Category Archives: Leadership

How Corporate DAOs Are Rewriting the Rules of Governance

The Code of Consensus

LAST UPDATED: November 14, 2025 at 2:43 PM

How Corporate DAOs Are Rewriting the Rules of Governance

GUEST POST from Art Inteligencia

In our increasingly Agile World, the pace of decision-making often determines the pace of innovation. Traditional hierarchical structures, designed for stability and control, frequently become bottlenecks, slowing progress and stifling distributed intelligence. We’ve previously explored the “Paradox of Control,” where excessive top-down management inhibits agility. Now, a new organizational model, emerging from the edges of Web3, offers a powerful antidote: the Decentralized Autonomous Organization (DAO).

For most, DAOs conjure images of cryptocurrency projects and esoteric online communities. However, the underlying principles of DAOs — transparency, automation, and distributed governance — are poised to profoundly impact corporate structures. This isn’t about replacing the CEO with a blockchain; it’s about embedding a new layer of organizational intelligence that can accelerate decision-making, empower teams, and enhance trust in an era of constant change.

The core promise of a corporate DAO is to move from governance by committee and bureaucracy to governance by consensus and code. It’s a human-centered change because it redefines power dynamics, shifting from centralized authority to collective, transparent decision-making that is executed automatically.

What is a Decentralized Autonomous Organization (DAO)?

At its heart, a DAO is an organization governed by rules encoded as a computer program on a blockchain, rather than by a central authority. These rules are transparent, immutable, and executed automatically by smart contracts. Participants typically hold “governance tokens,” which grant them voting rights proportionate to their holdings, allowing them to propose and vote on key decisions that affect the organization’s operations, treasury, and future direction.

Key Characteristics of Corporate DAOs

Transparency: All rules, proposals, and voting records are visible on the blockchain, eliminating opaque decision-making.
Automation: Decisions, once approved by the community (token holders), are executed automatically by smart contracts, removing human intermediaries and potential biases.
Distributed Governance: Power is spread across many participants, rather than concentrated in a few individuals or a central board.
Immutability: Once rules are set and decisions made, they are recorded on the blockchain and cannot be arbitrarily reversed or altered without further community consensus.
Meritocracy of Ideas: Good ideas, regardless of who proposes them, can gain traction through transparent voting, fostering a more inclusive innovation culture.

Key Benefits for Enterprises

While full corporate adoption is nascent, the benefits of integrating DAO principles are compelling for forward-thinking enterprises:

Accelerated Decision-Making: Bypass bureaucratic bottlenecks for specific types of decisions, leading to faster execution and greater agility.
Enhanced Trust & Accountability: Immutable, transparent records of decisions and resource allocation build internal and external trust.
Empowered Workforce: Employees or specific teams can be granted governance tokens for defined areas, giving them real, verifiable influence over projects or resource allocation. This boosts engagement and ownership.
De-risked Innovation: DAOs can manage decentralized innovation funds, allowing a wider array of internal (or external) projects to be funded based on collective intelligence rather than a single executive’s subjective view.
Optimized Resource Allocation: Budgets and resources can be allocated more efficiently and equitably through transparent, community-driven proposals and votes.

Case Study 1: Empowering an Internal Innovation Lab

Challenge: Stagnant Internal Innovation Fund

A large technology conglomerate maintained a multi-million-dollar internal innovation fund, but its allocation process was notoriously slow, biased towards executive favorites, and lacked transparency. Project teams felt disempowered, and many promising ideas died in committee.

DAO Intervention:

The conglomerate implemented a “shadow DAO” for its innovation lab. Each internal project team and key R&D leader received governance tokens. A portion of the innovation fund was placed into a smart contract governed by this internal DAO. Teams could submit proposals for funding tranches, outlining their project, milestones, and requested budget. Token holders (other teams, R&D leads) would then transparently vote on these proposals. Approved proposals automatically triggered fund release via the smart contract once specific, pre-agreed milestones were met.

The Human-Centered Lesson:

This shift democratized innovation. It moved from a subjective, top-down funding model to an objective, peer-reviewed, and code-governed system. It fostered a meritocracy of ideas, boosted team morale and ownership, and significantly accelerated the time-to-funding for promising projects. The “Not Invented Here” syndrome diminished as teams collectively invested in each other’s success.

Case Study 2: Supply Chain Resilience through Shared Governance

Challenge: Fragmented, Inflexible Supplier Network

A global manufacturing firm faced increasing supply chain disruptions (geopolitical, natural disasters) and struggled with a rigid, centralized supplier management system. Changes in sourcing, risk mitigation, or emergency re-routing required lengthy contracts and approvals, leading to significant delays and losses.

DAO Intervention:

The firm collaborated with key tier-1 and tier-2 suppliers to form a “Supply Chain Resilience DAO.” Participants (the firm and its trusted suppliers) were issued governance tokens. Critical, pre-agreed operational decisions — such as activating emergency backup suppliers, re-allocating shared logistics resources during a crisis, or approving collective investments in new sustainable sourcing methods — could be proposed and voted upon by token holders. Once consensus was reached, the smart contracts could automatically update sourcing agreements or release pre-committed funds for contingency plans.

