Essential Leadership

ESSENTIAL

LEADERSHIP

Daniel Augusto Motta

Preface:

Alessandro Carlucci

Contents

Preface by Alessandro Carlucci 05

Introduction 08

Elo 1 Competitive Environment 25

Elo 2 Value Proposition 111

Elo 3 Organization Essence 159

Elo 4 Strategic Execution 222

Elo 5 Essential Leader Dimensions 257

Elo 6 Performance Catalysts 298

Acknowledgements 329

References 330

About the Author 347

I have thoughts which,

if I could bring them

forth and make them living,

would add new light to the stars,

new beauty to the world

and greater love to the hearts of men.

Fernando Pessoa

To Ana Paula, Julia and Fernando

COMPANIES MADE

BY PEOPLE FOR PEOPLE

The world is a distinctly new place today, where time and space are measured differently and relationships have another dimension. Companies too, made by people serving people, are going through a profound transformation with all its intensity and nuances. In Essential Leadership, Daniel Motta invites us to take an in-depth look at this complex scenario.

With simplicity and passion, this work adds the concept of emotional bond to those of adherence to values and continuous productivity as the keys needed to boost individual performance. But when Motta talks about emotional bond, he does not propose another chore (one more to do on our corporate checklist) but to acknowledge us as full human beings, and that is one of the greatest challenges facing today’s enterprises.

As a leader, I consider the fostering of an emotional bond with people to be an ongoing journey. To know and acknowledge oneself continuously, truthfully and openly is crucial. In and out of the workplace, we need to be open to discussions that search for meaning in our lives and relationships, to develop bonds that are both real and gratifying.

The Essential Leadership Skills for Organizational Strategy© methodology, created by Motta and presented here, establishes objective concepts for those who wish to implement a consistent approach to management. The six ELOS©—Competitive Environment, Value Proposition, Organization Essence, Strategic Execution, Essential Leadership and Performance Catalysts—are treated clearly and realistically.

In a less and less hierarchical world, it is the leaders’ job to consciously and humbly take the champion role upon themselves, and to be aware of their influence in their companies’ dynamics.

ELOS© is not about the best leadership style. It is about continuous improvement, associated with individual essence—a critical combination for enterprise transformation.

I had the privilege of meeting Motta in 2010 when he helped us create our program for leadership development. His passion, his uncomplicated way of treating complex subjects and his alignment with our way of thinking not only brought him into the program training classes but also made him an important Natura partner. I was very honored to be invited to write this Foreword.

I hope you enjoy the reading and the reflections as much as I did!

Alessandro Carlucci

CEO, Natura Cosméticos S.A.

3:15 a.m., Wednesday, September 29th, 2011

As I woke up, I looked for the notepad that had been my companion for years on my night table. Eureka! After more than a decade dedicated to organizational research and consulting, that was the very moment I finished the mental model that served as the basis for the Essential Leadership concept. A sudden rush went through my body and I had to suppress a shout that would have awakened Ana and the kids. With great certainty, I scribbled the myriad connections and ideas in the old notepad. It was in the solitude of those hours before sunrise that the ELOS© Essential Leadership Skills Organizational Strategy© methodology was born.

1:15 p.m., Monday, September 29th, 1986

After another morning at school, an eight-year old boy arrived at the mercearia (Translator’s Note: Mercearia refers to a very small neighborhood grocery store, typically managed and operated by the owner and immediate family.) owned by his grandfather, a descendant of a Portuguese streetcar driver. It was his routine to stay there until early evening when his mom picked him up. The boy loved helping out throughout the store: at the cash register, serving customers, preparing snacks, managing the inventory, recording credit purchases and organizing the counter. That was me, and even though I am sure I wasn't a very effective helper, these memories would define my professional journey in the years to come and even today. My entrepreneurial drive never diminished nor did my commitment to devote myself relentlessly to perfect every customer experience. Also, it ingrained in me the idea that an organization should be based on a clear purpose that would inspire its contributors, leaders and shareholders to dedicate themselves daily to a flawless customer experience. These beliefs would be part of who I am as an entrepreneur, leader and professor. Twenty five years after that Monday, they would be firmly present in the ELOS© methodology.

11:15 p.m., Sunday, September 29th, 2013

Sundays are days of rest, but not today. I woke up early to finalize the last review of this book’s first edition. A strong cup of coffee and some toast have been beside me since 5:30 a.m. I keep thinking about the impact this work will have on its readers. This is not a how-to book. If you are looking for finalized answers, you will not find them here.

