What if your next job was not about salary?

Somewhere down the line, we made a mistake. We forgot that work is not about uncomfortable toil in return for tangible financial reward. It used to be so in the industrial age but those days are long gone.

Unfortunately most corporations still create non engaging jobs and most employees keeps accepting them. According to Gallup only 13% of world wide employees are engaged.

So how come companies still think we are motivated by money and most of us still behave like we are?

What if jobs were not only measured against the tangible reward that were offered but by the intangible benefits that the job might involve? Would companies create different jobs and would employees take them rather than high paying jobs?

These are the central questions in this brilliant article by Lynda Gratton of London Business School. Her recommendation is to include the intangibles into the job description:

• How interesting and engaging the job is
• The challenge and growth opportunity of the job both from a personal and skills perspective
• The job being non-routine and in danger of being automated.

I would like to add:

• Is it a job with independence, choice and responsibility
• How meaningful the job is to the corporation.
• The job makes the world a better place by tackling some of the large issues in society.

If you think your next job is about money then you should be ready to accept a routine, boring, controlled, non-developing, meaningless job without responsibility.

Is this your next job? 

Maybe this is your current job?

How are you engaging your customers?

To create satisfied customers doesn’t really make you successful anymore – apart from creating value you also need to engage your customer to grow your revenue.

Customers are not just looking for the same product or service they have only cheaper or with an extra feature – they are looking for something radically useful or something that creates meaning for them.

Every market matures and in every mature market the product/service looks more and more alike. It will be based on the same technology made on the same factory or delivered after the same principles. Not much room for differentiation other than price that shrinks the pie for all market players. All products will eventually satisfy customers but not necessarily engage them.

To engage customers you will need to go beyond the product or service itself. It is not about what you do, it is about why you do it and how you do it.

 "Always start with why" Simon Sinek

Customer engagement is an emotional relation between the customer and one or more actors associated with the company. It is certainly possible to create an emotional relationship between a customer and a product/service brand as is seen with luxury items and cars; however this is not possible in most markets.

Relationship with the product itself

When products and services become more alike it becomes more important how it is made and what the overall purpose of the producing company is. It is not anymore about transactional selling but more about a relationship and eventually being part of a movement.

Relationship with the company

Customers don’t buy from you just because you want a lot of money but they might want to buy from you if your company is trying to support society or making the world a better place. The low priority of CSR in many companies, will not work in the future. It does not inspire customers or employees. The new hyper growth companies predominantly from the US, all has a strong purpose in the centre of their activity. Google, Apple, Tesla, Facebook and similar are not in the business just to make money – they want to make a difference also. This engages not only employees but also customers.

Relationship with touch points

The rise of the internet and social media has made many companies forget that their employees are vital in creating engagement with customers. Unfortunately only 13% of all employees worldwide are engaged and hence capable of creating customer engagement. The service aspect has also been neglected even though there is a higher probability in creating an engaged customer through a service issue than there is through a normal successful delivery.

The massive advertising on social media that looks the same as the old newspaper advertising can create awareness but is not successful in creating engagement. Most companies miss the point of having their senior managers’ active on social media (Only 28% of CEO has social media accounts). CEO’s have an opportunity to engage in conversations about purpose and sustainable production that can catapult engagement. Leaders like Tim Cook (Apple), Elon Musk (Tesla) Eric Schmidt (Google) are all very active in engaging both customers and employees.

Relationship with other stakeholders

The most important consumer buying decisions are heavily impacted by people close to the consumer and different interest groups. You cannot ignore Greenpeace, Amnesty international or trade unions anymore. The company need to include all stakeholders into their strategy formation and make it transparent. A transparent company does not need to hide behind a brand.

The link between Employee and Customer engagement

Gallup has shown that there is a strong relationship from Employee Engagement over customer engagement to financial results. Companies that manage to engage both customers and employees have 240% better results on performance related parameters.

"Companies that engage both customers and employees have 240% better results on performance parameters." Gallup

Why corporations love delegation and are scared of Empowerment

Not only does empowerment of employees take the load of the task away from managers, it also takes the load of the decision away, making the role of the manager much easier. The time the manager does not have to be in the operation, she can work on the operation – improving it.

