from Fast Company

One of the finest conferences I have ever attended was last year’s Great Place To work conference in Atlanta. I tried unsuccessfully to interest CMS in a campaign to be the first school district to be on the list, but apparently that goal was too much of a stretch. One of these days I hope to convince a school district that being listed is not a pipe dream. It simply is a matter of changing a Theory Y organization into a Theory Z. Worth it? You bet!

The Proof Is In The Profits: America’s Happiest Companies Make More Money

BY MARK C. CROWLEY

FEBRUARY 22, 2013

Workplace happiness may seem like a fuzzy concept when it comes to financial value. But as the Parnassus Workplace Fund has proven, dignity has–and creates–value.

“Goodness is the only investment that never fails.” –Henry David Thoreau

Every year around this time, a new edition of the “100 Best Companies To Work For” is released, and employers deemed to have the happiest and most satisfied workers are heartily celebrated by the media.

What’s perplexing about all this fanfare, of course, is that we know most workplaces in the U.S. aren’t at all that good in sustaining employee morale. Gallup’s announcement a few months ago that only 19% of American workers are fully engaged in their jobs sufficiently validates this. It also suggests that few organizations have made it a priority to learn and model the leadership practices known to produce high employee contentment.

The question needing to be asked is whether or not we fully believe there’s a direct connection between having happy workers and improved profitability.

At this point, the evidence suggests many of us remain suspicious of any firm that, say, allows its employees to play foosball or shoot hoops during work hours. But our enduring cynicism may also have its roots in traditional beliefs about leadership effectiveness. Many of us have been taught that it’s actually desirable to have some worker unhappiness. The idea is that keeping people under some constant tension actually is a more powerful driver of productivity. There’s also the concern that when employees are cared for to any extent they’re likely to get soft in the middle–so sufficiently sated that motivation to work hard and produce is spoiled.

One person who may have the answer is Jerome Dodson, the founder in 1984 of ParnassusMutual Funds. Since April 2005, Dodson has held the additional role of portfolio manager for the Parnassus Workplace Fund, a mutual fund that invests exclusively in large American firms proven to have outstanding workplaces.

“The idea of creating a fund that only invested in organizations where employees were really happy,” Dodson told me recently, “was brought to me a decade or so ago by a journalist named Milton Moskowitz.” In 1998, Moskowitz and his associate Robert Levering (cofounder of the ) oversaw the production of the first “Best Companies To Work For” list ever published in Fortune magazine.

“He told me that the Russell Investments, publishers of the Russell 2000 Index, had performed an investment return analysis of all the “100 Best Companies To Work For” and proved it was phenomenal and much better than the S&P Index, one of the most commonly used benchmarks for the overall U.S. stock market. So, Moskowitz said, ‘Why don’t you start a fund like this?'”

Initially, Dodson, a Harvard Business School graduate, was resistant and told Moskowitz directly, “It’s a little different using real money compared to doing an analysis on a hypothetical basis.” But soon after their conversation, Dodson said, “the idea struck a chord in me because I’d always felt that having a happy workforce really meant a much better business as an investment. But until then I had no way of proving it.”

To get the fund going, Dodson and his firm invested $600,000 and solicited investors in other Parnassus funds to contribute more. In the first few years, with no track record of performance to draw on, along with an unproven premise, the fund grew very slowly.

Dodson spent his time scouring the country for companies that had built solid reputations for treating employees with profound respect and which supported them through ongoing training and personal development. To quote Moskowitz, they were the kinds of firms that “genuinely cared about their employees as people, not just hired hands.”Other important characteristics of the firms Dodson inevitably selected: they provided some meaningful form of profit sharing, health care, and retirement benefitswhile also being especially supportive of working mothers. He found many of these firms amongst the “100 Best Companies To Work For” list and discovered others that had never submitted the documentation to be officially considered an outstanding workplace. Ultimately, he chose companies like Intel, Google, Charles Schwab, Microsoft, and Gilead Sciences and then waited to see how they would all perform.

