Robert Kaplan, Leadership And Heavy Weather

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Not to toot our own horn or anything, but . . .

On November 17th, we were lucky to have a visit from one of the best business speakers I’ve seen in a while.  The Chamber marked the return of Insight Kansas City with a presentation by Harvard Business School professor Robert Kaplan here at Union Station.  Kaplan was touring in support of his new book, What To Ask The Person In The Mirror and was wearing two hats – speaking on business leadership from his position in the HBS department of Organizational Behavior, and speaking on overall economic conditions, given his experience in accounting, finance and investment banking.  Both parts of his presentation were outstanding and I’ll briefly summarize them in sequence.

The guts of the leadership portion of his presentation came down to something  that doesn’t happen all that often – asking ourselves fundamental questions about what our business is for:

  • Have you developed and communicated a vision for your business?
  • How often do you articulate your strategy to your people?
  • If asked, would your employees be able to repeat it?

“To make money” Kaplan emphasized, is not a vision for a business.  Heaven knows it’s a necessary part of operating one, but as a vision, it’s empty.  You could argue that “to make money” was Bernie Madoff’s vision for his particular “business”.  If a business owner doesn’t  – or can’t – tell colleagues what their company’s vision is, and can’t get that clear, understandable vision into every employee’s vocabulary, then it’s time to step back, think, adjust and articulate just why they are doing what they do.

A second salient point of Kaplan’s leadership presentation was all about feedback:

  • Do you tell people things they do not want to hear?
  • Do you wait for annual performance reviews to do so?
  • Do you have 5 or 6 people who will tell you the truth (whether you like it or not)?

Kaplan administered a quick left hook to the idea of annual performance reviews as the place to address performance issues.  If you deal with problems by . . . waiting eight months to deal with problems, why bother?  Conversely, if you as an executive or employer are bluntly honest in how you deal with people in your organization, it only works if you’re prepared for blunt honesty pointed in your direction.  The most soothing and comfortable place in the world is that place where you’re surrounded by people telling you what they think you want to hear.  It’s also the most dangerous.

In the closing third of the presentation, Kaplan dug into an analysis of what he sees as an economy still capable of serving up substantial shocks in the years ahead.  As consumers continue to pay off debts, governments also must deleverage.  But this is a process that will take years.  And unlike consumers, governments face the task of trying to maintain economic growth while paying off their own debts.

Above all, the amount of complex derivatives sloshing through the economy – in effect insurance on securities – remains enormous, perhaps as much as $60 trillion worldwide.  The Fed does not closely regulate these securities, and as one-on-one agreements between individual corporations and financial firms they’re not traded openly on any exchange.  Given this, and in light of the EU debt crisis, the potential for volatility remains strong, and business must be prepared for turbulence.

How can business prepare for such turbulence?  It’s not just a case of adopting a more conservative mindset towards expenditures.  It’s about getting back to the basics – articulating a clear vision, focusing on core strengths and aligning your company’s strengths with where you need to go in unsettled times.  As Henry Kaiser said, “Challenges are just opportunities with their work clothes on” and unsettled times can be moments of outstanding opportunity – if you ask the right questions of the person in the mirror.

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