Insigniam Quarterly Winter 2013 - Disruptive Leadership

VO L U M E 1 , I S S U E 4 | W I N T E R 2 013
REINVENTING
AN
ENTERPRISE
Solvay’s CEO
Jean-Pierre
Clamadieu talks
about building a
new company after
a merger.DISRUPTIVE
LEADERSHIPWHO IS INVENTING THE RULES
IN YOUR MARKET?
Building Circles of Trust
Simon Sinek explores
how to lead so that
people can thrive.
Survival at
the Tipping Point
Can a focus on results
instead of revenues
transform your business
in a time of uncertainty?

The last couple of decades proved to us that winning as
an executive required the ability to effectively and quickly
manage change. Agility and speed were the passwords
into the winner’s circle.
But, if yesterday’s winners were the masters of change
management, then who are the winners of tomorrow? How
do you gain a competitive edge in a world where leaders
and enterprises have already developed the ability to
embrace and integrate ongoing change?
Today, to lead among leaders is to be the person who sets
the course, changes the rules, and rewrites conventions,
the person who invents the rules of the game.
— JENNIFER ZIMMER
PARTNER, INSIGNIAM

LETTER
J
Jean-Pierre Clamadieu, the new CEO at Belgian chemical company Solvay
who appears on our cover, is very clear and direct about a keystone to being
successful as a disruptive leader.
“You are not a transformational hero who is carrying the weight of the
transformation on your own shoulders,” he told us.“You need to have a
strong team around you who have the ability to support the changes.”
It’s sometimes hard to think in those terms, especially when considering the
responsibilities that leaders are faced with. But person after person told us that
disruptive leadership is not a solo act.The vision for your enterprise’s future
may be yours — and you have to have a bold vision — but it takes a team of
people who have bought into that vision to make it a reality, because that’s
what disruptive leaders do.
•• They ask tough questions. Not “why didn’t we” questions but “why can’t
we” questions.
•• They present a bold vision, one that seems impossible on its face.
•• They align everything in the enterprise to turn that vision into a reality.
•• They inspire everyone on their team and in their organization to make
that vision happen.
So if you are still trying to shoulder the burdens of leadership alone, stop.
Look around you and see who you are surrounding yourself with? Are they,
as our own Nathan Rosenberg asks in this issue, committed to your vision for
the future or merely complying with your directives?
Shideh Sedgh Bina
Founding Partner, Insigniam
WINTER 2013 INSIGNIAM QUARTERLY 1
LEADERSHIP ISN’T A SOLITARY
JOURNEY

WINTER 20132 INSIGNIAM QUARTERLY
18
HARNESSING THE POWER OF COOPERATION
Simon Sinek introduced the Golden Circle. He
suggested we Start With Why. Now, with a new
book coming in January, he looks at how we can
create an environment where people thrive.
26
SURVIVAL AT THE TIPPING POINT
How do you move forward when the road ahead
is uncertain? For one North Carolina healthcare
provider, it was focusing on what they do, not what
they earn.
36
THE FOUR WAYS OF BEING THAT CREATE THE
FOUNDATION FOR GREAT LEADERSHIP, A GREAT
ORGANIZATION, AND A GREAT PERSONAL LIFE
Werner H. Erhard and Dr. Michael C. Jensen
46
PROFILES IN LEADERSHIP
What does a modern leader look like? We asked
some of today’s top executives their thoughts on
leadership, the challenges leaders face, and why
being disruptive is more important than ever.
FEATURES
DISRUPTIVE LEADERSHIP
IS NOT A SOLO ACT
Jean-Pierre Clamadieu
says that in a changing
world disruptive leadership
is what will take Solvay to
the next level.
COVER
STORY
30
TABLEOFCONTENTS

EDITOR-IN-CHIEF Shideh Sedgh Bina
shidehbinaIQ@insigniam.com
EXECUTIVE EDITOR Nathan O. Rosenberg
nrosenberg@insigniam.com
CHIEF FINANCIAL OFFICER Ralph Gotto
DIRECTOR OF WORLDWIDE Karen Turner
CLIENT SERVICES kturner@insigniam.com
DIRECTOR OF SPECIAL PROJECTS Alexes Fath
PUBLISHER Gordon Price Locke
gordon.locke@dcustom.com
MANAGING EDITOR Jarrett Rush
jarrett.rush@dcustom.com
CREATIVE DIRECTOR Kyle Phelps
kyle.phelps@dcustom.com

ASSISTANT ART DIRECTOR Emily Slack
PRODUCTION MANAGER Pedro Armstrong
IMAGING SPECIALIST John Gay
ACCOUNT SERVICE MANAGER Jas Robertson
EDITORIAL QUERIES
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Insigniam Quarterly is published by D Custom, 750 Saint Paul Street, Ste. 2100, Dallas, Texas 75201.
Copyright 2013 by Insigniam. All rights reserved. Letters to the editors may be sent to Insigniam
Quarterly c/o D Custom, 750 Saint Paul Street, Ste. 2100, Dallas, Texas 75201. No part of this
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Q U A R T E R LY
VOLUME 1, ISSUE 4 | WINTER 2013
“To be disruptive is to acknowledge the fact that we need to
change and that we need to accept and make moves that
sounded impossible yesterday.”
— JEAN-PIERRE CLAMADIEU, SOLVAY
THE TICKER
Leadership stories, books, and great ideas
TOP LINE
Leadership by the numbers
BLOOD, SWEAT & TEARS
What is your destination, and are people clear on where
you are going?
BOARDROOM POV
What is your appetite for risk?
Nathan Owen Rosenberg, Insigniam
Disruptive leadership is the art and science
of creating the future.
GLOBAL LEADERS
Effective leaders share the same characteristics, no
matter where they call home.
TO EVOLVE YOUR BUSINESS,
TAKE OTHERS ON YOUR JOURNEY
Hugh Jones at Sabre Airline Solutions shares how a
shift in perspective is transforming his enterprise.
IQ BOOST
Jon Kleinman, Insigniam
Own all of your actions — both what you did and did
not do — that lead to an outcome.
04
08
10
14
22
52
56
DEPARTMENTS
On the cover
Solvay’s Jean-Pierre Clamadieu
says leaders must acknowledge
the need to be disruptive.
VO L U M E 1 , I S S U E 4 | W I N T E R 2 013
REINVENTING
AN
ENTERPRISE
Solvay’s CEO
Jean-Pierre
Clamadieu talks
about building a
new company after
a merger.DISRUPTIVE
LEADERSHIPWHO IS INVENTING THE RULES
IN YOUR MARKET?
Building Circles of Trust
Simon Sinek explores
how to lead so that
people can thrive.
Survival at
the Tipping Point
Can a focus on results
instead of revenues
transform your business
in a time of uncertainty?
Insigniam and its publisher, D Custom, distribute
this editorial magazine to share the opinions
and insights of companies and their leaders on
impactful global business issues. Insigniam
Quarterly’s inclusion of a company or individual
does not indicate that they are a client of Insigniam.
Remuneration is not provided for editorial
coverage. Individuals appearing in Insigniam
Quarterly have done so with direct consent, or
provided consent by a designated authorized agent
in addition to being disclosed on the magazine’s
audience and purpose.
56

THE TICKERTHE TICKER
LEAPFROGGING INTO
Disruptive leadership requires leaders to fundamentally
disrupt the mindset that has often led to success thus far.
Author and speaker Soren Kaplan quickly admits that
business schools and traditional management training
absolutely do not prepare managers to put disruptive
leadership techniques into action. Managers rise through
ranks where predictability and control are rewarded, not
disruption and innovation. Business schools simply don’t
prepare leaders to be misunderstood or criticized nor
how to handle that sort of dissonance.
To guide people trained for predictability and control
in the art of disruption, Kaplan crafted the five-step
acronym LEAPS: Listen, Explore, Act, Persist, and Seize.
Disruptive leadership requires embracing the unknown
and ceding control in favor of the opportunity to gain new
insight or uncover opportunities, Kaplan says in his 2012
book, Leapfrogging: Harness the Power of Surprise for
Business Breakthroughs.
1/LISTEN
Listen to yourself,
not just conven-
tional wisdom.
2/EXPLORE
Work to escape
your comfort
zone, and get the
management team
out of its comfort
zone.
3/ACT
Encourage lead-
ers to take small,
simple steps and
be ready to adjust
rather than control
how things unfold.
4/PERSIST
Urge leaders
onward in spite
of failures and
reframe them as
opportunities to
learn from.
5/SEIZE
Encourage leaders
to be agile and
flexible to take
advantage of unan-
ticipated events.

