Instead of Being Interesting, Be Interested…..In Constantly Learning.

I recently read a Harvard Business Review article: The Best Leaders are Insatiable Learners. The author, Bill Taylor, discusses one of the more revered and read speeches of John Gardner  and the importance of constantly learning, growing and renewing yourself.  If you are not familiar with Gardner, you are in for a treat once you do some research.  At a high level, John Gardner was a legend, an intellect and civic reformer.  He was a well-known Standard University Professor, an architect of the Great Society under President Lydon Johnson, Secretary of Health, Education, and Welfare, founder of the White House Fellowship and The John Gardner Fellowship programs, and he was the founder of Common Cause and Independent Sector.  Gardner died in 2002 at the age of 89.  In 2012, Standford University held a 100 year anniversary on his birth with a panel of leaders discussing the impact Gardner had on society and their personal lives.

The HBR article was great and I would encourage you to read it.  It is a challenge to each of us as leaders to constantly push ourselves to learn and grow.  However, if you are limited on time and can only read one article, read the classic speech Gardner gave on November 10, 1990, to a group of McKinsey & Co. leaders.  This powerful speech was called “Personal Renewal,” the urgent need for leaders who wish to be impactful and effective to commit themselves to continuous learning and growing.  It was based on his 1964 book Self-Renewal.  What impresses me is how relevant the concepts are today as they were 24 years ago when that speech was given or even 50 years ago when the original book was written.  Cheers to leadership and to the concept of constantly learning and growing!

Speech Delivered to McKinsey & Company, Phoenix, AZ

“Personal Renewal”

By: John Gardner

November 10, 1990

I’m going to talk about “Self-Renewal.” One of your most fundamental tasks is the renewal of the organizations you serve, and that usually includes persuading the top officers to accomplish a certain amount of self-renewal. But to help you think about others is not my primary mission this morning. I want to help you think about yourselves.

I take that mission very seriously, and I’ve written out what I have to say because I want every sentence to hit its target. I know a good deal about the kind of work you do and know how demanding it is. But I’m not going to talk about the special problems of your kind of career; I’m going to talk about some basic problems of the life cycle that will surely hit you if you’re not ready for them.

I once wrote a book called “Self-Renewal” that deals with the decay and renewal of societies, organizations and individuals. I explored the question of why civilizations die and how they sometimes renew themselves, and the puzzle of why some men and women go to seed while others remain vital all of their lives. It’s the latter question that I shall deal with at this time. I know that you as an individual are not going to seed. But the person seated on your right may be in fairly serious danger.

Not long ago, I read a splendid article on barnacles. I don’t want to give the wrong impression of the focus of my reading interests. Sometimes days go by without my reading about barnacles, much less remembering what I read. But this article had an unforgettable opening paragraph. “The barnacle” the author explained “is confronted with an existential decision about where it’s going to live. Once it decides.. . it spends the rest of its life with its head cemented to a rock..” End of quote. For a good many of us, it comes to that.

We’ve all seen men and women, even ones in fortunate circumstances with responsible positions who seem to run out of steam in mid-career.

One must be compassionate in assessing the reasons. Perhaps life just presented them with tougher problems than they could solve. It happens. Perhaps something inflicted a major wound on their confidence or their self-esteem. Perhaps they were pulled down by the hidden resentments and grievances that grow in adult life, sometimes so luxuriantly that, like tangled vines, they immobilize the victim. You’ve known such people — feeling secretly defeated, maybe somewhat sour and cynical, or perhaps just vaguely dispirited. Or maybe they just ran so hard for so long that somewhere along the line they forgot what it was they were running for.

I’m not talking about people who fail to get to the top in achievement. We can’t all get to the top, and that isn’t the point of life anyway. I’m talking about people who — no matter how busy they seem to be — have stopped learning or growing. Many of them are just going through the motions. I don’t deride that. Life is hard. Just to keep on keeping on is sometimes an act of courage. But I do worry about men and women functioning far below the level of their potential.

We have to face the fact that most men and women out there in the world of work are more stale than they know, more bored than they would care to admit. Boredom is the secret ailment of large-scale organizations. Someone said to me the other day “How can I be so bored when I’m so busy?” And I said “Let me count the ways.” Logan Pearsall Smith said that boredom can rise to the level of a mystical experience, and if that’s true I know some very busy middle level executives who are among the great mystics of all time.

We can’t write off the danger of complacency, growing rigidity, imprisonment by our own comfortable habits and opinions. Look around you. How many people whom you know well — people even younger than yourselves –are already trapped in fixed attitudes and habits. A famous French writer said “There are people whose clocks stop at a certain point in their lives.” I could without any trouble name a half of a dozen national figures resident in Washington, D.C., whom you would recognize, and could tell you roughly the year their clock stopped. I won’t do it because I still have to deal with them periodically.

I’ve watched a lot of mid-career people, and Yogi Berra says you can observe a lot just by watching. I’ve concluded that most people enjoy learning and growing. And many are dearly troubled by the self-assessments of mid-career.

Such self-assessments are no great problem at your age. You’re young and moving up. The drama of your own rise is enough. But when you reach middle age, when your energies aren’t what they used to be, then you’ll begin to wonder what it all added up to; you’ll begin to look for the figure in the carpet of your life. I have some simple advice for you when you begin that process. Don’t be too hard on yourself. Look ahead. Someone said that “Life is the art of drawing without an eraser.” And above all don’t imagine that the story is over. Life has a lot of chapters.

If we are conscious of the danger of going to seed, we can resort to countervailing measures. At almost any age. You don’t need to run down like an unwound clock. And if your clock is unwound, you can wind it up again. You can stay alive in every sense of the word until you fail physically. I know some pretty successful people who feel that that just isn’t possible for them, that life has trapped them. But they don’t really know that. Life takes unexpected turns.

