We were intrigued by this unusual commitment to learning and growth. How did Zingerman’s integrate its higher purpose into its business operations? Ari said that one of the things the company does consistently is to emphasize the positives and develop in each of its employees a very proactive and growth-oriented outlook on life. Cultivating positivity in employees serves the higher purpose of delighting customers, and the delight of customers loops back to the employees.
Ari spoke of numerous unusual management practices that build trust, promote growth, and facilitate collaboration. For example, the company practices open-book finance: The company opens its books to trainees and teaches them how to run Zingerman’s. The employees have to make all the decisions that Ari and other senior executives make routinely—procurement, menu determination, pricing, hiring, and so on. The training program serves two important purposes: First, it teaches employees how to run the business and prepares them to become entrepreneurs. Second, it engenders trust and collaboration.
When asked why he engages in this and so many other unusual practices, Ari answered, “Let me explain to you how many companies are run, and you’ll understand why we don’t behave like that. Imagine that you have a football team and you have 11 players on offense, each very skilled in playing his position. But while 6 of the players are individually skilled, they don’t really understand the larger game. So you might have a wide receiver with great hands and speed but who catches a pass and then hands the ball over to the defensive back—an intentional fumble—because he wants to be a “nice guy” who wants to “share.” And you might have 4 players who are individually skilled and know the game but could not care less about the outcome. So you are left with one player—say the quarterback—who is individually skilled, knows the game, and actually cares about winning. Now, no one in his right mind would ever field a football team like that, right? But that’s how many companies are run. We don’t do that here.”
Ari and Paul clearly march to a different drummer. In 2006 Zingerman’s produced a vision written from the perspective of the company in 2020. In it we find many statements regarding learning and growth. Here is a small sample:
We feel to express ourselves and tap into our deepest creative potential. We believe in what we are doing and integrate our sense of purpose into who we are.
We must be profitable in order to survive but our primary purpose is to contribute to a better life for everyone we touch. We do this by providing meaningful work, dignified employment, beneficial goods and services, and relationships of trust and caring that are at the foundations of a healthy community.
Everyone who comes in contact with our organization—employees, customers, and suppliers, people asking for donations, journalists and reporters, public officials—leaves with the perception that we exist in order to be of service.
People come from all over the world to learn about almost everything we do.
We are inventing and rediscovering ways to work, constantly teaching them within and outside Zingerman’s. We teach people to learn so they learn to teach. Many employees have come to work here especially to further their education, be it about food, people, or organizational development.
When employees move on it is with a sense of self-confidence and with experiences they can use to better the next organization they are a part of.
Education is one of our passions. The more we teach, the more we learn. The more we teach, the more customers and staff are drawn to visit and shop with us. The more we teach and learn together, the more effectively we connect with each other, strengthen our culture, and improve the lives of everyone we interact with. We thrive on sharing information lavishly.58
As observers of the company, we can attest that the vision for 2020 has been mostly accomplished as we write in 2019.
At the end of our interview, Ari invited us to order dinner and to feel free to speak to any of the employees, which we did. Each employee radiated with positive energy. One young lady said that working at Zingerman’s had changed her life. It had helped her create a much more positive relationship with her daughter and her mother. A young man, a student at the University of Michigan, was working at Zingerman’s during the summer. He hoped to someday start his own business and expressed gratitude for the company. Both raved about their experience. Their work was meaningful, they were learning and growing, they were part of a collaborative whole, and the company was flourishing.
Summary
We learn from previous experience to make the standard principal–agent assumption that employees are people who work for monetary incentives and promotions. We do not see much of a role for learning and growth as things that agents want in this incentive system. But stimulation, learning, and growth are one basic need, which purpose-driven leaders understand and focus on. The learning has value in itself, but it also produces benefits. In purpose-driven organizations like Zingerman’s, unusual practices that revolve around growth and learning end up producing trust, collaboration, and higher performance, which reduce the contracting frictions in the principal–agent model. Thus, the fifth step in creating a purpose-driven organization is to create a purpose-driven culture that stimulates leaning.
Getting Started: Tools and Exercises
Hold a discussion and structure it as follows:
Phase 1. Have everyone read the chapter.
Phase 2. Give everyone a list of the seven points in the Zingerman’s vision as listed on page 141.
Phase 3. Have each person take a personal perspective and rank the seven planks in terms of desirability. Combine everyone’s scores.
Phase 4. Starting with the most highly ranked plank, discuss the extent to which it reflects the culture of your organization.
Phase 5. Add any new planks that emerge from your discussion.
Phase 6. Make a list of actions that your organization could take that would create a purpose-driven culture focused on learning and growth.
