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Managing Creativity and Risk

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Managing Creativity and Risk

Organisations usually take a view that to innovate is to take more risks, and so risk and creativity are conflated.  As I was researching my book on business creativity, Sparking Success, I interviewed Sir Clive Gillinson, Managing and Creative Director of Carnegie Hall in New York City, who had a clear and specific perspective on balancing creativity and risk.   Clive argues that risk isn’t necessarily a bad thing, but you have to possess the right perspective about holding the two conditions of invention and risk in balance: ‘You can’t run anything successfully without taking risks.  My view is the greatest risk of all is trying to avoid risk because then you’re almost guaranteed to fail.  So I’m an absolute believer in taking risks.  I’m not interested unless we’re taking risks.  We have got to be breaking new ground all the time, trying new things out.  But the most crucial thing to me is not about taking a risk, which is fundamental, but it’s how you manage risk.’  

Gillinson admits that he started out by taking risks which were probably unacceptable.  When he moved from being a cellist in the London Symphony Orchestra (LSO) one day to being manager of the orchestra the next, he heard that the conductor, cellist and one of the greatest artists who ever lived, Mstislav Rostropovich, was going to be celebrating his sixtieth birthday with two orchestras.  Clive went to Rostropovich’s manager and said, ‘This is crazy.  Why is he doing this with two orchestras?  It should be one orchestra so there’s a singular focus on him.’  She said, ‘Well, it’s such a massive project that each orchestra can’t afford it on its own.’  So Clive offered that the LSO would do it solo.  And she said, ‘But you’re on the verge of bankruptcy,’ and they were on the verge of bankruptcy when Clive became the interim manager.  That was the only reason he went into management in the first place – the previous managing director had lost his job as a result.  But Gillinson retorted, ‘That’s the way it’s got to be done for Rostropovich.  It’s such an extraordinary project for one of the world’s greatest artists, I’m sure we’ll find the money.’  At that, the manager went to Rostropovich, and she told him the story about this lunatic at the LSO and what he’d said, and he responded, ‘Well, if he believes in me like that, I believe in him.  And if he’s a cellist as well, then that settles it!’  Rostropovich brought the project to the LSO, they did raise the money, and they were better off financially and artistically for having taken the risk.  

Gillinson admits, ‘The fact is at that time I did not know how to calculate risk, so it was purely based on my view that this project had to happen in that way, and if I believed it, then I could get other people to believe it.  But that was, I would say, an unacceptable risk.  When I went to the board and declared, “We’ll raise the money,” they said, “Are you sure you can raise it?”  I said yes, but obviously I had no idea except my conviction that it had to happen.  Nowadays we would never do that.  But my view about projects is, firstly, I’m not interested in good ideas.  They have to be great ideas because who are you ever going to excite about just a good idea, and why are they going to give you money?  It’s got to be extraordinary.’

Now, unlike the Rostropovich example, Clive will work out the strategy with his team for how the organization will implement the idea and how to raise money for it, but at the end of the day there is still risk.  No matter how much you’re convinced yourself, you still have to convince other people.  But at the same time, Gillinson can’t ever remember a situation where he couldn’t persuade others to back an idea if he and his team were absolutely convinced in the first place that the idea was amazing.  

For example, creating the National Youth Orchestra of America was a huge demand, and Carnegie Hall decided on the level of risk they were willing to take before embarking on the project in earnest. They decided that if they could get a few founder patrons to donate a million dollars each over five years (because they felt it couldn’t be launched with just one year’s funding – it had to be five years at the very least), then they’d have the possibility of underpinning the project with long-term funding.  The team thought this was going to cost something like ten million dollars over five years.  If a critical mass of founder patrons could be found who would give sufficient backing so that everybody believed it’s got to happen and will happen, then they’d raise the rest of the money.  And that’s exactly what they did; Carnegie Hall succeeded in getting three or four founder patrons at a million dollars each, and that was sufficient to provide the launchpad.  

Clive recollects, ‘If we were able to get several people to put in a million as founder donors, that tells you about the importance of our idea.  I mean, that’s a lot of money to commit!  You would never be able to sell it if you haven’t got a great idea.  There wouldn’t be a hope in hell.  The fact is, by going out and saying we’ve got to raise three or four founder patrons, we were effectively checking risk because it meant that if nobody had come in, we would have known it wasn’t a compelling enough idea, and we wouldn’t have gone with it.  If nobody had given anything, you have to listen to that.  So that was how we approached that project – you eliminate some of the risk, and you calculate the rest of the risk.’