I said in my book, “Self-Renewal,” that we build our own prisons and serve as our own jail-keepers. I no longer completely agree with that. I still think we’re our own jail-keepers, but I’ve concluded that our parents and the society at large have a hand in building our prisons. They create roles for us — and self images — that hold us captive for a long time. The individual intent on self-renewal will have to deal with ghosts of the past — the memory of earlier failures, the remnants of childhood dramas and rebellions, accumulated grievances and resentments that have long outlived their cause. Sometimes people cling to the ghosts with something almost approaching pleasure — but the hampering effect on growth is inescapable. As Jim Whitaker, who climbed Mount Everest, said “You never conquer the mountain, You only conquer yourself.”

The more I see of human lives, the more I believe the business of growing up is much longer drawn out than we pretend. If we achieve it in our 30’s, even our 40s, we’re doing well. To those of you who are parents of teenagers, I can only say “Sorry about that.”

There’s a myth that learning is for young people. But as the proverb says, “It’s what you learn after you know it all that counts.” The middle years are great, great learning years. Even the years past the middle years. I took on a new job after my 77th birthday — and I’m still learning.

Learn all your life. Learn from your failures. Learn from your successes, When you hit a spell of trouble, ask “What is it trying to teach me?” The lessons aren’t always happy ones, but they keep coming. It isn’t a bad idea to pause occasionally for an inward look. By midlife, most of us are accomplished fugitives from ourselves.

We learn from our jobs, from our friends and families. We learn by accepting the commitments of life, by playing the roles that life hands us (not necessarily the roles we would have chosen). We learn by growing older, by suffering, by loving, by bearing with the things we can’t change, by taking risks.

The things you learn in maturity aren’t simple things such as acquiring information and skills. You learn not to engage in self-destructive behavior. You leant not to burn up energy in anxiety. You discover how to manage your tensions, if you have any, which you do. You learn that self-pity and resentment are among the most toxic of drugs. You find that the world loves talent, but pays off on character.

You come to understand that most people are neither for you nor against you, they are thinking about themselves. You learn that no matter how hard you try to please, some people in this world are not going to love you, a lesson that is at first troubling and then really quite relaxing.

Those are things that are hard to learn early in life, As a rule you have to have picked up some mileage and some dents in your fenders before you understand. As Norman Douglas said “There are some things you can’t learn from others. You have to pass through the fire.’

You come to terms with yourself. You finally grasp what S. N. Behrman meant when he said “At the end of every road you meet yourself.” You may not get rid of all of your hang-ups, but you learn to control them to the point that you can function productively and not hurt others.

You learn the arts of mutual dependence, meeting the needs of loved ones and letting yourself need them. You can even be unaffected — a quality that often takes years to acquire. You can achieve the simplicity that lies beyond sophistication.

You come to understand your impact on others. It’s interesting that even in the first year of life you learn the impact that a variety of others have on you, but as late as middle age many people have a very imperfect understanding of the impact they themselves have on others. The hostile person keeps asking ‘Why are people so hard to get along with?” In some measure we create our own environment. You may not yet grasp the power of that truth to change your life.

Of course failures are a part of the story too. Everyone fails, Joe Louis said “Everyone has to figure to get beat some time.” The question isn’t did you fail but did you pick yourself up and move ahead? And there is one other little question: ‘Did you collaborate in your own defeat?” A lot of people do. Learn not to.

One of the enemies of sound, lifelong motivation is a rather childish conception we have of the kind of concrete, describable goal toward which all of our efforts drive us. We want to believe that there is a point at which we can feel that we have arrived. We want a scoring system that tells us when we’ve piled up enough points to count ourselves successful.

So you scramble and sweat and climb to reach what you thought was the goal. When you get to the top you stand up and look around and chances are you feel a little empty. Maybe more than a little empty.

You wonder whether you climbed the wrong mountain.

But life isn’t a mountain that has a summit, Nor is it — as some suppose — a riddle that has an answer. Nor a game that has a final score.

Life is an endless unfolding, and if we wish it to be, an endless process of self-discovery, an endless and unpredictable dialogue between our own potentialities and the life situations in which we find ourselves. By potentialities I mean not just intellectual gifts but the full range of one’s capacities for learning, sensing, wondering, understanding, loving and aspiring.

Perhaps you imagine that by age 35 or 45 or even 33 you have explored those potentialities pretty fully. Don’t kid yourself!

The thing you have to understand is that the capacities you actually develop to the full come out as the result of an interplay between you and life’s challenges –and the challenges keep changing. Life pulls things out of you.

There’s something I know about you that you may or may not know about yourself. You have within you more resources of energy than have ever been tapped, more talent than has ever been exploited, more strength than has ever been tested, more to give than you have ever given.

You know about some of the gifts that you have left undeveloped. Would you believe that you have gifts and possibilities you don’t even know about? It’s true. We are just beginning to recognize how even those who have had every advantage and opportunity unconsciously put a ceiling on their own growth, underestimate their potentialities or hide from the risk that growth involves.

Now I’ve discussed renewal at some length, but it isn’t possible to talk about renewal without touching on the subject of motivation. Someone defined horse sense as the good judgment horses have that prevents them from betting on people. But we have to bet on people — and I place my bets more often on high motivation than on any other quality except judgment. There is no perfection of techniques that will substitute for the lift of spirit and heightened performance that comes from strong motivation, The world is moved by highly motivated people, by enthusiasts, by men and women who want something very much or believe very much.

I’m not talking about anything as narrow as ambition. After all, ambition eventually wears out and probably should. But you can keep your zest until the day you die. If I may offer you a simple maxim, “Be interesting,” Everyone wants to be interesting — but the vitalizing thing is to be interested. Keep a sense of curiosity. Discover new things. Care. Risk failure. Reach out.

The nature of one’s personal commitments is a powerful element in renewal, so let me say a word on that subject.

