S+B: Much of your book is about leadership and values. But when businesspeople talk about “how,” they typically mean execution: processes and routines.
SEIDMAN: That’s the “how” of operations, a process or a tactic. But more and more, people see “how” as a strategy or platform for innovation, and a form of leadership behavior. I see a similar shift in attitude among the CEOs I work with. There are two groups of chief executives. One is interested in “reforming” the current system. They may not say it this way, but subliminally they want to leave the company largely the way it is even as they improve it at its margins. The second group wants to “rethink” fundamentals, such as how they operate, how they lead people, and how their company relates to society.
Since the crash, the rethink group is growing. These CEOs say, “I used to run my company with a five-year plan. Then I went to a one-year budget. Now, in a single year, there might be a tsunami, a Greek bond crisis, a bank failure. I can’t run my company on a one-year plan anymore.”
One CEO, of a very large and well-respected company, said to me, “Dov, it took 17 days for the Egyptians to get rid of Hosni Mubarak, and the guy had a military. What if my consumers and employees decide to get rid of me because they don’t like how I run this place?”
Another company has just started rethinking its moral foundation. They’re concerned about what it will take for them to flourish in a more complex and uncertain world. One of the experiences that led to this reflection was a conversation between a top executive and a well-respected middle manager. The company had a long-standing practice of recruiting through referrals from its employees. This executive had asked the manager, “So when your brother finishes business school, you’ll recommend him to the company, won’t you?”
“Hell, no,” the middle manager said. “My brother can get a job anywhere.” He told the executive he was going to recommend a cousin that nobody else would hire.
They had thought their recruitment policy was one of the most positive aspects of their culture. Now they realized it was a negative. So they held a series of events for people to reflect on “who we were and how we have behaved on our best days to date, and on how we can be that kind of company every day in the future.”
That story shows why companies need to be ever-vigilant and deliberate about their cultures. People think that being values-based is about being nice. It’s really about being principled. You have to be firm, consistent, and even ruthless about your principles, and very few companies are. For instance, only 12 percent of the companies we surveyed practice genuine long-term thinking, which takes a lot of discipline. Short-term thinking is not just reflected in whether the executives run a company quarter by quarter. It also reflects employee behavior: “Do you make decisions to please your boss by Friday?”
S+B: How is long-term thinking different from short-term?
SEIDMAN: In How, I describe how the golf pro David Toms disqualified himself at the 2005 British Open tournament. He had a ball that stopped right by the hole; it seemed motionless to everyone, including the referee, and he putted it in and won.
That night, however, he had doubts; maybe the ball had been wobbling on the edge of the hole, which would mean he should be disqualified. In all honesty, he wasn’t sure. But the next day, he went to the rules tent to ask the judges about it. They watched the video, and it was inconclusive. The judges told him he could stay in the tournament or leave. They told him it should depend on how he felt about it. He chose to leave.