Sustainability: Leadership, Values and Culture in a New Leadership Paradigm Richard Barrett

The Global Sustainability Challenge?

Global Sustainability Issues Pandemics Climate Change Climate Change Global Economy Global Economy Global Terrorism Global Terrorism Poverty Reduction Poverty Reduction Food Resilience Food Resilience Natural Disasters Natural Disasters Energy Resilience Energy Resilience Species Extinction Species Extinction Water Shortages Water Shortages The significant problems we face cannot be solved at the same level of thinking that created them. Pollution Waste Disposal Waste Disposal

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. 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.

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 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

Sustainability and the New Leadership Paradigm Business is a wholly owned subsidiary of society, and society is wholly owned subsidiary of the environment. 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 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. If we lose our society, we will lose our economy and our businesses will perish too. Our Business Leaders need to recognise that:

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. 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

What this means for Business and Politics Political leaders must give up their parochial self-interest and exaggerated false belief in national sovereignty learn how to solve the problems of existence through international cooperation and collaboration. Political leaders must give up their parochial self-interest and exaggerated 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.

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). 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

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, 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, Shoshana Zuboff, Harvard Business School

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). 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).

A New Leadership Paradigm 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 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

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 We need a Culture Change

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.

From Leader’s Values to Shareholder Value Corporate Sector Leader’s Values/ Behaviours Corporate Culture Corporate Culture Competitive Advantage & Resilience Competitive Advantage & Resilience Performance & Shareholder Value Performance & Shareholder Value

From Leadership to Customer Satisfaction Public Sector Leader’s values/ behaviours Organisational Culture Organisational Culture Mission Assurance Mission Assurance Customer Satisfaction Customer Satisfaction

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.

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. 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

Models and Tools for Measuring Personal, Organisational and National Consciousness Personal Growth and Transformation Organisational Growth and Transformation. Measuring Consciousness by Mapping Values Organisational Growth and Transformation. Measuring Consciousness by Mapping Values Implementing Cultural Transformation based on eight years experience A Text Book, Web Site, and Learning System for the 21 st Century Leader A Text Book, Web Site, and Learning System for the 21 st Century Leader

Origins of the Cultural Transformation Tools Growth Needs When these needs are fulfilled they do not go away, they engender deeper levels of motivation and commitment. Growth Needs When these needs are fulfilled they do not go away, they engender deeper levels of motivation and commitment. Deficiency Needs An individual gains no sense of lasting satisfaction from being able to meet these needs, but feels a sense of anxiety if these needs are not met. Deficiency Needs An individual gains no sense of lasting satisfaction from being able to meet these needs, but feels a sense of anxiety if these needs are not met. Physiological Safety Love & Belonging Self-esteem Know and Understand Abraham Maslow Self Actualization

Maslow’s Needs to Barrett’s Consciousness Know and Understand Physiological Safety Love & Belonging Self-esteem Abraham Maslow Know and Understand NeedsConsciousness Self-Actualization Richard Barrett

Maslow’s Needs to Barrett’s Consciousness Know and Understand Physiological Safety Love & Belonging Self-esteem Know and Understand Needs Consciousness 1. Expansion of self-actualization into multiple levels. 2. Substitute ‘states of consciousness’ for hierarchy of needs. 3. Each state of consciousness is defined by specific values and behaviours.

Stages in the Evolution of Personal Consciousness Positive Focus / Excessive Focus Service Making a difference Internal Cohesion Transformation Self-esteem Relationship Survival Financial Security & Safety Creating a safe secure environment for self and significant others. Control, greed Belonging Feeling a personal sense of belonging, feeling loved by self and others. Being liked, blame Self-worth Feeling a positive sense of pride in self and ability to manage your life. Power, status Personal Growth Understanding your deepest motivations, experiencing responsible freedom by letting go of your fears Finding Personal Meaning Uncovering your sense of purpose and creating a vision for the future you want to create Collaborating with Partners Working with others to make a positive difference by actively implementing your purpose and vision Service to Humanity and the Planet Devoting your life in self-less service to your purpose and vision

Positive Focus / Excessive Focus Financial Stability Shareholder value, organisational growth, employee health, safety. Control, corruption, greed Belonging Loyalty, open communication, customer satisfaction, friendship. Manipulation, blame High Performance Systems, processes, quality, best practices, pride in performance. Bureaucracy, complacency Continuous Renewal and Learning Accountability, adaptability, empowerment, teamwork, goals orientation, personal growth Building Corporate Community Shared values, vision, commitment, integrity, trust, passion, creativity, openness, transparency Strategic Alliances and Partnerships Environmental awareness, community involvement, employee fulfillment, coaching/mentoring Service To Humanity And The Planet Social responsibility, future generations, long-term perspective, ethics, compassion, humility Stages in the Evolution of Organisational Consciousness Service Making a difference Internal Cohesion Transformation Self-esteem Relationship Survival