Once you have those platform advocates, it’s simpler to attract other supporters because they see that the idea has already been vetted.  After that stage, it’s much easier to raise money for something that exists.  As Clive elucidates, ‘The minute the National Youth Orchestra play, and people can hear what it is, and they can hear how extraordinary it is, it’s much easier to be inspired about giving money than people selling you an idea, where you have to believe it when they say, “This is going to be one of the greatest National Youth Orchestras in the world.  It’ll be a phenomenal orchestra with huge impact in terms of international understanding as they travel the world as youth ambassadors for their country.”  The theory is always less powerful than the fact.  The minute it exists, it’s much more fundable.’  

Gillinson set Carnegie Hall a target: they would only go public with the National Youth Orchestra and put it on the launchpad if they had raised three to four of the ten million dollars they required to fund the first five years.  Thereafter, they’d still be raising more money, but by that time they would be flying with commitments around a real project rather than a concept.  If the worst came to worst after two or three years, it’s possible that Carnegie may have had to scrap the Youth Orchestra if they simply couldn’t raise any more money.  But the initial risk they had to take related to the fact that they knew that once the orchestra had performed, people would be blown away by it, and that fact therefore would draw in the rest of the money, and that is precisely what happened.  Clive recalls, ‘We definitely didn’t raise the full five years of funding before the orchestra played.  You’ve got to try your very best to create a position where you’re not taking one hundred percent risk.  We’d eliminated thirty to fifty percent of the risk before we started, whereas I hadn’t eliminated any of the risk at the LSO with the Rostropovich decision.’    

Clive is really speaking about the power of displaying a prototype rather than merely summoning an image of what an idea could be.  This practice is core to Pixar Animation Studios’ success with their ever-present habit to ‘Display’.  If you are walking through the Studios, you can’t help but encounter work-in-progress, whether it’s an open screening of the dailies of a film, or a gallery of character studies or storyboard drawings.  These displays serve as an instant visual representation of the state of play, inviting everyone, even those just walking by, to contribute.  Thinking of work as in a state of perpetual Beta and inviting comments, questions and improvements facilitate learning, widen ownership of the challenge, and ultimately lead to better outputs.  All told, Pixar will often produce twelve thousand storyboard drawings to make one ninety-minute feature film.1  They wholeheartedly buy into the power of prototyping.  

Gillinson remembers another aspect of eliminating risk was not only attracting donors at the beginning but attracting world-famous artists to collaborate: ‘I knew that, in a country the size of America, the standard of the students would be among the greatest in the world.  But I also knew we had to get a great conductor for the National Youth Orchestra at the beginning.  That would also de-risk the project.  I managed to get Valery Gergiev, and Gergiev bought it sight unseen because he believed in Carnegie Hall, and this is where having a brand has huge power.  But you have to have such a compelling idea, and you’re pitching it at a level that’s right because without a great conductor, we wouldn’t have gotten concerts and television in Moscow, St. Petersburg, and the Proms in London.  Without Gergiev, we wouldn’t have gotten Joshua Bell, one of the world’s great violin soloists.  So all the pieces have to interact with one another, and if you go for a safer approach, if we’d gone for a conductor who wasn’t one of the world’s superstars, none of the other pieces would have fallen into place.  You’ve got to go for broke on every single part of implementation.  I knew we had to get the international concerts and television, but we also had to communicate that Carnegie Hall was an institution that will only do things if they’re extraordinary.  With all our projects, we set out to create a magnet for talent, so all the parts work together to ensure that every element is world class.’

Once a company has the reputation for ‘going for broke’ on absolute quality with every offer to the market, there is a shift in the customer-supplier relationship whereby market research is to a large extent disintermediated by the trust in the supplier.  In other words, the customer trusts that a new product or service is worthwhile because they trust the source of the offer.  Without the permission to invent things the world doesn’t know it needs, a company can never reach tomorrow.  Market research only tells you about what already exists or what the world already knows.  

