Shared Leadership

Why Can't Nike - "Just Do It?"

 

For the past decade Nike’s business journey is characterized by two distinctive qualities - business growth and learning to take responsibility. Since 2003 they have exceeded the Dow, split their stock in 2007 and weathered the global financial crisis better than most. They are now reclaiming their former wealth showing an aggressive steady climb over the last six months. This is a testament to Nike’s sound business basics, good products and superb marketing.

Nike is one of the pioneers of outsourcing manufacturing overseas. This is one of their major engines for profit. Cheap labor allows for high profit margins in shoes and apparel. Over the last twenty years they have moved manufacturing to various countries to catch the wave of the lowest labor costs. Today it is estimated that their supply chain funds the employment of over 800,000 people primarily located in Malaysia, Indonesia, Vietnam,Thailand and China. 

During 1990’s Nike held center stage as a company whose partners engaged in child labor, employee abuses, and sweatshop working conditions. Nike’s initial response was characterized by adamant denial and aggressive self-defense. They did not own the manufacturing and could not be held responsible for labor practices in countries outside the United States. This was legally and technically true. Human rights activists had another view. For the next decade Nike would engage in a policy of monitoring and beleaguered enforcement of violations against Nike’s Code of Conduct.

In 2006 Nike made a bold move to be more transparent and turned over its monitoring data to Richard Locke of MIT’s Sloan School. Locke spent three months just organizing the data, which suggested to him that Nike had not been trying to actively learn from it.  Locke’s final conclusions would state that despite "significant efforts and investments by Nike ... workplace conditions in almost 80% of its suppliers have either remained the same or worsened over time."

Expanding Corporate Responsibility

Today Nike is engaged in new series of projects, which are bringing results to the bottom line and external accolades from environmentalists. Using quality methodology and new design techniques they are committed to reduce over $800 million dollars of annual product waste and to use environmentally friendly materials. This led to Nike being rated third in the top 100 companies in 2008 committed to Corporate Social Responsibility. (However in 2009 they dropped to 23 primarily based on CRO placing more weight on human rights.)

Even more significant, Eguenia Levinson in her article Citizen Nike reports that for the first time Nike is thinking about its deeper connection to it’s supply chain. Nike is realizing that as they make decisions they drive behavior inside manufacturing plants.  

When the employees in Beaverton, Oregon link themselves and their work processes to their outsourcing partners plants, a new set of possibilities are open for consideration. Seeing the creation of a shoe as a full process and specifically seeing how design decisions directly impact manufacturing is new to Nike’s way of thinking. Further learning how the use of hazardous glues effects safety in plants or even how last minute design changes or delays impact schedules and drive overtime and working conditions inside plants sometimes leading to Code of Conduct violations. This is a tremendous leap from twenty years ago when they said they had no connection to their manufacturing partners. This learning brings about another level of cooperation and responsibility.

Leadership Bubble of Self-Interest

Yet Nike’s business still operates within the bubble of self-interest. This is the predominate filter which drives what possibilities are open for consideration. Now to be fair, Nike is no different than their competitors or the majority of American businesses. What we are learning from Nike’s behavior and other companies engaged in sustainability efforts is that there is room for change. The bubble of self interest can be expanded, if and when the new behavior is carefully couched in terms of how this is “good for business.”

An expansion of the bubble of self-interest for any business is a significant change in the right direction, especially in the area of sustainable growth practices. However this stance still limits a company’s ability to explore other options.

The prime example of this is paying “living wages.” For the past fifteen years Nike has refused to consider setting the standard in it’s Code of Conduct to pay living wages to it's workers. They do agree to pay the country's minimum wage. However, in many countries minimum wage does not equate to living wages. It is a known fact that many countries like Indonesia arbitrarily set minimum wage low to attract foreign companies.  

A second example is seeing the connection between competitive outsourcing, based on driving lower prices, and how it drives specific work practices in a factory. Richard Read of the Oregonian wrote specifically about this issue last August. In his article he quotes Jeffrey Ballinger, a longtime anti-Nike activist, who says "If Nike put four factories in competition for 100,000 Air-whatever shoes, they can't go back and say, 'Give the workers Saturdays off,' because the contractor needs to make money." Scott Nova, the executive director of the Worker Rights Consortium which monitors labor rights in foreign countries who says “factory owners are being asked to do two mutually contradictory things: improve standards and cut prices. The factories do everything they possibly can to hold down labor costs, and they hope nobody catches them for violating labor standards.” This is another example how the competitive nature of the stance of self-interest sustains extremely negative working conditions.

