sector, has lost a third of its members in just the last decade—it represents just 20 percent of the workforce today, about the same share that farmers held at the turn of the last century (they are less than one percent of the economy today). About half of the workforce belongs to the Service Class—the people who serve our food, cut our lawns and our fingernails, take care of our elderly. Most of them are paid terribly and there are very few opportunities for advancement.

Class and geography have a huge impact on your destiny in the US—if your parents don’t have good jobs and good educations and you live in a state that has a smaller Creative Class share, the odds are that you’ll be poorer, travel less, and receive a worse education than your peers in more creative states. That’s not snobbery or elitism—that’s just statistics. Poorer states have shorter life expectancies too—there is more smoking and obesity, more gun violence, and worse health outcomes across the board.

This is why I’m so passionate about the need for change—for a new Creative Compact, as I put it, that will do for our own epoch what the New Deal did for its own generation.

Morris:  What are the defining characteristics of the Creative Class?

Florida: I define the Creative Class by what people do—by the kinds of jobs they hold. What I call the Super-Creative Core of the Creative Class are scientists and engineers, university professors, poets and novelists, artists, entertainers, actors, designers, and architects, as well as the thought leadership of modern society: nonfiction writers, editors, cultural figures, think-tank researchers, analysts, and other opinion shapers. I define the highest order of creative work as the production of new forms or designs that are readily transferable and widely useful—such as designing a consumer product, coming up with a theorem or strategy that can be applied in many situations, or composing music that can be performed again and again.

The Creative Class doesn’t just solve problems—it finds problems that we didn’t know we had. It invents the iPod and then it figures out a better way to organize its music library—and to combine it with a telephone, and an e-book reader while giving its battery longer life.

Beyond this core group, the Creative Class also includes “creative professionals” who work in a wide range of knowledge-intensive industries, such as high-tech, financial services, the legal and health professions, and business management, who engage in creative problem solving. Creative Class people are smart and skilled; they’re often (but not always) highly educated. Three quarters of degree holders belong to the Creative Class, but less than 60 percent of the Creative Class has degrees.

I talk a lot about “creatifying” jobs that are not considered Creative Class, but could be, such as retail sales. With the addition of creativity such jobs can become more productive and earn higher and higher salaries.  Services can be creatified too, as their providers become more entrepreneurial.

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Richard cordially invites you to check out the resources at these websites:

http://www.creativeclass.com/

http://www.theatlanticcities.com/

To read the complete second interview, please click here.

To read  my first interview of him, please click here.

To read my review of his latest book, The Rise of the Creative Class, Revisited: 10th Anniversary Edition, please click here.

Margaret Heffernan : An interview by Bob Morris

Margaret Heffernan

Margaret Heffernan is an entrepreneur, Chief Executive and author. She was born in Texas, raised in Holland and educated at Cambridge University. She worked in BBC Radio and television for 13 years. She was one of the producers of Out of the Doll’s House, the prize-winning documentary series about the history of women in the twentieth century. She designed and executive produced a thirteen part series on The French Revolution for the BBC and A&E, featuring Alan Rickman, Alfred Molina, Janet Suzman, Simon Callow and Jim Broadbent and introduced both historian Simon Schama and playwright Peter Barnes to British television.

Leaving the BBC, she ran the trade association IPPA, which was once described by the Financial Times as “the most formidable lobbying organization in England.”

In 1994, she returned to the United States where she developed interactive multimedia products with Peter Lynch, Tom Peters, Standard & Poors and The Learning Company.

She then joined CMGI where she ran, bought and sold leading Internet businesses, serving as Chief Executive Officer for InfoMation Corporation, ZineZone Corporation and iCAST Corporation. She was named one of the Internet’s Top 100 by Silicon Alley Reporter in 1999, one of the Top 25 by Streaming Media magazine and one of the Top 100 Media Executives by The Hollywood Reporter.

2011 saw the publication of her third book, Willful Blindness: Why We Ignore the Obvious at Our Peril, (published by Simon & Schuster in the UK, Bloomsbury in the US and Doubleday in Canada) which was shortlisted for the Financial Times/Goldman Sachs Best Business Book award. Margaret blogs for the Huffington Post in the US and the UK, and for CBS MoneyWatch (formerly BNET)

Here is an excerpt from my interview of Margaret. To read the complete interview, please click here.

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Morris: Before discussing Willful Blindness, a few general questions. Which person has had the great influence on your personal growth?

