Enron is back in the news because Jeff Skilling’s appeal is currently in front of the Supreme Court (his sentence may be reduced or overturned on a technicality).

Arthur I. Cyr, Clausen Distinguished Professor at Carthage College, offers an interesting commentary on Skilling, the Enron debacle and Arthur Andersen.

Leadership personality is telling in any organization. Skilling from early days as a McKinsey consultant was notorious for an exceptionally aggressive, grasping style. Business author and former colleague Tom Peters described him as apparently able to “out-argue God.”

The damage that attitude causes knows no bounds and holds true wherever it is found.

Enron, stock option backdating and finally the derivatives of the financial meltdown are all from the same seeds.

In hindsight, Enron’s death was symptomatic of growing global problems. In an age of great prosperity and exceptionally cheap credit, people fairly easily could put greed before good judgment.

Greed before good judgment says a lot, but not quite all.

Even when greed isn’t the driving force there is ideology—an inflexible force that proponents claim eliminates the need for any judgment at all.

Good management, however, requires flexible, insightful human strengths. Regulation and law enforcement only provide context.

Cyr’s final comment sums up the true solution as well as the why rules and even laws don’t work.

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One reason I love the NY Times is that it runs great articles on new research about what makes us humans tick.

Most of us are aware that there are different forms of communications. Verbal, i.e., words, is the most common, but nonverbal, tone of voice and facial expressions, are often more potent.

And then there is touch.

For years, I’ve read about the importance of touch for infants.

In research with infants, it was shown that gently massaging premature infants three times per day for 15 minutes helped them gain weight, be more alert, and cry less. These infants were released from the hospital sooner than infants who were not massaged.

The latest research confirms the same positive response in adults.

Momentary touches, they say — whether an exuberant high five, a warm hand on the shoulder, or a creepy touch to the arm — can communicate an even wider range of emotion than gestures or expressions, and sometimes do so more quickly and accurately than words.

Two attitudes make this work.

1. Sincerity; people will know if your actions are manipulative as opposed to authentic.
2. Appropriateness; to avoid a negative reaction from anyone use your observational skills and common sense; high fives and similar expressions are the safest, while hugs are the most dangerous. An employee who avoids physical contact with her team is unlikely to appreciate being touched by her boss.

There are many ways to inspire and show you care just as there are many clubs in a golf bag; and just as it is a fallacy to play the whole course with just one club, using only one form of communication to motivate your people is to shortchange them—and you.

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Yesterday we looked at positive and negative aspects of culture and I said that today we would discuss how to change/create a culture or sub-culture.

Repeating yesterday’s warning: if you want a culture that is fundamentally different from the overall company culutre be sure you’re willing to shield your people and take the heat.

Remembering that culture is a function of your MAP (mindset, attitude, philosophy™), here are 7 critical points that you need to think through before starting—whether you are CEO of a startup or a first level supervisor in a large company.