Having more decision power closer to the customers and the employees create a more agile organisation that can respond to rapid or local changes without HQ being awake.

Decision power and responsibility is a powerful motivator that significantly increases Employee Engagement and through that increases customer engagement and financial results.

Most employees also tend to grow capabilities faster when trusted with decisions rather than being locked in a training room for mandatory compliance training. So how come many companies don’t really deploy empowerment?

So why don’t organisations embrace Empowerment?

Many organisations now see themselves as values based. This should in principle means less rules and higher ability for the individual contributor to have responsibility and decision power over what they do. Often in the same companies there are more rules than ever, often camouflaged as a need to meet governance, compliance or to lower corporate risk. Many of these rules are created to protect the organisation against potential actions of the individual employee - a strange concept indeed. 

Decisions are concentrated around a few select senior managers and delegation trickles down the organisation in a way that often is counterproductive to what individuals and departments are trying to achieve.

In these organisations it looks like control and hierarchy is more important than making the company great and able to create value. There are powerful forces that make it so, as senior management is always benefitting from status quo.

Their operating logic dictates that highly paid individuals knows best and needs to decide. While this might be true it completely disarms the organisation and lowers the engagement of the entire organisation. This can become a threat for the survival of the organisation. People without engagement stay and get their pay check but they are not motivated and do not contribute.

The direct manager

When divine decision does not create the intended greatness the spotlight is on the middle manager responsible for the implementation close to the employees. Creating an environment that punishes only increases the middle managers need for control and somebody to direct the blame to.

At the same time, it has become so popular to coach that managers call everything they do and have always done for coaching. Reality is that most managers are still coaching for compliance: Trying to manipulate the employee into what the corporation thinks is the right behaviour.

Delegation is a great tool if it is more important to stay in power than to create a great company and all stakeholders should analyse if their company has a delegating or an empowering culture. This is likely to determine their fate.

Seek companies with an Empowered Culture

The 11 questions that will tell you if your behaviour is collaborative

From the industrial age of business the concept of coordination has ruled the way people work together. Driven by directive and a singular focus on return to the ownership structure it is not based on trust or on team work, but often focused on a narrow short term cost based goal.

In the more modern knowledge area cooperation started to become more important. Although still a directed mandate it requires a higher degree of personal investment and motivation from the individuals participating. However cooperation still works inside the frames established by the operating logic of the company.

Neither works well when innovation or disruption are needed, which is why collaboration has emerged in the recent years. Collaboration is driven by mulutal self interest and requires a high level of trust and commitment for each party. It requires highly engaged people that are willing to challenge authority and status quo to unlock new value to the benefit of all parties.

These 11 questions will give you an idea if you are currenlty working in a collaborative way:

1. Are you unselfish and do not pull rank
2. Are you Inspirational and positive
3. Are you Committed to the team and the challenge
4. Are you Curios and have an open mind
5. Do you Participate but do not dominate
6. Do You Build trust and create a safe environment
7. Are you adaptable – not Dominant
8. Are you honest but with respect and tact
9. Do you Listen with the aim to understand
10. Do you Respect other persons and their views and ideas
11. Are you focused on Value Creation not value extraction

Top 10 dangers in your BIG is BEAUTIFUL Strategy

To want to grow and become a bigger company is a normal objective for most businesses, but in some companies it becomes the main purpose – above and beyond becoming a better company and creating value for the company’s stakeholders. 

Like revenue and profit, size is really an outcome – it is a measure of how much your customers are willing to pay for your services and how inspired your employees are. Both are shaped significantly by the way the company treats its other and often weaker stakeholders.

If customers and employees are just plankton feeding your corporate whale you can use the shortcut of an acquisition strategy.

Unfortunately the BIG is Beautiful thinking has been accepted as a commandment in the corporate religion not to be challenged – only good things comes out pursuing BIG. It is well documented that large companies have scale of economies and can do a lot of things cheaper than smaller companies. 

