By Michael F. Carmichael
November 5, 2009
Michael Stallard is president and Jason Pankau is a partner in E Pluribus Partners, a business consultancy and co-authors of Fired Up or Burned Out. They have consulted on the importance of building a connected culture at organizations such as Google, NASA, General Electric and the University of Toronto. They recently spoke at the second annual Think Tank symposium sponsored by the Forum for People Performance Management and Measurement, a research center of Northwestern University’s Medill School.
Stallard previously served as chief marketing officer for Morgan Stanley and Charles Schwab. Pankau began his career in the financial services industry and more recently was a minister in Greenwich, Conn. Pankau also runs a ministry called the Life Spring Ministry where the focus is on a consulting role for churches.
Whatever the organization, it all comes down to leadership, Stallard and Pankau explain.
Steven Rattner, the Administration’s ‘car czar,’ wrote recently that he came into General Motors and saw an extreme need for speed to make a major cultural change in a company that was organizationally hidebound, so the leadership at GM was changed.
Stallard contrasts that situation with a company known for its technological innovation. “Apple,” he explains, “has been wildly successful with iTunes and the iPod and the iPhone. They have jumped ahead of a whole industry in the recording area. They came out of nowhere and now they’re a leader in the music industry. They’re transforming it.”
Stallard says this transformation can be found in other industries, where an entire industry is getting behind the growth curve. “Because of innovation, they’re in a weaker competitive position that may eventually make them irrelevant. With the world becoming more wired and technology growing exponentially, those types of threats and opportunities in the broader environment are going to come faster in the future.”
This is where the idea of connectedness becomes apparent. “The people in a company need to be really connected organizationally,” Stallard explains. “Senior leadership are often the last ones who see the clues on the ground in a business. You need to be serious about staying connected to the broader population of employees. Then those people need to be encouraged to share their ideas, opinions and observations about changes in the industry. Unless the leadership really processes those and thinks through the implications and where opportunities and threats are emerging, their company, and perhaps their industry, is going to be vulnerable.”
These “knowledge traps,” he says, are largely relational. “If you don’t stay connected with an organization relationally you’re setting yourself up for these knowledge traps that impede the flow of knowledge that really helps you innovate and stay ahead of the growth curve in your industry.”
Stallard points to NASA as an example. “NASA, for instance, has had two space shuttle disasters and when you look at the research that’s been done on those it’s clearly been linked to a failure of relationships between people in lower levels of the organization who could see what was happening and saw the threats emerging. Those who were in more senior positions, and in a position to do something about it, weren’t connected so the information became trapped at a lower level in the organization and it resulted in managerial failure and disaster.”
Does today’s pervasive technology enable relationships to happen faster and better or does it get in the way - is it easier to tweet than talk?
Stallard responds “Look at a company like IBM. They’re enormous. Their technologies have really empowered employees to make their voice heard in terms of internal blogging among other forms. They just have so many great tools at IBM. But,” he cautions, “if you don’t have a culture that encourages people to speak up and share their ideas, especially when they’re in the minority, that’s counter-productive. Threats that are emerging in the industry are not what leaders want to hear about, because it’s usually not good news. That employee voice has to be safe, and encouraged.”
Stallard and Pankau talk about Andy Grove, former CEO of Intel and now a senior advisor. “He encouraged what he called ‘helpful Cassandras’ (Cassandra being the priestess who foresaw the fall of Troy). He said there are people who are out there in the front lines of the business who just see change coming and you want to encourage them to speak up. When they do it’ll give you critical essential signals (he’s an engineer, so he speaks in a kind of signals/noise language) that will help you make better decisions.”
Grove is an example of a leader who ‘gets it,’ says Stallard. “Grove talks about a few helpful Cassandras in the organization who shared with him information that they thought if they stayed in the memory business, they were going to get creamed because Japanese memory producers’ quality was far, far superior to what Intel could produce. People in the computer industry thought the memory chips coming from Japan were being dumped at below-market value, but they were actually making lots of money at those prices, and that torrent was going to continue. So Grove then made the decision to get out of memory chips and focus on microprocessors, which is an area they were really strong in.
“Flash-forward 13 years later,” says Stallard, “and Intel’s the world’s largest manufacturer of integrated non-proprietary circuits, larger than their next three competitors combined. Grove traces it back to that information he had, from just a handful of people, who could see the future threat emerging - and helped him recognize the opportunity. He became Time’s Man of the Year, in part because of Intel’s success.”