CHAPTER TWELVE
STEP 6 Turn Midlevel Managers into Purpose-Driven Leaders
We have a friend who strives to be a positive, purpose-driven leader. She was invited to join a new company that has a purpose-driven culture. She asked to meet with us and discuss her opportunity. As she described the culture of the new organization, she kept saying she felt attracted to the company.
We asked her what it meant to feel attracted. She described her interview with one of the senior executives. Within 15 minutes she was engaged in an intimate and candid exploration of who he really was and who she really was. She asked him, “What draws you here?”
Tears came to his eyes. He said, “When I leave home in the morning, I feel that I am driving to my second home and my second family. I feel that I am part of a community that is serving a community.”
When later she met with the CEO, he spoke of the mission and purpose of the organization and the challenges of making a meaningful difference in the community. She said, “Everyone talked to me from both their hearts and their heads.”
She contrasted these authentic conversations with a transactional conversation that had taken place in her own organization that morning, a discussion about an important promotion in which a man could enter a role of great influence and make an extraordinary difference. When asked about whether he would be interested in the position, instead of exploring the possibility of impact, he made financial demands. As he did, she felt energy draining from her. She was not attracted to the self-interested actor; she was repelled.
The contrast made her aware that she had never before visited a large organization that was purpose driven. She continued to speak of “attraction” and of the “drawing power” of the company. In relationships and in cultures where people are so engaged that they speak from both their heads and their hearts, others are drawn in and tend to engage.
Almost as an afterthought, she said, “In my life I have been blessed to have a network of extraordinary, purpose-focused people. It occurred to me that if I do take the
job, the company will not only get me, they will also get a mini army of connections. They will get the positive energy and the positive thoughts that flow from my network into me. I bring those precious resources with me.”
She was making an important point: Purpose-driven people often find themselves in networks of purpose-driven people who are engaged with both their heads and their hearts. They attract one another. Purpose-driven organizations are composed of many people who feel the organization is a community of service. It is their “second home” and their “second family.” So they are willing to take initiatives they might not otherwise take. As a result, these midlevel people become leaders who embody the purpose and bring energy to the community.
Conventional Organizations
Once in a focus group interview at a Fortune 100 company, a woman described a phenomenon we have observed for decades but have never articulated. She said, “We have 1,600 executives. They fall into three groups. There is a very small group of people who know how to lead. When I meet one of them, I immediately know they are a leader because I want to be like them. We then have a large group of managers who intellectually understand leadership but do not practice it. Finally, we have another small group of technically oriented people who cannot even conceive of leading.”
The woman was accurately describing a pattern that occurs in numerous organizations. We have since shared the story with scores of executives and asked them why the middle group is so large. Each time we do this, the room goes quiet. Slowly answers come: “It is too hard.” “Leadership is risky.” “The culture prevents it.”
No one ever responds, “She is wrong. In our organization every executive and every manager is a leader.” Rather, with some chagrin, they recognize the fact, and painfully they explain it.
In organizations we often make conventional assumptions, and we expect and accept self-interested, political posturing in the vast majority of authority figures. We call them leaders because they hold positions of authority. But they actually fall in the large middle group.
Why is this the dominant paradigm of leadership? The entire leadership development industry is inculcated with the notions of knowledge and skill, and leadership is seen as a practice about knowing and doing. The assumption facilitates a fruitful exchange between universities and corporations. Universities produce knowledge and skills, and corporations buy those things. Yet little changes. The vast middle group in every organization continues to manage.
Why? “It is too hard.” “Leadership is risky.” “The culture prevents it.” But there are exceptions—organizations and leaders who do not fit this mold.
Conventional Culture and Purpose Work
As mentioned in chapter 5, we interviewed Jim Weddle, then CEO of Edward Jones, the financial services company. He told us that the company’s purpose is not to make a profit, not to help clients decrease taxes or increase income. The purpose is to help individuals meet their most important financial goals like educating their children, preparing for retirement, or leaving a legacy. Company profit is simply a metric that indicates how well the purpose is being served.
This orientation has guided the company for decades. When it was first introduced, some partners left. They could not accept the unconventional notion that profit was not the organization’s purpose. We have noticed this same pattern in other organizations. Today, that purpose is a magnet that attracts many new associates and partners to the company. They naturally want to be paid for their work, but they also want to belong to an organization of higher purpose.
The notion of purpose is also a magnet that attracts clients. When clients get assistance in clarifying what they really want and in aligning with their desired future, they feel well looked after. They become loyal, and this positive reaction feeds back to employees and sparks their growth.