Advocates for change should have
more sympathy for people in positions of
authority, argues Ron Heifetz, co-founder of
Cambridge Leadership Associates and author
of Leadership without Easy Answers.
Peopleinpositionsofauthorityfeelenormous
pressure to act like they know what they are
doing, he says. Further, leaders are expected to
protect people from painful change, rather than
prepare a team for a period of sustained dis-
equilibrium and experimentation while the
group seeks out new answers,Heifetz says.
Organizations should also distinguish
authority and leadership, in order to foster
greater experimentation and disruptive
leadership. Authority is formal power that
comes from a title. It provides direction and
order. Leadership is more inspirational. It’s
closely tied to ‘why’ something is being done,
and is not necessarily tied to the person
in the highest position. Distinguishing the
differences between these two will help
enterprises recognize and reward leadership
exercised from a wide range of perspectives
— not just the authority granted in an
organizational chart.
SYMPATHY FOR AUTHORITY
HCL Technologies, an Indian information technology company,
has distinguished itself in the competitive world of South Asian IT
businesses by putting its employees first, even ahead of its customers.
The move — begun in 2005 — is built around disrupting a key
corporate and service business tenet that customers come before
workers.
The aim of the new effort was to build trust between managers and
workers,and make managers — even up to the C-suite — accountable
to everyone in the organization.
Fast forward eight years, and the employees who were put first are
now leading version 2.0 of the program.The second phase includes a
program to link employees on HCL’s own internal social networking
platform, companywide events focused on making a difference for
customers, and encouraging social responsibility across the company.
HCL has more than 85,000 employees in 31 countries, and
produced the equivalent of $4.6 billion in revenue in its most recent
fiscal year.
MAKING EMPLOYEES THE FOCUS,
EVEN AHEAD OF CUSTOMERS
85,000
31
4.6
EMPLOYEES
COUNTRIES
REVENUE
(IN BILLIONS)
BY THE NUMBERS
http://www.hcltech.com

ALGORITHM
HEURISTIC
MYSTERY
EXPLORE
EXPLOIT
THE TICKER
Innovative thinking in business typically resists
standardization and formulas, but Roger Martin, Premier’s
Chair in Productivity & Competitiveness and Director of
the Martin Prosperity Institute at the Rotman School of
Management at the University of Toronto, has articulated
a methodology for combining analytics and intuition to
grow business.
Martin describes a “knowledge funnel” for business
success that flows from mystery (or problem) to heuristic
(rule of thumb) to algorithm (repeatable formula).
That process may lead to results, but doesn’t guarantee
continuing success, as Martin cautions in his 2009 book,
The Design of Business: Why Design Thinking is the Next
Competitive Advantage.
For leaders to have continued success they must provide
their enterprise with room to fail, and not simply lead the
company into exploitation mode,he cautions.Exploitation
itself — getting the most out of what you know how to
do today — is not necessarily bad, but leaders looking to
institutionalize innovation must establish a culture (and
compensation structure) that encourages exploration
and provides room to fail. By finding and defining new
problems, or mysteries, leaders will lead their companies
back to the widest part of the knowledge funnel.
FIND THE FORMULA, THEN FIND THE NEXT PROBLEM

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www.ced.org
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TOPLINE
BY THE NUMBERS
COMPILED BY GEOFF WILLIAMS
ORVILLE AND WILBUR WRIGHT
On December 17, 1903, the famous
brothers opened up the world. By creating
the first successful airplane, they gave
the everyday person the ability to travel
everywhere in the world. Today there are
93,000 flights each day worldwide.
JOHN WALSON
In 1948, by running a cable from an antennae he’d installed in the mountains above his Pennsylvania
home so he and some of his customers could receive a stronger TV signal from the stations in
Philadelphia, the owner of the Mahanoy City General Electric appliance store invented cable television,
ultimately changing how we think of television and the networks.
HERB KELLEHER
The Texas lawyer co-founded
Southwest Airlines in 1967.
Where the Wright brothers made
air travel possible, Kelleher helped
make it affordable.
A SHORT TIMELINE OF DISRUPTIVE LEADERS
Industry analysts said Henry Ford was crazy to drop the price of his
ModelT, but profits went from $3 million in 1909 to $25 million in 1914.
Ford’s U.S.market share rose to 48
percent in 1914 after they dropped
the price of the ModelT to $99.
$99PRICE OF A MODEL T IN 1914
$220PRICE OF A MODEL T IN 1909
48%
8 INSIGNIAM QUARTERLY WINTER 2013
THE NUMBER OF CARS FORD MADE IN
1914 WITH ONLY 13,000 WORKERS.260,720

KEVIN SYSTROM AND MIKE KRIEGER
When cameras were first added to cellphones, they
were not good for taking more than a grainy image.
Fast forward a few years and the cameras were
upgraded, but they were still little more than a nice
feature, an add on. That is until 2010, when Systrom
and Krieger introduced the world to Instagram.
SERGEY BRIN AND LARRY PAGE
The two computer science students changed how we
search the Internet when they founded Google in 1998.
With Google Drive, Google Glass, and myriad other
products, they continue to innovate how we interact with
our computers, our phones, and the Internet.
STEVE CHEN, CHAD HURLEY,AND JAWED KARIM
Before this trio founded YouTube in 2005, the Internet was not a place for
video. The site — purchased by Google in 2006 — proved, though, that
video can work on the web and helped bring about original web series from
the networks and major studios, changing our viewing habits and where we
watch our favorite “television” shows.
$3.6 billion in
annual revenue
The pertinent numbers for Netflix, a company that has been an undisputed
disruptive leader since it was founded in 1997
33million
members
Countries with Netflix
Countries without Netflix
COUNTRIES
40

WWINTER 201310 INSIGNIAM QUARTERLY
BLOOD,SWEAT&TEARS
WHAT IS YOUR
DESTINATION?
When aligning a clear strategy, accountability and
communication are keys to success.
BY JEFF BOUNDS
WhenVirginiaAlbanesetookthe
helmaspresidentandCEOofFedEx
Custom Critical in June 2007, the
time-sensitive,customshippingarm
of the logistics and transportation
giant was at a crossroads.
It was working to protect its
core business in a mature market,
grow its new truckload brokerage
division, and also determine how
best to work with the other FedEx operating companies.
Trying to do so many things meant that managers had competing
priorities. One manager would tell an employee to do one thing,

QUALITIES OF
A DISRUPTIVE
LEADER
Here are some traits of
top executives who can
bring positive, wholesale
change to an organization,
according to Virginia Alba-
nese, president and CEO of
FedEx Custom Critical.
NOT SATISFIED WITH
THE STATUS QUO
A disruptive leader “is not
interested in riding out the
wave,” Albanese says.
COMPETITIVE
“They want to win, they
want to grow,” she says.
OPEN TO CHANGE
They must also be open
to the intense labor that
comes with the kinds of
discussions Albanese
had with her staff. “Having
discussions like that and
doing nothing with it is very
demoralizing to the staff.
But the execution is a lot of
work.”
OK WITH FAILURE
Nobody likes it when
things don’t go as planned.
“But you must be open to
the fact that some ideas
won’t work,” Albanese says.
“If it’s not going to work,
say it.”
whileanothermanagerwouldhaverequestedthatsameemployeedosomething
different, and both directives were supposed to be the most important.
Ground-level employees were feeling the dissonance above them in the
management and executive ranks.
“People had good intentions,” Albanese says. “It’s not like they had rogue
ideas. But everyone had differing opinions on what the priority was, on what
needed to be accomplished.”
CREATING TEAM ALIGNMENT
Albanese had to create alignment. Priorities needed to be made clear.That’s
no small feat at even the smallest of organizations, but it’s especially difficult for
a business unit that currently has roughly 600 employees and 2,500 contractors
and drivers.

BLOOD,SWEAT&TEARS
BY THE NUMBERS
600
26%
EMPLOYEES
2,500
CONTRACTORS
AND DRIVERS
GROWTH
Albanese and her team created a three-point plan to get FedEx Custom Critical’s
troops on the same page.
èè First, Albanese gathered her executive team to figure out what the
business’priorities were,and what they weren’t.
èè Second, she had similar discussions in off-site meetings with managers
of FedEx Custom Critical.
èè Finally,Albanese and her team created a communications plan to get the
word out to the rank and file — and to make those employees realize
that, finally, every manager and executive was operating with the same
priorities.The plan included everything from motivational meetings in
arena-type settings to one-on-one sessions with individual employees.
Once those meetings were completed,Albanese had employees sign a wall in
the company cafeteria at FedEx Custom Critical’s base in Green, Ohio, to show
that they understood the mission moving forward and would live up to the new
way of doing things. She changed the screen savers on employees’ computers to
reinforce her messages.She even had managers hand out $5 bills to workers who
could recite,without prompting,what the new plan was all about.
REFOCUSING ON CUSTOMER SERVICE
A big part of Albanese’s vision was about improving customer service.
When Albanese first became CEO, she recognized that agents needed