Clive recognises this truth: ‘Steve Jobs sold things that market research would have told him he couldn’t sell.  But Jobs’ view was always, “I’ve got to create something that people want, but they don’t know they want it until I’ve created it.”  That was exactly the same with the Walkman at Sony.  Sony did all the market research around the Walkman, which told them it wouldn’t work.  Japanese companies were not necessarily known at the time to be huge risk-takers.  Sony chairman Akio Morita was, however, and he said, “I know it will work.  We’re doing it.  Never mind the market research.”  He believed in it, and of course it was an extraordinary success.’

To achieve radical creativity requires questioning how much we are managing ourselves and our teams in terms of what is acceptable novelty.  Are the boundaries we set as leaders too tight?  Exponential creativity perhaps means managing less.  Highly ‘manageable’ creativity will most likely at best earn incremental improvements rather than revolutionary ones.  As author and educator Richard Farson concluded with his characteristically radical candour: ‘Real creativity, the kind that is responsible for breakthroughs…always violates the rules….  In most organizations, when we say we desire creativity, we really mean manageable creativity.  We don’t mean raw, dynamic, radical creativity that requires us to change….  The problem with creativity in a lot of companies (and a lot of individuals as well) is that they just don’t want to go through all the necessary changes.  They want creativity the easy way.  Manageable creativity means lukewarm, half-ass creativity, which unfortunately usually means no creativity at all.’ 2  

1 Ed Catmull, Creativity, Inc. (London: Transworld Publishers, 2014).

2 Richard Farson, Management of the Absurd (New York: Simon & Schuster, 1997) 131.

For more on this topic, please see my book, Sparking Success: Why every leader needs to develop a creative mindset (Kogan Page, 2023). 

     

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Making Time for Creativity

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Is creativity a product of nature or nurture?  While some people have a higher proclivity to creative expression, we all have the potential; it’s part of human nature.  But we are forced to specialise so early in our development, we shut down pursuits, interests and disciplines unconscionably early.  The arts are often the first to go, either because parents push their children toward so-called ‘safe’ subject matters to set them up for stable careers, such as engineering, mathematics and the like, or schools shove art, music, creative writing and drama into the periphery of the curriculum, if they appear at all.  In grade school, I recall that my music and art classes only occurred once a week versus daily sessions in math, history and science.  There may be exceptions, but most schools do not hesitate to shave funding from the arts at the first sign of budget cuts.  As the harried principal shouts when firing the titular music teacher in the film Mr. Holland’s Opus, ‘If I’m forced to choose between Mozart and reading, writing and long division, I choose long division.’  To which, the music teacher Mr. Holland retorts, ‘Well, I guess you can cut the arts as much as you want, Gene.  Sooner or later, these kids aren’t going to have anything to read or write about.’[i]

Too many schools minimise or ignore creativity, too many parents discourage it and too many companies devalue it.  Our firms abrogate responsibility for innovation to a select fraction of the employee population, often someone with a lofty title like Chief Creative Officer, which of course tacitly communicates to the rest of the company that they should leave creativity to the specialists.  This is not only a shame but a great waste since seventy-five percent of productivity gains can be traced back to bottom-up ideas from front-line employees.[ii]  Or our company’s leaders encourage innovation in their words but deprioritize it in their actions, always selecting the safe, the incremental and the staid in their decisions.  Or if we observe how our leaders spend their time, and by extension how we should spend ours, they are tacitly telling us that creativity is relegated to possibly a few minutes a week and ideally in one’s free time, not when we’re ‘on the clock’.  In my advisory work, I usually find this last condition, lack of time, to be the most common and pernicious reason why people tell me they cannot be creative at work.

The problem is that if we budget very little time in our lives to innovating or adapting to try new ideas, we typically incur a double deficit in our creative capacity.  First, we never make the time because creativity is always at the bottom of our priority list.  Inevitably, we can never plan on all the firefighting and pop-up meetings that will occur in the week, so our real week is much more full of ‘dealing with the day to day’ than our diaries suggested on Monday morning.

Second, if we do keep and honour a tiny fraction of our week or month to creative thinking, brainstorming and the like, we find our attention span is constantly distracted, and we never seem to produce anything worthwhile as a result.  So we face each new window of opportunity for innovation with an ever growing, soul-sucking impression of dread or, at the least, resignation.

What we’re learning now is that we’re actually training our brains to deliver this depressing result.  These hurried, captured moments of precious time for innovation yield paltry results because our brains just can’t turn on the magic for such short, unsustainable periods of time. Because we don’t have balance between the mundane and the creative, we can’t achieve creativity even if we give ourselves those fleeting thirty minutes a week to do so.  We must change our routines so that we give our brains more time to marinate in innovative thinking or expression and increase the frequency of those marinades.  Like any muscle, the creative function in our brains requires exercise in order to improve, but as importantly, to be receptive to create in the first place.

