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Sustainability: What has to change in our leadership and management models?

Richard BarrettMay 2011

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The Global Sustainability Challenge?

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The Sustainability Challenge

The problems of existence have become global but the decision-making structures we have for

dealing with them are national.

We cannot move forward without a high degree of global cooperation.

Richard Barrett: The New Leadership Paradigm, 2011

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Global Sustainability Issues

Pandemics

Climate Change

Global Economy

GlobalTerrorism

Poverty Reduction

Food Resilience

Natural Disasters

Energy Resilience

Species Extinction

WaterShortages

The significant problems we face cannot be solved at the same level of thinking that created them.

Pollution

Waste Disposal

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Two Types of Problem*

Type 1: Convergent Problems…

…are about finding technical solutions by manipulating the material universe. After a while, and a few trials and errors, solutions tend to converge.

We can find technical solutions to global warming and sustainability, it is just a matter of time, resources and intelligence.

*E. F. Schumacher: A Guide for the Perplexed

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Two Types of Problem*

Type 2: Divergent Problems…

…are about finding agreements on divergent points of view that occur in the world of ideas, beliefs, world views and philosophies.

Divergent problems can only be solved by transcending the level of consciousness on which the opposites meet by moving to a higher level of meaning (consciousness).

*E. F. Schumacher: A Guide for the Perplexed

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A New Leadership Paradigm

Private Sector

Social Sector

Public Sector

The paradigm that divides the world into the social sector, the private sector, and the

governmental sector is not working.

It creates artificial barriers. We are each a constituent of the problem, so we have to

combine our forces, our efforts, and our competencies.

Tex Gunning, Unilever, Best Foods Asia

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A New Leadership Paradigm

Private Sector

Social Sector

Public Sector

Average leaders take care of themselves and their families.

Good leaders take care of themselves, their families, and some of the community.

Great leaders—and great companies—not only take care of all stakeholders but also want to change the world.

They want to leave the world better than they found it.

Tex Gunning, Unilever, Best Foods Asia

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3 Years 5 Years 10 Years0%

200%

400%

600%

800%

1000%

1200%

S&P 500 Good to Great

Firms of Endearment

Firms of Endearment*

Investor returns over 3, 5 and 10 years comparing S&P 500, Good to Great and Firms of Endearment.

“... the distinguishing feature of “firms of endearment” is that they treat all stakeholders—employees, customers, investors, partners, and society—equally. In addition, they fully recognize that they are a part of an economic ecosystem with many interdependent participants. They are committed to exemplary citizenship, and they embrace the concept of servant leadership.

* Rajendra S. Sisodia, David B. Wolfe, and Jagdish N. Seth, Firms of Endearment: The Pursuit of Purpose and Profit (Upper Saddle River, N.J.: Wharton School of Publishing, 2007).

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Firms of Endearment

“FoEs share five primary elements in their corporate visions.

• A broader purpose than wealth generation• Dedication to servant leadership • Emotionally intelligent leadership• Commitment to exemplary citizenship• Recognition that they are part of an economic ecosystem with many interdependent participants”

Firms of Endearment: How World-Class Companies Profit from Passion and Purpose, David Wolfe, 2006

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Sustainability and the New Leadership Paradigm

Business is a wholly owned subsidiary of society, and society is wholly owned subsidiary of the environment.

If we lose our environment and our life-support systems, our society will perish.

If we lose our society, we will lose our economy and our businesses will perish too.

Our Business Leaders need to recognise that:

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What this means for Business and Politics

Political leaders must give up their parochial self-interest andexaggerated false belief in national sovereignty learn how to

solve the problems of existence through international cooperation and collaboration.

Business leaders need to work with their competitors, political and societal leaders to define a framework of policies that support the evolution of our global society by developing industry charters that regulate the rules of competition

between companies in a way that supports the societal common good.

Building a sustainable future for everyone is not just societal imperative. It is business imperative, too.

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A Crisis in Leadership

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A Crisis in Leadership

After conducting fourteen formal studies and more than a thousand interviews, directly observing dozens of executives in action, and compiling innumerable surveys, I am completely convinced that most organisations today lack the leadership they need.

John P. Kotter and James L. Heskett, Corporate Culture and Performance (New York: The Free Press, 1992).

John Kotter, Harvard Business School

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A Crisis in Leadership

I have come to believe that much of what my colleagues and I taught has caused real suffering, suppressed wealth creation, destabilized the world economy, and accelerated the demise of the 20th century capitalism.

