Category: 07. Discernment and the Predicament of Control

LINKING THEORY + PRACTICE

~ ricardolevy ~ 3 Comments

When uncertainty reigns and an economy shrinks, management may downsize. Typically governed by conventional management thinking, most such efforts are damaging to culture. Yet, the downsizing process can lead to long-term higher performance.

Read “Leading through Crisis: When Downsizing Results in a Standing Ovation” in People + Strategy Journal, by Robert E. Quinn, Ricardo B. Levy and Brad Winn.

Watch the video “Leading in Crisis: A Downsizing and A Standing Ovation” — Brad Winn interviews Ricardo Levy and Robert Quinn

THE ANATOMY OF LEADERSHIP

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All important business challenges involve complexity and significant uncertainty. While the most difficult ones often tax our capacity, they also offer us the opportunity to engage all of our training and preparedness as leaders. Such challenges may require us to not only contribute, but often to create something new and unanticipated, and each challenge that we overcome is a wonderful opportunity for us to learn. My purpose in this article is to share some of my more difficult experiences, and what they teach me about refining our leadership capabilities and qualities.

I was trained as a scientist and engineer. Science enhanced my inclination to imagine molecules in action; engineering made me a “systems thinker.” I learned to scope a problem, formulate possible solution paths, prioritize and dive in. I was taught to seek the full extent of possibilities and to examine all relevant variables, trying not to leave behind any critical issues that might trap me later.

This broad systems thinking served me well as I entered my PhD thesis work. I was comfortable with the technical complexity, and I welcomed the uncertainty as an opportunity to find pathways others might not have tried and could thus lead to novel discoveries. Anxiety did occasionally creep in as I faced difficult technical hurdles and, in particular, as time pressures (often self generated) bore down on me. But the excitement of scientific discovery kept these concerns in check.

And then I started a company.

The scientific challenges were still there as we tackled ever-more-complex problems, seeking new pathways that would give our company a “raison d’etre.” My colleagues and I handled this quite well, largely because we were fortunate in attracting superb talent. But this was only part of the challenge for me. The scope of the issues I faced increased well beyond my training: finance, legal, personnel, human dynamics… the list went on. We engaged experts in these various domains but, in the end, as a co-founding entrepreneur, I had to “hold it all together.” The analytical thinking that I was so accustomed to did not always adequately address all of the issues I faced, especially those dealing with human dynamics. These unfamiliar challenges created a fertile medium for my anxiety to swell. Most of the time I somehow managed, running more on intuition and momentum than through thoughtful reflection.

It is only recently that I have begun to more fully understand what was going on inside me, to recognize what worked (particularly in times of crisis), and to analyze what I might have done so much better. I’ve shared some of this understanding in two previous posts. (1)(2) Here, I want to offer a summary of what I now recognize as critical leadership capacities, in the hope that those of you who are still “in the trenches” will benefit from considering how you might improve your own leadership efficacy. I’ve distilled these capacities into three essential skills that I believe can make us all better leaders:

  1. Finding clarity in complexity
  2. Creating safe spaces
  3. Acknowledging the leadership covenant

FINDING CLARITY IN COMPLEXITY

In my April 2, 2017 post, I referred to a wonderful quote attributed to Chief Justice Oliver Wendell Holmes: (3)

“I wouldn’t give a fig for the simplicity on this side of complexity, but I would give my life for the simplicity on the far side of complexity.”

The more I think about this statement, the more I come to appreciate my discernment process and the shortcuts I had taken, over the years, in my decision-making.

I boil it down to the following: In order to make fast decisions (and gain the accompanying sense of being in control of the situation), I had often minimized the time I was willing to spend in the limbo of the unknown. As a result, I would avoid dwelling long enough in this uncomfortable zone, failing to soak up the fullness of the complexity and thereby failing to give new pathways a chance to unfold. Perhaps, responding to pride in my engineering agility which made me capable of processing complex technical questions quickly, I would “skim the surface” of the problem and grab the first solution offered by my intellect. Having found a quick solution would make me feel good and decisive, even when the dimension of the issues far exceeded the scientific or technical hurdles and required much more intuition and heart. Fortunately, I often injected just enough intuition and heart so that the outcome was positive — but not always. And even when it worked, I wonder in retrospect if I achieved the best possible outcome or if I had chosen too quickly. Had I simply been settling for the comfort zone that had much less tension rather than the challenge zone where the issues would have lingered longer in an unresolved state?