I once lived in a house where I could look out a window as I worked at my desk and observe a small herd of cattle browsing in a neighboring field. And I was struck with a thought that must have occurred to the earliest herdsmen tens of thousands of years ago. You never get the impression that a cow is about to have a nervous breakdown. Or is puzzling about the meaning of life.

Humans have never mastered that kind of complacency. We are worriers and puzzlers, and we want meaning in our lives. I’m not speaking idealistically; I’m stating a plainly observable fact about men and women. It’s a rare person who can go through life-like a homeless alley cat, living from day-to-day, taking its pleasures where it can and dying unnoticed.

That isn’t to say that we haven’t all known a few alley cats. But it isn’t the norm. It just isn’t the way we’re built.

As Robert Louis Stevenson said, “Old or young, we’re on our last cruise.” We want it to mean something.

For many this life is a vale of tears; for no one is it free of pain. But we are so designed that we can cope with it if we can live in some context of meaning. Given that powerful help, we can draw on the deep springs of the human spirit, to see our suffering in the framework of all human suffering, to accept the gifts of life with thanks and endure life’s indignities with dignity.

In the stable periods of history, meaning was supplied in the context of a coherent communities and traditionally prescribed patterns of culture. Today you can’t count on any such heritage. You have to build meaning into your life, and you build it through your commitments — whether to your religion, to an ethical order as you conceive it, to your life’s work, to loved ones, to your fellow humans. Young people run around searching for identity, but it isn’t handed out free any more — not in this transient, rootless, pluralistic society. Your identity is what you’ve committed yourself to.

It may just mean doing a better job at whatever you’re doing. There are men and women who make the world better just by being the kind of people they are –and that too is a kind of commitment. They have the gift of kindness or courage or loyalty or integrity. It matters very little whether they’re behind the wheel of a truck or running a country store or bringing up a family.

I must pause to say a word about my statement “There are men and women who make the world better just by being the kind of people they are.” I first wrote the sentence some years ago and it has been widely quoted. One day I was looking through a mail order gift catalogue and it included some small ornamental bronze plaques with brief sayings on them, and one of the sayings was the one I just read to you, with my name as author. Well I was so overcome by the idea of a sentence of mine being cast in bronze that I ordered it, but then couldn’t figure out what in the world to do with it. I finally sent it to a friend.

We tend to think of youth and the active middle years as the years of commitment. As you get a little older, you’re told you’ve earned the right to think about yourself. But that’s a deadly prescription! People of every age need commitments beyond the self, need the meaning that commitments provide. Self-preoccupation is a prison, as every self-absorbed person finally knows. Commitments to larger purposes can get you out of prison.

Another significant ingredient in motivation is one’s attitude toward the future. Optimism is unfashionable today, particularly among intellectuals. Everyone makes fun of it. Someone said “Pessimists got that way by financing optimists.” But I am not pessimistic and I advise you not to be. As the fellow said, “I’d be a pessimist but it would never work.”

I can tell you that for renewal, a tough-minded optimism is best. The future is not shaped by people who don’t really believe in the future. Men and women of vitality have always been prepared to bet their futures, even their lives, on ventures of unknown outcome. If they had all looked before they leaped, we would still be crouched in caves sketching animal pictures on the wall,

But I did say tough-minded optimism. High hopes that are dashed by the first failure are precisely what we don’t need. We have to believe in ourselves, but we mustn’t suppose that the path will be easy, it’s tough. Life is painful, and rain falls on the just, and Mr. Churchill was not being a pessimist when he said “I have nothing to offer, but blood, toil, tears and sweat.” He had a great deal more to offer, but as a good leader he was saying it wasn’t going to be easy, and he was also saying something that all great leaders say constantly — that failure is simply a reason to strengthen resolve.

We cannot dream of a Utopia in which all arrangements are ideal and everyone is flawless. Life is tumultuous — an endless losing and regaining of balance, a continuous struggle, never an assured victory.

Nothing is ever finally safe. Every important battle is fought and re-fought. We need to develop a resilient, indomitable morale that enables us to face those realities and still strive with every ounce of energy to prevail. You may wonder if such a struggle — endless and of uncertain outcome — isn’t more than humans can bear. But all of history suggests that the human spirit is well fitted to cope with just that kind of world.

Remember I mentioned earlier the myth that learning is for young people. I want to give you some examples, In a piece I wrote for Reader’s Digest not long ago, I gave what seemed to me a particularly interesting true example of renewal. The man in question was 53 years old. Most of his adult life had been a losing struggle against debt and misfortune. In military service he received a battlefield injury that denied him the use of his left arm. And he was seized and held in captivity for five years. Later he held two government jobs, succeeding at neither. At 53 he was in prison — and not for the first time. There in prison, he decided to write a book, driven by Heaven knows what motive — boredom, the hope of gain, emotional release, creative impulse, who can say? And the book turned out to be one of the greatest ever written, a book that has enthralled the world for ever 350 years. The prisoner was Cervantes; the book: Don Quixote.

Another example was Pope John XXIII, a serious man who found a lot to laugh about. The son of peasant farmers, he once said “In Italy there are three roads to poverty — drinking, gambling and fanning. My family chose the slowest of the three.” When someone asked him how many people worked in the Vatican he said “Oh, about half.” He was 76 years old when he was elected Pope. Through a lifetime in the bureaucracy, the spark of spirit and imagination had remained undimmed, and when he reached the top he launched the most vigorous renewal that the Church has known in this century.

Still another example is Winston Churchill. At age 25, as a correspondent in the Boer War he became a prisoner of war and his dramatic escape made him a national hero. Elected to Parliament at 26, he performed brilliantly, held high cabinet posts with distinction and at 37 became First Lord of the Admiralty. Then he was discredited, unjustly, I believe, by the Dardanelles expedition — the defeat at Gallipoli– and lost his admiralty post. There followed 24 years of ups and downs. All too often the verdict on him was “Brilliant but erratic…not steady, not dependable.” He had only himself to blame. A friend described him as a man who jaywalked through life. He was 66 before his moment of flowering came. Someone said “It’s all right to be a late bloomer if you don’t miss the flower show.” Churchill didn’t miss it.