The point is not that we denude all traditional routine from our organisations;  we need some of that.  But the hundreds of companies that I’ve worked with usually operate at a ratio of about ninety-nine percent business as usual to one percent creative time…on a good week!  So if you’re feeling uncomfortable that I might be suggesting something like a fifty-fifty balance, I’m not necessarily saying that.  But the better ratio surely has to be closer to eighty-twenty at least? I’m merely entreating us to ask ourselves honestly, ‘Is the balance right?’

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For more on my thinking on this topic, please see my book, Sparking Success: Why every leader needs to develop a creative mindset [Kogan Page, 2023].  

i. Mr. Holland’s Opus, directed by Stephen Herek (1995; Burbank, CA: Hollywood Pictures).

ii. Bilal Gokpinar, ‘Driving Efficiency Gains Starts with Frontline Employee Innovation,’ UCL School of Management, 21 July, 2021, https://www.mgmt.ucl.ac.uk/news/driving-efficiency-gains-starts-frontline-employee-innovation.

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Just In Time Hiring, ‘Covering’ and the Engagement Crisis

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I’ve talked at length in previous blogs and articles about employee engagement, but now I’m going to address a political hot potato – that thing that many people in organisations all know, all whisper about around the water cooler, but won’t say out loud, and that is the staffing model. How many of us have been in situations where our colleagues have gone off on long holidays or unfortunately have gone off sick for a long period of time, or fortunately have had children? What happens with the rest of us? Almost always, our organisation asks us to pick up the slack. So for a long period of time we’re not just trying to fulfil our roles, but we’re trying to fulfil someone else’s role as well. But do we receive both titles? No. Do we receive two salaries? No. Are we rewarded in any way by our organisations? Typically not. In fact, in many ways we’re often punished. What do I mean by that? Well, think about what happens during one’s annual review. Your boss or HR might say, ‘Well look, you didn’t achieve these objectives,’ and you’re thinking, ‘Yeah, I didn’t fully achieve those objectives because I was trying to achieve those objectives and someone else’s objectives while trying not to keel over from exhaustion!’

So our organisations might philosophically say we have just the right number of people to fulfil all the roles required. In reality, architecturally our organisations are chronically understaffed, and that creates an enormous engagement problem.

Think about what happens when organisations downsize and they tell teams, ‘Okay, yes, we know you had to do x amount of work with six people but now you have to do x amount of work with two people, but don’t worry’, the organisation says, ‘After six months we’ll revisit. This is just temporary.’ And we all know what happens: Two years later you look back and you think, ‘Huh!  We’re still in exactly the same position. We’re all working umpteen hours a day, and this was all supposed to be temporary!’ Organisations sometimes claim: ‘We have just in time hiring. As soon as we see a gap we will hire.’  I say that’s almost always nonsense. Organisations typically do not do that. They tacitly expect their people to pick up the slack. And if they are going to do that, then at least be honest with employees. When you do put them under that stress of having to work two or three jobs for the same title for the same salary for long stretches, then, even better than simply being honest about it, reward them for it and watch what will happen to your employee engagement when you combine transparency with recognition.  

Adam Kingl, www.adamkingl.com, is the author of Next Generation Leadership and Sparking Success.  He is also an educator, adviser and keynote speaker.  

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Quiet Quitting: New Name for an Old Problem?

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Let’s consider that most troublesome of conditions that’s much in the press – quiet quitting. Is that a thing? Really? Or actually, are we just talking about people doing the bare minimum, just trying to hang on and draw their pay cheque and keep their noses down? Well, isn’t that what a lot of people have been doing for decades, if not centuries? I wonder if we just put a new label on a condition that we have been too easily ignoring for far too long, and that’s the chronic engagement problem. So how do we as leaders better engage our people?

I was particularly looking at the largest demographic (over 65%) in the workforce in my own research, and that’s Generation Y or Millennials, and what might keep them engaged at work and actually allow them to give more discretionary effort than they ever have before, and I found that engagement has to do with mainly three things.

