Dov Seidman. How: Why HOW We Do Anything Means Everything. Wiley, 2007. (344 pages)
Foreword – President Bill Clinton
…it’s clear that we can no longer regard success as a zero-sum game: one group rising only at the expense of another. In this new century people worldwide will rise or fall together. Our mission must be to create a global community of shared responsibilities, shared benefits, and shared values. (xi)
When people from different backgrounds, regions, and sectors come together in the spirit of true collaboration, challenging each other to do more and to do better, we find answers to those how question, answers that make the world around us better and our children’s futures brighter. (xii)
Preface
In this networked global economy, it is getting harder for organizations and individuals to succeed just on the basis of what they produce or the services they provide. (xiii)
At the same time, in our hyperconnected, hypertransparent world, there is no longer such a thing as private behavior. For better or worse, everything that happens can now be forwarded, tweeted, and blogged about. We all now have unprecedented power to see over the fences and through the walls. (xiii)
There is one area where tremendous variation and variability still exist. There is one place that we have not yet analyzed, quantified, systematized, or commoditized, one that, in many important respects, cannot be commoditized or copied: the realm of human behavior — how we do what we do. (xiv)
…today, how we behave, consume, build trust in our relationships, and relate to others matters more than ever and in ways it never has before. (xiv)
THE ERA OF BEHAVIOR. …we really needed, and still need, a rethink of the human relationships underpinning that system. … You can solve a way-of-life crisis only by changing the way you live. (xvii)
All behavior is guided by values. There are only two types of values: situational values and sustainable values. … Relationships propelled by situational values involved calculations about what’s available in the here and now. They are about exploiting short-term opportunities rather than consistently living by principles that create long-term success. They stress what we can and cannot do in any given situation. Sustainable values, by contrast, are all about what we should and should not do in all situations. They literally sustain relationships over the long term. Sustainable values are those that connect us deeply as humans. They include integrity, honesty, truth, humility, and hope. Sustainable values are therefore all about how, not how much. (xviii)
HOW GOES GLOBAL. …the ideas in this book are universal. (xix)
HOW VALUES SCALE. …economic behavior has always had a moral dimension.
If you retain nothing else from this book, remember this: In the twenty-first century, principled behavior is the surest path to success and significance in business and in life. If that seems counterintuitive, it’s because we’re used to thinking that business and life are somehow different spheres that are governed by different rules. According to this logic, social and environmental responsibility is at best peripheral to the core purpose of business, which is to maximize economic profit. (xxi)
…too many of us failed to realize that technology not only interconnected us; it also made us morally interdependent. “Greed is good” and “too big to fail” are rational strategies for a world in which business and personal lives are separate. but they are the absolute worst strategies in a connected world where everything is personal because everyone’s behavior affects everyone else. (xxiii)
As I watched thousands of ordinary Egyptians demanding their rights in Tahrir Square, I felt that we received final confirmation that being too big to fail is a myth. Whether on Wall Street or in Cairo, it has certainly proven misguided as a strategy. Instead we need leaders, companies, and governments that are too sustainable to fail, too principled to fail, and too good to fail. | Why? Because in a hyperconnected world, more individuals and small groups can be a stronger force for more good or more evil. One individual can steal millions of personal identities, and one individual can spark revolutions for freedom across the Arab world. Essentially, we’ve democratized the production of good and evil. The closer we’re all connected, the more frequently we should expect the unexpected to happen. In a world of constant, radical change, we all need a bulwark that will act simultaneously as propellant and guide. We need to root ourselves in what we know should never change — our values. That’s why now more than ever we need people and organizations rooted in sustainable values. Such values do double duty by keeping you from lurching from crisis to crisis, from greed to fear. They guide you on a sustainable path of progress. (xxiv)
THE RISE OF INSPIRATIONAL LEADERSHIP. …we need to re-think the nature of leadership itself. …from “command and control” to “connect and collaborate.” It’s a move from exerting power over people to generating waves through them. (xxv)
There are only three ways to generate human connection and conduct: You can coerce, motivate, or inspire. (xxv) [VIA: There are only three true motivations in the world: rewards, punishment, and grace.]
