sustainability leadership, values and culture

www.valuescentre.com 1www.valuescentre.comwww.valuescentre.com

Sustainability: Leadership, Values and Culture

Richard BarrettMay 2011

2

The Global Sustainability Challenge?

3

Global Sustainability Issues

Pandemics

Climate Change

Global Economy

GlobalTerrorism

Poverty Reduction

Food Resilience

Natural Disasters

Energy Resilience

Species Extinction

WaterShortages

The significant problems we face cannot be solved at the same level of thinking that created them.

Pollution

Waste Disposal

4

The Sustainability Challenge

The problems of existence have become global but the decision-making structures we have for

dealing with them are national.

We cannot move forward without a high degree of global cooperation.

5

A New Leadership Paradigm

Private Sector

Social Sector

Public Sector

The paradigm that divides the world into the social sector, the private sector, and the

governmental sector is not working.

It creates artificial barriers. We are each a constituent of the problem, so we have to

combine our forces, our efforts, and our competencies.

Tex Gunning, Unilever, Best Foods Asia

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Private Sector

Social Sector

Public Sector

Average leaders take care of themselves and their families.

Good leaders take care of themselves, their families, and some of the community.

Great leaders—and great companies—not only take care of all stakeholders but also want to change the world.

They want to leave the world better than they found it.

Tex Gunning, Unilever, Best Foods Asia

7

Sustainability and the New Leadership Paradigm

Business is a wholly owned subsidiary of society, and society is wholly owned subsidiary of the environment.

If we lose our environment and our life-support systems, our society will perish.

If we lose our society, we will lose our economy and our businesses will perish too.

Our Business Leaders need to recognise that:

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What this means for Business and Politics

Political leaders must give up their parochial self-interest andexaggerated false belief in national sovereignty learn how to

solve the problems of existence through international cooperation and collaboration.

Business leaders need to work with their competitors, political and societal leaders to define a framework of policies that support the evolution of our global society by developing industry charters that regulate the rules of competition

between companies in a way that supports the societal common good.

Building a sustainable future for everyone is not just societal imperative. It is business imperative, too.

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Ultimately, the problems of existence we face are issues of consciousness.

We will only get beyond this stage of our collective evolution if we can put aside our narrow self-interest, focus

on the whole system, and build a values-driven framework of policies

that support the common good.


Richard Barrett, The New Leadership Paradigm, 2011

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A shift in focus from “I” to “we”

A shift from self-interest to the common good

A shift from being the best in the world to the best for the world.

WE NEED A NEW LEADERSHIP PARADIGM

11

The Three Mantras of Culture Change

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The Three Mantras of Culture Change

Cultural Capital is the new frontier of competitive advantage.

Organisational transformation begins with the personal transformation of the leaders.

Measurement matters. If you can measure it you can manage it.

13

From Leader’s Values to Shareholder Value

Corporate Sector

Leader’s Values/ Behaviours

Corporate Culture

CompetitiveAdvantage &Resilience

Performance & Shareholder

Value

14

From Leadership to Customer Satisfaction

Public Sector

Leader’s values/ behaviours

OrganisationalCulture

Mission Assurance

CustomerSatisfaction

15

The Good News

16

For the first time in human history we have the possibility of making the evolution of consciousness,

conscious.

Why now? Because we can measure it, both at a personal,

organisational and national level.

And if you can measure it, you can manage it.

The Good News

Richard Barrett, The New Leadership Paradigm, 2011

17

Models and Tools for Measuring Personal, Organisational and National Consciousness

1998 20111995 2006

Personal Growth and

Transformation

Organisational Growth and

Transformation.Measuring

Consciousness by Mapping

Values

Implementing Cultural

Transformation.Eight Years

Experience of Measuring

Personal and Organisational Consciousness and Exploring Whole System

Change

A Text Book, Web Site, and

Learning System for the 21st

Century Leader

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Origins of the Cultural Transformation Tools

Growth NeedsWhen these needs are fulfilled they do not go away, they engender deeper levels of motivation and commitment.