The Human-Centered Lesson:

This created a robust, transparent, and collectively governed supply network. Instead of bilateral, often adversarial, relationships, it fostered a collaborative ecosystem where decisions impacting shared risk and opportunity were made transparently and efficiently. It transformed the human element from reactive problem-solving under pressure to proactive, consensus-driven resilience planning.

The Road Ahead: Challenges and Opportunities

Adopting DAO principles within a traditional corporate environment presents significant challenges: legal recognition, integration with legacy systems, managing token distribution fairly, and overcoming deep-seated cultural resistance to distributed authority. Yet, the opportunities for enhanced agility, transparency, and employee empowerment are too compelling to ignore.

For human-centered change leaders, the task is clear: begin by experimenting with “shadow DAOs” for specific functions, focusing on clearly defined guardrails and outcomes. It’s about taking the principles of consensus and code and applying them to solve real, human-centric organizational friction through iterative, experimental adoption.

“The future of corporate governance isn’t just about better software; it’s about better social contracts, codified for trust and agility.”

Your first step toward exploring DAOs: Identify a specific, low-risk internal decision-making process (e.g., allocating a small innovation budget or approving a new internal tool) that currently suffers from slowness or lack of transparency. Imagine how a simple, token-governed voting system could transform it.

Image credit: Google Gemini

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How to Survive the Next Decade

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The Not So Obvious or Easy Answer

How to Survive the Next Decade

GUEST POST from Robyn Bolton

Last week, I shared that 74% of executives believe that their organizations will cease to exist in ten years. They believe that strategic transformation is required, but cite the obvious problem of organizational inertia and the easy scapegoat of people’s resistance to change.

Great. Now we know the problem. What’s the solution?

The Obvious: Put the Right People in Leadership Roles

Flipping through the report, the obvious answers (especially from an executive search firm) were front and center:

Build a top team with relevant experience, competencies, and diverse backgrounds
Develop the team and don’t be afraid to make changes along the way
Set a common purpose and clear objectives, then actively manage the team

The Easy: Do Your Job as a Leader

OK, these may not be easy but it’s not that hard, either:

Relentlessly and clearly communicate the why behind the change
Change one thing at a time
Align incentives to desired outcomes and behaviors
Be a role model
Understand and manage culture (remember, it’s reflected in the worst behaviors you tolerate)

The Not-Obvious-or-Easy-But-Still-Make-or-Break: Deputize the Next Generation

Buried amongst the obvious and easy was a rarely discussed, let alone implemented, choice – actively engaging the next generation of leaders.

But this isn’t the usual “invite a bunch of Hi-Pos (high potentials) to preview and upcoming announcement or participate in a focus group to share their opinions” performance most companies engage in.

This is something much different.

Step 1: Align on WHY an “extended leadership team” of Next Gen talent is mission critical

The C-Suite doesn’t see what happens on the front lines. It doesn’t know or understand the details of what’s working and what’s not. Instead, it receives information filtered through dozens of layers, all worried about positioning things just right.

Building a Next Gen extended leadership team puts the day-to-day realities front and center. It brings together capabilities that the C-Suite team may lack and creates the space for people to point out what looks good on paper but will be disastrous in practice.

Instead, leaders must commit to the purpose and value of engaging the next generation, not merely as “sensing mechanisms” (though that’s important, too) but as colleagues with different and equally valuable experiences and insights.

Step 2: Pick WHO is on the team without using the org chart

High-potentials are high potential because they know how to succeed in the current state. But transformation isn’t about replicating the current state. It requires creating a new state. For that, you need new perspectives:

Super connecters who have wide, diverse, and trusted relationships across the organization so they can tap into a range of perspectives and connect the dots that most can barely see
Credible experts who are trusted for their knowledge and experience and are known to be genuinely supportive of the changes being made
Influencers who can rally the troops at the beginning and keep them motivated throughout

Step 3: Give them a clear mandate (WHAT) but don’t dictate HOW to fulfill it

During times of great change, it’s normal to want to control everything possible, including a team of brilliant, creative, and committed leaders. Don’t involve them in the following steps and be open to being surprised by their approaches and insights:

At the beginning, involve them in understanding and defining the problem and opportunity.
Throughout, engage them as advisors and influencers in decision-making (
During and after implementation, empower them to continue to educate and motivate others and to make adaptations in real-time when needed.

Co-creation is the key to survival

Transforming your organization to survive, even thrive, in the future is hard work. Why not increase your odds of success by inviting the people who will inherit what you create to be part of the transformation?

Image credit: Pixabay

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How to Make Your Employees Thirsty

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LAST UPDATED: November 5, 2025 at 5:11PM

How to Make Your Employees Thirsty

by Braden Kelley

Last month I had the opportunity to attend Customer Contact Week (CCW) in Nashville, Tennessee and following up on my article The Voicebots Are Coming I’d like to dig into what Shantel Love had to say about the importance of keeping employee engaged as artificial intelligence (AI) starts to take over, and a framework she shared that can help you do so.

