It matters how money is made

"Everything happens in the context of relationships."

This concept was a revelation to me a few years ago. I'd been raised on a different business ethic: "Don't bring your personal life to work." In this way of thinking, your job specifies the 'role' you play.To be successful, you must not only embody the role, but also recognize the roles others are playing, and with them perform an unseen script. Bringing one's personal self to work, and interacting with others' personal selves, can't be tolerated, since this intrusion gets in the way of achieving business goals. Good workers must strive single-mindedly toward meeting the corporation's objectives. Those who do this well will be rewarded.

Being very driven operationally and technically, I was more than receptive to a de-personalized work place, and approaching my work this way usually produced good business results. But, when I sought feedback from peers and direct reports, I heard a consistent message that I was 'at times' not approachable. Those 'times' occurred when I was most intently driving to a business objective: meeting a project deadline; overcoming obstacles in reaching business goals. I was grateful that I had good enough relationships with others that they felt comfortable sharing this with me, and yet for years I failed to understand what I could do about it, other than try to play my role a bit differently.

And then a couple years ago, I came across what seemed a completely revolutionary thought: Everything happens in the context of relationships. If you care for those relationships, your outcomes will exceed your expectations. The person you are as a leader either enables or prevents others to be successful. If the people you lead are not being successful, look first to the relationship between you. Is it characterized by honesty and disclosure? Is it apparent to the other person that you care about his or her success, and that you bring a sincere interest in understanding both the facts and feelings of the relationship? As I've put this learning to practice, I have a growing appreciation for its power. A business is not a disembodied entity that people work for. A business is the people who work in it, and it changes measurably as the people within it change. It is simply the sum of the outcomes produced by those peoples' relationships, popularly called 'teamwork.' Moreover, the business exists within the environment of its community: consciously or not, the business contributes to community-based relationships, for good or ill.

Following the nation's economic news, I have come to realize a fundamental difference in the ethos of the community and that of many corporations. The people who work in businesses and whose communities are affected by them share a relationship-based ethos. Listen to interviews of workers who have been laid off recently. Whether the workers are young in their careers or have spent a lifetime with the company, they speak emotionally about their loss: not only of the loss of their livelihood, but also of the relationships lost to them. They speak of the close ties they have forged with co-workers, their 'second family' at work, and of the pride they have taken in what they accomplished together. People view work as more than an exchange of time for money. They bring to work not only their physical bodies but also all the complexities of their personalities, histories, emotions, and aspirations.They witness the contributions that they produce individually and with others for the business. All of the corporate talk of 'teamwork' just reinforces with them the importance of relationships as the singular engine for corporate success.

A corporation tethered by the concept of itself within its de-personalized person-hood can never understand the power that actually drives success in its business. The business's responsibility for its relationships with its employees and community trumps the profit imperative. In my work, I am responsible for profitability, and I take that responsibility seriously. So seriously, that I maintain that a business cannot be profitable both today and in the future unless its management understands that everything happens in the context of relationships. Failure to understand this leads to toxic debt packages that lead to rampant foreclosures that lead to ultimate insolvency (unless your business is 'too big to fail'). It leads to double-digit unemployment, with unimaginable human misery and long-term scarring with unknowable economic impact. It leads to toxic food, loss of life and health. The tolls are incalculable - and for what end?

Profits do not have to suffer as relationships are honored; my experience is that in fact, quite the opposite is true. This seems counter-intuitive only if you accept that the corporation is a mechanical entity that exists only to produce profits. However if you assume that the corporation is the sum of the people who work together to produce services or products profitably, and that the business exists within the context of the community upon which it depends, then it seems perfectly reasonable if not inevitable. I work in a company governed by a set of values that give shape to the relationships inside and outside the business. Not so coincidentally, the company has produced year-on-year growth every year (this one included) since embracing these values. The company's values are not just nice-to-haves; they are essential to the company's business plans and its success.

If all actions were based on the profit imperative, irrespective of relationships, human society as we know it would not be possible. Yet, even when our communities bear the manifold costs of the financial collapse caused by uncontrolled profiteering, society is reluctant to hold the bad actors accountable. I think our failure is partly grounded in an unmindful acceptance of their ethos, even when we do not share in it. We have accepted too readily that as long as it's legal, it's acceptable. But it matters how money is made. Legality is a low standard indeed for a society's norms, and you have to ask:who has decided what is legal and what is not?

Let us accept that human society is nothing if not the relationships that allow us to live together successfully to produce successive generations who may also thrive. Economic security and success are interwoven with those relationships. Everything happens in the context of relationships.

