Response from B Shotton LiftOFF Leadership
The author makes some good technical, analytical and academic points about the responsibility executives have to profitability.
However there is something missing in this piece and it is the writer’s sense of the role of business in the grand scheme of humanity. The statement ” Companies that simply do everything they can to boost profits will end up increasing social welfare.” is just not true. It depends on how profits are distributed and what happens with those distributions. The argument that more money in the hands of the already wealthy is a primary engine of the economy doesn’t hold true either.
I believe that there is a fundamental need for leadership to balance economic value with human value; when profit becomes the primary reason for existence at the expense of the environment, without regard to the consequences of financially driven decisions on the lives of people and communities, then profit is not king as it inflicts suffering and degradation on society.
I also believe that this discussion needs to include integrity and the degree to which we value mankind when we determine how we will measure our leaders and how we will define success.
I am not espousing a disregard for profitability; obviously there is no business/no jobs without it. What I am espousing is that businesses/leaders are measured not on profitability alone but also on the consequences their product & services have on humanity and its environment.
I do believe that conversation alone, activists, government, self control…all have some impact on social responsibility but being good business minded people we also know that leaders need to be measured and exchanges want measurements and CEO’s want metrics.
I think what is needed is a measurement that is integrated into financial and corporate reporting that is an indicator of the impact the organization is having on the human and societal side of the equation…I call it VOP, the Value of People .This indicator is in the idea stage/ not developed but I believe that it can be with the right professionals involved.
The answer to the promise of a mix of profit and people, fiscal and social responsibility is to elevate the latter into the science of business, give it a name and give it a measure…let it be held up for discussion.
Its all about balance.
Betty Shotton
CEO LiftOFF Leadership
www.liftoffleadership.com

In further contemplation of the HBR article July 21 by Rakesh Khurana and associated responses I would like to add some additional thoughts about leadership and it being designated as a profession.

Underlying this discussion is the reason I believe for the discussion; that is the decline in public trust & confidence in leadership as a consequence of the egregious behavior of leaders in many arenas. I’m not slamming all leaders because surely there are many altruistic, effective leaders of integrity and accountability.

In my perspective and in the many conversations that I have with people about the state of leadership today, there is a lot of cynicism and distrust of leadership in general; many have given up on having respect for leaders at all.

I believe that this lack of confidence and trust is at the root of the need to even have a conversation about professionalizing leadership.

With that said, I believe that something needs to be done to elevate the behaviors, conduct and quality of leadership. Something needs to be done to restore public trust and confidence. And not just for the sake of restoring respect but for the sake of the future as it is affected by the conduct of leaders.

Developing a professional designation is in my opinion one way to solve what I consider to be a real issue around the poor regard that leaders hold now for all the reasons and more stated above.

A professional designation doesn’t have to be like accountants or physicians. It can be unique to leadership and developed through pulling together a diverse group of actual leaders, academics, consultants and employees to tackle the issue and arrive at solutions. They could start with a future vision of how leadership could look in the future and go from there with a strategy.

The Hippocratic Oath wasn’t a designation or something in a book for my father. It was an expression of what he believed in his heart was the reason that he was a physician. The plaque on the wall that he proudly displayed had nothing to do with money and everything to do with serving others. It was an ideal that he believed in. Imagine if leaders felt that way about their responsibility to and influence on the quality of the lives of others?

To me it’s not naïve to think that leadership can be moved I this direction; it’s necessary to our future.

Leadership in its positional authority can have a great influence on people and society. In that role leaders can do good or do harm. If a designation and program can be developed that will remind leaders of this then it is a project truly worthwhile.

The attached video is a quick reminder of how important it is to know where you are going and what you are up to…know and be clear about your commitments. If you just work hard and keep working, working, working without a clear sense of what is important to you and why you are doing what you are doing, then you will be easily detoured and also susceptible to burn out.