Well, I won’t give you any more examples. From those I’ve given I hope it’s clear to you that the door of opportunity doesn’t really close as long as you’re reasonably healthy. And I don’t just mean opportunity for high status, but opportunity to grow and enrich your life in every dimension. You just don’t know what’s ahead for you. And remember the words on the bronze plaque “Some men and women make the world better just by being the kind of people they are.” To be that kind of person would be worth all the years of living and learning.

Many years ago I concluded a speech with a paragraph on the meaning in life. The speech was reprinted over the years, and 15 years later that final paragraph came back to me in a rather dramatic way, really a heartbreaking way.

A man wrote to me from Colorado saying that his 20 year-old daughter had been killed in an auto accident some weeks before and that she was carrying in her billfold a paragraph from a speech of mine. He said he was grateful because the paragraph — and the fact that she kept it close to her — told him something he might not otherwise have known about her values and concerns. I can’t imagine where or how she came across the paragraph, but here it is:

“Meaning is not something you stumble across, like the answer to a riddle or the prize in a treasure hunt. Meaning is something you build into your life. You build it out of your own past, out of your affections and loyalties, out of the experience of humankind as it is passed on to you, out of your own talent and understanding, out of the things you believe in, out of the things and people you love, out of the values for which you are willing to sacrifice something. The ingredients are there. You are the only one who can put them together into that unique pattern that will be your life. Let it be a life that has dignity and meaning for you. If it does, then the particular balance of success or failure is of less account.”

Barron’s: Accounting Games Companies Play

Barron's (newspaper)
Barron’s (newspaper) (Photo credit: Wikipedia)

Each Saturday morning I look forward to my electronic copy of Barron’s.  It is to those who enjoy a morning cup of coffee and the paper my equivalent enjoyment.

Barron’s offers a section called “other voices” which is the ability for others to write a 1000 word essay or less with their thought provoking views.  This week Jack Adamo wrote a piece on adjusted earnings versus GAAP.  How should investors view “adjusted earnings?”

While I don’t know Jack Adamo, I can say that now days there are so many adjustments, for pension funding, mergers & acquisitions, stock compensation, severance adjustments, asset write-offs, restructuring, etc. In this fast past business environment, there are far too many of these to say that they are extraordinary.

In fact,  as I look at companies and their financial discipline, I am looking five plus years back keeping all of these adjustments included in the calculation.  It is part of the business of being an investor and owner.  As I tell my team, if we have to use “yeah, but” to explain things then we have lost the reader or listener.  As for investments, I want to keep my world as simple as I can.  In my view, a true restructure, asset write-down are decisions that were made some time back that are now having a negative consequence.  We should all be held to our decisions….both the excellent ones and the not so good ones.  Excluding what we don’t like and including what we do seems to be quite difficult for an investor to keep things straight.  I don’t know about you, but I am trying to figure out how to keep things simple.

In my view, while GAAP is not perfect at least it is consistent across the board and I can simply adjust for the known GAAP deficiencies instead of all the one-timers across the companies I am invested in.  To be clear, I invest in good well run companies with strong managers that think long term.  So this is not a knock on my investments or the CEO’s that run these companies.

Measuring short-term vs. long term results tends to produce tendencies and “one-timers” exclusion could be tenancies in this business.  As Investors we just have to be mindful of that.

One of the books on my list of reads this year:

Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports

by Howard Schilit and Jeremy Perler.

I know what you are thinking….but investing and reading are my Saturday cups of coffee.

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Top Five Wealth Building Factors

Net worth of the United States by sector as a ...
Net worth of the United States by sector as a fraction of GDP 1960-2008 (Photo credit: Wikipedia)

Today I found this Survey $25 Million Plus Investors 2012 by Spectrum Groups.  The site had some good insights that I would like to share plus I added my two cents.  Here are their top five factors:

5)  In the Right Place at the Right Time

Being in the right place at the right time.  For large investors of $25M or more, being at the right place at the right time was more important to frugality.  My two cents: Being at the right place happens probably more than you think.  Are you reading up on what is going on in the world?  Do you associate with similarly situated and minded folks as your aspiration and your interest?    I do agree being frugal is important…no doubt.  Living below your means is how you take some income and convert it into investments.  This is how you create momentum and with momentum comes the ability to cease an opportunity when the right one shows up.

4)  Taking Risk

Ah…the difference between high net worth and ultra-high net worth is the latter ranks taking risker higher than those with with investments less than $25M.  Do you know your risk tolerance level?  That is going to be important if you are going to leverage risk into your investment strategy.

3)  Smart Investing

In a recent study by Spectrum Group, millionaires, regardless of level agreed Smart Investing was the third most important factor. From my perspective, allocating your resources into asset classes and vehicles is such a critical decisions that requires thorough analysis and consideration.  If someone tells you it is a good thing and yet you know nothing about it….run away from yourself and your tendencies to give your money to someone else to invest.  Knowledge is Power and being knowledgeable about your money and investments is how you win.

2)  Education

Higher Education and Advanced Education is an important factor.  I would add to this category that we should include daily reading materials on global/geopolitical, political, and economics in order to stay knowledgeable.

1)  Hard Work

Millionaires, regardless of level, credit their wealth to hard work.  I do think, also, the harder your work the luckier you get which loops #1 to #5.

And for me, I have added an extra one…number zero, where it all begins.

0)  All People can Make Money, it Takes a GENIUS to Keep It!

Be strategic on what you make, how you spend it and what you invest in.  Live below what you need, and be respectful of the economy, it can get shaky and you have to be ready for what it will bring you.

