Leading the Future
Our jobs determine to a large extent what our lives are like. Is what you do for a living making you ill? Does it keep you from becoming a more fully realized person? Do you feel ashamed of what you have to do at work? All too often, the answer to such questions is yes. Yet it does not have to be like that. Work can be one of the most joyful, most fulfilling aspects of life. Whether it will be or not depends on the actions we collectively take. If the firms that employ an increasing majority of the population are driven solely to satisfy the owners' greed at the expense of working conditions, of the stability of the community, and of the health of the environment, chances are that the quality of our lives-and that of our children-will be worse than it is now.
Fortunately, despite the scandals that have rocked the business world at the start of this century, there are still corporate leaders who understand that they are allowed to hold their privileges only because the rest of us expect them to improve the conditions of existence, rather than help to destroy them. This book is a survey of some of their values, their goals, their mode of operation-a guidebook for a way of conducting business that is both successful and humane.
While the book draws primarily on the experience of leaders of major corporations, it is really about how to improve one's work life at any level-be it janitor or manager. It tries to provide a context for a meaningful life in which work and the pursuit of
financial rewards can find their proper places. The men and women we interviewed* had been nominated by their peers because they were both successful and because they cared for more than success. In one way or another, they all had demonstrated that selfish advantage was not their sole motivation. Their collective wisdom provides a blueprint for doing business that is good in both senses: the material and the spiritual.
Now that the entire nation is finally calling the bluff of rogue CEOs, every business leader is eager to mouth pieties to camouflage his true priorities. After the corporate giant Enron collapsed and became a global byword for irresponsible management, one of its leading executives, Jeff Skilling, described his job as doing "God's work." His CEO, Kenneth Lay, had earlier declared: "I was, and am, a strong believer that one of the most satisfying things in life is to create a highly moral and ethical environment in which every individual is allowed and encouraged to realize that God-given potential."
These are worthy sentiments, but worse than useless if one's actions do not support them. As opposed to those leaders who use language only as a disguise, the people on whose experience this book is based actually have shown that they tried hard to create ethical environments in which individuals could realize their potentials. By no means did they always live up to their stated intentions; but their ideas, words, and example show that doing business can be much more fulfilling than most of us realize. So, based in large part on the experience of these exemplary CEOs, this book will discuss what it means to be a good leader, a good manager, and a good worker.
Bookstores are full of volumes containing very good advice about how to be an effective manager or successful leader. Often such books will instruct a reader to model his or her behavior on the cynical wisdom of Machiavelli, the relentless drive of Genghis Khan, or the ruthlessness of Attila the Hun as a way to achieve power and plunder. Good Business has a more modest ambition.
It will explore how leaders who have impressed their peers for both their business success and their commitment to broader social goals go about their jobs-what ambitions motivate them, and what kind of organizations they try to develop in pursuit of those ideals.
The necessity for considering such issues is simple: Today business leaders are among the most influential members of society. While they are all trained to generate profits, many of them are oblivious to the other responsibilities that their new societal leadership entails. In this book, visionary leaders will explain what they consider to be their duties and how they go about fulfilling them. In the process of examining their philosophies and their practical applications, we will focus especially on how leaders and managers and even the concerned employees of any organization can learn to contribute to the sum of human happiness, to the development of an enjoyable life that provides meaning, and to a society that is just and evolving.
These may seem like goals that are beyond human reach, and certainly outside the scope of a book dealing with business. But the way we make a living, the jobs we have, and the way our work is rewarded have a tremendous bearing on our lives, making them either exciting and rewarding, or dull and anxious. For that reason alone anyone in charge of a workplace is obliged to consider the question: How am I contributing to human well-being? This
is certainly not a concern that motivated Genghis Khan, or even Machiavelli. But to follow the examples of such social predators prevents business leaders from achieving their full potential. Of course there will always be single-mindedly ambitious executives concerned only with clawing their way to the top. But is such behavior really the kind of leadership we want in our society? In fact, there are enough people in business who do genuinely value organizations that promote happiness, and it is my hope that this book will help them.
As a first step, we should consider what it has meant to be a successful leader in the past, so that we can understand better what options the future may hold.