This is a book of reflections about the context and the challenges of Essential Leadership. I only recommend this book to those who really want to reflect on and challenge their paradigms. If you need to formulate the questions, you are in the right place!

Organizations nowadays are adrift. Old business models and organization charts can address neither new market dynamics nor stockholders’ increasingly higher expectations. People are distressed as they are unable to relate their daily activities and goals to aspirations that are ever more abstract and less exciting. Leaders are neglecting to face organizational transformation challenges.

We live in a collective angst concealed by the delusion of a calendar packed with activities, meetings and reports. We fail to distinguish between the real meaning of life and a life full of hustle.

We wrongly believe our days and weeks fly by much faster than they did decades ago. We do not realize how superficial our personal relationships are and we are unaware of the amount of rapidly changing information we foolishly try to process every day.

We just give up understanding ourselves because we are too afraid of the mirror. We forgo building long-term relationships as we accept the convenience of a long list of virtual contacts. And even as we unconsciously seek this escape, we silently ask ourselves again and again what our life purpose is. As a leader in your organization, it is your responsibility to engage in this personal quest and to influence your team, managers and peers to do the same.

So, ultimately, what is the meaning of your life? In view of the certainty of death, this question is the cornerstone of metaphysics and religions. We learn about death while still in the first years of our lives, and this question remains a fundamental, if not desirable, contemplation. But many people would rather live their lives in a state of thoughtless frenzy, lacking the courage to ask what their life’s purpose is, always taking advantage of convenient excuses, such as family, work, bills, and leisure distractions.

The four pillars of life’s meaning—family, community, nation and spirituality—are currently being challenged. And this is complicated. These pillars have sustained us for centuries. If they are in turmoil, our life’s meaning is challenged, so we look for answers by satisfying our individual needs and expectations.

Family as a concept is in the process of being redefined. Different family configurations are the new trend as the old dad-mom-kids model falls apart. Our work demands increasingly more of our individual energy. New technologies change the allocation of time spent in family activities. Credit-based upward mobility leads to homogenized consumer behaviors. Generational conflicts have always existed, but they seem more embittered now due to the speed and amount of information, which favor a desire for instant gratification instead of a journey towards an ideal future.

The community concept, particularly in large and midsize cities, is nowadays totally irrelevant for most people. In the past, relatives would live close by, neighborhood families would know each other for generations, and there were small neighborhood drugstores and grocers, community recreation centers, churches, street festivals, bakeries and little stationary stores. But those are all things of the past. These sweet memories reside with us now in a new environment of commuter towns, high-rises and faceless condo buildings. We just have to read homeowners association bylaws to realize that public and private space boundaries are exhaustively defined.

The concept of nation—not just in Brazil—is vaguely remembered in high profile sports events, but it is not part of personal priorities anymore. It has been buried under general political disappointment and surpassed by the power of huge multinational organizations. These companies, which are ever more omnipresent, self-sufficient and unconstrained by geographical borders, have enormous influence over the masses. Even though we are proud of being Brazilians at the finals of the Soccer World Cup, we don’t know our own national anthem. We have the colonial trait of valuing everything foreign over what we have. The love we have for our country is insincere, in spite of our desire to remember ancient European roots. To be a Brazilian is tacky, exotic and innocuous. Brazilian creativity in skirting the rules has been the standard for personal conduct for decades. The threat of Chinese piracy is used as a shameless excuse for informal deals and tax evasion. To believe the country is fast changing is heartwarming but misleading. It is true that many people are willing to change and it is true that many are changing lots of things, but they are disorganized and incapable of arousing civic consciousness in the general population, whose daily lives are focused on their own dilemmas, problems and pleasures. Also, the role of spirituality is being reviewed. I cannot think of anything more passé than hell and, for this very reason, God has lost ground to Google. One can argue we used to be more fearful of God and, therefore, were more loyal to the Church. Communion, confession, prayer and novenas have become lost customs for preparing for the Judgment Day and they don’t fit a modern life schedule anymore. Nowadays, our prayers happen pretty much only when we face some serious family problem. At the same time, the Church is going through an ethical crisis. That explains in part the amazing growth of self-help book sales and the success of the prosperity theology in its many shapes.

