ebbfgovernance keynote: aligned human networks by James Jennings

Geneva - 17th to 20th May 2018
ebbf’s 28th international learning event
ethical business building the future,
rethinking the governance  
of your organization
#ebbfgovernance
proceedings
Keynote
James Jennings 
Aligned Human Networks

Aligned Human Networks
James Jennings
At One, Sàrl
ebbf InternationalConference onGovernance
Geneva May 2018
© At One Sàrl 2018

koan
Noun: an unsolvable riddle to show
the limitations of rational thought
Notes: A Koan is an unsolvable riddle in Zen Buddhist practice to show the limitations of rational thought and provoke
Enlightenment.

You know the sound of two hands
clapping; tell me, what is the sound of
one hand?
Notes: An example is What Is the Sound of One Hand Clapping. How many of you have heard of it? Raise your hand.
Now clap. Kidding.
Why go to the trouble of showing the limits of rational thought?

Notes: Economic theory is based on a expedient fiction called homo economicus - rational actor. It is expedient
because it makes the math easier. It doesn’t always make for better answers, just easier calculations. Sometimes we
have the same temptation with governance.

When an economist
says the evidence is
“mixed,” he or she
means the theory says
one thing and the data
say the opposite.
- RichardThaler
Notes: DickThaler was one of my professors 25 years before he won the Nobel Prize for his contributions to
Behavioural Economics. Perhaps I should call him Richard now. Anyway, after he won, a journalist asked him what he
was going to do next. He said he was going to put human beings in economics.
So let’s start with human beings in our discussion of governance. Governance is an expression our beliefs and
aspirations and it has to work for human beings as we are, not a fiction like homo economicus.

Notes: Where to begin with humans? We are complex and layered. I propose to begin at the top with the pinnacle of
human awareness and insight. In religion, philosophy, politics, art we find Enlightenment.That is Enlightenment with a
big E.

Notes: Man exiting Plato’s cave and being blinded by the sun, Arjuna in the Bhagavad Gita being blinded by Krishna
who is brighter than a thousand suns, St. John on the road to Damascus being blinded for 3 days by a light in the sky.

Notes: Despite the appearance that only a chosen few experience Enlightenment, we all have the biology for it. It is
fundamentally inclusive not exclusive. Researchers using brain scans have identified 3 parts of the brain that are
effected during and after an Enlightenment experience. and we all have those parts.
If you hold your hands like this and place them against your head, behind your forefingers is the dorsolateral prefrontal
cortex.This part of the brain is normally most active when you are thinking about anything or focusing attention on a
specific task like solving a math problem.
Inside thumbs is the parietal lobe, where your sense of self originates. In both these areas, during an Enlightenment
experience, activity drops 40% or more.

We are One
Notes: One’s sense of self dissipates or is extinguished.Thinking shuts down. Sensing goes into overdrive. People
describe an instantaneous awakening, a bright light, a sense of super-connectedness or unity with everything
everywhere.
That sense of connectedness can be distilled into three words. We are One. [pause and pause again breathe] Looking
around the room, many of us have experienced it or believe it.
why did I start with We are One?
When thinking, there is always a risk that we start with homo economicus or some other expedient fiction. By starting
with the highest level of human insight, we can align the governance system and hold it accountable to our humanity.

Notes: For example,Thomas Jefferson wrote “We hold these truths to be self evident, that all Men are created equal.

Notes:The US Constitution begins We the People in Order to form a more perfect Union establish Justice. Notice that
justice is first. Ahead of domestic tranquility, common defense and general welfare. If you look behind Equality and
justice you see we are one.

belief
goals
language
Commun-
ication
Incentives
value
proposition
leadership
culture
Notes: ebbf is ethical business, so let’s apply we are one to governance in business. First lets look at common
mechanisms of governance. goals, language, communication, incentives, value proposition, leadership, culture

belief
goals
language
Commun-
ication
Incentives
value
proposition
leadership
culture
Notes: together and in myriad combinations, they can make a system of governance. Governance is not a silver bullet,
more like a silver web.The pieces support and amplify each other.

We are
One
Goals
Language
Commun-
ication
Incentivesvalue
proposition
leadership
culture
Notes: How may goals? Many or one? One.
How many measures or KPIs? Many or one? One.
How many conversations about performance? Many or one? One.
How incentive pools? Many or one? One.
You might have started to think about how this might work or why it can’t work. One conversation? With everyone?
Sales and Operations don’t have the same goal. Indulge me a few more minutes.

