Yep, it’s the last chapter! Phew, I hope you are still with me after Chapter 4…hello, is there anyone out there???
I said that I would end with “…and we all lived happily ever after” but there’s a few people who stand in the way of this.
Let’s get personal – Hot Potato time
So everything I’ve written so far may resonate with you…and yet you will likely reply that nothing will change because those in control have no interest in doing so…and so I need to write a couple of personal messages:
- to existing free-floating shareholders; and
- to ‘large corporate’ CEOs;
I totally accept that there will be no real change unless both of these parties understand, need and want it.
A personal message to all you existing free-floating shareholders out there:
Okay, so cast your mind back to the opening of Chapter 1.
I held out Henry Ford as someone with something important to say…but I also noted that he had a huge amount of luck – he was on the right side of a technological disruption.
This is the time to inform (or remind) you that there are loads of technological (and related business model) disruptions happening right now:
- In transportation: autonomous vehicles that will disrupt taxis, haulage, public transport…
- In power: electrical generation (such as solar) and storage (such as batteries) that will disrupt the incumbent fossil fuel industry and its distribution networks…
- In finance: I’m only just feeling around the crypto-currency stuff (I confess to being a bit of a laggard!)…but I can see that the effect will likely be huge;
- In production: such that people can 3D print their own products to their own specifications as and when they want;
- ….and all the financial service knock-on effects of the above:
- On banking (e.g. less cars on the road = less car loans)
- On insurance (e.g. drastically less accidents = no need for car insurance)
- On currencies and share trading
- …and probably loads more game changers that I don’t know about and/ or don’t understand (I haven’t even mentioned the rather trendy ‘internet of things’!);
- …and yet more that none of us yet know about but could be around the corner.
Now, for a nimble start-up with a true purpose, the above is exciting. Indeed, they are the ones driving it.
But for a traditional, large, shareholder-owned incumbent, this is the stuff of nightmares!!!!
Such an organisation finds it almost impossible to change even though (and this is the interesting bit) it can and does see it coming – it’s as if its feet are stuck in cement blocks at the start of a 100 metre race. Worse, they waste loads of time and money flailing around trying to move (perhaps via ‘innovation’ programmes1)…but don’t really get anywhere.
In short: If you are a shareholder in such a company, you’d better wake up soon…’cos Henry Ford’s modern day equivalents are coming at ya! Your horse doesn’t stand a chance.
If you think “nah, none of the disruptions affect my investments in companies” then remember that many periphery industries were also devastated when the horse carked it.
“Hang on – aren’t many of these technological disruptions coming from large corporations?!”
Yes, they are…but what form do these typically take? And did they start off from such a ‘large corporate’ state?
Well, they are usually led by a seriously driven founder (and likely lead investor), who toiled for years, because their personal purpose was clear from the start…and it wasn’t to make millions – this was the result from their success.
We can name:
- Steve Jobs2 at Apple (and previously NeXT and Pixar)
- Jeff Bezo at Amazon
- Larry Page at Google
- Elon Musk at Tesla, SpaceX, SolarCity (and previously Zip2 and PayPal)
- and, of course, Richard Branson3 and his Virgin Group
- …and there are no doubt loads more ‘seriously driven founders’ you could put forward.
(Please note that I’m not holding any of them out as great leaders – that’s a totally different matter.)
“Quick – grab a seriously driven founder!”
Every traditional ‘large corporate’ would just LOVE to employ a seriously driven founder…but it doesn’t work like that – they are doing their own thing…and perhaps sold their company to you!
You can’t fake being a seriously driven founder – you either are or you aren’t.
But wait, the large corporates that you invest in employ thousands of really capable people who, whilst they may not have the desire to ‘go it alone’, would be really happy to give of their all for a really great company that they co-own with you, through sharing in its success.
This is to match the right model to the system type.
At the moment, Management may be:
- giving lectures on “you need to be innovative or else we’ll die”; and
- putting huge effort into attempts to kick-start this (such as by setting up worker clubs)
…but change the paradigm and they may be hugely surprised4 at who starts talking to who…about what…who then informally club together to take it further…who enlist the help of others to do a little experiment…and uncover/ solve/ create something no-one else had…and, wow, that result could just be amazing!
To close this shareholder message: Your Dead money is useful, important and appreciated but, for your own good, it needs suitably diluting with Live money. This is in your interest – do you want your investments to be worthless or priceless?
And to all you Investment Fund Managers out there: You spend your days passing around shares in such ‘large corporates’. If the above is even slightly close to what is happening out there in your world, then I present you with the following analogy:
You are essentially playing Russian roulette, passing the gun around with your fellow fund managers until it goes off in the hands of whoever happens to be holding it.
How about swapping to play games with companies that have a lot better odds!
A personal message to CEOs out there:
If the common man might label you as a ‘fat-cat CEO’ and you are responsible for a floating shareholder-owned company then I’d like to ‘speak to you’ about your situation:
- You’ve done well for yourself; you’ve risen to the top. You are financially secure, in fact ‘set up for life’;
- You probably spend much of your time telling your employees about the importance of purpose, and about matching their personal purpose with the stated purpose of your organisation;
- So, what about your personal purpose?5 Are you here on earth ‘just for the money’?