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Internal Controls and Accountability – Corporate Culture Necessities

UBS Investment Bank's Offices at 299 Park Avenue
Image via Wikipedia

This week another “what is going on” happened in the financial industry.  This time it is UBS and 31-year-old UBS trader Kweku Adoboli who is accused of rogue trading with estimated losses now closer to $2.3B.  The activity had been occurring for the last three years but according to UBS it just recently uncovered the activity.  Sadly, this comes just a few years after the financial crisis of 2008 and UBS’ commitment to improve risk-controls and management system after it had a $50B write-down.

Accountability and risk management were areas of opportunity for UBS back in 2008 and part of the commitment Oswald Grübel, CEO made when he joined in 2009 to improve the risk management.  Fast-forward to September 2011, and apparently the culture is deeply rooted with folks who are working against the mantra of improved operations and risk management or so it seems.

UBS’ story is too familiar to those following the market, corporate culture and the financial industry.  In fact UBS’s story is eerily similar to Société Générale SA and Jérôme Kerviel, who racked up a $7.2B loss doing the EXACT same thing.  Kerviel was accused of making fake trades to hide his losses and repeatedly deleted those trades just before inspections, re-entering them afterward.

If you read Kerviel’s and the Soc Gen story, Kerviel will tell you that his leadership knew what was going on and he alleges even helped circumvent the system controls to allow him to make incredibly large trades given his previous successes.  Others were also involved, knew what was going on and in fact left the business shortly after the discovery.  Regulators on the Soc Gen case, The Bank of France, made 17 routine on-site investigations of Soc Gen in the two years prior to Kerviel’s capture and did not detect the matter.

So what is the answer to protect business owners, investors, customers and employees?  First off businesses today are operating in a much more complex environment and with a weaker economy.  When knowledge and money are scarce, we see the true ethical fabric of people and corporate cultures.

Knowing that we have complex and fast-paced environments, and financially weaker economics, we have to acknowledge that financial controls, IT security, risk management and a “do the right thing” culture are critical to ensuring protection of economic value.

As leaders, I would recommend the following to help create a culture of accountability and oversight:

1)  Automation of controls is good but it alone will not do it.  Human observation is critical to catch activity when systems do not.  In the cases I have been involved in; it was the person who has a funny feeling that triggered the review.

2)  Instill in all levels of management the understanding and expectation of risk management as part of their core responsibilities.

3)  View new processes, systems, people selection all with the eye of risk avoidance.  How can we ensure our data is protected, our systems are secure, our people support a culture of taking care of each other, the investors, the customers and the broader economic community?

4)  If you find a flaw, promote it, tell others so they know how it happened, how it was fixed, and that leadership is always on the lookout for other errors.

  1. If it is a system error, do a full sweep of the systems to inventory and determine if others are out there.
  2. If personnel related, investigate how rooted the infraction is on the culture.  Usually people cannot commit a crime alone…typically there are others who at least know about it if not participated in the act.  Determine the depth and breadth of the web of knowledge.

UBS, the world’s largest private wealth manager said no client’s positions were compromised.  However its reputation has been seriously harmed and with their letter to clients this weekend they attempt to provide some assurances “We fully understand this incident has caused you concern.  We too are very disappointed, and we assure you that UBS is taking the matter extremely seriously.”

Well, what about the letter to its shareholders that lost $2B in operating income, or the 3,500 employee force reduction announced in August with a value of $2B which will appear to cover the loss or the broader market that is teetering in its confidence of the financial industry and market in general?

This was not a single person acting alone in a cone.  Several people either activity or passively through lack of controls and accountability played a role in the situation.

We as leaders of companies must understand we are all connected…when we create an environment of strength, values, sustainability and corporate citizenry then we create our own destiny of greatness.  Looking away is not an option for us.  If internal controls and accountability are not on your short list as a leader….this is your wake up call to make some changes.  Too many people are counting on us.

 

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Learn from History: Transparency in Corporate Culture is Essential

Enron Complex in Houston Texas
Image via Wikipedia

I am watching a rerun of “Enron: Smartest Guys in the Room“.  Had the Stockholders had transparency into the company, the corporate culture and the legacy of leadership decisions, things would have been different.  A sad story of how so many people on the inside knew or sensed much but said little until it was too late.

If you own a business, share your culture, your decisions and your stories with your employees, your clients and your stockholders.  If you want a legacy and long term success, this is the only way to go…like any relationship…Trust is Essential.

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Corporate Culture: The Sleeper in a Company’s Valuation Equation

MATH ON TV
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I recently heard a story of a woman who bought a CPA firm.  In essence, she believed she was paying for the client list of the seller.  She had the seller sign a non-compete agreement to protect the customers.  She also agreed to keep the two tenured employees onboard as part of the seller’s request.  For the buyer, life was good for about six months.

Soon thereafter the first employee decides to leave the business and informs the clients she will be starting her own bookkeeping practice.  The clients move with the employee.  The other employee sees this and soon follows the same plan leaving the buyer short $100K a year in fees.

Litigation later, the buyer loses the cases and is required to pay the defendants’ fees.  Oh by the way, did I tell you one of the employees was wife to the seller?

There are so many life lessons here, so let’s focus on the overarching one.

When you are thinking of buying an existing business, be very clear in your own mind that you are not buying the revenue, assets and profits.  You are buying the culture and the relationships.

The culture tells you if there are good financial controls in place, leadership is honorable and respected, employees are valued and motivated to stay, customers feel a sense of loyalty to a company that has given them more than they paid for.  Culture tells you if you are buying a transactional versus transformational business.

When buying a business, you are also buying the relationships.  There is no certainty the customers will return post close.  Frankly, there is no certainty the customer list even represents repeat customers to the seller.  While it is not possible to know the relationship with every customer, it is necessary when establishing a good price to know the relationship with the top customers and a sampling of the mid-size and smaller customers.

