Fraud Is Our Fault
Stories like Theranos, Vice, and The Shed are testaments to our biases, and demonstrate how much we’re willing to look beyond the surface and believe only what we want to desperately believe is true. In the case of Theranos, investors wanted to believe they had a golden goose in the lucrative health care industry. With Vice, investors wanted to believe that they had found the key to entertaining the next generation. With Butler’s shed, customers wanted to believe they had earned a coveted reservation at an exclusive venue—and, more importantly, that they had earned the social rank that came with such an honor.
They were wrong.
Any time with a child, you know that children are born compulsive liars. We emerge from the womb able to say, “No . . . I didn’t eat the cookie you told me not to eat.” Our rocky relationship with honesty is as old as our ability to lie. That means we must actively work at transforming ourselves into honest, effective leaders. But before we can transform ourselves as individuals, we must deeply understand our complicated relationship with honesty as a society—because unless we understand the context around what we’re fighting, we won’t stand a chance.
Lying is not new; throughout the ages, we’ve consistently struggled with the balance between advancement at all costs and virtuous behavior. Now, in our newly transparent world, the pendulum is swinging back to what used to reside at the heart of free-market enterprise when the idea originated. Organizations like Conscious Capitalism are paving the way for how to do honest-to-greatness business in the twenty-first century.
To check if your organization is embracing a conscious way of doing business, consider the four pillars of Conscious Capitalism to see where you stack up.
Higher Purpose: While making money is essential for the vitality and sustainability of a business, it is not the only or even the most important reason a business exists. Conscious businesses focus on their purpose beyond profit. By focusing on its deeper purpose, a conscious business inspires, engages, and energizes its stakeholders. Employees, customers, and others trust and even love companies that have an inspiring purpose.
Stakeholder Orientation: Unlike some businesses that believe they only exist to maximize return on investment for their shareholders, conscious businesses focus on their whole business ecosystem, creating and optimizing value for all their stakeholders, understanding that strong and engaged stakeholders lead to a healthy, sustainable, resilient business. They recognize that without employees, customers, suppliers, funders, supportive communities, and a life-sustaining ecosystem, there is no business. Conscious business is a win-win-win proposition, which includes a healthy return to shareholders.
Conscious Leadership: Conscious leaders focus on “we” rather than “me.” They inspire, foster transformation, and bring out the best in those around them. They understand that their role is to serve the purpose of the organization, support the people within the organization, and create value for all the organization’s stakeholders. They recognize the integral role of culture and purposefully cultivate a conscious culture of trust and care.
Conscious Culture: A conscious culture fosters love, care, and inclusiveness and builds trust among the company’s team members and all its other stakeholders. Conscious culture is an energizing and unifying force that truly brings a conscious business to life.
How would your organization rank according to these four pillars? Even if your report card needs some work, the key is to develop an organizational habit—the habit of being conscious about your purpose, stakeholders, leadership, and culture. If you’re a leader in your organization, you can create change by introducing these ideas and helping shift your organization’s beliefs about business. If you’re not a leader in your organization, you can still create enormous change in your organization—and with the help of the CEOs in this book, you’re going to learn how.
Giving Power to the People Will Make You Rich
Honesty isn’t a cost; it’s an investment that will drive better products, experiences, sales, marketing, finance, culture, and more.
Consumers buy things when they believe the products they’re purchasing hold more value than the money they’re paying. When consumers have bad information, they make bad choices—choices that they wouldn’t make if they had better information about the value of what they’re buying.
The Hourglass of Honesty
If honesty is universally effective, we must have a method for applying it universally.
Honesty can take on many different meanings in life and business. It can mean true, candid, direct, transparent, authentic, and more.
There are three very specific levels of honesty that any organization can use to innovate and dominate.
The first level of honesty is getting honest about the community. To attain this level, it’s essential to understand what’s happening in the world around you and what’s changing in your industry. It’s putting yourself in the context of your present surroundings and circumstances, and observing the zeitgeist of our society. Consider, for instance, what the #MeToo movement has brought to our global conversation; how that singular shift in our consciousness has created a cascade of reactions, stoking the fires of related issues like gender-pay inequality. Reflect on how the 2007–2008 financial crisis drastically changed the trust level between consumers and businesses. Witness the swift rise of nonbinary gender fluidity—an idea that seemed nearly impossible just a few short years ago.
Getting honest about the community means thinking critically about the world around you, developing a keen awareness of how society’s belief systems and habits are changing, and learning to consistently examine the evolving beliefs of our time.
The second level of honesty is being honest with and about the others in your life. The “others” are the people who make up your personal and professional worlds. They are your family, friends, colleagues, bosses, clients, neighbors, and, well, others. Most people are dishonest with and about those around them at some level. For instance, think of your friend who won’t break up with her boyfriend, even though it’s objectively obvious that her boyfriend is no good for her. Think about the times you’ve avoided a much-needed, candid conversation with another person because you think it might jeopardize the relationship. Consider a time when you’ve excused the bad behavior of a loved one under the excuse that you’re “protecting” them.