more solutions for their customers. While customer service was always strong,
employeesdidnotalwayshaveafullportfolioofpotentialsolutionsforprospective
clients. For instance, personnel nearly always recommended the same fix to
customers’ shipping problems: “exclusive use” trucks, vehicles that customers
can call whenever they need to move a high-value item such as artwork, factory
machinery, or pharmaceuticals. But what if the customer would be best served
by, say, using the air transport services of another FedEx arm?
Under the new plan, agents who took calls from prospective clientele were
trained to suggest a full gamut of FedEx services, not just the ground-based
offering that FedEx Custom Critical provides. That has resulted in a positive
change in the variety of shipments that the unit is booking, including air and
other avenues for getting high-value freight from point A to B.
And if that means revenue goes to other areas of FedEx and not Albanese’s
unit, well, so be it.
“When customers are happy, they’ll come back to you again and again,” she
says. “We made sure that people understood that giving the customer the right
solution at the right time will get them to call back again. Customers want
solutions. They don’t just want what you’ve got.”
So far, those customers do appear to be calling back. FedEx Custom Critical
has grown 26 percent since Albanese became CEO until the fiscal year ended
May 31, 2013.
And customers appear to be happier with how FedEx Custom Critical treats
them. Internal metrics, such as the “service quality index,” are up. (Called SQI
for short, these metrics measure how quickly a customer’s call is answered,
on-time pickup and delivery service, and the availability of equipment when
customers call.)
“Virginia is one of those rare breeds of leader who can create vision and
strategy, inspire people to bring their best to their jobs, and be creative while still
demanding high performance,” says Insigniam founding partner Shideh Sedgh
Bina. “Throughout the time we have worked with her and her organization
it is evident that she does that all with the customer front and centermost.”
While the bulk of the improvement initiative was done in about two months,
Albanese says the process will never end. From the cafeteria wall to kickoff
meetings for each fiscal year, FedEx Custom Critical is constantly working on
ensuring that everybody knows the company strategy and the desired outcomes.
“We continue to communicate in a variety of ways,” Albanese says. “From
our daily email to all employees showing the previous day’s business results to
regular leadership meetings, videos, and town hall meetings, we strive to ensure
everyone knows how we are doing and where we are going.”
HOW TO LEAD
DISRUPTIVELY
Executives who want
to bring positive change
to their organizations had
better be ready to roll up
their sleeves, according to
Virginia Albanese, president
and CEO of FedEx Custom
Critical. “This is hard work,”
she says.
Here are some tips from
Albanese on how to be a
disruptive leader.
• ENSURE you have solid
leaders in place who
can not only formulate
strategy, but execute
on it as well. These
leaders must be able to
communicate the strategy
well and have the trust of
their employees.
• DEVELOP a plan that’s
clear and concise.
Everyone in the
organization needs to be
able to understand and
get on board with it.
• ASSEMBLE a
terrific strategy for
communicating your
plan consistently and
repeatedly.
• CLEAR
ACCOUNTABILITY for
each team member is
vital. Each member of
your organization must
understand where he or
she fits into your plan
and why their particular
positions are vital.
“WE MADE SURE THAT PEOPLE
UNDERSTOOD THAT GIVING THE CUSTOMER
THE RIGHT SOLUTION AT THE RIGHT TIME
WILL GET THEM TO CALL BACK AGAIN.”

T
THEBOARDROOM
Though he likes to refer to himself as a “reformed
banker,” Dennis McCuistion, former CEO of Texas-
based The American Bank, still finds himself regularly
having professional conversations with financial industry
executives. Like just the other day, when McCuistion,
now director of the Institute
for Excellence in Corporate
Governance at the University
of Texas at Dallas, was at a
roundtable meeting with, as
he puts it, “a whole mess of
board directors” from banks
located around the country.
“So,” McCuistion recalls, “I
say to them, ‘As directors, wouldn’t you all agree that
you’re pretty much change agents? And wouldn’t you
agree that you’re mainly there to encourage the manage-
ment team to make a positive disruption in leadership, at
least from time to time?’ Well, they all nod their heads
Having a disruptive leader isn’t enough. For successful and
effective change, the board needs to be willing to take a
chance and potentially lose now in order to gain later.
BY JOE GUINTO
WHAT IS YOUR
APPETITE FOR RISK?

and say,‘Yes, sure, of course.’ So then I ask them,‘So how
come you all sit in the same chairs at your board meetings
every month? Do you really value change, or do you just
say you value it?’ ”
Too often,the answer to that question — whether from
directors in the financial industry or other industries — is
not what CEOs who believe in the power of disruptive
leadership would like to hear.“Many boards,”McCuistion
says,“especially those with entrenched membership,con-
sider change abhorrent,unless — and this is a big unless —
there is a problem with the company’s performance.That’s
unfortunate.Because it’s often better to have change,even
radical change, before you get into problems.”
That was certainly the case at one company where
McCuistion was a board director. From 2003 to 2007,
McCuistion, who has hosted his own PBS business talk
show for the past 24 years, was a board member at Affili-
ated Computer Services. That company,founded in 1988,
started out as a data processing firm with modest revenues.
But by the time McCuistion joined the board it had $4
billion in annual revenue and had morphed into a business
processing outsourcing company. Three years after he left
his directorship, ACS had hit $6.5 billion in revenues and
was acquired by Xerox in a blockbuster merger.
“Virtually the entire strategy of that company was
changed — successfully — four different times in a 22-
year period from its founding to the time it was acquired
by Xerox,” McCuistion says.Why? Not because financial
results were poor. Far from it.ACS was highly profitable
during each major shift in strategy.But management fore-
saw changes coming in the marketplace for information
technology and data processing services and decided to
get out ahead of those changes rather than,as McCuistion
puts it,“waiting for the company to go in the dumper.”

THEBOARDROOM
MAKING THE CHANGE
Making the changes atACS required,as it does with every
company,the active participation of the board.So how did
management get directors to go along with four corporate
reinventions even when the bottom line was solid? For one
thing, McCuistion says,ACS was able to assemble a board
that understood the company and its marketplace.
“The biggest problem you have as a CEO,
and I have been there a few times in my life,
is that it is the loneliest position there is,”Mc-
Cuistion says.“Who do you talk to? Often,
when you talk to your management team,
they just tell you what they think you want to
hear.So,when you’re a CEO who is propos-
ing change, you need the board to assist in a
dialogue about what the changes need to be
and to understand the upside of the strategy you’re proposing
and the risks inherent in the strategy. Then the board can
make an informed decision about whether to accept this
kind of disruption to business as usual or not.”
In a way, assembling a board of directors that gets your
business may seem obvious.But it isn’t always done.Take the
case of one major company in McCuistion’s backyard —
Plano,Texas-based J.C.Penney.The retailer suffered a major
meltdown under the disruptive leadership of formerApple
executive Ron Johnson,who came into J.C.Penney seeking
to do nothing less than reinvent the American department
store. Instead, J.C. Penney saw its revenues cascade by $4
billion and its stock value fall by more than half before the
board finally terminated Johnson just 18 months into his
tenure.Of those 12 board members,just two had hands-on
experience in the retail industry.
“Was there significant industry expertise on this board —
people who would know something about what the retail
business is?”McCuistion asks.“You need some people on a
board who have‘been there and done that,’and I think that
may have been where J.C. Penney’s board lost their way.”
YOU NEED SOME PEOPLE ON A BOARD WHO
HAVE ‘BEEN THERE AND DONE THAT,’ AND
I THINK THAT MAY HAVE BEEN WHERE J.C.
PENNEY’S BOARD LOST THEIR WAY.”

TAKING THE RISK
Still,to the credit of J.C.Penney’s board,they were will-
ing to OK a radical reinvention of a 100-year-old company.
But how do directors,as McCuistion says,accept that they
should “change seats” sometimes even when that means
accepting the risk that comes along with disruptive leader-
ship plans? McCuistion has a few thoughts on that.
1 ESTABLISH A CORPORATE “RISK APPETITE.”
“Risk appetite is a phrase that has only come into the
corporate governance vernacular in the last five years,”Mc-
Cuistion says.“It means the board has to decide how much
risk it is willing to take to better compete.That helps the
management team know what they’re likely to sell to the
board when they propose a change.”
2 SET A TOLERANCE LEVEL FOR RISK.
At J.C.Penney,the board’s risk appetite was clearly large.
But it doesn’t seem to have set a “tolerance level,” or spe-
cific parameters that would quantify that appetite for risk.
“As a director, when change is proposed, you have to be
able to say to the senior management,‘OK, we’re willing
to make this change, and here’s what we’re willing to let
that change cost us,’ ” McCuistion says. “Maybe that’s a
10 percent decline in sales over six months or a specific
loss of revenue or profit over a year. But it should be
specific, because that lets management know what their
performance benchmarks are. And if those aren’t hit,then
management knows that either the board is going to pull
back or they’re going to have to come back and re-sell the
board on a new strategy.”
3 MEASURE THE CHANGE PERFORMANCE.
On ACS’s board,McCuistion was on the audit commit-
tee, which meant he had oversight of the company’s vora-
cious appetite for mergers and acquisitions.ACS’board had
a specific tolerance level for the risk it was willing to take
in those acquisitions and monitored them carefully for a
year-long period before fully folding the acquired company
into ACS. “Directors have to be able to regularly monitor
what’s going on when you’re making big changes,” Mc-
Cuistion says.In fact,McCuistion says that being able to see
how changes are unfolding can sometimes give the board a
bigger risk appetite.That was the case at ACS.“The more
we were able to watch and see that these acquisitions were
going well, the more confidence we had in management’s
proposals,” McCuistion says.
A RADICAL RISK
$34 $14NOVEMBER 2012
STOCK PRICE WHEN RON
JOHNSON WAS HIRED
% DECREASE OF THE STOCK PRICE
DURING RON JOHNSON’S TENURE
THE NUMBER OF MONTHS
RON JOHNSON WAS CEO
AT J.C. PENNEY
APRIL 2013
STOCK PRICE WHEN RON
JOHNSON WAS FIRED
48%
$4,000,000,000THE AMOUNT REVENUE DROPPED BY
The board at J.C.Penney approved the radical vision
of former CEO Ron Johnson,but it never set a
tolerance level for what it could cost the company.
17
* *
* STOCK PRICES ARE ROUNDED TO THE NEAREST DOLLAR

