Tag Archives: Unilever

Re-writing Unwritten Rules – Is this the change we want?

Sports as a metaphor for business fits well for me, so imagine my delight at Chris MacDonald using the Odor/Bautista brouhaha as a starting point for a discussion on unwritten rules. He was equating the competitiveness of sport with competitiveness in the market economy. The parallels are endearing, and he also presents the necessity for self-regulation (according to “the code”), as well as some imposed regulation (from the umpiring squad or regulator). This balance often gets lost in the sports-meets-business mash-up and we are left feeling that some external force (e.g. referees or “the Government”) is supposed to curtail undesirable actions or that “the market” will keep us in check.

In baseball, there is a complex series of “you do this; we do this.” Predictably, people’s interpretation of the Odor/Bautista event is heavily coloured by allegiances: whether you love/hate the Jays, love/hate Texas, love/hate “old school baseball,” etc. Beyond the superficial barbs, what appears to be noteworthy is the first punch by Odor. In baseball’s full unwritten ledger of “this warrants that,” there is no “this” for which the “that” is “”punch opposing player in the face.” When it comes to the retaliatory punch, we are into another rule book where, presumably, equal retaliation is deemed acceptable. (But he punched me first!)

Call it a “code” or “unwritten rules” or “norms” or whatever, in sport and business there is a rich interplay between the enforced formal rules and the understood informal rules. In both cases, the very worst kind of rule making is in reaction to a specific incident. Sports tends to enshrine the original offender in the rule: the Utley rule in baseball, the Avery rule in hockey. Hopefully we don’t see an Odor rule emerge from this because reactive rule alters the essence of a game played between competitors who abide by a similar set of beliefs. Do we want to shift from the shared understanding that “we don’t fight in baseball” to crafting a rule that delineates a “scrap” or a “tussle” from a “fight” in order to assign the correct fair punishment to each (e.g. if the hand stays unclenched, it is at most a tussle)?

When he took over as global CEO of Unilever, Paul Polman countered a conventional unwritten rule by refusing to report quarterly to the analysts who so craved the latest information. Unilever’s stock price hit a low in March 2009 with the first missed quarterly report. Was this a metaphoric “punch” to the information hungry analysts and the short-term profit seekers they serve? Seven years out, Polman is still CEO and the stock sits at almost 3x what it was at the end of Q1 2009. This metaphoric punch has been described a courageous, which could not be more different than the words by some to describe Odor real-live punch.

For baseball, one big question is whether Odor has tapped into something that changes the fabric of the game. In the ebb and flow of sport, we now have professional golfers sporting beards and “joggers,” both of which can be hailed a step into the 21st century for a game weighed down by elitist traditions. Is baseball due for a similar shift?

Whether from the sport or business perspective,, the question of “what kind of game do we want?” can help shape if and how we challenge the status quo. An Odor/Polman punch can be the catalyst to shake things up, or be the action that begs our response. The change to the written rule can be swift, but changes to the code can be a slower burn. Both can have lingering effects on “the game we get,” which may not be the one we want.

Results-Based Development (Under the hood of Aligning Interests)

In many different contexts, we see examples of competition contributing to higher performance. For competition in business, we can draw and important distinction between “good competition” and “bad competition,” which is sometimes under emphasized. As I understand it, “good competition” creates an environment where everyone has to “up their game” to remain competitive. As evidence that “the market works,” we would see examples of customers benefiting from competition because organizations have to work harder and smarter to remain in business. Conversely, “bad competition” creates an environment that destroys long-term value in the name of “winning” or “surviving.” In such scenarios, organizations harm the sector and themselves in a “race to the bottom.” Such scenarios also have organizations engage in ethically questionable behaviour to “win at all costs.”

To start, let’s assume that “good competition” is indeed possible. Let’s further assume that for it to work, it requires that parties share an understanding of what “good” they are trying to accomplish.