Stages in the Evolution of National Consciousness Positive Focus / Excessive Focus Economic Stability Prosperity. Health, Defense, Social Safety Nets. Corruption, Greed, Violence Social Stability Conflict Resolution, Racial Harmony, Rituals. Discrimination, Intolerance Institutional Effectiveness Rule of Law, National Pride, Governmental Efficiency. Bureaucracy, Elitism, Power Democratic Processes Equality, Freedom of Speech, Consensus, Adaptability, Accountability. Strong Cohesive National Identity Trust, Openness, Transparency, Shared Vision and Values, Fairness. Strategic Alliances with Other Nations Regional Collaboration, Environmental Awareness, Quality Of Life. Global Sustainability Human Rights, Future Generations, Ecological Resilience. Service Making a difference Internal Cohesion Transformation Self-esteem Relationship Survival

Placement of Values by Level Current Culture 100 Employees Top Ten Values 1. tradition (L) (59) 2. diversity (54) 3. control (L) (53) 4. goals orientation (46) 5. knowledge (43) 6. creativity (42) 7. productivity (37) 8. image (L) (36) 9. profit (36) 10. open communication (31) Service Making a difference Internal Cohesion Transformation Self-esteem Relationship Survival

Cultural Entropy Distribution of Values by Level Current Culture 100 Employees 11% Service Making a difference Internal Cohesion Transformation Self-esteem Relationship Survival

Organisational (Cultural) Values Assessments

What is Culture? “The way things are done around here” The culture of an organisation or any group of individuals is a reflection of the values, beliefs and behaviours of leaders of the group and the legacy of past leaders.

Engineering and Projects Company (339) Level 7 Level 6 Level 5 Level 4 Level 3 Level 2 Level 1 Personal ValuesCurrent Culture ValuesDesired Culture Values IRS (P)= | IRS (L)= IROS (P)= | IROS (L)= IROS (P)= | IROS (L)= Matches PV - CC1 CC - DC4 PV - DC2 Health Index (PL) PV: 10-0 CC: 7-3 DC: honesty1695(I) 2. accountability1654(R) 3. commitment1505(I) 4. continuous learning924(I) 5. balance (home/work)914(I) 6. family912(R) 7. self-discipline911(I) 8. responsibility894(I) 9. respect812(R) 10. open communication762(R) Black Underline = PV & CCOrange = CC & DCP = PositiveL = Potentially Limiting I = IndividualO = Organizational Orange = PV, CC & DCBlue = PV & DC(white circle)R = RelationshipS = Societal 1. continuous improvement 1114(O) 2. customer satisfaction 1112(O) 3. safety conscious1021(O) 4. cost reduction881(O) 5. job insecurity (L) 771(O) 6. inconsistent (L) 753(I) 7. teamwork744(R) 8. accountability714(R) 9. blame (L) 712(R) 10. corporate image643(O) 1. accountability 1804(R) 2. customer satisfaction 1472(O) 3. continuous improvement 1434(O) 4. employee development 1114(O) 5. employee recognition 962(R) 6. commitment 955(I) 7. inspirational leadership 956(O) 8. employee fulfillment 946(O) 9. teamwork 904(R) 10. professionalism 803(O) Values PlotCopyright 2011 Barrett Values CentreFebruary 2011 The values that are important to employees in their personal lives. How employees experience the company - What is working well? What is undermining the sustainability of the company. What employees believe is necessary for the company to achieve its full potential

Engineering and Projects Company (339) C T S Values DistributionCopyright 2011 Barrett Values CentreFebruary 2011 C = Common Good T = Transformation S = Self-Interest Positive Values Potentially Limiting Values Total number of votes for all values at each level Cultural Entropy % of Votes for Limiting Values Common Good Transformation Self Interest

Definition of Cultural Entropy Cultural Entropy Cultural entropy is the amount of energy consumed in unproductive work. It is a measure of the conflict, friction, and frustration that exists within an organisation or social system. Cultural Entropy Cultural entropy is the amount of energy consumed in unproductive work. It is a measure of the conflict, friction, and frustration that exists within an organisation or social system.