As leaders, we need to rely more on inspiration and less on coercion and motivation, especially because we now are asking more of our employees and their conduct than we ever did in the past. (xxv)
In our radically interconnected world, leaders need to flip the switch and replace task-based jobs (which are about what people must do) with values-based missions. In short, it’s about how we should get things done. (xxviii)
Whereas coercion and motivation happen to you, inspiration happens in you. … HOW is an anagram of WHO. (xxix)
…inspirational leadership is the most powerful, abundant, efficient, affordable, and shareable source of human connection and guide of human behavior. This kind of leadership can inspire — and reinspire — over and over, without any cost and with dividends that never cease. (xxix)
THE HUMAN OPERATING SYSTEM. It’s about moving from freedom from micromanagement and unnecessary approvals to freedom to contribute one’s character and creativity to how the organization pursues its mission. (xxxi)
…organizations first need to build cultures that value humans and behavior at their core. (xxxi)
…philosophy…is fundamentally a discipline that teaches you how to rethink the world using observation and logic. (xxxii)
…values-based organizational cultures (those with a human operating system and inspirational leaders) much more readily adopt new ideas, are more innovative, deliver better financial performance and customer experiences, enhance their recruiting success, are less plagued by employee attrition, and find lower levels of employee misconduct and retaliation — all well-established building blocks of long-term sustainability and success. (xxxv)
THE PURSUIT OF SIGNIFICANCE. I believe that a truly useful book must deliver something more — more lasting, more essential, and more applicable to the full range of life. Instead of rules, steps, or an instruction manual, this book offers an approach — a framework and a way of seeing — to help you navigate the globally interconnected and interdependent world in which we now live and work. It offers a more positive, hopeful vision that will guide you beyond short-term rewards toward lasting success. (xxxv)
A new vision of HOW requires a new way of embracing why we get up every morning and go to work. I believe that the inspiration to do so lives in the thought that there is a difference between doing something so as to succeed and doing something and achieving success. Inspirational leaders understand this important distinction. They are mindful of the paradox of hedonism, which I discuss in this book, the philosophical idea that if you pursue happiness directly it eludes you. But if you passionately pursue a higher, more meaningful purpose, you can achieve happiness. I have learned from my work that there is a corollary to the paradox of hedonism. I call it the paradox of success — that you can’t achieve success by pursuing it directly. (xxxvi)
…inspirational leaders understand that hope is very much a strategy. (xxxvii)
Hope is a sustainable value that inspires us to see the world as a source of meaning and to connect with people in valuable ways. Hope is a catalyst. When we lose hope, we retreat into ourselves; we detach and despair. When we have hope, we lean into the world, and a sense of possibility takes root that allows us to connect with others and collaborate with them to bring these futures about. Like trust, hope is fundamental to how we connect in a connected world. Without hope there can be no progress, no innovation, and no lasting prosperity. Hope impels people to get up out of their chairs, and inspires them to take on challenges that they never dreamed of taking on before — and to stick with them however hard things get. Of course hope alone is not a strategy, but it is the essential starting point for any sustainable strategy. In this way, hope inspires the pursuit of significance. And that’s the ultimate HOW. (xxxvii)
Prologue: Making Waves
Starting a Wave requires an act of leadership, so you must be willing to stand up and lead. (4)
Clearly, how you communicate your vision — how you connect with those around you — directly affects the outcome… (7)
…you need to reach out to those around you, to share your vision with them, to enlist them in a common purpose. (7)
The best HOWs make a Wave continue long after it has moved beyond your reach. I’ve found that anyone willing to do so can understand, focus, and unleash that power in business (if not in all aspects of life) regardless of position, status, or authority. This is the first point of this book. | Individuals start Waves by acting powerfully and effectively on those around them. For the Wave to take off and go, however, the conditions in the stadium must be such that the energy generated by the few can flow easily to the many. (8)
Teams can create environments that allow Waves to happen. This is the book’s second point. (8)
It reminded me of the old story about two guys doing masonry work on a building. The first one, when asked what he was doing, says, “Laying bricks.” The second replies, “Building a cathedral.” (9)
To build and sustain long-term success in the new socioeconomic conditions that define our world, you must embrace a new power, the power in human conduct, the power in HOW. (9)
Part I How We Have Been, How We Have Changed
Introduction: The Spaces between Us
The space between them, where one person’s skin leaves off and another’s begins, is like a synapse. It’s the space in-between where we connect. … By analogy, in the realm of human behavior, everything that affects the spaces between us affects our ability to get things done. (14)
Chapter 1: From Land to Information
Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information? – T.S. Eliot
Land is a zero-sum game. … As we shifted from land to capital as the engine of wealth, however, the zero-sum mentality of feudal times remained. (18)
Lines of Communication
The telephone was the telegraph on steroids, and its impact on business was similarly huge. (20)
A single pair of optic fibers can carry more than 30,000 telephone conversations for distances of hundreds of kilometers, whereas a pair of copper wires twice as thick carries 24 conversations about 5 kilometers. When you apply new technologies like wavelength division multiplexing (WDM), fiber capacity increases by up to 64 times. … Suddenly, total global electronic communications consumed just 5 percent of transmission capacity. Transmission princes again collapsed (along with a lot of the companies hatched with the idea of getting rich quick on the back of this new technology), and we found ourselves in a world in which information flowed around the world instantly and cheaply like light through a darkened room. (20)
Getting Flattened
Information, unlike land and capital, is not zero-sum; it’s infinite. The more I have, the more you can have, too. And, unlike money, it is elastic; a dollar is worth a dollar no matter how much you desire it. Knowledge, in contrast, becomes more valuable directly in proportion to your need or desire for it. (20)
In the days of fortress capitalism, a professional class of lawyers, doctors, accountants, and other gatekeepers of knowledge took advantage of information’s elasticity and profited from it in two significant ways: They hoarded knowledge. … Simultaneously, they built indecipherably specialized language and complex codes — like legalese, the tax code, and other “fine print” — as barriers to keep people from gaining easy access to what they knew. (21)
The wired world, by conducting information so quickly and cheaply, in contrast removed the layers between individuals and knowledge, making the professional specialist somewhat less valuable and the information itself more so. Power and wealth shifted from those who hoard information to those who could make it available and accessible to the most people. | This simple fact makes the habits of fortress capitalism obsolete. … it is no longer about hoarding, no longer about creating secrets, no longer about keeping things private; it is about reaching people. (21)
The free flow of information significantly changes the way internal business units perform and are governed, and how individuals work together every day. Fading away are the days of the vertical silo model, when departments and programs within a corporation ran independent fiefdoms organized in top-down, command-and-control hierarchies in the spirit of feudal systems. (22)
Success depends on how people of diverse backgrounds and skills communicate with and complement one another. In a connected world, power shifts to those best able to connect. (23)
With the fundamental shift from land to capital to knowledge and information as the currency of business, we’ve seen a concurrent shift from the power of command-and-control hierarchies to the power of collaborative, horizontal effort. … | More profoundly than just getting things done, strong connections with others represent a value unto themselves. Relationships lie at the heart of who we are as humans. (24)
Though our jobs may make us wealthy, our relationships give us lasting value and enduring worth. Building stronger relationships, then, can lead to more than success: it can lead to a kind of significance. (24)
Chapter 2: Technology’s Trespass
Computers are useless. They can only give you answers. – Pablo Picasso
Communicate comes from the Latin word communicare, meaning “to share.” (25)
The Ties That Bind Us
The workforce has become an ecosystem comprised of mutually reinforcing independent agents. An ecosystem, by definition, interacts or it does not survive. (27)
…we have both thinner and thicker bonds with our various shareholders, stakeholders, and partners. They are thinner because the diverse types of relationship and connection we form with suppliers, freelancers, part-timers, outsources, free agents, and cooperative partners are no longer strong enough on their own to impel total cooperation. They are thicker in the degree to which we now may depend on these bonds to achieve critical goals. (27)
Distance Unites Us
David Hume once said that the moral imagination diminishes with distance. … our personal survival systems depend on not feeling implicated with things that are far away. (28)
For centuries, local proximity determined the majority of our social functions, containing us in relatively homogenous environments. … We now find ourselves in a world where we are thrust together in all aspects of our lives without borders and without the homogenizing pressures of locality. (28)
…new communications capabilities render distance irrelevant by connecting us instantly. In this proximal world, the opportunities for misunderstandings abound. How do you write an e-mail to someone if you can’t tell from their e-mail address if they are a man or a woman, what country they are from, what upbringing they had, or if they believe cows to be sacred or just lunch? (29)
[Here Seidman reports on a moral dilemma scenario and the differences between strong Protestant tradition cultures and Eastern Asian cultures]
Can You Hear Me Now?