We managed to produce a generation of managers and business professionals that is deeply mistrusted and despised by a majority of people in our society and around the world. This is a terrible failure.

Shoshana Zuboff, “The Old Solutions Have Become the New Problems,” Business Week, Viewpoint, July 2, 2009.

Shoshana Zuboff, Harvard Business School

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A Crisis in Leadership

Bill George, Harvard Business School

An enormous vacuum in leadership exists today—in business, politics, government, education, religion, and nonprofit organisations. Yet there is no shortage of people with the capacity for leadership.

The problem is we have a wrongheaded notion of what constitutes a leader, driven by an obsession with leaders at the top.

Bill George, True North: Discover Your Authentic Leadership (San Francisco: Jossey-Bass, 2007).

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A New Leadership Paradigm

A shift in focus from “I” to “we”

A shift from self-interest to the common good

A shift from being the best in the world to the best for the world.

WE NEED A NEW LEADERSHIP PARADIGM

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Ultimately, the problems of existence we face are issues of consciousness.

We will only get beyond this stage of our collective evolution if we can put aside our narrow self-interest, focus

on the whole system, and build a values-driven framework of policies

that support the common good.

A New Leadership Paradigm

Richard Barrett, The New Leadership Paradigm, 2011

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What Evolution can teach us about the New Leadership Paradigm

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What is Evolution?

At each stage of evolution – from atoms, to cells, to creatures – there was not only an expansion in awareness, but also an expansion in the range of possible reactions or responses that an entity could make to changes in its internal or external environment.

Evolution: The continually unfolding ability to respond to increasingly complex life conditions.

An increase in external complexity demanded an increase in

internal complexity

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The Universal Stages of Evolution

From the Big Bang … to the Present Day

Stage 1Entities learn how to become viable and independent in their frameworks of existence.

Stage 2 As life conditions become more complex, viable independent entities bond with each other to create a group structures.

Stage 3 Viable independent group structures then cooperate with each other to form a higher order entity.

Energy Atoms Molecules Cells Organisms Creatures Homo sapiens

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Stage 1:

Entities learn how to become viable and independent in their frameworks of existence.

Stage 2:

As life conditions become more complex, viable independent entities bond with each other to create a group structures.

Stage 3:

Viable independent group structures then cooperate with each other to form a higher order entity.

Particles/waves of information existing in a quantum energy field.

Carbon atom Molecules Cells

Eukaryotic cell Organisms Creatures

Homo sapiens Nations Humanity

The Universal Stages of EvolutionLevels

of

Bein

g

Evolution

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Leading Yourself

If you can’t lead yourself, then you will not be able to lead others

If you can’t lead others, then you will not be able to lead an organisation

If you can’t lead an organisation, then you will not be able to lead a

community or a nation

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Priorities for Leadership Development

Stage 1: Personal Mastery

Overcoming the fears of the Ego to become viable and independent in your framework of existence

Stage 2: Internal Cohesion

Aligning the motivations of the Ego with the Soul (bonding) to become an authentic individual

Stage 3: External Cohesion

Cooperating with other individuals who share the same values and mission to leverage impact

Evolu

tion

Stage 1: Team Mastery

Overcoming the fears of individual Team membersTo minimize cultural entropy

Stage 2:Internal Cohesion

Aligning the motivations of Team members with the mission of the Team for team alignment

Stage 3:External Cohesion

Cooperating with other Teams who share the same values and vision

Stage 1: Personal Mastery

Overcoming the fears of individual Staff members to minimize cultural entropy

Stage 2:Internal Cohesion

Aligning the motivations of Staff members with the vision and values of the Organization

Stage 3:External Cohesion

Cooperating with other Organizations who share the same values and vision

Leading Self Leading Others Leading an

Organisation

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Components of the New Leadership Paradigm Learning System

The Book

The Multi-media

Web site The Workbooks

and Journals

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The Good News

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For the first time in human history we have the possibility of making the evolution of consciousness,

conscious.

Why now? Because we can measure it, both at a personal,

organisational and national level.

And if you can measure it, you can manage it.