If you believe that business is driven wholly by the people within it, then you’ll agree that getting brutally honest with and about the people in your workplace is critical to making the right assessments, building the right teams, and achieving your goals.
Getting honest about the community takes intense listening skills and awareness. Getting honest about others takes the resolute pursuit of objectivity and the bravery to be honest and direct with those around you—not even letting “love” and “kindness” come before truth. But in the third and final level of honesty, getting honest with the self requires something entirely different, an element that escapes the vast majority of leaders across every size organization, every industry, every culture, and even every country. Getting honest with the self requires self-awareness, that elusive character trait that all want, most insist they have, and yet very few truly possess. Getting honest with and about the self requires a lifelong pursuit of exploration into the very depths of your identity, where you find countless fears, hopes, dreams, and beliefs that serve you or defeat you by the millisecond.
Once you get honest about what’s going on in society at large and in your industry, and then get honest about the customers and colleagues around you, and then get honest about your own biases and beliefs, you naturally change. You’re able to see different insights, assess new possibilities, and approach old problems in an entirely new way.
Effective Honesty for Managers and Frontline Employees
Guideline 1: Do What You Can Within Your Own Team
Let’s be honest: our efforts go nowhere without the people—the right people—to back us up. That means spending time understanding what’s going on with the people around you and what motivates them, so you can start to figure out how to move them by dangling carrots rather than by hitting them with sticks.
Sometimes, those carrots include asking people to consider if they’re really living up to the organization’s values. Sometimes it’s that simple: the organization has decent values, it’s just that they’re not enforced because no one’s reminding the team why their culture code is important. As Dan Hesse shared, “How we live our values” should always underpin the conversation you have with the members of your team individually and together.
Other times, your culture doesn’t have values, or has crappy values, or no one really thinks about the identity of the organization, and the result is a free-for-all where what you do supersedes who you are. In that case, you have lots of options here, and you may want to start by getting to know the people around you—again, managers, direct reports, bosses, etc.—to begin to understand their personal goals, biases, and assumptions. You’ll need to get honest about the people around you if you’re going to make any headway, especially in a politicized work environment.
Build strong relationships throughout your team so you get to truly know people. Become known as the person crusading for what’s true, and build on that reputation. You might be surprised how quickly you can rally others around the ideal of honesty. If you hope to extract superior performance from your team, you must present a positive business case on how we can look at this in a different way.
Guideline 2: Assemble and Use Coalitions of Support Wisely
At some point you’re going to need to make a case for honesty to either your peers, bosses, or direct reports. If so, consider assembling a coalition. What does this look like? As Rohit Malik, one of the architects behind Columbia Business School’s honor code, specifies, “Form a committee of those [you] consider to be high-integrity leaders and work with those people to create programs, workshops,” and brainstorming sessions specifically designed to mine honest insights. Employees who bring a united front to the decision-maker are harder to ignore, particularly if they make a strong, data-backed case for what they believe in and if what’s being proposed is truly for the good of the organization.
Your coalition will go further, and faster, than you could on your own. After studying which tactics worked best to create organizational change, researchers Susan J. Ashford and James R. Detert found that “building a coalition generates organization buy-in more quickly and on a larger scale as more people contribute energy and resources.”1
The authors reiterated that diversity is key. As they wrote in the Harvard Business Review, “One person might have access to important data . . . and another might have a personal relationship with one of the top managers you’re trying to persuade.” The most successful leaders in their study involved a diverse group of colleagues in pitching their concepts, because the network effect gave the group access to resources and relationships that made the whole buy-in process easier.
Guideline 3: Use Data, and If That Fails, Use More Data
To really get your organization moving, take action. Start small, with accessible hypotheses and tests. Gather data—especially from customers, just as Russell Weiner did at Domino’s. It’s worth noting that Weiner asked his current customers what they thought about his pizza, and they told him how to fix it.
Can you imagine basing an entire business strategy on the feedback of people who might be your customers? But when you open your wallet and buy, that’s a powerful vote, and—as Weiner pointed out—it’s the only vote that matters. Ask current customers what they think; they’re usually more than happy to be put in charge of how you might make positive changes.
Making the case for organizational change to your boss while she’s right in the middle of preparing for her next board meeting is probably an ill-fated idea. Executives, boards, leaders of all kinds are people, too, so some sensitivity is in order here. Remember the feed-forward framing technique for gently nudging people along to the benefit of all. With a scientific, data-driven method in hand, and the right persuasive tactics, you’ll be able to make a proper case to effectively communicate to those in charge when the time is right.