S
Simon Sinek can predict your future. By simply walking
through the hallways, he can tell whether your business will
succeed or fail.That’s because Sinek believes an organization’s
future doesn’t hinge on its stock ticker,but in the attitudes and
cultureofitsemployees.Dopeoplefeelsafeatwork?Sheltered
from perceived danger? Do they know, deep down, that the
leaders have their best interests in mind
and will take care of them?
In his first book, Start With Why,
Sinek examined how focusing first
on why an enterprise exists can better
inform both what it does and the how it
does it, thus creating a more successful
and compelling company. The book
and his TED talk — viewed almost 13 million times —
launched Sinek into the spotlight as a modern philosopher
for executives, entrepreneurs, and organizational leaders. His
latest book, Leaders Eat Last:Why some teams pull together and
others don’t,coming out in January,delves into the who of any
organization — its people — and how leaders can create an
HARNESSING THE POWER
OF COOPERATION
Simon Sinek introduced the Golden Circle. He
suggested we Start With Why. Now, with a new
book coming in January, he looks at how we can
create an environment where people thrive.
BY STACEY CLOSSER

INSIGNIAM QUARTERLY 19WINTER 2013
environment built for success.
Sinek began his pursuit by asking a series of questions
about leadership and how it intersects with the very nature
of humanity. Sinek says he wanted to know under what
circumstances do humans best function?What he discovered
was that people are designed to work as a community.When
we look out for one another,we all benefit.As Sinek explains,
even our chemical make-up rewards us for this behavior with
feelings of fulfillment,acceptance,and safety.
So to answer his question of “What makes a great leader,”
Sinek had to determine: “In what environment does
cooperation naturally thrive, and how do you create that
environment as a leader?”
This is what Sinek says he learned.
DANGER IS NOT THE DANGER
In the time of the cave man, danger was constant.
Unpredictable weather,predatory animals,limited resources,
and hostile geographic phenomena threatened humanity’s
very survival. Quite literally, life was not safe.This was the
reality of the world then,and it remains the reality today.Even
though predatory animals are
now most often observed in
enclosures, Sinek says that
other dangers have emerged,
especially in business — the
fickleness of Wall Street,
a wavering economy,
unpredictable world events,
aggressive competitors, and
new technologies that render
businesses obsolete.
For example,McDonald’s leaders could not have predicted
that a small sandwich chain would pass it as the largest fast food
restaurant in the world, but that’s what Subway restaurants
has done. In 1982, Subway founder Fred DeLuca set a goal
of the chain opening 5,000 stores by 1994.The company hit
that mark by 1990.Today the number of stores is approaching
40,000,andthecompanyisshootingfor100,000by2030.And
now the sandwich chain is the top choice for workers at lunch,
passing McDonald’s in the first quarter of 2013.
These outside dangers cannot be controlled by the

individual employee. Within this
chaotic environment resides your
organization.Ifyou’vebuiltitproperly,
Sinek says, the company offers a ring
of safety engineered to help not just
investors,boardmembers,andC-level
executives, but the entire enterprise.
A circle of trust that reaches the
outermost edges of an organization
ensures that the company will survive
and thrive.Why? Because people, all
people,function best in environments where they feel safe.
If leaders create a hostile work environment within the
organization, Sinek says employees will be forced to protect
themselves from internal dangers as well.Think about it: If
you’re an employee and you’re constantly worried you’ll lose
your job,you’re less likely to take risks,be innovative,push for
change,or promote a colleague’s ideas.
Employeeswhodonotfeelprotectedatworkfeelvulnerable,
self-interested,cynical,paranoid,and stressed — for biological
reasons. Managers can’t just instruct their teams to trust one
another and cooperate.Those are not things people decide to
do,but rather the natural result of team members feeling safe
and having a shared value set.Those are things that can only
be developed over time.“There’s no app that can speed that
up,”says Sinek.
DEFINING THE CIRCLE OF TRUST
Sinek says leaders have two responsibilities when
maintaining a healthy circle of trust.First,they’re responsible
for determining how porous the circle is.Who is allowed to
join? By what criteria are new employees measured? Hiring
managers must give value to candidates’ overall character as
Simon Sinek’s mission is to help people wake up every
day inspired to go to work and return home every night
fulfilled by their work.His first book, Start With Why, offered
theessentialstartingpoint,explainingthepoweroffocusing
onWHY we do what we do, before getting into the details of
WHATandHOW. StartWithWhy becameaninstantclassic,
with a loyal following among Fortune 500 companies,
entrepreneurs, nonprofits, governments, and the highest
levels of the U.S. Military.
Now Sinek is ready to reveal the next step in creating
more productive organizations. He explains, in simple
terms, the biology of trust and cooperation and why they’re
essential to our success and fulfillment.Organizations that
create environments in which trust and cooperation thrive
vastlyoutperformtheircompetition.And,notcoincidentally,
their employees love working there.
But “truly human” cultures don’t just happen; they are
intentionally created by great leaders.Leaders who, in hard
times, would sooner sacrifice their numbers to protect their
people,ratherthansacrificepeopletoprotecttheirnumbers,
are rewarded with deeply loyal teams that consistently
contribute their best efforts, ideas, and passion.
As he did in Start With Why, Sinek illustrates his points
with fascinating true stories from many fields. He implores
ustoactsoonerratherthanlater,becauseourstressfuljobs
areliterallykillingus.Andheofferssurprisinglysimplesteps
for building a truly human organization.
LEADERS EAT LAST:
WHY SOME TEAMS PULL
TOGETHER AND OTHERS DON’T
“LEADERS HAVE TO MAKE THE
PRIORITY THOSE WHO ARE
RESPONSIBLE FOR THE COMPANY’S
SUCCESS, AHEAD OF THOSE
WHO SIMPLY BENEFIT FROM THE
COMPANY’S SUCCESS.”

INSIGNIAM QUARTERLY 21WINTER 2013
Instudyingtheleaderswho’vehadthegreatest
influence in the world, Simon Sinek discovered
that they think, act, and communicate in the
exactsameway—andit’sthecompleteopposite
of what everyone else does. Sinek calls this
powerful idea The Golden Circle. Imagine three
concentric circles. In the outermost ring is the
‘What.’ It’s what you do.The second ring covers
“How”you do it.The innermost ring, the bullseye,
is the “Why.” Sinek’s Golden Circle provides a
framework upon which organizations can be
built, movements can be led, and people can be
inspired.And it all starts with why.
Any organization can explain what it does;
some can explain how they do it; but very few
can clearly articulate why. Why is not money or
profit — those are always results.Why does your
organization exist? Why does it do the things it
does? Why do customers really buy from one
company or another? Why are people loyal to
some leaders, but not others?
Starting with why can help inform an
organization’s what and how. Using examples
ranging from the Wright brothers to Apple
ComputerstoMartinLutherKing,Jr.,Sinekshows
howthisprocessworksinbigbusinessandsmall
business, in the nonprofit world, and in politics.
Those who start with why never manipulate, they
inspire.Andpeoplefollowthemnotbecausethey
have to; they follow because they want to.
wellastheirrésumés.EvenifacompanyhiresalltheIvyLeagueMBAs
in the world,it’s no guarantee they will create a cooperative company.
The second thing leaders determine is the size of the circle of trust.
Sinek says that when the circle is extended to all employees in an
organization everyone feels secure and is inclined to look after the
customers and clients.
Sinek references the universal travel experience of having a front-
lineemployeebeingtotallyunreasonablebecause“thosearetherules.”
How many times have you heard someone say,“Sorry, sir, I have to
follow the rules, otherwise I’ll lose my job?” Sinek asks. Compare
that to the employee who is empowered to make decisions that will
directly impact customer satisfaction.
Companyleadershipisresponsibleforlookingafteritspeople,who
will then,in turn,take care of customers.
“Leaders have to make the priority those who are responsible for
the company’s success, ahead of those who simply benefit from the
company’ssuccess,”saysSinek.Sometimesthatmeanstakingafinancial
hit to save the jobs of your loyal employees or giving them the benefits
they deserve.To get those results,leaders often have to go to battle.
Employees at Costco don’t get paid double their Sam’s Club
counterparts by coincidence. Someone had to go to battle for
that.And guess what, those investments have translated into higher
productivity and sales for Costco.
HONORING THE SOCIAL CONTRACT
Humans are anthropologically engineered to support the idea
that the alpha,or leader,reaps more rewards because he or she takes
on more of the risk. Sinek says he found that people are perfectly
comfortable with someone more senior getting a bigger paycheck,
a nicer car, bigger office, or more attractive spouse.There are huge
perkswithbeingthealpha,butitdoesnotcomeforfree.Whendanger
appears on the horizon, the alpha is expected to rush in to meet it.
That is the cost of leadership.
“This is why we are so viscerally offended by some of the CEOs
of investment banks who have such ridiculously, disproportionately
high salaries,” Sinek says.“It has nothing to do with the money. It
has to do with the fact that they have violated a deeply ingrained
social contract.We know that they did not sacrifice themselves for
their people to get that money.In fact,we know that sometimes they
sacrificed their people to get the money.And that’s what offends us.
It’s not the money. It’s the failure to uphold the very definition of
what it means to be a leader.”
A leader protects those in their group and offers them a circle of
safety.It is a decision,and Sinek says to not be surprised when it’s hard
work.Beinginchargedoesnotgrantyoutherighttodoless,butgives
you the responsibility to do more.Sometimes that requires you to put
your own reputation or even career on the line. But the reward is a
dedicated workforce that feels safe,cooperates,survives,and thrives.
WHAT IS THE
GOLDEN CIRCLE?
WHAT
HOW
WHY