Shantel spoke about how Gallup statistics show that for U.S. employees in early 2025, 31% are engaged, 17% are actively disengaged, and 52% are not engaged. This reflects a decade-low engagement level, with active disengagement also at 2014 levels. The global cost of disengagement is estimated at $8.8 trillion annually, or about 9% of global GDP. These statistics are shocking. Do you think they represent reality? If not, leave a comment below supporting your dissent.

Shantel also spoke about how employee disengagement can seep into your profits, customer experience and culture, and that while you can lead a horse to water, you can’t make it drink, but you can make it thirsty. Right on queue comes in Shantel’s WATER framework, for which I have summarized some of the key insights for each of the key components below.

Work That Matters

Does anyone even care about this?
70% of employees disengage because they can’t connect their work to purpose (World Economic Forum)
If your team disappeared tomorrow, what would the business lose?
Write down what the business would lose and tell your team to give them the why (their value and their purpose)

AI as an Accelerator not a threat

AI won’t replace you but it will replace the invisible employee
Employees are still left with the work that nobody notices
As an exercise, ask AI to take your last big project and rewrite it in language that makes your leadership visible
How can I make our customer sentiment visible to leadership? (inputting the sentiments with this AI prompt)

Transparency and Trust

Disengagement is a hidden problem – a profit leak
“Psychological safety is the strongest predictor of innovation across distributed teams.” (MIT Sloan)
People don’t leave a company, they leave a manager – 70% of disengagement starts at the manager level – Managers account for 70% of the variance in team engagement (Is the real point this second one?) — Gallup
What is one belief my team or customer needs restored right now? (transformation you will lead – what you will act on)

Embrace Personal Branding

Most organizations believe that if you encourage your employees to invest in their personal brand, then they are going to leave
Most people achieve less than 20% of their true potential (Forbes)
73% of social media managers say employee post have double the engagement of regular business posts, and 26% say employees triple brand engagement (GaggleAMP)
The biggest room in the world is the room for improvement

Recognition That’s Real

“79% of employees quite because they feel underappreciated.” (OC Tanner research)
You made an impact this week because …

It goes without saying that if you lead your employees to WATER you will find them more engaged (meaning they are no longer disengaged) and as a result they will be of greater service to your customers, and by extension your shareholders. Employee engagement matters, and the pursuit of it by your managers will not only create better leaders, but it will also engage your managers. So, are you ready to give your employees a drink of WATER or are going to insist on keeping them thirsty?

Image credits: Customer Management Practice (CMP)

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Eight Types of Innovation Executives

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Revisited

Eight Types of Innovation Executives

GUEST POST from Stefan Lindegaard

Over the past few decades working with corporate innovation, I’ve noticed recurring patterns especially when it comes to executive leadership.

True, we shouldn’t put leaders in boxes. But we also can’t afford to ignore the signs. That’s why I created this visual: an overview of eight (8) types of innovation executives.

It’s a simple ‘tool’ to help you recognize behaviors, traits, and (in)actions that influence your organization’s innovation capabilities.

By spotting these patterns, you can better understand where your executive team stands and how to move forward with initiatives that strengthen your ability to innovate.

I am curious: which of these types do you recognize in your organization? Or maybe even in yourself? Feel free to drop a comment.

1. No Problem

Best-case scenario: executives who understand innovation and get personally involved.

Hint: Leverage their support to upgrade other key leaders.

2. No Need

“We don’t need innovation.” If that’s the belief, you’ve got a deeper issue.

Hint: Understand the mindset. If change isn’t possible, consider walking away.

3. No Results

“We tried, it didn’t work.” Past failures lead to present resistance.

Hint: Deliver quick wins, back up with data, and rebuild credibility.

4. No Time

“Too busy.” Innovation gets pushed aside by daily demands.

Hint: Integrate with existing priorities—show how everyone wins without adding work.

5. No Money

There’s no budget for innovation, capabilities, or execution.

Hint: Shift the focus to people. Show impact. Demonstrate ROI.

6. No Walk

They say the right things, but take no real action.

Hint: Test for walk vs. talk. Use respectful confrontation to prompt real commitment.

7. No Responsibility

“Not my job. Go ask someone else.” Ownership is missing.

Hint: Innovation is everyone’s responsibility — starting at the top. Align ownership.

8. No Clue

“I’ve never been trained in this.” A lack of understanding, not resistance.

Hint: This is workable. Provide support, context, and practical tools.

Image Credit: Stefan Lindegaard

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74% of Companies Will Die in 10 Years Without Business Transformation

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According to Executives

74% of Companies Will Die in 10 Years Without Business Transformation

GUEST POST from Robyn Bolton

One day, an architect visited the building site of his latest project. There he saw three people all laying bricks. He asked each what they were doing. “I’m laying bricks,” the first responded. “I’m building a wall,” said the second. “I’m building a cathedral,” exclaimed the third.

The parable of the Three Bricklayers is a favorite amongst motivational speakers, urging their audiences to think beyond today’s tasks and this quarter’s goals to commit to a grandiose vision of eternal success and glory.

But there’s a problem.

The narrative changed

The person who had a vision of building a cathedral? They now believe they’re building ruins.

Is the C-Suite Quietly Quitting?

