Leadership and the Law

As an executive coach, mentor and management consultant, I work with leaders who are required to manage complex legal and regulatory issues on a daily basis. In my experience, clients who have acquired a solid understanding of their legal responsibilities as managers - or owners – are more effective in leading their organizations. On the other hand, I have seen too often costs to organizations resulting from their leaders not knowing the legal issues they are facing, the pertinent legal questions to ask and not consulting their internal legal team, or outside counsel, in a timely fashion. For instance, there are many legal risks that should be factored into management’s decision-making when entering into contractual negotiations with vendors, joint venture partners and acquisition targets. There is an ever expanding array of liability issues associated with human resources management, environmental regulations and intellectual property issues.

In a recent article on the University of Toronto’s Faculty of Law Global Professional Master of Laws program (GPLLM), I found a very timely perspective on this important subject. (Globe and Mail, May 3, 2018) This program is a 12-month executive-style Masters of Laws which marries U of T’s deserved reputation for academic rigour with pragmatic real-world expertise. What intrigued me was that the GPLLM program is aimed at executives and managers in the private, public or non-profit sectors, as well as practicing lawyers. Of the 85 students in the class of 2018, 63% are new to law; and 48% are women while 52% are men. The students of the class of 2018 have on average 12 years of work experience.

So, what attracts busy leaders to invest their scarce time and money in this program? The pace of change we are experiencing is unparalleled in human history. Today’s leaders recognize the need to draw on a broad range of knowledge to keep atop of current and future challenges. Our volatile and complex economy creates risks that senior executives and leaders must effectively manage and resolve. (See my August 27, 2017, article Surviving or Thriving? Prospering Through Purpose.) According to Ed Iacobucci, Dean of the Faculty of Law, the GPLLM aims to “reshape the way leaders think. The law has an impact on a large portion of issues in the business world, yet executive education doesn’t offer that lens. The capacity to look at complexity, recognize the nuance and apply legal reasoning to come up with the best answer to a difficult problem is invaluable.” (“University of Toronto program helps executives master the law”, Globe and Mail, May 3, 2018)

Founded in 2011, the GPLLM has four concentrations: Business Law; Canadian Law in a Global Context; Innovation, Law and Technology; and the Law of Leadership. The curriculum is carefully designed to balance leaders’ challenging professional commitments with intensive study and professional development in individual and group setting. Students are exposed to the legal issues and problems that are most timely and relevant. They acquire the transformative skills and knowledge that will inform their responses to the wide-ranging challenges full of nuance of our rapidly changing global economy.

For many students, the program offers new perspectives and opportunities. Howard Shearer for example, CEO of Hitachi Canada and an Engineer by training, has worked 35 years in the tech sector. He feels the legal background he acquired at GPLLM has added a vital element to his tool kit. He says he now has a “deeper understanding of the challenges his legal team faces”. This has “opened the door to more productive discussions in the boardroom particularly regarding risk management.” (“University of Toronto program helps executives master the law”, Globe and Mail, May 3, 2018)

In my experience, the most successful leaders understand that they must not only develop new ways of doing business to thrive; they are also stewards of the communities they serve. This is exemplified by another GPLLM graduate. Kevin Vuong was named by Corporate Knights magazine one of Canada’s “Top 30 Under 30" for his work in helping to foster more resilient and livable communities. He is a community leader, city-builder, university lecturer and military officer using social innovation to build healthier, complete communities. (See his LinkedIn profile.) He is currently running for public office in the 2018 Toronto Municipal Election.

Increasingly, leaders recognize that legal literacy is a major benefit to their career development and to their organizations. To the best of my knowledge, the type of training offered at the GPLLM is unique in Canada. I would expect other institutions will want to offer comparable programs in future.

For more on the GPLLM, see http://connect.law.utoronto.ca/gpllm-law-of-leadership/

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The Power of an Impactful Value Story

You can if you believe you can, and then others will believe you can.

— Adapted from Virgil

An old friend asked me recently how many of my coaching clients can tell their value story convincingly? I asked him what precisely he meant by value story. He responded that in his experience as a corporate executive, impactful value stories have a powerful influence on people’s decisions and behaviours: “Facts tell, but stories sell!” Presenting the competitive benefits of a product or service is necessary, but not sufficient.

Many of my clients do indeed tell their organizations’ value stories persuasively. Others, however, are less adept. Effective value stories are essential in following situations:

  • CEO’s who must 'sell' their vision to their boards, investors and other stakeholders;
  • senior managers who need the collaboration of colleagues from other departments to finish a pressing initiative, and
  • marketing and sales teams that must induce new customers to buy their products and services, while retaining existing ones.

My clients say that their customers expect them to quickly grasp the issues and values that are both important, and in alignment, with their own. These customers want to be convinced that my clients will be able to help them achieve their goals successfully. Customers want to believe in them, in their track record and in their values, which mirror their own. Customers want to be certain that they will be worth the investment of their time, attention and money.

Good is the enemy of memorable! My most successful clients understand that it is not enough to be good at what they do, they must be unforgettable! When they tell an authentic, impactful and unique story of who they are and what they stand for, they connect with customers at an emotional level. When they are positive, affable and vibrant, they attract customers. Prospective customers are more apt to like them, to believe in them, and to trust them. They are disposed to do business with them – if not now, then later.

A well-told value story is an indispensable tool in effectively marketing products and services. For example, Tesla loses hundreds of millions of dollars a year. Yet it still entices investors and fosters customer loyalty with the promise of reinventing and dominating the automotive market with the world’s safest and most ecologically friendly battery-powered vehicles. Tesla’s real value is its story. However, crafting an impactful value story is a daunting task for many. It takes courage. It starts with having a firm understanding of what our own values are, as well as, what customers want and what they value enough to pay for.

This is all the more complex in our uncertain, volatile and hyper-connected 24/7 world, where we are all struggling to keep pace with seemingly unlimited options and on-demand everything. Amid these challenges, most successful organizations recognize that they must develop new ways of coping, adapting and doing business to thrive. They don’t ignore old assets and strengths. Rather, they endeavour to create and foster new ones based on a deep understanding of their genuine values, which reflect and guide the organizations that they serve. This helps shape purpose and direction for their organization in achieving its ultimate business goal.

Purpose-driven companies recognize that business is about creating lasting worth for all their stakeholders: shareholders, team members, vendors, customers, society and the environment. They are focused on creating a meaningful, sustainable future both within and beyond their organizations. (See my February 19, 2017, article, Economic Sustainability & the Environment.) Organizations prosper through purpose and sharing their powerful value stories with their customers and other stakeholders. When we align our value story with those of our customers we demonstrate a keen understanding of their issues, values and overarching purpose. They believe we will help them to be successful. (See my August 27, 2017, article Surviving or Thriving? Prospering Through Purpose.)

At the Bonar Institute, we have stated our purpose. We are committed to helping our clients discover theirs. We empower them to optimize their performance by embracing a reality greater than themselves and the companies they lead. This is the genesis of creating a powerful and impactful value story.

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Government: The Forgotten Collaborator

by James de Gaspé Bonar, Ph.D., CEC, ACC and John D. Bonar, Retired Trade Commissioner

Many of our executive coaching clients report feeling overwhelmed due to the daunting challenges of dizzying technological change coupled with instant dissemination of vast amounts of information -- and increasingly, disinformation -- in our hyper-connected world. The current rate, magnitude and complexity of change we are experiencing are unparalleled in human history. The business paradigms that worked well in the past no longer apply, leaving many executives uncertain and adrift.

The increasingly complex challenges of the volatile and uncertain global economy raise their stress levels even further. Protectionism is on the rise in the US, in parts of Europe and elsewhere. The relevance of vitally-important institutions such as the World Trade Organization, the World Bank and the International Monetary Fund is now challenged by their largest member. This is seriously undermining the safeguards of free and fair systems of global trade and investment. The prospects of major and destabilizing trade wars are imminent and expanding. Add, the alarmingly destructive impact of climate change and many fear we are at a tipping point of no return…

Though weakened, multilateralism is still alive, as the following three examples show:

  • the initiative to create the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP);
  • the ongoing negotiations to modernize NAFTA, and
  • the successful conclusion in 2017 of the Canada – E.U. Comprehensive Economic and Trade Agreement (CETA).

