Not long ago a friend was at a high school basketball game; the home team, from a wealthy community, was losing to the visiting inner city team. My friend was horrified to hear the home team students start chanting “We don’t care, we won’t fuss, someday you will work for us!”

He was even more aghast when he realized that many of the parents were joining in.

That’s why some schools are working to change kids’ MAP (mindset, attitude, philosophy™) by finding ways to teach empathy; programs such as Second Step and Roots of Empathy seem to be working in the schools using them.

Empathy is especially important for those kids from wealthy areas whose parents often have (hopefully) unconscious, elitist MAP.

But it’s hard to empathize with things you’ve never experienced.

Neither adults nor kids can understand hunger if they’ve always been able to eat when they feel like it.

It’s not just feeling hungry, cold, wet, etc. that creates empathy; it’s enduring them beyond where it’s comfortable that allows people to get some idea of what millions face every day.

Few adults like venturing outside their comfort zone and kids like it even less, but learning empathy requires discomfort. Go ahead, you’ll survive—I promise.

Please take a few minutes to read the article and think about your own level of empathy and the levels of those around you—at home, at work and elsewhere.

Then think about what you can do to increase empathy in your little corner of the world. Perhaps then we can replace one e-word, entitlement with another, empathy.

If everybody does that the whole world really will change.

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One of the hardest things that growing companies face is the need to stop shooting from the hip.

I hear the reasons not to all the time, from startups, small biz, entrepreneurs, et al:

• It will ruin our culture.
• It stifles creativity. It’s for larger companies.
• It’s bureaucratic. It’s too time consuming.

“It” refers to the underpinnings of all successful companies. “It” includes the following in order of importance:

• Financial controls that include
  • monthly statements of revenues by product;
  • discounts;
  • costs by department;
  • cost of goods sold;
  • inventory;
  • receivables aging;
  • stock issuance;
  • cash flow;
  • manufacturing yields;
  • hiring by department
• Annual operating plan covering the above financial measures
• Organization charts and definitions of responsibilities
• Hiring process
• Long-term planning
• Centralized information technology implementation and planning

Whether it’s just you, or one, ten, fifty, or more employees, whether full time, part time or virtual, you need viable processes to keep you focused—think of it as coloring inside the lines.

Everything on this list can, and should, be scaled for applicability, but all are important to every business endeavor.

Those that don’t directly apply may be tweaked, e.g., manufacturing yields can change to productivity measures; a very few, such as “stock issuance” may be completely discarded if the action is truly warranted.

Sure, they can’t all be implemented at once, but none of them will happen as long as your MAP rejects or begrudges them—after all, you’re the boss (CEO/president/managing partner/owner) and people will follow your lead.

Finally, don’t confuse process with bureaucracy. Process is like MAP, it gets you where you want to go, whereas bureaucracy stifles whatever it touches; process, like MAP, is ever-growing, while bureaucracy is carved in stone.

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Three great interviews on tap today with lots to learn.Unfortunately, I couldn’t get the embed code to work for either video (the Washington Post and McKinsey may need lessons from YouTube:), but they’re both worth clicking over to watch.

First up is Anne Mulcahy, chairwoman and chief executive of Xerox Corporation, a company that she took over on the brink of extinction and turned around. “In 2002 this company lost almost $300 million, and by 2006 we were making over $1 billion.” Now that’s a turn around!

When asked what the secret was, Mulcahy said, “It isn’t a secret sauce. It’s actually fundamental communications, in terms of your ability to really get out there and be with your people, tell a story. People really have to begin to believe in a story to get passionate about the direction the company is going in, which hopefully you’ve been able to do through the way you articulate it, simplifying the complex so that people can get their arms around it and see how they can make a difference. There’s nothing quite as powerful as people feeling they can have impact and make a difference. When you’ve got that going for you, I think it’s a very powerful way to implement change.”

Next is a video interview with John Chambers of Cisco Systems. The dot com bomb blasted Cisco and Chambers brought it back. In the interview Chambers talks about managing in this downturn, how collaboration is the next phase of management style, change, and identifying market transitions. He also discusses how business leaders need to “earn back” public trust, how he is adapting the company and why he’s “far from a perfect leader.”

Finally is a great McKinsey print and video interview with venture philanthropist Jacqueline Novogratz.