The stance of self-interest also drives behavior and prevents people or companies from direct involvement in learning and discovery. 

If we go back ten to fifteen years when Nike began their more active inquiry into the state of working conditions, the did so by hiring outside resources to do the work for them. As they began to learn more of what was happening, they would put plants on notice. Much as a health inspector might do.  Their initial follow-up cleared up the worse cases of sweatshop management and child labor. However until recently their follow-up always been characterized by patience.

Nowhere is it documented that a practice evolved in Nike for executives or even middle level managers to go to their manufacturing facilities and for a week or even a day work the same jobs, under the same conditions, with the same hours as the women on the factory floor. 

It would seem that a decade of slow to little change might have sped up considerably if one executive had personally experienced breathing problems, chemical skin irritations, suffered from heat stroke or exhaustion, been verbally or physically harassed. No executive at Nike has tried to live on a weekly wage that is paid in the factories. 

Nor it is documented anywhere that a regular practice of surveying employees or holding focus groups with employees and learning from this data is used. It would seem the authentic listening or interviewing of employees has been left to journalists and human rights activists. Historically Nike has relied on other measures having factories self report the age of employees, hours worked, overtime, pay practices and days off. More recently they focus on safety practices and air quality.

Behaviors that create high contact and connection are consistent with abandoning self-interest and adopting a true learning position, which in turns always leads to being influenced. The value of the stance of self-interest is that it limits the influence others have on you, because you are less connected and your are committed to certain ways of doing business which are unquestioned.

Nike is now recognized as a leader in Corporate Social Responsibility. Yet today we have a host of global problems, which cannot be solved by institutions that operate from a stance of self-interest, even Nike’s more expanded version of self-interest.

Self-Interest and the Millennium Development Goals

I would imagine that only a handful of American and European business executives could name the United Nations’ Millennium Goals and a many would not even know what the Millennium Goals are. Why should they? The Millennium Goals are not in their bubble of self-interest. To directly support the Millennium Goals requires people (leaders) and institutions (governments and businesses) to step out of their bubble of self-interest. 

The Millennium Development Goals are End Poverty and Hunger, Universal Education, Gender Equality, Child Health, Maternal Health, Combat HIV/AIDS, Environmental Sustainability, and Global Partnership.

Nike’s improvement projects do contribute directly to Environmental Sustainability. At the same time their unwillingness to dialogue and take responsibility for not paying living wages directly contributes to the status quo of sustaining poverty and preventing gender equality (remember that 80% of the people who produce NIKE shoes and apparel are young women) Without the active involvement of business, countries are not capable of meeting the Millennium Development Goals. The problems are too large, too complex, too interconnected.

Nike is the market leader controlling approximately 45% of the global market in shoes. They have a growing revenue stream of 18.6 billion dollars, a sales increase of 52% since 2004, a gross margin of 45%, and a net income of 1.88 billion.  

So why can’t Nike “Just Do It?”

In regards to working conditions Nike says they personally can't shift industry conditions, without help from other companies, governments and workers' rights groups. According to Erin Dobson, Nike's director of corporate-responsibility communications. "The real way to address this is for the brands to collaborate and agree on a core set of standards. Our monitors aren't going to catch everything." Of course the deeper fear, which has been stated over the last fifteen years, in more direct ways, is that by paying living wage without competitors agreeing to the same standards Nike will lose some of its competitive advantage.

Yet there is nothing preventing Nike from creating a goal to wherever possible award contracts to companies who pay living wage. Of course this might be in direct conflict with their goal of awarding contracts to the suppliers who bid at the lowest cost in and industry, which competes on the low cost of its labor. Ironically because Nike is dominates the market many of its competitors copy or follow its lead. Companies like Adidas frequently award contracts to the same suppliers Nike already is using. Since Nike has never experimented with paying living wage their fear is untested. The industry may follow. Nike might generate extraordinary good will leading to increased sales and customer loyalty.

