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strategy and business
 / Summer 2012 / Issue 67(originally published by Booz & Company)


The Thought Leader Interview: Dov Seidman

The same thing happened with quality. American CEOs used to consider it merely an aesthetic factor. They installed inspectors to check for defects at the end of the production line. Then, when the Japanese bought Pebble Beach and Rockefeller Center, Americans declared that quality was Job One. At GE, even the lawyers tried to qualify for Six Sigma black belts.

Now the same thing will start to happen with human values. To a hardline businessperson, humanity is even softer and less measurable than quality. But Chevron, Cisco, Dow Chemical, Delta Airlines, Ally Bank, and others all advertise themselves by declaring their humanity.

S+B: What do you mean by humanity in this context?
They want a relationship. “Buy from us, work here, because of who we are, what we stand for, and how we behave.” They’re trading on trustworthiness and integrity. This is a huge strategic shift for many companies, and, like manufacturers in the early days of safety or quality consciousness, they’re committing themselves to a body of new practices without being fully aware of the ramifications.

For example, I know many earnest executives in informed acquiescence companies who genuinely believe that they’re empowering their people. They tell an individual, “I trust you to innovate.” The individual runs off, inspired by the trust, but then has to obtain four approvals for the first round of investment. The individual concludes that the CEO is a hypocrite. “He told me to innovate, but he doesn’t mean it.” But the CEO isn’t a hypocrite. He’s just presiding over a system of governance, culture, and leadership that is not in sync.

I described our three categories — blind obedience, informed acquiescence, and self-governance — to the board of a world-famous company, one that had grown rapidly from the founder’s original small-scale business to a Fortune 100 enterprise. The founder, who had remained active with the company throughout his long life, had passed away within the living memory of the people in the room.

One board member said to the rest, “You know, when [the founder] was alive, we were self-governing. With all this scale and the rules and the policies, we’ve regressed to informed acquiescence.” Those categories gave them a concrete way to talk about their own culture, which was vital to them but had always seemed elusive and intangible.

S+B: If you were a CEO, how would you start?
Begin by looking diagnostically at your own company and culture. Our study found that CEOs are eight times as likely as lower-level employees to perceive their workplace as a self-governance company. It’s not because most CEOs are out of touch. Rather, they preside over a 19th-century human operating system that doesn’t work anymore. All it takes is one middle manager saying, “Get me this memo by five o’clock” without bothering to say why. Junior people perceive that kind of thing as blind obedience.

I have facilitated sessions with CEOs in which I ask, “How many of you could grab your BlackBerry and in the next five minutes produce a list of your top 25 performers?” All the hands go up. Then I ask, “How many, with the same confidence, could produce a list of your most principled or ethical leaders?” Every hand goes down. They all recognize that if they could answer yes to the second question, they’d be running a better company.

CEOs today are certainly enlightened enough to understand the new world. They know they are more vulnerable than ever. In quiet moments, they say, “I don’t have the answers. This is pretty hard.” That’s why I’m optimistic. I think this is the right time to rethink and change how business is done.

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