“As a venture philanthropist, Acumen Fund’s Jacqueline Novogratz leads entrepreneurial projects across the globe—many of which put women at the helm of emerging local businesses. In this video interview, she discusses her experience developing other women leaders, the way they have shaped her own approach to leadership, and the different leadership cultures she sees at play in the public and private sectors.”

Fabulous. Do click over to see the video and read the print part, also.

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Usually I only offer up one link when the reading is heavy, but today I have two.

The first is a book I read about on Expert CEO.

How We Decide by Jonah Lehrer is an exploration of “the neural machinery behind our decision-making processes: a network of dopamine-sensitive cells in the brain’s emotional and cognitive centers, which tie feelings and reason together so closely that the two operate almost as one. According to Lehrer, correct decisions require an awareness of both halves of the equation — and a perfect balance of visceral response and cognitive knowledge.”

I’m so far behind on my reading that I don’t know when I’ll get to it, but if one of you wants to do a guest review for Leadership Turn I’d be delighted.

The heavy reading comes from Max Bazerman, the Jesse Isidor Straus Professor of Business Administration at Harvard Business School. A working paper “shows that seemingly innocuous aspects of the environment can promote the decision to act ethically or unethically. Key concepts include:

• Once people behave dishonestly, they are able to morally disengage, setting off a downward spiral of future bad behavior and ever more lenient moral codes.
• However, this slippery slope can be forestalled with simple measures, such as honor codes, that increase people’s awareness of ethical standards.
• Moral disengagement is not always a necessary condition leading to dishonesty, but it may in fact result from unethical behavior.
• The decision to behave dishonestly changes levels of moral disengagement, and the awareness of ethical standards affects the decision to engage in unethical behavior.”

The paper is downloadable and I think you’ll find it interesting.

As always, your thoughts on the subject are of great interest, so please share them.

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The markets are in turmoil, the economy sucks, borrowing has gone the way of the dodo bird and businesses large, small and micro are looking to cut costs while still motivating their people.

For many companies this means a change in corporate culture, but which changes will have the most impact?

Short answer: creating/enhancing a culture of fiscal intelligence.

Long answer: a transparent culture that spends its money wisely, sharing the reasoning with its people, eliminating low ROI frills and cuts without selling the company’s future down the drain.

This doesn’t mean substituting crappy coffee for the good stuff and eliminating free soda or M&Ms as so many companies do.

It does mean listing all the frills—executive and worker alike—and polling your people to find which are really paying off and which can be scrapped—not a decision made by management, but one that your people hash out and agree to before it’s a done deal.

Sometimes good coffee and soda have a higher ROI morale-wise than you would think.

All this should be doubly true for startups, but it often isn’t. Yes, your money is banked and if you’re VC funded, as opposed to angel, chances are you’re pretty flush—but having it doesn’t mean you should spend it.

Any company that thinks cushy perks are attractive in this economy think again.

Think just how naïve/ignorant/arrogant a candidate must be to expect a large sign-on bonus or fancy perks given current economic conditions.

Not to mention how financially stupid any company still offering them appears to a candidate.

The smartest companies build fiscally intelligent corporate cultures from the beginning, so that when they have to tighten down they know exactly where to cut and their people aren’t surprised.

Throwing money around is always stupid, whether in business or personally.

I’ve heard from companies of all sizes and managers at all levels why this one candidate was worth X more than anyone else walking and how not getting her could deal a crippling, or even lethal, blow to the company.

If you ever feel that way, remember two inimitable truths.

• If not having that one specific person could bring down the company it’s probably going to crash and burn anyway.

• The candidate who joins you for money will always leave for more money.

Remember, the goal is a lean, mean, innovative, motivated machine—not a lean, mean, depressed one.

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The foremost thought to hold in you mind when creating a positive and powerful review culture is that it’s similar to Chinese cooking—most of the time is spent in preparation, whereas the food cooks quickly.

(Note: terminology can be confusing; ‘goal’ and ‘objective’ are interchangeable as are ‘appraisal’ and ‘review’.)

Here are the underlying steps that you need to learn, practice and absorb into your MAP.

Annual reviews alone don’t work even when that’s all your company requires.

To succeed people need semiformal feedback each quarter along with constant, informal daily input and coaching focused on helping them achieve the goals set forth in the previous annual review. (More on goals later.)

Reviews are the same as every other management task—they require good planning, open communications and accountability on both sides.

