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On Governance…

by Rick Baker
On Jul 20, 2010
William Dimma has served on over 50 corporate boards and 40 not-for-profit boards. He is well-recognized with doctorate and honourary degrees from several Canadian universities, an Order of Ontario, and an Order of Canada.
 
In 2006 Dimma published ‘Tougher Boards for Tougher Times’.
 
Here is an excerpt from page 44:
 
“You know and I know that best practice in governance is a complex synthesis of many things: board composition, structure, process, chemistry, leadership, culture, behaviour, and values. But it’s also influenced, at least to some degree, by a host of largely uncontrollable external variables (what economists like to call exogenous factors).”
 
While the book has a big-enterprise thrust – ie, a subtitle of “Corporate Governance in the Post-Enron Era” and the use university boards as an illustration of a not-for-profit organization – directors of smaller-enterprise boards can learn from the messages Dimma teaches.
 
We can start with the above Dimma quote…his list of things required under the complex synthesis of governance.
 
We need to simplify Dimma’s list.
 
We also need to get to a point where we agree governance does not have to be a complex synthesis.
 
We can start by simplifying the ‘Dimma list’.
 
To simplify the list we can repackage it as follows: Values > Culture > Communication > Value. I have blogged about this …for example.
 
In summary:
 
Values lead to…

Culture, which should include top-notch

Communication, which when done with excellence creates

Value for all stakeholders

Values:
 
By Values, I mean the Personal Values of the directors. To the extent a director holds more power than others the Personal Values of that director will dominate. For example, if one director controls the corporation then that person’s Values ought to reign supreme. This works when a majority owner is a director of a corporate board. It also works for a not-for-profit board where control isn’t through ‘ownership’…consider, for example, the founder. I expect some will argue this is not the correct approach. I expect some will argue it isn’t good governance.
 
If a person in control has Personal Values that conflict with those of the other directors then good governance will not be possible
 
If Values are not genuine or properly ‘encultured’ then good governance will not be possible.
 
Values must be solidified. I designed a process several years ago to address this need: the My Business & Our Business process.
 
Personal Values, when they are genuine and shared by directors, capture chemistry and set the boundaries for behaviour so those two words can be removed from Dimma’s list.
 
Culture:
 
When the Personal Values of the directors are discussed, clarified, well-understood, agreed-to, and aligned we have set the framework for culture. We have set the foundation for process and leadership. This should never be left to chance. This is particularly true when governance is to be overseen by a Board of Directors [rather than a single individual, or a pair of founders, etc].
 
If Personal Values did not capture chemistry and set boundaries on behaviour then Culture better! So, we can remove those two words from Dimma’s list.
 
That simplifies the under-our-control pieces of Governance to:
  • Values
  • Culture
  • Composition
  • Structure
  • Process
  • Leadership
More on simplifying this list [and simplifying governance] in future blogs…
 
PS: some hints…
  • Composition – shared Values is the most-critical factor for selection, next is ability to deliver measurable Value
  • Structure – the simpler the better…have role clarity [process]
  • Process – the key process is Communication
  • Leadership – inspiring the People to prepare, perform, and perfect the Process

Tags:

Leaders' Thoughts | Values: Personal Values

Innovation & Creativity

by Rick Baker
On Jul 1, 2010
During a recent strategic-planning session we discussed corporate Values and Culture. I mentioned Spirited’s corporate Values are: Courage, Confidence, Conviction, and Creativity. I also mentioned each of these words had been defined, discussed, and described in blogs…because it’s risky to use words unless those words are understood.
 
This meshes with our philosophy: Values – Culture – Communication – Value
 
Some discussion and lots of thinking about innovation and creativity ensued.
 
So, now I am writing to share more of my thoughts…
 
About Innovation
                       
Do some search-engine exploration. Or, check LinkedIn questions & answers. If you do this then you can find hundreds of definitions of innovation, perhaps dozens credited to Peter Drucker alone.
 
A couple of years ago, I blogged about Innovation
 
In that blog, I proposed the following definition for Business Innovation:
 
Business Innovation [def’n]:
 
a thing done or provided to add value by solving a customer’s problem or satisfying a customer’s need
 
That definition of Innovation still works for me.
 
But – perhaps that’s because I have drawn some clear lines between Innovation and Creativity.
 
What’s the difference between Creativity and Innovation? And, how do I define Creativity?
 
First, Innovation and Creativity have two very important things in common.
 
Each is
  • heavily grounded in Imagination and
  • closely tied to Change.
Creativity and Innovation also have in common, but to differing degrees, elements of Surprise. I argue Creativity contains more element of Surprise. In some cases the element of Surprise is too great to be tolerated [apparently they placed Marconi in an insane asylum when he created the vision which led to wireless communication]. In other cases the element of Surprise shows up in revolutionary art forms [such as the jump-shift of Picasso’s art and Mozart’s music].
 
While, to my knowledge, Napoleon Hill did not present arguments in this direction, I believe his description of the two types of Imagination - synthetic imagination and creative imagination - provides an excellent way to describe the difference between Innovation and Creativity.
 