Want to know the price you should pay for a business, find out the company culture.  It is the sleeper element in the valuation equation.

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The Day You Get Promoted by Election

Imagine the Day When Your Promotion is not by your boss or what others leaders have heard about you and your past performance.  Instead, you are promoted based on an election of the people you will be managing in a team environment.  They pick you based on what they thought of your past performance, previous results and accomplishments, intelligence, vision, drive, relationships with the team members, inspirational and motivational skills and your genuine interest and past successes developing others.

It is not too far in the distant future that leaders will not be selected any longer by a select group of who you know and who knows your work but rather by a communal review and election.  Everyone wants the winning team, the winning track record for success and soon it will move from the childhood line up of where some fortunate individual gets to pick the team and the selectee just hopes the right leader picks them first and they go early in the draft otherwise it tells others they weren’t their first choice.

Although the economy maybe still limping into recovery, I submit that we as leaders not be fooled and recognize our teammates are sizing up their accomplishments and options.  When the time is right and someone is ready to jump in first, we will see a shift in how we select team members.  We will move in the direction of a democracy of where we as leaders are selected based on our performance, our values, our vision of the future of the organization and our track record for success.

The same will hold true for those members being selected for a team.  The days of where folks get paid to do a job will move away and instead we will have people who are paid to deliver objectives and selection to teams are communal and by leaders AND peers.  Teams and leaders will have less and less bench-warmers and more team members who have siginificant clock time.  Teams will move to compensation on objectives and more importantly results.  Even further in the future I could see compensation of a team to be more communal and based on a meritocracy.  Imagine, your teammates and members determine your pay.  I know it is a little out there but it will happen.  There are already people talking about ways to change the management paradigm.  Check out Management Exchange, a community of like-minded leaders who are looking to change today how we manage.

Although technology and this new age of innovation in everything from consumer products to management are changing how we live and work in the world, I still see that real and meaningful connections is the secret sauce to success.  This means the teams/companies that win BIG in the marketplace will be the ones that care first.  They will care first about their teams who in turn care about the consumers.  We, as humans, are always generous to those who think of us, take care of us and show us they love us.  Consumers will be generous to teams that care about them and that will result in better results for the owners of the companies.

Who will be the owners of the companies?  I am not sure it will be the structure we have today.  Having skin in the game is an age-old life truth.  Those that are invested are more interested in the success.  Giving team members ownership interest in the team that ties directly to their short term and long-term results in a real and sizeable way is what help create the connection between the team and the results.  Loose ties through 401(k)s may still exist but they will do so more for altruistic means sake and not as a direct measure to tie to performance.  By getting those that have no real interest and steel glad ties in the success of teams/companies/objectives is part of the new world order.  Unconnected and uninterested money managers will not be part of the long-term equation.  Frankly, having more skin in the game would have made a difference and perhaps prevented the near precipitous of the recent financial crisis.  We as human have the innate ability to survive and getting the layers out of successes for a company and therefore our future, ensures those survival skills are closer to the ground and always sensing.

I am excited at all the possibilities of where we are going.  I would just encourage everyone to be ready and understand that we can’t look back at what was and wish it could be again.  We have to enjoy what is occurring today and be prepared through constant development of ourselves and our relationships and experiences so we are ready for tomorrow.

Keep your Business Relationship Healthy and Sustainable

You have seen those men and women that have been married for years and have let themselves go whether extra weight, outdated look, or the loss of pep that made the other like them so much.  Folks get settled into what is comfortable, easy and things just start to lose importance.  Before you know it, you realize your best self was some time ago and you wonder if you can get it back and certainly your partner is thinking the same thing.

In a business relationship, between an organization and its employees, the same holds true.  Organizations court, some time intensely and fiercely, to win you over to their team.  They offer you a good package, opportunities for advancement and the idea or fantasy of having your own empire.

Employees, too, play the game of coming to the dance with their best outfit, their promises to be their best, give their all, win like no other, be relentless to learn, grow and demonstrate loyalty that they will not look at another company.

At some point, the honeymoon is over and reality sets in.  The air comes out of the bubble and depending on how far off you are from what you represented, respectively, will determine how disappointed you will each be and who will be disappointed the most.

Anyone who has been in a successful relationship knows that you have to be sincere, honest, respectful, ethical, healthy, kind, constantly learning/growing and give more than you expect if you want your relationship to live and flourish.  The same holds true for your Business Relationships.

What is a Healthy Business Relationship?

In 2011, a healthy business relationship is an absolute necessity if you want to win in the global economy.  We need each other like never before.  Our talents as individuals when well placed in a diversified group coupled with the power of brand and financial strength can make for a powerful partnership.  A successful partnership is one of trust, giving our best and not expecting an equal reciprocity.  It is a partnership that strives and drives for excellence in all things we do together.  You have seen those partnerships.  They are strong and formidable, loving, kind, intensely emotional, intellectual with deep sense of connection.  In the business world if you do not have that sense of connection between an individual, a team and a company, you will not win in the global marketplace.  If you want to win, you have to have a Healthy Business Relationship.

To talk about this subject, we need a series of posting involving employees, teams and organizations.  Today’s post is about the employee role and the importance and necessity of self-development.  If we believe the notion that we are responsible for our own destiny, then we should have high expectations of ourselves and recognize individuals, as employees, hold the key to success.  This includes employees being accountable to what they promised and what we expect of them when it comes to personal and professional growth.  Employees play a critical role on the team so they must constantly be challenging themselves and ultimately their team to greatness in their mind, spirit and heart.

“…The true nobility is in being superior to your previous self.”
 – Hindu Proverb

Employees on a team and in an organization must commit to themselves to constantly work on improving themselves.  That is how to stay fit and stay in a healthy relationship.