Nike just doesn’t do it because they still work within a bubble of self-interest surrounded by an industry, which operates in a larger bubble of self-interest. And currently the pressure is off on human rights. The public has cooled to this issue in regards to Nike and there halo of good will created by Nike’s aggressively publicized their green efforts does not invite criticism. So in large part Nike doesn’t do it because we don’t ask them to do it.

  So how does all this change. The answer is through one person at a time. The degree of freedom for CEO’s to operate in a larger field of self interest is proven by Nike. However it is only when leaders abandon self-interest for themselves and their companies that we see a new form of leadership emerge. In this form of leadership business success is possible as negative cycles of harm to the environment and humans cease, and being of service to becomes a predominate characteristic.

 A Lesson in Leadership 

The Haudenosaunee or as they are more commonly known The Iroquois Confederacy understoodthe importance of leaders abandoning self interest. Each new chief followed these principles and was held accountable by the people of the tribes. They were told:

“In all of your deliberations in the Confederate Council, in your efforts at law making, in all your official acts, self interest shall be cast into oblivion.  Cast not over your shoulder behind you the warnings of the nephews and nieces should they chide you for any error or wrong you may do, but return to the way of the Great Law that is just and right.  Look and listen for the welfare of the whole people and have always in view not only the present but also the coming generations, even those whose faces are yet beneath the surface of the ground -- the unborn of the future Nation."

Leaders and Listening - Part 1

How many leaders are known for their deep capacity to listen? How often do we select our leaders based on their capacity to learn?

Several years ago I began a search for photographs of nationally recognized leaders who were captured listening. The search took me to presidential libraries, national archives, Associated Press, Look magazine.  One person kept emerging -- listening to children, listening to groups of workers, listening to people in pain – Robert F. Kennedy. On the fortieth anniversary of his death, the New York Times turned over the Op-Ed page to RFK’s children to share their memories of him. (NY Times 6/6/08)  His oldest son, Joseph Kennedy II wrote this about his father.

I remember how my father listened with rare empathy to everyone. He paid a lot of attention, for instance, to Putt, an old man who lived in a rest home at the end of Sea Street in Hyannis. A gas at­tack during World War I had left Putt unable to hear or speak. He spent most every day riding around Lewis Bay in a little rowboat with a five-horsepow­er engine.

If Putt spotted us sailing to Egg Island for a picnic, he’d pull alongside, and my father would pass him a sandwich, a bag of chips and a beer. Putt would fol­low the sailboat until we gently beached, and then he and my father would stand together on the sand, their heads leaning toward one another.

Years later, in the same way, my father sat down with Appalachian coal miners — tough men, cov­ered in soot, sharing their aches and ambitions. In a famous photo of him with his arm resting easily on the shoulder of a miner, he could be talking to Putt.

I once traveled with him to a Navajo reservation and watched in the dim light of a rundown adobe dwell­ing as he leaned over to hear an old man talk about the struggles of his people. I heard Native Ameri­cans share their pain as if they somehow knew, be­cause of a certain sorrow in his heart coupled with an active and tough mind, that my father would do everything to help.

So it happened wherever he went — on the streets of the Bedford-Stuyvesant neighborhood in Brooklyn, in a square in Warsaw or in the well of the Senate. And wherever he could, he acted. After visiting Bed-Stuy, he pressed his cam­paign donors to direct investments into one of New York City’s poorest and most neglected neighborhoods.

A more recent article in the NY Times discusses the Bedford Stuyvesant Restoration Corporation which traces it origins to the same visit Joseph Kennedy II mentions.

Senator Kennedy, of course, was born out of state, grew up in privilege and was white, which made him different from most of Bedford-Stuyvesant’s residents in at least three major ways. Still, as Elsie Richardson, a longtime neighborhood activist, recalled: “None of that showed. I know one thing. He was someone who listened. He was always interested in getting information, he picked it up fast, and he would move on the information he received.”

This is the power of listening – the ability to connect, erase differences, build trust and most importantly to have new possibilities emerge.

Acting, making decisions, being tough, or being expert are easily recognized forms of leadership. Not so with listening. There is of course a major dilemma with listening and that is your willingness to be influenced, to change course, to become an advocate for others.

Once during a business crisis, which was creating layoffs I encouraged a senior executive to get out and talk to people. He was very resistant and when I pressed, him he said – “What’s the point? The decisions been made, people are unhappy. There is nothing I can do about it. Besides, it is too painful to listen to them.”

