Values-Driven Leadership

Returning from a conference on values-driven leadership, I share these insights on the investment industry.  First, let’s define terms.  Many readers may be thinking, “Aren’t all leaders value-driven?  Even the ones driven by profit, competition, and winning?”  Well, yes.  “So, if all leaders are values-driven then what’s the point of the conference?  Just to affirm this fact?”

For me, the big distinction is which values?  And, are they positive and full-spectrum?  In this regard, Richard Barrett, founder of the conference, has provided a useful framework.[1]  He has taken Maslow’s hierarchy, which is familiar to most of us, and reframed it this way for firms:

As you can see, values like “shareholder/profit” are included in this list; they are perfectly valid.  But if done to excess, they become harmful, like “greed (read: Wells Fargo)” or “corruption.”  Similarly, the second level of values includes those relating to relationship.  They also are positive, unless they drift into manipulating and blaming.[2]  Investment leaders are especially keen on level 3:  self-esteem.  They are a competitive bunch and love to win.  Many firms we survey have more values at this level than any other level.  All investment firms must succeed at levels 1-3 if they are to grow and prosper.

In FCG language, the first three levels are “below the line” because they are often command-and-control driven.  Whether overtly or covertly, leaders at these levels often use fear to achieve results.  They want the firm to survive and thrive, so they push for open communication and mastery.  Lance Secretan, founder of Manpower, spoke at the conference and provided a useful distinction between motivating and inspiring.  Command-and-control leaders try to motivate the staff.  And there is extensive literature available about motivating employees.  (346 million Google hits)  Secretan’s point was a subtle one: motivation is often externally driven—by rewards and punishment—and can be coercive.  Secretan then offered an alternative:  inspiration.  Good leaders inspire their teams.  Instead of lighting a fire UNDER them, they light a fire INSIDE of them.  They use a pull strategy instead of a push strategy.  At the root of pushing is often fear:  “If I don’t push them, we’ll fall behind.  We won’t win.  We won’t improve.  We’ll fail.”

Many conference speakers emphasized that today’s top leaders have moved beyond command-and-control/fear-based leadership to conscious leadership, or values-driven leadership.  The chart above helps us understand what that means.  As a conscious leader, I have mastered my own needs for survival, relationship and self-esteem, so that I can lead from the higher values, such as:

  • Accountability
  • Trust
  • Integrity
  • Compassion
  • Humility

Remarkably, many of the successful leaders today speak openly about compassion/love in the workplace.  Mulally, the Ford CEO who led the highly successful turnaround, told his Executive Committee that they needed to go beyond simply tolerating the dealership managers.  They needed to love them.  (!)  Mackey, CEO at Whole Foods, showed this slide at the conference:

Mackey provided powerful examples from his leadership journey, including one from his encounter with the SEC.  Mackey said his guiding principle is always to act from a place of love.  And he said he always looks for “win/win/win” solutions.  If a staff member brings him a solution that looks like win/lose, Mackey asks the person to reexamine it and try for the triple win.[3]

Notice the third bullet in Mackey’s slide:  Seek to eliminate fear.  In FCG’s model of over/under the line, leaders are constantly challenged to choose between fear-based vs. trust/compassion-based actions. Fear takes us to scarcity mindset, where we fight for our share of the pie.  Trust moves us to ask:  what’s the right and compassionate thing to do.  And how do we all win?  Obviously, the actions we take will be very different depending on our state of mind.

The final bullet on Mackey’s slide promotes appreciations.  The investment industry suffers from ADD in our view:  Appreciation Deficit Disorder.  In culture surveys, we see repeatedly that staff members feel underappreciated.  Appreciation is a way—without getting mushy—to show love and care in the workplace.  Mackey advocates for the simple practice of starting meetings with one appreciation for a team member.

Secretan also advocated powerfully for the importance of love in the workplace.  He spoke about the extensive research reported in the book, Triumphs of Experience: The Men of the Harvard Grant Study.[4]

He showed this chart to summarize the findings from the longest longitudinal study of human development ever undertake:

No surprise that the top two findings are 1) Love is really all that matters, and 2) It’s about more than Money and Power.