These key initiatives have demonstrated how national governments can successfully collaborate in lowering or even eliminating barriers to international commerce, thus benefitting all participant nations. And, the Paris Agreement of April 2016 marked a turning point in the battle against climate change. For the first time in history, world leaders united to legally ratify action against increases of greenhouse gas emissions through the United Nations Framework Convention on Climate Change. However, full implementation remains a challenge. The sole exception to this breakthrough agreement is the United States, which intends to withdraw from the Accord.

Excellent business opportunities still exist in foreign markets; though many executives are not fully aware of the wide variety of helpful programs governments directly offer to businesses. These include, in particular, export advisory expertise, as well as contracting, insurance and financing services. In many ways, government is truly the forgotten, yet invaluable collaborator in the success of business in global markets.

In Canada, for instance, the Trade Commissioner Service (TCS) assists companies to exploit new export opportunities, invest in foreign markets and find foreign R&D partners. TCS, which was created in 1894, has trade commissioners located in offices across Canada and in over 100 locations around the world. For American exporters the U.S. Commercial Service is the trade promotion arm of the Department of Commerce’s International Trade Administration. U.S. Commercial Service has trade officers in over 100 U.S. cities and more than 75 countries where they assist companies to begin exporting and/or exploiting sales opportunities in new global markets.

Export Development Canada (EDC) is considered by many as the premier export credit agency in the world. Its products and services include a wide range of trade credit insurance programs, in addition to export financing for Canadian exporters and their foreign customers. In the United States, the Export – Import Bank (EXIM) provides American businesses with an array of trade financing solutions – including export credit insurance, working capital guarantees, and guarantees of commercial loans to foreign buyers – to promote the exports of U.S. goods and services.

The Canadian Commercial Corporation (CCC) offers collaborative project development and foreign contracting expertise to assist exporters in securing contracts with foreign government buyers. As prime contractor, CCC signs and manages contracts with foreign governments on behalf of Canadian suppliers. The CCC has two core program portfolios: Defense and Security and Infrastructure Projects. The Defense and Security Programs with the U.S. on behalf of Canadian exporters have evolved as the primary role for the corporation.

These government entities promote the sale of billions of dollars of goods and services for businesses every year. The current global business environment is exceptionally challenging and will probably remain so for the foreseeable future. Those businesses that work collaboratively with their governments, however, are far more likely to obtain long term success than those that do not.

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Between Jobs? Now What?

I was speaking recently with a former colleague who is between jobs. He is an experienced and highly respected senior executive who is struggling to know what to do next. He shared that he wasn’t particularly happy in his previous job, and that he wants his next opportunity to have purpose and meaning. He emphasized that it would have to be in keeping with his values.

This conversation brought to mind the agonizing between-job experience of one of my coaching clients who I will call Sandy. He explained that following the loss of his well-paid and prestigious corporate job, he had benefitted from some excellent career transition coaching provided by his employer. It prepared him well to find another good job. A year later, however, he found himself again between jobs. Thus, began a deeply frustrating, three-year-plus odyssey to find yet another, comparable position.

However, the longer he was out of work, the less particular Sandy became. He did all the 'right' things: extensive networking, volunteer work, strict budgeting to make his severance last as long as possible, branching out to do management consulting... He sought career transition coaching (once again) now at his own expense. It seemed that everything that had served him well in the past no longer did now. He felt as though he was hitting his head repeatedly against a brick wall; leaving him feeling bloodied and isolated, but no further ahead. With his finances rapidly depleting, his mounting frustration turned to depression.

Sandy felt that at that point, he was nearing the breaking point emotionally and financially. He was willing to do anything to reduce his pain. He decided this dark night had to end NOW! This was not some desperate cry for help or even worse. No; born out of the intensity of his pain, Sandy somehow found the inner strength to decisively start letting go of now-obsolete values and priorities that were blocking his new path forward. He no longer defined success solely by power, prestige and money. He was now seeking something more meaningful.

While profound change is rarely instantaneous, something major had undeniably shifted for Sandy. He began to feel a new, growing sense of purpose deep within himself. Over the next few months, he met some like-minded people and was recruited for two promising opportunities. This is when we started to work together. Sandy wanted to ensure that his new position would be a good fit with his evolving values and priorities. He didn’t want to re-enter the dark night he was just leaving.

My coaching with Sandy focussed on helping him become more aware of his intellectual, emotional, physical and spiritual needs - without encroaching on the domain of psychotherapy, of course. We worked on identifying and letting go of previously ineffective approaches. He discovered the values that are now important to him personally and professionally. He acquired the insights, skills, knowledge and decisiveness needed to urgently move forward.

The overarching lessons he learned from our deep coaching sessions were the following:

  • To be successful, positive and happy, we have to have a goal and a purpose that are higher than ourselves and the organizations we work for;
  • In transforming ourselves, we can transform our surroundings, as well.

Between Jobs? Now What? For many executives this is one of the most important questions they will ever have to answer. Their response will have far-reaching consequences on their lives. This profound cross-road is where I come in. I recognize that each one of my clients is unique with specific talents, challenges and needs. Through deep coaching I assist them to discover their genuine personal and professional values, and to embrace their unique talents. (See my June 18th, 2017, post: Deep Coaching: No One Size Fits All.) This powerful and rewarding process enables them to acquire the self-knowledge and awareness to become both the person and the leader they aspire to be.

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The Greening Economy: Private Sector/Government Collaboration

By James de Gaspé Bonar Ph.D., CEC, ACC and Paul Bisson MBA, MHD, Ph.D. candidate

We have been reflecting on the threats and opportunities the environment poses to economic sustainability. Many have noted the economy is increasingly removed from nature and natural processes. Our natural resources are being consumed at an unsustainable rate. The Earth’s ecosystems cannot survive relentless growth in economic production and consumption. The environmental impact of unbridled economic production and global consumption is well-known (see James Bonar’s February 19, 2017 article, Economic Sustainability & the Environment). The related problems of waste and contaminants, however, are complex, often contentious, and in need of urgent solutions.

One prominent example is plastics: Plastics are undoubtedly one of the great inventions of the 20th Century. They provide the world with lightweight, useful and durable products and packaging. It is projected that the production of plastics will exceed 700 million tons annually by 2050. The bad news: Most plastic packaging products are used only once. One third of our plastic ends up in the natural environment, where it remains for centuries (New Plastics Economy, Ellen MacArthur Foundation, January 19, 2016). Some 8 million tons of plastic leak from land into the world’s oceans every year (Jambeck et al, Science Magazine, Feb. 2015). This has a dire, cumulative effect on our habitat: Some species of whales, for example, are near extinction due to pollution caused by dumping toxic plastic waste into the oceans.

Successful companies and forward-looking governments understand the threat to the environment of unbridled production, consumption and waste. They also see the opportunity to reinvent a greener and more sustainable economy for generations to come.

Plastics can be produced to be either non-bio-degradable or bio-degradable. Fortunately, bio-degradable plastics are increasingly used in industry to help reduce the harmful effects of non-bio-degradable plastics. Paul Bisson has been actively involved in a most promising venture between various levels of government in Canada and a UK-based bio-degradation technology company -- Polymateria -- based in London. Its mission is to help combat the global crisis of plastic pollution through scientific innovation and excellence. While there are a number of competitors in the ‘green plastic’ space, most are wedded to a specific technology – e.g., bio-plastics, oxo-bio-degradable plastics. Different applications require different technologies, however. The competitive advantage of Polymateria's is that it offers clients a ‘total solution’; it both assists its clients to determine the best technology and then develop formulae for their particular situations.