One is giving them development opportunities and naming those development opportunities explicitly. In other words, if we give people projects, do we actually tell them that this is a development opportunity for these reasons?  When they are shadowing, or attending international secondments or placements, are we explicit about how and why those are development opportunities? Do we give our people mentoring? Most of the things I’ve mentioned are free or inexpensive.

The second thing that we need to think about is culture. What is it like to work around here? What’s the experience? The two questions that Gen Y told me they wish they could ask or would have been asked in a recruitment interview are: Can I meet the team I would be working with, and can you show me where my desk will be? In other words, what they are interested in is: What are the behaviours I observe from the people around me? What they are interested in, therefore, is culture.

Third is work-life balance. Now, this doesn’t mean necessarily working fewer hours, so when we say people are quiet quitting, what they’re telling us is that they’re working the bare minimum of hours, but there might be something behind that, which is that they may truly want flexibility in terms of where they work, and if they have that flexibility then they might actually give us more of their time in terms of doing the work required. I am not suggesting that we kill people and work them to death, but if we think that people are giving us the bare minimum, how do we create the conditions of that work, so that they’re more willing to do what is required to the extent that is healthy and well? That is a two-way conversation of course between employer and employee. But work-life balance is a tricky question because we always have to ask ourselves whether we are dealing with hours worked or with flexibility in terms of where and how the work happens.

For more of my media and speaking, please visit www.adamkingl.com 

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Responding to the Resignation Crisis

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One of the topics I discuss in my book, Next Generation Leadership, is how to respond to the resignation crisis. I discovered that, among many tactics, one which appears to be highly effective is cultivating an alumni network. If it is true that Generation Y, or Millennials, are leaving their organisations with frightening rapidity, my research show that this is in fact their expectation.  They are often anticipating leaving every two to five years from one organisation to the next. 

Then, it’s best that we consider how we might allow them to come back at some point in the future. So, they may not stay for more than two to five years at a time, but perhaps we can convince them to come back two, three times over the course of their careers, and in so doing, the develop new, senior leadership skills, customer relations skills, sales skills, whatever it might be, which you didn’t have to pay for, and then you get them back, and you get the benefit of all that new development. So how do we cultivate an alumni network? Well, professional services organisations like McKinsey or Accenture are world class at maintaining their alumni networks, so we can learn a thing or two from them. They even hold reunions in many cases, just as a university would, of their former employees because these people are currently clients, they’re customers, they’re net promoters.  You certainly don’t want them to be net detractors!  

But what too many organisations do, instead of cultivating those relationships, instead of holding alumni reunions, instead of keeping a social network alive, is when someone resigns they say, ‘Oh, you’re leaving? Ok, leave your swipe card on the desk and don’t let the door hit your butt on the way out.’ That’s certainly not the way forward. We want to keep a workforce, whether it’s in one go at a time or two or three goes at a time because we’re living in a world where young employees want mobility from job to job.  Sometimes those future collaborations might be contractor positions instead of full-time employee engagements, and that’s fine.  Certainly we need to make working with us as attractive as possible, so that over the course of their careers, we can collaborate with the high potentials for as long as possible. The only thing is – it may not be all in one go. 

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Humanising Leadership

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Work life has fundamentally changed over the last 150 years. We’ve seen technology evolve how we work, we’ve seen scientific management evolve how we work, we’ve seen Six Sigma evolve how we work. We’ve seen other forms of agility, adaptability, etc., evolve how we work. However, the act of management, the habits, processes, and technologies of management have fundamentally not changed since the industrial revolution. As a result, we are facing an engagement crisis, and I don’t need to tell you that we are also in the midst of a resignation crisis. That’s because work is becoming more incremental, inertial, and inhuman. Fundamentally inhuman.  

Covid didn’t cause these crises, but they accelerated the trends, as we were forced home to contemplate our lives and fulfilment.  We’ve seen the engagement crisis evident for years in polls such as the Gallup Survey, which indicates that only about 13% of the global workforce are engaged in their jobs, 62% are disengaged, and about a quarter are actively disengaged, meaning that they hate their employment so much that they would sabotage their organisation given half a chance.  As dramatically depressing as those statistics are, the real tragedy is that most managers don’t seem to care enough to do much about it.  When I share these survey results in front of executive audiences, the most common reaction I see is resigned acceptance: a shrug, a shake of the head, eyes downcast.  