Looking back at our list of “higher” values given above, Barrett claims that “humility” is one of the top values at level 7.  In simple terms, humility could be seen as the opposite of ego.  In the humble person, there is very little self-interest.  Their main concern is for the common good, the higher cause. Conversely, the ego driven person is all about me, me, me.  When Crain Neal spoke at the conference, he showed a slide which summarized what 5,000 executives had said about the qualities of a transformational leader.  In the chart below, size indicates popularity of the response:

Note that trust, openness, and vision are all in the Barrett higher values, and are seen as key qualities of top leaders.  But the number one value for great leadership is humility.  In FCG language, we would say that curiosity and humility are closely linked.  It’s hard to imagine a genuinely curious person who is not humble.  Conversely, it’s hard to imagine an ego-driven person who is genuinely curious.

With all of this as background, I’ll describe my breakout session with two investment CEOs:  Fred Martin (Disciplined Growth Investors, Minneapolis) and Michael Mezei (Mawer Investment Management, Calgary).  Each of these firms has earned the distinction of being a “Focus Elite” firm.[5]  Using the culture and leadership surveys, FCG has measured them against hundreds of other asset managers.  Only 9 firms have earned this distinction.  The audience seemed genuinely curious about hearing from these investment leaders.  With stereotypes like Gordon Gekko, or real-life villains like Bernie Madoff, floating in our psyches, a natural question is:  “are we peering into the belly of the beast?!  Who are these leaders that live in the heart of capitalism, the financial markets?”  In short order, the audience relaxed as Fred and Michael appeared as clear examples of humility, compassion, and wisdom.  Early on, I asked Michael for his definition of purpose in the investment world.  He said simply, “a better world for investors.”  Then he and Fred described and explained the values that were core to their firm’s cultures. And their journey as leaders, as they’ve undertaken the task of building strong, healthy cultures.

One attendee, Ruth Steinholtz, has a legal and compliance background and asked specifically about building an ethical culture.  Fred and Michael each gave real-time examples of wrestling with tough ethical decisions.  In Fred’s case, his firm had discovered an error in the last 24 hours which could cost his firm $2 million.  Without hesitation, Fred said that he immediately decided to make the clients whole, even though the clients would probably never have known that an error had been made.  In discussing the incident, Fred’s main concern was mostly about the woman who had found the error and felt deeply upset about it.  Fred reassured her that he and all the staff members shared responsibility for it.  Additionally, this incident gave Fred a chance to talk about his four key principles that he has instilled at DGI, one of which is forgiveness.  Fred was able to remind the woman in question that we are all human, we make mistakes, and we let them go.  The other three principles are:  integrity, compassion, and responsibility.  The dialogue between the two CEOs and the audience was very open and reaffirming that the leadership values being discussed in the conference were alive and well in these two investment firms.  The most humorous moment occurred at the end of the session when one participant asked, “Are you two representative of the industry at large?”  Spontaneous laughter erupted as we all sensed the underlying disbelief.  I reminded participants that Fred and Michael represented Focus Elite firms and that “no, not all investment firms have built strong cultures like Mawer and DGI.”

Having said that, I will add that 97% of investment audiences around the world agree with the statement:  “strong, positive culture is important to an investment firm’s success.”  So, there is general awareness that culture is important.  The difficulty, as many speakers at the conference acknowledged, is that strong, positive cultures can only be built by leaders who have started to operate from trust rather than fear.  In other words, they have personally evolved up the Barrett hierarchy.  Barrett would say, “Conscious leaders are operating more from soul than ego.”

My major takeaway from the conference is a deeper commitment to writing and speaking about a new investment vision.  Conscious leaders are vision-led and values-driven.  So, for the investment industry the vision would start with a broader and more global view of the purpose of investments.  In FCG’s recent CEO roundtable in Chicago, we asked our 22 guests to respond to this purpose statement:

There were only a couple of dissenting votes, which were largely resolved by the ensuing dialogue.  FCG is encouraged that the investment leaders are moving away from the business school mindset that “the only purpose of a business is to shareholder maximization.”  Investment leaders are embracing a bigger dream.  Additionally, in our large database of investment culture surveys, we know that the core values for the industry are:  1) Client Satisfaction, 2) Ethics/Integrity, 3) Teamwork, 4) Excellence/Continuous Improvement, and 5) Accountability.  These five values represent a good spectrum from the Barrett hierarchy shown above.  My hope is that more and more investment leaders will realize the truly joyful experience of the triple win:  clients, employees, and owners.  And then dream even bigger:  community, country and the world.

Curiously and humbly yours,


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[1] Barrett has written a number of good books on these topics. See website:

[2] See FCG’s paper published in the Journal of Portfolio Management, “Does a Culture of Blame Predict Poor Performance for Asset Managers?