Jim told us that associates and partners do not feel like manipulative salespeople but like servants to the best interests of clients. With this positive orientation, associates and partners begin to feel good about themselves and what they do. Success creates faith and hope. They begin to believe the company can reach millions of future clients. The associates and partners become deeply committed, and they act like owners. They transcend the assumptions of the traditional principal–agent perspective. They invest more in their work and in their organization. Each one of them is a purpose-driven leader, self-motivated by the higher purpose rather than getting their direction from above.
The higher purpose has resulted in the emergence of a strong culture. The culture helps people feel like owners and makes it possible for people to lead without getting orders from above because the purpose is the arbiter of all decisions. This empowering culture is seen as so valuable that the company works to preserve it. Recruitment is focused on finding people who fit the culture. In one case, there was a wait of two years in finding the right chief marketing officer.
Systems and processes also reflect the culture. The company provides bonus pools and profit sharing plans. It sees that associates are treated like partners. It treats ownership as an opportunity. Competitors are stunned to learn how much it spends on small-group employee appreciation trips. The company also makes an extraordinary investment to ensure that new people are successful.
The company also places a great emphasis on integrity. Jim told us that when a company really has purpose and values and crisis comes, the leaders act in unconventional ways. During the financial crisis of 2008, its volume and profits were shrinking. Instead of the conventional response of cutting salaries and people, the leaders at Edward Jones cut 15 percent out of other areas. They told people that the company was responsible to its clients and employees. Expenses would be cut, but no person would be financially penalized or let go. They preserved the covenant that was described earlier by Ricardo Levy and Rabbi Sacks.
What happened? After the cost cuts, the company did not have another unprofitable month. Furthermore, although years have passed since that time, the people still speak of how they were treated in the time of crisis. There is a level of trust that money cannot buy. It is attractive and permeates the culture.
An Opportunity
As great as the Edward Jones story is, we have to note where the sense of higher purpose emerged. In chapter 5 we mentioned the role of Peter Drucker. Drucker forced the CEO and others to stay on a topic they did not wish to engage with: organizational purpose.
This reluctance suggests a golden opportunity for you. If so many people in positions of authority do not understand the power of purpose and resist doing purpose work, you potentially have a great advantage. If you are willing to contemplate and experiment and learn to do purpose work at whatever level you occupy, you can become a rare and desired asset, a positive leader who can create a purpose-driven culture.
While the opportunity to do purpose work is available to every midlevel person, few will embrace it. A challenge for senior leaders who seek to create a purpose-driven organization is to turn midlevel professionals into leaders. In fact, until this happens, an organization will not be a purpose-driven community. Senior people tend to understand this as a concept, but they do not tend to embrace it. They are sometimes hindered by not knowing what to do or by an unwillingness to invest the necessary resources. Yet as they themselves become purpose driven, a new vision unfolds.
We turn now to a company where such a vision emerged and midlevel managers became purpose-driven leaders.
The Evolution of Leadership in an Unlikely Place
A Big Four accounting firm is a cooperative made up of thousands of partners.59 The partners think like accountants: They tend to be careful in their observations, exact in their assessments, and cautious about their decisions. They tend to have a conservative culture, and they are not inclined to get emotional about abstractions. Changing the culture of any company is difficult; changing the culture of an accounting firm is a true challenge.
In 2004 the culture at KPMG was becoming an issue of concern. Surveys
showed that only 50 percent of the employees thought the culture was favorable. Turnover was in the high 20 percent range. A variety of typical HR programs were used to raise favorability scores, which climbed into the 80 percent range. Bruce Pfau, vice chair of HR at KPMG, said, “It was an accomplishment, but we had a problem: we desired higher scores and we were out of programs and out of ideas.” Bruce needed to think in a new way. He soon had some random experiences that provided new perspectives and led to two actions right away.
First, Bruce got exposed to the data. There was an item on the satisfaction survey that continually showed up with low scores: “My job has special meaning.” Bruce believed that nothing could be done about meaning, yet the challenge stayed with him. He then had a conversation with a management professor who told him a story about the CEO of Men’s Wearhouse. The CEO sincerely believed that the mission of the company was not to sell suits but to help people genuinely feel better. This higher purpose seemed to permeate the organization. The idea of higher purpose also stayed with Bruce.
Second, Bruce visited an actuarial firm. In the foyer of the office was an exhibit of memorabilia from the firm’s history. As he talked with people, he heard them express pride in their organization’s past. At KPMG history was seldom discussed, and culture was not seen as a lever of performance. Bruce began to ask, “At KPMG, what is our highest purpose?”
In the meantime, John Veihmeyer, the former chair of the US division, was coming to a similar viewpoint. He told us that, as chair of the US division, he knew he was not doing “the one thing that had the most potential to change the organization: increase employee engagement.”
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