To Dodson–and Moskowitz’s–delight, the Parnassus Workplace Fund proved immediately, enormously, and enduringly successful. Since the fund’s inception (April 2005-January 2013) it’s had a 9.63% annualized return. This compares to the S&P Index which has earned just 5.58% during the same period. “Our fund has had returns over 4% better than the S&P Index every year,” Dodson noted. “Eight years later, the performance of the fund confirms what I’ve always believed. Treating people well and authentically respecting them does lead to far better business performance. We proved it works.”

Another compelling statistic buried in the Parnassus prospectus: Over the past five years–the height of the Great Recession–the average annual return on the Workplace Fund was an incredible 10.81%. The S&P Index for the same period was just 3.97%, a 6.84% difference. Dodson believes the wide gap in performance is easily explained: “I think what happens when you have a contented workplace, people are willing to put out more effort to improve operations during really difficult times. While I think every organization has their ups and downs, the downs are not as pronounced because everybody pulls together to try to get through the crisis. And, of course, this consistently more engaged performance inevitably reveals itself in the firm’s bottom line.”

After five years, investments in the Workplace Fund had grown to $80 million. Today, less than 3 years later, balances have ballooned to over $300 million. As reported by rating agency Morningstar, the fund also ranks highest in shareholder return compared to 1,303 other peer funds.

According to a 1997 article in the San Francisco Chronicle, many business leaders dismissed Moskowitz’s earliest list of “Best Places To Work” and derided it as being “a ’beauty contest’ that didn’t matter to anyone outside of corporate personnel departments.” But Moskowitz, and soon after, Dodson, have gone on to prove that the leaders at organizations which ensure employees feel valued, supported, developed, and rewarded are the most enlightened. They inspire a greatly expanded bottom line and set an example for all to follow in this 21st century.

Related: Secrets Of America’s Happiest Companies

Mark C. Crowley is the author of Lead From The Heart: Transformational Leadership For The 21st Century. Reach him via his website, markccrowley.com, on Twitter at@markccrowley and on Facebook.

The difference between strategy and planning.

From Roger Martin’s HBR blog…”strategy is a singular thing; there is one strategy for a given business — not a set of strategies. It is one integrated set of choices: what is our winning aspiration; where will we play; how will we win; what capabilities need to be in place; and what management systems must be instituted?”

His recently published book with A. G. Lafley is called Playing to Win: How Strategy Really Works.

Innovation as an Economic Engine

from Fast Company…

4 Things Obama Could Do To Foster America’s Creativity

INNOVATION ENGINE

WRITTEN BY: 

BOOSTING THE MIDDLE CLASS, RESEARCHING CLEAN ENERGY, BUILDING BETTER SCHOOLS–ALL GOOD STUFF. BUT IF YOU WANT REAL ECONOMIC VALUE, BRUCE NUSSBAUM ARGUES, PROMOTE CREATIVITY ACROSS THE NATION.

When President Barack Obama takes the stage on Tuesday night to deliver his State of the Union address, he’ll attempt to take the pulse of the nation and prescribe a cure. His message is going to focus on the economy and helping the middle class. But his prescriptions, as leaked to the media, appear to be standard political fare–boost R&D, build infrastructure, more clean energy, and better schools.

That’s all good, standard stuff but familiar stuff. The problem is that Obama isn’t a very creative president. He’s progressive (which is great by me) but not creative in the sense of sharply reframing our national narrative and offering dramatically different solutions to our challenges.

Here’s a different speech. President Obama reframes himself and America’s economic agenda by making creativity the centerpiece of his State of the Union. Obama makes raising America’s creative capacities his second-term goal. There is good reason to do this.

Creativity is the source of economic value. Creativity takes what money can’t buy and transforms it into what money can buy. We have spent decades focusing on efficiency, and it has brought us stagnating incomes and falling mobility for the middle class. It’s time to focus on creativity.

Why? First, because we have so little of it. Most of us believe we live in an age of innovation, because of our iPads, Google, Facebook. But the reality is shockingly different. In my new book, Creative Intelligence, I cite the business R&D and innovation surveys put out by the NSF and Census Bureau showing that only 9% of all public and private corporations do any product or service innovation. Think about that. I don’t have any stats for innovation in government services, but we can all imagine how bad that must be (with the exception of the military).

How could the president amplify the nation’s creativity? Here are four major reframes of our national economic narrative, Mr. President.