In order to expand its North American operations, Polymateria considered setting up a production plant in the United States. It explored various sites, but found little state and federal support for bio-degradable technology. It then mandated Paul Bisson to examine Canadian government incentive programs and help identify appropriate sites.

As a seasoned corporate executive and management consultant, Paul has extensive experience in securing private sector/government partnerships. Ultimately, Polymateria chose the National Capital Region (NCR), comprising the cities of Gatineau, Québec and Ottawa, Ontario. The NCR offers the necessary government support, skilled work force, and scalable infrastructure to serve the entire continental market. Moreover, production costs in Canada are very competitive. The mayors of both cities as well as the Minister of the Federal Department of the Environment and Climate Change have enthusiastically welcomed the arrival of the British green tech firm. The first phase of Polymateria’s operations in Canada will be up and running in the latter part of 2018. The total production for the first year is already pre-sold. The plant has the capabilities to expand to 10 phases within the next three to five years, creating some 800 highly skilled direct and indirect jobs. Growth prospects are strong, with the global bio-plastics market expected to reach US $43.8 B by 2020 (Ankush Nikam, “Bio-plastics Market Expected to Grow at CAGR of 28.8% During 2014 – 2020”, LANEWS.org, December 28, 2017).

This example of private sector/government collaboration illustrates the opportunity for communities to develop an innovative and technologically compelling economy that is green, profitable and sustainable. Paul Bisson and James de Gaspé Bonar are committed to assisting green companies to tackle the financing and leadership challenges required to achieve long-term success.

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Mitigating Leadership Risk in Uncertain Times

The current pace and scope of global change are unparalleled in human history. This dramatic upheaval is largely due to dizzying technological development that enables instantaneous global sharing of information.

Moreover, the world order established after World War II is also undergoing a seismic shift. One notable example is the United States. It has recently begun withdrawing rapidly from its leadership position in world trade, environmental protection and diplomacy; creating a vacuum that could be filled by other resurgent and increasingly assertive superpowers such as Russia or China. Profound changes such as these are impacting the global economy in highly unpredictable ways. The new normal appears to be volatility, complexity and uncertainty. There is an urgent need for leaders to successfully navigate their organizations though these uncharted waters, which teem both with unknown dangers and new opportunities. Sadly, many of today’s business leaders are unprepared for this challenge. According to academic literature, one in two business leaders is deemed a disappointment, incompetent or a complete failure. The situation is no better for executives new to their position – either external hires or those who are newly promoted; though internal promotions tend to fare better. Between 40% and 64% of new executives leave their jobs (voluntarily or otherwise) within the first 18 months of being hired. (See my post, Great Leaders: The Competency Imperative, November 2015).

The cost of replacing an underperforming executive within 18 months is enormous: approximately three times the leader’s first year salary. The cost is much higher when productivity and opportunity costs are factored in. (See my post, Why New Leaders Fail, August, 2015). While less conspicuous than financial risks and cyber threats, leadership is the single, most ominous and under-scrutinized risk facing organizations today – bar none!  Ineffective leadership affects every aspect of an organization from strategic and succession planning and execution, to team building, operations, business development and corporate reputation...  It can ruin even great organizations over time.

Companies take a huge risk in hiring and assessing their leaders because they can’t always predict how human beings will actually behave within a new work environment.

At the Bonar Institute, we identified the critical need for organizations to mitigate the performance risks of their leadership teams. We developed our unique Leadership Risk Mitigation Program for Management, Boards, Government, Non-profits and Entrepreneurs. This program includes innovative, leading-edge advisory tools that enable us to both identify and evaluate the capabilities of leaders and their management teams, as described below:

What we do: We evaluate the management team to determine its potential to meet stakeholders' performance expectations...

Our approach: We tailor our process to meet the unique needs of our clients. For example, does the leader have the necessary knowledge and skill set to be successful? Does he or she have the crucial management and human relations skills? We then identify any gaps and report our findings to our client.

Discovery and Diagnostics: We conduct discovery and diagnostic sessions with relevant parties to identify and evaluate their needs and expectations, as well as the degree of risk they perceive in situations facing our client's organisation. We supplement this phase with appropriate assessment tools: Emotional Intelligence, 360, Psychometric Tools.

Reporting and Next Steps: We present our findings and recommendations, including next steps, if appropriate. These may include: executive coaching and mentoring, leadership development and training, corporate governance, and skills enhancement techniques.

Our comprehensive approach helps organizations minimize management risks and position them for success in our highly uncertain and complex economy. Please contact us for more information on how we can help you succeed.

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Stuck at Work? Choose to Become Unstuck!

If you are in a rut and feel stuck in your job, you are not alone. Research shows that up to 40% of managers and executives in the US are dissatisfied in their jobs (Pew Research, October 6, 2016). There are many reasons for this dissatisfaction ranging from stress, issues with your boss, not feeling valued, work environment, poor salary and benefits, office location, etc. Some reasons are much more serious, such as burnout and severe stress reactions such as anger, anxiety, depression and substance abuse.  These problems may even require therapy. Approximately 20% of the population in North America suffers some form of mental illness, but fear of being stigmatized is often a barrier to receiving appropriate help.

In my experience as an executive coach, there are two phases of being stuck in the workplace that are not related to emotional or mental health problems. The first phase is most frequently exhibited by those who are in a fairly shallow rut. They tend to be bored with their jobs or dissatisfied with their bosses, their salary, etc.  They are generally too complacent to move or too afraid to take action: “It’s tough out there!” is a refrain often voiced.  Typically, this inertia can be remedied by speaking to a coach, a good friend, a family member or a trusted colleague, who will tell them the truth with ruthless compassion (see my March 16, 2015 post, Ruthless Compassion? Really?).  

In the second phase, the rut is deeper and more complex. For such managers and executives, the consequences can be debilitating. They feel great pressure not only to perform at peak levels: to be capable of dealing successfully with any and all problems, and to be seen as being on top of the situation. They feel an urgency to act quickly -- only to realize they can’t, no matter how hard they struggle. Others are impervious to their condition, and are functioning in an unhappy, quasi-mechanical daze.  Many are despondent, and some are even desperate.  They may fear for their job and for their health…  

The good news is that they don’t have to remain stuck.  They can choose to get unstuck. I speak from personal experience. During my career, I felt at times trapped in a morass that affected my productivity and my well-being. I had to learn to find the resources deep within myself to get unstuck.  These experiences have helped inform my coaching of senior managers and executives who also find themselves in such situations. The first step is for these clients to admit and understand the situation which is sapping their enthusiasm, their energy and their ability to perform. This may seem obvious at first blush, but it isn’t.  Most of us are more accustomed to taking immediate action, rather than taking the time to reflect on what we are experiencing and to become self-aware.  One must learn at such times to heed our body when it is crying out for help or to listen to well-intentioned colleagues or friends who tell us we’re 'not right'.  

Though self-awareness is necessary, it is not sufficient.  To become unstuck, marshalling inner resources and adopting a structured approach based on practical techniques is required.  This is a daunting task, especially if left to one’s own resources.  My responsibility as an executive coach is to assist my clients identify the causes of such ruts and to develop the proactive techniques required for them to move forward.

This type of professional support is not a luxury. It is one of the most important investments an organization can make.

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Surviving or Thriving? Prospering Through Purpose

Today's volatile and complex global economy creates significant corporate risks that executives must effectively manage and resolve.  The most prominent risks are financial and cyber threats. Others though, such as leadership, strategic and succession planning and execution, team building, and corporate reputation are perhaps less conspicuous, but are no less ominous.  Indeed, leadership is the greatest single risk facing organizations today – bar none! (See my January 8, 2016, post entitled CEO Performance and Board Oversight.)  Ineffective leadership can ruin even great companies over time.