Heffernan: Hard to choose one. My parents gave me a great work ethic; he also taught me that it is often the most junior people who know best what is going on in an organisation.

My employees showed me that, in the end, we don’t work for ourselves but for others.

Morris: The greatest impact on your professional development?

Heffernan: Probably a BBC producer Piers Plowright. He was a bold experimenter and developed terrific levels of artistry through his willingness to try things that sometimes failed.

Morris: Was there a turning point (if not an epiphany) in the past that set you on the career course since then? Please explain.

Heffernan: No epiphanies, more of a continuous development. I think I’d always wanted to write but, until I’d lived a lot, had nothing to write about. After running 5 businesses, I think I felt I’d found a subject. I’ve always gone through life – and business – asking questions.

Morris: To what extent has your formal education proven invaluable to what you have achieved thus far?

Heffernan: My formal education gave me, I think, a pretty intense habit of rigorous scrutiny. It taught me to ask questions and challenge answers. I think that all walks of life require critical thinking and that that is what my formal education taught me.

Morris: In recent years, which aspect of the business world have you found most difficult to understand? Why?

Heffernan: Increasingly I think I’m baffled by the bifurcation of business and society. The more remote these become to each other, the more dangerous and unstable the world becomes. Many people understand this on an individual basis but are not prepared to act collectively to change it. Some of this is short term thinking, and I guess I’m always baffled by the degree to which we choose short term comfort at the price of long term risk.

Morris: To what extent do you agree with Thomas Friedman’s assertion that the world today is “hot, flat, and crowded”?

Heffernan: I agree with his assertions though I’m often less persuaded by Friedman’s proposed solutions.

Morris: In your opinion, are business opportunities better, worse, or about the same today as they were (let’s say) 3-5 years ago? Please explain.

Heffernan: There are always huge business opportunities for those with the courage and expertise to seize them. That’s no different now than it was 3,5,10 years ago. Businesses spring from problems -and we always have plenty of those.

Morris: In your opinion, are business opportunities better, worse, or about the same today for women as they were (let’s say) 3-5 years ago? Please explain.

Heffernan:  Business opportunities for women are abundant but so too are the obstacles that women face. We are still a minority in most organizations even though a lot of lip service is paid to diversity. After 50 years of concerted effort to be treated as equals, women are still marginalized and trivialized, very much to the detriment of the organizations they attempt to serve. That there are so few women on corporate boards shows the degree to which equality may be accepted intellectually but not in real life. There’s really no excuse for this any more: the talent pipeline is bulging. What women confront is entrenched bias and I think we have consistently underestimated how hard it is to eliminate that.

Morris: Now please shift your attention to Willful Blindness. When and why did you decide to write it?

Heffernan: I decided to write it after I’d finished writing 2 plays for the BBC about the collapse of Enron. The judge in the trial of the Enron CEO and Chairman referred to the legal concept of willful blindness. At the time that I was writing the plays, the banks were imploding and a lot of pundits were running around saying this was a ‘black swan’ event, that no one could have seen it coming. This was willful blindness on an epic scale and it made me want to understand how we make such colossal errors.

Morris: Were there any head-snapping revelations while writing it?

Heffernan: I don’t think I’d understood before quite how different our individual selves are from our social selves – that we have at least 2 identities that see and do quite different things. Nor had I fully appreciated the degree to which we will reconfigure reality in order to preserve and protect our self-regard.

Morris: To what extent (if any) does it differ significantly from the book you originally envisioned?

Heffernan: When I write a book, I outline it extensively; this is so that, when I’m embroiled in the detail, I don’t lose sight of where I’m going. So to that extent, the finished book was exactly as I envisaged it. On the other hand, the sheer emotional distress implicit in willful blindness was something I learned as I went along. But it is very hard, now I’ve written the book, to remember what I didn’t know when I started!

Morris: Are you suggesting that the blindness you discuss is intentional and if so, can be avoided? Please explain.

Heffernan: It can, I believe, be reduced but not eliminated. In part this is because some forms of willful blindness are quite useful – after all, if we confronted our own mortality each morning, we might not get up in the morning; denying it – and getting out of bed! – is quite creative. Nevertheless, I think there are things, as individuals, we can do to protect ourselves against the dangerous aspects of willful blindness. And I feel highly committed to the idea that organizations can do a very great deal to avoid being blindsided.