And so, in the absence of the four traditional pillars of meaning of life, we aspire for goods and services to fulfill our quest for self-satisfaction and our need to belong to a tribe that can differentiate us from the masses. We are back in the hedonist age! The search for the meaning of life has turned into an egocentric journey in which organizations exist as places to partially satisfy these needs but, at any moment, can be replaced by another professional opportunity with a more attractive value proposition. Even time is now viewed under the carpe diem philosophy because the future is uncertain and possibly adverse.

It is important to note that this quest does not translate into isolation. It is rather a constant search for social networks which represent the dynamic area of individual, virtual or face-to-face consensual relationships and associations. These networks serve a common purpose in a group where the components identify and mirror themselves in each other.

What kind of impact does this sociological, psychological and anthropological context have on the organizational environment? The answer is very simple: huge! Organizations had already broken their job for life commitment in the 1970s and 80s due to the speed-up of innovation processes. Now, facing an even stronger disruptive scenario, they fight every day to survive and to rediscover the importance of personal relationships and Essential Leadership to their processes of cultural transformation, strategic execution and high-performance team development.

The traditional structures of command-control—and their processes structured around layers of power, their emphasis on operational excellence of processes, their financial incentives for individual performance and their focus on short-term profit optimization—are being challenged by network structures based on shared values where a new person to person paradigm is fostered based on individual appreciation, focus on intellectual capital and emphasis on relationships.

Duty ethics, which had replaced power ethics, has been replaced by pleasure ethics. Several generations worked very hard, in more difficult work environments, so that one day, God willing, they could enjoy life in retirement. More recently, however, social security shortfalls, an enormous increase in life expectation, the individual quest for meaning of life and the power of social networks have all contributed to consolidate pleasure ethics —where each relationship and each activity must fit individual needs and expectations. This phenomenon is not exclusive to the new generations, though it is more natural for them to challenge the status quo. Men and women in their fifties or sixties are also thinking about this very subject as they try to find purpose for their next 30 years of life.

In this new context focused on a larger meaning, both organizations and individuals are aware of the typical challenges of a new Anthropocene geological epoch, which deals with the human impact on the biosphere starting with the First Industrial Revolution in the 18th Century. It is interesting to note that this egocentric quest for meaning of life is intensified exactly at the moment when human impact on the planet is irreversible. It is in this general context that Essential Leaders currently find themselves.

The very expression Essential Leadership has a meaning in itself. Essence, as defined in the Houaiss Dictionary (Translator’s Note: The Dicionário Houaiss da Língua Portuguesa (Houaiss Dictionary of the Portuguese Language) is a major reference dictionary for the Portuguese language.), is the core, the central, the most basic feature of a being or thing, which confers to it identity, distinctive characteristics, meaning, raison d’être.

To analyze Essence in depth, we need to draw upon philosophical concepts.

Philosophy differs from religion or science and can be organized around different subjects: politics, ethics, aesthetics, logic, epistemology, and metaphysics. And it is precisely in metaphysics that this essence can be fully studied, because metaphysics, which is also transcendental and is not subject to empirical investigation, focuses on the core problems of philosophy: the analysis of fundamentals, laws, foundations, initial causes, the meaning of everything and anything.

Essence has important philosophical properties:

it is necessary, for without it the being has no identity;

it is indivisible, or it would not be what it is;

it is unchangeable, for if anything was missing, it wouldn’t be what it is today;

it is eternal, for it is not time dependent;

it is seminal, for it has always existed.

Plato, in Parmenides, defined essence as the true being which is acknowledged when the spirit becomes capable of recognizing the eternal and unchangeable components of reality, as it frees itself from the illusory aspects that are part of sensorial experiences. Platonism countered essence with appearance.

Aristotle, in Parva Naturalia, defined essence as a set of universal attributes in the nature of an individual as opposed to the circumstantial changes that occur to him. Aristotelianism compared essence to accident.

In Eastern philosophy, essence also has great importance. In Hinduism, for example, Swadharma (essence) and Swabhava (customs) are set apart, and only the latter is influenced by Samskaras (experiences registered in a mental map due to personal interactions with the external world.)

On the other hand, the existentialist philosophy of Jean-Paul Sartre valued human existence, stating that everything starts with the individual and is reflected by him or her, who creates the essence of anything through his or her own conception. In other words, human essence is not unchangeable or deterministic as stated by Plato or Aristotle but can be transformed at any given moment, even if this freedom has an agonizing feeling. And the biggest human mistake would be to simply shy away from these responsibilities, attributing the purpose of life to another person or even to God.

Essential Leadership, therefore, carries the weight of being philosophically essential.