1. MAKE ENTREPRENEURSHIP, NOT BIG BUSINESS, THE CENTERPIECE OF ECONOMIC POLICY

Most of our innovation and jobs come from new companies that expand and grow. Tax, regulatory, R&D, banking, and trade policies should all be reframed to enable and scale startup companies. And bring entrepreneurs and venture capitalists to Washington to run cabinet posts, regulatory bodies, and perhaps most important of all, the Fed and other financial policymaking organizations.

2. MAKE MANUFACTURING, NOT BIOSCIENCE, THE MAJOR RECIPIENT OF FEDERAL R&D SPENDING

Washington has poured hundreds of billions of dollars into bioscience with little economic impact. Thanks to digital fabrication, open sourcing, and low-cost sales channels, a new “maker culture” is rising. The government should support it.

3. PROMOTE CROWDSOURCING. RELEASE THE JOBS ACT FROM THE SEC

Kickstarter is the most important organizational change to capitalism since outsourcing (crowdsourcing, in many ways, is the opposite of outsourcing). We can all be consumers, investors, designers, and producers in a creative process that makes things. Kickstarter alone raised $300 million in 2012 from direct contributions.

The JOBS Act expands crowdsourcing to a wider economic space, but the SEC is strangling it in an effort to protect investors. Cut the red tape.

4. MAKE ART AND SHOP COURSES CENTRAL TO EDUCATION

John Dewey and Maria Montessori both believed that the best way of learning is by doing. We need to develop a creative-arts curriculum that puts making at the center of our education. Bringing back art and shop to the classroom are simple steps to get us using our hands again. The rote memorization of math and science to pass tests will not make America a creative, prosperous nation.

We have come to define capitalism as strictly a market phenomenon based on efficiency and trading. This narrative has both alienated and impoverished us. We need to recast capitalism as a social movement led by entrepreneurs generating new products with high economic value.

Mr. President, reframing the country’s economic narrative can set the nation on a new journey toward prosperity. Amplifying America’s creativity is a story that engages all of us across the political spectrum.

Educational mash-up

  • Gladwell’s 10.000 hours of directed practice.
  • A recent New York Times Q & A with Google’s Karen May, VP of people development, talking about training. “If people opt in, versus being required to go, you’re more likely to have a better outcome.”
  • Glenn Singleton’s statistics about “the gap.”
  • Stephen Covey’s reminder that we can’t drastically change outcomes without changing the paradigm.

Is there a solution here somewhere? Can we stand the heat if we change our paradigm? Can we stand the results, if we don’t?

Gravitas Required

There was an article in December’s HBR  by Charles Galunic and Immanual Hermreck that described how to help employees get strategy. It seems “trickle down” doesn’t work for strategy. “Only top leaders can give strategic communications the appropriate weight. Strategy involves trade-offs, which are more easily accepted when put in a broad perspective, without parochial filters. As in the game of Telephone, messages passed from person to person seldom arrive intact.” How many of you strategic planners were surprised at that research? That’s what I thought. How many of you will use it in your next pitch to get the executive staff involved? Me too!

the laws of subtraction

My latest reading adventure has involved devouring Matthew E. May’s The Laws of Subtraction. He certainly follows his owns dictums when it comes to text. It is dense in content, but sparse in volume. He is, however, prolific with the single page “Silhouettes in Subtraction” that follow each chapter – personal stories from industry leaders about their adventures in subtraction.

So how and why does this apply to my personal interest in what my colleague, Paul Reali, has termed “strategic creativity” ( i.e. innovative problem-solving for public education)? Schools in general, and public schools in particular, have struggled during the past four years to retain their quality of service within the context of ever-shrinking resources. In fact many of my former co-workers would say there have never been enough resources to provide a high quality education to each and every student in public education.

Many of the problem-solving teams described in the book faced similar difficulties – Toyota’s secret project to design and build the Lexus (less costly, faster, more efficient and quieter) and the successful Mars Pathfinder mission (in one third the time and using only 15% of the budget of the previous NASA mission.) One of our former Charlotte-Mecklenburg School Board members, Coach Joe White, often reminded us that public education professionals have been looking for a silver bullet for a long time and still haven’t found it. But just because we haven’t found it, doesn’t mean it doesn’t exist. It’s just hard to find!