For example if you are leading a significant re-organization and are challenged by the chaos of change and the challenges of the never ending emotional issues involved in the human side of the equation, being clear about your overarching commitment will keep you focused…what is it? A vibrant and sustainable future for the organization? A promotion and upward trajectory of you leadership path? Keeping your commitments in front of you helps keep you on track and brings meaning and purpose to your endeavors. Meaning is, in and of itself inspiring and will keep you and your leadership vital and vibrant.

What are your major commitments..personal and career?

And I’m not talking about just the Presidency or big name/high profile names like Fuld or Madoff or Lay.

I believe that we are experiencing a growing public lack of trust and confidence and respect for the profession because unethical and self serving behavior amongst leaders is so rampant.

This poor behavior on the part of leaders has developed from a widely adopted Wall Street model that says profit at all costs…at the cost of jobs, the environment, sustainability, the health and welfare of customers and the public…profit at the cost of what is needed to actually sustain life in the long run.

This narrow focus has and continues to pummel humankind and our natural resources.

Do you agree/disagree and from your responses I would like to move forward with discussions of solutions.

Leadership crisis? Yes/ No?

Thanks for bringing up the subject of the “Non consciousness” in leadership. I like to refer to your use of the term as EMOTIONAL BAGGAGE.

We all have it; it’s just the degree to which our behavior and conduct is adversely affected by it.

In a perfect world leaders would have the enlightenment of Buddha and the humility born of the hardships and injustices endured by Nelson Mandela. Unfortunately most western leaders don’t get the opportunity to be wrongfully imprisoned for 27 years nor do many decide to cast off their inherited legacies of wealth and comfort for a lifelong pursuit of meaning.

It might be kind of ok to have wasted time and energy in the ranks as employees grabble with the complexities and dysfunctions of other staff members.

The same should not be so for leaders. Their influence is too great.

A leader’s emotional baggage can inflict much harm and is evident in the meltdowns of many a financial/business/religious and political leader recently…pick your scandal. Behind the dysfunction is a root cause that could be dealt with some analysis and time devoted to understanding oneself and doing the work and spending the time to correct resultant damaging behaviors. But leaders are not encouraged to do that.

Thousands of years ago the Delphi Oracle told us succinctly what was fundamental to progress, “Know thyself”. It is as pertinent today as it was then yet still we don’t take the time to do it.

Our business culture has largely modeled itself after the military so stoicism, stiff upper lip, hide your weaknesses has been the message to leaders for decades.

Perhaps it is time to start providing emotional training in MBA programs and push Self Leadership as a fundamental class for any Leadership Development Program. Send out the message to leaders that not only is it ok to get help with emotional issues but it is imperative that they  identify their weaknesses and  be willing to change and grow into an ever better person(on an on-going basis) .

A very wise friend of mine once said; “I looked at my life and noted where I hurt others and vowed to change the behaviors behind the damaging actions and/or words”…good advice for all of us.

9:27 AM Wednesday May 26, 2010
by Sally Blount  | Comments ( 2)

From the Gilded Age to the Information Age, business leaders who attain rock star status have often been the deal makers. When a megatransaction is completed, we see front-page stories in the business press praising their financial savvy. And the engineers of the deal offer prescient insights into the global market dynamics.

It’s not surprising, then, that business students often see acquiring market-based, transactional knowledge as central to their education. Indeed, an understanding of markets is a valuable and essential part of a business education, and mathematically based economic models are the best tool available for providing insight into the behavior of markets and the actors within them. But if the past few years have taught us anything, they have reminded us that models are not reality and that free markets are not so easily captured by mathematical equations.

By contrast, the ethical, social, and cultural values that give meaning to the organizations and institutions where we spend our working lives defy any attempt at quantification. These values are crucial to helping business people achieve a deeper understanding of markets and their own organizations. Values guide us to the non-monetary worth and meaning of our work, along with the civic obligations that come with it. Values guide successful leaders in the way they interact and communicate with employees, customers, civil servants, investors and others who surround them. Many would argue that this type of values-based leadership is so important as to be priceless. Yet you almost never read stories about values-based leadership or how a megadeal supports a corporation’s approach to social responsibility.

