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Many leaders of small businesses want to serve the common good, but everyday pressures can make that extremely difficult. What tools are available to lead an organization that's obligated to more than the financial bottom line? Utilizing a sleek, condensed format, "True to Yourself provides potent, practical advice for leaders looking to make their small business profitable and sustainable. Arguing that small-business leaders that look beyond the bottom-line are not only more fulfilled, but also more successful, ...
Many leaders of small businesses want to serve the common good, but everyday pressures can make that extremely difficult. What tools are available to lead an organization that's obligated to more than the financial bottom line? Utilizing a sleek, condensed format, "True to Yourself provides potent, practical advice for leaders looking to make their small business profitable and sustainable. Arguing that small-business leaders that look beyond the bottom-line are not only more fulfilled, but also more successful, author Mark Albion shows how by embodying competence, commitment, and compassion any small businessperson can lead more effectively. A series of five best practices forms the basis of a full plan to that shows readers how to bring the three C's to their business. Equally useful for those starting out or veterans of many years, "True to Yourself reveals tried-and-true methods for keeping a values-based business on track.
In this chapter, we'll learn the three strategic requirements for building a successful values-based small business. The sooner you focus on these organizational values, the easier your job will be. It all starts with your example.
It's My First Day on the Job: What Should Be My Strategic Focus?
During my years as a Harvard Business School professor, I learned about leadership and strategy from the most successful CEOs of the world's largest corporations. In the 1980s and 1990s, I listened closely to General Electric's Jack Welch, who I believe set the standard for how to lead a profitable global corporation. His leadership mantra was simple: To dominate your markets, you must focus on whatwill increase your reputation and productivity or decrease your costs of regulation. Your success in managing these three factors will determine the
success of your business.
Seasoned business leaders know what their key determinants of financial success are. Many monitor them daily. For a retailer, the key determinant may be shrinkage. If inventory lost from employee theft, shoplifting, vendor fraud, and administrative error is less than 2 percent of revenues, this indicates that the company is running efficiently. For one executive director of a school for challenging teenagers, his barometer is the students' "positive feelings" created at school. He monitors them each night in his office on wall charts of data collected daily.
Whatever these determinants are for your company, CEO Welch maintains that you need to focus on the ones that have the greatest impact on your reputation, productivity, or regulation. Your job as company leader is to ensure that everyone understands that and is working in that one direction.
In small, values-based companies, these three organizational factors are no less important than in more traditional large corporations-at one level. But values-based leaders have broader company goals than CEO Welch and, therefore, a somewhat different set of organizational values as requirements for success.
Many are committed to environmental responsibility. It's not enough to make a simple calculation on what environmental regulations make financial sense to meet. For example, Aveda's founder, Horst Rachelbacher, once told me that when faced with potentially conflicting corporate goals, he expected his people to "report to the Earth." Profitability was important for the personal care products company, but most important was to "care for the world we live in ... and set an example of environmental leadership and responsibility" (part of the company's mission statement). If there were a conflict between the profitability of a decision and environmental damage, Horst and the culture were clear about what to do.
These values suggest that reputation is built on openness and honesty, what I call "transparency." "Sustainability" denotes longer-term thinking than productivity. "Responsibility" to people and the planet means that you do the right thing proactively instead of reacting to regulation. In this chapter, I illustrate these organizational values with examples of how they impact your job as a values-based leader.
Leading Transparency: How Much Openness Do You Want?
How much openness and honesty do you want to engage in every day? It's a lot easier to measure your C[O.sup.2] [carbon dioxide] emissions than the level of honesty and transparency in your company. What it's about is that when you are committed to a certain set of values, like transparency, you will communicate that in all you do, no matter what. Around here, if we mess up, someone immediately tells the person who writes our external corporate responsibility report to make sure that is included. JEFFREY HOLLENDER, FOUNDER AND CEO OF SEVENTH GENERATION, THE LEADING U.S. BRAND OF NONTOXIC AND ENVIRONMENTALLY SAFE HOUSEHOLD PRODUCTS
I often think of building a reputation as a marketing effort, an act of persuasion. Transparency builds your reputation as a leader and your business's reputation as a values-based company, too, but in a way that is stronger yet more delicate. Transparency is about being honest, open, and imperfect. Transparency means no secrets (within reason; e.g., trade secrets must be kept)-not only within the company but also in the marketplace. Its cousins are integrity, authenticity, and credibility. Its power comes from its source: truth.