Holmes articulated the importance of holding within us the fullness of the issues and problems, in all their glory and gore, whether they are technical, legal, financial or human. This requires withstanding anxiety and coping with discomfort in order to make way for the peace needed to allow all of our talents to come to bear in the quest for clarity.

How to cope with this anxiety?

I have previously described the metaphor of the crucible of anxiety, so well characterized by Bob Quinn. (4) Accepting the need to immerse oneself in complexity, with its potential to generate anxiety, is an important first step in subjugating the tendency to skim the surface. For me another step was required. I needed a mind-shift. The metaphor I successfully adopted was to transform the crucible to a chalice. This mental transmutation was, in effect, my way of creating within myself a safe space. I needed to give myself “permission” to hold all the issues in a benevolent domain where nothing was adversarial and nothing was prejudged. The only thing that mattered was to hold my greater purpose in mind: my role in and responsibility to the entrepreneurial endeavor. In this safe space, I was reminded that my task was one of service rather than a burden of office. In effect, I was converting an arduous task into a sacred mission, one that transcended my presumptions and served a higher calling, namely the mission I had signed up for on behalf of my company, a mission that was congruent with my life’s purpose. This safe space also shielded me from the over-intrusion of my ego.

There is an important additional shift that comes with the transformation of the crucible to the chalice: the change from anxiety to anticipation. Rather than dreading the next steps and fearing the next encounters, there is a wave of anticipation for what will unfold and my role in it. While anxiety does not fully disappear, it is softened by an expectation of change, of resolution, of service. Once our attitude of service takes over, we are well on the way to a positive resolution: We have found a safe and meaningful space.

Many years ago, when we suddenly lost a major partner and had to reduce the company significantly to survive, I was actually creating this safe space within myself without being aware of it. My sense of mission enabled me to survive this horrific episode with my integrity intact, my self esteem still more or less whole in spite of the trauma, and an ability to take actions that were consistent with my values. We reduced the company in a manner that everyone supported, both those who remained and those who moved on. It was a terrible experience that I would not wish on anyone — but it happened, and we had to survive. I created a safe space within myself and, without even being aware of it, I also created a safe space within our company for all to express their feelings and to help discover the solutions we had needed to sustain our mission and our company.

More recently, in dealing with a difficult business reality facing an organization for which I served as a Board Member, I much more consciously transformed a crucible into a chalice. This safe space allowed me to alleviate a state of mind so constraining that I had not been able to think straight. Unshackled from my anxiety, I became a positive contributor, able to help the company and the Board to arrive at a responsible resolution that was necessary, albeit disappointing.

CREATING SAFE SPACES

The same mindset that creates a safe space for coping with complexity and managing anxiety within oneself can also enrich the environment for our teams.

My friend and mentor Andre Delbeck often reminded me that the complex strategic decisions we face in business typically have 18 to 30 distinct variables, yet the human mind is capable of handling, at best, only 5 to 6 variables at any one time. This emphasizes that we should not go it alone when attempting to resolve complex situations. While I knew this, my impatience, my ego and my control syndrome often tended to push me to do it all myself, rationalizing that it would be faster, more expedient and more likely to be done “as I envisioned it.” Especially in the pressured rush of the moment, it’s wise to recall Andre’s admonition, lest we forget our human limitations and weaknesses.

Therefore, it’s just as vital to carve out safe spaces for our teams, as it is to create them within ourselves. This ensures that we allow others to contribute their best. A safe space minimizes ulterior motives, discourages criticism of out-of-the-norm ideas and supports brainstorming, free from repercussions either in performance appraisal or job security. The energy should all be directed to solving the problem, not to preserving our self-esteem or our status. Bob Quinn aptly describes this as a place where “the ego’s driven need to be right is replaced by the shared need to learn.” Again, this moves us from anxiety to anticipation.

I often call this safe space a “sacred space.” I don’t intend any religious connotation here. But a safe space embraced by all participants, which is free of ego-driven contamination and does not enable the petty, self-serving motivations of any participants, is sacred in that it honors a shared higher purpose.