The most successful leaders assess risks beyond the narrow imperative of robust quarterly earnings. Of course, profits are of the utmost importance for the success of their businesses; however, profits alone cannot be their single purpose. It is crucial how the money is made. Companies such as Amazon, Twitter and Facebook have implemented policies to avoid having hate speech associated with the products and services they allow on their platforms. These organizations realize that profits involving a social objective create a harmonious circle of prosperity between the company and society. They embrace a Purpose.

Ah, but what is Purpose and why is it important for business leaders?  Based on my experience with executives and the review of the best thinking on the subject, it is clear that Purpose is a moral choice that principled leaders make to achieve something greater than themselves and the companies they lead.  For some, it’s Social Responsibility (Toms and Starbucks), for other it’s Excellence (Berkshire Hathaway), and for still others it’s Innovation and Discovery (Apple, Tesla and Virgin).  Purpose inspires leaders to believe that their vision of the future is worthwhile and attainable, and it inspires others to reach for their dreams too.

Not all companies have a Purpose, and some succeed financially without it. However, the most successful ones understand that Purpose is key for their prosperity over the long term. It creates a direction for their organizations, and it leads to better decision making on a day-to-day basis. Their leaders are Purposeful. They recognize that real risk mitigation requires more than drive, intellect and experience. They don’t ignore old assets and strengths; rather, they endeavour to create and foster new ones based on a deep understanding of their genuine professional and personal values, as well as their companies’ cultures. They realize that business is about creating lasting worth for all their stakeholders: shareholders, team members, vendors, customers, society and the environment.  All are unique and interconnected in a vibrant community of purpose and prosperity.

Purposeful Leadership Circle.png

Each stakeholder complements the others synergistically. This leads to the creation of even greater value.  Indeed, research indicates that there is a positive correlation between this type of corporate culture and profitability.  Respected companies such as Southwest Airlines, Google, Costco, Tata, Royal Bank of Canada, Unilever, Nordstrom, Ecolab and Trader Joe’s have all shown that this way of doing business leads to multifaceted success over time, including higher profits.

When a company has successfully developed and deployed a clear and consistent organizational purpose, its culture becomes more closely aligned with that purpose. Then, goals, strategies, objectives and tactics are understood, embraced and acted upon more effectively and enthusiastically.  

Executives who are successfully managing the volatility and complexity of the global economy have a strong sense of purpose. They embrace a reality greater than themselves and the companies they lead. They create a corporate culture focused on achieving effective, practical, sustainable and transformational results for the long-term. (See my September 6th, 2016, post entitled CEOs & Stakeholders’ Value Creation.) They choose service over short term self-interest.

Purposeful leaders have let go of old management paradigms. Supported by like-minded management teams, they inspire all their stakeholders by example to build a more coherent and prosperous enterprise that is far greater than its individual parts. Purposeful leaders are ethical corporate stewards focused on creating a meaningful, sustainable future both within and beyond their organizations.

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Deep Coaching: No One Size Fits All

Our approach to executive coaching is based on the firm belief that each client is unique and has specific needs, challenges, opportunities and practical goals. One size doesn’t fit all!

In our practice we have identified the risks and benefits of a coaching engagement. The risks of a failed engagement are considerable, both to our clients and to the Bonar Institute, as follows:

Risks for the client:

  • The client does not receive the full value of the coaching they require. This includes adapting satisfactorily to a new organizational culture or position, fine-tuning competencies, enhancing professional development and having access to the trusted advisor/executive confidant they need.
  • The financial investment for an executive coaching engagement.
  • The potential opportunity costs in terms of time, unmet expectations, and unrealized revenues and profits for their organization.

Risks for the Bonar Institute:

  • A dissatisfied client
  • Possible lost business
  • Potential tarnishing of our reputation

The long-term benefits of a successful engagement to a client's organization are a more productive, satisfied and effective leader, and overall improved organizational performance. The benefits to the Bonar Institute are that the organization will likely use our services again, if the situation should arise, and refer us to others.

To ensure that our coaching is tailored to meet our client’s specific needs, we have developed the following three-stage preparation program:

1. Establish the potential success of the engagement

Many prospective clients don’t fully understand the purpose of executive coaching. Without this understanding, it is difficult for them to know what to expect. Expectations may be misinformed or impractical. To minimize this risk, we ensure that our prospective clients understand the nature and limits of deep coaching. Have they had any previous experience with an executive coach? What were the most helpful elements? What were the more challenging ones?

We then identify their expectations and goals for the coaching engagement. What would success look like? This often requires clients to change their beliefs, attitudes and actions. We determine whether they have the openness and motivation to change. Are they fully committed to the process? If not, the coaching will likely fail. If the prospective client is committed and we determine that we can help them, we then evaluate whether a positive chemistry exists between the prospective client and our coach. Only then do we accept the engagement.

2. Personalized Review:

We need to have a deep understanding of our client. To this end, we administer an Eqi (Emotional Intelligence) Leadership assessment to the client and a 360 to key stakeholders. We ask the client to tell us their story in a comfortable and safe environment. Confidentiality and trust are the hallmarks of our entire engagement. We pay particular attention to what we learn of this client’s career and the following needs:

  • Behavioural
  • Intellectual
  • Emotional
  • Physical (e.g. nutrition, exercise, stress management)
  • Purpose
  • Fulfillment

This review will provide valuable insights to the coaching process. It will also serve as a beginning benchmark of the client’s situation prior to starting the engagement.

3. Review of the Organization and the Industry:

  • Corporate governance, organizational structure, operations, culture and values
  • Key challenges and opportunities for the organization and for the industry

Our three-stage preparation program helps optimize our coaching engagements and minimize risk of failure. We ensure that our personalized coaching engagement is tailored to the unique needs and expectations of our clients. The Engagement Plan is based on goals and timelines that are clear, achievable, measurable and monitored. We develop these with our clients and we then hold them accountable.

Typically, we conduct a second set of Eqi assessments at the end of the engagement to measure success. We review areas that might not have met the goals of the Engagement Plan, and explore possible next steps.

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Thriving in a World of Exponential Change Through Deep Coaching

The pace of change we are currently experiencing is unparalleled in human history.

This is due in large part to exponential technological change coupled with the instantaneous dissemination of ideas and information across an increasingly connected world. (See Duleesha Kulasooriya and Maggie Wooll, Unlocking Human Potential: Proactive Practices for Individual Elasticity, Deloitte University Press, 2017). The options available to meet our needs and pursue our goals are evolving in extremely rapid and often unpredictable ways. New business models are sprouting seemingly everywhere. For some executives, this is a step into a new world full of excitement, vitality and promise. For others, there is distress over the unknown. They worry about what (and how many) jobs will remain in the age of intelligent machines and rapidly improving artificial intelligence. Some envision our changing world as a kind of hyper-connected technological wasteland where their connection to others – and to themselves – is being lost.

We are all struggling to keep pace with the world we have created and are continuing to create that now has unlimited options and on-demand everything. We are left with a sense of fleeting time and lost opportunities. Amid these pressures, we need to develop new ways of coping, adapting and leading.

While our world is evolving rapidly, our basic human needs remain unchanged. To better deal with the pressures and stresses of today’s business environment, many executives are striving to manage their lives holistically: physical and mental well-being, professional development, volunteering, community service, etc. They are not turning their backs on technology. Rather, they embrace smart phones, social media, and video conferencing, among others. However, they are also searching for more balance in their lives. Some are turning to ancient disciplines such as meditation, mindfulness, yoga, etc. Today, the workplace wellness industry in the US is worth over $40B US. (See Unlocking Human Potential: Proactive Practices for Individual Elasticity.) The practise of these disciplines can help executives bring creativity, calm, reflection, and resilience to the challenges of a turbulent, uncertain future. This, in turn, can lead to increased productivity, improved performance and better staff morale.