The Power of Doubt and Not Knowing
Transparency requires that you change how you spend your time and how you lead. Listen to Danny Grossman, CEO of Wild Planet Toys, a manufacturer of innovative nonviolent products that appeal to both parents and children and treat girls and boys with equal respect. A former diplomat, Danny speaks thoughtfully and in measured tones: "How do you lead with doubt? How do you express that doubt? It's a critical nuance of leadership. If you don't express it, it will erode your credibility. So I'm clear about what I know and don't know. If we launch a product that I think might fail, I say so and say why, but I also always offer a Plan B, too, in case my doubts prove correct."
Leading with doubt and opening yourself up to other people's opinions and your own imperfections means you should be comfortable with not knowing the answer for everything-and spend time to develop Plan B, too! Women in leadership positions can face even greater challenges.
Nina Simons is the co-executive director of Bioneers/CHI (Collective Heritage Institute), a national nonprofit organization that promotes practical environmental solutions and social strategies for restoring the earth and communities. Though her résumé swells with experience, she has had to overcome insecurities by making peace with not knowing: "I've found that the practice of not knowing has a powerful effect on people. I had no formal business training, but I did have a strong innate set of skills and talents. I knew that the only way to work toward a leadership position was in an honest way, to recognize repeatedly what I didn't know."
Not knowing allows people to contribute and grow with you. But Nina knows it's important to let others know you don't know in a way that doesn't undermine your authority or sense of self-esteem: "We've all grown up in a culture that tends to value masculine versus feminine traits. There's often an acculturated insecurity among women, a fear of not being up to the task. It's taken me fifteen years to learn to value myself and gracefully accept my not knowing. You need to give yourself permission to fail and communicate that to others. My mantra is 'It's okay to not know.'"
Leadership requires that you continually reinvent yourself. At times you will fail. If you don't, you limit your self-expression and possibilities and create a stiff, conservative culture. Not knowing means that you look at power in a new way.
It's the power of transparency. If you set the tone that transparency is valued in your organization, doubt and not knowing can be celebrated as your leadership credibility rises. The same can be said for organizational transparency.
The Power of Open-Book Management
Popularized in the 1990s, open-book management calls for financial information to be shared and a process to be developed that enables people to use business information to improve their on-the-job success. It's not only a management tool but also a cultural tool that requires a shared vision and a group compensation system. Some values-based leaders take open-book management even a step further.
Joan Bavaria is the founding president and CEO of Trillium Asset Management, an employee-owned investment adviser. Slight of build but strong in her beliefs, Joan believes that it's essential to have truth in your organization, to have humility and not arrogance: "As a business leader, your job is not a popularity contest. It's to do the right thing and help people become the best they can be.
"Every employee can look at all our financials. All are invited to come in and ask questions after every board meeting. It's so tempting to try to manage what's happening and the dissemination of information. But you must let go of control to have honesty and transparency inside and outside the company. It's the only way to treat your people like grown-ups so that you can develop trust and build leadership in the company. It's the only way we treat anyone involved with Trillium."
For a look at transparency, visit Trillium's Web site and read a full report on the company. You can also read about the company's governance, compensation, and ownership. That's how Trillium builds its reputation.
Does Transparency Pay?
Like all values, transparency is a process always in need of improvement. Does transparency pay? Here's an example of how the lack of transparency hurt one values-based leader:
In the 1980s and 1990s, many values-based small company founders took paternalistic attitudes toward their employees, not treating them as "grown-ups," as Joan would say. They offered great pay and benefit plans. To do so, they took minimal salaries and accumulated little excess capital in the company for a rainy day.
That rainy day came in the late 1990s. For example, one founder who even had full paternity leave benefits for factory workers since the 1970s discovered that his employees were not prepared to accept that profits had been used to fund generous employee benefit programs. They thought that they were being lied to-that the founder had hidden the money somewhere. They couldn't believe how little the founder had taken the past decades for salary. When it was time to agree on some benefit and pay reductions to minimize layoffs, the founder stood alone. He'd never let go of control nor shared company financial information with his employees. He suffered the consequences.