Once created and embraced by the team, sustaining the safe space becomes the leader’s task: a responsibility that’s part of the leadership covenant I address below. This can often be challenging, and I have recently found it particularly daunting in several Board situations. At times, I have deeply felt the fraying of the safe space, yet I either did nothing about it or my efforts were weak. This has occurred primarily when the CEO or Chair has held too tight a grip on the Board. By the time the repercussions were felt, it was too late to do anything about it.

The one key factor most frayed in these situations is trust: trust in the leadership and trust in one another. Trust is a critical factor in all interactions. As leaders, we can provide a sort of “trust glue” that holds together the safe space needed to foster productive interactions.

So how do we gain trust?

My friend Steve King, who heads up the University of Wisconsin Business School Executive Program, pointed out to me that trust has two aspects: professional and personal. Professional trust embodies competence in our field and the rigor of our thinking. Personal trust is much more intangible and intimate, perhaps best described as a “warmth,” a sense of simpatico, a connectivity, an openness, a feeling of accessibility. Trust, both professional and personal, grows with time and familiarity: Professional trust grows with our track record; personal trust with our behavior. And both are needed for us to be effective leaders.

Personal trust is more difficult to attain, requiring that a connection be forged between individuals, a linkage that becomes stronger with time and the intensity of mutual experiences. A significant advantage is a trustworthy personality, characterized by a demeanor that invites a sense of ease. If we are comfortable with ourselves and at peace, we will stimulate trust. By contrast, if we tend to be suspicious by nature or overly protective of our personal space, it will be more difficult to generate the trust of those we need the most.

Each of us emanates a certain level of trustworthiness that comes from deep inside and manifests itself even in our facial expressions during interactions. The best advice I can offer, in this regard, is to attempt to be aware of our trustworthiness-emanations and to continue to sharpen that awareness as we pursue our own personal development.
In the end, fostering productive interactions comes down to connections between individuals, hence the need to establish close one-on-one relationships. I have often described these relationships as an exchange of “trust packets,” (5) and each such exchange establishes a “covenant.” This brings me to the last of the essential leadership qualities: the leadership covenant.

ACKNOWLEDGING THE LEADERSHIP COVENANT

When faced with complexity, we gain clarity either by ourselves or, more likely, through deliberations with our team — ideally in a “safe space.” This is the process of discernment. But wading through the quagmire of complexity to glean a clear solution is only part of the process. It reveals an opportunity, but we need to act on it: Discernment has shown us the path; decision steps us into action.

How do we know when to act? We need to feel that the moment is right. And once we do act, it places on us a heavy responsibility. It is what I call the “leadership covenant” and includes two obligations:

  1. The obligation to confirm a common understanding of the action path, and
  2. The obligation to shepherd the process to its conclusion.

The first ensures that there is congruence in everyone’s understanding of the chosen direction and approach. This requires a clear, concise and compelling articulation of the discernment, as well as confirmation that it appropriately resonates with everyone. This allows us to resolve any misunderstandings and improves the chance for a positive outcome. It also makes our job as leaders easier as we navigate the course out of complexity toward resolution, and it permits us to loop back for further help as we face the new challenges that inevitably arise. It ensures that every one of the participants in the process is fully vested in a positive outcome, rather than satisfying any selfish or petty elements that can slow the momentum toward a win for all.

The second is inherent in the trust placed in us by our team. As leaders, we essentially hold, in our hands, the team’s belief in our mission, and we make the commitment to take it the distance. This is part and parcel of the exchange of trust packets. This exchange builds, over time, rather imperceptibly, and pays enormous dividends when it counts. As I look back at the most difficult times in my entrepreneurial career, I am convinced that these trust packets were the only factor that enabled us to survive. I described a clear example of this earlier: When we had to drastically reduce the size of the company upon the abrupt termination of a key partnership, trust was surely what kept us going.

The obligations inherent in the leadership covenant are weighty, which is the reason I use the word covenant. My meaning is best described by Rabbi Jonathan Sacks in his acceptance speech for the American Enterprise Institute’s Irving Kristol Award. (6) He compares and contrasts the meanings of contract and covenant.

“In a contract, two or more people come together to make an exchange. And so you have the commercial contract that creates the market and the social contract that creates the state.