ARE YOU GETTING
COMMITMENT OR
COMPLIANCE?
Disruptive leadership is the art and science
of creating the future.
BY NATHAN OWEN ROSENBERG

his issue of Insigniam Quarterly is all about
disruptive leadership. But at the risk of
contradicting ourselves, Insigniam
consultants would tell you that the
term disruptive leadership is redundant.
The effective practice of leadership is
disruptive.
But too many companies confuse leadership with
managementandleadershipwithtitleorposition.Theyequate
these — no distinction.
Management and leadership are both important disciplines
for any executive, but they are in no way the same. Leadership
has nothing to do with title or position or an organizational
chart. And yet too many companies impute leadership intent
and leadership practices onto someone just because of that
person’s title. The sad truth is that the most effective leader
may be far from the C-suite.
THE NEW LEADERSHIP PARADIGM
Until recently, managers and executives were not expected
to be leaders. When I went to the United States Air Force
Academy, only two other institutions of higher learning
taught leadership as an academic subject: the U.S. Military
and Naval academies. Today, it is a subject in virtually every
MBAprogramandistaughtinmanyundergraduateprograms.
Why the change? In the post-war era up until close to the
end of the century, there was so much demand for goods and
services that all an executive had to do was keep the enterprise
well functioning. In fact, in many cases, disrupting the status
quo was antithetical to good business practices.
Intoday’smarketplace,thatisnearlytheoppositeofwhatan
executive should do. Effective leadership changes a company’s
trajectoryanddisruptsthestatusquo.Predictableperformance
is not enough.
Everycompanyhascompetitors,manyofwhichareunseen
becausetheyarenotthetraditionalcompetitors.Everycompany
has others working to put it out of business. If leaders do not
disrupt their business, someone else will.
For big luxury automakers, the big competition is coming
from a company that did not even exist 10 years ago, Tesla.
Thesearecompaniesthatwerethoughttobebulletproof.They
are in an industry with a barrier to entry that is so high almost
no one new could get in. Yet, here’s Tesla.
While the company will not pass any of its more established
competitorsanytimesoon,itisgrowingmorequicklythanthe
marketleaders.Thecompany’sstockopenedtheyeartradingat
roughly $35 a share. By the end of October the share price was
over $160. With a 2013 sales estimate of 21,500 vehicles, it is
nippingattheheelsoftheLexusLS600H,adirectcompetitor.
At Insigniam, we say that the executive function is to create
a previously unimagined future for the enterprise and then to
empower and enable the people of the enterprise to fulfill that
future. In other words, leaders unhook from the predictable
future of their companies and invent and implement new,
exciting futures for their enterprises, putting the enterprise on
a new trajectory.
THREE LEADERSHIP PRACTICES
ElonMuskheadsTesla;healsoistheCEOofaprivatespace
transport company and co-founded PayPal. He is obviously a
leader. His way of thinking about the future is consistent with
the first of three traits that all disruptive leaders have.
èè Leaders aren’t looking for the future; they’re
creating it.
The future is unknowable, but that does not stop all too
many executives from trying to forecast what the future will
bring.(Thatisananalyst’swork.)Leadersdeterminewhatthey
want the future to be, and then determine what must happen
to create that future. They identify the possibilities and what
they need to do to wrestle them into reality.
T
2002 2003 2004
6 BILLION
4 BILLION
2 BILLION
800 MILLION
600 MILLION
400 MILLION
200 MILLION
THE POWER OF A BOLD VISION
Ask most anyone what caused the decline and
bankruptcyofBlockbuster,themovierentalchain,
and they will probably answer “Netflix.”
While the subscription-based movie rental company
definitely helped bring Blockbuster down,it wasn’t the
reason that Blockbuster failed. No, Blockbuster failed
because of a lack of vision. Leaders there failed to see
whattheleadersatNetflixandHulusaw—theInternet
wouldfundamentallyalterthewaythatpeopleconsume
movies and television.
BLOCKBUSTER
NETFLIX
HULU

èè In the face of uncertainty, disruptive leaders
move forward.
It is our nature: when we encounter uncertainty, we freeze.
Disruptive leaders have learned to overcome those instincts.
Uncertainty does not stop them. Instead, they move forward.
That is not to say that they are reckless. They are always
questioningtokeepfromgoingdownablindalley,and,even,to
stopdiggingwhentheyfindthemselvesinahole.Theymaintain
a good contention between confidence and questioning. But,
they are biased towards action, as Tom Peters says.
èè Disruptiveleadersenrollothersintheirfuture.
In a breakfast of ham and eggs, the chicken contributes,
but the pig is committed. Leaders have conversations to gain
the authentic commitment of others. Commitment is not
compliance. Leaders are willing to give up control to allow
others to choose. In most large corporations, it would be rare
for someone to tell her boss that she will not do something
asked of her. She is complying, not committing. Almost every
corporate culture is a culture of compliance. Until you have
a culture where it’s OK to say, “No,” you will never have any
way of knowing if you have real commitment.
THE MANY FACES OF DISRUPTIVE LEADERSHIP
Most companies are set up to protect the business model.
Theyaresetuptoprotectkeysourcesofincome.Noonewants
to disrupt those things. In actuality, that is exactly what they
needtodo.Maintainingthestatusquoovertimeisasureroute
to failure. A lack of disruption is a lack of leadership.
Leaders understand this. In the recent industrial past, we see
leaders who had a willingness to revolutionize and radicalize.
JACK WELCH
As head of General Electric, Welch laid down the
challenge for his people: General Electric will be No. 1 or
2 in a market segment or we will get out of the business.
KONOSUKE MATSUSHITA
The founder of Panasonic put a laser focus on quality,
setting a goal of creating perfect products — a
commitment that most American executives could not
get out of their mouths at the time.
There are also examples of disruptive leaders who are not so
obvious, because an effective leader is not a personality type
or a set of qualities. Disruptive leadership is not a particular
leadershipstyle.Aswehavesaid,itisallaboutbringingacreated
and proprietary future into the present.
One quieter leader who is in the middle of disrupting his
industryrightnowisRayConneratBoeing.Anexecutivevice
presidentandthepresidentandchiefexecutiveofficerofBoeing
Commercial Airplanes, Conner is not a loud, charismatic
leader. He is just a solid executive who stuck his neck out for
the future that he saw in Boeing’s 787 (an airplane that I will
stickmyneckouttosaythatitwillchangecommercialaviation).
Conner and his colleagues took on the multiple aspects of
bringing a new airplane to market. The 787 took ideas and
possibilities explored in a failed breakthrough project and gave
them another chance to see the light of day. The new plane is
constructedmostlyofcompositesmakingitmorefuelefficient.
The cabin is pressurized to a lower pressure, meaning fewer
headaches, reduced dizziness, and less fatigue for passengers.
The launch of the 787 has not been without big problems
thathavecostbothBoeinganditscustomers.However,Boeing
stock is up well over 50 percent since the grounding of the 787
fleet in January. Much of that increase can be attributed to
growth in the commercial division.
This is an airplane that will revolutionize the market, and
it is all because Conner and other Boeing executives created
a future, and he and the people of Boeing committed to that
future —stoodforit.And,intheend,that’sthemostimportant
thing that a disruptive leader can do.
2007 2008 2009 2010 2011 20122005 2006
Blockbuster files for bankruptcy in
September 2010. It posts a net loss
of $569 million for the year
Netflix launches streaming service
2011
DISH Network pays approximately $321
million for Blockbuster when the company’s
assets are auctioned off at bankruptcy court.
2013
DISH announces it will end
Blockbuster’s on-demand video
service and close the remaining 300
retail stores by early 2014.

SURVIVAL AT
THE TIPPING
POINTHow do you move forward when the road ahead is uncertain? For
one North Carolina healthcare provider, it was focusing on what they
do, not what they earn.
W
hentheyoungsonoftwonursesatNorthCarolina-
based Cone Health suffered a serious head injury in
askateboardaccidentearlierthisyear,thecompany’s
staffers went out of their way to make sure the boy got the best
carepossible,evenvolunteeringtheirtimetodrivetheboytoan
out-of-state rehabilitation center every weekend.Cone Health
CEOTim Rice used that story,told in a 12-minute video,to
open a corporate board retreat this past fall.
“When the video ended — and you better have had a tissue
handy at that point — I told the board that our people,and the
kindofcaretheygive,iswhywe’rehere,” hesays.“Andweneed
torememberthataswebeginthediscussionsaboutourfuture.”
Thosediscussionswerenoteasyones.Coneisjustoneofthe
many U.S.healthcare providers dealing with an unprecedented
upheaval in their nearly $3 trillion industry. The federal
Affordable CareAct,budget cuts at the state and local level,and
a soft economy has prompted a wave of industry consolidation
and a cascade in revenues. Among the biggest hits to revenue
is an overhaul of Medicare.
Revenues are expected to fall by $379 billion nationwide in
thenexteightyears,atimethatmostanalystssaywillbemarked
by deflation in most healthcare costs.As a result, healthcare
companies are merging at a heated pace, not just to expand
market share, but to slash costs in an effort to make up for
the expected revenue loss.One healthcare research firm found
that industry mergers have more than doubled from 2009
to 2012, and another reports that one-fifth of all the nation’s
5,000 hospitals are likely to seek mergers in the next few years.
Meanwhile, the industry is also shifting its focus to a more
proactive model of patient care — one focused on preventing
illness and injury.
Taken together,all of that change could make any healthcare
executivefeelabitill.Howdoyouleadwhenyourentireworld
is being disrupted,when your whole industry is in the middle
of a massive transformation? For Cone Health’s leaders, there
are a few key ways they’re trying to do just that.
NO. 1 // IN TOUGH TIMES, TAKE BETTER
CARE OF YOUR CUSTOMERS AND THE BOTTOM
LINE WILL TAKE CARE OF ITSELF
Fouryearsago,Coneexecutiveslookedovertheirprofitable
bottom line and their years of solid revenue growth and
decidedthatthosenumbersweren’tsufficient.Thecompany’s
leadership felt Cone Health needed a new direction.
“Atthattimewewereproducingprettygoodmargins,”Rice
says,“and the board was saying‘What are you worrying about?’
But we saw a freight train coming our way. We believed we’d
be taking in $125 million less per year than we had been taking
in if we didn’t do something to get in front of changes in the
marketplace.”
SoConeHealthembarkedonatotalculturaltransformation.
The goal: Put patients and providers first and compete on
performance — on how well patients do under their care —
on a national basis.
BY JOSEPH GUINTO