At NYU’s Stern School of Business we have embraced the study of meaning, values, and corporate social responsibility through our Social Impact Core. The Social Impact Core is a required, four-course sequence. It is where our undergraduates explore the assumptions and implicit values that underlie markets and other social institutions, like the legal system and government agencies. Students actively explore and discuss how these institutions intersect to create meaning, conflicts, and ethical dilemmas in the lives of consumers, investors, executives, and politicians each day.

The Core covers previously uncharted territory in undergraduate education and makes significant demands on both the students’ time and the university’s resources — accounting for 14 out of 128 total credits required for graduation. The extensiveness of the program reflects our conviction that business schools must take responsibility for helping our students, the next generation’s leaders, to uncover and examine the ideologies and values that underlie the mathematical and governance models that we teach.

Note that it is not the goal of the Social Impact Core to teach values per se. Instead, the goal is to provide a compelling context for our students to uncover and examine their own assumptions and values and compare them to those espoused by other thinkers across the ages — in sources ranging from classical literature and philosophy to the contemporary leaders who are frequent visitors to the program.

Those visitors reflect a wide range of ideologies and backgrounds, from conservative business leaders like Steve Forbes to liberal politicians like Cory Booker, the mayor of Newark, New Jersey. They appear in lively plenary sessions attended by all 550 of our first-year students. These plenaries are supplemented by twice-weekly seminar sessions, typically held to a maximum of 18 students, to encourage extensive face-to-face discussion. Substantive written assignments stimulate research and original thinking about the ideas examined in class. Subsequent courses lead students through stakeholder theory and the legal system, asking questions such as “Why do we need laws?” and “What is the purpose of the corporation?”

By senior year the social impact experience involves reading and discussing classic works by authors such as Cicero, Aristotle, and Gandhi on the ethical obligations of the individual. Students also learn to extract the messages about business and work delivered by Hollywood movies as well as in contemporary case studies.

 By forcing our students to examine and discuss assumptions, meaning, values, and social responsibility in different contexts across their four years, we hope to produce graduates who are comfortable with complex thought and do not easily fall prey to the illusions of mathematical quantification and oversimplified market ideologies. And while the Social Impact Core has been designed for our undergraduate program, I would argue that this intellectual approach is no less appropriate for MBA candidates.

Business is the dominant social institution of our time. The future stewards of that institution pass through our business schools during a period in their lives when they are arguably most open to exploring the relationships between personal values, markets, social obligations, and leadership. This is a responsibility business schools can’t afford to shirk and an opportunity we can’t afford to squander.

Sally Blount is the dean of the Stern School of Business Undergraduate College at New York University and dean designate of the Kellogg School of Management at Northwestern University.

LIFTOFF LEADERSHIP response May 27,2010

At this time in human evolution, our world and its inhabitants are in critical need of high caliber leaders with integrity. What we are experiencing however, is an alarming display of leadership corruption, fraud, greed, and a disquieting lack of regard for the needs of the greater good.

As leaders we must embrace values that give the fullest meaning to personal existence and bring stability sustainability and hope to the future of mankind.

 Our future will reflect the values, morals and ethics that are instilled in society largely through leadership.

As to measuring the contribution of ethical social and cultural values in the workplace, I believe that there is a way to measure that.

I have come up with a concept, VOP.  The Value of People could be measured by employee surveys, customer surveys, Turnover, Retention, Performance Data and other data that someone more analytical than me could develop into a valid and relevant statistic. VOP would summarize and give a point in time indicator of the well being of the human side of the balance sheet. VOP would be a part of financial reporting and stimulate executive discussions about the overall morale and vitality of an organization.

I invite anyone interested in furthering this concept to get in touch.

VOP…every bit as important as EPS, ROI and other measures that have dominated thinking that has led us to where we are today.

 Our future will be shaped by many of the students that come through our MBA classes.

It is high time we turn it around and a key part of that shift in my opinion is in the B Schools. I applaud your efforts.