Bob Stiller
• Open-Book Management
• Appreciative Inquiry
• GettingThings Done
• Mindfulness
• Situational Leadership
• And others…
Notes:
From 2000 to 2009, I worked at Keurig Green Mountain, a publicly traded American coffee company, as it grew from
$100 to $900 million. Bob Stiller, the founder and CEO, was a visionary who brought many practices into the company
that expressed his fundamental belief in people. One was open-book management.

Goals
Language
Commun-
ication
Incentives
Notes: Open Book Management is a system of governance that has one goal, one conversation about performance,
and one universal incentive pool.

Things
Money
Notes: For everyone to be able to participate, we all need to speak the same language.To enable us to create the future
together, we have to be talking about the future. Let me say a little more about these.
Most organizations are bilingual. Not French and English. Companies speak the language of things and the language of
money.

Language of things
Practical
Intuitive, common
Horizontal
– From input to output
– From farm to table
– How people talk about creating
value for customers
Real time
Notes:The language of things is the common language. it is practical, intuitive, horizontal and real time. Cases of
coffee, customers, phone calls, trucks, nuts and bolts.

Language of money
Abstract
– Can’t be seen or touched
Elite
– owners, management and finance
Vertical
– Rolls up
Periodic (not real time)
Notes:The language of money is abstract, elite, vertical, periodic. It is the language of owners, boards, management
and finance. Money is the language of power in business.

Notes: A minority of people speak finance so it is a barrier to participation. Like any language, if you are not fluent, you
hold back. When first learning French, you learn descriptions and transactions. You are less likely to have the
vocabulary and grammar to talk about values and other things of importance to you.
How can you talk about sustainability if you just know colors, construction equipment and animals?

Language is a significant
barrier to participation…
so it is a barrier to realizing
our values of justice,
equality, and human
nobility.
Notes: If you believe that we are one and that what connects us is more real than what separates us, then we need to
dispel the illusion that some people do not deserve to be part of the conversation.
By learning the language of power and using it, the artificial barriers between those who govern and the governed
dissolve

Notes: Financial reports are the rear view mirror.They can’t help drive. So our primary conversation is a 90 day rolling
forecast.The future is where we anticipate, plan, adapt. If you want to engage people’s curiosity, creativity,
compassion, sense of adventure, boldness, empathy, and commitment then we are best served by talking about the
future.
Let’s bring this down to earth.

We are One
Goals
language
Commun-
ication
Incentives
value
proposition
leadership
culture
Notes:The first step to set our goal was to listen. We surveyed all employees, interviewed senior leaders, reviewed 5 years of
financials. For our issues and ambitions, our goal was expressed in net operating income. So that everyone could be engaged,
we taught financial literacy to everyone. Production line workers, service techs, accounts payable clerks, marketing project
managers, call centre reps, HR admins. Everyone.
So we had one goal and one language.

We are One
Goals
language
Commun-
ication
Incentives
value
proposition
leadership
culture
Notes: We mapped the income statement to the people who made the decisions that effected revenue and expenses.
We met once a week for an hour to update a rolling 90 day forecast of the entire income statement.
So you don’t have the wrong picture about this in your mind, each person would update their forecast by saying
something like Period 5 no change. Period 6 up 6000 to 58000. Period 7 no change. Someone might ask for a
clarification. Overall, a very light touch.
When actuals came in, we calculated forecast accuracy. Someone who was dead on or within a couple percent knew
their business.That earned respect and trust. If someone had low forecast accuracy, they didn’t understand their
business.This accelerated learning though feedback, transparency and emergent cultural norms.

Controller
Mktg
Sales
Ops
Purch
HR
IT
Notes:To compare. In the old world, the Controller reviews actuals versus budget than contacts line managers to
explain variances. Nobody looked forward to those calls, not even the controller.The marketing guy might say “we had
a favourable expense variance of $60K.”The finance guy would roll up all the numbers and report to the senior
leadership team.

Controller
Mktg
Sales
Ops
Purch
HR
IT
Notes:

Controller
Mktg
Sales
Ops
Purch
HR
IT
Notes: New world, all the line managers and execs are in the same room.The marketing guy says “I had a favourable
budget variance of $60K.” Polite applause then the sales guy asks what that was for.The marketing guy explains, “The Q1
promotion won’t be ready until Q3.” Sales guy takes revenue down. Ops doesn’t schedule overtime and temp labor. Supply
chain puts a hold on purchase orders.
Accountability is where it belongs but more importantly, people are steering the company together in real time.