1. Know who you are: Since this step is strictly between you and yourself you need to be brutally frank as to your attitudes towards people, motivation, what’s important, what’s OK to do, etc., in other words, know your MAP! You need to know exactly what you think, are comfortable with the elements you embrace and understand that you need to hire people who will flourish in the environment you create.
2. Define your cultural goals: Use the knowledge of your MAP to determine the kind of culture you want and write a description including your vision and the specific infrastructure, processes, practices, etc., that are needed to make it reality. Test the attractiveness of your cultural vision by whether you would want to work in a similar culture. If the answer is yes then you can proceed with it; however, if your response is “no way” then you need to rethink what you want because over the long haul there is no way you can sustain a culture in which you don’t believe. Also, people tend to gravitate to people like themselves (likes really do attract). In other words, you will be hired by, work with and hire those with synergistic MAP.
3. Know what you have: Honestly assess (warts and all) whatever culture currently exists in your company and department (if you have one or more people you have some kind of culture); without a detailed assessment you won’t know what you need to tweak, change, circumvent, ignore or avoid.
4. Be aware of the cost of change: Changing culture often results in turnover and turnover can be costly no matter the condition of the labor market. People join companies because they feel comfortable and change is rarely comfortable. If they don’t like the end result (or the direction it’s heading) they are likely to start looking. If you are aware and prepared that isn’t always a bad thing; cultural changes can’t happen if employees aren’t willing to change their mindset; worse, those who won’t change will make every effort to sabotage the emerging culture. By being prepared you can not only circumvent that, but often turn the saboteur into a new culture evangelist.
5. Don’t assume: The human race functions to a great extent on various sets of unconscious assumptions. In the workplace people tend to assume that people with similar educations, experience levels, positions, etc., have similar mindsets, attitudes and philosophies. The next assumption is that based on those similarities everybody would create similar cultures; the third assumption is that the first 2 guarantee people’s willingness to buy into the vision. Predicating acceptance of cultural change on the assumption of deep, unproven commonality is a recipe for disaster.
6. Don’t overwhelm the troops: Whether you are changing an entire corporation (Gerstner and IBM), creating a culture for your startup, tweaking it within your department or group, or revamping it in your small business, recognize that you can’t just come in, make an announcement and expect people to buy into the vision. Present it in small bite-size pieces and in such a way that people feel they have input in the process, thus creating a strong feeling of ownership. Better yet, listen to the input and adjust if it makes sense.
7. Communicate and sell—don’t order and tell! Even if your goal is a truly collaborative, nurturing culture that challenges and then helps people to realize their full potential you can’t just walk in on Monday and announce that that’s the way it will be from then on.

• First, it’s unlikely that anybody will believe you (talk’s cheap);
• second, if you’re new it’s unlikely they’ll trust you (no track record with them); and
• third, whether you’re proposing a radically different culture or just fine tuning the current one they have no reason to get on the bandwagon if it means changing.

In the final analysis what you do will carry far more weight than anything you say about your culture.

It boils down to your having the courage to walk your talk.

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Corporate culture is a big deal these days, often seen as the difference between success and failure.

Millions of words have been used by thousands of people to describe and explain culture, but it pretty much boils down to the following:

• How the people relate to each other professionally and personally; their personalities and interpersonal communications.
• The work environment/atmosphere/ethics/morale/people/style/etc.
• The company’s identity.
• Environment of interaction and judgment.
• The primary reason people join/leave the company/manager.
• The way things really are as opposed to how they’re described (the walk vs. the talk).

Money lures, but culture holds. Culture is why people join a company—and more importantly, why they stay. It is what motivates (or demotivates) them, and cultural changes are frequently why they leave. Additionally, people learn from experience and eventually will reflect the traits of the cultures in which they work; as with other relationships, people will continue to gravitate to the same situation they were in previously.

Cultural elements people want:

• The opportunity to truly “make a difference.”
• To be treated fairly.
• Positive ethics and values.
• To trust management and be trusted by them.
• To embrace the idea that work can and should be fun.
• Accurate prioritizing of company, team and individual goals while keeping them synergistic
• A positive “can-do” attitude (aggressive, but realistic).
• A conscious effort to stamp out “not invented here” syndrome (in all its varied forms), so as to not waste time reinventing the wheel.
• Continuing development and quality improvement in people, product/services and processes.
• Committing to employees, customers, and investors—and meeting those commitments.
• An open, accurate, company-wide flow of information starting from the top.
• An environment that encourages people to reach their full potential, professionally and personally.

What people don’t want:

• Politics: personal, group, or senior management
• Unfairness; favoritism; star mentality
• Unnecessary bureaucracy; inflexible process or bureaucracy masquerading as process
• Poor management practices such as: erratic management; micro-management; workaholism; intimidation; belittling or contemptuous treatment; no loyalty; poor scheduling; the attitude that “we don’t have the time to do it right but we have the time to do it over”
• Any form of harassment whether overt or covert
• A generally negative attitude, i.e., the glass is half empty
• Arrogance or an elitist attitude
• An unwillingness (at whatever level) to seek and implement the compromises necessary to meet organizational needs within the required timeframe

Obviously there are many more philosophies, attitudes, and actions that I could list, but most would fit the spirit, if not the specifics of the two lists.

In general culture comes from, or is enabled by, the top and rarely can be changed from below.

That said, every person in a management role from team leader up creates a subculture in their own organization.

If you are strong enough and believe deeply enough, you can become an umbrella to your organization and shield it from the toxic elements in the overall culture.