The International Coaching Federation defines coaching as partnering with clients in a thought-provoking and creative process that inspires them to maximize their personal and professional potential. Our work with executives has shown that coaching at a deep level is a highly effective way of developing and sustaining leadership. Deep coaching focusses on acquiring awareness of intellectual, emotional, physical and spiritual needs without encroaching on the domain of psychotherapy. Our approach helps executives develop and maintain equilibrium between the exponential change in their everyday lives and their own human needs. Deep coaching helps leaders develop the insights and decisiveness to successfully manage unrelenting and unpredictable challenges. They let go of previously ineffective approaches. They commit themselves to learning new skills and knowledge that are urgently needed now and going forward. The most successful executives concentrate on finding and striving for a higher goal and purpose beyond themselves and their organizations. Thus, in transforming themselves, they can transform their organizations, as well.

Each one of our clients is unique and has specific needs. 'One size does not fit all.' Before starting deep coaching with a new client, we follow a rigorous preparation program. This will be the subject of my next article.

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An Enduring Question: Can a Company Have a Soul?

One of my coaching clients asked me recently if a company can have a soul. This question is very common in today’s fiercely competitive business environment - witness a recent search on Google came up with over 100 million results.

Based on my experience with executives and a review of the best thinking on leadership and governance, I have identified the following characteristics of a company with soul. By soul, I mean a broader, higher purpose than just more robust quarterly results.

Social responsibility: Profits are of course one of the most important drivers of business, but they cannot be its sole purpose. Not all profits are equal. It matters how money is made. For example, companies such as Amazon, Twitter and Facebook have implemented policies to avoid having hate speech associated with the products and services they allow on their platforms. Companies with a higher purpose realize that profits involving a social objective create a positive cycle of prosperity between a company and society. These organizations embrace the interdependencies and synergies between their stakeholders: shareholders, employees, vendors, customers, society and the environment. Companies such as Tata, Unilever and Google see their organizations as greater than their individual component parts. Social responsibility is becoming important for executives and the companies that they lead. Research indicates that there is a positive correlation between this type of corporate culture and profitability.

Environmental responsibility: Forward-looking companies understand that our natural resources are being consumed at an unsustainable rate. They see it as a stark, existential threat for humanity. They also recognize the real prospects for sustainable growth by developing innovative and technologically compelling solutions to reduce ecosystem loss. Some, like Intel, Ericsson and Ecolab are creating sustainable long-term value for their shareholders and all their stakeholders by decoupling resource consumption from growth. Forward-looking companies, such as these, grasp the opportunity to reinvent a greener more sustainable economy for the generations to come. The most forward-looking ones are already doing so.

The human imperative: The slogan of one of Canada’s oldest and most efficient steel makers, Dofasco (now part of ArcelorMittal) is Steel is our product, People are our strength. Research confirms this adage by showing the link between superior human resource management and superior organizational performance. Successful companies, such as Starbucks and Southwest Airlines, invest time and effort to hire the best talent, and devote considerable resources to retain them. They engage employees who not only have the required competencies, but who also share the businesses’ purpose, values and culture. They stress employee training, empowerment and involvement. They promote teamwork and a team culture characterized by sharing and collaborating. A good team always produces better results than individuals working alone. Incentive programs are team based and compensation policies are fair and transparent. Forward looking companies create purposeful work that challenges and encourages their employees to learn and grow.

Moral authority: Companies with a higher purpose have moral authority. A company’s stakeholders (shareholders, employees, customers, vendors…) want to know that the company is honest and dependable and that its values align with their own. Stakeholders do not want to be manipulated. The most successful leaders seek to align the values of their stakeholders to create organizational cultures that bring about lasting change, and achieve the desired results. Stakeholders value privacy highly. Trust is the cornerstone; and it is built with transparency, integrity and respect.

Executives who are successfully managing the volatility and complexity of the global economy have a strong sense of purpose. They embrace a reality greater than themselves and the companies that they lead. They create a corporate culture focused on achieving effective, practical, sustainable and transformational results for the long-term. The Bonar Institute is committed to assisting companies discover and nurture their higher purpose, their soul...

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Economic Sustainability & the Environment

This is the fifth and final post in our series on stakeholders’ value creation in volatile times. It deals with the threats and opportunities the environment poses to economic sustainability.

The Threat: Innovation, technology and resource conservation are core sustainability issues to business performance in the 21st century. The economy is increasingly removed from nature and natural processes. Our natural resources are being consumed at an unsustainable rate. The effects of climate change on lives and property is devastating. Many indicators suggest that we are experiencing increasing “loss of natural diversity, changing and expanding disease vectors and the spreading of an unsustainable growth and consumption model” across the globe. (P. G. Brown and P. Timmerman, Ecological Economics for the Anthropocene, Columbia University Press, 2015). The strains between economic winners and losers are worsening. Despite gains in the past decades, nearly a billion people are still living in poverty. (World Bank, 2015) Social and political unrest is stirring in many countries. The world may not be able to feed itself by 2050 if we don’t increase food productivity. The Earth’s ecosystems can’t survive relentless growth in economic production and consumption. (A. Korngold, “Board Governance for a Better World”, The Hand Book of Corporate Governance, Wiley, 2016)

Taking stock: A number of companies and their boards of directors recognize that responsible environmental stewardship is vital for long term corporate sustainability, and that the development needs of the present must not compromise those of future generations. These companies monitor carefully their ability to operate profitably over time in the face of changing economic, social and environmental conditions. Such conditions impact their operations and affect their value creation activities and sustainability. Many companies now report on their performance on these issues so that shareholders (and other stakeholders) can determine where value is being created within the organization. For example, what is a company’s use of non-renewable resources and its impact on the environment? And, how does a company integrate environmental and social factors into its value creation process in product innovation, design and disposal? (D.Y. Park, “The Board’s Role in Sustainability Governance”, The Hand Book of Corporate Governance, Wiley, 2016)

The Opportunity: A number of corporations recognize that they can create sustainable long-term value by decoupling resource use from growth. Some, like Intel, are developing innovative and compelling solutions to conserve energy to reduce the most serious effects of climate change, which they then sell to other companies. Ericsson is developing and marketing smart city technology to help reduce carbon emissions. This is especially important since 70% of the world’s population is expected to live in cities by 2050. Ecolab is a global leader in water, hygiene and energy technologies and services. It helps major companies in over 40 industries to “operate more efficiently, expand their operations responsibly in resource-scarce regions, and adapt to meet changing conditions and expectations.” (Korngold, “Board Governance for a Better World”)

Environmentally and socially responsible corporations understand the stark threat of the irretrievable depletion of our natural resources. They also recognize the very real prospects for sustainable growth by developing innovative and technologically compelling solutions to reduce ecosystems loss. These companies are ensuring the long-term value creation for their shareholders and for all their stakeholders. Innovation, technology, social responsibility and the environment are the pillars of the economic sustainability in the 21st century. Successful companies understand that the threat to the environment is dire, but they also see the opportunity to reinvent a greener and more sustainable economy for the generations to come. The most forward-looking companies are already doing so. For them, the environment is a major stakeholder, as important, if not more so, than the others…

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The Complex Case of Customers as Stakeholders

This is the fourth in a series on stakeholders’ value creation.

The case of customers as stakeholders appears self-evident. Simply, a company cannot exist without customers. The purpose of every business centers on creating customer value. Forgetting that customers are the ultimate decision makers of what they will buy can be fatal. The premise that customers are stakeholders is more complex however. Where do a company’s interests intersect with those of its customers? Corporate boards and management are focused on financial performance, stock prices, and maintaining sustainable and profitable growth objectives. Customers want products and services to meet their standards, expectations and needs at a price they are willing to pay. In addition, an increasing number of their buying decisions are influenced by whether a company’s values align with their own (e.g., fair trade coffee, the green revolution etc.). The challenge is to ensure that the needs and wants of the company and of its customers are met simultaneously.