What separates humans from other creatures is our uniquely complex ability to create symbols. (31)
When we communicate electronically, we communicate less dynamically, with less give-and-take. Electronic communication tends to unidirectional and sequential. (32)
Technology connects us more than ever before but those connections are more fractured and incomplete than we are accustomed to. Missing are many of the clues we need to fully decode the intentions of others. (33)
The Expectation of Response Factor exerts an influence on the quality of our communication, often forcing us to respond in less considered ways. (33)
The Age of Transparency
It has been said that information is like a toddler. It goes everywhere, gets into everything, and you can’t always control it. (34)
An information society also breeds a surveillance society. People are more curious and they look a lot more. (36)
The Persistence of Memory
The brain forms and stores memories by building networks of neurons. Each network imprints and stores the millions of detailed impressions that make up a memory. (37)
With the democratization of information, anyone can publish whatever they think at whatever time he or she thinks it, true or false. The standard of information verification has been lowered. (38)
A lie can travel halfway round the world while the truth is putting on its shoes. – Mark Twain (attributed)
The Information Jinni Is Out of the Lamp
We will never become less connected. We will never become less transparent. The information jinni is out of the lamp and he’s paying attention to no one’s wishes. (39)
…the destruction of the fortress, the flattening of the world, the rise of the business ecosystem, the fractured nature of virtual discourse, uncontrollable transparency, the destructive power of accusation, and the importance of reputation. With all these changes to the way we live, connect, and conduct our professional and personal lives, the questions become: How do we now thrive? How can we turn these challenges into strengths? We’ll answer these questions in the chapters ahead, but first there are a few more important issues to consider: changes in what society values, trusts, and relies on for stability in times of uncertainty. (39)
Chapter 3: The Journey to How
Just Do It
The habits and tendencies of the industrial age — efficiency, speed, and a focus o the bottom line — became all-consuming priorities. … Along the way, however, we lost the value of leadership. (43)
The Certainty Gap
We all carry in us a vision of ideal stability and security, an idea in our minds and hearts of what it would feel like to live a perfectly secure life. (44)
I have always thought that three pillars give life integrity: physical security, mental prosperity, and emotional well-being. (44)
The Limitations of Rules
Rules have been established for a reason, but most people are out of touch with the rationale and spirit of why. (47)
Rules fail because you cannot write a rule to contain every possible behavior in the vast spectrum of human conduct. There will always be gray areas, and therefore, given the right circumstances, opportunities, or outside pressures, some people might be motivated to circumvent them. When they do, our typical response is to just make more rules. Rules, then, become part of the problem. (47)
People who feel overregulated in turn feel distrusted. … With each successive failure of rules, our faith in the very ability of rules to govern human conduct decreases. (47)
There is something in the nature of rules and laws that reduces their effectiveness in certain realms of human behavior. How do you legislate fairness? What enforceable language can we use to enshrine into law a powerful value like that? … By setting floors of behavior, rules unintentionally also set ceilings. (48)
In a hyperconnected and hypertransparent world, you can no longer Just Do It; you must Just Do It Right. (48)
Outbehaving the Competition
To succeed in a crowded, global market of companies and people, we must find a way to differentiate ourselves from the competition in an enduring fashion. (49)
We have commoditized process and performance in the same way we have so much else, possibly to the point of diminishing returns. (52)
There is one area where tremendous variability still exists, however, one place that we have not yet analyzed and commoditized, and which, in fact, cannot be commoditized: the realm of human behavior — HOW we do WHAT we do. … When it comes to human conduct there is tremendous variation, and where a broad spectrum of variation exists, opportunity exists. The tapestry of human behavior is so varied, so rich, and so global that it presents a rare opportunity, the opportunity to outbehave the competition. (52)
The emerging trend among leading-edge businesses today involves delivering not so much a better product, but a better experience to their customers. The opportunity to differentiate by outbehaving the competition is the central raison d’etre for both this book and my life’s work. This concept, applied broadly to company/customer/supplier relationships and worker/boss/team relationships, is what I mean what I talk about innovating and winning through HOW. (54)
How We Go Forward
In 2005, Merriam-Webster reported that the number-one most looked-up word on its world-renowned dictionary web site was integrity. (54)
It bears repeating that we will never be less transparent, will never have less information, and will never be less connected than we are today. (55)
Part II How We Think
He who has a hundred miles to walk should reckon ninety as half the journey. – Japanese proverb
Introduction: The Paradox of Journey
If one really wishes to be master of an art, technical knowledge of it is not enough. One has to transcend technique so that the art becomes an ‘artless art’ growing out of the Unconscious. – Zen Buddhist scholar Daisetz T. Suzuki
Power in a world of HOW is not power over something, but power through something, like a network, or a synapse, or a circuit; a power that connects, not a power that commands. … To be on a journey means to focus on process not product, on HOW not WHAT, and on the road not the destination. (60)
Chapter 4: Playing to Your Strengths
We can’t solve problems by using the same kind of thinking we used when we created them. – Albert Einstein
Academics and scientists, it turns out, have begun to marry advances in their ability to see the brain at work with behavioral research in economics, politics, and other sociological activities, to reveal an inherent, biological human predilection for certain behaviors that increase our ability to be effective and prosperous. The networked brain and the networked world of business have more in common than we ever thought possible. (65)
Help
Humans routinely help one another, even if there is no payoff for the helper … altruistic helping. (65-66)