Recently published research found that three out of four executives believe that “without fundamental transformation* their organization will cease to exist” in ten years. That’s based on data from interviews with twenty-four “current or former CEOs who have led successful transformations” and 1,360 survey responses from C-Suite and next-generation leaders.

And, somehow, the news gets worse.

While 77% of C-suite executives report that they’re committed to their companies’ transformation efforts, but 57% believe their organization is taking the wrong approach to that transformation. But that’s still better than the 68% of Next-Gen executives who disagree with the approach.

So, it should come as no surprise that 71% of executives rate their companies’ transformation efforts as not at all to moderately successful. After all, it’s hard to lead people along a path you don’t agree with to a vision you don’t believe in.

Did they just realize that “change is hard in human systems?”

We all fall into the trap of believing that understanding something results in commitment and change.

But that’s not how humans work.

That’s definitely not how large groups of humans, known as organizations, work.

Companies’ operations are driven only loosely by the purpose, structures, and processes neatly outlined in HR documents. Instead, they are controlled by the power and influence afforded to individuals by virtue of the collective’s culture, beliefs, histories, myths, and informal ways of working.

And when these “opaque dimensions” are challenged, they don’t result in resistance,

They result in inertia.

“Organizational inertia kills transformations”

Organizations are “complex organisms” that evolve to do things better, faster, cheaper over time. They will continue doing so unless changed by an external force (yes, that’s Newton’s first law of motion).

That external force, the drive for transformation, must be strong enough to overcome:

Insight Inertia stops organizations from getting started because there is a lack of awareness or acceptance amongst leaders that change is needed.
Psychological Inertia emerges when change demands abandoning familiar success strategies. People embrace the idea of transformation but resist personal adaptation, defaulting to comfortable old behaviors.
Action Inertia sets in and gains power as the long and hard work of transformation drags on. Over time, people grow tired. Exhausted by continuous change, teams progressively disengage, becoming less responsive and decisive.

But is that possible when 74% of executives are simply biding their time and waiting for failure?

“There’s a crack in everything, that’s how the light gets in.”

Did you see the crack in all the doom and gloom above?

43% of executives believe their organizations are taking the right approach to transformation.
29% believe that their organizations’ transformations have been successful.
26% believe their company will still be around in ten years.

The majority may not believe in transformation but only 33% of bricklayers believed they were building a cathedral, and the cathedral still got built.

Next week, we’ll explore how.

Image credit: Pixabay

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Is There a Real Difference Between Leaders and Managers?

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Is There a Real Difference Between Leaders and Managers?

GUEST POST from David Burkus

The debate between leaders vs managers has been a long-standing conversation in professional circles. Some elevate the role of leaders, casting them as visionaries who inspire, while relegating managers to the shadows of administrative drudgery. But does this distinction really matter? More importantly, how can a manager evolve into a true leader? Let’s explore the heart of this conversation and break down why separating leadership from management can sometimes lead to dangerous misconceptions.

Why the Debate Between Leaders vs Managers Matters Less Than You Think

Much of the debate over leaders vs managers hinges on over-idealization. Leaders are often depicted as charismatic figures, visionaries who drive change and inspire their teams. Managers, by contrast, are often painted as the ones who carry out routine, less glamorous tasks. However, this binary thinking is a gross oversimplification. When we separate leaders vs managers too starkly, we set both roles up for failure.

In reality, great leaders need managerial skills to succeed. Likewise, strong managers must cultivate leadership qualities if they aim to have a meaningful impact. Consider recent examples: Adam Neumann of WeWork or Elizabeth Holmes of Theranos—visionaries without the grounding managerial skills to make their ambitious plans a reality. Even Steve Jobs, who is lionized as a leader, struggled as a manager and needed skilled managerial partners like Tim Cook to bring his vision to life. This demonstrates the inherent interdependence of the leader vs manager roles.

Management as a Foundation for Leadership

To understand why leadership is inseparable from management, let’s break down what being a manager entails. In the leader vs manager conversation, management often gets short-changed as “administrative,” but it encompasses setting objectives, removing obstacles, allocating resources, delegating tasks, and ensuring accountability. These tasks are not merely about managing people; they are about creating results and making progress happen.

In contrast, leaders serve to inspire, unify, and mobilize teams around a shared mission. They cast a vision of what can be, rallying people to pursue a goal together. But what use is vision if there is no plan for how to achieve it? This is why the idea of leaders vs managers being wholly distinct from one another can be damaging; leadership without a managerial foundation is fragile.

The Leader vs Manager Hybrid in Action

Successful professionals embody the blend of both roles in the leaders vs managers debate. Consider Steve Jobs again: his visionary prowess would not have led to Apple’s success without the operational grounding provided by Tim Cook. The true distinction between effective leaders and ineffective ones often boils down to their ability to marry visionary leadership with operational execution, revealing that the line separating leaders vs managers is not as clear as it might seem.

Great leaders do not abandon their managerial roots. Even CEOs, often perceived as paragons of leadership, must manage resources, oversee strategy, and allocate people effectively. Leadership might soar at 30,000 feet, but it always requires an anchor on the ground—a reminder that even the most inspiring figures must master the duality inherent in the leader vs manager dynamic.