Forward-looking companies, Such as Apple and Southwest Airlines, devise strategies to satisfy and to reconcile the needs, interests and behaviours of their customers and of their shareholders. Trust is the cornerstone. When customers trust a company, they implicitly give it permission to influence them. Customers want to know that the companies they are doing business with are honest and dependable. Companies built trust by interacting with customers with transparency, integrity and respect. The prevalence of social and mobile technologies has changed the traditional ties that build trust between companies and their customers. These technologies are an accelerant and an amplifier of this process.

Present-day consumers have more power than ever before. They are better informed than they were only a few years ago. For many, trust means respect of privacy. “Seventy-two percent of Americans are reluctant to share information with businesses because they just want to maintain [their] privacy” (J. Gin, “A New Paradigm for Building Customer Trust”, Entrepreneur, June 27, 2016). This reluctance is intensified when global companies, such as Amazon, Google and Facebook, have little or no direct interaction with customers. It should be noted that in-store customers also value privacy. (See C. Esmark, “Your In-store Customers Want More Privacy”, HBR, Dec. 28, 2016.) Successful companies do not manipulate their customers. They ask only for personal information that is necessary to complete the transaction, forgoing near-term marketing opportunities offered by collecting additional data. Respecting privacy is an important branding differentiator for companies competing for the business of often leery customers. (See J. Hinz, “The Power of Customer Trust in Brand Marketing”, marketingland.com, October 29, 2015.)

The most successful brands, such as Starbucks and Disney, ensure that their clients are satisfied at every point of interaction with the company. They create environments that customers value. They eliminate practices and people that detract from the optimal customer experience. They empower their employees, and encourage creativity and innovation in dealing with customer wants and concerns. (See my December 5, 2016, post: “The Case for Employees as Stakeholders”.) One well-known retailer had for many years this simple rule for its employees:

Rule #1: Use good judgment in all situations. There will be no additional rules.

These businesses recognize that acquiring a new customer costs up to seven times more than retaining an existing one. (See “10 Reasons Why Customer Satisfaction Is Still a Crucial Business Metric”, July 16, 2016, by Infinit Contact.) Simply put, excellent customer service leads to customer loyalty, which in turn leads to sustainable long-term success.

The most successful companies treat customers as valued stakeholders. They develop and implement strategies that accommodate and leverage synergistically the interests of all of their stakeholders.

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The Case for Employees as Stakeholders

This post is the third in a series on stakeholders’ value creation in volatile times.

As traditional and social media unfailingly reiterate, we are living in turbulent and potentially dangerous times. Traditional spheres of political and economic power are mutating rapidly. Established values are being shaken. The certainties of yesterday are falling away. Managers and employees are increasingly stressed out and disengaged.

The gap between economic winners and losers is widening. Some evidence suggests that wealth inequality measures are the greatest ever recorded. This can lead to the social and political unrest stirring in many advanced economies. (See my October 24, 2016 post, “Value Creation in Volatile Times: The Case for Ethical & Socially Responsible Companies”.)

Governments have registered only limited success in addressing these dangerous tensions. Conversely, multinational corporations with their vast resources, global footprints and market orientation are well positioned to alleviate them. While companies depend on profitability for their existence, corporations are increasingly recognizing that the interests of each stakeholder - shareholders, employees, vendors, customers, the larger community and the environment- complement synergistically the others and lead to the creation of even greater, sustainable, value. For many, this starts with their employees.

Corporate leaders often repeat: Our employees are our greatest asset! As so eloquently put in the slogan of Dofasco (part of ArcelorMittal), one of Canada’s oldest and most efficient steel makers, Steel is our product. People are our strength. Research confirms this adage by showing the link between superior human resource management and superior organizational performance. “Along with the intellectual and knowledge property they create, human capital has become the most important intangible asset most corporations possess.” (Jay A. Conger and Edward E. Lawler III, “Human Resource Management: The Role of Boards”, The Handbook of Board Governance, Wiley, 2016, p. 501)

Successful corporations hire the best talent, and devote considerable resources to retain them and keep them engaged. They invest the necessary time and effort to hire the right candidates who not only possesses all the required competencies (see my November 12, 2015 post, Great Leaders: The Competencies Imperative), but who also share their business purpose, values and culture. They stress employee empowerment and engagement. These companies - such as Starbucks, Southwest Airlines and The Container Store - are future-looking, playing the long-game. They invest in better trained and more service-oriented workforces. They promote teamwork and a team culture characterized by sharing and collaborating. A good team always produces better results than individuals working alone. Incentive programs are often team-based. Compensation policies are transparent, fair and generous; senior executives don’t earn disproportionately more than the average pay of all employees. Some provide their employees with a share of their profits (profit sharing or equity). Forward-looking companies create purposeful work environments that challenge and encourage their employees to learn and grow.

The benefits accruing from having engaged and collaborative employees as full-fledged stakeholders are evident. V. Kumar and Anita Pansari cite the following statistics in their article, “Measuring the Benefits of Employee Engagement”, (MIT Sloan Management Review, June 16th, 2015). Businesses with more engaged employees:

  • Outperform disengaged employees by over 20%
  • Have 10% - 15% higher profits versus 0% - 1% in companies with disengaged employees
  • Are 87% less likely to have employees leave the organization

We are in the midst of an historic transition where many companies are starting to recognize that the best way to create value in the long term is to integrate the interests of its multiple stakeholders in a single strategy. The most successful corporate leaders see beyond the sole imperative of quarterly profits. Forward-looking companies understand that sustainability depends on their ability to understand and accommodate the needs of all stakeholders, starting with their employees. The most successful ones (such as Tata, Google and Costco) do already …

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Value Creation in Volatile Times: The Case for Ethical & Socially Responsible Companies

This post is the second in a series on Stakeholders’ Value Creation.

Large publicly traded multinationals are considered by some to be the real centres of power of the global economy in the 21st century, where technology and innovation are integral to success (See James McRichie, The Individuals Role in Driving Corporate Governance, The Hand Book of Corporate Governance, Wiley, 2016). If true, this is both a challenge and an opportunity to shareholders’ long-term value creation.

The challenge, here, is that these corporations are so widely traded, have such vast resources and large global foot prints that they risk being more accountable to management than to shareholders. According to Robert A.G. Monks, a shareholder activist and corporate governance advisor, shareholders’ ultimate right to control corporations is “aspirational at best”. Today’s corporations, he contends, are “so widely owned and so widely traded that they have no owners” (defined by the SEC as 10% or more). Control, in such scenarios, has effectively been separated from ownership (“The Happy Myth, Sad Reality: Capitalism without Owners Will Fail”, The Hand Book of Corporate Governance). Corporate managers thus might end up being too focused on quarterly results to the detriment of considerations of the public good and long-term corporate sustainability.

Large multi-nationals, as well as large privately-held companies, naturally do gravitate to countries offering the best incentives and the lowest corporate tax rates. This, over time, could exacerbate strains between economic winners and losers. Some evidence suggests that wealth inequality measures are the widest ever recorded. (Jill Treanor, “Richest 1 Percent Own Nearly Half of Global Wealth, Says Report”, The Guardian, Oct. 14 2014). This leads to the social and political unrest stirring in many advanced economies.

Conversely, the very power of multinational corporations with their vast resources, global footprint and market orientation positions them well to alleviate these dangerous tensions. These corporations advance employment and reduce poverty through access to new markets, workforce development, product innovation and distribution. Unilever’s purpose, for example, is to make sustainable living commonplace by enhancing the livelihoods of millions of people as it grows its business. (See Unilever’s 2014 Annual Report).

Increasingly corporations are being held to account by their stakeholders - shareholders, employees, vendors, customers, the larger community and the environment. While companies depend on profitability for their existence, forward-looking corporate boards recognize that it is not sufficient in and of itself (see my September 6 2016 post, CEOs & Stakeholders’ Value Creation). The most successful boards are comprised of directors of diverse experiences, expertise, age and gender. They understand that “non-financial” environmental and social issues are risks that can over time impact corporate capital and long-term shareholder value creation. They realize that devastation created by the increasing frequency and severity of natural disasters due to climate change; scarcity of food, water and medicine; and poverty are global existential threats.