[3] A triple win is a win for all three stakeholders: customer, shareholder, employee.

[4] Triumphs of Experience:  The Men of the Harvard Grant Study

[5] For more on the Focus Elite firms, read our paper:  “Linking Strong Culture to Success


Clear Leadership

Clarity is a passion of mine. My colleagues at FCG will tell you that I go into spasms when a client responds to something we said with, “Huh? I don’t understand what you mean.” Argh! I tell my colleagues repeatedly, “that’s the worst thing we can hear!” Our job at FCG is to bring clarity to a client’s confusion. We help them sort out the issues and make good decisions. Bringing more confusion to a client is like a doctor bringing more sickness to a patient. First, do no harm! Or in our case: Don’t add to the confusion!

So, I was delighted when a client shared a book recommendation called, “Clear Leadership.” The tie-in with our work was the chapter in the book about appreciation. The author, Gervase Bushe, promotes appreciation as a powerful way to unleash the potential of an organization. My last two LOL’s have addressed that topic. Beyond advocating for appreciation, Bushe is excellent on the topic of clarity. He argues that much of the communication in firms is “mush.” That’s our experience at FCG as well. In Bushe’s words:

Interactions between people are based on stories they’ve made up about each other that they haven’t checked out directly with the other person. I call this condition ‘interpersonal mush,’ and I am convinced that collaboration is not sustainable in interpersonal mush.”

To form a successful partnership with colleagues one has to eliminate mush. Bushe defines partnership as, “a relationship between two or more people who are jointly committed to the success of whatever process or project they are engaged in.” For senior teams (e.g. exco’s), FCG would simplify it down to, “a relationship between two or more people who are jointly committed to the success of their shared mission.” And to be successful in partnership, Bushe says four skillsets are necessary:

  1. Self-awareness (emotional intelligence)
  2. Descriptiveness (candor and transparency)
  3. Curiosity (mutual understanding)
  4. Appreciation (identifying and amplifying the strengths)

For those of you who have followed FCG’s work closely, you realize that this is exactly what we’ve been preaching for over 15 years. (When I first described “Clear Leadership” to Keith Robinson in my perky and animated excitement, he looked puzzled and asked, “Did you learn anything new?” His question gave me pause. Hmmm. Was I just excited because Bushe was affirming all of our belief systems?! Partly, yes. But also, Bushe has added some really good concepts and techniques to the toolkit.)

For example, Bushe introduces what he calls the “cube” and it captures the four important elements of one’s experience in a conversation:

Observing: what are the facts? What can we all agree to? Thinking: What story did you make up about the facts? What is your opinion, evaluation, judgment?
Wanting: What is it that you want? What does a successful outcome look like? Feeling: What is your reaction to the story? Does it evoke anger, sadness, joy, fear?

For clear communication to occur, it is very helpful to master the cube. Much of the “mush” in communication occurs because people don’t understand the distinctions. For example, people confuse observations (facts) with thinking (stories). Consider each of the following statements and pick out the observations:

  • I observe you are upset.
  • I observe he is hungry.
  • I observe her working hard.

None of these is an observation! They are all thoughts (stories) about someone’s behavior. As Bushe writes, “to get clear, you need to be able to tell the difference between what you think, feel, want and observe.” FCG’s advice in this regard is to know the difference between fact and story, and then to hold your story lightly. (Because it is only your opinion, not the final Truth.) Further, both FCG and Bushe argue for the importance of “checking out your story.” For example, Friday FCG was with a client and the CEO said, “I’m irritated that David was in Boston and was too lazy to go visit our big client.” Keith and I both jumped on that one: “Have you checked out your story with David?” The CEO’s response, “No.” Untold damage occurs on teams (and in marriages) when we “run” with our stories instead of checking them out. So Bushe and FCG both argue that this is where curiosity plays a big role. Instead of getting judgmental—“David is lazy”—get curious: why did David not visit our client? (In this case, the CEO did check out his story later and found that David had indeed called the client to schedule a meeting but the client was unavailable for a meeting!)

Bushe suggests that good transparency on a team would mean that each team member could skillfully provide a description (i.e. the descriptive skills) of an event from all four quadrants of the cube. In the case above, the CEO might say, “I observe that David did not visit our client in Boston. My story is that he’s lazy. I’m irritated by that. Because I want our clients to receive world class treatment from our firm.” This would be an accurate description of what the CEO was experiencing in the here-and-now. Anyone listening would know where the CEO was coming from. And in this case, a really good suggestion from a colleague would be, “check out your story.” Teams that learn and practice this behavior eliminate much of the mush in their conversations.