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To read the complete interview, please click here.

Margaret Heffernan cordially invites you to check out the resources at these websites:  www.mheffernan.com.

The #1 Leadership Problem

Margaret Heffernan

Here is an article written by Margaret Heffernan for BNET (January 27, 2011), The CBS Interactive Business Network. To check out an abundance of valuable resources and obtain a free subscription to one or more of the BNET newsletters, please click here.

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When I meet with CEOs, I like to find out what keeps them awake at night, what intractable issues or opportunities disturb their sense of confidence. Of course, each one has industry-specific or company-specific challenges and they’re fascinating.

But there’s one problem common to each one of them. They all know it. Only a brave few will talk about it openly: Ignorance.

It doesn’t matter whether the company is large or small, old or young, high tech or blue collar manufacturing. The reality is that no leader is fully informed of what is happening on his or her watch.

Ignorance Isn’t Bliss

Of course in theory, this shouldn’t happen. The chain of command should ensure that information reaches the top. Daily reports should flag critical issues. Balance sheets should indicate significant trends. And they all do – up to a point. The problem is that none of them works quite well enough.

That’s why BP can run unsafe plants and still be taken by surprise when they blow up.

It’s why music labels could be blind-sided by the rise of digital downloads.

It’s why soft drink companies were surprised by the popularity of vitamin drinks.

It’s why Lehman Brothers and Enron and Citibank and Merrill Lynch had no idea actually how much money they had.

It’s why companies are so anxious about what Wikileaks will publish next.

It Can Happen to You

The most tempting thing in the world is to look at that string of business disasters and argue: that was them, not me. It couldn’t happen here. They were just bad leaders, a few bad apples. But the minute you say you don’t have this problem is the minute you know you do.

The problem is willful blindness: the human propensity to ignore the obvious. It isn’t just a business problem, of course. We do it in our private lives when we leave those credit card bills unopened or take on a mortgage we can’t afford or insist that tanning salons really won’t cause us any harm.

There are numerous social, structural, organizational and neurological reasons for willful blindness and I’ll be blogging about them over the next few weeks. But in the meantime I’d like to hear from you:in your company or department or industry, where are your blindspots?

Please click here to see the video, courtesy of Lindsay Nicholson and music courtesy of Nick Bicat.

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Margaret Heffernan worked for 13 years as a producer for BBC Radio and Television before running her first company. She has since been CEO of five businesses in the United States and United Kingdom, including InfoMation Corporation, ZineZone Corporation and iCAST Corporation. She has been named one of the Internet’s Top 100 by Silicon Alley Reporter and one of the Top 100 Media Executives by The Hollywood Reporter. Her books include The Naked Truth: Female Entrepreneurs Are Changing the Rules for Business Success, and the upcoming Willful Blindness. She has appeared on NPR, CNN, CNBC, and the BBC, and writes for Real Business,The Huffington Post, and Fast Company.

Stefan Stern on “Trust at the top” at Rolls-Royce

Stefan Stern

Here is an excerpt from an article written by Stefan Stern for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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A Rolls-Royce engine blows up, and … silence — for four days. The great British engineering company took its time to find out what had happened to the Trent 900 engine mounted on the wing of a Qantas A380 superjumbo, which had to make an emergency landing in Singapore a few days ago. The company preferred to offer facts rather than speculation. Its brief statement on Monday, declaring that progress was being made in the investigation, calmed investors, initially. By Friday it had identified the faulty component. So not too much harm done. Probably.

Rolls-Royce is still a trusted name. But most businesses cannot be so confident that their brands are equally bullet-proof. As if to remind us of this, the presidential commission into the Macondo well disaster is causing BP, Transocean, and Halliburton further reputational damage.

Trust is hard won and easily lost.

Lack of trust makes business life more complicated, pushing up the cost of transactions, and making it harder to win and retain customers. All over the world, as the Edelman trust barometer has shown, trust has been in trouble for years.

“There is this huge stuff about trust,” wrote Alastair Campbell, former director of strategy and communications for the British prime minister Tony Blair, in his diary at the height of the controversy over missing Iraqi weapons of mass destruction in July 2003. How our leaders behave, in politics and business, shapes public opinion and can boost or undermine levels of trust in society at large.

Britain’s new coalition government, elected in May, was greeted initially as a welcome new broom, offering trustworthy new faces to replace its predecessors. But as The New York Times has reported in minute detail, a cloud already hangs over it, and in particular over the figure of Andy Coulson, the new director of communications at the heart of government.