The Good News

Richard Barrett, The New Leadership Paradigm, 2011

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Positive Focus / Excessive Focus

Financial StabilityShareholder value, organisational growth, employee health, safety. Control, corruption, greed

BelongingLoyalty, open communication, customer satisfaction, friendship. Manipulation, blame

High PerformanceSystems, processes, quality, best practices, pride in performance. Bureaucracy, complacency

Continuous Renewal and LearningAccountability, adaptability, empowerment, teamwork, goals orientation, personal growth

Building Corporate CommunityShared values, vision, commitment, integrity, trust, passion, creativity, openness, transparency

Strategic Alliances and PartnershipsEnvironmental awareness, community involvement, employee fulfillment, coaching/mentoring

Service To Humanity And The PlanetSocial responsibility, future generations, long-term perspective, ethics, compassion, humility

Stages in the Development of Organisational Consciousness

Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

Survival

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STAGE 1: PERSONAL MASTERYEncourage individuals to become viable

independent (be accountable and responsible for their work

STAGE 2: INTERNAL COHESIONEncourage those individuals to bond together to form teams and business

units with common values and a sense of Shared mission and vision

STAGE 3: EXTERNAL COHESIONEncourage those teams and business units

to collaborate together to form a higher order entity known as the organization

Three-Stage Leadership Development

H u m a n C o n s c i o u s n e s s( W o r l d V i e w s )

Stage 1

Stage 2

Stage 3

S t a g e s o f E v o l u t i o n

Evolu

tion

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The Three Mantras of Culture Change

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The Three Mantras of Culture Change

Cultural Capital is the new frontier of competitive advantage.

Organisational transformation begins with the personal transformation of the leaders.

Measurement matters. If you can measure it you can manage it.

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From Leader’s Values to Shareholder Value

Corporate Sector

Leader’s Values/ Behaviours

Corporate Culture

CompetitiveAdvantage &Resilience

Performance & Shareholder

Value

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From Leadership to Customer Satisfaction

Public Sector

Leader’s values/ behaviours

OrganisationalCulture

Mission Assurance

CustomerSatisfaction

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Personal Alignment of the Leaders

1

3

2

4

Wilber’s Four Quadrants

Organisational transformation begins with the personal transformation of the leaders. Organisations don’t transform. People do.

When leaders change their beliefs and values (1), their behaviours change (2).

This influences the culture of the group (3), which in turn changes the behaviours of the group (4).

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The Leader and the Values

Tom Peters, “In Search of Excellence: Lessons from America’s best run companies”, 1983

The real role of the leader is to manage the values of the corporation.

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Nedbank, South Africa: An Example of Cultural Evolution

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Values in Organisations

Tom Boardman Former CEO of Nedbank, South Africa

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Entropy 13%Entropy 25% Entropy 19% Entropy 17% Entropy 14%

Nedbank: Current Culture Evolution

1. cost-consciousness2. profit 3. accountability 4. community involvement 5. client-driven 6. process-driven7. bureaucracy (L)8. results orientation 9. client satisfaction10. silo mentality (L)

2005

1. cost-consciousness2. accountability 3. client-driven 4. client satisfaction 5. results orientation 6. performance driven7. profit8. bureaucracy (L)9. teamwork 10. community involvement

2006

1. client-driven 2. accountability 3. client satisfaction 4. cost-consciousness5. community involvement6. performance driven 7. profit8. achievement9. being the best 10. results orientation

2007 2008

1. accountability2. client-driven 3. client satisfaction 4. community involvement 5. achievement6. cost-consciousness7. teamwork8. performance driven9. being the best 10. delivery

2009

1. accountability2. client-driven 3. client satisfaction 4. cost-consciousness5. community involvement 6. achievement7. teamwork 8. employee recognition 9. being the best10. performance driven

5 matches4 matches4 matches3 matches 6 matches

40

25%

19%17%

14%13%

0%

5%

10%

15%

20%

25%

2005 2006 2007 2008 2009

Nedbank: Cultural Evolution

Entropy reduction leads to improved performance—increased revenues, profits and share price. Working toward entropy of <10% will result in healthy functioning of the organisation and improvement of staff morale.

Entropy Scores

Entropy risk bands

<10% Healthy functioning10-19% Some problems requiring careful monitoring20-29% Significant problems requiring attention30-39% Crisis situation requiring immediate change40%> Impending risk of implosion, bankruptcy or failure

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Nedbank: Response Rate to Values Survey

1827

6083

10155

14091

18206

0

4000

8000

12000

16000

20000

2005 2006 2007 2008 2009

63.0%

50.4%

28.0%

35.5%

20.2%

28,898 employees in 2009

Response rate

nu

mb

er

of

pa

rtic

ipa

nts

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Nedbank: Cultural Evolution

Nedbank Staff Survey Scores

59.6% 66.3%71.5% 75.1% 78.8%

0.0%20.0%40.0%60.0%80.0%

100.0%

2005 2006 2007 2008 2009

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Revenue grew on average 16.9% (CAGR) per year from 2004 to 2007