Here is another example how leaders can slowly stop listening. The head of a large engineering division asked me to talk with small groups of his engineers. He had received some disturbing feedback and wanted to know what was going on and what it was like to be a new engineer. I was a bit surprised that he didn’t want to do it himself, since he had come up through the ranks. He explained to me that over the years he had put on suit of armor mostly to defend against criticism and that these kind of face-to-face discussions had a tendency to get messy. He went on to explain that since he become an executive vice president that most of his attention went to the politics of what was going on along side him with peers and those above him. How the engineers felt was a mystery to him.

All leaders should ask themselves a simple question – to whom am I passionate about listening? If it is only your advisors, your boss or your board of directors then it is time to get out of the office and try listening to your customers and your employees. Of course you have to be open to influence.

When we elect our leaders we should ask the question does he or she have a track record of listening and learning? The world is too complex to have leaders who act solely based on their own knowledge and input from their advisors. If we expect our leaders to listen, maybe they will.

We need more leaders like Robert F. Kennedy who walk the streets and listen, are touched and then act. We need these leaders in our churches, our communities, our businesses and in our government. 

The Power of A Leader's Questions

An ancient master was asked by a student. “What is the source of your wisdom?” The ancient master replied:

 “You cannot find wisdom it finds you. The search for knowledge is not a search for answers or information. It is a search for questions. There is nothing more precious than a good question.  A good question can be your companion for a lifetime. You will never feel lonely.  Good questions are very tricky. There is hidden underneath the question another dozen questions that sneak up on you when you are least expecting it. Before you realize it you are deeply immersed in curiosity. This of course is the key - curiosity. Curiosity sets you on a path that wisdom frequents.“  

Understanding the questions that leaders hold is very important. The questions that leaders hold and how they use them often shapes what are possible in a community.

Leadership Examples

Steven is often hired when change is necessary. He believes people don’t change unless they are uncomfortable. He likes the challenge of broken situations and doesn’t care what others think about him.  One of his key questions is – “how do I create pain or discomfort?” He looks for people’s soft spots and asks – “how do I keep them off balance?”

Mary is head of Human Resources. Her questions focus on others. Her central question is – “how are the people who work here?” She deeply believes if people are well the company will be successful. She carries this question wherever she goes and asks it also about her children, her friends, and the community in which she lives.

Bob loves competing. He hates to lose. When he sets his eyes on something or is given a goal he accepts and looks for the shortest, straightest path to get to his goal. After all there is nothing wrong with a collateral damage.  His singular question is – “what do I need to do to win?” He views relationships with the question –, “how can this person help or hinder to meet my goals?”

Sheryl is runs a large technology company. She is brilliant, with the capacity to sift through large amounts of information and find both inconsistencies and see patterns. Her central question is – “how good is the information I am receiving?” She uses this question to make key decisions in her worklife and at home.

Paul has made steady consistent progress in his career with regular promotions. People trust him to produce results. His employees know that he doesn’t like surprises. His central question is How do I avoid making a mistake?

Every leader holds a cluster of questions which guide behavior as he or she navigates through making decisions. These questions are near and dear friends, well used some are used publically and others privately. Sometimes it takes time to understand all your questions and to find the deeper ones. Ask a friend or colleague what they think are the questions are you use to guide you in making decisions?

Once you have a list of your questions reflect on them asking yourself – How do these questions serve me?

Do my questions connect or separate me from my community? Do my questions connect or separate my community from other communities?  How do they support my learning and the learning of those around me to consider new possibilities? Do they evaluate and judge closing off possibilities?

Finally ask yourself where do my questions come from?

Who taught me these questions? What beliefs are attached to my questions?

Those who practice shared leadership often carry these types of questions with them:

·      How does my behavior impact others?

·      What do people need?

·      What are the unintended consequences of our decisions? Who benefits? Who is harmed?

·      How can we involve people?

·      How do I create spaces for dialogue and learning?

·      How are the children effected by our decisions?

·      What are the prayers of the community?

·      How do I build connections across communities?

·      How do I create collaboration not competition to solve complex problems?

·      What kind of future are we creating?  Does anything need to change

What are your questions?

How do they serve you?

Where did they come from?

Are We All In This Together?