Questions continue to be asked over Mr Coulson’s behaviour when, in a former life, he was editor of the News of the World. In April 2005, when it was named newspaper of the year,

Mr Coulson was happy to boast about how carefully he operated as editor.

“We talk about our stories in great detail prior to publication,” he told the UK Press Gazette.

Journalists who had worked at the NotW and then returned “were surprised by the degree of discussion and analysis that goes on before we decide to publish a story,” he said.

But in front of a parliamentary select committee in July 2009, Mr Coulson denied knowing anything about the allegedly widespread phone-hacking (described at length by The New York Times) that was going on at his newspaper. This episode has done nothing to improve levels of trust in the British media or British society more widely.

Business leaders should be concerned about declining levels of trust in what they do. Talented employees will leave untrustworthy organizations. Suppliers may not do business with untrustworthy counterparties. Well-informed consumers will reject untrustworthy products.

No one should take trust for granted. Mark Thompson, director general (CEO) of the BBC, one of the world’s most trusted media organisations, put it well in a speech over two years ago.

“Trust in a given institution may be based on a great tradition and great inherited values, but it depends on what you do today,” he said. “It has to be earned and earned again. And the higher the trust, the higher the public expectation.”

Speaking on the BBC in 2002, the philosopher Onora O’Neill identified the source of mistrust in society and within organizations generally: “Deception is the real enemy of trust,” she said. “Deception is not just a matter of getting things wrong. Deceivers. . . mislead intentionally, and it is because their falsehood is deliberate… that it damages trust and future relationships.”

It is time for some straight talk in the battle to rebuild trust.

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Stefan Stern is the director of strategy in the U.K. for Edelman and was the management columnist for the Financial Times for four years prior to that. He is a visiting professor at Cass Business School in London.

Recession Doldrums: What Would Churchill Do?

Margaret Heffernan

Here is an article written by Margaret Heffernan for BNET, The CBS Interactive Business Network. To check out an abundance of valuable resources and obtain a free subscription to one or more of the BNET newsletters, please click here.

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Warren Buffett, trying to describe the importance of leadership, once called it a “secret sauce,” arguing that it makes all the difference to the value of a business, even if you don’t quite know what it is.

I was reminded of the issue last week when I was in London and visited Winston Churchill’s cabinet war rooms. As you’d expect, they’re underground, dark and rather dismal, and neither Churchill nor his staff much liked spending time in them. That the government spent so much time above ground was due not to heroism but claustrophobia.

But on one level, I envied these men and women. They had a very clear, well-defined problem with an obvious goal: Defeat Hitler. How many business leaders yearn for so simply articulated a task! What’s easy to forget, in such nostalgia, is just how daunting it was. Three days before Churchill delivered one of his most rousing speeches — “this was their finest hour” — he confessed to a colleague that he expected them both to be dead within three months.  A clear goal, yes. But with only the slimmest chance of success.

How did Churchill define leadership? In his own words, what he did was “keep buggering on.” In more contemporary words, what this meant was he and his Cabinet just kept going, putting one foot in front of the other, making the best decisions they could, many of which turned out to be wrong. He never made unilateral decisions, and he spent a lot of time in that bunker arguing.
I’ve never had much affinity for the business-as-war metaphor, and Sun Tzu leaves me cold.  But what I respect in Churchill’s wartime leadership was his recognition that there were no magic bullets.

He had no illusion of control. Strategy, alliances, technology, and mental, emotional and operational discipline were all essential — for six long years. But there was no such thing as a quick fix.
When I meet with CEOs, they’re all eager to hear what other companies are doing. Their curiosity is driven by a lingering sense that somewhere out there must lie a solution, a quantum leap that will catapult their business out of recession and themselves out of the doldrums. They’re sick of recession, despairing of government, cynical about temporary market rallies and deeply nostalgic for the good old days of predictable if slow growth.

It’s a lesson any leader would do well to remember as we enter the fourth year of the credit crunch. If there were a magic solution, someone would have found it by now. Growth is elusive and, in a recession, more so than ever. Maintaining morale is hard but fundamental. No miracle — in the form of strategy, technology or stimulus — will substitute for mental, emotional and operational discipline. The only thing that leaders can do, and must do, is abandon the illusion of control and keep buggering on.