BIG companies can compete more effectively in traditional markets and squeeze smaller players out of the distribution channels and outspend them. This has worked in the industrial age and to a degree in the knowledge age – but the global business environment is changing:

• The average lifespan of an S&P 500 company has declined from 70 years in the 1920s to 15 years today. 

• More than half the S&P500 companies from year 2000 have disappeared. 

• There are 40% less public companies in the US than in 2000. In UK it is 50% less

If large corporations were a species – we would call it endangered - Lynn Stout, UCLA

If companies manage to get into fortune 50 they are almost guaranteed not to grow. So treating  growth and size as a married couple is wrong – they are not even dating!

Contrary to the BIG is Beautiful thinking it is not the asset builders that have dominated the most recent future – it is time to look at the dangers of being big.

Top 10 dangers in your BIG is BEAUTIFUL Strategy

1. Takeover targets are not just about tangible assets anymore.

To buy acquire a company you have to pay more than it is worth and find synergies (short for axing management and all staff functions, marketing and sales). This worked well when assets mainly where brick, machines, products and other tangibles but this has been overtaken by intangible values like knowledge, brand, engagement and networking capabilities. 

2. Asset hoarding is not the most effective business model anymore

The companies with the most effective business models seen from a revenue and profit perspective is not relying on the traditional logic of buying competitors or squeezing them out of markets. The new network companies like Google, Apple (in its app store driven version), Amazon and their likes are connecting manufacturers and suppliers with consumers and buyers in a massive scale.

The central goal was not to buy their way to big but to create massive value for users with radically useful products. Big was certainly an outcome.

3. Acquisitions are not as profitable as they used to be

 Few in numbers the network companies normally create markets rather than fight the incumbents in their well-defined little market sandboxes with set rules about who own the toys. In the process of creating new markets they destroy old markets. The incumbents in the mobile phone market fell as a result of the appstores – not the smart phones. The newspaper industry lost half its advertising revenue to Google in a few years and Amazon is closing brick and mortar stores. 

Being big in a market that is being disrupted does not protect a company; it just means a larger and more smelly carcass.

It is also well known that acquisitions are a reset button that can mask a company’s true performance. When the balance sheets merge the CEO gets a new lease of his corner office making it impossible to really measure the value of an acquisition.

Asset builders are not the largest animals in the jungle anymore and the networking companies don’t want to buy them or even compete with them. They will be outmaneuvered.

4. When you buy intangibles they might not work in your company.

This became obvious when McDonalds bought Chipotle and although they expanded the chain dramatically the Chipotle sustainability brand grew faster outside McDonalds. From a valuation of 1.5B$ in 2006 when it was sold to 23B$ today – this McDonald could not unlock. As knowledge become more generally available more value is locked in the engagement created with employees and customers. Both can walk out the door at any time.

5. A takeover destroys massive amounts of value

If an acquisition is driven by being “BIG” rather than synergies with the existing organisations the value extraction process becomes painful as cannot buy a company for what it is worth – you have to pay more. The headcount stripping exercise is only seen as impacting cost when in reality it affects all areas of the business – people have a lot of knowledge that is not captured in systems. A long time after the CEO declares the acquisition a success and completed customers and employees are still suffering from lack of knowledgeable people that could have intervened when the poorly integrated systems fail. Before the systems are up running the next acquisition will be lined up.

Synergies are often internally driven not market driven

If an acquisition was treated like a product 

6. Measurement often destroys more value than it creates 

The growth imperative often forces organisations to take a very short sighted approach. Acquisitions and other “getting big” initiatives have to be successful and results demonstrated immediately. Anybody that has been through a merger knows that it often take many years before the merger is settled – not quarters.

Large organisations also tend to measure the wrong things. Typically the focus is on the easy rather than the important measures which lead to a cost centric culture. Creating value and innovation is a long term process that cannot effectively be managed through cost control. Finally large companies tend to use the measurements for the wrong purpose. Measurements are typically used to control people and not to develop and motivate them.

“No measure does less damage than wrong measures or measures used for the wrong purpose” Jeffrey Pfeffer

7. Innovation and creativity declines as corporation grows

Most of the truly innovative companies of our time did not exist a few years ago and they claim to fame is not innovative products it is innovative business models and thinking. This kind of innovation rarely happens in large corporations.