Evolving From Manager to Leader

For those starting out in management, the path from manager to leader is not instantaneous. When you are first assigned a managerial role, your primary tasks center around administrative competence: running effective meetings, managing budgets, and ensuring project deadlines are met. This foundational period is essential for anyone navigating the leader vs manager journey. Only by mastering these skills can you then focus on expanding your influence, building relationships, and inspiring others.

True leadership emerges gradually. It begins with influence over your team and, as you grow, expands to influence your broader organization. The journey from manager to leader involves understanding the company’s strategic direction, aligning your team’s objectives with broader organizational goals, and participating in or leading conversations about that strategy. For those grappling with the leaders vs managers dichotomy, take note: growth happens through learning and doing, not simply by aspiring.

The Practical Blend of Leaders vs Managers

Ultimately, the debate between leaders vs managers is less important than understanding their interconnectedness. Every organization needs individuals who can inspire and guide while also ensuring operational discipline. Leaders who lose sight of practicalities can steer organizations into chaos. Managers who refuse to inspire can stifle innovation and morale. The true magic lies in combining these strengths: casting a compelling vision and navigating the gritty realities that make it possible.

By blending strong leadership qualities with grounded managerial skills, you become the kind of leader who doesn’t just talk about vision but delivers results. In the end, the best leaders are those who understand their dual responsibility in the leader vs manager equation—and execute both roles masterfully.

Image credit: Unsplash

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Four Pillars of Innovation

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People, Learning, Judgment and Trust

Four Pillars of Innovation

GUEST POST from Mike Shipulski

Innovation is a hot topic. Everyone wants to do it. And everyone wants a simple process that works step-wise – first this, then that, then success.

But Innovation isn’t like that. I think it’s more effective to think of innovation as a result. Innovation as something that emerges from a group of people who are trying to make a difference. In that way, Innovation is a people process. And like with all processes that depend on people, the Innovation process is fluid, dynamic, complex, and context-specific.

Innovation isn’t sequential, it’s not linear and cannot be scripted.. There is no best way to do it, no best tool, no best training, and no best outcome. There is no way to predict where the process will take you. The only predictable thing is you’re better off doing it than not.

The key to Innovation is good judgment. And the key to good judgment is bad judgment. You’ve got to get things wrong before you know how to get them right. In the end, innovation comes down to maximizing the learning rate. And the teams with the highest learning rates are the teams that try the most things and use good judgement to decide what to try.

I used to take offense to the idea that trying the most things is the most effective way. But now, I believe it is. That is not to say it’s best to try everything. It’s best to try the most things that are coherent with the situation as it is, the market conditions as they are, the competitive landscape as we know it, and the the facts as we know them.

And there are ways to try things that are more effective than others. Think small, focused experiments driven by a formal learning objective and supported by repeatable measurement systems and formalized decision criteria. The best teams define end implement the tightest, smallest experiment to learn what needs to be learned. With no excess resources and no wasted time, the team wins runs a tight experiment, measures the feedback, and takes immediate action based on the experimental results.

In short, the team that runs the most effective experiments learns the most, and the team that learns the most wins.

It all comes down to choosing what to learn. Or, another way to look at it is choosing the right problems to solve. If you solve new problems, you’ll learn new things. And if you have the sightedness to choose the right problems, you learn the right new things.

Sightedness is a difficult thing to define and a more difficult thing to hone and improve. If you were charged with creating a new business in a new commercial space and the survival of the company depended on the success of the project, who would you want to choose the things to try? That person has sightedness.

Innovation is about people, learning, judgement and trust.

And innovation is more about why than how and more about who than what.

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The Intersection Between Ethics and Metaphysics

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The Intersection Between Ethics and Metaphysics

GUEST POST from Geoffrey A. Moore

Ethics partners with metaphysics in order to create strategies for living. Metaphysics provides the situation analysis and ethics the prescribed course of action. The two are indispensable to one another. Metaphysics without ethics is idle speculation, ethics without metaphysics, arbitrary action. Taken together, however, they supply our fundamental equipment for living.

In that context, ethics is chartered to help us “do good.” It has two central questions to answer: What kind of good should we want to bring about? and What is the right way to achieve that end? Each one raises its own set of issues to work through.

With respect to what is good, the core issue is that, in English at any rate, the word good has three distinct meanings. It can refer to what is pleasurable, what feels good. It can refer to what is fit for purpose, what works good. And it can refer to actions beneficial to others, what I would argue simply is good. Importantly, these three dimensions can team up with one another to create as many as eight different categories of goodness, illustrated by the table below:

Geoffrey Moore Pleasurable Effective Table

Many of the ethical quandaries philosophers wrestle with arise from trying to unite some or all of these categories into a single concept of goodness. This is simply a mistake. That said, the type of goodness that is most proper to ethics is benevolence, actions beneficial to others (see rows 1,2, 5, and 6). It need not concern itself with either pleasure or effectiveness, both of which, while certainly desirable, are intrinsically amoral.