A covenant isn’t like that. It’s more like a marriage than an exchange. In a covenant, two or more parties each respecting the dignity and integrity of the other come together in a bond of loyalty and trust to do together what neither can do alone. A covenant isn’t about me. It’s about us. A covenant isn’t about interests. It’s about identity. A covenant isn’t about me, the voter, or me, the consumer, but about all of us together. Or in that lovely key phrase of American politics, it’s about “we, the people.”

The market is about the creation and distribution of wealth. The state is about the creation and distribution of power. But a covenant is about neither wealth nor power, but about the bonds of belonging and of collective responsibility. And to put it as simply as I can, the social contract creates a state but the social covenant creates a society. That is the difference. They’re different things. Now, what is more, every covenant comes with a story.”

I find Rabbi Sacks’ last point most interesting: every covenant comes with a story. As leaders, the story we live is the shared purpose of our organization. It provides the “bonds of belonging and of shared responsibility,” and is the story that continually recreates the raison d’etre for us to be together in the first place, justifying all the sacrifices we make to achieve our common goal.

Reflections:

  • List the times in your life when anxiety has threatened to paralyze you.
  • Examine how you overcame these crises, be they personal or professional. What do you learn from what worked for you?
  • Have you experienced the liberating power of safe spaces in your personal life? List the times it has served you. What would it take to create such spaces in your professional life? Could you build it into all levels of leadership in your organization?
  • Think about the times when you have entered into a personal covenant obligation in the sense we are using it here, perhaps even in a religious context. Could you see it applied to your relationships with your colleagues? Examine how it would influence your mutual trust.

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(1) From Crucible to Chalice https://ricardolevy.com/2017/04/02/dealing-with-uncertainty-from-the-crucible-of-anxiety-to-the-chalice-of-change-lessons-in-leadership/

(2) From Crucible to Chalice Part 2 https://ricardolevy.com/2017/07/27/from-crucible-to-chalice-part-2-unlocking-our-leadership-capacity-all-we-need-to-do-is-clear-the-path/

(3)  As quoted by Professor James O’Toole in his book The Executive’s Compass, Business and the Good Society (New York: Oxford University Press, 1993), 5.

(4) Bob Quinn https://thepositiveorganization.wordpress.com/2016/07/20/an-elusive-leadership-skill/

(5)  Ricardo Levy, Letters to a Young Entrepreneur: Succeeding in Business Without losing at Life (San Francisco: Catalytic Publishers, 2015), 66

(6) 2017 Kristol Award http://www.aei.org/publication/2017-irving-kristol-award-recipient-rabbi-lord-jonathan-sacks-remarks/

ON BEING A BETTER CHAIR OF THE BOARD

~ ricardolevy ~ 2 Comments

Dear Reader:

I write my blogs sporadically. Triggered by particular events or situations with which I am deeply involved, I find myself prompted to write because of the acute nature of the matter. This post, however, is different. The subject has been lingering inside me for a long time. It rarely rises to the acute level, but rather I feel it as a dull “chronic” discomfort in situations when I sense a problem, but the stimulus is not strong enough to incite me to act. And then I bemoan the fact that I did not act in time. It’s like an ache telling me I should go and see the doctor… Yet I don’t go, figuring that trying to describe it would be too amorphous and thus embarrassing. Of course most of the time, it dissipates and life goes on just fine. But sometimes it does not.

The subject? Maximizing the effectiveness of a Board of Directors. I have been involved with Boards for almost half a century, and I attribute much of my entrepreneurial success to the extraordinary nature of the Boards I have been privileged to build and serve under as CEO. As I reflect on what worked so well, a few factors are evident:

  1. Each member of my Boards has been a superb professional.
  2. Members have joined my Boards because they believed in the company mission and trusted the executives.
  3. They did not do it for money, yet felt respectfully compensated for their efforts.
  4. They respected the other Board members, enjoyed their company, and did not hesitate to express their opinions while listening to the opinions and positions of their colleagues.