May says, “When you remove just the right things in just the right way, something good happens.” Let’s get to work!

John Kotter’s latest

John Kotter’s latest

I have read Harvard Business Review since 1990. This is John Kotter’s latest on a revolutionary approach to strategic change.

From Tim Brown’s blog …

A Design Lens on Education

November 13, 2012

 

“Education provides the foundation of our global possibilities. We design this well, and the whole world changes.”

I agree wholeheartedly with this statement from Sandy Speicher, one of the few people I know who is well qualified to have a perspective on both design and education. Her journey has taken her from graphic designer to college professor to education designer to education expert. Sandy now leads the education practice at IDEO.

Recently I asked Sandy to share her thoughts on design thinking in education. Here’s an excerpt:

What’s different when you look at the world of education through the lens of design?

Most of us have deeply embedded ideas about what’s “right” for education. But when you look at the world of education through the lens of design, you start to see that there isn’t one right answer, there are many. And when you really examine the world of education, you realize that “the system” is actually an outcome of millions of different solutions, organizations, priorities, and experiences. As designers, our job is to understand the conditions in any given situation deeply enough to be able to find new, relevant solutions for a particular context, need, or challenge—whether it’s about interactions in the classroom or the structures that drive our system.

What are some of the big questions in education that design is helping to address?

Some of my favorites we’ve been working on at IDEO include:
How might we create a digital learning platform that helps adult learners succeed through college completion?
How might we develop a network of schools that are of international quality, affordable (under $100/month tuition), and can be scaled to serve hundreds of thousands of children in the rising middle class of Peru?
How might we engage parents in understanding national trends and topics in education?
How might we design a comprehensive learning environment that seamlessly connects the classroom with the opportunities of the digital world for middle-school students?
How might we create system-level solutions that help more students gain access to college?

I’d love to see design address challenges of the financial models that underlie education institutions, ecosystem development for continuous innovation in education, and ways we can increase access to quality education around the globe.

What are some ways we are seeing the application of design thinking within education?

We’re seeing people use design thinking to create change at multiple levels—from national education reform to individual classroom needs. Teachers find it to be an engaging pedagogical approach, because in order to create new solutions, you cannot help but learn about people and their interests, about business or math or science or engineering. Plus, while students are learning the specific knowledge set required to develop a relevant and buildable solution, they’re also developing highly valuable skills such as empathy, the ability to collaborate, to deal with ambiguity, and of course, to create.

We’re also seeing teachers use design thinking to redesign the curriculum around experiences that engage students, and shift their physical classrooms based on feedback from students. We’re seeing school leaders engage faculty to develop a shared philosophy on teaching and learning; district administration using design to reimagine tools they create to help teachers be successful. We’re even seeing community volunteer groups engage in a process to help redesign schools that are less successful within their state system. Each of these stories alone is not the answer to whole-scale education reform—but if you multiply these activities by three million teachers across this country, and magnify that by the organizations that are creating new, human-centered tools and services to support our students—it can add up to a big impact on the system.

What was the path you took to becoming a designer of educational systems and tools?

My background is in visual communications. I began my career by creating brand identity systems, signage systems, and interactive systems for organizations. While I was working, I volunteered to teach design to 5th graders in San Francisco for about 6 years. (I probably learned the most about my own work and beliefs about how design can impact the world by having to essentialize it and create projects that would be clear and engaging for 10-year-olds!)

I then spent a couple of years teaching design at Washington University in St. Louis. In one deeply meaningful discussion with a group of students, I had the realization that our system needs the type of thinking that we designers bring to the table—being aware of the world around you, the knowledge that you have a role in shaping that world, and a belief that a new future is possible. We desperately need this next generation to address the giant challenges our world faces. Our current system, it seemed, wasn’t really preparing them for this future. I decided to go back to school to study education, to learn about the ways we can design for learning, and to help me reimagine what my role in the world could be.

Now, educators from all over the world email me asking how they can apply design to their work, and designers email me asking for advice on how they can help education. This shift is very exciting to me, because there is perhaps nothing more important for us to design well in this world than our systems of education. Education provides the foundation of our global possibilities. We design this well, and the whole world changes.