Focusing on actions beneficial to others, the core of ethics is prescriptive, offering behavioral guidelines that are most likely to generate benevolent outcomes. This is the realm of virtue. Once again, however, there is more than one dimension to take into account, leading to more than one kind of virtue. In this case, it is determined by the situation or context in which the action is undertaken, what we called in The Infinite Staircase the geography of ethics.

The geography of ethics is organized into four zones divided by two defining axes. The first axis distinguishes between society and community, the former being the realm of impersonal third-party relationships, the latter that of personal first-and-second-party relationships). This is essentially the distinction between them and us, and while in its polarized form it can be highly disruptive, it is nonetheless universally observed and absolutely essential to managing human relationships.

The second axis addresses the degree of contact involved, contrasting global situations which involve large populations that have little to no direct contact with each other versus local situations where we participate in exchanges with people we encounter in our daily lives. There is still a distinction between them and us, but local relationships require us to enact and incorporate our responses into our everyday behavior.

When paired, the axes generate four zones, each highlighting a different virtue:

Geoffrey Moore Geography of Ethics

Kindness is unique in that it is the only virtue that is universally valued. It is anchored in unconditional love, something that we as mammals have all personally experienced in our infancy, else we would not be alive today. Unlike the other virtues called out here, it does not depend upon the resources of culture, language, narrative, and analytics to activate itself. Once we engage with those forces, we will find ourselves increasingly at odds with people who have opposing views, but prior to so doing, we are all one family. Kindness, thus, is the glue that holds community together, and as such it deserves our greatest respect.

Fairness comes next. The ability to play fair, something children learn at a very early age, sets us apart from all other animals. That’s because it calls upon narrative and analytics to operationalize itself. Specifically, it asks us to imagine a situation in which we are the other person, and they are us, and to then determine whether or not we would endorse the action under consideration. This is the first bridge to connect us with them, and thus is the foundation for social equity and inclusion. Importantly, it is distinct from kindness, for it is possible to be kind without being fair and to be fair without being kind. Kindness by nature is personal, fairness by nature is impersonal, and together they govern our day-to-day ad hoc relationships.

To scale beyond local governance we must transition from the essentially intuitive disciplines of kindness and fairness to the more formalized ones of morality and justice. Both the latter are essential to social welfare, but neither comes into being easily, and each poses challenges humankind continues to struggle with.

Morality is the actionable extension of metaphysics. It teaches us how to align our behavior with the highest forces in the universe, be they sacred or secular. It does so through inspirational narratives that recruit us into imitating role models and committing to values we will live by, and if necessary, be willing to die for. These values are captured in moral codes that assist our day-to-day decision-making. We judge ourselves and others in terms of how well our actual behavior measures up to these codes.

In this way morality becomes foundational to identity. As such, we want it to be both stable and authoritative. Religion provides stable authority by holding certain texts and traditions to be both sacred and undeniable. This works fine up to the boundaries of the religious faith, but beyond that, it encounters disbelief and unbelief, as well as counter-beliefs, all of which deny such authority. The question for the believers then becomes, is such denial acceptable, or must it be confronted and overcome?

Call this the challenge of righteousness. Deeply moved by their own commitments, the righteous seek to impose moral sanctions on entire populations that do not share their views. The current engagement with abortion rights in the U.S. is a relatively benign example. Conservative parties empowered by the recent action of the Supreme Court are challenging a secular tradition of tolerance that is deeply ingrained in American culture. This tolerance is anchored by the First Amendment’s guarantee of religious freedom, itself a product of the European Enlightenment’s efforts to counteract more than a hundred years of sustained religious warfare between Protestants and Catholics, fueled by righteousness of a similar kind. At present, the First Amendment still has the upper hand, but in other societies, we have watched the opposite unfold, and it can leave deep rents in the social fabric.

Whereas conservatives on the right are challenged when they seek to bend the domain of morality to their ends, progressives on the left are equally challenged when they seek to bend the domain of justice to theirs. Justice represents society’s best attempt to institutionalize fairness at scale. It is comprised of two domains—legal justice and social justice. Legal justice represents the rule of law. It is foundational to safety and security, ensuring accountability with respect to personal acts, laws, elections, and dispute resolution. Social justice, in contrast, represents a commitment to equity. It is aspirational, anchored in empathy for all those who are disadvantaged.

The challenge is that legal justice can reinforce, even institutionalize, social injustice, as both our prison and homeless populations bear witness. This is further exacerbated by failed autocratic states exporting their disadvantaged populations to democratic nations, creating crises of immigration around the world. In response, progressives committed to social justice often seek to subvert legal controls in order to create more equitable outcomes, turning a blind eye to illegal immigration and encampments, as well as misdemeanor crimes like shoplifting and drug use. This has the unintended consequence, however, of encouraging free riders to further exploit these looser controls, pushing the boundaries of tolerance ever closer to intolerability, as cities like San Francisco, Portland, and Seattle can testify.

To operate successfully at scale, both morality and justice call for a balance between accountability and empathy. The righteous tend to withdraw empathy in the name of accountability, the progressives to withdraw accountability in the name of empathy. Neither approach suffices. Citizenship calls for us all to hold these two imperatives in tandem, even when they pull us in opposite directions.

That’s what I think. What do you think?