At the same time, I recognize that the Board of Directors is often comprised of strange bedfellows, which can be awkward. Meetings are few and far between, often months apart; some of these meetings are by phone; in-person meetings are even more infrequent. Members may know each other outside of the Board, but most likely do not see each other very often. They may live in different parts of the country or the world. To say they are a team is sometimes a stretch. To make them a team is possible but takes concerted effort. Yet Board members have a weighty responsibility: to monitor the company’s performance on behalf of the shareholders and ensure that execution meets expectations. To do so, one of their most important responsibilities is to hire and monitor the performance of the CEO. Yet for their deliberations and decisions, they depend on information that is provided by the CEO – who is, most likely, also a member of the Board. This places the CEO in a strange position: being a part of a group from which he or she may be excluded, when certain decisions are taken behind closed doors.

Most of the time this works very well. In addition to the caliber of the Board members, two critical factors facilitate good results:

  1. An active effort on the part of the CEO to work with the Board, by communicating often, managing the information flow and making key executives available for complementary discussions; and
  2. The skill, sensitivity and impact of the Board Chair.

It is the Chair on whom I want to focus in this article. I have been privileged to act as Chair on many Boards, as well as to serve as a Board member under many different Chairs. As I think back to the most critical growth periods of my companies, I attribute part of our success to my discipline in taking time to check in on all Board members frequently, to keep the information flow current, to never allow for any surprises, and to ensure that views are expressed and heard even in the most pressured moments. The times when I did not do well as Chair occurred when I fell into a few traps, which I describe below as typical “Syndromes.”

While many shortcomings can manifest themselves during the normal course of Board business, many manifest during Board meetings. The challenge is that Board meetings can be highly “charged” by the very nature of the participants, their inherent intensity and the import of their role. To work best, Board meetings require members – in particular the Chair – to be very aware of and present to emerging dynamics. When the tenor begins to crescendo, a good Chair senses this and redirects the energy before a discharge occurs. If, on the other hand, the Chair is affected, in whole or in part, by any of the Syndromes outlined below, things may rapidly take a course that is unanticipated or unintended.

The “Strongest Voice” Syndrome

A situation that appears in particular at Board meetings is something that all Chairs face: the Board member with the strong voice and the quick mind (especially financial), who can overwhelm a meeting and reduce the opportunity for considered deliberation, often by dint of his or her brilliance and eloquence. In doing so, such a strong voice may rob the Board of the great value of hearing different viewpoints and shared experiences. I learned this the hard way with some very vocal Board members in the early years of my entrepreneurial journey. But I also learned that if managed properly, such a situation can end with very positive results. One case that is strikingly vivid in my mind was when my young and small pharmaceutical company considered buying a large manufacturing plant in North Carolina. It contained a very sophisticated sterile manufacturing facility, something that was outside of our expertise. One Board member stated flat out that such a move would be crazy. His voice seemed particularly relevant because the facility had been built under his watch when he was CEO of the seller, a large drug company. You can imagine the weight of such an opinion. Fortunately, we were able to navigate the discussion to an examination of what it would take to make such an acquisition possible and prudent (in addition to the need for sizable funding which, at that point, we did not have.) In the end – and that end was 10 months later – we did make the acquisition and it catapulted our firm to be the largest outsourcing manufacturer of drugs in the Americas.

The “Founder” Syndrome

Being a company Founder is one of the greatest joys of the entrepreneur, especially if the enterprise grows. As I advise many Founders, a critical part of success (as it certainly was for me) is building superb Boards. Ideally, the Board is truly a strong, independent voice that enriches the leadership, guides and mentors the entrepreneur, and ensures that the business avoids mistakes that waste time and money. For this to be the case, an active, free and candid dialogue at the Board level is paramount. We must be careful not to overwhelm the Board with our “Founder’s aura,” which can be limiting. We tend to be so focused on our passionate vision that our capacity to listen may be affected. Selective hearing is a common ailment. We Founders need to constantly remind ourselves to clear our ear canals.

The “I am Still the Boss” Syndrome

This happened to me several times, and is related to the Founder-Chair issue described above. I founded a company of which I was CEO for many years. Eventually, I transitioned to Chair when we brought in a new CEO more capable of further growing the company. My shortcoming as Chair was due to the presence, often inadvertent, of my fingerprints on the everyday running of the business. I had given up the CEO title, but never fully let go. And the new CEO could feel it, as could the employees. Without meaning to, I was exerting an influence over the company that did not allow the new CEO to fully gain the leadership needed to propel the company to new levels. And I never appreciated that because of my lingering presence the incoming CEO – who I had recruited and felt very positive about – never entered the full covenant needed for him to be an effective entrepreneurial leader. A few years later, he found “a better offer” and resigned, giving us a very “generous” three-week notice. When I asked him how he could leave the company hanging at such a critical time, he simply said, “Well, what’s the problem? You’re still here.” That told the whole story.