It turns out that greed, in the sense of doing only for yourself, others be damned, is not only not good, it is not natural. (66)
You Can Judge a Book by Its Cover
In order to help strangers — or vote for them — you have to overcome the biological fear response that they will harm you when you approach. In other words, you have to decide to trust them. (67)
First impressions, it seems, do count. Humans are biologically hardwired to make snap decisions to trust or distrust others. (68)
Looking Out for Number Two
Trust, it turns out, is a drug called oxytocin. (68)
…when you trust someone, their brain responds by making more oxytocin, which allows them to trust you in return. Reciprocity — doing unto others as they do unto you — seems therefore to be a biological function; trust begets trust. (71)
If trust is, as Zak explains, “a tangible, intentional act in which you cede power over resources to another person,” both sides can recognize extending trust as cooperation for potential gain. We generate feel-good hormones in the people we trust, and they reciprocate by trusting us in return. We, in turn, consciously or unconsciously acknowledge their trust with a similar biological response. Fear dissolves, cooperation ensues, and an upward spiral of mutual reinforcement thrives. We are on some level, it seems, hardwired to seek connections with others, to build biological networks to achieve greater personal gain. (71)
The Evolution of What is Valuable
Moral thinking [the capacity to conceive of social behavior in terms of values] can be found in every culture and throughout history, tracing back even to the Epic of Gilgamesh or ancient Egyptian writings – Dr. Richard Joyce
Now, here is a leap: Our biological propensity for values-based thinking leads directly to Adam Smith’s vision of ideal capitalist enterprise: the development of a free and fair market system based on mutual advantage. (75)
Thinking of something as mine/ours is a value-based admission, implying an awareness of rights: that is, if you have earned/created something, then other people are obliged to respect your ownership. Ownership engenders rights, obligations, and prohibitions. To create a market, both trading parties must be capable of this sort of values-based thinking and see the mutual benefit in exchange. (76)
Believe It
There is one last piece of the brain puzzle to touch on: belief. A belief occupies a very special place in the human intellect: It can exist int he absence of any objective proof, and often in the face of direct contradiction. We all have something of a system of beliefs. (76)
A big part of our humanness involves our ability to hold both factual knowledge and belief in our consciousness simultaneously. … The other side of this belief coin, however, is that belief can also negate fact. …it is important for our discussion to understand that believe and know have two different definitions and employ two different parts of our brains. (76)
…expectations play an important role in placebo effects. Expectations typically involve affective thoughts about current and future experience. In other words, our expectations can affect our experiences; beliefs can alter how we perceive information, and sometimes these beliefs manifest themselves unconsciously, separate from our conscious thought processes. (77)
Here is where belief enters the picture. If you believe that people are generally good and trust worthy, people sense that about you; they make quick judgments about your trustworthiness; and they return the trust more easily. Belief in trust created the conditions for trust, and the profit that results. (78)
Chapter 5: From Can to Should
[There is a] difference between what you have a right to do, and what is the right thing to do. – Potter Stewart, U.S. Supreme Court Justice
Rules as Proxies
In a rules-based society, we often choose efficiency over value, but, while rules-based governance systems may often serve well the values of fairness and representation, their seeming efficiency hides a deep and important flaw: We often rely on rules when they are not, in fact, the most efficient or effective solution to getting the result that we desire. Understanding that flaw is vital to thriving in a world of HOW. (85)
Despite the best of intentions, people create rules variously and often in reaction to behaviors deemed unacceptable to the larger goals of the group. That is why we often find ourselves revising the rules when new conditions reveal their loopholes. (85)
Rules respond to behavior; they don’t lead it. Rules don’t govern human progress; they govern the human past. This essential truth shapes our thinking about rules: To succeed, it seems to imply, we must learn to dance with the rules. (86)
Dancing with Rules
When I talk about rules, I’m talking about the rules that regulate behavior within the mainstream of socially acceptable action. (87)
As Supreme Court Justice Potter Stewart suggested, we’ve conflated legal permissibility with permission. Dancing with rules often leads to losing your sense of what is right for the long term. (87)
My central conflict with rules lies in the essential nature of our relationship to them; rules live outside of us. Because of this, we spend a lot of time and effort wrestling with them, trying to find ingenious ways around them or creative ways of living within them. No one internalizes the tax code, not even the accountants who make their living interpreting it. Human beings are natural problem solvers and enjoy the challenge of puzzles. We will always invent new loopholes, and no rule can govern all the cracks. (88)
Working in opposition to rules is simply the negative space of working within them; thinking just in terms of what a rule excludes is as limiting as being bound by what it includes. Too much time spent in the realm of law limits truly creative thought. | An excess of rules breeds an environment where we are less conscious about what is right. We become dependent on the rule book to govern our behavior. Where no rule exists — in those gray areas that we come up against every day — we sometimes feel we can do what we like. “If it mattered,” we think, “they would have made a rule.” Overreliance on rules also tempts people to play close to the edge. “How close can I go?” we wonder. We focus on exactly where the rule is and try to toe the line without exceeding its limits. (88)
Human conduct is more complicated than what the language of law can describe. Human conduct, in its infinite variety and creativity, defies reduction. It has a lot to do with aspirations and intentions, with back-and-forth interactions. … Rules, because they are made reactively, have difficulty keeping up with the infinite permutations and various shades of meaning that pass between people in the course of life. (89)
RULES ARE EXTERNAL
They are made by others.