Here is an excerpt from Napoleon Hill’s Think and Grow Rich, (1937):
 
Synthetic Imagination – Through this faculty, one may arrange old concepts, ideas, or plans into new combinations. This faculty creates nothing. It merely works with the material of experience, education, and observation with which it is fed. It is the faculty used most by the inventor, with the exception of the “genius” who draws upon the creative imagination, when he cannot solve his problem through synthetic imagination.
 
Creative Imagination - Through the faculty of creative imagination, the finite mind of man has direct communication with Infinite Intelligence. It is the faculty through which “hunches” and “inspirations” are received. It is by this faculty that all basic, or new ideas are handed over to man. It is through this faculty that one individual may “tune in” or communicate with the subconscious minds of other men.
 
My point is: when we have successfully used what Napoleon Hill called synthetic imagination the result is a thing of Innovation and when we have successfully used what Napoleon Hill called creative imagination the result is a thing of Creativity.
 
In simplest terms:
  • Innovation is adjusting or repackaging existing things.
  • Creativity brings new things.
Napoleon Hill described, as many others have done since [using different words], how to go about the processes of developing skills related to both synthetic imagination and creative imagination.
 
The process he outlined for developing skills related to creative imagination will not be well-received by some...perhaps many. For example, some people firmly believe Creativity is something you are born with...or not born with. That is, Creativity cannot be learned. Other folks, my favourite being Edward De Bono, prove through training Creativity can indeed be learned.
 
And, what about that Infinite Intelligence thing Napoleon Hill talked about? Some will be very comfortable considering that to be God. Some will be extremely uncomfortable with the whole chapter of the book.
 
Regardless, few will argue against the existence of the amazing human experience we call “hunches”.
 
That alone provides enough common ground for explaining the difference between Innovation and Creativity.
 
With all that and much more considered:
 
Innovation happens when we think. Innovation happens when we consciously engage the logical and deductive workings of our brains...and we might as well call that thinking process and the brain parts used in that thinking process our synthetic imagination. So, we can revise our definition of Business Innovation as follows:
 
Business Innovation [def’n]:
 
arranging old concepts, ideas, or plans into new combinations to solve customers’ problems or satisfy customers’ needs
 
And...
 
Creativity happens when “flashes of inspirations” or “hunches” come to our consciousness. Since it is nicer to think each of us possesses a level of creativity and it is nicer to think each of us can learn to be more creative...we might as well call “inspirations” and “hunches” gifts of our creative imagination. So, we can define Business Creativity as follows:
 
Business Creativity [def’n]:
 
using “flashes of inspirations” or “hunches”, the elite gifts of our imaginations, to solve customers’ problems or satisfy customers’ needs
 
***
 
Footnotes:
  1. The definitions of Innovation and Creativity contain the phrase to solve customers’ problems or satisfy customers’ needs. The phrase is a qualifier, intentionally added to draw attention to the fact business innovation and creativity must serve a purpose and that purpose must be tested in terms of ‘value added’ as perceived by customers. This is required under the Values–Culture–Communication–Value philosophy, which is introduced at https://rickbaker.ca/post/2010/06/17/Do-family-businesses-have-better-values.aspx
  2. Napoleon Hill link  http://www.naphill.org

Do family businesses have better values?

by Rick Baker
On Jun 17, 2010
Recently, I was chatting with a business friend and he felt family businesses had better values than other businesses. To be more specific, we were discussing bait-and-switch and other deceptive marketing tactics employed by some businesses. My friend made the point his family business does not engage in that sort of marketing.
 
That got me thinking.
 
My family company is a member of our community’s Centre For Family Business [CFFB].  www.cffb.ca
 
Every month the CFFB members meet, have breakfast, network, enjoy a family business presentation, and receive education from an expert. The 3-hour sessions, which I spend with my son Jack, are my favourite business experiences. So, I look forward to the sessions.
 
Now that I have relayed my pro-CFFB thinking, I suppose I may be a little biased…favouring family businesses?
 
Regardless, I am wondering if family businesses have better values than other businesses. Could family businesses serve as ‘role models’ and ‘mentors’, helping other businesses create and sustain better values?
 
The question is important to me because I believe Values are the starting point for business success. I mean Personal Values.
 
I believe business success follows a path like this:
 
Values ► Culture ► Communication ► Value
 
V-C-C-V
 
Where:
Values = the personal Values of the Leaders of the business
Culture = the business Culture the Leaders of the business demand/accept
Communication = how well the business Leaders communicate the Culture
Value = the Value the business delivers to one and all, but especially to its Clients
 
Again - I am wondering if family businesses have better Values than other businesses.
 
I am going to give that more thought.
 
More on family business values in future blogs…

Tags:

Communication: Improving Communication | Family Business and CFFB | Values: Personal Values

Emergent Change

by Rick Baker
On Apr 1, 2010
Planned Change & Emergent Change…these are the two types of business change Linda Gregorio described when she presented to the Centre For Family Business last Friday morning. www.cffb.ca
 
[ Linda can be reached by email. ]
 
Here are some of the notes I took as Linda summarized Emergent Change.
 