The answer to this question should be fairly obvious given the world financial crisis. Many of us knew our financial markets around the world were connected and influence each other. And yet most of us (including myself) didn’t know it in the gut until recently, as we watched our life savings evaporate and people in our community lose their homes and jobs. The lines of our connection become visible as we watch the effects of the financial crisis, with its epicenter in Wall Street, stretch  out across the globe and devastate Iceland.  Just last year the UN Development Index listed Iceland, as the most desirable place to live in the world.

“Are we all in this together” is a question of connection and our experience of connection. We can intellectually believe we are all in this together, even recognize how we are connected and how our actions impact one another, individually or across community. It is only when the connection is person to person, that new possibilities emerge for change. This is one of the first moves of the practice of shared leadership – “Creating Connections.”

President Carter Creates Connections for Peace

President Jimmy Carter understood this move well. In September 1978 he invited Anwar Sadat of Egypt and Israel’s Menachem Begin  to Camp David for peace negotiations. Israel and Egypt had been at war four times in the last twenty years. . From the beginning it was structured to create connections, a small intimate setting, with shared recreation facilities.

However, after three days of working alone together in Carter’s cabin, he came to the conclusion that the two men were completely incompatible and he made the decision to separate the two leaders. In a recent lecture he remember the 13 days as full of “intense verbal warfare.” In his words “they were completely immersed in condemning each other not only for the past three years, but the past 3000 years.”  For the next ten days he would shuttle between the two men listening, understanding their needs, and trying to build common connections.

On the 13th day Begin announced he was leaving and no agreement was possible. He had requested that before he left that Carter sign pictures taken of the three men for each of Begin’s grandchildren. At the urging of his secretary Carter personalized the inscription on each photo using the their names.

In his memoir Carter describes this final opportunity to make a connection.

“I walked over to Begin’s cabin with the pictures. He was sitting on the front porch, very distraught and nervous because the talks had finally broken down at the last minute.
 I handed him the photographs. He took them and thanked me. Then he happened to look down and saw that his granddaughter’s name was on the top one. He spoke it aloud, and then looked at each photograph individually, repeating the name of the grandchild I had written on it. His lips trembled, and tears welled up in his eyes. He told me a little about each child, and especially about the one who seemed to be his favorite. We were both emotional as we talked quietly for a few minutes about grandchildren and about war.” (Page 399)

Ultimately this deep personal connection led to a breathrough and the creation of the Peace Accords.

Disconnection among leaders happens every day in less dramatic circumstances. Where the results of disconnection are not life threatening. Sometimes the results are loss or opportunity, stress, dissatisfaction, waste or cost.

Consequences of Disconnected Business Leaders

In business it is not easy to get a team of leaders on the same page. Bob and Kevin are executives in a large company based in the Northwest, with offices around the country. Kevin runs sales and Bob runs installation and service.  In their company sales is king. Maintaining a high growth rate of new customers is one of the key metrics for success. Kevin knows this and uses it to his advantage. Basically anytime he needs to do something that Bob resists he says he has to do it to meet his numbers.

According to Bob the sales organization has no incentive to be cooperative. Orders are incomplete, not submitted on time, and customer requirements are not documented. Over 50% of new orders are marked high priority for expedited installation. Kevin says this is necessary to make the sale.  This in turn leads to either a backlog or overtime.

The two men don’t like or trust one another. They work independent of one another as much as possible. The district managers in both organizations mirror their leaders behavior. Bob’s solution has been to document everything and create new rules. Things improve for awhile and as soon as sales numbers are down Kevin and his people do what they need to do to meet their goals.

There is one exception to this -- the southern region. Sales never abuses the high priority for accelerated installs. Installation often bends over backwards to give sales what they need. On complex sales installation is often invited to meet with the customer before the sale is complete to determine the exact requirements. The difference is that in the southern region the two district managers know one another as people and trust each other. They keep each other’s interest in mind as they make decisions.

It may seem to simple – people connecting as people. Remember the opportunity for connection is always just below the surface waiting to emerge. Try simple genuine actions.

Listening is the foundation for connection.

Learning together builds opportunity for new conversations

Making sure there is enough time for dialogue

Create opportunities for people to connect as people and get to know one another

Those who practice Shared Leadership build and deepen connections. They constantly invite new connections and attend to the health of established connections. “People connecting as People” is a building block of growth and healing in organizations and communities. 