Deficiency NeedsAn individual gains no sense of lasting satisfaction from being able to meet these needs, but feels a sense of anxiety if these needs are not met. Physiological

Safety

Love & Belonging

Self-esteem

Know and Understand

Abraham Maslow

Self Actualization

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Maslow’s Needs to Barrett’s Consciousness

Know and Understand

Physiological

Safety

Love & Belonging

Self-esteemAbraham Maslow

Know and Understand

N e e d s C o n s c i o u s n e s s

Self-Actualization

Richard Barrett

20

Maslow’s Needs to Barrett’s Consciousness

Know and Understand

Physiological

Safety

Love & Belonging

Self-esteem

Know and Understand

N e e d s C o n s c i o u s n e s s

1. Expansion of self-actualization into multiple levels.

2. Substitute ‘states of consciousness’ for hierarchy of needs.

3. Each state of consciousness is defined by specific values and behaviours.

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Stages in the Development of Personal Consciousness

Positive Focus / Excessive Focus

Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

SurvivalFinancial Security & SafetyCreating a safe secure environment for self and significant others. Control, greed

BelongingFeeling a personal sense of belonging, feeling loved by self and others. Being liked, blame

Self-worth Feeling a positive sense of pride in self and ability to manage your life. Power, status

Personal GrowthUnderstanding your deepest motivations, experiencing responsible freedom by letting go of your fears

Finding Personal MeaningUncovering your sense of purpose and creating a vision for the future you want to create

Collaborating with PartnersWorking with others to make a positive difference by actively implementing your purpose and vision

Service to Humanity and the PlanetDevoting your life in self-less service to your purpose and vision

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Financial StabilityShareholder value, organisational growth, employee health, safety. Control, corruption, greed

BelongingLoyalty, open communication, customer satisfaction, friendship. Manipulation, blame

High PerformanceSystems, processes, quality, best practices, pride in performance. Bureaucracy, complacency

Continuous Renewal and LearningAccountability, adaptability, empowerment, teamwork, goals orientation, personal growth

Building Corporate CommunityShared values, vision, commitment, integrity, trust, passion, creativity, openness, transparency

Strategic Alliances and PartnershipsEnvironmental awareness, community involvement, employee fulfillment, coaching/mentoring

Service To Humanity And The PlanetSocial responsibility, future generations, long-term perspective, ethics, compassion, humility

Stages in the Development of Organisational Consciousness

Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

Survival

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Stages in the Development of National Consciousness


Economic Stability Prosperity. Health, Defense, Social Safety Nets. Corruption, Greed, Violence

Social StabilityConflict Resolution, Racial Harmony, Rituals. Discrimination, Intolerance

Institutional EffectivenessRule of Law, National Pride, Governmental Efficiency. Bureaucracy, Elitism, Power

Democratic ProcessesEquality, Freedom of Speech, Consensus, Adaptability, Accountability.

Strong Cohesive National IdentityTrust, Openness, Transparency, Shared Vision and Values, Fairness.

Strategic Alliances with Other NationsRegional Collaboration, Environmental Awareness, Quality Of Life.

Global SustainabilityHuman Rights, Future Generations, Ecological Resilience.

Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

Survival

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Placement of Values by Level

Current Culture 100 Employees

Top Ten Values

1. tradition (L) (59)

2. diversity (54)

3. control (L) (53)

4. goals orientation (46)

5. knowledge (43)

6. creativity (42)

7. productivity (37)

8. image (L) (36)

9. profit (36)

10. open communication (31)

10

42 5

7

9

6

8

3

110

Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

Survival

25

Cultural Entropy

Distribution of Values by Level

Current Culture 100 Employees

11%

1

2

3

4

5

6

7Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

Survival

Individual Values Assessments (IVA)

What are Values?

Values - A shorthand method of describing our individual and collective motivations and what is important to us.

Values can be positive or potentially limiting.

Positive Values: trust, creativity, passion, honesty, integrity, clarity

Potentially Limiting Values: power, blame, greed, status, being liked

Personal Values

Pick ten values/behaviours that most reflect who you are, not who you desired to become.

Current Culture Values

Pick ten values/behaviours that most reflect how your organisation currently operates.

Desired Culture Values

Pick ten values/behaviours that, in your opinion, are essential for your organisation to achieve its highest performance.