Share Price grewon average 20.4% (CAGR) per year from 2004 to 2007

Nedbank: Financial Impact of Cultural Evolution

78

100

134 136

96

0

20

40

60

80

100

120

140

160

2004 2005 2006 2007 2008

Closing share price (Rand)

1402715809

18948

22428 22077

0

5000

10000

15000

20000

25000

2004 2005 2006 2007 2008

Revenue Rm (operating income)

CAGR : Compound Annual Growth Rate

National and Regional Values Assessments

National/Regional Values Assessments

Denmark Latvia Sweden Canada

Iceland Bhutan USA Belgium

AustraliaUK North West) BrazilFinland

Spain (Extremadura) Macedonia (Skopje) Argentina Venezuela

Entropy Percentages by Nation (2007 – 2010)

72%

63% 60% 58%54% 53% 51% 48%

43% 42% 39%34% 32%

21%

4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Vene

zuel

a

Icel

and

Arg

enti

na

USA

Latv

ia

Belg

ium

Braz

il

Finl

and

UK

(NW

)

Aus

tral

ia

Spai

n (E

XT)

Swed

en

Cana

da

Den

mar

k

Bhut

an

Cultural entropy is a measure of the dysfunction in a social system

National Assessment Sweden: Group (1030)

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

Personal Values Current Culture Values Desired Culture Values

IRS (P)= 5-5-0 | IRS (L)= 0-0-0 IROS (P)= 1-0-1-2 | IROS (L)= 2-1-3-0 IROS (P)= 1-1-2-6 | IROS (L)= 0-0-0-0

Matches

PV - CC 0CC - DC 2PV - DC 0

Health Index (PL)

PV: 10-0CC: 4-6

DC: 10-0

1. family 472 2(R)

2. humour/ fun 467 5(I)

3. responsibility 388 4(I)

4. accountability 371 4(R)

5. honesty 340 5(I)

6. positive attitude 305 5(I)

7. compassion 300 7(R)

8. fairness 262 5(R)

9. adaptability 251 4(I)

10. caring 239 2(R)

Black Underline = PV & CC Orange = CC & DC P = Positive L = Potentially Limiting I = Individual O = Organizational

Orange = PV, CC & DC Blue = PV & DC (white circle) R = Relationship S = Societal

1. unemployment (L) 535 1(O)

2. bureaucracy (L) 483 3(O)

3. freedom of speech 408 4(O)

4. uncertainty about the future (L)

369 1(I)

5. materialistic (L) 338 1(I)

6. blame (L) 331 2(R)

7. wasted resources (L) 326 3(O)

8. peace 298 7(S)

9. financial stability 288 1(I)

10. environmental awareness

286 6(S)

1. employment opportunities 629 1(O)

2. financial stability 500 1(I)

3. concern for future generations

423 7(S)

4. effective healthcare 369 1(O)

5. democratic process 300 4(R)

6. nature conservancy 284 6(S)

7. caring for the elderly 267 4(S)

8. environmental awareness

253 6(S)

9. sustainability 248 6(S)

10. caring for the disadvantaged

239 4(S)

Values Plot Copyright 2011 Barrett Values Centre March 2011

The values that are important to people in their personal lives.

How citizens experience the values in Sweden.

The values that

citizens want to

see more of in the country.

National Assessment Sweden: Group (1030)

C

T

S

Values Distribution Copyright 2011 Barrett Values Centre March 2011

C = Common GoodT = TransformationS = Self-Interest

Positive ValuesPotentially Limiting Values

CTS = 42-21-37Entropy = 5%

CTS = 25-16-59Entropy = 42%

CTS = 41-24-35Entropy = 2%

Personal Values

Current Culture Values

Desired Culture Values

Cultural Entropy Impacts in Nations

Cultural Entropy in Nations

Entropy Impact

< 10% This a low level of entropy and augurs well for the future.

11%-20% This is a relatively low level of entropy indicating that there is some degree of dissatisfaction with the current culture that could lead to social unrest.

21%-30% This is a moderate level of entropy indicating potential unease among the population and/or potential conflict situations that need to be addressed.

31%-40% This is a relatively high level of entropy indicating unresolved issues that if left unaddressed could lead to significant social unrest.

41%-50% This level of entropy indicates leadership issues that if left unaddressed could lead to changes in government.

>51% This is a high level of entropy that could lead to riots, civil disobedience and social unrest. This indicates a need for a change in policy that could also be accompanied by a change in government

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