They present us with a puzzle to be solved and loopholes to be found.
WE ARE AMBIVALENT ABOUT RULES
We know we need some and we want others to play by them, but we say, “Rules are meant to be broken.”
RULES ARE REACTIVE
They respond to past events.
RUELS ARE BOTH OVER- AND UNDERINCLUSIVE
Because they are proxies, they cannot be precise.
PROLIFERATION OF RULES IS A TAX ON THE SYSTEM
Few people can remember them all.
We lose productivity when we stop to look them up.
RULES ARE TYPICALLY PROHIBITIONS
They speak to can and can’t.
We view them as confiding and constricting.
RULES REQUIRE ENFORCEMENT
With laxity, they lose credibility and effectiveness.
They necessitate expensive bureaucracies of compliance.
RULES SPEAK TO BOUNDARIES AND FLOORS
BUT CREATE INADVERTENT CEILINGS
We can’t legislate “The sky’s the limit.”
THE ONLY WAY TO HONOR RULES IS TO OBEY THEM EXACTLY
They speak to coercion and motivation.
The inspiration to excel must come from somewhere else.
TOO MANY RULES BREEDS OVERRELIANCE
We think, “If it mattered, they would have made a rule.”
This presents us with a question: In a fast-changing world, is there a way to govern human behavior that proactively embraces change? (91)
Constitutions are powerful documents because they are filled with the values and principles of the people they govern, such as free expression, liberty, enfranchisement, fairness, justice, the pursuit of happiness, or the rule of law. These core, foundational values can be interpreted and reapplied to new situations as they arise. The more profound the document, the more durably it can adapt to changing times. The key to long-term sustained success does not lie in breaking all the rules; it lies in transcending the rules and harnessing the power of values. (91)
On the Tip of Your Tongue
Most people believe, for instance, that words follow thought: Something occurs to you and then you find the words to express it. In fact, studies have shown that the exact opposite is true; we think in language. (91)
…you are more likely to make certain kinds of assessments because of the nature of the language you speak. (91)
It is critically important to realize that in a hyperconnected world where information about your actions travels instantly to any interested party, people watching you will judge not just what you do, but how you do it. (93)
The language of laws and rules is the language of can and can’t, right versus wrong. It’s a binary language with little room for nuance or shads of meaning. that is why it is inadequate to describe the full richness of human behavior. We are, as people, so much more than right or wrong. (96)
In that difference — the difference between can and should — lies an extraordinarily important step toward thriving in a world of HOW: True freedom lies not int he absence of constraint; true freedom lies in the transcendence of rules-based thinking. (96)
Unlocking Should
To thrive in a world of HOW, you must balance your muscles of casual avoidance — as strong and developed as they are — with the ability to think in the language of values, in terms of should. (97)
There is little in rules that inspires; by definition, you comply with them. All it takes to honor a rule is to do what it says, and nothing more. Rules breed a culture of acquiescence in which everyone comes to terms with them and finds a way to live within them or a way to circumvent them — in other words, to live in their positive or negative space. While giving someone the advice to “break all the rules” is terrible counsel, giving them the opposite age-old counsel to “just play by the rules” is now not that much better advice. It consigns them to a life of external servitude and a compliant mind-set. Thinking in the language of values frees you from the tyranny of rules and from the illusion of freedom you have when in their negative space. (98)
Values have texture. (98)
Risk and Reward
Governing by rules shifts less power down the hierarchy, allowing those at the top to believe they can easily control the actions of those below them. … Leading from values, on the other hand, decentralizes power and shifts the responsibility for decision making into the hand of individuals at all levels. Values are not black-and-white or quantitative. Values are like trust: they empower others to honor or betray you. They open up avenues of possibility and leave room for interpretation. (99)
Chapter 6: Keeping Your Head in the Game
The shortest and surest way to live with honor in the world is to be in reality what we would appear to be. – Socrates
…how you bring yourself to the ball is almost more important than what you do when you get there. (106)
Distraction
The actions of any single individual can drain significant resources from a company and affect the fortunes of many. Major failures of conduct can bring about the downfall of a company or cost it millions in fines, legal fees, and lost business. But far more significant (and ultimately more detrimental) are the million small events — like that comment about cheating — that crowd our attention each day, activate our inner voices, and pull our minds out of the game. (110)
Small Lapses, Large Costs
Both positive Waves and negative Waves derive their force and power form the ways we choose to interrelate. (110)
Dissonance
Studies have shown that when confronted with situations like these the reasoning parts of your brain — normally employed for effective decision making and sound judgment — actually turn off, and the emotional parts of your brain turn on. Dissonance physically impedes your ability to think clearly, act with reason, and make good decisions. (114)
The opposite of dissonance is consonance, a sense that things belong together. Consonant messages inspire in those around you a greater sense of alignment to a common cause. 9115)
Even more damaging is the profound, deleterious effect dissonance exerts on people’s ability to learn and adapt to new information. (115)
Accommodation — the ability to reconcile conflicting ideas — is more difficult than assimilation — the ability to accept a new idea as wholly true. In other words, if someone is called upon to learn something that contradicts what they already think they know — particularly if they are committed to that prior knowledge — they are likely to resist the new learning. Studies o the brain have shown that not only will they reject the dissonant message, but, amazingly, will feel good about so doing; their brain actually rewards them. (116)