Pankau explains, “There’s nothing that replaces a personal connection - life on life, looking at each other in the eye, shaking hands-¦ at the end of the day, grandpas were right. Some of the wealthiest guys in the world will fly across the world before closing a deal just to look someone in the eye, get to know their people. It’s not enough to do it in a phone call, not enough even to Skype it. There’s something we’re all longing for in a work environment, to have a connection point. Technology can aid little micro-connections but we need those in-person connections to know we belong to one another, we’re on this team together, we’re part of this corporation.”
Pankau notes the connections also play a role in society at large and in his consulting through the Life Spring Ministry.
“The ministry teaches church leadership how to educate their congregations in how to live their faith and not just show up on Sunday” says Pankau. “People aren’t connecting. They’re doing this kind of rote religious thing which they were never intended to do, and the church leaders know they’re drowning. So, using our processes for corporate America, we’re not just describing the water, but we’re teaching them how to swim,” he laughs.
The instruction takes the form of a four-hour workshop, just like his consulting for business. “The difference is that with churches we say what we do is supported by Scripture and for businesses we explain it’s supported by research,” says Pankau.” It’s the brightest people in the world teaching you how to make connections to be successful - and, duh! - it works.”
Because Stallard and Pankau consult with very large corporations they are asked how the leaders of smaller companies can recognize there are roadblocks to that upward flow of knowledge and what can they do about it.
Stallard explains, “They have to become what we call ‘intentional connectors.’ Leaders have to make a conscious decision to become intentional connectors and then that can transform the culture. But, even if they don’t make what for some is an enormous leap, there can still be pockets of connections within a company, where the leader of a team or a division can foster those connections.”
Ultimately, it’s up to the leadership. “The leaders are going to set the pace and they’re going to measure towards that connection culture. We try to challenge people with the idea that it’s not just about task excellence, which is important, but you have to measure the quality of relationships that you’re building,” continues Stallard. “We’re going to reward people who are part of the solution and discourage people who are going to be part of the problem, we’ll actually penalize them.”
And ‘bad behavior’ must have a consequence, Stallard stresses. “Even if it’s the star performer, bringing in all the big bucks, the monster sales guy who, when he relates to the rest of the team is a total jerk, and it’s all about him and he pulls everyone else down. That has to be dealt with. The impact it’s having on our corporate potential is big. So what you see in Wall Street is that they haven’t been willing to do that because they’re generating the dollars. The dollars speak everything. We need a different kind of leader who sees beyond this quarter.”
Can this idea of connection be applied to Washington? Stallard and Pankau have been thinking about this as well. “The President is trying to be an intentional connector, that’s his M.O.,” says Stallard. “There will be some momentum shift with that, but he can’t do that alone, and he’s looked at as the ‘young guy on the block’ still in many ways. You’ve got people who are dug in. My personal belief about transformation and life change is that people won’t change unless the pain threshold reaches the point where they have to. Part of this is a pain issue. We’ve got two big relief packages passed because of pain. We all felt the pain, so boom, it passed.”
Continuing on that theme, Stallard says, “There is something to people in general, and our research will bear this out, that first of all we don’t drift towards anything good. If we’re not intentionally becoming connectors, we’re becoming disconnectors - that’s just the way it is. So if we’re not intentionally working on building relationships, and keeping those relationships sound, it’s not going to happen - they will erode right in front of our eyes.”
He continues, “Secondly, we don’t succeed well. There’s something to the independent, self-sufficient attitude of ‘I’ve got my act together and I don’t need you’ that is very disconnecting. When we succeed we feel as though we can operate in that space a little bit more. We should be saying ‘we won’t get there unless we stay together, pull together, push together.’ Our research shows it worked in WWII, in Vietnam, even 9/11 when we stayed together for about nine months then we went back to business as usual - ‘it’s all about me’.”
Is there a positive outcome with a connection culture? Again, it’s all about leadership. “We talk a lot about ‘servant leaders,'” Stallard explains, “our research shows it’s really critical. We have to have people who are serving a cause greater than self, who are committed to a journey to get there, that’s consistent with values that we know are healthy values.”
That applies to business as well as government.