Larger corporations also have difficulty tapping into their people creativity as the executive suite gets isolated from their people, from customers and society at large and frankly they often don’t believe in the organisations value capabilities

In a survey of 400 CFOs 80% stated “they would reduce discretionary spending on potentially value creating activities in order to meet short term earnings targets”   The Boston Consulting Group

8. The illusion of bigger means more diversified and lower risk

The prevailing wisdom is that when companies diversify they also lower risk although the financial crisis should have eradicated that assumption it still lives on. Markets are not safe isolated lakes where the larges fish rule – disruptors empty these lakes fast. 

Many companies rely on some commodities that seriously impact their business either as raw goods or as finished products. These markets used to follow demand and supply models before the derivatives markets started to dominate. Today every $ of commodity traded Is multiplied by hundreds of dollars of derivative contracts that are controlled by algorithms rather than people – perfect bubble economy conditions.

9. Corporate Silence, Effectiveness & Psychological distance

The larger a corporation becomes the more it follows the conventional wisdom it has created. There is no consent and all views are convergent with the logic of the corporation and its industry. This is coined corporate silence. 

In large scale organisations efficiency becomes the focus rather than actually investigating if processes create the desired output. Effective is forgotten and finally the psychological distance between large corporation managers and ordinary customers and customers becomes so large that they really fail to understand each other.

10. Large organisations have lower engagement

As Gallup has demonstrated, companies with a high level of engagement outperform their low engagement peers on all revenue, profit and quality parameters. 

At the same time they can demonstrate that there is a significant correlation between size and engagement levels.

Is it time to rethink your BIG IS BEAUTIFUL strategy?

Will purpose and transparency kill your business model? Better create a new one fast.

The traditional approach to employee and other stakeholder engagement activities has been addressed predominantly on an operational level  with a focus on what the corporation is doing. By changing practices it is indeed possible to impact engagement but only if your stakeholders believe that you are doing it for the right reasons and in the right way.

Stakeholder engagement  strategies should follow Simon Sinek's golden circle model – always start with the why, followed by the how before you even start thinking about the what.

The Why

Stakeholders will forgive you for mistakes done for the right reasons – not for perfect products created by the exploitation of others. Although most companies have been started to serve a specific purpose or create value for stakeholders, the same companies often over time transform their value focus to a cost focus. A transformation that narrows the value creation to one single stakeholder – the shareholder itself. Many senior managers proudly declare their purpose as serving the shareholder – even when the other stakeholders are listening.

“Problems are just businesses waiting for the right entrepreneur to unlock the value.” Jay Samit         

Assuming that taking from the environment, society, the customers and the employees to give to shareholders is in the best long term interest of the shareholder is not logical. The shareholder will benefit when all other stakeholders benefit in a way that creates long term sustainable competitive advantage.

Most companies start like disruptive wolfs hunting apathetic market sheep busy competing for grass. Over time they themselves become sheep anxiously scanning for disruptive predators while protecting their patch of grass. Not a purpose that is likely to engage stakeholders.

Preserving or recreation of the purpose of the corporation will be increasingly important with the wave of millenials taking over as the prime stakeholders. It will be important to have a ”why” that serves many stakeholders simultaneously in what is know as super alignment.

"Make yourself sheep and the wolves will eat you" 

Benjamin Franklin                                       

The How

The rise of the millenials also makes it important how corporations operate not only as a corporate citizen with respect for society, the environment, customers, employees and other stakeholders but also with transparency.

The concept of corporate transparency is developing rapidly and can be a major source of stakeholder engagement. From being a spotlight you only pointed at the cleaner areas of the corporate exhibition halls the social media revolution is illuminating everything, including dirty laundry. Transparency is not a strategy anymore – organisations will have to work on creating sustainable business models that can withstand light rather than try and sugarcoat the existing business model.

”Transparency may be the most disruptive and far reaching 

innovation to come out of social media”           Paul Gillin

Transparency normally stops when getting close to the business model and the supply chain. Traditional companies are not comfortable disclosing their internal costs of manufacturing and similar. The official reason is that it is proprietary information that needs to be held from competitors but it could also bet that  customers would be furious knowing how they get robbed. And the other sheep are probably experts in grass anyway.