Emory University professor of psychology Drew Westen demonstrated how this works. He put self-described partisans from opposing political parties in brain scanners and asked them to evaluate negative information about various candidates. Both groups rapidly identified inconsistency and hypocrisy in the candidates, but only the ones they opposed. When Westen confronted them with negative information about the candidate they supported, the parts of the brain associated with reasoning and learning switched off and the parts associated with strong emotions kicked on. These strong emotional reactions allowed them to easily reject the information they found dissonant. Then something really interesting happened. Their brains released endorphins, the body’s natural opiates, flooding them with a sense of warmth and happiness. In other words, subjects rewarded themselves for finding a way to resolve dissonance without having to change their beliefs. (116)
Other studies of cognitive dissonance have shown that when learning something has been difficult, uncomfortable, or even humiliating enough, people are less likely to concede that what they believe is useless, pointless, or valueless because to do so would be to admit that they had been duped. (116)
Doing Consonance
You don’t have to be a passive victim of dissonance;… The most common resolution strategy involves changing one of the held ideas. (118) Another technique is to bolster the new idea… (119)
When the desire to achieve is strong enough, you sometimes trivialize a conflicting idea that prevents action. … When the challenge to deeply held beliefs activates strong emotional responses to new information, emotional expression can also remove the mind-clouding effects of dissonance. Talking about the emotions helps to normalize them, which minimizes their distracting influence. Lastly, if you can identify the source of dissonant ideas, sometimes simply avoiding the cause of them can be an effective strategy for keeping your head in the game. (119)
Friction
When distraction, dissonance, and cynicism overflow the boundaries of the mind and manifest themselves in conduct they contaminate these spaces. That’s where friction comes from. (121)
Putting It in the Whole
The ability to keep your head in the game is closely married to the ability to get your HOWs right, to build strong synapses between yourself and others, and to keep them clear and unpolluted in everything you do. If the challenge of living in a connected world requires us to make strong connections with others, we can only do so if we first accept the challenge of making strong connections within ourselves. (124)
Part III How We Behave
Introduction: How We Do What We Do
This part looks at the HOWs of behavior, the ways of conducting ourselves in an internet-worked world: transparency, trust, and reputation. (128)
Chapter 7: Doing Transparency
Sunlight is the best disinfectant. – Supreme Court Justice Louis Brandeis
Transparency — the new conditions of the world that allow us to see past the medium to get to the heart of the message — fundamentally changes almost every way we conduct our lives in public, (and in private), demanding a new set of HOWs if we really want to thrive. to understand these changes, we must consider two types of transparency: technological and interpersonal. Technological transparency describes the ever-evolving state of the networked world, the transparency that happens to us — transparency as a noun, if you will. … Interpersonal transparency centers on the realm of HOW we do what we do — transparency as an action, as a way of being, as a verb to be transparent. This is the active transparency we bring to our interactions with others. These two forms of transparency live in a symbiotic relationship, each fueling the other synergistically. The question before us as we consider what we need to thrive in the internetworked world is: How do we conquer our fear of exposure and turn these new realities into new abilities and behaviors? How can we become proactive about transparency? (132)
Beyond Proxies and Surrogates
Character is a difficult thing to judge, and yet we judge the character of individuals day in and day out… (133)
Like every city has some criminals, every organization has some bad apples; you judge a city by its laws and efforts to root out crime, and you judge a company by the programs and policies it has in place to keep people in line. City laws and company programs served roughly the same function in this respect, as proxies for their leaders’ efforts to stop crime. You don’t arrest the mayor or penalize the company for the transgressions of its bad actors. In legal terms, they call this the due diligence standard. Judging the actions of an organization centered around answering the question of whether it took reasonable precautions and preventive measures to protect against what ended up occurring; had the organization shown due diligence? (135)
Consumers, customers, regulators, judges, and juries have now begun to view companies from a characterological viewpoint. … According to a recent LRN study, an overwhelming majority of employees — 94 percent — say it is critical that the company they work for have a strong commitment to values. In fact, 82 percent said they would prefer to be paid less and work for that values-driven company than receive higher pay at a company with questionable commitment. (136)
ICU, UC Me
Technological transparency has lifted the veil of proxies and surrogates, leaving individuals and organizations exposed as never before. (137)
The Market Defines You
By the 1990s, brand messaging had become so abstract and sophisticated that the product itself often became less important than the image or associations that our most talented marketers could wrap it in. | The connected world is changing all that. (139)
The world is so transparent today that the minute you’re not honest and authentic with what you stand for, the damage can be done so quickly… Your customers feel like they’ve been fooled or tricked; they absolutely do feel like they’ve been betrayed. When a company has done such a good job in building up the trust in this relationship and then does something to crack that, the sense of betrayal is just huge. – Linda Wolf, former chairman and CEO of Leo Burnett Worldwide
Connecting with the market is no longer about propagating brand image or brand awareness; it is about asserting brand promise, a direct relationship between business and the market.