Emergent Change is happening in your workplace when you can spot:
  • A business-literate work force where people have role knowledge
    • People get the context for Change
    • People understand how Change meshes with Corporate Vision
  • A work force that has permission to act
    • Not managers swooping down on people like seagulls
  • A work force that will challenge the status quo
  • ‘Leaderness’ that encourages a ‘readiness to change’ culture
So, whether or not change happens successfully at your organization depends on your business culture. Put another way…you have the ability to influence that culture. As a leader, or an aspiring leader, you have an obligation to work at creating a business culture that encourages ‘readiness to change’.
 
Here is a sample of the process I am thinking about to encourage a proper business culture, including ‘readiness to change’.
 
I call the process V-C-C-V.
 
Values – Culture – Communication – Value
 
Values: the leader’s personal Values
 
Culture: the sum of the leader’s Values and the Values of everyone at the organization
 
Communication: the leader must share his/her Values…repeatedly
 
Value: then, all parties - employees, clients, shareholders, suppliers, etc – will receive Value
 
More about V-C-C-V in future blogs…

Tags:

Change: Creating Positive Change | Values: Personal Values

10 Rules for Building a Great Organization

by Rick Baker
On Mar 30, 2010
My friend, Ben Bach, thoughtfully loaned me his copy of the book ‘Enough. True Measures of Money, Business, and Life’, written by John C. Bogle, the founder and former CEO of Vanguard Mutual Fund Group.
 
 
I recommend the book to anyone interested in understanding the current status of capitalism. Of more importance, John C. Bogle offers clear ideas on how we can help build a better future for our businesses and for our investments [and for generations to follow].
 
I will be picking up a copy of ‘Enough.’ for my library.   [some personal comments at the footnote]
 
Here is a sample of John C. Bogle’s wisdom…
 
10 Rules For Building a Great Business
 
Rule 1: Make Caring the Soul of the Organization
 
Rule 2: Forget about Employees (the word hardly suggests teamwork and cooperation at Vanguard, Bogle uses 'crew member'…see footnote for an explanation)
 
Rule 3: Set High Standards and Values - and Stick to Them
 
Rule 4: Talk the Talk, Repeat the Values Endlessly
 
Rule 5: Walk the Walk, Actions Speak Louder than Words
 
Rule 6: Don't Overmanage
 
Rule 7: Recognize Individual Achievement
 
Rule 8: A Reminder - Loyalty Is a Two-Way Street
 
Rule 9: Lead and Manage for the Long Term
 
Rule 10: Press On, Regardless
 
Footnote: John C. Bogle is an avid admirer of Lord Horatio Nelson. We have that in common. Lord Nelson is very high on my list of historic heroes. Nelson inspired a nation to heights rarely accomplished and his legacy lives on in the hearts of many. In honour of his ‘patron saint’, Admiral Nelson, Bogle decided to remove the word employee from his company’s lexicon and instead call his people crew members. [PS: Bogle also named his company Vanguard out of respect for Lord Nelson.]
 
 
More about Standards and Values [Rules 3 and 4] in future blogs…

Tags:

Hero Worship | INSPIRE PEOPLE - GROW PROFITS! | Master Rules | Values: Personal Values

Corporate Culture Matters

by Rick Baker
On Feb 23, 2010
Here’s a quote from an article titled ‘Does Corporate Culture Matter? The Case of Enron’, written by A.J. Schuler, Psy.D.
 
“Enron’s corporate culture best exemplified values of risk taking, aggressive growth and entrepreneurial creativity.  These are all positive values. But these values were not balanced by genuine attention to corporate integrity and the creation of customer - and not just shareholder - value.  Because the Enron corporate culture was not well grounded, a single scorecard - maximized price per share of common stock - became its reason for being, and even its positive values became liabilities.”
 
Why was I reading about Enron?
 
2 reasons…
  1. We were having a discussion about corporate values and culture.
  2. During my energy career we worked with many Enron and ex-Enron people: many personal experiences are still vivid in my memory.
Here’s the gist of our discussion…our conclusion.
 
We agreed, over our business careers many of our failures were consequences of opposed values. We had one set of values. The other folks had a different set of values. And the two sets of values were in [unspoken] conflict.
 
Expanding on A.J. Schuler’s point, the corporate values reported by Enron appear to be positive. The fact is to those values are only positive when they are guided and bounded by certain attributes of character.
 
What attributes of character?
 
A.J. Schuler used the words ‘genuine attention to corporate integrity’.
 
That captures it…as long as we have a common definition of ‘corporate integrity’, we have a common description of ‘genuine attention’, and we communicate our views about integrity accurately.
 
That’s where the devil really does hide in the details.
 
A few years ago, we did a real-life, SouthWestern-Ontario-CEO study of Integrity. If you would like to know the results of our study…email me and I will send a little report to you. Contact Rick
 
My next blog will be titled To agree or not to agree, that is the question.

Tags:

Entrepreneur Thinking | Values: Personal Values

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