We are One
Goals
Measures
Commun-
ication
Incentives
Notes: We had one goal, one language and one conversation about upcoming performance. What about money? Aren’t
people motivated by money?
For some people, it was about the money. For most, money was recognition for creating value. It was recognition of us
engaging our curiosity, creativity, compassion, sense of adventure, willingness to collaborate, boldness, empathy, and
commitment toward a common goal and being successful.

Monday October 22, 2001
Notes: Case in point. Monday October 22, 2001 there was an argument in the office next to me then the door slammed.
TheVP of sales and marketing had just fired the national sales director. At 5 pm, I was in charge of the National Sales
Team.
A few days later, theVP told me that we were overstaffed for our revenue and I had to choose 2 positions to eliminate.
It felt wrong, but I did it.That quarter, the company made earnings and theVP along with his peers got paid bonus.
There was a lot of water cooler talk around the company.They get rich and we get screwed.

We are One
Goals
Measures
Commun-
ication
Incentives
Notes: The universal bonus pool is a key element of open-book management.There was one goal, one language, one
conversation and one bonus pool. It paid out proportional to base compensation.
We could forecast earnings, so we could also forecast bonus. People could connect the decisions they made day to day
with the company goals and their compensation.
When do people take open book management seriously? When the first quartlerly bonus checks get paid.

Open-Book Management changes
how power and information are
distributed within a structure.
Notes: Open-book doesn’t change the organizational structure. It changes how power and information are distributed
within a structure.That is worth saying twice. It changes how power and information are distributed within a structure.
Meeting weekly gave us the perspective, skills and confidence to solve our own problems without the need for further
guidance or clarification. By having hundreds of people participating in these weekly interactions, we saved an
incalculable amount of time that was no longer needed to seek clarification or permission.

We are One
Goals
Measures
Commun-
ication
IncentivesLeadership
Value
Proposition
Processes
Notes: As I said a the beginning, Governance is an expression our beliefs and aspirations, mechanisms to achieve them.
When we are clear about what we believe, we can ensure the mechanisms work together.
I’m a fan of Open-Book because of its speed, simplicity and power. We implemented it with an excel spreadsheet and a
meeting one hour per week. Nevertheless, it has its boundaries. Open-Book has these components and does not
explicitly include these.There is opportunity to align and integrate other parts of the governance system.

When you appeal to people at the highest
level of thinking, you get the highest level of
performance.
-Jack Stack, CEO SRC
Notes: Open-book has been hiding in plain sight for 30 years.The man who coached us at GMCR has coached over
400 companies. Many are small, but some you’ve heard of. Southwest Airlines, Harley Davidson, CarlsonWagonlit,
Zambian Consolidated Copper Mines. None are doing it because they are enlightened.They are doing it because it
works.That is the good news.You don’t need to believe anything for it to work.
It is a governance system that embraces and encourages human beings to be at our best and rewards us for the value
we create.

Meaningful Conversations
We hold these truths to be self evident…
How can we express those beliefs in
governance mechanisms?
What do you need to defend against?
Notes: Get into groups.Two questions. 1. We hold these truths to be self evident… what do you believe that should be
the sun in the solar system of your governance system. 2. How do you express those beliefs in governance mechanisms
like metrics, communication, rewards, human performance management, leadership.

what is the sound of one hand?
Notes: what is the sound of one hand clapping?You can’t reason your way to it. A key is in the charkas – the body’s
energy centers in Hindu and Buddhist traditions.The name of the 4th chakra is anahata. In English it means unstruck. It
is the sound produced when two parts do not strike each other.
You can only have impact when there is separation. However, when you love, when we are one, there is no separation,
no impact and no sound.There can still be movement, dynamism. It isn’t about being locked in an embrace. Instead,
imagine dance partners.
at one with yourself,
are at one with your customers
at one with your coworkers
When the elements of your governance system are at one with each other, there is no separation and no impact.

Service to
or
Service with
Notes: Last year, Dhairya Pujara told of a project in Africa. In his story, he made a distinction between “service to” and
“service with.” “Service to” implies separateness and worse a hierarchical separateness. It is supposed to sound
humble, but is still egotistical. As an alternative, he described “Service with” as shoulder to shoulder. Both parties learn
and both benefit. Effect without impact.
That is the sound of one hand clapping.

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