It’s all about trust… Trust is the key, and brands that consistently stand for something build that trust and build that credibility and build that relationship. When they do, it’s a rock-solid relationship that is very difficult to be broken. – Linda Wolf
All of this points to one simple conclusion: what you say about yourself now takes a backseat to how you create a rewarding and reliable experience for your customers. (144)
Say You Are Sorry
To apologize is inherently a dangerous act, but one with latent power. To apologize is to accept responsibility, this we all know, but it is also to cede power to the wronged party. You place in their hands the decision to forgive you or not. Apologizing requires willful vulnerability. It is the ultimate act of transparency, which makes it an extremely interesting example of turning the new realities of the hypertransparent world in your favor. (145)
Interpersonal Transparency
That’s the paradox of success. You can achieve it only by pursuing something greater: significance. (151)
There has never been a better time to turn your weaknesses into strengths, …because strength now comes with this type of vulnerability.
Sig, Don’t Zag
In a horizontal, connected world nothing achieves alignment and common purpose faster then active transparency. In fact, without it, they are almost impossible to achieve. (153)
You don’t want to do the right thing for the wrong reasons. It will inevitably backfire later. (154)
Vulnerability creates true opportunities for deep collaboration, a much more profitable relationship than just making money. (154)
DOING TRANSPARENCYThe Certainty Gap does not just describe a condition of the world; it also describes our relationship with those around us in business. There is a Certainty Gap between people, too. Business relationships are formal relationships, and just like companies use programs or advertising as formal layers between themselves and their market, people rely on personal surrogates and proxies in their dealings with others each day. When a buyer in a negotiation tells a potential vendor, “We’re talking to your competitors,” when it isn’t true, the buyer is using the illusion of false action to secure a better price. When a boss says, “Get it to me by four o’clock,” without sharing the reasons and benefits of the action, the boss is relying on the proxy of his or her position to get things done. When the world is opaque and you can’t see beyond people’s personal proxies, there is a Certainty Gap in your interactions with them. But when active transparency is in the room and people show you what’s behind the curtain, it raises the floor, the Gap is smaller, and the conditions that breed the trust you need to fill it rush in. The conditions of general uncertainty in the world make transparency – both technological when you can turn it to your favor and interpersonal when you can bring it to the table – into one of the most powerful HOWs there is.
Chapter 8: Trust
For it is mutual trust, even more than mutual interest that holds human associations together. Our friends seldom profit us but they make us feel safe. – H.L. Mencken
Trust is like the air we breath. When it’s present, nobody really notices. But when it’s absent, everybody notices. – Warren Buffett
The Soft Made Hard
We have two ways of calculating the value of trust: subjectively (how it makes us feel) and objectively (in dollars and cents). (159)
The wealth of a nation, “as well as its ability to compete is conditioned by … the level of trust in the society.” – Francis Fukuyama (161)
…when law breaks down — for example, if there’s a blackout and all the signals stop working — people do not suddenly go charging off at breakneck speed. Traffic, in fact, slows down. The absence of predictability makes everyone more cautious. People tend to prioritize safety over speed. … When we experience states of high uncertainty, everyone slows down, as does economic activity. (163)
How High Is the Ceiling?
Going on a TRIP
TRIP
Trust | Trusting, in a sense, means giving something away and ceding power to others, an essential step in achieving the outward focus needed in a hyperconnected world. Trust empowers others but, because it is a virtue, it also empowers one’s self. (166)
Risk | This soft thing called trust is actually the hardest thing of all. When it’s there, it allows you to take a risk, to leap higher. (167)
Innovation | Leaders who want employees to take risks must create an environment where risk can flourish, a trust-based environment. Trust enables risk, and risk leads to innovation… (168)
Progress | What happens if you innovate? You create progress. (168)
Tripping
Trust enables risk, which leads to innovation, which creates progress. TRIP. This is the basic formula for thriving in the hyperconnected, hypertransparent world of twenty-first-century business. (168)
Trust also frees instinct, another “I.” … What most people consider instincts are simply a complicated interweaving of experience, judgment, and sense perception that takes place in the synapses of the brain when face with making a decision. (169)
Doing Trust
You go up one run at a time, but when you slip you come all the way back down to the bottom. (172)
Despite the fact that we talk about “interorganizational trust,” organizations can’t actually manifest trust for each other. Trust flows from individuals. (173)
Trust Is the Drug
The first step is to listen to people. – Jeffrey B. Kindler
…find out what is on their minds, what bothers them about the industry, what bothers them about the company, what is frustrating them, and whether we are serving appropriate objectives. I’m trying to fully understand the source of the mistrust. (174)
Listening — the first crucial step toward gaining trust — helped him establish stronger connections with those he hoped to lead. By showing that he understood and embraced the challenges everyone knew were ahead, he was able to begin the process of building strong synapses throughout the organization. (175)
A cornerstone of trust is credibility. (175)
Keeping promises, acting in a consistent manner, building upon and extending the work of your predecessors … acting from principle, thinking in values terms and putting those values into operation, and pursuing activities of significance are all larger ideas that inspire trust in others. (176)
Trust, but Verify
At first blush, “trust, but verify” seems oxymoronic. If you are verifying, doesn’t that mean you’ve stopped trusting? (178)
Everyone also knows that the only way to find the people who betray your trust is to pay attention; attention is care as well. The key is to do so in a way that honors the needs of the company without undermining the commitment to trust. Random checks allow ongoing vigilance without imposing a compliance tax on the trustworthy. That’s what it means to trust and verify. (179)
Chapter 9: Reputation, Reputation, Reputation
Reputation in a Wired World
Reputation is the sum total of your HOWs: What you stand for, what you can be trusted to do, your track record of accomplishment, the esteem you have earned, and how you have been experienced by others. In a transparent world, reputation leads. It enters the room before you do, and remains after you go, either enhanced or tarnished. It records your past, but also creates expectations for the future. (186)