As humans, we cannot survive without hope. When we lack reasons for living apart from the urges that biology has built into our nervous system we soon revert to an animal level of existence, where only food, comfort, and sex matter. By contrast, the remarkable cultures that some of the great world civilizations have occasionally achieved were made possible by two very different prerequisites: a reasonable level of resources and the technology to use them, leading to a material surplus; and a defined set of goals that helped their citizens overcome the inevitable obstacles and tragedies inherent in living. If either of these conditions is absent, life devolves to a selfish scramble; if both are lacking, it becomes utterly hopeless.
Depending on the level of societal development, a particular class of individuals may step forth with the promise of improving the material conditions of the populace, and offer a set of goals for channeling its life energy. If these individuals can make a credible claim for their program, they are likely to emerge as the leaders of society because the rest of the population will agree to follow them. For untold thousands of years these leaders were typically the best hunters of the tribe, who offered good spoils to their followers, and inspiring stories about the happy hunting grounds in the thereafter. As technologies of food production and warfare became more advanced, however, groups of warlords and of kings surrounded by courtiers and priests assumed leadership. In some periods the clergy and the nobility-usually made up of great landowners-jointly shared power. More recently merchants and manufacturers have risen to the top of the social pyramid.
At the present time two categories of individuals hold the clearest title to providing for the material and spiritual needs of the community. The first is scientists, who promise hope through a longer and healthier life, an expansion of our ambitions into the solar system, and eventual control over both animate and inanimate matter. The second and larger group consists of men and women engaged in business, who promise to make our lives more affluent, comfortable, and exciting by allowing market forces to direct production and consumption in the most efficient way. Scientists and business leaders-the elite of the new knowledge workforce-have achieved an eminence reserved in former times for the nobility and the clergy. Those who do not belong to their ranks are nevertheless willing to grant them power and wealth because they believe that society as a whole will ultimately benefit from their efforts. Is this faith misplaced?
It is difficult to answer that question objectively, let alone accurately. But I believe that most people would agree that science (along with its handmaiden, technology) and business have indeed created living conditions that are more desirable than any that ever existed. Let us set aside for a moment the very real issue of whether such material blessings can be sustained indefinitely, or even as long as into the coming decades. Huge problems confront us, ranging from the inevitable depletion of scarce natural resources, to the many stresses of our increasingly hard-driven lifestyles, to the strains resulting from the unequal allocation of resources among the rich and the poor both within and between societies. Let us also overlook the real costs of progress in terms
of maladies like drug addiction, violence, and depression, which have become so endemic in technologically advanced societies, and concede the fact that scientific and entrepreneurial leadership has indeed delivered on the promise of a more desirable material existence.
That leaves, however, the second condition for a good life unaccounted for. What about the sense of hope that successful leaders are also supposed to convey to those who follow them? In this area, the results are more equivocal. Basically science and business both follow empirical, pragmatic, value-free methods. Although there are individual scientists and business leaders who take a quasi-religious stance toward their work, they usually do so by drawing on some established spiritual or moral tradition, and not on any particular tenets of their profession. Science can promise truth, but its version of truth is as often harsh as it is soothing. Business promises efficiency and profit, but what do these achievements contribute toward filling life with joy and meaning?
Most leaders of business and science would argue that it is not their responsibility to cater to the spiritual needs of society, a job that is better left to the clergy, or even political leaders. But for many people, traditional religions and political parties seem to have run out of visions compelling enough to provide global leadership. If no one else steps forward to assume that role we risk succumbing to charlatans and demagogues-a fate that has befallen many powerful and rich societies.
It is useful to reflect on the patterns of history so that we may learn from them and avoid having to repeat the mistakes of our ancestors. In the past a leading elite has usually emerged because it promised to improve the life of the majority. At that point at least some of the energy of its leaders was directed outward, working for the benefit of others. For instance the early Christian Church helped the downtrodden multitudes of the Roman Empire to find meaning and dignity in their existence. This very success resulted, however, in the church's being populated by ever greater numbers of clergy attracted primarily by a selfish desire for comfort and power, so that increasingly it withdrew its energies from the community and used them instead for its own profit. While the hovels of medieval peasants remained dark and dirty century after century, the palaces of the princes of the church became ever more resplendent. Eventually leaders with credible messages of hope had to separate themselves from the hierarchy of the Church; first from within it, as spiritual innovators like Saint Bernard or Saint Francis did, and later in opposition to it, like Luther and Calvin.