For businesses, making money is “good,” but so are other forms of benefit: safer automobile travel (Toyota), or sustainable practices (Unilever). Governments are expected to think more about the greater “good,” and as a specific illustration, let me use community health-care in Ontario. Let’s say that “good” in this context is “efficiency in delivering necessary services to patients,” or something that balances provision of necessary services within fiscal constraints. As is the current practice, the government-funded payment to service providers for some activities can be attached to a result or outcome: a service provider is given a lump sum to achieve a specific outcome (e.g. heal a wound). If they can complete the task more efficiently, profit is theirs. If it happens to take longer or more resources, the provider spends those resources, but can’t come back to the funder for more money. If this works, tax-payers in Ontario get better bang for their collective buck, and patients get high quality care; wins all around.

This same type of arrangement could work in a non-governemnt context as long as the service provider is at least partially interested in the same definition of “good.” This creates “good competition, and efficient organizations that do good work will succeed.

The realm of “bad competition” can be peppered with “perverse incentives,” whereby, for example, a service provider could legitimately want a patient to stay sick, or at very least, err too much on the side of caution and so as to go wildly offside with a “fiscal responsibility” effort. This is the potentially very ugly underbelly of the public-sector contracting out to the private sector. In a consulting relationship, this can create, for example, an incentive to run-up the billable hours.

Setting goals and objectives that promote shared accountability is extremely tricky. From my experience, the real trick is to align activity to a common purpose (e.g. the “good”), and I will go as far to say that without a shared interest, collaboration of this nature is impossible because the result will actually create “bad” competition.

Purpose revisited: looking at the “why? (Survey Insights Part 5)

Our Summer Survey revealed a potential problem that employees have in finding a sense of purpose in their work. This was spurred by the finding that while leadership feels the work provides opportunities to matter, employees don’t seem to find it.

Our previous post suggested that organizations could take some responsibility to be clearer about how they pursue economic success, including the forgoing of maximized returns in order to pursue something non-economic that matters. As an example of this latter point, consider Unilever CEO Paul Polman’s decision to forgo quarterly reporting claiming it distracted from long-term sustainable business activities. He explains his rationale here.

From an investor perspective, this money-where-your-mouth-is approach appears to be working: after a sudden dip 4 years ago right after the change, the stock price is back to pre-crash levels. So would an organization like this, with this kind of CEO, continue to thrive by attracting and retaining the right employees? The right customers? Time always tells, but right now, no one knows for sure. Perhaps, this consistency and clarity makes it easier for both employees and customers to know what to expect. The onus will be on all other actions and policies to align as much as possible with this obvious focus on sustainability. Maybe compensation incentives will tie to long-term results. In Seymour Schulich’s book Get Smarter, he counsels any organization to pay out bonuses 12 months hence. The message is we want you to stick around.

Simply because we see an organization as a collection of human beings, we will suggest that a good chunk of the “purpose” equation sits with the individual employee. What do you want out of this job? Your life? These are big questions and answers may take a lifetime of thought and reflection. When Simon Sinek roles out the golden circle and says, “Why are you doing what you are doing?” a reasonable response could be, “I am still figuring that out, but in the mean time, my situation is working just fine.”

We invite you to a dialogue on this journey of “figuring it out.”

Here is a recent anecdote to share:

“Since our last conversation, I had been thinking about where things fit in. As I was mulling it over, I had the opportunity to shadow one of the front-line workers in my organization. The organization is government funded and coordinates in-home health care services. The interaction that my colleague led was a wonderfully compassionate negotiation. A health-care professional guided a convalescing woman to determine the care that she needed, while being conscious that too much care was detrimental to recovery and any waste would impact resources available to another client/patient in this or a different community. All of a sudden, it lined up. It made me look and my job and ask, ‘How am I helping this to happen?’ I think that would be a good point of view for everyone in our organization to take.”

Please get in touch through e-mail or through our website with anecdotes that you can share.