We simply have to get angry about this state of affairs in order finally to change it.  I would argue that you wouldn’t see this reaction in similar circumstances with professionals other than ‘managers’.  If I were addressing an audience of general practitioner doctors and told them, ‘I interviewed all the patients you saw over the past year and their families.  Here are the results.  13% of your patients got better.  25% died, and 62% reported that seeing you made no difference to their health whatsoever.’  Those GPs would be up in arms!  They would be demanding that the practice of medicine be completely reimagined in the face of these results and particularly if they largely didn’t change year to year.  Yet again, corporate managers have grown accustomed to such dire results to the point that they neither act upon nor even dwell on them.    

What’s the solution? Not more management!  At least not more management in terms of the definition of ‘to control’, but more management in relation to being more human, more empathetic, helping our people, and by extension our organisations to be more relevant tomorrow than they are today. This, I believe is the challenge of leadership in the 21st century: humanising management. 

To find out more, please go to my website www.adamkingl.com.

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Work-Life Balance

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When I wrote my book Next Generation Leadership, I interviewed Generation Ys, Generation Xers and Baby Boomers, and I asked them about work-life balance. My first question was, ‘What do you mean when you say work-life balance?’ What was very interesting is that I learned that there’s semantic discord among the generations about their definitions of that term. 

For most Gen Xs and Baby Boomers, work-life balance is a ‘when’ question. In other words, when they hear ‘work-life balance’ they would interpret that the speaker wants to work fewer hours, which can lead them to conclude, ‘They don’t want to pay the dues that I paid, and so they’re lazy. So it goes, and that contributes to this incorrect prejudice that Gen Ys are somehow lazy. 

When I ask Gen Ys what they mean when they say or hear ‘work-life balance’, they generally say that this is a ‘where’ statement. In other words, technology allows me to work wherever I want. Therefore, what they’re looking for is flexibility in terms of location of work. What they’re rejecting is face-time culture, being chained to your desk, not being able to leave the office until the boss leaves, etc. 

Of course, what we learned since Covid is that we should in fact have flexibility in terms of workplace location. And yes, I know that it does vary based on your function or industry whether it is possible to work from home or elsewhere, but nevertheless this is an important semantic discord for us to notice and understand. A great solution is to ask one another before you get into a work-life balance conversation is ‘Well, what do you mean when you say work-life balance in your context,’ to make sure that you aren’t speaking at cross-purposes. 

For more from my articles, media, book and speaking, please visit adamkingl.com

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The Evolution of Capitalism: Profit or Purpose?

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HR Magazine, 26 January 2022

The Evolution of Capitalism

Profit or Purpose?

Adam Kingl

Is profit the fundamental criterion for a business?  As capitalism is evolving under our feet, and that evolution is accelerating since Covid, we’re seeing a shift of emphasis from the pre-eminence of shareholders to stakeholders: customers, employees and communities.  Now, I want to make a very important distinction.  This does not mean that shareholders are getting the short end of the stick in terms of reward.  If companies refocus or even redefine how they add value to stakeholders, then shareholders are rewarded too.  

At a macrolevel, this shift that we are just starting to observe is essentially a rebalance in corporate focus from outcomes to outputs.  If we think of outcomes as share price and profit, we cannot deny that these are good things to have.  But I can’t storm into the office and say that my focus today will be to maximise my share price. What am I supposed to DO??  A blinkered focus on share price creates drift away from the reasons a company was founded in the first place: to identify a market need and to serve customers brilliantly.  Creating value for customers and serving them better are outputs that companies can rally behind, can guide whether to spend more time on activity A or activity B.  My outputs will lead to the outcome of enhancing my bottom line.  But the outcome is not my daily focus – this is a subtle but hugely important point.  

Does this mean that the CEO would not want to earn a profit?  Absolutely not. Business has to survive and thrive.  Here’s the rub.  Most businesses were founded on an idea of introducing an exciting product to the world, serving a previously undiscovered market need, bettering a community or creating employment opportunities.  But then financial analysts’ opinions grew in importance to investors, with their use of various ratios that are useful shortcuts in assessing company health.  However, we must remember that these shortcuts are only performance indicators for today; they do not assess if the business is closer to or farther from achieving its purpose, closer to or farther from achieving long-term or ‘moon shot’ objectives.