Similar cycles of hope and disillusion have recurred in most societies around the world. Lord Asquith, premier of Great Britain, once said that "All civilizations are the work of aristocracies"-to which Winston Churchill retorted: "It is more accurate to say that aristocracies are what civilizations have had to work for." Both aphorisms are valid, although they refer to different phases of the cycle-Asquith describing the brief dawn, and Churchill the much longer period that follows.
The parallels with our own times are quite obvious. For the past century or so, business leaders have made credible claims to the effect that allowing for the operation of a free market, unfettered by social and political regulations, would improve the quality of life for everyone. As a result, our mental model of how the world works has become one in which production and consumption, the twin poles of economics, are the benchmarks of prosperity and well-being. Any fraction of a percent drop in consumption becomes a flag of distress that sends investors scurrying for shelter. After the terrorist attack of September 11, 2001, one of the most often heard responses from political and business leaders was: "Go out and buy. Don't let the enemy threaten your way of life." While this worldview offers an easy solution, and is convenient for those who benefit from it at the higher levels of the supply hierarchy, is a way of life that has consumption as its highest aim really that rewarding?
For much of the last century, the message of capitalism was opposed by what to many seemed to be the equally powerful vision of socialist states, in which centrally prioritized needs dictated production and consumption. The socialist solution, however, turned out to have feet of clay. It collapsed in part because it could not produce the promised material benefits, and in part because its political organization turned out to be even more vulnerable to the greed of its leaders than Church hierarchies, aristocracies, or mercantile elites had been.
The capitalist vision now stands alone on the world stage. Will those who promote it understand and accept the responsibilities that come with the privileges they have been given? Or will they, like so many leading classes before them, believe that their power was fairly won, that they owe nothing to the less fortunate whose toil funds their bonuses and stock options?
It would be easy to take a cynical perspective and conclude that human nature being what it is, greed will invariably prevail, and today's financial leaders will keep accumulating wealth until either the internal discrepancies in income become too blatant
for the social fabric to withstand, or until a global desperation proves that Karl Marx was actually right (even though he could not foresee a truly international proletariat lashing out against the capitalist nations, who have now taken up the role that the capitalist classes once occupied within nations in the nineteenth century). Yet however dispiriting the historical record may seem to be, human nature is not, in fact, based on greed alone. In every historical period there have been individuals who care for more than their own profit, who find fulfillment in dedicating themselves to the advancement of the common good. The struggle between selfishness and altruism has run throughout history like periods of sunlight and shade on a summer afternoon.
Many business leaders today do view their jobs as entailing
responsibility for the welfare of the wider community. These individuals do not define themselves as profit-making machines whose only reason for existing is to satisfy escalating expectation for immediate gain. It is to such visionary leaders that my colleagues and I turned, to learn what lessons they may have for others involved in business, as well as for everyone else who lives in these times. What do they consider their mission to be? What do they do to make life better for themselves and for others? Is there hope for society as a whole in the example they provide?
The Hundred-Year Managers
Recently I had a meeting with Yvon Chouinard, the founder of Patagonia, the manufacturer of outdoor gear. His office was located in a stucco building painted in pastel colors, hidden among eucalyptus and jacaranda trees in a quiet cul-de-sac. Inside the spaces were simple and serene with old hardwoods, glass, and ferns hanging from exposed beams. Employees in shorts and sandals moved around the premises as comfortably as if they were walking from the kitchen to the bedroom of their own homes. Sunshine shimmered through strands of wisteria, and the ocean stretched peacefully one block to the west, bearing the Channel Islands on the horizon. Occasionally the laughter of small children erupted from the day-care center on the floor below. I complimented Chouinard on how handsome an environment he had managed to carve out of an abandoned industrial building that was almost a century old.
"Yeah," he answered, "you don't build something like this if you're going to go public in three years and cash out and walk away. So we really do try to act like this company is going to be here a hundred years from now."