I have been working for global and successful companies for 18 years and I have found self-development to be an underpinning of a successful relationship.  Employees who practice self-development are multi-faceted through enlightenment and practice.  To be successful in your business relationship you need to be the following:

1)   Be a Technical Superhero.

2)   Be a Life Long Student and Sage Seeker.

3)   Be a Principles and Morals Partner.

4)   Be a Humanist.

5)   Be a Connector.

6)   Be an Athlete.

7)   Be a Kind Contrarian.

8)   Be a Calculated Risk Taker.

9)   Be a Leader of One and Many.

10) Be Yourself.

Be a Technical Superhero

Become fierce and ferocious about your technical skills.  As employees, organizations are expecting you come to the relationship with an already healthy set of technical and analytical skills.  Whether you are in the business of law, accounting, relationships and advocacy, IT technical skills, marketing, operations or organizational development to name a few, you have to know your profession and its technical and analytical skills like no one’s business.  You are not going to be expected to know the business or certainly be an expert out of the gate, but you are expected to come to the table with the technical skills to handle the job.  Whether in an existing job or a new assignment, you have to study and practice the skills to keep yourself current and relevant.  I tell my team compatriots “think of yourself as if you are joining favorite pro football team and you are the quarterback.  You are expected to know to throw touchdowns, make completions and get the ball down the field. You are not expected to know the playbook of the team, but you are expected to bring your strength and skills and not only learn the playbook but bring a fresh perspective based on your expertise that would otherwise be missing without you.”  The same is true in when you join a company or a team in business.  They are hiring your strengths so be fierce and ferocious and bring your A game to the table.  If you are coming into a new position, make sure you already have down at least half of the job they are asking you to do and be ready to put in a tremendous amount of hours, outside the office, to learn the new skills, laws, theories and practices to help you escalate up the learning curve.

When studying your subject matter, please know all the basic answers are out there.  You have to be willing to put in whatever the effort to seek the answers and obtain understanding.  Your teammates, your team leader and your company will invest in you to the same degree you are willing to invest in yourself.  The law of attractions is alive and well when it comes to self-development.  Be willing to be the Technical Superhero even if you have to moonlight to get there.  Success doesn’t happen by accident.  It happens because of tremendous investment by those willing to invest in themselves.

With the world changing so fast, there are expectations you take the time and energy to self develop and improve quickly and constantly.  It is what being “informative” is all about and one of the five pillars of i5.  Also, it is what you bring to a healthy relationship.  When you are healthy and in shape you will want to be with others who are like-minded and others with the same qualities will seek you out and want to be with you.  Be a Technical Superhero and Be Informative.  It is what makes a business relationship healthy and long lasting.

Be a Life Long Student and Sage Seeker.

Be tenacious to learn new frameworks in your profession, new management and leadership concepts and learn unrelated subjects.  Learning new items regardless of the subject is a huge multiplier for you as an employee.  Expanding your knowledge makes your conversations more interesting, enlightening and empathetic.  Knowledge makes your contributions to the business relationship more creative.  People like to take their newfound knowledge and apply it.  Applying your newfound knowledge, regardless of the topic, in a new and creative way is what being innovative is all about.  Being Innovative is one of the five pillars of i5 and one of the most interesting.

Take a look at something that you just love whether a painting, a great book, a new technical gadget, an application, a website or service, a movie, a designed room and see if you notice the multiple layers of textures, ideas, or needs being met.  Creativity is about layering and mixing multiple items.  It could be bringing together unrelated topics.  For example, Picasso’s artwork took cubism and introduced new shapes and form and incorporating African Art to create some of the most revered and widely recognized artwork around the world.  Spend some time looking at his artwork, see if you can see the singular items and how they were layered, integrated and ultimately created a new masterpiece and a new form of art language.  As another example, last week in Santa Fe, New Mexico I met and spent time with an artist named Jennifer JL Jones.  She was discussing one of her painting that was on exhibit.  Jennifer is an accomplished artist with representation/exhibits in Atlanta, Florida, Santa Fe, Chicago, and San Francisco.     When I viewed her work, I loved it and was inspired to include her in this section as her work is a creation of nine different mediums (oil, acrylic, textured paper, asphalt, wood stain, glue, charcoal, wax and metal) all on a wood board.  For me the work is beautiful and a great example of learning and using different items in a layering way to create something completely different, unique an extraordinarily beautiful.

You can apply these concepts to business in many ways: 1) be enlightened that creativity comes from learning new things and 2) layering and mixing unique and unrelated items together is what creates something new.  Other examples, more applicable to the business and technology world include Steve Jobs and the invention of the Mac computer.  In his 2005 Stanford University commencement speech, Steve Jobs talked about having an insatiable appetite to learn and he took a calligraphy class after dropping out of college.  Ten years after taking the class, when he was designing the first Macintosh computer, all his studies of typography came back to him.  “The Mac would have never had multiple typefaces or proportionally spaced fonts” had he not mixed and layered.  Some most recent inventions featured in Time Magazine’s 50 Best Inventions of 2010 display the art of layering and mixing to create anew:  1) Flipboard the fabulous iPad application that organizes getting updates from your friends via facebook, twitter and links from others of interest in an browsable and magazine like format.  The images are oversized, the typography is clean and the product has an overall glossy magazine feel that is just superb.  Here is an example of mixing the reality of information overload of social media with the old world charm of magazines where we could sit and read flipping the pages on a Sunday afternoon (something I am doing today).  Great concepts are born when we bring items together and ask “why not”?

If you research innovative creations you will see the Life Truth that mixing ideas and theories together is how new ideas, creations and inventions are born.  Here is one last example of just how new and crazy things get life.  eLegs Exoskeleton is a robotic prosthetic leg that uses artificial intelligence to “read” the wearer’s arm gestures via crutches and capturing and simulating their walk without a tether.