The final quadrant of the cube—the “Wants” piece—is also useful in cutting through mush. Instead of guessing what people want, teach the team to state it explicitly. Bushe writes:

“One rule of partnership is that people have to say what they want. The second rule is that they shouldn’t expect to get it.”

We practice this rule often at FCG. We state what we want—I request such-and-such—and then allow team members to comply or not. For example, my request of team members is that they turn off their smart phones when we meet. If they do so, great. If not, well, that’s their business. At least I’ve made my request clearly. (Note: when we talk about requests, we are NOT talking about things like embezzling from the firm: “Please don’t steal our money.” That’s not a request, that should be an agreement with your partners!)

Another way to cut through mush is to use clear language. Be precise. Bushe writes, “If someone enters the room and feels cold, he is most likely to say, ‘it’s cold in here.’ Coldness is a sensation, an inner experience. I have canvassed rooms of people and found that some are cold, some are hot, and some are neither.” When we get the hang of this precision in language, we stop making statements like, “this is a fun company to work for.” Instead, we make an accurate statement like, “I have fun working here.” (Whether other people do or do not have fun is uncertain.) Owning one’s experience and making “I” statements can really help with clarity. I was with a CIO recently who said, “When you go and look at the stocks they’ve put in my portfolio, you just want to scream about the mess they’ve made. We’ve worked really hard to improve the process, but you look at their attitude and just have to shake your head.”

Obviously, the CIO is the one who just wants to scream. The “you” language is so prevalent that most of us have learned to translate it when we hear it. But who is the “we” that has worked so hard to improve the process? It turns out it was the CIO, but that wasn’t obvious until I asked. Bushe writes, “The rule of clear language is very simple—say ‘I’ when you are talking about your own experience.”

FCG would add that pronouns can get very complicated as well. Instead of saying, “He was unwilling to share resources with her because he knew that she would get upset.” Say: “Paul was unwilling to share resources with Mary because Paul knew that Susan would get upset.” This precision may seem a bit overdone but it is well worth the effort because it eliminates confusion. Some common examples of the confusion:

  • We need to take a break (when really I need to take a break).
  • We’re glad you came (when really I’m glad you came).
  • It’s scary to tell the boss the truth (when really I’m scared to tell the boss the truth).

Bushe has some very useful and practical advice for leaders, such as “Make statements before asking questions.” Hmmm, you might wonder. Why do that? Bushe gives this example:

The boss says, “Do you support our plans or don’t you?” This seems to be a straightforward question, but what kind of “story” will it generate in the listener? One might infer undertones of distrust. Another might begin trying to imagine why the question is being asked. A third might think that her reservations

 about the plans are clearly not welcome. Questions lead to more clarity all around only when they are preceded by descriptive statement. For example the boss could say, “Yesterday you seemed really committed to our plan when you were describing it to Sally, but today you keep hedging on your commitment. I’m feeling confused. Do you support our plans or don’t you?” Make a statement before you ask the question.

The book is full of these tips for clarity, which I love. Perhaps the most useful one is about candor. When FCG asks teams why they are less than fully candid, the most common response is: If I am fully candid, I might hurt someone’s feelings. The underlying reality here is that “most of us have been trained in one way or another to hold others responsible for our experience (i.e. you make me feel…).” Bushe gives this example:

Let’s say you work for me, and you start to tell me that the plan we are executing is not going to work. I start to get anxious, and instead of listening to your concerns and delving more deeply into where they are coming from, I argue with you about why you are wrong and why the plan will work. Or maybe, instead of arguing, I give you a pep talk about how it will all work out if we stay the course, and ask you to get on board. In either case, I am trying to get you to have a different experience about the plan so I won’t feel anxious. Rather than taking responsibility for creating my own experience (the anxiety), I’m implicitly making you responsible for my experience. You have to change so I won’t feel anxious!

FCG witnesses this form of mush week after week. Team members are unwilling to be honest about their views because they might offend someone. The remedy is to discuss and agree as a team that each member is responsible for his/her own reactions. And that it is expected of team members to candidly state their views as objectively and respectfully as possible, regardless of how others react. This simple understanding and agreement could profoundly transform a team’s conversations. I take responsibility for my reactions; you take responsibility for yours. Clear? Good. Now, can we talk…J

Stay curious,


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