“ThedecisionbytheConeleadershiptoinvestinensuring
it has the right culture to provide exceptional care while
adapting and innovating flew in the face of common sense,”
says Shideh Sedgh Bina, Insigniam co-founding partner.
“Common sense says that when facing looming shortfalls
you focus all of your attention on
efficiencies and cost cutting. Yes,
the Cone leaders had to make
some tough fiscal decisions, and
they did that while reinventing
the very core of their culture.
Now that takes guts — and
wisdom.”
Today, the entire healthcare
industry is steering in that same
direction. Doctors, hospitals,
and pharmacists are all seeing
their financial rewards tied to
making their patients better, not
just providing treatment.
And consumers of healthcare
are about to become better able
to comparison shop among the
providers who give the best care
to their patients. According to a
study published in 2013 by the
Healthcare Innovation Center
at Oliver Wyman, by next year,
some 85 million consumers
with $600 billion in purchasing
power may be shopping for their
own healthcare, and many of
them “will be making their own
decisions about coverage for the
first time.”
Thatmeanshospitalswillhavetocompetenotwiththecare
providerdownthestreetoracrossthestate,butwithproviders
across the country. Walmart is already making that happen
for its workers. It provides travel expenses to some workers
who are willing to seek out top care providers nationally.
So how does Cone compete with providers in, say, Cali-
fornia?Through a key core principle.The company’s top goal,
set during its cultural transformation, is not to boost profits.
It is, simply, to rank among the top decile of all hospital
organizations nationwide in terms of what is known asTriple
Aim Performance:patient experience,quality of care,and cost
management. As a result of that effort to be in the top decile
inTriple Aim,the company has dramatically increased patient
safety, employee engagement, employee retention, and has
boosted its scores in key areas of patient satisfaction by a rate
that’ssixtimesbetterthantheaveragehospitalnationwide.From
there,they hope,that profits and growth,even in the turbulent
future,will follow.
“This is a business, and
financial results matter,” Rice
says. “But providing top care is
still the key context for gauging
everything we do. And that has
been really embraced by our
clinicians. Tell me what surgeon
goes into surgery in the morning
andsays,‘I’dliketodoanaverage
surgery’?”
NO. 2 // HONESTY
IS THE BEST POLICY, OR
TREAT EMPLOYEES LIKE
GROWNUPS
After decades of solid revenue
andprofitgrowth,thisyearCone
has struggled just to break even,
whichiswhyRice’sboardretreat
discussions were not easy. Cuts
and changes to Medicare outlays
at the federal and state level cost
thecompany$30millionjustthis
year.Asaresult,Conelaidoff150
people and left another 150 open
positions vacant. Those were
the first layoffs in the company’s
history.
So how did the executives spin
that news to their employees? They didn’t spin it at all. They
just told them.
“Our employees are smart people,” Rice says. “And we
treat them that way. We all feel the pain of the layoffs. But
if we can tell people the ‘Why’ behind any decision we’ve
made,they’llunderstandit.Sure,therehavebeensomepeople
sniping.Andwithmorethan10,000employees,you’regoing
tohavethat.Byandlarge,though,peoplehaveacceptedwhat
we’re doing because we’ve tried hard to be transparent and
over-communicate the ‘why’ behind our decisions.”
That“over-communication”isoneresultofthecompany’s
culturaltransformation.“We’veestablishedanincreasedlevel
of trust and an increased level of communication across the
With an uncertain future, leaders at Cone Health — like Terry Akin
and Tim Rice — decided to tranform the healthcare network’s
culture from one focused on revenues to one focused on results.

organization that is key in times like these,” says Terry Akin, Cone’s
president and chief operating officer.
“The core of the new Cone is a bold and inspiring future — the
opportunity to transform healthcare itself in service of a healthier
community,” says Jen Zimmer, a partner at Insigniam who worked
with Cone on its transformation. “When the enterprise is mobilized
in service of something bigger than its own survival and the leaders
lead in an authentic manner almost anything can be said and heard.”
NO. 3 //WHEN THE INDUSTRY IS STRUGGLING,
DON’T FOCUS TOO MUCH ON THE PRESENT — THE
FUTURE STILL MATTERS.
Cone executives say they are pushing innovation and risk-taking
now, even though the industry is in a period of uncertainty. Or,
perhaps, because the industry is in a period of uncertainty.
“We have immediate financial issues to deal with,” Rice says.
“And we will deal with those. But our focus has to be on the future,
because this business, a year from now, won’t look like it does today.
A lot of things we think of as providers may be very different in the
very near future. We may not need to do near as many amputations
because we’re controlling diabetes better now. We may not need
near as many beds in the ICU because more patients are sent home
to use home monitoring equipment now. We need to start planning
out the breakthroughs that can happen in the industry and planning
for what that’s going to change in terms of what a hospital looks like.
“Themessagewe’recommunicatingtoourboard,toourleadership
team, and to our people is that the tipping point for our industry is
no longer coming. We’re at the tipping point. And we have to stay
out in front of the changes that are coming.”
Akinsaysthat’swhythecompanyhasbeencombiningforceswith
other regional healthcare providers in recent years, including 2013,
and has been tasking leaders at all levels of the organization to find
ways to simultaneously cut costs and improve patient outcomes.
“We have wanted to avoid being in reactive mode,” he says. “We
wanttodefineandshapeourfutureratherthanhaveitshapedforus.”
NO. 4 // REMEMBER, AND REMIND YOURSELF
OFTEN OF, THE CORE MISSION.
Cone begins every executive meeting with a patient story — the
same kind of story it told at the start of this fall’s board retreat. The
reason: to remind leaders that their business exists for one reason, to
care for patients.
“Intimesofstress,andwe’reallgoingthroughthefinancialstresses
in this industry right now, the numbers can be a huge distraction
from the reasons we’re here,” Rice says. “But for our patients and
our people, we can’t let that happen.”
$3TRILLION
$379 BILLION
85 MILLION
$600 BILLION
10,000
HEALTHCARE INDUSTRY
FACTS & FIGURES
REVENUES IN THE
HEALTHCARE INDUSTRY
ARE EXPECTED TO FALL
IN PURCHASING
POWER WILL BE
BUYING THEIR OWN
COVERAGE
CUSTOMERS WITH
NUMBER OF CONE
HEALTH EMPLOYEES
IN THE NEXT 3 YEARS

DISRUPTIVE
LEADERSHIP
IS NOT A
SOLO ACT

JEAN-PIERRE CLAMADIEU SAYS THAT IN A
CHANGING WORLD DISRUPTIVE LEADERSHIP IS
WHAT WILL TAKE SOLVAY TO THE NEXT LEVEL.
BY CHRIS WARREN

labs to also include how efficiently manufacturing
plants operate and how flexible and responsive customer
relationships are managed. And it is in the successful
formulation, articulation, and implementation of these
changes that Clamadieu sees the essence of disruptive
leadership.
“To be disruptive is to acknowledge the fact that we
need to change and that we need to accept and make
moves that sounded impossible yesterday,” he says.
While that may sound revolutionary to some,
Clamadieu believes periods of disruptive leadership are a
fact of life for companies that want to thrive in a quickly
changing and complex global economy.
“There could be some situations where you develop
such a successful business model that you think the most
important thing is to not change a bit of it,” he says. “My
feeling is that those situations are not common today.”
Clamadieu’s efforts at disruptive leadership at Solvay
ean-Pierre Clamadieu is willing to make a bet. The chief
executive officer of Solvay SA is certain that if you asked
employees at the chemical giant’s Brussels headquarters
how much the firm has changed since his tenure began
in May of 2012 you would get remarkably consistent
answers.
“They would say that they barely recognize the
company,” says Clamadieu, who previously was chairman
and CEO of the French chemical company Rhodia, which
he helped lead back from the brink of insolvency before
navigating its acquisition by Solvay in September of 2011.
Although Clamadieu disputes that perception —
“People tend to overreact to change,” he says — he happily
acknowledges that he has been a disruptive leader of this
venerable, 150-year-old institution, which has more
than 29,000 employees worldwide and a broad product
portfolio that includes essential and specialty chemicals,
polymers, and vinyls.
Indeed, during the course of his time at the helm of
Solvay, Clamadieu has outlined and begun implementing
a number of fundamental changes to how the company
operates, many of which have profound implications for
how individuals do their jobs. For example, Clamadieu
has dispensed with Solvay’s traditionally centralized
decision making.
“We are quite large, and we’re dealing with a lot of
businesses in many geographies,” he says. “We are only
going to be successful by empowering the people very close
to the battlefield and then holding them accountable.”
Clamadieu says he has also worked on extending
innovation at Solvay beyond the research and development
J