35 Value Current Culture Votes Desired Culture Votes Value Jump accountability inspirational leadership employee fulfilment employee recognition employee development professionalism efficiency commitment honesty balance (home/work) Value Jumps Votes for Values in Current Culture Votes for Values in Desired Culture

Nedbank, South Africa: An Example of Cultural Evolution

Entropy 13% Entropy 25% Entropy 19% Entropy 17% Entropy 14% Nedbank: Current Culture Evolution 1. cost-consciousness 2. profit 3. accountability 4. community involvement 5. client-driven 6. process-driven 7. bureaucracy (L) 8. results orientation 9. client satisfaction 10. silo mentality (L) cost-consciousness 2. accountability 3. client-driven 4. client satisfaction 5. results orientation 6. performance driven 7. profit 8. bureaucracy (L) 9. teamwork 10. community involvement client-driven 2. accountability 3. client satisfaction 4. cost-consciousness 5. community involvement 6. performance driven 7. profit 8. achievement 9. being the best 10. results orientation accountability 2. client-driven 3. client satisfaction 4. community involvement 5. achievement 6. cost-consciousness 7. teamwork 8. performance driven 9. being the best 10. delivery accountability 2. client-driven 3. client satisfaction 4. cost-consciousness 5. community involvement 6. achievement 7. teamwork 8. employee recognition 9. being the best 10. performance driven 5 matches 4 matches 3 matches 6 matches

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 functioning 10-19% Some problems requiring careful monitoring 20-29% Significant problems requiring attention 30-39% Crisis situation requiring immediate change 40%> Impending risk of implosion, bankruptcy or failure

Cultural entropy represents the degree of dysfunction in a culture Cultural Entropy EntropyImpact <10%Prime: Healthy Functioning 11-19%Minor Issues: Requiring cultural and/or structural adjustment 20-29%Significant Issues: Requiring cultural and structural transformation, and leadership coaching 30-39%Serious Issues: Requiring cultural and structural transformation, leadership mentoring/coaching, and leadership development 40-49%Critical Issues: Requiring cultural and structural transformation, selective changes in leadership, leadership mentoring/coaching and leadership development

Nedbank: Response Rate to Values Survey 63.0% 50.4% 28.0% 35.5% 20.2% 28,898 employees in 2009 Response rate number of participants

Nedbank: Cultural Evolution Nedbank Staff Survey Scores

Revenue grew average 16.9% (CAGR) per year from 2004 to 2007 Revenue grew average 16.9% (CAGR) per year from 2004 to 2007 Share Price grew average 20.4% ( CAGR) per year from 2004 to 2007 Share Price grew average 20.4% ( CAGR) per year from 2004 to 2007 Nedbank: Financial Impact of Cultural Evolution CAGR : Compound Annual Growth Rate

Values in Organisations Tom Boardman Former CEO of Nedbank, South Africa

National and Regional Values Assessments

National/Regional Values Assessments DenmarkDenmarkLatviaLatviaSwedenSwedenCanadaCanada IcelandIcelandBhutanBhutanUSAUSABelgiumBelgium AustraliaAustralia UK North West) BrazilBrazilFinlandFinland Spain (Extremadura) Macedonia (Skopje) Argentina Venezuela

Entropy Percentages by Nation (2007 – 2010) Cultural entropy is a measure of the dysfunction in a social system

Cultural Entropy Impacts in Nations Cultural Entropy in Nations EntropyImpact < 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

Iceland: August 2008 (635) Level 7 Level 6 Level 5 Level 4 Level 3 Level 2 Level 1 Personal ValuesCurrent Culture ValuesDesired Culture Values PL= 11-0 | IRS (P)= | IRS (L)= PL= 2-8 | IROS (P)= | IROS (L)= PL= 10-0 | IROS (P)= | IROS (L)= Matches PV - CC0 CC - DC0 PV - DC4 1. family420Level 2 2. honesty297Level 5 3. responsibility258Level 4 4. accountability225Level 4 5. financial stability185Level 1 6. trust181Level 5 7. friendship175Level 2 8. positive attitude175Level 5 9. humor/fun158Level adaptability155Level respect155Level 2 Black Underline = PV & CCOrange = CC & DCP = PositiveL = Potentially Limiting I = IndividualO = organisational Orange = PV, CC & DCBlue = PV & DC(white circle)R = RelationshipS = Societal 1. materialistic (L) 419Level 1 2. short-term focus (L) 324Level 1 3. educational opportunities275Level 3 4. uncertainty about the future (L) 275Level 1 5. corruption (L) 269Level 1 6. elitism (L) 264Level 3 7. material needs224Level 1 8. wasted resources (L) 207Level 3 9. gender discrimination (L) 196Level blame (L) 177Level 2 1. accountability352Level 4 2. family307Level 2 3. employment opportunities281Level 1 4. financial stability249Level 1 5. optimism233Level 5 6. dependable public services228Level 3 7. honesty222Level 5 8. social responsibility174Level 4 9. human rights163Level poverty reduction160Level 1 Values PlotCopyright 2008 Barrett Values CentreSeptember 2008 The values that are important to citizens in their personal lives. How citizens experience the country - What is working well? What is undermining the sustainability of the country. What citizens believe is necessary for the country to achieve its full potential

Iceland: August 2008 (635) C T S Values DistributionCopyright 2008 Barrett Values CentreSeptember 2008 C = Common Good T = Transformation S = Self-Interest Positive Values Potentially Limiting Values Personal Values Current Culture Values Desired Culture Values

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