The first step to painless reviews is to commit to doing

• one HR-blessed annual review, with full paperwork, during the last two weeks of December;
• four quarterly reviews within the first week of each quarter; and
• constant, informal, ‘how am I doing’ feedback all year long.

Remember that

• any time you set a goal it needs a delivery date to be real; and
• never make commitments you either can’t or aren’t planning to fulfill.

First tell your people what to expect, then post your commitment on the department intranet and tell every person you hire how it works—and follow-through.

When you commit publicly you make yourself accountable.

Good reviews aren’t about filling out a lot of paperwork, whether by hand or computer. Yes, you need to follow company guidelines and use company approved forms, but as stated at the beginning, those are the mechanics.

The secret of a positive review culture is defining exactly what you want a person to accomplish during the year, discussing the goals and refining them together, in other words, the heart is the interaction between you and each person on your team, because one size does not fit all.

The result is that your people not only know exactly what their goals are, but they own them.

Setting Goals

• The basic rule is to never set more than three to five major goals in a year and the exact number depends on their size and complexity.

• Annual review goals should be high level, complex, and take 12 months to accomplish. They can include hard skills, such as technical certification, and soft skills, such as improving presentation skills.

• All goals should be quantified. “Be more willing to share” is a self defeating goal because it offers no way for the person or you to measure improvement; it becomes totally subjective, a matter of opinion and a source of contention at next year’s review. Instead the goal might be “Increase time spent sharing knowledge 10%” and agree on what the baseline is currently.

• Work together during the discussions to break down large/complex annual goals into smaller, more manageable goals that can be achieved each quarter and still more bit-sized pieces for each month, week and even day.

The cool thing is that achieving a constant stream of smaller goals keeps people motivated and prevents the large goals from overwhelming them.

And before you start complaining about the time involved, perhaps you should go back and read your job description or, better yet, go back a little further and think about all the lousy reviews you’ve had along the way, either because they didn’t happen or because they were all form and no substance.

Then think about, hopefully, the manager(s) who saw the value and used reviews to challenge, stretch and juice your growth, so you were ready for a promotion that put you in their shoes.

Then decide which one you want to be for your people.

Be sure to come back next week when I show you a simple, amazing tool that helps identify goals for each of your people and also has some terrific side benefits.

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A few days ago an executive I’ll call Dan called me to bemoan the lack of creativity in his organization and I told him to stop hiring dogs. He informed me that he had great people and when I agreed he demanded to know why I called them dogs.

The problem is that Dan hires people he likes who fall inside his comfort zone, so his organization gets along well. And while it’s well diversified from an HR point of view it has little mental diversity.

It’s a happy place, kind of like a dog park with a large variety of breeds and mutts all well socialized to play together and those that don’t play nice are asked to leave.

That kind of peace may be good for a dog park, but it can mean death for a company’s innovation efforts.

Unfortunately, people have been moving away from thought diversity for quite awhile now. The attitude has a name, homophily, it’s been around forever and it’s an attitude I run into frequently when it comes to hiring, although it’s rarely intentional. It’s a word you should learn just so you can avoid it.

It’s what makes it difficult for Dan’s people to be creative; when something is suggested it’s often accepted with little discussion and even when a counter idea is presented it has similar DNA.

It’s not that Dan needs to toss a bunch of cats in the middle, but he does need to start hiring people that come from a variety of companies and industries, with different experiences and with whom he may not be as comfortable as he is now.

It also means that Dan will have to work harder.

Not because his people won’t get along, but because diversity of thought does foster exactly what Dan wants—higher creativity.

Creativity means multiple ideas with no common DNA leading to passionate champions, intense discussions and heated meetings. Dan will have to actively manage the various elements if he wants to harness that energy for the benefit of the organization.

Whether you consider yourself a manager, a leader or a combination thereof, the more mentally diverse your organization the more difficult to manage, but the rewards are high for doing it well.

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As discussed last week accountability stems from the public nature of an action and one of the best ways to inject strong accountability into your organization is with a positive review function that your people might actually like!

Sound impossible? It’s not and over the next few weeks we’ll discuss how to make it happen.

The first thing that you need to understand is that there are two totally separate parts of the review process.

The visible part, the mechanics, is dictated by your company, but that’s all it is—mechanics; usually a timetable and a set of forms.

The important part is invisible and is bound by your MAP (mindset, attitude, philosophy™).