Lean takes on a new meaning

Update 8 October 09:
This morning's NYTimes reports that Costco has worked out a supply agreement with Tyson, allowing Costco to test Tyson's products prior to resale. And, there's some speechifying from the administration and Congress. Would be encouraging if this goes somewhere, but it's hard to see it will.


The Sunday NY Times featured a front-page story, shocking and deeply disturbing, that explained how E. coli contamination is allowed to occur in the US meat industry. In one example, meat sold under the product name "American Chef’s Selection Angus Beef Patties" was actually a mixture of meat products made by Cargill from three separate suppliers. None of these suppliers, nor the producer of 'American Chef's Selection Angus Beef Patties,' tested their products for contamination. Ms. Smith, a young woman who ate a hamburger made of this meat, became critically ill and is paralyzed.

In combining the ingredients, Cargill was following a common industry practice of mixing trim from various suppliers to hit the desired fat content for the least money, industry officials said. [...] In all, the ingredients for Ms. Smith’s burger cost Cargill about $1 a pound, company records show, or about 30 cents less than industry experts say it would cost for ground beef made from whole cuts of meat [....] The listed ingredients revealed little of how the meat was made. There was just one meat product listed: “Beef.”

But, you may wonder, I thought Sinclair's The Jungle changed all of this last century ... don't we have regulations that protect the consumer? That would be the USDA, and this is what they say:

Dr. Kenneth Petersen, an assistant administrator with the department’s Food Safety and Inspection Service, said that the department could mandate testing, but that it needed to consider the impact on companies as well as consumers. “I have to look at the entire industry, not just what is best for public health,” Dr. Petersen said.

No doubt Cargill has worked its supply chain relationships to drive down costs, but it's certainly not practicing Lean principles. This is old-fashioned greed. The article takes pains to point out that Costco, known for its supply chain and cost management, insists on testing the meat it procures: those suppliers who don't want their products tested (like Tyson) don't sell to Costco. Dr. Petersen should not worry about protecting the businesses he regulates. If they have to charge 30 cents more to produce meat that is clean, so be it. What consumer wouldn't prefer to pay an incremental difference for the peace of mind?

The kink in that argument is that consumer trust is badly eroded, because regulation has not been enforced where it exists, and it has been severely cut back. Protections we once enjoyed have been hacked away under the philosophy that government is bad. We are reaping the results now, not only in unclean food but also in huge economic failures. If consumers no longer trust that they are being protected, how can a business assure its customer that the higher price of its product is due to the product really being what it's labeled? Bubba Burgers, the article tells us, attempts to differentiate its product by this label: “100% whole muscle means no trimmings.” Until I read this article, I would have had no appreciation for what's behind this message (or what something called 'fine lean textured beef' really is - for starters, the raw material for this substance is up to 70% fat; centrifuges and ammonia are involved). If you're purchasing ground beef based on label information alone, which would you think the safer choice for your family: Bubba Burgers, or American Chef's Selection Angus Beef Patties? They both bear the USDA Approval label. What are you supposed to make of that?

And yet, I have little expectation that the article will have much more of an effect than grossing out its readers. Maybe Costco will get a brief uptick in their meat department. Maybe grocery store butchers will have more requests this week for grinding whole cuts of meat for customers. That's fine, but it's not the solution. Why shouldn't we expect businesses to eliminate costs by reducing waste, not by reducing quality? Why should we not insist that government do what we individually cannot do? Why are we paying the salaries of bureaucrats who seek to protect the industries they are supposed to regulate, at the expense of citizens? Why aren't we demanding substantive change?

President Obama campaigned on change, and surely that's the message that gave him a four-year lease at 1600 Pennsylvania Ave. Yet since January, simply the prospect of change has become radicalized. Even in the face of incontrovertible evidence that the status quo is harmful, leaders are fearful of taking a stand for change, as if the safe position was to stand pat. Geoffrey Miller, in his book Spent, cites studies that correlate threat of disease in a population with low ratings of openness. The more people sense threats they cannot control, they become more resistant to change and fearful of outsiders. We can look around us and see catastrophe on all sides: environment, financial sector, housing, employment, education, health care. The response of some will be: "We need to do something about that!" Apparently, even more people will hunker down in their misery, and attack those who press for change.

You don't have to play to those fears, however. If they trust their leadership, people can be inspired to overcome their fears and act. Recently at work, we set a challenge for the stores to achieve sales levels never consistently met before. We were responding to the same economy that other retailers are using to justify hunkering down: cutting back, hyping poor values. But, we decided to inspire new levels of performance. I could give the stores no magic bullet, no certainty that they would succeed -- just my belief they would. I asked them to look only within the walls of their own stores to see what they could do to transform the experience of our customers, and deliver even greater value to them. And you know what? They did it.