- Or would you like to be known (and remembered) for creating and sustaining a truly awesome organisation, for the good of society?
If it’s no longer ‘for the money’ (because, frankly, you’ve got that box ticked) then I’d ask that you ponder this post, perhaps share it with your board, and have a discussion about how you could change (I mean ‘improve’) the ownership structure of your company for the good of all…and that includes your current shareholders.
Personally, I love what Handelsbanken has done. But I recognise that there are many ways to ‘skin a cat’ (there’s that cat again!)
I hear what you say but…
If you ‘get’ what’s written in this post but don’t want to change your world, then at least know that employees of floating shareholder-owned organisations distinguish that it is really about the profit…and many (most?) of them see the constant blowing of your ‘purpose trumpet’ as convenient propaganda i.e. not the rallying cry that you might imagine. Sad, but true.
A ‘half arsed’ attempt:
Now, it’s possible that you’ve taken this all in, can see some industry or societal ‘movement’ towards profit sharing, and feel pressure building to be seen to be doing something.
So to a warning: Don’t play profit sharing ‘dress up’ (i.e. pretending that you are doing it but then hiding behind complex scheme rules and playing accounting games). Your people will see right through it and you will be the same as, and likely worse off than, before (minus the costs of your failed propaganda exercise).
Only do it if you actually WANT to share the success of the organisation with the people who make it possible…and this will only be because you’ve truly understood the situation, the opportunity, and the immense and sustainable potential.
A thought to finish:
…so, don’t think about the profit! Focus on the service…but change something with regards to your ownership structure so that you (and everyone else) can!
…and with that:
- We all lived happily ever after (that’s nice 🙂 ); or
- Armagedon!!! (bugger)
If you’ve got to the end…yes, this is it! – nice one, top banana, brilliant. Thanks for staying with me!
I don’t pretend that I’ve solved ANYTHING…but I’ve definitely ‘got a lot off my chest’ 🙂 . I also hope that I’ve helped you in some way. Perhaps not yet…but with what might come.
Normal ‘single issue’ blog posts will resume from next week….and now to go and lie down.
1. On efforts to ‘get your people innovative’: You should know that incentives and innovation don’t go well together! Alfie Kohn writes eloquently to explain why research repeatedly shows that “Rewards discourage risk taking”:
“the risks we want people to take – being willing to explore new possibilities… – are minimised by the presence of rewards. An extrinsic orientation, for example, makes people less likely to challenge themselves. Instead, they are apt to choose the easiest possible tasks to do, since this maximises the chance of getting the reward and getting it quickly.”
And, just in case you think incentives and profit sharing are the same thing, here’s an earlier post that explains why they are polar opposites.
2. Steve Jobs:
“I was worth over a million dollars when I was 23. And over ten million dollars when I was 24, and over a hundred million dollars when I was 25. And you know, it wasn’t that important, because I never did it for the money. I think money is a wonderful thing, because it enables you to do things. It enables you to invest in ideas that don’t have a short-term payback. At that time in my life, it was not the most important thing. The most important thing was the company, the people, the products we were making. And what we were going to enable people to do with these products. So I didn’t think about the money a great deal. I never sold any stock [shares]. I just believed that the company would do very well over the long term.”
3. Richard Branson:
“My interest in life comes from setting myself huge, apparently unachievable challenges and trying to rise above them … from the perspective of wanting to live life to the full, I felt that I had to attempt it.”
4. Doing something about it: I find it really interesting that the talk around me in my workplace is all about the disruptions out there (i.e. people know about, and are interested in them)…but there’s little real passion to do something about it (i.e. actions rather than merely talking about it) because we’re all placed in our hierarchy with our cascaded objectives and incentive/merit mechanisms.
Take those crypto-currencies. I’m sure that there’s something really important within…but I’m not leaping about to DO SOMETHING. I’ve got ‘concrete feet’ just like many (most? all?) those around me.
Is this me being lazy? Is this me being some sort of organisational traitor? No, these are the behaviours that the current system creates.
5. Your personal purpose: Looking at Maslow’s hierarchy of needs (see nice piccie below), I’d ask you to reflect that you (as a highly paid executive) are in the wonderful position to choose whether you move up the scale – to esteem and, ultimately, self-actualisation.
More Money won’t get you there!
Money is necessary for the bottom two levels of the scale (also referred to by Frederick Herzberg as ‘hygiene factors’), and might assist with the middle (though can you really buy friends?)…but, once these levels are in place, money has little (if anything) to do with the top.
Conversely, continuing to adopt a (potentially subconscious) position, and take actions, towards more ‘money’ will prevent you getting there…which can lead to unhappiness and (at the end) a sense of huge disappointment through wasted opportunities.
Reflect on how many seriously driven founders, not knowing what to do with their wealth and often becoming very unhappy, turn to philanthropy.
You can create an amazing organisation (and gain colossal satisfaction) by creating the necessary environment for all the people who work there…and this will require you to be courageous and think totally differently.