have yet to reach the two-year mark, but he already has a
number of practical tips for other executives considering a
similar approach.
HAVE A CLEAR VISION
The global chemical industry had total revenues of
$3.6 trillion in 2011 and is expected to grow 47 percent
by 2016. When Clamadieu was first appointed CEO of
Solvay, his marching orders from the board of directors
were very clear. It’s a mandate that he can recite without a
moment’s hesitation.
“We want to be a global leader in the chemical
industry and be one of the companies that participates in
the reshaping of this industry,” he says. “And to achieve
that we need to be among the best performing chemical
companies.”
Being able to clearly and concisely enunciate a big
picture vision, says Clamadieu, is vital because it provides
a context as well as a purpose for
all the disruptive changes that are
necessary in order to achieve it.
In other words, it helps people
understand why meddling with
the status quo — in everything
from procuring raw materials to
marketing to operations — matters.
Not coincidentally, having clarity also helps focus
executive decisions about what changes and disruptions
are truly required.
“You have to develop one simple idea of where you
want to go and what you want to achieve collectively and
make sure all the strategies and elements are aligned with
this vision,” he says.
DON’T GO IT ALONE
Among certain circles, there is a romantic notion that a
Jean-Pierre
Clamadieu’s charge
when he took over
leadership of Solvay
was to make the
company a leader in
the global chemical
industry and play a
role in its reshaping.
Clamadieu knew
that would require
disruptive leadership.

CEO can be a disruptive and transformational leader all
by him or herself. Clamadieu disagrees.
“You are not a transformational hero who is carrying
the weight of the transformation on your own shoulders,”
he says. “You need to have a strong team around you who
has the ability to support the changes.”
Building a strong leadership corps is one of Clamadieu’s
strengths, says Katerin Le Folcalvez, a partner at
Insigniam. One of the many things that she says helps
Clamadieu stand out as a leader is his careful hiring and
focus on finding people with the right attitude in addition
to the right skills.
“He surrounds himself with people who share with
him the ability to question their own ways, turn over
every stone, and challenge themselves,” says Le Folcalvez.
Clamadieu says there are a number of things he and his
executive team did that have helped encourage Solvay’s
tens of thousands of employees to support the changes.
One is simply not to change course frequently, either
in the communication of the company’s vision or in the
strategy to achieve it.
Jean-Pierre Clamadieu
says that for disruptive
leadership to work,
leaders need a team
of people around
them who support the
vision of the future
everyone is working
towards. “You are not
a transformational
hero who is carrying
the weight of the
transformation on your
own shoulders.”
JEAN-PIERRE CLAMADIEU’S PRINCIPLES
OF DISRUPTIVE LEADERSHIP
7 Have a clear bold vision: Be able to state a big-
picture vision for the enterprise.
7 Don’t go it alone: Surround yourself with a strong
team that supports change.
7 Be visible and accessible: It’s important for people
to hear about the vision from you — repeatedly and
often.
7 Be persistent with big ambitions: Do not
settle for solid results. Keep working until big,
transformational goals are met.

“It’s important that you show some consistency in the
way you act,” he says.
Equally important is to have the patience to let what
can feel like drastic changes sink in and be accepted and
embraced by the employees who will implement them.
“You need to give people time to understand what you
want to do so that they’re willing to move alongside
you,” he says. “Otherwise, you are not a leader. You’re
just sitting alone in a room making nice presentations.”
BE VISIBLE AND ACCESSIBLE
These days, Clamadieu spends about 50 percent of his
time visiting Solvay facilities and employees around the
globe. He does this because he knows just how important
it is for as many of his colleagues as possible to hear about
the company’s vision and the need for disruptions from
him personally.
“Part of disruptive leadership is understanding that when
people hear about it they are a bit lost and the first thing
you need to do is reassure them and help them understand
what is being done and why,” he says.
Interestingly, Clamadieu says that
those conversations are easier in some
places than in others. For instance, he
says that Brazilians generally are quick
to embrace change while Europeans are
more instinctively suspicious.
“Their first reaction is often to be on
the defensive,” he says.
Regardless of the initial reception,
Clamadieu says he always tries to make
the company’s overall vision relatable
and exciting for each individual.
“Yes, you may have been doing things
like this for 10 years and now that job is
disappearing but we will find something
new for you that allows you to make a
new contribution,” he says. “And that
change could and should mean personal improvement and
personal development. It’s very important to show that this
transformation is not just for stock management, but that it
can also bring opportunities to people.”
BE PERSISTENT
Even though Clamadieu is exceptionally proud of
the progress Solvay has made since he became CEO —
net sales in 2012 were up 2 percent from 2011 to €12.4
billion (approximately $16.8 billion) and net debt went
down from €1.8 billion (approximately $2.4 billion) in
2011 to €1.1 billion (approximately $1.4 billion) in 2012
— he still sees much work to be done. For instance,
in his travels to company outposts he has been asking
employees at all levels whether they have felt the impact
of the new emphasis on decentralized decision making.
“People say, ‘No, we haven’t, because you have given
more authority and empowered my boss and he has
become a bit worried because with that empowerment
comes responsibility,’ ” he says. “They say their bosses are
too focused on their own issues to empower those under
them, so it will take time to make sure decentralization
doesn’t stop.”
SELLING DISRUPTION
In some ways, Clamadieu’s own transition from leading
Rhodia from the brink of bankruptcy to taking over the
reins of Solvay has been surprisingly seamless.
“I used to say that at Rhodia we were facing a liquidity
crisis, but the root cause was a trust crisis; it was internal,
the employees not trusting the leaders
and where the company was going,”
he says. “Although we had to rebuild
the balance sheet, we also had to
rebuild trust and the way to do that
was not that different from today:
setting a goal, explaining how we get
there, and making progress quarter by
quarter.”
In some ways, being a disruptive
leader focused on change was actually
easier for Clamadieu at Rhodia than it
is at Solvay.
“When you’re in an emergency
situation, people don’t ask why we need
to change. They understand that you
are on the side of a cliff and absolutely
need to turn the steering wheel in a
different direction,” he says. But at Solvay, which has a
strong balance sheet and no large, immediate challenges
Clamadieu has had to make a stronger case for disruption.
“The challenge is a bit bigger for the CEO to explain
why the situation needs disruptive management,” he says.
“In our case, it is because the world is changing.”
Clearly, Clamadieu has made his case well. And it’s a
job he relishes. “I would not lead a company that didn’t
need big changes,” he says. “I wouldn’t want to take a
mundane CEO job.”
TO BE
DISRUPTIVE IS TO
ACKNOWLEDGE
THE FACT THAT WE
NEED TO CHANGE
AND THAT WE
NEED TO ACCEPT
AND MAKE MOVES
THAT SOUNDED
IMPOSSIBLE
YESTERDAY.

GREAT LEADERSHIP,A
GREAT ORGANIZATION
A GREAT PERSONAL LIFE
The four ways of being that
create the foundation for
BY WERNER H. ERHARD AND MICHAEL C. JENSEN