A few brave companies are taking this next step and disclosing internal costs to their customers. The company Everlane in the fashion industry have given full disclosure in a market where 8x markup is common. No doubt they will attract unwanted attention to the other sheep in that marketplace and has the potential of becoming a wolf.

It is uncomfortable for most leaders to address the why and the how of their strategy. ”Why cant we just focus on the shareholder like everybody else”? ”Why can’t we hide the true nature of our operation so we do not attract uncomfortable questions”?

Unfortunately addressing the why and the how of the strategy is seen as a negative that adds costs and not as having the potential to create significant engagement with the company's stakeholders.

“The best way to predict the future is to invent it.”

                                                              Alan Kay

Shareholder focus kills employee engagement.

Corporate view of motivation

The modern era of HR is predominantly dominated by a Maslowian view of motivation: The individual is driven by a motivation to ffulfill increasingly higher needs depending on the completion of a lower level of motivation. Although still useful, the Maslow Hierarchy, used in an organisational setting, creates a division between the employee and the company. The company has to deliver a lot of elements to the employee or risk the employee leaving. This creates thinking where every dollar that is given to the employee is seen to come out of the shareholders pockets - a zero sum game. This has become evident in the pre Financial Crisis age where companies relentlessly have reduced headcount to meet cost targets, completely ignoring that the same employees had a positive impact on revenue. If the logic of employees only affecting cost was true, corporations should have no people at all.

Purpose driven motivation

A more useful model for human motivation is what is known as the 3^rd Viennese school of psychology based on Viktor Frankls work on Logotheraphy.  In opposition to the first two – Freud’s view of human motivation as search for pleasure and Adler’s search for power, Frankl work points towards humans being motivated by a search for meaning. Rather than seeing people’s motivation as a result of external stimuli he believes that motivation comes from within and is based on your subjective view of what meaning is. Despite meaning being subjective and situation bound, Frankl suggests that meaning is often associated with doing good for others, with love and with the freedom to choose your attitude in any given situation – even in hopeless situations.

A survivor of the Holocaust, Frankl got plenty of experience of humans in hopeless situations and found that the people surviving rarely where the physically strongest but more often somebody that had a strong purpose and a reason to survive. He captured it in the phrase:

It is not what you expect of life that is important; it is what life expects of you.

Frankl’s motivational model is becoming increasingly more relevant as corporations are starting to understand that employee engagement is crucial to the creation of sustainable competitive advantage. The traditional employee satisfaction surveys show the same and predictable results independent of it is conducted in successful companies or the opposite. Employee engagement is strongly impacted by purpose – both the purpose of the individual’s contribution to the corporate purpose and to the corporate purpose itself. And a good purpose isn't about making money!

Corporate purpose is important

The financial crisis killed the real and initial purpose of many corporations – a purpose often focused on bringing value to one or more of the company’s stakeholders. Instead a relentless shareholder focus took over in a way that would have made Milton Friedman proud. Making bosses and owners wealthier is not a noble purpose that engages employees and unlocks productivity. Jack Welsh ex Ceo of GE calls shareholder focus the dumbest concept he has ever heard of and Kip Tindell of Container Store says that shareholder focus alienates all other stakeholder groups including employees and customers.

A new and engaging way of creating value

Leading companies have found that creating strategies that serves the needs of many stakeholder groups simultaneously in what Tom Gardner, CEO of Moetly Fool calls super-alignment creates a strong purpose that engages stakeholders to support the company in a way that creates competitive advantage. The beauty of stakeholder alignment is that it also increases the value for the shareholders – a company loved by its customers and employees will not fail completely.

Talking against shareholder value is often seen as an attack on capitalism and the free market and a defense of totalitarian systems. Reality is that no company became great because they wanted to make money – they became great because they created value for others. Somewhere down the line it was forgotten that capitalism is a social experiment focused on value creation for others and not ugly exploitation of often powerless stakeholder groups to satisfy the greed of a few.