But don’t kid yourself; this is a difficult path to choose, so it is wise to make the choice consciously, instead of accidentally bucking your company’s culture.

Join me tomorrow when we look at how to create a culture—or sub-culture.

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An angry email berated me for Saturday’s post, saying in part, “Why don’t you ever choose more typical CEOs and cultures to write about? I read blogs to help me manage more effectively and the stuff you talk about is almost impossible to implement.”

The answer, in a nutshell, is that you can’t implement anything at odds with your own MAP (mindset, attitude, philosophy™)

Therefore:

• If you don’t believe in a happy workplace where people have fun then there is nothing that Tony Hsieh or anybody else can teach you that will help you create one.
• If you stand on your dignity and can’t laugh at yourself there is no way you can implement The Levity Effect.

I could keep giving examples, but you get the point.

I, and dozens of other experts, have said over and over that people can’t sell something they don’t believe themselves.

Nor can they implement cultural features that are out of sync with their MAP.

This is especially true for managers because they typically hire in their own image, so that their team has similar MAP—and the same problem.

If you find yourself on this treadmill, rather than write an angry email or complain to your buddies look in the mirror and know that you can change if you want to.

It’s your choice.

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I’m not sure whether it’s amusing or ironic (or both) but breakout companies all seem to be focused on culture. And when they are successful, no matter the business, they are immediately in high demand to tell others how they do it—think Tony Hsieh and Zappos.

Last Saturday I told you about Nick Sarillo, whose two pizza restaurants in Chicago do $7 million a year with 20% turnover vs. the casual dining industry average of 200%. As a result of the Inc magazine profile he is keynote speaker at the Pizza Executive Summit this summer. I’m sure he’ll be in demand other places. I love the title—“Culture 2.0: Branding your company’s way of life;” think about it.

Along with being a culture fanatic I also believe that anyone can lead given the opportunity, challenge and a supportive culture in which the messenger is never killed.

An NYT interview with Mark Pincus, founder and chief executive of Zynga offers insight into his approach of making all his people CEOs.

“I’d turn people into C.E.O.’s. One thing I did at my second company was to put white sticky sheets on the wall, and I put everyone’s name on one of the sheets, and I said, “By the end of the week, everybody needs to write what you’re C.E.O. of, and it needs to be something really meaningful.” And that way, everyone knows whose C.E.O. of what and they know whom to ask instead of me. And it was really effective. People liked it. And there was nowhere to hide.”

A new blog by David Silverman at Harvard Business Review should prove interesting; the first is about Richard Charkin, Director of Bloomsbury Publishing Plc.

Stories from CEOs of their most life-changing day in their careers. Sometimes the result was promotion to the upper reaches of business, and sometimes a steep fall from grace.

TED has become a phenomenon and it’s on now. Plan to spend some time listening to an eclectic group of creative thinkers.

TED is a small nonprofit devoted to Ideas Worth Spreading. It started out (in 1984) as a conference bringing together people from three worlds: Technology, Entertainment, Design.

The annual conferences in Long Beach and Oxford bring together the world’s most fascinating thinkers and doers, who are challenged to give the talk of their lives (in 18 minutes).

In a final tip of the hat to Valentine’s Day tomorrow, check out substitutes for Viagra that taste great.

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Did you watch the new reality show Undercover Boss on CBS Sunday after the Super Bowl?

The opening episode starred Larry O’Donnell, President and C.O.O. of Waste Management.

O’Donnell plays ‘Randy’, a new worker being filmed for training purposes. At one location he jams the trash line by not removing large cardboard; he is fired, for the first time in his life, for not being able to efficiently collect blowing trash at a landfill—unlike the worker he is with who has done the job for 19 years while spending three days a week in dialysis; he cleans porta-potties with a guy who’s attitude is every manager’s best dream; and he rides with a female trash hauler where he learns that to stay on schedule women drivers use cans from the trash as pee-pots.

He meets a 29 year old single mother who overcame five kinds of cancer by age 25, has taken in her brother’s family and her dad, is about to lose her home in foreclosure and is doing three jobs post layoffs for the same money she was getting before, but is still upbeat and even invites the new guy to dinner.