Henry

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

Personal Values Current Culture Values Desired Culture Values

IRS (P)= 5-5-0 | IRS (L)= 0-0-0 IROS (P)= 0-0-5-0 | IROS (L)= 1-3-1-0 IROS (P)= 2-2-5-1 | IROS (L)= 0-0-0-0

Matches

PV - CC 0CC - DC 1PV - DC 1

Health Index (PL)

PV: 10-0CC: 5-5

DC: 10-0

1. accountability 4(R)

2. achievement 3(I)

3. coaching/mentoring 6(R)

4. creativity 5(I)

5. ethics 7(I)

6. listening 2(R)

7. open communication 2(R)

8. personal fulfillment 6(I)

9. responsibility 4(I)

10. trust 5(R)

Black Underline = PV & CC Orange = CC & DC P = Positive L = Potentially Limiting I = Individual O = Organizational

Orange = PV, CC & DC Blue = PV & DC (white circle) R = Relationship S = Societal

1. bureaucracy (L) 3(O)

2. caution (L) 1(I)

3. control (L) 1(R)

4. cost reduction 1(O)

5. customer satisfaction 2(O)

6. efficiency 3(O)

7. information hoarding (L) 3(R)

8. power (L) 3(R)

9. productivity 3(O)

10. profit 1(O)

1. community involvement 6(S)

2. customer satisfaction 2(O)

3. employee fulfilment 6(O)

4. empowerment 4(R)

5. information sharing 4(O)

6. integrity 5(I)

7. open communication 2(R)

8. organisational growth 1(O)

9. personal growth 4(I)

10. results orientation 3(O)

Values Plot Copyright 2009 Barrett Values Centre May 2009

The values that are important to

Henry in his personal life.

How Henry experiences the company - What is working well? What is undermining the sustainability

of the company.

What Henry

believes is necessary

for the company to achieve

its full potential

Henry

Current Culture Values Desired Culture Values

Finance Finance

Fitness Client Relations

Evolution Culture

Societal Contribution


Current Culture Desired Culture

Financecost reduction

profitorganisational

growth

Fitness

bureaucracy (L)

efficiency

information hoarding (L)

productivity

results orientation

Client Relations

customer satisfaction

customer satisfaction

Evolution caution (L)

Culturecontrol (L)

power (L)

employee fulfilment

empowerment

open communication

personal growth


community involvement

Business Needs Copyright 2009 Barrett Values Centre May 2009

Top current culture values

assigned to Business Needs

Scorecard

Top desired culture values

assigned to Business Needs

Scorecard

Top current culture values

Top desired culture values

Organisational (Cultural) Values Assessments

What is Culture?

“The way things are done around here”

The culture of an organisation or any group of individuals is a reflection of the values, beliefs and behaviours of leaders of the group and the legacy of past leaders.

Engineering and Projects Company (339)

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1



Matches


Health Index (PL)

PV: 10-0CC: 7-3

DC: 10-0

1. honesty 169 5(I)

2. accountability 165 4(R)

3. commitment 150 5(I)

4. continuous learning 92 4(I)

5. balance (home/work) 91 4(I)

6. family 91 2(R)

7. self-discipline 91 1(I)

8. responsibility 89 4(I)

9. respect 81 2(R)

10. open communication 76 2(R)



1. continuous improvement

111 4(O)

2. customer satisfaction

111 2(O)

3. safety conscious 102 1(O)

4. cost reduction 88 1(O)

5. job insecurity (L) 77 1(O)

6. inconsistent (L) 75 3(I)

7. teamwork 74 4(R)


9. blame (L) 71 2(R)

10. corporate image 64 3(O)


2. customer satisfaction

147 2(O)

3. continuous improvement

143 4(O)

4. employee development 111 4(O)

5. employee recognition 96 2(R)

6. commitment 95 5(I)

7. inspirational leadership 95 6(O)

8. employee fulfilment 94 6(O)

9. teamwork 90 4(R)

10. professionalism 80 3(O)

Values Plot Copyright 2011 Barrett Values Centre February 2011

The values that are important to

employees in their personal

lives.

How employees experience the company - What is working well? What is undermining the sustainability

of the company.

What employees believe is necessary

for the company to achieve

its full potential

1%

1%

1%

9%

12%

17%

24%

8%

6%

21%

0% 20% 40%

1

2

3

4

5

6

7

6%

5%

12%

10%

8%

14%

11%

9%

5%

20%

0% 20% 40%

1

2

3

4

5

6

7

1%

1%

0%

6%

12%

16%

19%

13%

5%

27%

0% 20% 40%

1

2

3

4

5

6

7

Engineering and Projects Company (339)

C

T

S

Values Distribution Copyright 2011 Barrett Values Centre February 2011

C = Common GoodT = TransformationS = Self-Interest

Positive ValuesPotentially Limiting Values

CTS = 38-21-41Entropy = 3%

CTS = 25-20-55Entropy = 23%

CTS = 37-27-36Entropy = 2%

Personal Values



Total number of votes for all

values at each level

Cultural Entropy % of Votes for Limiting Values

Common Good

Transformation

Self Interest

Definition of Cultural Entropy

Cultural Entropy

Cultural entropy is the amount of energy consumed in unproductive work.