It is intriguing how we start to notice a new car model as soon as we buy or contemplate buying one. Suddenly, hundreds of cars like ours seem to invade the streets and dozens of ads appear in social media and on websites, on TV and in magazines.

I have experienced these same feelings in the last few years. As a partner and CEO at BMI Blue Management Institute, a company that has provided education to more than 100,000 managers and executives since 1994, I have been fully engaged in leadership development and organization transformation processes in some of the largest companies in the country. Throughout this intense and gratifying journey initiated in mid-2001, in spite of my degree in Economics and my executive experience in the strategy and finance areas, I have been increasingly convinced of the pronounced impact culture and leadership have on the performance of teams and organizations. And this has been the focus of my studies during the past few years.

As soon as I intensified my quest for the drivers of a high-performance team influenced by Essential Leadership, I encountered many intellectuals and researchers with the same questions. I want to mention some of them: Anthony Giddens, Betania Tanure, Clayton Christensen, Chris Argyris, Daniel Pink, Daniel Goleman, Dave Ulrich, Edgar Schein, Gareth Jones, Geert Hofstede, Gita Bellin, Gurnek Bains, Henry Mintzberg, Jim Collins, John Kotter, Keith Ayers, Ken Wilber, Kim Cameron, Michael Beer, Nitin Nohria, Mihaly Csikszentmihaly, Peter Senge, Priscila Gripp Soares, Ram Charan, Richard Barrett, Richard Leider, Rob Goffee, Robert Quinn, Roman Krznaric, Teresa Amabile and Viktor Frankl, among others.

The ELOS© Essential Leadership Skills for Organizational Strategy© methodology is different from other widely known models because it emphasizes that individuals in a high-performance team reach their full potential when there is a combination of adherence to the organization’s beliefs and values, a high level of consistent productivity and, inevitably, an emotional bond.

Adherence to the organization’s beliefs and values is required so individuals can function within the group's rules. With it, a group's cohesion around group and individual values and behaviors minimizes the level of cultural entropy typical of an organization with no identity.

A high degree of consistent productivity over time results from the particular combination of competences, skills and knowledge available to the individuals and to the group. At this particular point, ability to deliver better than expected results is assessed more closely than expected behaviors.

Emotional bond is the biggest news in this scenario, boosted by the replacement of duty ethics with pleasure ethics. Emotional bond is a result of the erosion of family, community, nation and spirituality as pillars of an individual's meaning of life. It is also inevitable considering the intense egocentric quest for satisfaction of individual needs and expectations, and the desire to develop strong relationships with the social group.

Considering this updated view of performance axes, Essential Leaders are integrated in the organization dynamics and its operation will require from them two elements: on one hand, close alignment between strategic reasoning and alliance with teams; on the other hand, team engagement and a systemic view of the business. As yin-yang in Taoism, this organizational dualism describes major opposed but complementary forces that drive all collective energy toward achievement of a purpose that inspires each individual in a team. This inspiring purpose defines the very logic of an organization dynamics.

Strategy has both a business model and decision making patterns built in as sources of competitive advantage. Organizational sustainability is more correlated to its value proposition and tactic-operational execution than to the right strategy.

Culture defines an organization’s behavior style, considering its group rules, values and beliefs. The most relevant cultural attributes to a company's sustainability are defined by a strategic choice, the historic journey started with the company's creation, and the set of values of its founders and management.

Structure is present in projects, processes and systems operations. Strategic and cultural changes end in catastrophic failures if the structure cannot be adapted. Paradoxically, while enterprise consistency and coherence depend upon a strong structure, this very structural force can be the largest obstacle to transformation.

Essential competences, without which the whole structure is compromised, are affected both by strategic logic and a company's behavior style. They are somewhat different from business, functional and personal competences. Any organizational transformation process will require development of new essential competences, since excellence is a moving target in an increasingly fluid competitive environment.

And, considering organizational dynamics, how does an Essential Leader influence high-performance teams? Well, this has been a fundamental consideration of the ELOS© methodology, which proposes a triangular vectorial space to articulate Essential Leadership as the main transformation driver, considering a self-awareness of one’s own individual essence and a systemic quest for one’s personal excellence using leadership tools and competences.

Individual essence self-awareness can be achieved through different and complementary ways, such as coaching, mentoring, sabbaticals, psychotherapy and meditation, besides psychological profile mapping tools. Here comes into play the rule that an ability to influence others depends directly on an ability to understand oneself.

Personal excellence in methods and competences of leadership enables a mastering of practices of communication, coaching, tactical management