Chouinard's program speaks to a fundamental aspect of human nature: We need a certain amount of stability in our lives. But it is not enough simply to know that the sun is going to rise the next morning, and that the robins will return in the spring. We also have to feel that despite chaos and entropy, there is some order and permanence in our relationships and that our lives are not wasted, and will leave some trace in the sands of time. In short, we must have the conviction that our existence serves a useful purpose and has value. In the past the family provided focus to day-to-day life. Then, for several centuries, the Church assumed that role, as did local communities, who took care of their own. In more recent times a remarkable individual business-a factory, a bank, a proud old store-stood as a beacon of enlightenment
and social responsibility. Today, business leaders cannot begin to foster a climate of positive order if their sole concern is making a profit. They must also have a vision that gives life meaning, that offers people hope for their own future and those of their children. We have learned how to develop five-minute and even one-minute managers. But we would do better to ask ourselves what
it takes to be an executive who helps build a better future. More than anything else, we need hundred-year managers at the helm of corporations.
Halfway around the world, in an elegant apartment in Milan, a few steps from La Scala, Enrico Randone discusses his career. He has been working for the Italian insurer Assicurazioni Generali since he was a teenager, an orphan who had to support a mother and several brothers and sisters. Now eighty years old, he has been president and chairman of the board since he was sixty-nine-the youngest man to hold these positions in the 250 years of the company's history. If you stand in the Piazza Venezia of Rome, one of the main squares of the city, looking up at the balcony from which Mussolini used to threaten the world, the palazzo of the Assicurazioni Generali would be at your back. In Venice it faces St. Mark's Cathedral, and in almost every other Italian city the offices of the insurance company are located in an ancient palace, at the center of town. "Every policy we issue is backed by gold or real estate" says Randone of the firm that he reveres more than the Church, more than the government, more than any other earthly institution. "It is an awesome trust that every one of our twenty thousand employees is proud to be a part of."
In today's world it is primarily businesses that have the power and the responsibility to make our lives comfortable and secure. But how many firms are actually taking up this challenge? How many MBAs are taught that a "bottom line" based solely on finances is a tragic simplification? As companies dissolve and morph into new shapes, shedding employees and commitments in the process, it would seem that fewer and fewer individuals take such responsibilities seriously. But there are some executives who don't view their calling as managing merely for the next five minutes, or even the next year or decade. They have, like Enrico Randore, committed themselves for a lifetime, and beyond. In many ways, our very future depends on such visionaries.
Yvon Chouinard began his professional career as an itinerant blacksmith smitten by a love for the mountains. He spent every day he could among the dizzying spires of the Sierras, systematically climbing their most exposed routes. He became a legend among climbers. In the euphoric 1960s, sleeping on the shores of mountain lakes and trying out new passages up the polished rock walls of Yosemite seemed a good enough way to live, even though he couldn't earn a cent doing it. Chouinard describes this period:
I had no idea what I wanted to do in life. I started out as a craftsman. And my craft was climbing mountains, really. And then I just happened to have a lot of interest in the tools of climbing. In those days, it was very difficult to buy European climbing equipment.... So I decided to make my own stuff.
With his metal-working skills he was able to forge better climbing hardware than what others were producing. At campgrounds he started selling pitons and snap rings from the back of his beat-up station wagon. In a few years he had a thriving business making climbing gear.
But success turned out to be bittersweet: As the sport of climbing grew popular, the majestic rock faces became pitted and scarred from the hardware hammered into them. Some people would have regarded this as the inevitable price of progress and forged ahead. But when Chouinard realized he was helping to ruin the mountains he loved, he knew he couldn't live with himself unless he changed course. So he invented a new way of climbing with gear that could be placed into already-existing cracks and removed easily afterward, thus keeping the mountains clean. Eventually he eased out of hardware altogether and started making clothes-but clothes that were so durable that a blacksmith would be satisfied with them.
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The first pair of shorts, we had to sew it on a machine for sewing leather. I used a very heavy canvas. In fact, the woman who sewed them stood them up, and they stood up on the table. And that was the birth of our Standup Short. We were blacksmiths making clothes.