Forward-looking boards focus on generating sustainable value for all their stakeholders. They recognize that the interests of each stakeholder complement synergistically the others and lead to the creation of even greater, sustainable, value. These companies codify and publicly state their commitments to ethical, socially responsible and sustainable business practices. A number report on how they perform in the financial, social and environmental areas. There is a clear connection between such a corporate culture and profitability. Research indicates that the performance of stock prices of companies is influenced positively by clearly stated sustainability practices. (See Alice Korngold, “Board Governance for a Better World, The Hand Book of Corporate Governance).

The success of companies to resolve the highly complex and volatile challenges they are facing rests on the excellence of the CEOs, and of the boards of that hire them and provide strong oversight, strategic direction on long-term value creation and support.

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CEOs & Stakeholders' Value Creation

The primary goal of CEOs is to leave a meaningful legacy, something greater than themselves and the organizations they lead. They aspire to accomplish the extraordinary. Today’s legacies differ from yesterday’s. We are in the midst of a historic transition where old paradigms are giving way to new challenges and innovative possibilities.

Based on our experience with high performing executives and our review of the best thinking on leadership, we have determined that the most successful CEOs are purposeful leaders. They create motivated, successful organizations that work well in both human and business terms. While companies depend on sustainable profits for their very existence, these leaders recognize that they are not sufficient in and of themselves. Not all profits are equal. It matters how money is made. David Gregory Roberts, author and former heroin addict and convicted “gentleman bandit”, said it well: “If we can’t respect the way we earn it, money has no value. If we can’t use it to make life better for our families and loved ones, money has no purpose.” (Shantaram, 2004) For purposeful CEOs, leadership includes social responsibility.

As Michael Porter and Mark Kramer contend “profits involving a social purpose represent a higher form of capitalism, one that creates a positive cycle of company and community prosperity.” (“Creating Shared Value: How to Reinvent Capitalism - and Unleash a Wave of Innovation and Growth”, HBR, January-February, 2011) Great CEOs make a positive contribution to society through their organizations. These leaders are self-aware, optimistic, persistent and resilient. Their message is one of hope, respect and compassion. As a seasoned CEO and mentor once told me, “If you treat your stakeholders as children and they will act as children. But if you treat them as adults, with respect and trust, they will act as mature responsible adults.”

The most successful CEOs understand the purpose, values and culture of their organizations. They realise that business is about creating lasting value for all their stakeholders: shareholders, team members, vendors, customers, society and the environment. All are linked, interconnected. This interconnection creates a vibrant circle of harmony where each stakeholder complements synergistically the others and leads to the creation of even greater value, including higher profits.

Ah but the proof is in the pudding. Companies win in the marketplace. Respected companies such as “Southwest Airlines, Google, Costco, UPS, POSCO, Tata, The Container Store, Amazon.com, Whole Foods Market, Nordstrom, Patagonia, Trader Joe’s, Panera, and Bright Horizons have all shown that this way of doing business is leads to multifaceted success over time.” (John Mackay and Raj Sisodia, Conscious Capitalism, 2013)

Purposeful leadership is not for the faint of heart. It calls for great vision, courage and resolve. But the rewards are real and fulfilling. As stewards of all their stakeholders’ values, purposeful CEOs choose service over short term self-interest. They embrace the interdependencies and synergies between them. They inspire all their stakeholders to build an enterprise which is greater than its individual constituent parts. This is their legacy. By fashioning a vibrant circle of harmony between all of their stakeholders, purposeful CEOs create the extraordinary.

We will explore in subsequent posts the role of CEOs as stewards for each of their stakeholders, starting with shareholders.

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Complexity, Volatility, Purpose & Leadership

At the Bonar Institute for Purposeful Leadership, we work with executives who are dealing with the demands of increasingly complex problems in a volatile and uncertain global economy. The most recent example is the immediate and dramatic global reaction to the “Brexit” result. In the past, issues were generally more straightforward and could be solved more quickly and efficiently. Today, executives face problems that typically have no single right solution. How, for example, to respond to the ultimatum from a major client for more customized (and expensive) products at significantly reduced prices? Or, how to square increasing shareholder returns while simultaneously raising employees’ salaries? According to David Dotlich, Peter Cairo and Cade Cowan, these types of issues are paradoxes: Problems “complicated not just by a single set of contradictory forces but by many” (The Unfinished Leader, p. xi, 2014). Our focus at the Bonar Institute is to help leaders effectively manage these issues by helping them accept their inherent complexity and ambiguity, and then develop strategies to move forward.

While problem solving and flexibility remain necessary skills of a successful leader, they are not sufficient. Steven Stein and Howard Book identify in TheEQEdge (pp. 269-271, 2011), four pillars of highly successful leaders:

  1. Being centered, self-aware, straightforward and composed under stress
  2. Taking action, being decisive with follow-through on important decisions
  3. Having a participative management style, excellent listening and communication skills, focus on winning hearts and minds, accountable for their mistakes and imbued with a strong sense of social responsibility
  4. Being tough-minded, assertive, resilient and optimistic

Social responsibility is becoming increasingly important for executives and the companies that they lead.

From our experience with executives, it is their strong sense of purpose, of embracing a reality greater than themselves that brings the characteristics of successful leadership together. This creates the sharp focus that leads to effective, practical and transformational results. A leader’s “most important role is to be the steward of an organization’s purpose” (Nick Craig and Scott Snook, From Purpose to Impact. HBR, May 2014). Successful companies such as Johnson & Johnson, Royal Bank of Canada and Whole Foods identify and embrace the raison d’être of why they are in business. This is their higher purpose. It transcends the sole imperative of superior quarterly earnings. Profits are of course one of the most important drivers of business. But, they cannot be its sole purpose. A company’s higher purpose guides overarching decisions from governance and corporate structure to next generation succession planning to investments, including product development. These corporations align their purpose at the highest level with those of all their stakeholders: shareholders, employees, vendors, customers and the larger community. They devise strategies that engage stakeholders, as well as accommodate their specific behaviours, interests and needs. Business leaders “must never knowingly allow the overall enterprise to be harmed just to benefit one of its shareholders in the short term” (John Mackey and Raj Sisodia, Conscious Capitalism, 2013, p.305).

We are in the midst of an historic transition in corporate governance where the community and the environment are beginning to be seen as key stakeholders. At the Bonar Institute, we offer tailored programs to assist companies and their leaders acquire the skills and mind sets to be agents of change and responsible corporate stewards of our complex, volatile and uncertain world. The most successful companies already are …

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Risk Mitigation for Businesses in Early Stages of Development: The HR Imperative

The dynamics underlying the everyday business situations of companies in early stages of development is a particular focus of the Bonar Institute for Purposeful Leadership. We are currently working on developing an effective and practical customized Leadership Risk Mitigation Program to help investors identify and mitigate the leadership risk component of their investments.

In today’s highly complex, volatile and uncertain economy, risk and expected ROI are very much on the minds of investors. While risk is unavoidable, it can be significantly reduced. The most serious and difficult risk factor facing potential investors in start-ups and businesses in early stages of development deals with the founder-CEO. Investors’ expectations for the business prove over time to be significantly different than those of the founder. In the case of ROI, entrepreneurs often make decisions that conflict with the wealth-maximization principle of the investors (Noam Wasserman, The Founder’s Dilemma, HBR, February 2008).

The following statistics are stark: Within three years of a venture’s founding, only 50% of founders are still the CEOs of their companies ; in year four, the percentage is 40%, and by the time of the companies’ initial public offerings, the percentage falls to less than 25%. Most entrepreneurs are forced to step down. Change in leadership is often stormy and damaging for the prospects of young companies. A caveat: As founder-run companies grow and become mature, they have proven to be very successful at maintaining profitable growth (Chris Zock, Founder-Led Companies Outperform the Rest – Here’s Why, HBR, March 2016). But they are the minority. 90% of all start-ups fail.