The “Confusion between Executive and Non-Executive Chair” Syndrome

There are circumstances when companies need to have an Executive Chair as well as a CEO. This might occur during a transition period when a President is promoted to CEO or when a new leader is transitioned into the company from outside. In general, the Executive Chair holds some of the responsibilities of the CEO, and spends much more time on the company’s business than an ordinary Chair would or should do. The responsibilities of the Executive Chair often include some operations, whereas a non-executive Chair’s do not. The problem occurs when a Chair acts as if he or she is Executive Chair – often without even noticing it. In the process, the Chair will disenfranchise the CEO, eroding some of the CEO’s initiative, and not allow the CEO to fully become the organization’s leader. This is a very inefficient situation. While I may have good intuition and the best intentions, as Chair I may suggest initiatives to the CEO. Only when such initiatives are wholly “owned” by the CEO do they stand a chance of being successfully implemented. Implementation is not our job as Chair, although our demeanor may raise expectations to the contrary.

The “Clinical” Syndrome

As Chair, we are tasked with many key activities on behalf of the Board. They include being the key interface between the Company and the CEO in negotiating the employment agreement, coordinating performance assessments, reviewing compensation, or the much more difficult task of negotiating the exit of a CEO who is being replaced. As with so many complex negotiations, personal feelings may make the task more difficult. In those situations, some of us tend to take a more clinical approach and keep it impersonal. This may work well to get the best “terms” but, in the end, is not likely to yield a win-win outcome. Hiring, performance reviews and the rare need for separation are very sensitive and personal events for all involved. Showing the warmth of our humanity in these times is essential for a good outcome. As Chair, we need to remember this. Yes, we represent the Board, which is a somewhat impersonal “body,” yet it is an entity comprised of individuals. Part of our task is to carry this humanity to the discussion, regardless of whether being “detached” might seem the more expedient approach.

The “Overbearing” Syndrome

Let’s face it: Those of us in CEO or Chair positions are, by definition, individuals with strong personalities and, often, high adrenaline levels. We are passionate about what we are doing, and approach every task with gusto and exuberance. As we grow in our leadership journey one of our most important learnings is how to “tune” this enormous energy to be appropriate for different situations. Some of us are not very aware of the “long shadow” our personas cast. Sometimes, our hugs (while meant with a genuine and caring intent) can be too tight. I have both embodied this myself and seen it in others. The challenge is how to be fully present to this dynamic, especially in the Chair-to-CEO relationship. If our inclination is to get too involved, we need to recognize when we are stealing some of the breathing space from our CEO, and pull back.

*****

The net of this post: If you are Chair, take the time to examine whether there are any aspects of these syndromes that ail you. If the answer is “Yes,” talk to fellow Board members or the CEO about your concerns, and recruit these colleagues to monitor you and help you become a better Chair. Further, I propose that neither the Chair nor the CEO are the most effective monitors of their own performance – or for that matter of the Board as a whole. These are tasks best relegated to a skilled external resource whose objectivity and professionalism inform their insights. So consider engaging an outsider for a regular 360 review of your performance as Chair and the effectiveness of your Board. While this may be time consuming and add expense, it is an extremely valuable investment that can make the difference between a good Board and an excellent Board. I have found such 360 reviews by an outside professional to offer some of my own best opportunities for personal growth. It also does wonders in “lubricating” the dialogue among Board members.

 

WELCOME TO A CONVERSATION about “Letters to a Young Entrepreneur”

Featured ~ ricardolevy

In Letters to a Young Entrepreneur, I share some of the highlights of my entrepreneurial journey. On this website, I continue to offer reflections on my leadership experiences, and very much welcome your comments, critique and suggestions. Most importantly, I invite you to share your own experiences and insights, as well.

My hope is that through this dialogue we will all benefit from our common entrepreneurial adventure, and perhaps provide some new approaches to the challenges we all face as we embody our dreams.