Chasing ratio optimization is a short-term game.  Before one knows it, the purpose of the business is about tacitly, implicitly pleasing analysts.  Making decisions toward long-term objectives takes a back seat, and sustained success can become much harder to achieve over time. Unfortunately, that’s exactly what happened on a massive scale.  At an inflection point in the second half of the twentieth century, as analysts’ and shareholders’ voices became louder, the CFOs’ and Investor Relations’ departments began to dominate the c-suite conversations. CEOs’ compensations grew increasingly related to share price and less on customer value indicators.  The focus on outputs dropped down the totem pole in terms of time and attention in favour of outcomes.  One could argue that the Great Recession of 2007-09 was caused, or at least made much worse, by this shift in focus.   

Companies that remain focused on their purpose are rewarded by investors and customers.  Aggregate research has proven that such purpose-focused firms significantly outperform their rivals.  The authors of the book, Firms of Endearment, explored those organisations who are in the top ten percent in relation to focusing on their purpose, community, customers and employees.  Their research revealed that, over the decade ending in June 2006, these firms returned 1,025% to their shareholders, compared to 122% return on investment by the S&P 500 overall.  Just to be clear, this study therefore quantified that purpose-driven organisations reward their investors better than the market average by a multiple of ten!  

Separate research published in Organization Science reached a similar conclusion.  Faculty from Harvard, Pennsylvania and Columbia Universities surveyed half a million employees across 429 firms.  While these academics did not find correlation between purpose alone and financial performance, they proved that companies with strong purpose and high clarity from management exhibit stronger financial and stock market performance.  The implication is that one condition of commercial success is that an organisation’s employees understand and believe in their collective purpose and have a clear path as to how that purpose will be achieved.  

Perhaps our ultimate question is: Are purpose and profit a zero-sum game?  Recent research indicates this is not necessarily so, and the two forces may even serve each other.  A huge amount of dialogue has attempted to answer this question both in media and in conferences.  The opinions are typically more definitive than one may guess and often resemble the sentiment: ‘The most successful companies, both in profitability and longevity, are the ones who recognise the absolute necessity of profits as well as the equally high necessity of having a purpose beyond shareholders’ wealth.’

Adam Kingl (adamkingl.com) is the author of Next Generation Leadership and is an Adjunct Lecturer at the UCL School of Management, where this theme of the evolution of capitalism is explored in the School’s executive education practice and notably in its Building Competitive Advantage through Sustainability course: https://www.mgmt.ucl.ac.uk/executive-education. 

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Inspire Magazine: Next Generation Leadership Book Launch

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Inspire Magazine, The Møller Institute: Issue 4, Leadership Mindsets, p. 16

Book Launches

Next Generation Leadership: How To Ensure Young Talent Will Thrive With Your Organisation

  • Adam Kingl

We are on the verge of a seismic shift in a world of work.  Why are we toil, the employer-employee social contract, leadership, retirement and the nature of business itself are changing before our eyes in ways as least as significant as what humanity and served in the early days of the industrial revolution. And it all starts with understanding Generation Y.

Generation Ys (or Millennials), are youngest workers have been slandered for a decade. You’ve heard the accusations before: Gen Ys are indolent, spoiled, coddled, uninterested in climbing the corporate ladder, ever texting, indifferent about what it takes to succeed. Those who aren’t quite so critical merely laugh off these generalisations saying, ‘Oh we were like them when we were young too.’

In reality, to be so dismissive us to ignore macro-trends that have forever altered fundamental models of work and employment.

These trends include insecure retirement, the failures of shareholder capitalism and longer lifespans. What we observe in Generation Y is merely the first, widely shared rejection of their inheritance—the world as we know it.

This rejection manifested itself in what confounds, annoys and terrifies human resources department the world over: scarce loyalty to one’s employer, a trivialising of financial benefits, a hue and cry for work-life balance, a craving for constant development, and an insistence on a powerful, shared, authentic corporate purpose. Kingl’s research in his new book Next Generation Leadership explores what’s behind these shifts in the character of the emerging workforce and the implications for how we might need to manage and lead differently today. How might we recruit, retain and develop top talent?

Most importantly, if Gen Y indeed requires a different style of leadership, then as Gen Y assumes managerial positions themselves, then the nature of leadership and of business itself will also change over the next few decades in irrevocable and profound ways.

“Nuggets of gold which challenge the way we should lead our multi generational teams / organisations.”

https://indd.adobe.com/view/bb16cf03-6c8a-4d66-8ae3-90c406118980