The need to have the right leadership in place is the cornerstone of the success of young ventures. However, the attributes of the right leader change as a company grows from early stage start-up to a more mature and complex organization; from founder, to manager to strategic leader. The ROI depends on how well the CEO manages risk, while creating sustainable growth and wealth creation.

According to a recent study, there are four factors that predict start-up success when assessing the strengths and potential of the founder-CEO in the IT sector (See Tucker. J. Marion, HBR, May 3, 2016).

  • Age: Technology favours the young: Younger entrepreneurs in technolog c ompanies are a key success factor.
  • Diverse teams, including gender diversity: High-performing investments have at least one female founder; female-founded IT start-ups outperform all-male teams by 63%.
  • Education: A top education is a significant ingredient for start-up success. Companies with at least one founder from top school perform 220% better than other companies.
  • Experience: Prior work and start-up experience in top tech companies predict success of founder.

    o Investors view this experience highly as a form of pre-screening

    o Acquired hard skills (e.g., project management)

    o Acquired soft skills (e.g., politics and networking)

Other key factors that predict success include alignment among members of the investment group on risk tolerance, their understanding of the complexities of the sector they’re investing in, their expectations regarding the ROI and their expectations of the founder-CEO; and, finally, there needs to be alignment between the expectations of the investors and those of the founder-CEO on the type of leadership required at both the investors and CEO’s tables.

Identifying, assessing and evaluating the areas of alignment and misalignment between the investor group and the founder-CEO, and creating tailored-made coaching and mentoring programs where appropriate, is a crucial element in the work we are doing to mitigate leadership risk for investors in companies in the early stages of development.

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Succession Planning: Skills Gap & Corporate Risk

In our volatile, uncertain, complex and inter-connected world, the challenges facing corporate executives are often outpacing their cognitive abilities. This is undermining the sustainability of companies across North America, Europe and Asia. The need to find the right leader to navigate their corporations through these unchartered waters, teeming with unknown dangers and new opportunities, is paramount.

Increasingly, companies are hiring internal candidates for their top executive positions. Research reveals that CEOs brought in from outside the company succeed less often than those who are promoted from within. (Joseph L. Bower, More Insiders Are Being Hired and That’s a Good Thing, HBR, March 18, 2016). Hiring external senior executives is warranted however in some cases; for example, bringing in a Chief Digital Officer to overcome organizational inertia and to lead digital transformation and innovation. The ideal CEO is one who is promoted from within, but with as wide-ranging experience as possible working in different cultures and countries, a passion for deepening his or her knowledge and a rich network of contacts to broaden perspective. The ideal CEO looks at the “world in a way that allows one to weigh on opposing and contradictory demands and manage them on an ongoing basis.” (David L. Dotlich; Peter, C. Cairo and Cade Cowan 2014, The Unfinished Leader, p. xi) Companies with a history of success and innovation over the long-term, such as Johnson and Johnson and the Royal Bank of Canada, have placed the development of their next generation leaders at the top of their agendas.

Digital technologies are disrupting and transforming the economy. Nowhere is this more prevalent than in the media industry. According to a recent survey of 2,000 c-level executives, media companies anticipate massive disruption to their business models in the next 12 months (72%); followed by Telecom (64%) and Consumer financial services (61%). (Rhys Grossman, Industries That Are Being Disrupted the Most by Digital, HBR, March 21, 2016).

Even with digital strategies in place, the sheer rate of change has created a skills gap. This is undermining established companies, with legacy business models that still generate most of their revenues. It is difficult for companies and leaders to embrace change and break with the past. “Too many companies and leaders, and often the best companies and the most successful leader, struggle with the frustrating reality that the more deeply immersed you are in a market, a product category, or a technology, the harder it becomes to open your mind to new business models that may reshape that market or exciting way to leapfrog that technology.” (Bill Taylor, Companies Can’t Be Great Unless They Almost Failed, HBR, March 21, 2016).

In forward-looking companies, the task of driving growth and finding new meaningful revenue streams is often given to the Chief Digital Offer (or Chief Growth Officer). These companies create a culture of decision-making based on the best available evidence/data, which will enable them to manage the changes that lie ahead. This requires commitment that starts at the highest level of the organization: the board.

The management of board continuity and renewal, along with executive succession, is imperative for corporations. Increasingly, greater gender diversification is driving corporate governance , along with improved mechanisms for renewal of directors based on performance management and accountability.

A proper succession process for top executives requires considerable planning and time, sometimes several years, to implement successfully. The process of nurturing the most promising next-generation leaders within an organization is one of the most serious and complex issues facing business today. It is challenging for corporations, and their boards, to devote the time and resources required to properly nurture these leaders amid the intense pressure to achieve higher quarterly earnings. But those that don’t are falling behind.

The most successful companies understand that leadership development is one of the best investments an organization can make to ensure its future. Today, executive coaching is recognized as a vital component of leadership development. By committing to excellence in their corporate leadership, boards are fostering the enduring success of their companies.

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Reframing: The Hallmark of Great Leaders

The challenges facing today’s corporate leaders often outpace their cognitive abilities. Errors, failures and chaos are an everyday occurrence in the life of an organization – some are small, others are catastrophic such as the 2008 Wall Street debacle. Calamities occur because executives are unable to foresee clearly the emerging issues that will impact their organizations. They lack awareness and/or the skills to chart a different course. These executives are afflicted with what Lee Bolman and Terrence Deal (2003) call the “curse of cluelessness”. They are not the innovative leaders that their companies desperately need them to be. (See my November 2015 blog: Great Leaders: The Competencies Imperative.)

These executives regularly surrender to ingrained mental models instead of seeing old problems in a new light or finding more promising ways to solve persistent challenges. They inevitably do more of what they know. Communications in organizations aren’t always candid, open or timely. When challenges become issues, and issues become problems, some leaders may resort to “artful camouflage” to down play anything that might have a negative impact on unexpectedly poor quarterly results. At times, ambiguity is deliberate. But, more often, the information and processes are so complex and uncoordinated that they are unintelligible. In the end, irrationality often prevails. When companies flounder; it is usually due to managerial error. (See Charan and Useem, 2002.)

Ah… improving management is the answer. Organizations will work splendidly if properly managed. The short answer is rarely. Executives and consultants draw on a variety of approaches to improve their organizations ranging from Six Sigma to Emotional Intelligence. But these approaches, while worthwhile, can easily become dogma, blinding us to other possibilities. There is always more than one way to respond to a problem or dilemma.

An increasingly turbulent, rapidly shifting economy requires contemporary organizations to learn better and adapt faster just to survive. The ability to see things from various perspectives helps redefine situations so that they become understandable and manageable. This ability to reframe is one of the most powerful capabilities of highly successful leaders and the coaches who assist them. Leaders need to find new ways of seeing things. They have to create a coherent and compelling vision for the organization going forward. They need to articulate and communicate this vision so all their stakeholders (employees, boards, vendors, customers) can learn to shift perspectives when needed.

In devising his first telescope, Galileo discovered that each lens he added contributed to a more accurate image of the heavens. Similarly, successful leaders reframe until they have a solid understanding of the situation at hand. They do this by using more than one perspective, more than one “frame”. Bolman and Deal espouse the Four-Frame Model, comprising the following components: Structural (the architecture of an organization; its goals, structure, technology, roles and relationships), Human Resource (understanding people and their relationships), Political (emphasizing power, competition, and winning scarce resources), and Symbolic (focusing on faith and meaning). Each frame is powerful and coherent. Taken together, they enable us to “reframe”, to see the challenge or issue from multiple perspectives.

Research shows that the ability to use multiple frames is associated with greater effectiveness for leaders. When leaders are stuck and nothing is working, reframing is a powerful tool which coaches use to help executives initiate, effective, practical, meaningful and lasting change.

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