Image Credit: Unsplash and Geoffrey Moore

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Why Putting Employees First and Customers Second Works

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Why Putting Employees First and Customers Second Works

GUEST POST from David Burkus

What if your company announced that, moving forward, it would be place customers second on its list of priorities?

Sounds crazy. The customer is always right. Surely the customer is always first as well.

But that’s exactly what Vineet Nayar, CEO of HCL Technologies did over a decade ago. He announced that the company’s senior leaders would be placing the needs of employees first, and customers second. And the results have been spectacular.

How The Employees First Strategy Started

In 2006, Vineet Nayar, CEO of HCL, a digital engineering company based in India, boldly told his clients they were no longer the company’s top priority. Instead, the focus would be put on employees first. His belief was simple: happy employees make happy customers. Nayar labeled employees who actually interacted with customers as the “value zone,” where the real business magic happens — and any employee in the value zone received the dedicated focus of managers and support functions.

To bring this to life, he flipped the traditional management structure. He made the organizational chart look like an upside-down pyramid. Turning the hierarchy upside down required making managers accountable to front-line employees and ensuring that those in the support functions actually supported those front-line employees, instead of just insisting that they follow the hierarchy’s rigid systems.

Nayar focused his attention on two areas to ensure that the management and support functions served the front-line: reversing accountability and building transparency. Specifically, 360-degree feedback evaluations were expanded to include more front-line workers’ feedback for managers and senior level executives (that’s the accountability), and crucially those evaluations were made public so everyone who contributed to the survey could see the results (there’s your transparency). In addition, when problems occurred for front-line workers, they could create and own support tickets that their managers would have to address (usually, it’s the other way around in top to bottom organizations).

It’s important to note that HCL Technologies wasn’t a little start up in a garage or even a 50-person company. This was done at a 55,000 person, multinational organization. And, spoiler alert, it’s now grown to over 200,000 employees. Pulling off this flip was no small feat, but the results speak for themselves. Employee satisfaction soared, customer service improved, and revenues nearly tripled. By 2009, HCL was named India’s best employer.

Contrast this story with an example of what can go wrong when employee experience is overlooked. In 2001, Robert Nardelli was the newly minted CEO of Home Depot. Expectations were high given his track record at his old job at General Electric, where he had led several successful manufacturing operations.

At Home Depot, Nardelli noticed the stores were staffed with knowledgeable, full-time employees, and in his opinion, a bit too many. What do new leaders, wrongfully, do when they want to make waves and save money?

Yep, he downsized to optimize costs.

He decided to hire more part-timers, many of whom had less expertise in home improvement. The results were not what he expected. Customers quickly noticed the absence of their favorite employees and the decline in service quality. It turned out that managing a service organization like Home Depot was very different from managing a manufacturing operation.

This story underscores a critical point: leading a service organization requires a different approach — one that prioritizes employee engagement and expertise.

“Employees first, customers second” is still about serving the customer, but it’s about serving the customer through the employees whose job it is to serve the customer. Weird how that works, isn’t it? Understand that helping your employees helps your customers. These two parties are intrinsically tied together.

Research On Employees First

Nayar’s success story isn’t an isolated incidence of dumb luck. There’s research behind this. Researchers at Harvard University found a link between employee satisfaction and profitability. They took aim at a long-standing assumption in the business world that market share is the primary driver of profitability. If a company can increase market share, the thinking went, it will increase sales while taking advantage of economies of scale to lower costs and thus increase profits.

However, when they examined a variety of companies and the existing research, they found that market share is one factor in profitability. But that another factor better explains the most profitable companies: customer loyalty.

Based on their research, they estimated that a mere 5 percent increase in customer loyalty can yield a 25 to 85 percent increase in profitability.

Here’s how it works in practice: Profits are driven by customer loyalty. Customer loyalty is driven by employee satisfaction. And employee satisfaction is driven by putting employees first. They called this The Service-Profit Chain and managers who understand this can create a thriving cycle where employee and customer satisfaction drive each other, ultimately leading to greater business success.

In simple terms, if your business provides a service that your employees have front-line participation in, they are in essence an embodiment of the company, not you or the CEO. The entire brand, the experience, the service rests on those front-line employees. If they aren’t taken care of — if they aren’t satisfied — the customer tends to notice.

How Employees First Creates Customer Loyalty

Employee loyalty is a deep indicator of future performance for service organizations. It’s worth noting that there is a subtle difference between employee satisfaction and employee loyalty. Satisfaction derives from how happy employees are in their role. Loyalty comes from having a real stake in the success of the business. Without loyalty, employees leave for better opportunities, then high turnover rates drive up recruitment and training costs, disrupt productivity, and can negatively impact customer experiences. When employees stay longer, companies save on hiring costs, maintain productivity gains, and create a more positive environment for customers.

Simply put, loyal employees lead to loyal customers.

Great service leaders recognize that improving employee retention involves providing opportunities for growth and advancement. This approach keeps talented employees closer to the customer for longer periods, which directly impacts customer satisfaction and loyalty.

