Unlocking the Heart and Soul of Remarkable Leadership, Keith Merron
Remarkable Leadership

Archive for May, 2010

On Responsibility

Thursday, May 13th, 2010

In the wake of the disastrous oil spill in the Gulf of Mexico, the CEO of BP said last week on ABC’s Good Morning America: “We are responsible —not for the accid

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ent — but we are responsible for the oil, and for dealing with it, and cleaning the situation up.” During the interview he went on to explain that the failure on the rig that led to the spill belonged to equipment owned by Transocean Ltd., not BP, and that BP only operated the rig.

While I appreciate that BP is taking responsibility for cleaning up the oil, it is interesting that they do not take responsibility for the accident because they don’t own the equipment. This is the way we tend to apportion responsibility in our society, as if it is a fixed pie.

In the wake of a disaster, there is always plenty of blame to go around, but rarely does anyone take responsibility. The net result—no one standing up as a powerful leader. Powerful leaders are able to see their impact on events and outcomes and are able to take responsibility for such. They understand that their actions matter. After a disaster, they acknowledge their contribution to the circumstance, however indirect and therefore take responsibility. Is it possible that BP is responsible for the accident and so is Transocean? Of course!

While BP may not have manufactured the rig, they choose to operate it and chose to partner with Transocean, and may have made any of a number of other choices that contributed to the accident.

Isn’t in interesting that with a huge success, many rush in to own their responsibility, but after a failure, many retreat, far and fast? It is the rare and extraordinary leader that, rushes forward during

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a failure. BP’s CEO may have chosen his words carefully to protect BP, either legally or ethically, but in so doing, he loses some of his own credibility. Yes, taking responsibility for the consequences is a good thing, worthy of our appreciation and respect. I just wish he took that one last powerful step that few leaders dare to take and recognized publicly that, he owns in some small or large way, the cause and consequences of the accident. This would, in my view, earn him not just respect, but deep admiration for his capacity to take true responsibility and help rectify a horrific situation.

Stakeholder Value

Monday, May 3rd, 2010

Recently, the Economist published an article titled: Shareholders v Stakeholders: A new idolatry. http://www.economist.com/businessfinance/displaystory.cfm

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In it, they made a persuasive case for a sea change developing in the nature of business goals and aims. The article suggests that the old paradigm of operating purely in service to shareholder profits is rapidly becoming a dinosaur. Instead, there is a strong and growing focus on stakeholder value rather than shareholder value. Appropriate stakeholders in a particular enterprise include investors, customers, employees, strategic partners, etc. It is recognized that the ability to balance and optimize the needs of all stakeholders is the mark of a sustainable and healthy enterprise.

Why has this idea taken so long to take root? For years now, many have been advocating for

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the triple bottom line: people, profit, and planet (often thought of as the three Ps). Well over 10 years ago, John Kotter and James Heskett wrote a profound book called Corporate Culture and Performance, wherein they pointed out that the most effective companies balance the needs of employees, shareholders, and customers.

In my view, to be a great leader one must pay attention to the needs of the whole system, and how can we possibly produce sustainably productive organizations unless the needs of all stakeholders in the system are taken into account. Long gone are the days when shareholder value is the only piece of the equation.

Yes, I am well aware that there are shareholders who invest purely for profitable gain and this will always be the case, but it is the enlightened shareholder that recognizes there must be attention to all needs for the enterprise be sustainable. And aren’t these the kind of investors one would ultimately choose if sustainability were the goal? Many investors talk this game, aware that business leaders often care about such things, but beware the wolf in sheep’s clothing for when push comes to shove, they will indeed shove you out if you don’t maximize their needs above all else, and even to the exclusion of all else. If you are building an organization to sell, puffing up the organization purely for sale may cause you to do things that limit the long-term viability of the firm for short term gains. But if you are building to last, then such efforts are unwise and even counterproductive.

In my 30 years of working with CEOs, I have known many a leader who has focused on what kind of messaging needs to occur so that the stock value goes up. This is a temporary ruse that is not sustainable. The only thing that is truly sustainable is to continue to build value through intelligent long-term decisions designed to strengthen the organization over time. In a world where we are measured by how we did last quarter and how we appear to be doing this quarter, such thoughts appear anathema. In a world designed for sustainable growth, these are the thoughts that matter.