O’Donnell is surprised by the physical and mental exhaustion he experiences his first day, amazed by the people he meets, outraged by what he learns and shocked at the implementation of a policy he personally conceived to raise productivity by which workers were docked 2 minutes for every 1 minute they were late.

At the start of the show when O’Donnell tells his executive team that he is going undercover the reactions vary from surprise to incredulity.

When he meets with them at the end and talks about what he learned and changes he believes are needed and how he plans to use his new knowledge the look on guy’s face said it all—he might as well have rolled his eyes.

Sadly, that is often the reaction from senior leadership regarding intel that comes from front-line, bottom-of-the-heap workers.

The smartest managers listen to their all their people—not just the ones in suits.

The final scene includes and overlay update on what happened to each of the people who worked with O’Donell and changes, both made and ongoing, as a result.

I don’t watch reality shows; I’ve read that many are scripted, but I do believe that there are bosses of large companies who don’t have egos the size of Texas and are capable of learning from unfiltered feedback from the lowest rank and file.

Plus, it seems that changes were actually made.

As big a believer as I am in bosses talking to the troops, there is no way O’Donnell would get this kind of feedback from this level of employee if they knew who he was.

Go ahead and call me naïve, but in spite of everything I’d rather be a chump than a cynic.

And in case you missed Undercover Boss you can watch it here.

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Today we have four stories that sit at the intersection of innovation and culture.

The first is the story of Nick Sarillo, founder of Nick’s Pizza & Pub in Chicago. Sarillo set out to build a culture that ignored common knowledge’ about what to expect from hourly workers. Did he succeed? You tell me.

In an industry in which annual employee turnover of 200 percent is considered normal, Sarillo’s restaurants lose and replace just 20 percent of their staff members every year. Net operating profit in the industry averages 6.6 percent; Sarillo’s runs about 14 percent and has gone as high as 18 percent. Meanwhile, the 14-year-old company does more volume on a per-unit basis (an average of $3.5 million over the past three years) than nearly all independent pizza restaurants. And customers, it seems, adore the service: On three occasions, waitresses have received tips of $1,000.

Next is commentary from Daniel Isenberg, professor of management practice at Babson College, who offers cogent reasoning to save passion for the bedroom.

Passion is up there with innovation in what people think entrepreneurs need in order to succeed. I doubt it. My experience as entrepreneur, entrepreneur educator, and venture capitalist tells me that the more scarce and valuable commodity is cold-shower-self-honesty.

Third on our list is a cautionary tale about what happens when a leader looks for external confirmation that am innovative idea is great and passes on it when none is forthcoming.

Innovation is killed with the two deadliest words in business: Prove it.

When faced with a new idea, the boardroom impulse is to ask for proof in one of two flavors: deductive and inductive.

This attitude gives insight on the difference between Apple and Microsoft—only Microsoft’s blockage is internal according to Dick Brass, a vice president at Microsoft from 1997 to 2004.

Microsoft has become a clumsy, uncompetitive innovator. …

Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence.

The striking difference between the culture at Nick’s and the one at Microsoft is a real eye-opener.

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Do you wonder what’s happened to people over the last century and into this one?

Did something change or was it always this way?

When did fudging, dissembling, dissimulating, equivocating, falsifying, fibbing, inventing, misleading, misrepresenting, misstating, and prevaricating become business as usual?

Call it what you will, it is still lying.

Leaders, followers, parents, kids; religious or not; whether business or personal, everybody does it.

We lie to avoid confrontation; improve results; sidestep repercussions.

We lie to our friends, parents, kids, congregations, clergy people, bosses, workers, colleagues and service providers.

From why something/someone is late to income tax to stock option backdating and corporate results to campaign promises and disagreeing ideologies—the list is both endless and all encompassing.

Most of us don’t see ourselves as liars, usually because there are “valid reasons” for it.

But ‘reasons’ don’t change the bottom line and Plato’s words ring as true today as when he spoke them,

“False words are not only evil in themselves, but they infect the soul with evil.”

That infection has become a pandemic, spreading from one to another in both obvious and insidious ways.

It’s doubtful that there is any way to actually eradicate lying, but the next time you deviate from the truth think hard about your reasons; most of the time they won’t hold up.

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