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Margaret Heffernan worked for 13 years as a producer for BBC Radio and Television before running her first company. She has since been CEO of five businesses in the United States and United Kingdom, including InfoMation Corporation, ZineZone Corporation and iCAST Corporation. She has been named one of the Internet’s Top 100 by Silicon Alley Reporter and one of the Top 100 Media Executives by The Hollywood Reporter. Her books include The Naked Truth, How She Does It: How Female Entrepreneurs are Changing the Rules for Business Success , and the upcoming Willful Blindness. She has appeared on NPR, CNN, CNBC, and the BBC, and writes for Real Business, The Huffington Post, and Fast Company.
TAGs: Recession Doldrums: What Would Churchill Do?

Interview: Richard Florida

Richard Florida is the author of several global best-sellers: The Rise of the Creative Class, The Breakthrough Illusion, Beyond Mass Production, The Flight of the Creative Class, and Who’s Your City? In his latest book, The Great Reset, he explains how new ways of living and working will drive post-crash prosperity. Florida is a regular correspondent for the Atlantic Monthly and a regular columnist for The Globe and Mail. He has also written for The New York Times, The Wall Street Journal, The Washington Post, The Boston Globe, The Economist, and The Harvard Business Review. He has been featured as an expert on MSNBC, CNN, BBC, NPR and CBS, to name just a few. He has also been appointed to the Business Innovation Factory’s Research Advisory Council and recently named European Ambassador for Creativity and Innovation. Florida’s ideas on the “creative class,” commercial innovation, and regional development have been featured in major ad campaigns from BMW and Apple, and are being used globally to transform the way regions and nations do business and “reset” their economies. He is one of the world’s leading public intellectuals on economic competitiveness, demographic trends, global trends, economics, prosperity, competitiveness, and disruptive growth as well as cultural and technological innovation.

Morris: For those who have not as yet read The Great Reset, what is a “Reset”?

Florida: Economies and societies invariably remake themselves in the wake of a crisis. It’s a necessary component of rebound and recovery. Outmoded industries and tired consumption habits make way for new goods and services, new careers and forms of employment, and population realigns itself in the landscape. All these developments are connected to lifestyle changes.

Morris: In which specific ways are economic systems “embedded within the geographic fabric” of a society?

Florida: Many ways. I have always argued that the place and geography has a significant impact on economic systems. With this Great Reset, we will see an even greater emphasis on place – more specifically the rise of the mega region, which are new and incredibly powerful economic units. No longer will we focus on the city versus suburb but on how to increase our connection to our respective mega regions. Worldwide there are just 40 significant mega regions, which are home to 1/5 of the world’s population, 2/3′s of the globaleconomic output and 85% of all worldwide innovation. The rise of vast mega-regions such as the corridors stretching from Boston to New York and Washington, D.C., which will intensify our use of land and space the way that the industrial city did during the First Reset and suburbia did in the Second.

Morris: Where were the most significant consequences of the First Great Reset in the 1870s? And of the Second Great Reset in the 1930s?

Florida: Each of the previous two Resets were actually vibrant periods of innovation. Inventors and entrepreneurs rushed to fill the voids left by struggling industries with new ideas and new technologies that led to new forms of infrastructure like railroads, subways, and highways systems. All of that innovation powers economic growth. The First Reset saw power and communication grids and streetcar and subway systems spread across the country, speeding the movement of goods, people, and ideas. This was the era of Thomas Edison and Alexander Graham Bell, Andrew Carnegie and J.P. Morgan, after all. The Second Reset brought huge developments in media, mass-produced consumer goods, and the role of large corporations, when companies like IBM rose to prominence and when what was good for General Motors was good for the nation. It also saw the rise of a suburban, mass-consuming nation.

Morris: In Chapter Thirteen, you discuss Toronto. Why do you think this city has “tremendous upside potential coming out of the current crisis”?

Florida: I’m convinced that Toronto has a tremendous upside potential coming out of the current crisis. It won’t topple New York or London as a financial center, nor will it dethrone Los Angeles as the international entertainment capital, but with its large and stable banks, numerous knowledge-based industries thriving in the surrounding mega-regions, and an increasingly diverse population, it will gain ground. And with employment opportunities in the largest centers eroding, it can make a big move on top global talent. It stands as a model of an older, once heavily industrial Frostbelt city that has not only turned itself around but continues to grow and thrive.

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To read the complete interview, please click here.

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