It is a measure of the conflict, friction, and frustration that exists within an organisation or social system.

Cultural Entropy in Organisations

Cultural Entropy

Entropy Impact

<10% Prime: Healthy Functioning

11-19% Minor Issues: Requiring cultural and/or structural adjustment

20-29% Significant Issues: Requiring cultural and structural transformation, and leadership coaching

30-39% Serious Issues: Requiring cultural and structural transformation, leadership mentoring/coaching, and leadership development

40-49% Critical Issues: Requiring cultural and structural transformation, selective changes in leadership, leadership mentoring/coachingand leadership development

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ValueCurrent

Culture VotesDesired

Culture VotesValue Jump

accountability 71 180 109

inspirational leadership 15 95 80

employee fulfilment 23 94 71

employee recognition 28 96 68

employee development 57 111 54

professionalism 36 80 44

efficiency 30 74 44

commitment 55 95 40

honesty 33 70 37

balance (home/work) 29 66 37

Value JumpsValue JumpsVotes for Values in

Current CultureVotes for Values in

Desired Culture

40

ESPOUSED VALUE

CC VOTES DC VOTES Difference*

Customer satisfaction

111 147 +10%

Accountability 71 180 +32%

Honesty 33 70 +11%

Employee fulfilment

23 94 +21%

Espoused Values AnalysisEspoused Values Analysis

Votes for Values in Current Culture

Votes for Values in Desired Culture

41

Nedbank, South Africa: An Example of Cultural Evolution

43

Entropy 13%Entropy 25% Entropy 19% Entropy 17% Entropy 14%

Nedbank: Current Culture Evolution

1. cost-consciousness2. profit 3. accountability 4. community involvement 5. client-driven 6. process-driven7. bureaucracy (L)8. results orientation 9. client satisfaction10. silo mentality (L)

2005

1. cost-consciousness2. accountability 3. client-driven 4. client satisfaction 5. results orientation 6. performance driven7. profit8. bureaucracy (L)9. teamwork 10. community involvement

2006

1. client-driven 2. accountability 3. client satisfaction 4. cost-consciousness5. community involvement6. performance driven 7. profit8. achievement9. being the best 10. results orientation

2007 2008

1. accountability2. client-driven 3. client satisfaction 4. community involvement 5. achievement6. cost-consciousness7. teamwork8. performance driven9. being the best 10. delivery

2009

1. accountability2. client-driven 3. client satisfaction 4. cost-consciousness5. community involvement 6. achievement7. teamwork 8. employee recognition 9. being the best10. performance driven

5 matches4 matches4 matches3 matches 6 matches

44

25%

19%17%

14%13%

0%

5%

10%

15%

20%

25%

2005 2006 2007 2008 2009

Nedbank: Cultural Evolution

Entropy reduction leads to improved performance—increased revenues, profits and share price. Working toward entropy of <10% will result in healthy functioning of the organisation and improvement of staff morale.

Entropy Scores

Entropy risk bands

<10% Healthy functioning10-19% Some problems requiring careful monitoring20-29% Significant problems requiring attention30-39% Crisis situation requiring immediate change40%> Impending risk of implosion, bankruptcy or failure

45

Cultural entropy represents the degree of dysfunction in a culture

Cultural Entropy

Entropy Impact

<10% Prime: Healthy Functioning

11-19% Minor Issues: Requiring cultural and/or structural adjustment

20-29% Significant Issues: Requiring cultural and structural transformation, and leadership coaching

30-39% Serious Issues: Requiring cultural and structural transformation, leadership mentoring/coaching, and leadership development

40-49% Critical Issues: Requiring cultural and structural transformation, selective changes in leadership, leadership mentoring/coachingand leadership development