In other words, positive reviews are a function of how you choose to think about them.

Done correctly reviews are painless and even enjoyable for both parties.

Done incorrectly reviews are painful, embarrassing, discouraging, upsetting, frustrating or all of the above—for both parties.

The bottom line of reviews can be summed up in two words—no surprises.

Any time an employee is surprised by information during a review means that you aren’t doing your job as a manager.

You avoid surprises by understanding the philosophy behind the review process and how it should work and then allocating the time and effort to make it work.

How many times during or after your own annual review have you said out loud, or silently screamed in your head, “Why didn’t you tell me?”

How many times since you were promoted has one of your own people felt the same way?

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Why Can’t We Figure Out How to Select Leaders? was the question asked by Harvard’s Jim Heskett at the beginning of February.

It’s a pertinent question right now, since for more than a decade many of the people held up as examples of great leadership have fallen on their faces and even ended up in jail. Worse still, the companies they ran were destroyed or badly damaged—short term Wall Street numbers were met at the cost of long-term innovation and sustainability.

The Forum drew 88 comments that Heskett says fall in three categories,

• enumerating the qualities that we should look for in a leader without suggesting how we identify and select for them;
• the body of knowledge based on research and practice that can guide and improve the selection process and its outcomes; and
• why theory has had less impact on results than we might expect, essentially identifying reasons for a gap between theory and results achieved in practice.

Two quotes I found very pertinent from the original article,

“At most companies, people spend 2 percent of their time recruiting and 75 percent managing their recruiting mistakes.” — Richard Fairbank, CEO, Capital One

This is so true it’s depressing. I started my company to teach better hiring skills; it was funded by a retired CEO who believed that hiring was a manager’s most crucial task and that few managers were very good at it—boom or bust there was little interest. (Going forward, the information was folded into our overall coaching program.)

“There are certain jobs where almost nothing you can learn about candidates before they start predicts how they’ll do once they’re hired.” –Malcolm Gladwell (author of The Tipping Point, Blink, and Outliers)

Also true. It’s the difference of asking customers what they want and conceiving a product that no one mentioned because it didn’t exist—think iPod. There are no questions to tell you if a candidate can see around corners.

Even hiring a person who has done it before doesn’t mean they can do it again; there are just too many variables in any given situation.

How could you have hired someone to deal with the current crisis when it was unimaginable just a few short months ago.

Perhaps it’s time for companies to stop looking for guarantees, perfection or a savior—no candidate walks on water.

I believe what is needed is to spread leadership throughout the company and avoid hiring imperial egos. What do you think?

I hope you’ll take the time to read both Heskett’s article (short) and comments (interesting and valuable) and then leave your thoughts here.

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I was delighted when I was sent a free copy of Barack, Inc.: Winning Business Lessons of the Obama Campaign to review. Not just because I voted for him, but because this is a book about how to sell change, major change, to strangers and in doing so turn them into a community of supporters.

That’s what Apple did with the iPod and that’s what every CEO recognizes as being of paramount importance.

In a post last summer I said, “You must constantly change MAP (mindset, attitude, philosophy™)—your own, your people’s and your culture’s.

But it’s not just about managing change; it’s about creating a desire for it. It’s about creating an environment where changes are being driven by your workers, not just by you and your execs.”

That’s what Obama and his team did brilliantly and that’s why you should read the book.

Forget politics, think about the challenges your company faces. Survival isn’t enough.

The business world and consumer landscapes are changing—industries that downplay or ignore innovation to focus on survival and the status quo out of fear of upsetting their current business model are likely to be swept away by the transformation rocking the global economy.

To thrive, you need to engage your current stakeholders (investors, employees, vendors, current customers)—just as Obama did.

His success turned on three main points, he

1. kept his cool under all provocations,
2. applied social technologies, including blogs, texting, and viral videos, and
3. made himself synonymous with what he was selling—change.

Obama allowed nothing to be set in stone and moved swiftly when the landscape changed.

One of my favorite examples was his choice to reject funding limitations, although he had previously said he would accept them. Why?

Because he realized that the amount of money he would raise via the Net more than compensated for McCain’s bashing him for the switch.

Now substitute ‘innovation’ for money and ‘quarterly results’ for bashing and give it some hard thought.

Read the book; adopt/tweak/adjust its lessons and tools for your company’s situation and then execute, because all the theory and examples won’t help unless you have the courage to use them.

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