Oh, Out-Behave!


October 16, 2007

by Marshall Goldsmith

Dov Seidman is the author of How: Why How We Do Anything Means Everything … in Business (and in Life) and the chief executive of LRN, a company that helps businesses develop ethical corporate cultures. He and I recently spoke about the ideas in his new book that dispel the so-called tried-and-true notions of finding success in business and outline the new path to achieving sustainable advantage. I agree with Dov’s view that how you do what you do means more today that ever before. Read edited excerpts of our conversation:

MG: You say that how we work and live can be even more important than what we do. What do you mean by “how”?

DS: Today’s world connects us – and reveals us – in ways we have only just begun to comprehend. The flood of easily and universally accessible information has dramatically changed the dynamics and rules of business. Results are not the only barometer of success in a world in which people can also judge how you achieve those results. So notions such as “business is war,” “survival of the fittest,” “by any means necessary,” and “just do it” no longer apply; they encourage behaviors that, when discovered, threaten the very success they hope to achieve.

It is not just what we do that makes a difference; it is how we do it that matters. Through years of practice and personal observation, I’ve come to believe that how individuals and companies think, behave, and govern themselves can set them apart, facilitate stronger relationships, and enable greater successes.

MG: So, how isn’t just about how companies can protect themselves and their reputations in a new, transparent, and connected world?

DS: No, in fact, it is about just the opposite. How is about finding greater rewards by turning the specific conditions of the 21st century to your advantage. We are hyperconnected, which means we work with diverse teams of people in diverse places across the globe. We are hypertransparent. We live in a world where nothing stays hidden. Companies operating in this new world have a choice. They can either hunker down and avoid exposure or can go from defense to offense. Leaders today recognize that how we do what we do is not defensive, it is all about taking charge.

MG: Is that what you mean by out-behaving the competition?

DS: If you make something new (or just better, faster, and cheaper), you may out-perform a competitor, but the advantage is short-lived. Our whats – products, services, and processes – can be easily duplicated and reverse-engineered. Competitors can quickly improve on and deliver them at the same or an even lower price, effectively rendering almost everything a commodity.

Out-behaving the competition is about how you do what you do. If you keep promises 99% of the time and your competitor keeps theirs 80%, you can gain critical advantage in the marketplace. If your interactions with others deliver a more meaningful customer experience, you engender a loyalty that brings them back again and again.

If you make stronger connections and collaborate more intensely with your co-workers, encouraging them to take risks and innovate, you win. Our hows – our values, principles, reputations, and cultures – provide advantage and sustain us over the long term. These are the things that define how we collaborate with co-workers, how we inspire more people throughout our global networks, how we interact with – not just serve – customers. These are the things that cannot be copied.

MG: You mention a distinction between serving and interacting with customers. How is out-behaving different from good old customer service?

DS: Customer service has become commoditized. Every employee knows they must answer the phone by the third ring, greet customers with the company tagline, direct customers to goods and services, often walking with them to ensure they find the goods they are looking to buy. Out-behaving is about what happens during the walk. It’s about interacting and connecting with customers in a way that delights them and serves them in the process.

For instance, there is a donut vendor I feature in the book who trusts his customers to make their own change when making a purchase. This increases his productivity and their satisfaction, ensures customer loyalty, and wins him more customers. On a larger scale, the University of Michigan Hospitals & Health Systems made the important decision to encourage their doctors to apologize to patients when mistakes were made in their care. This act, considered legal suicide at the time, resulted in patients feeling better served, medical malpractice claims and lawsuits dropping by nearly 50%, and the per-case cost of defending remaining lawsuits dropping by 50%.

It’s important to remember that how isn’t just about gaining and keeping more customers. It’s as important in the boardroom as it is in the classroom and living room.

MG: Leadership is a key focus of several chapters in your book. What’s the call to action for CEOs and other company leaders in a how world?

DS: A leader is a model of behavior. A leader self-governs himself or herself by a set of principles and inspires others to do the same. A leader embraces the conditions of the new world and turns it to his or her advantage. I think of Bill Marriott, the 74-year-old CEO of Marriott Worldwide (MAR), who used to go from hotel to hotel with a pencil and paper taking notes for his staff. Now he blogs, embracing our new era of transparency. Instead of issuing directives for his staff to execute or regurgitating talking points from his public relations staff, he engages in true, authentic, two-way dialogue with all of his stakeholders. He is establishing a direct relationship with anyone who might want to visit one of his hotel rooms or invest in his company, building more trust and deeper connections in the process.

MG: You suggest companies can “do” culture.

DS: Just like it would be odd to think you can copy the inner workings of another family – their history, traditions, interactions – one company can’t copy another’s culture. Culture is the unique character of any organization of people. It is the sum of all of their hows. It is the way things really work, the way decisions are really made, e-mails really composed, promotions really earned and meted out, and people really treated every day.

Grasping how culture really works gives you the building blocks to develop a culture that can out-behave the competition. A culture of how uniquely transforms new conditions of our world into new opportunities. These cultures, which I refer to as “values-based and self-governing,” keep external controls peripheral to the central effort of the group, and keep everyone inspired and propelled by their central values.

MG: How does this differ in companies with multiple locations around the world?

DS: It doesn’t. The new age of connectedness has thrust us together faster than we have developed frameworks of understanding to adapt to it. Shared values can be the tie that binds different cultures and people spread far apart from one another. This is true for merged and acquired organizations, those with multiple ventures, suppliers, and partners, and those with multinational operations.

MG: Can you explain your definition of success in a how world?

DS: I believe it is virtually impossible to be inspired and generate passion unless you have an important mission. It is virtually impossible to find success directly, without pursuing something of significance. It is virtually impossible to achieve significance without being principled every step the way. It is virtually impossible to perform if you embrace profits over principles. I believe today’s business leaders understand this. The people and companies that will rise to the top today and stay on top tomorrow, who will be rewarded, promoted, and celebrated, are those that get their hows right.

MG: If people want to learn more about this perspective, where can they find you?

DS: People can find me at my own blog: www.HowsMatter.com/blog or at www.LRN.com.