Transparency shifts the burden of leadership. It creates its own culture and requires you to help build the business skills of your employees. It makes information available to others, even to competitors.
Full transparency is not for everyone. It can be personally difficult if you want to keep salaries confidential. (Use salary ranges instead.) It can be professionally harmful if employees leave and take confidential information to a competitor. Hopefully, if you build your organization on the values of trust, honesty, and openness, this won't happen.
Leading Sustainability: Can You Slow Down Your Business?
I was working in a very healthy ecosystem. Dad made sure every person in his [box] company felt they were a part of a vibrant, collaborative system, not separate from it. He also deeply valued family, vacation, and rest. To stay creative, he knew he needed to rest, and he encouraged others to do the same. His actions set the pace for our ecosystem. His pace told others to slow down, to know when to be the turtle and when to be the hare. LORI HANAU, PRESIDENT OF GLOBAL ROUNDTABLE LEADERSHIP, SUMMARIZING HER NINE YEARS WORKING AT HER FATHER'S COMPANY
Productivity is often based on working faster, growing more quickly, and reengineering operating systems for short-term efficiencies that may lead to layoffs. Business schools teach young leaders to put together a business plan, get some talent and money, launch the business, establish it, and "flip" it in five to seven years. Lead for the quick money, not a sustainable presence in the marketplace.
Leading a sustainable organization means knowing when to slow down and to take the time to, as Lori Hanau says, "clean up and nourish your own soil. That allows you to access your wisdom and creativity and to replenish what you take out for yourself, for others, and for the planet."
The Power of Patience
Lori and I frequently discuss our society's cultural obsession with size and speed. You know that if you try to do too much, if you get out of balance in your life, eventually you'll collapse. It's the same with building a company. You get caught up in the hype that bigger and faster is better. It takes you away from building a company that reflects your values and lasts.
I spent the spring of 2005 meeting with retired values-based CEOs of large companies. I asked them what was their primary company goal in their last years as CEO. The similarity of responses surprised me. To paraphrase, "I wanted us to build something special. My first priority was to get everyone to slow down and reflect on what's really important to do to reach our objectives. It's easy to forget in the hectic daily pressures."
Some CEOs instituted daily transcendental meditation. Others used off-site retreats. Several had regular get-togethers to relax and talk about the bigger picture-meetings they attended personally. Many instituted policies that forced people to take time off when it came due. The results were reinvigorated managers, new ideas, and more time spent on what was critical to accomplishing the larger goals. For example, attention to customer needs increased as less time was spent answering intracompany e-mails.
Values-based leaders are stewards, not predators. Make no mistake. Every successful values-based leader I've met has developed a best-in-class company. But it took time. As the president of the investment banking firm Condor Ventures, Adnan Durrani, who's also the founder of Vermont Pure Water Company and an early investor in organic yogurt manufacturer Stonyfield Farm, counsels, "It takes at least ten to fifteen years to build a good business. You need to set a tone that will provide the right foundation. Like Eileen [Fisher] did by slowly building a joyful, egalitarian culture at her clothing company. Or like Gary [Hirshberg] did, taking ten years to build Stony- field properly-not only to be a sustainable enterprise promoting sustainable agriculture but also one that is cautious about its own use of natural resources and careful about adding external pressures from taking in too much money too soon."
Adnan learned patience the hard way. He had been a go-go guy on Wall Street in the 1980s. He made a lot of money, but "what I was building was not sustainable. I was looking for shortcuts, pushing everyone and myself. I lost myself spiritually. Then, I lost all my money. It was the best thing that ever happened to me. It got me back on track."
The power of patience is ultimately the power of passion. If you have true passion for building your business, you can wait. You enjoy the journey. At times, that may require you to put a brake on growth.
The Power of Matching Market Growth to Company Capabilities
Most founders, or at least one of the cofounders, start off as the best salesperson in their company. But as they continue to "do their job," if they are not careful, sales growth can outstrip their people's capacity. This is not easy for them to accept, particularly when they have raised capital and fought hard to increase sales for most of their business years.
Excerpted from True to Yourself by Mark Albion Copyright © 2006 by Mark Albion. Excerpted by permission.
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