To have a reputation that is worthy of merit, other shave to impute something to you, that you are a good leader or a good executive, that you are consistently creative or a reliably hard worker, that you treat people well and fairly, or that you are honest. They only do that if they trust you, because reputation is a series of mutual connections. Consider reputation, therefore, as the sum of the trust circles you have developed over time, radiating out from you across companies, industries, and areas of endeavor. You build a good reputation when those who encounter you — employees, co-workers, and customers — trust you. (187)
Repuatational Capital
Delivering reputational consonance — giving others the feeling that what you see is what you get — creates quicker acceptance, stronger synapses, and greater opportunity. This, in turn, contributes to your reputational capital by increasing the trust circles around you, and, increasingly, your reputational capital is the coin of the realm that affects your buy-in to the biggest games going. (192)
Mismanaging Reputation Management
…reputation is not the same as brand, and does not equate automatically with brand awareness. (195)
The problem with external approaches to corporate reputation, and by extension trust, is that they look at reputation as a silo to be managed, a story to be spun. (195)
Great companies and leaders today know that their reputational capital is as valuable to their success as their physical capital. (196)
Reputation is who you are – Jeff Kindler
In the end, managers are not loyal to a particular boss or even to a company, but to a set of values they believe in and find satisfying. – Goran Lindahl
Those values, manifested as behavior and performance throughout every facet of an enterprise’s activity, provide the building blocks and mortar of reputation. They are the invisible added something that binds people together more powerfully than short-term gain. Instead of thinking of reputation and trust as just shiny surfaces on the walls of the fortress, we need to understand them as assets that provide the engine of our achievement. (198
Reputation is not about spin. It is merging what is real with what people think about you. – Charles Fombrun
Values. Continuity. Reputation. …You cannot get to a good reputation by cutting corners; reputation is on the square, or not at all. (199)
A Second Chance
Your reputation is not for your epitaph; it’s like a baseball player’s batting average — very difficult to move up more than a few points towards the end of a season. (199)
Reputation is built one interaction, one gesture, and one event at a time throughout your life. (200)
Part IV How We Govern
Introduction: Innovating in How
Business, simply put, is a vessel that contains and expresses the results of human endeavor. Within it pools much that we aspire to: meaning, success, significance, excellence, and contribution to the greater good. There, too, live greed, self-serving attitudes, covetousness, consumption, exploitation, and a host of our less savory qualities. A company or an organization forms to achieve a goal unattainable by an individual alone — a greater service to others, a larger product, or an advancement of human knowledge. For business to find its greatest expression and achieve its loftier aims, it must organize and govern itself in a manner that unleashes these higher forces in those who join within it. Every group faces the challenge of how best to accomplish this goal, an organizational premise that attracts the best and brightest, inspires them to achieve at the highest level, and generates sufficient reward — both monetary and nonmonetary — to compensate their efforts. (209)
Chapter 10: Doing Culture
I came to see, in my time at IBM, that culture isn’t just one aspect of the game; it is the game. – Lou Gerstner
The Sum of All Hows
Organizational culture, then, is really more like an ecosystem, a highly sophisticated, interdependent cosmos of evolving organisms with a profusion of interrelationships. More simply defined, culture is the way things really work, the way decisions are really made, e-mails really composed, promotions really earned and meted out, and people really treated every day. (218)
Much as some people say that character is one’s destiny, culture can be thought of as the destiny of an organization. (218)
The Spectrum of Culture
The Four Types of Culture
anarchy and lawlessness, a state where everyone acts in their own self-interest with little regard for the group dynamic or organizational ethos. (222)
blind obedience. (223)
informed acquiescence. …rules-based; those wishing to participate in the culture learn the rules and agree to abide by them. …informed acquiescence cultures tend to be management-oriented, with an established managing class and a well-entrenched bureaucracy. | Informed acquiescence represented a brilliant an innovated step forward from blind obedience. (223)
It treats people as rational agents; people who like carrots and hate sticks, people who like to be motivated because motivation leads to concrete results.
values-bases self-governance. … There is no gap, either personally or institutionally, between the individual and the best behavior. | Values speak to the higher self. They have the power to inspire and not just motivate. They breed belief. Values-based self-governance, in turn, performs a remarkable double duty: It controls unwanted behavior while simultaneously inspiring higher conduct. (226)
There are no hard walls between these four basic cultures; most groups organize themselves in a progressive and evolutionary state embracing elements of all four. (226)
Five Hows of Culture
Culture occurs at the synapses where people interact. (227)
How we know, How we behave, How we relate, How we recognize, How we pursue.
Chapter 11: The Case for Self-Governing Cultures
If from lawlessness or fickleness, from folly or self-indulgence, [we] refuse to govern [our]selves, then assuredly in the end [we] will have to be governed from the outside. – Theodore Roosevelt, 1907
Self-Governance on the Shop Floor
Freedom Is Just Another Word
Freedom does not mean anarchy. The freedom to self-govern actually binds people together around stated values and the desire to accomplish common goals. (247)
I told him I’ve never had control and I never wanted it. If you create an environment where the people truly participate, you don’t need control. They know what needs to be done, and they do it. And the more that people will devote themselves to your cause on a voluntary basis, a willing basis, the fewer hierarchies and control mechanisms you need. We’re not looking for blind obedience. We’re looking for people who on their own initiative want to be doing what they’re doing because they consider it to be a worthy objective. I have always believed that the best leader is the best server. And if you’re a servant, by definition you’re not controlling. – Herb Kelleher, Southwest Airlines
The rationale for centralized, top-down decision making —