Betty Shotton

LIFTOFF Leadership

.(Editor’s note: This post is part of a six-week blog series on how leadership might look in the future. The conversations generated by these posts will help shape the agenda of a symposium on the topic in June 2010, hosted by HBS’s Nitin Nohria, Rakesh Khurana, and Scott Snook. This week’s focus: values.)

For years some of us warned against the perils of an economy driven exclusively by self-interest (made evident by the financial disaster of 2008) and vigorously argued for management, like other professional disciplines, to require its members to accept a code of conduct and make a public commitment to do no harm.

We even went as far as to propose various versions of such a code of conduct, and now some of these codes have actually been adopted by MBA students (e.g. the MBA Oath started at Harvard), business schools (e.g. Thunderbird), and international associations (e.g. the Forum of Young Global Leaders). The Oath Project was established last year, as well, to propose a universal professional code of conduct for managers, the current draft of which has been endorsed by organizations such as the United Nations Global Compact, the World Economic Forum’s Young Global Leaders, Net Impact, and the Aspen Institute.

But perhaps the message we have yet to convey in a compelling enough way is that a commitment to serve the public good not only benefits society but also is a vital element of effective leadership and a precondition for organizational success.

Research by my colleagues Mary Sully de Luque and Nathan Washburn shows that CEOs who frame decisions in pure economic terms tend to be perceived as more autocratic and less visionary than leaders who express concern for a broader set of stakeholders through, for example, a commitment to public good. And the more visionary a leader is perceived to be, the more willing employees are to go the extra mile and consequently deliver higher performance.

To lead is to influence others without coercion. To follow is to take a leap of faith and put your future into someone else’s hands.

Before taking this risk, followers seek out proof that a leader’s values are solid and compatible with their own. Above all, they look for evidence that a leader is not driven exclusively by self-interest and will take others into consideration when making decisions.

In the modern corporation, the motives driving a leader may not always be perceived as trustworthy because significant personal gain in the form of power, status, and monetary compensation is inevitably at stake. The higher the position in the organization — and the greater the sphere of influence a leader commands — the higher the stakes become and the more questionable the leader’s motives can appear to would-be followers.

Corporations may have “no body to kick and no soul to damn” as the old adage goes. But their leaders do. In fact, it is followers’ perceptions of a leader’s “soul” that can make or break the deal. One of the greatest challenges of any corporate leader is to convince everyone else that they will not compromise the interest of the corporation, if not society, for their own benefit.

Taking a public oath to safeguard the interest of the corporation above one’s own and to refrain from practices that are harmful to society is not the only way to earn the trust necessary to lead effectively. But it can be a terrific place to start.

RESPONSE FROM BLS LIFTOFF Leadership

You have to start somewhere and these Codes of Conduct are a beginning step ! Up until recently there were no Leadership Codes of Conduct; MBA programs had the obligatory ethics class. The academic environments of leadership focused on the technical, structural and strategic skills and gave passing attention to the “sissy” realms of altruism, contribution,sustainability, collaboration and genuine caring about the impacts arising from capitalism. Thankfully we are seeing more emphasis on leadership conduct and character in HBR as well.
I applaud the Students & Faculty at Harvard, Thunderbird, Kellogg….and organizations such as The Young Global Leaders(it obviously made an impact on Shai Agassi) for bringing the critical issue of leadership character and conduct to the forefront of leadership development.
I encourage business professors, educators, authors, lecturers,students to turn up the heat and keep the momentum going in stressing the importance of integrity, purpose and service in leadership.We sure have enough intriquing case studies to capture MBA student attention in demonstrating the fallacy of a”money and growth at all costs” model; plenty of juicy case studies of leaders in all realms of business/politics/religion operating out of integrity and the disastrous and far reaching negative consequences of that behavior.
I hope we finally get it, that leadership has a huge impact on the direction of the future and we need to get great leaders in place before we tip every ecological and human system on our planet.
Betty Shotton