Today military soldiers use exoskeletons to lift heavy packs and this idea was the inspiration for eLeg.  I wonder if an ex-military solider was the connector in helping to bring the need to regain or obtain movement of others and exoskeletons together?  Rehabilitation centers are using this technology today and it is expected this will hit the home market in 2013.

Innovation is not just creating new things by mixing, layers and bringing together disparate ideas, but it is also about having the tenacity and courage to work on dormant ideas started by others and making them your own.  Some say Apple’s iPad is one such example where Apple reinvented Microsoft’s unpopular TabletPC by creating and layering in new finger friendly hardware and software to its already intuitive operating system with access to prolific applications.

Recognize that while these items are big and life changing, they were started by people willing to learn, keep their eyes and mind open to creation and were willing to speak their voice.  If you work for a company, you have the backing of a company with financial power, brand strength and the amazing power of a team of individuals.  You don’t have to work at Google, Facebook or Apple to be Innovative.  I submit you have to be willing to learn, create and then most importantly of all…speak your voice and then speak it again, until one of your ideas makes it from ideation to creation.

Become a Life Long Learner and you will become Innovative.  Being innovative is a VERY attractive feature to bring to the Business Relationship.

Life Truth:  A business relationship is no different than any other close relationship.  You have to be willing to give your best, grow and constantly reinvent yourself.  Greatness will follow in the proportion you are willing to contribute to the relationship.  Be willing and through actions put your best self forward.  Your business relationships will be what sustains you economically.

Hey where are 3 – 9?  You are probably wondering where the rest of the self-development topics are at….well we should let these two marinate for a bit to go from your conscious to your subconscious.  Feel free to read again and more importantly spend some time seeking examples of where this maybe true in your own world and your own experiences.  Know of any Technical Superheroes and any Life Learners?  I do, they are my friends, my colleagues, my mentor, my leadership, my beloved man, my mother, my family and my team.  They were the inspiration for this post.    When you see that we are informative and innovative creatures if we are willing to open our eyes, minds and hearts to learning new things and mixing and layering and creating ideas, we will see that they sky is the limit for us.  Share with me what you observed; I would love to hear what you see with these lenses.

The rest of the articles will post over the coming weeks.  I too need time to take my superhero strengths to create and develop something worthy of your valuable time.

Be a Technical Superhero.  Be a Life Learner,

RC Ybarra

You want to Get Great…You must be willing to Give Good first.

“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” – Maya Angelou

Amen.  I am one of those loyal customers.  You know the ones you small business owners salivate over.  The ones that will drive 30 minutes out of their way pay more than the going rate and willing to wait because they feel you are just that special.  When I lived in San Antonio, Texas I would drive for over an hour to Austin on Sundays to just have breakfast at Kerbey Lane.

The reality is that I am not that special.  Many people will go to even greater lengths than I do.  I have a girlfriend that will travel 200 miles to another city to see her favorite hairstylist.  Why do people go through such extremes?

The owners of these businesses treat them like royalty.  Royalty is knowing their souls, not their names, but their souls, what motivates them, what is important to them and truly do appreciate who they are and the fact they are leaving their hard earned money with them.  These are the owners that leave a real gift for them, not a company logo gift, but something that is more unique and special.  At the end of they day, people want to be heard and remembered.

Hear your customers, help them without any expectation for reciprocity and I will tell you it will be like Harvey Mackay’s  Dig Your Well Before You are Thirsty.  I read this book when I was in my twenties.  So you know that was some time ago.  But it left a permanent impression on me.  Help others…not because you want something but because you want to help others.  When you are in need of help people will be there to help you.  That is human nature.

About six years ago I worked with a very smart man, we were peers for a few years and then I was promoted.  There were a few things I remembered about him.  He was always interested in himself, his career and his finances.  He was rarely interested in others and always looking for ways to move up and not living in the moment and working to do well in his own position.  After I got promoted I remember going to lunch with him and he said “you know my wife and I were talking about you.”  I was thinking really what were you thinking?  He proceeded to tell me that with my new position I would be looking to fill one of my open positions and his wife would be a good selection.  While she doesn’t have current experience she would be a good; however she would require working from home.  It would be ideal for her to work from home with their small children.  So maybe work would not be first on the list of important priorities.  How is this helpful for the business and me?  That was one of the last lunches I had with this individual.  I knew for sure he was so focused on himself that he would never get anything good coming to him and frankly I wasn’t interested in helping someone who was unable to see beyond himself.

Customers sense these feelings in business leaders and owners.  If you are heart is not into them, they are not going to be into you.

You Give Good and You Will Get Great!  It is a life truth.  We know it; now practice it.   Go get great!

Get Inspired

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You are one of nearly 6 million; you employ 59 million people with a payroll of $2 trillion annually.  It is because of you that our economy leans on.  In my opinion, your grit, determination and perseverance helped to sustain us through this great recession.

As you go forward, your strategic and tactical decisions will be key to allow your employees to rest easier at night knowing they can count on your leadership to give them peace of mind.

You should be proud of who you are.  You are what have made our country great.  Now more than ever you call upon what you know and dig deep, real deep.  If you want your business to survive and grow, you will have to open your minds to things you have never thought about, you will have to be willing to take risks and think about progressive topics that may seem unconventional.  You will have to open your hearts to love something different than you may have loved before.  And you will have to open your spirit to a new sense of grit and determination beyond anything you have ever done.

This site will give you a toolbox of thoughtful and insightful topics.  Use them and make them your own.  This is not a follow these instructions to improve or make your business successful.  Heck no.  This is a site is provocative.  Use these tools to think, create and execute a business strategy that is right for you.  One that rings true to your inner beat.  That is the only way your business will succeed.  I will just tell you, though be ready to bring on your game and be it will be tough.

Ready to take your business to a new level?  Be vulnerable and be inspirational.  You have to be inspirational to move forward.  When times are tough, which they will, it is your inspiration that will see you through.  Get Inspired!

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