46

Nedbank: Response Rate to Values Survey

1827

6083

10155

14091

18206

0

4000

8000

12000

16000

20000

2005 2006 2007 2008 2009

63.0%

50.4%

28.0%

35.5%

20.2%

28,898 employees in 2009

Response rate

nu

mb

er

of

pa

rtic

ipa

nts

47

Nedbank: Cultural Evolution

Nedbank Staff Survey Scores

59.6% 66.3%71.5% 75.1% 78.8%

0.0%20.0%40.0%60.0%80.0%

100.0%

2005 2006 2007 2008 2009

48

Revenue grew on average 16.9% (CAGR) per year from 2004 to 2007

Share Price grewon average 20.4% (CAGR) per year from 2004 to 2007

Nedbank: Financial Impact of Cultural Evolution

78

100

134 136

96

0

20

40

60

80

100

120

140

160

2004 2005 2006 2007 2008

Closing share price (Rand)

1402715809

18948

22428 22077

0

5000

10000

15000

20000

25000

2004 2005 2006 2007 2008

Revenue Rm (operating income)

CAGR : Compound Annual Growth Rate

49

Values in Organisations

Tom Boardman Former CEO of Nedbank, South Africa

National and Regional Values Assessments

National/Regional Values Assessments

Denmark Latvia Sweden Canada

Iceland Bhutan USA Belgium

AustraliaUK North West) BrazilFinland

Spain (Extremadura) Macedonia (Skopje) Argentina Venezuela

Entropy Percentages by Nation (2007 – 2010)

72%

63% 60% 58%54% 53% 51% 48%

43% 42% 39%34% 32%

21%

4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Vene

zuel

a

Icel

and

Arg

enti

na

USA

Latv

ia

Belg

ium

Braz

il

Finl

and

UK

(NW

)

Aus

tral

ia

Spai

n (E

XT)

Swed

en

Cana

da

Den

mar

k

Bhut

an

Cultural entropy is a measure of the dysfunction in a social system

National Assessment Sweden: Group (1030)

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1



Matches


Health Index (PL)

PV: 10-0CC: 4-6

DC: 10-0

1. family 472 2(R)

2. humour/ fun 467 5(I)

3. responsibility 388 4(I)


5. honesty 340 5(I)

6. positive attitude 305 5(I)

7. compassion 300 7(R)

8. fairness 262 5(R)

9. adaptability 251 4(I)

10. caring 239 2(R)



1. unemployment (L) 535 1(O)

2. bureaucracy (L) 483 3(O)

3. freedom of speech 408 4(O)

4. uncertainty about the future (L)

369 1(I)

5. materialistic (L) 338 1(I)

6. blame (L) 331 2(R)

7. wasted resources (L) 326 3(O)

8. peace 298 7(S)

9. financial stability 288 1(I)

10. environmental awareness

286 6(S)

1. employment opportunities 629 1(O)

2. financial stability 500 1(I)

3. concern for future generations

423 7(S)

4. effective healthcare 369 1(O)

5. democratic process 300 4(R)

6. nature conservancy 284 6(S)

7. caring for the elderly 267 4(S)

8. environmental awareness

253 6(S)

9. sustainability 248 6(S)

10. caring for the disadvantaged

239 4(S)

Values Plot Copyright 2011 Barrett Values Centre March 2011

The values that are important to people in their personal lives.

How citizens experience the values in Sweden.

The values that

citizens want to

see more of in the country.

National Assessment Sweden: Group (1030)

C

T

S

Values Distribution Copyright 2011 Barrett Values Centre March 2011

C = Common GoodT = TransformationS = Self-Interest

Positive ValuesPotentially Limiting Values

CTS = 42-21-37Entropy = 5%

CTS = 25-16-59Entropy = 42%

CTS = 41-24-35Entropy = 2%

Personal Values



Cultural Entropy Impacts in Nations

Cultural Entropy in Nations

Entropy Impact

< 10% This a low level of entropy and augurs well for the future.

11%-20% This is a relatively low level of entropy indicating that there is some degree of dissatisfaction with the current culture that could lead to social unrest.

21%-30% This is a moderate level of entropy indicating potential unease among the population and/or potential conflict situations that need to be addressed.

31%-40% This is a relatively high level of entropy indicating unresolved issues that if left unaddressed could lead to significant social unrest.

41%-50% This level of entropy indicates leadership issues that if left unaddressed could lead to changes in government.

>51% This is a high level of entropy that could lead to riots, civil disobedience and social unrest. This indicates a need for a change in policy that could also be accompanied by a change in government

56

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sustainability leadership, values and culture

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