When relationships break down across communities; when one community chooses to act completely independent of other communities; when those in-charge of communities do not trust each other, do not communicate, withhold information or act independent of each other -- those who practice shared leadership are drawn in to build connections.  

Complexity Calls for Change

One Community Shares Leadership

In Rochester, Minnesota 25% of the children have asthma. With no clear understanding of the root causes, this surprising statistic is a complex problem for the children, their families and the community. Good Morning America reported that the city is taking this problem seriously and pioneering a radical new treatment approach. The approach has nothing to do with new medicines, new medical technology, or fixing the air quality. Rather it involves a collaboration, full of cooperation and communication to help children with asthma. The partnership consists of the child, her parents, a Mayo Clinic doctor, school nurse, classroom teachers, and the country health department. This replaces the traditional model where the parents are responsible to manage and integrate the health care of their child.  In this new partnership, rather than going it alone, parents report the quality of their childrens’ health and the quality of their life style is dramatically improving.

Well you might be thinking good for them – interesting story, why didn’t they do this before? Good question, why didn’t they do this before? By definition complex problems are not easy to solve. Our typical approach to complex problems involves a heavy dose of leadership from subject matter experts, who focus on telling not listening, who position themselves outside the problem and the community trying to solve the problem.  Often within the community many people feel they need to be the expert and come up with the solution, leading to competition.  Next there is often strong independence from different parts of the community. This can take the form of job rules – I would like to help you, but my job is this, not that. Sometimes independence comes from protecting my turf or feeling the need to defend against criticism real or implied, from the lack of progress.

And of course everybody is overwhelmed with the complexity of the problem and distracted by the competing demands. This is not always discussable. So it is easy to imagine in a situation like Rochester that the parent is overwhelmed. The child’s teacher is overwhelmed. The school nurse is overwhelmed because she has hundreds of children to keep track of. Community services are overwhelmed – down in resources people and budget. Even the local experts, who feel they should know the answers because they are leaders, find themselves reluctant to admit being stumped.

And maybe it is even simpler than all of that. Our communities (towns, organizations, corporations) don’t have a lot of experience solving complex problems reliably. Our traditional forms of leadership rooted in one leader knowing more than others, determining the course of action, being a source of wisdom, being directive, being independent – don’t help solve complex and ugly problems. The qualities we typically associate with leaders such as decisive, directive, forceful, independent, expert, don’t help solve complex problems. In the places in the world where communities select their leaders how often do we look for qualities like collaborative, listens, builds coalitions, learns, creates spaces for dialogue?

Larry the Executive

Consider the case of Larry an executive in a large corporation whose mandate is to fix a major problem – customer billing. In the first month he spends most of his time talking to his boss and other key executives, spends a week traveling to meet customers and has some individual meetings with people on his team who he thinks are reliable. He learns that there are 8 different customer billing systems, which are separate. 

This was the result of highly independent business units and several acquisitions which for various reasons had never been fully integrated. The billing systems use different customer codes, different product codes. Only 3 of the eight systems can share information. There is no way to produce an integrated customer bill. Bills are late, inaccurate, and the first bill is often delayed by 3 months. Attempts to fix these problems have failed primarily because of the inability to reach agreement on what each business unit requires. When work would start on a fix, funding was not sustained, often reduced or withdrawn because of budget cuts or because work would stretch over budget years. 

Larry’s solution is to reorganize and consolidate authority, funding and personnel under him. This would move resources directly from the business units to his organization and allow him to set requirements for the billing systems. His proposal is meet with little enthusiasm and great resistance by the business unit presidents. They say publically they must directly control any process which touches their customers. Privately they react to any loss of authority or budget reduction.  The CEO is not willing to revisit the authority of the Business Units because it raises so many other issues – and so Larry gets some of what he wants.

Complexity calls for new leadership. Notice that I used the word leadership not leaders. It calls for us to leave behind the old model of singular, independent, expert leadership in favor of one that is shared and collaborative. The purpose of this blog is to explore shared leadership and how it can help us solve complex problems. In the coming weeks and months I will examine the moves and qualities of those who practice shared leadership and the principles they follow to create change in their communities. 

Much of the material here is adapted from a forthcoming book called in-Spire: Ten Principles to Evoke, Focus and Sustain Energy in Organizations and Communities.