Take Whole Foods Market, for example. They have crafted their entire system — from their rigorous selection process to compensation methods — to encourage front-line employees to stay and thrive. Teams at Whole Foods are responsible for setting key metrics, making decisions on how to meet these targets, and even choosing what food items to buy locally. They’re rewarded with bonuses based on team performance, which often includes finding creative ways to boost sales to balance out labor costs. After three years on the job, employees receive stock options, which further incentivizes them to stay.

Additionally, Whole Foods allows employees to vote every three years on various aspects of the benefits package, from community service pay to health insurance provisions. All these factors contribute to Whole Foods’ remarkably low turnover rate of less than 10 percent for full-time employees after the probationary period — far below the industry average.

The results speak for themselves: Whole Foods is regularly rated as one of the best places to work, known for excellent customer service, and boasts some of the highest profits per square foot in the grocery retail industry.

This success is a testament to the power of employee loyalty in driving exceptional service. Great service leadership isn’t just about managing day-to-day operations — it’s about creating an environment where employees feel valued, empowered, and committed. By focusing on employee loyalty, service leaders can build stronger customer relationships and achieve sustainable success.

Employees First For All Leaders

You may not have the power in your organization to completely flip the hierarchy. But there’s still an important lesson for leaders at all levels: Flip the accountability. This can look like bringing in more feedback from front-line employees or just seeing the structure of your team differently. You work for your team. Don’t squeeze your team; foster them to do well.

In addition, give your employees real stakes and invest in them. Prioritize training and growth opportunities for your employees so they know you’re committed to not just their output, but their career. Parties, gift certificates, awards, summer Fridays, bonuses — all of these are great. Do those things. But those are more employee appreciation, not real development. Development looks like sending your rising stars to conferences, workshops, night school even, if you have the budget. Things you think will help them grow as employees, spark innovation, and create future leaders.

Conclusion

If I could put a message on a billboard in front of every Fortune 500 company, it would be this:

People don’t work for you.

Smart leaders know that employees work with them, and ultimately, leaders work for their people. Embracing the “employees first, customers second” philosophy means prioritizing the well-being and growth of employees, enabling them to deliver outstanding service. Happy, engaged employees create satisfied customers. When leaders invest in their teams’ success and happiness, they cultivate a culture where customers feel valued, leading to long-term loyalty and a thriving business.

Image credit: David Burkus

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Picking Innovation Projects in Four Questions or Less

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Picking Innovation Projects in Four Questions or Less

GUEST POST from Mike Shipulski

It’s a challenge to prioritize and choose innovation projects. There are open questions on the technology, the product/service, the customer, the price and sales volume. Other than that, things are pretty well defined.

But with all that, you’ve still go to choose. Here are four questions that may help in your selection process:

1. Is it big enough?

The project will be long, expensive and difficult. And if the potential increase in sales is not big enough, the project is not worth starting. Think (Price – Cost) x Volume. Define a minimum viable increase in sales and bound it in time. For example, the minimum incremental sales is twenty five million dollars after five years in the market. If the project does not have the potential to meet those criteria, don’t do the project. The difficult question – How to estimate the incremental sales five years after launch? The difficult answer – Use your best judgement to estimate sales based on market size and review your assumptions and predictions with seasoned people you trust.

2. Why you?

High growth markets/applications are attractive to everyone, including the big players and the well-funded start-ups. How does your company have an advantage over these tough competitors? What about your company sets you apart? Why will customers buy from you? If you don’t have good answers, don’t start the project. Instead, hold the work hostage and take the time to come up with good answers. If you come up with good answers, try to answer the next questions. If you don’t, choose another project.

3. How is it different?

If the new technology can’t distinguish itself over existing alternatives, you don’t have a project worth starting. So, how is your new offering (the one you’re thinking about creating) better than the ones that can be purchased today? What’s the new value to the customer? Or, in the lingo of the day, what is the Distinctive Value Proposition (DVP)? If there’s no DVP, there’s no project. If you’re not sure of the DVP, figure that out before investing in the project. If you have a DVP but aren’t sure it’s good enough, figure out how to test the DVP before bringing the DVP to life.

4. Is it possible?

Usually, this is where everyone starts. But I’ve listed it last, and it seems backward. Would you rather spend a year making it work only to learn no one wants it, or would you rather spend a month to learn the market wants it then a year making it work? If you make it work and no one wants it, you’ve wasted a year. If, before you make it work, you learn no one wants it, you’ve spent a month learning the right thing and you haven’t spent a year working on the wrong thing. It feels unnatural to define the market need before making it work, but though it feels unnatural, it can block resources from working on the wrong projects.

Conclusion

There is no foolproof way to choose the best innovation projects, but these four questions go a long way. Create a one-page template with four sections to ask the questions and capture the answers. The sections without answers define the next work. Define the learning objectives and the learning activities and do the learning. Fill in the missing answers and you’re ready to compare one project to another.

Sort the projects large-to-small by Is it big enough? Then, rank the top three by Why you? and How is it different? Then, for the highest ranked project, do the work to answer Is it possible?

If it’s possible, commercialize. If it’s not, re-sort the remaining projects by Is it big enough? Why you? and How is it different? and learn if It is possible.

Image credit: Pexels

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