1
n this paper we argue that the
four ways of being we identify as
constituting the foundation for
being a leader and the effective
exercise of leadership are also the
the foundation for an extraordinary
organization and the foundation of
an extraordinary personal life.
We start with a brief overview of each of these four
foundations before going into an expanded discussion of each.
AN OVERVIEW
èè Being Authentic
Being authentic is being and acting consistent with who you
hold yourself out to be for others, and who you hold yourself
to be for yourself.When leading, being authentic leaves you
grounded and able to be straight with others without the use
of force.
èè Being Cause In the Matter of Everything InYour
Life
Being Cause in the Matter is a stand you take on yourself and
your life.A stand is a declaration you make, not a statement of
fact.Being Cause in the Matter is viewing life from and acting
from the stand that “I am cause in the matter of everything in
my life.”Being willing to view life from this perspective leaves
you with power.You are never for yourself a victim.
èè Being Committed to Something Bigger than
Oneself
Being committed to something bigger than oneself is the
source of the serene passion (charisma) required to lead and to
develop others as leaders and the source of persistence (joy in
the labor of) when the path gets tough.
èè Being A Person or an Organization of Integrity
In our model, integrity for anything is the state of being
whole, complete, unbroken, sound, in perfect condition1
. For
a person and any human organization, integrity is a matter of
that person’s word or that organization’s word being whole
and complete — nothing more and nothing less. Integrity is
required to create the maximum opportunity for performance
and quickly generate trust.
A WORD ABOUT VALUES
In our discussion here we are not concerned with values
— that is,we are not concerned with what is considered good
as opposed to bad, or right as opposed to wrong.We advocate
these four principles not because they are “right,” but simply
because they are in each individual’s personal self-interest
and in each organization’s self-interest.These insights into the
actual nature and function of the four aspects of the foundation
for great leadership, great organizations, and a great personal
life create workability, trust, peace, joy, and private and social
value.They provide a path for individuals, organizations, and
societies to realize much of what people generally think ethics
and morality produce.And,if we look at the state of the world
around us,obviously that latter path has not worked.
FOUNDATION ONE: BEING AUTHENTIC
Being authentic is being and acting consistent with who you
hold yourself out to be for others, and who you hold yourself
to be for yourself.
Surprisingly, there is nothing authentic about any attempt
to be authentic. Any attempt to be authentic on top of our
inauthenticities is like putting cake frosting on cow dung,
thinking that will make the cow dung go down well. In any
case, the attempt to be authentic is a put on and therefore
inauthentic.
One cannot pretend to be authentic.That, by definition, is
inauthentic. Remarkably, the only path to being authentic is
being authentic about one’s inauthenticities. Being authentic
is being willing to discover, confront, and tell the truth about
your inauthenticities — where you are not being genuine,real,
I
1
SeeErhard,Jensen,andZaffron(2009),“Integrity:APositiveModelthatIncorporatestheNormativePhenomenaofMorality,Ethics
and Legality.” Harvard Business School NOM Working Paper No. 06-11. Available at SSRN: http://ssrn.com/abstract=920625
Dr.Michael C.Jensen is the Jesse Isidor Straus Professor of BusinessAdministration,Emeritus at Harvard Business School.He has played an important
role in the academic discussion of the capital asset pricing model,stock options policy,and corporate governance.
Werner H.Erhard is recognized worldwide as a business,management,and humanitarian leader.He has consulted for numerous corporations and charitable
and governmental agencies.

EDITOR’S NOTE:
The following article is excerpted by the
authors from an academic paper on which
they are working.While different in style and
length from our typical IQ article, you can be
sure that it is worth your time to read and,
even study, this article. Erhard and Jensen
are making a significant contribution to the
field of leadership development and the
effective exercise of leadership. Moreover,
their work reinforces, illuminates, and expands
the principles and practices that Insigniam’s
clients have found so valuable:
èè At the core of Insigniam’s leadership
development work is the notion that
leadership starts with taking a stand — the
access to which is your word. In particular,
Jensen and Erhard’s seminal work to
define integrity as “working as your word”
elevates that notion and extends it in
multiple dimensions.
èè One highly effective supply chain executive
who has worked with Insigniam for a
decade says that his most impactful
learning is that, if he touches or sees it,
he is responsible (a leader is responsible);
that discovery is harmonic with the authors’
foundation of being cause in the matter of
everything in your life.

or authentic. Specifically, being authentic is being willing to
discover, confront, and tell the truth about where in your life
you are not being or acting consistent with who you hold
yourself out to be for others,or not being or acting consistent
with who you hold yourself to be for yourself.
Most of us think of ourselves as being authentic; however,
each of us in certain situations,and each of us in certain ways,
is consistently inauthentic.
SOME EXAMPLES OF OUR INAUTHENTICITIES
We as persons and in our organizations desperately want
to be admired. For many, admiration is the most valuable
coin of the realm. Almost none of us is willing to confront
just how much we want to be admired, and how readily we
will fudge on being straightforward and completely honest in
a situation where we perceive doing so threatens us with a loss
of admiration.We will do almost anything to avoid the loss of
admiration — stretch the truth,manipulate the facts,hide what
might be embarrassing or unpleasant or even awkward and,
where required,outright lie.
We also all want to be seen by our colleagues as being loyal,
protesting that loyalty is a virtue even in situations where
the truth is that we are acting “loyal” solely to avoid the loss
of admiration. And, in such situations, how ready we are to
sacrifice authenticity to maintain the pretense of being loyal,
when the truth is that we are “being loyal” only because we
fear losing the admiration of our close colleagues,subordinates,
or bosses.
In addition, most of us have a pathetic need for looking
good (and in certain situations this shows up as wanting to be
liked), and almost none of us is willing to confront just how
much we care about looking good — even to the extent of
the silliness of pretending to have followed and understood
something when we haven’t.
Each of us is inauthentic in certain ways.While this may
sound like a description of this or that person you know, it
actually describes each of us — including you the reader and
each of us authors.We are all guilty of being small in these ways
— it comes with being human.
If you cannot find the
courage to be authentic about
your inauthenticities, you can
forget about being a great
leader or having a great personal
life. And an organization that
cannot be authentic about it’s
inauthenticities will experience
great conflicts,costs,and inevitably loss of reputation.
Great leaders, great organizations, and those who lead great
personal lives are noteworthy in having come to grips with
these foibles of being human,not eliminating them,but being
the master of these weaknesses.
IS BEING AUTHENTIC IMPORTANT TO BEING A LEADER?
Quoting former Medtronics CEO and now Harvard
Business School Professor of Leadership Bill George:“After
years of studying leaders and their traits, I believe that
leadership begins and ends with authenticity.”2
To be a leader and to have a great organization and to have
a truly great personal life, you and your organization must be
big enough to be authentic about your inauthenticities and
your organization’s inauthenticities.This kind of bigness is a
sign of power, and is so interpreted by others. Being a leader
requires that you be absolutely authentic,and true authenticity
begins with being authentic about your inauthenticities; and
almost no one does this.
THE ACTIONABLE ACCESS TO AUTHENTICITY
As we have said, the only path to authenticity is being
authentic about your inauthenticities. In order to achieve this
you must find in yourself, that “self” that leaves you free to
be authentic about your inauthenticities.That “self,” the one
required to be authentic about your inauthenticities, is who
you authentically are.
And you will know when this process is complete when you
are free to be publicly authentic about your inauthenticities,
and have experienced the freedom, courage, and peace of
2
George, Bill. 2003, p.11. “Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value”. San Francisco: Jossey-Bass.
IF YOU CANNOT FIND THE COURAGE
TO BE AUTHENTIC ABOUT YOUR
INAUTHENTICITIES, YOU CAN FORGET
ABOUT BEING A GREAT LEADER OR
HAVING A GREAT PERSONAL LIFE.

2
mind that comes from doing so.And this is especially so when
you are authentic with those around you for whom those
inauthenticities matter (and who are likely to be aware of them
in any case).
FOUNDATION TWO: BEING CAUSE IN THE
MATTER
By “Being Cause in the Matter” we mean being cause
in the matter of everything in your life as a stand you take
for yourself and life, and acting from that stand. To take
the stand that you are cause in the matter contrasts with it
being your fault,or that you failed,or that you are to blame,
or even that you did it.
It is not true that you are the cause of everything in
your life.That you are the cause of everything in your life
is a place to stand from which to view and deal with life,
a place that exists solely as a matter of your choice. The
stand that one is cause in the matter is a declaration, not an
assertion of fact.It simply says:“You can count on me (and,
I can count on me) to look at and deal with life from the
perspective of my being cause in the matter.”
BEING CAUSE IN THE MATTER MEANSYOU GIVE UP THE RIGHT TO
BE A VICTIM
When you have taken the stand (declared) that you are
cause in the matter of your life, it means that you give up
the right to assign cause to the circumstances or to others.
That is you give up the right to be a victim. At the same
time, taking this stand does not prevent you from holding
others responsible.
As we said, it is not true that you are the cause of
everything in your life. Being cause in the matter does not
mean that you are taking on the burden of or being blamed
for or praised for anything in the matter. And, taking the
stand that you are cause in the matter does not mean that
you won’t fail.
However, when you have mastered this aspect of the
foundation required for being a leader and exercising
leadership effectively, you will experience a state change in
effectiveness and power in dealing with the challenges of
leadership and living a great personal life (not to mention
the challenges of creating a great organization).
In taking the stand that you are the cause of everything
in your life, you give up the right to blame others or the
environment. In fact, you give up the right to blame the
circumstances for anything that is going on with you or
your organization.

3
4
FOUNDATION THREE: BEING COMMITTED TO
SOMETHING BIGGER THAN ONESELF
What we mean by “being committed to something bigger
than oneself” is being committed in a way that shapes one’s
being and actions so that your ways of being and acting are
in the service of realizing something beyond your personal
concerns for yourself — beyond a direct personal payoff. As
they are acted on, such commitments create something to
which others can also be committed and have the sense that
their lives are about something bigger than themselves.This is
an important aspect of a great personal life,great leadership,and
a great organization.
BEING COMMITTED TO SOMETHING BIGGER THAN ONESELF IS
THE SOURCE OF PASSION
Without the passion that comes from being committed to
something bigger than yourself, you are unlikely to persevere
in the valley of tears that is an inevitable experience in the lives
of all true leaders.Times when nothing goes right, there is no
way, no help is available, nothing there except what you can
do to find something in yourself — the strength to persevere
in the face of impossible,insurmountable hurdles and barriers.
And, by the way, every great personal life includes having to
come to grips with one or more of these profound challenges.
When you are committed to something bigger than yourself
and you reach down inside you will find the strength to
continue (joy in the labor of).
EXAMPLE OF A VALLEY OF TEARS THAT ALMOST EVERYONE
EXPERIENCES: THE MID-LIFE CRISIS
At some point in life we all stop measuring time from the
beginning and start measuring it from the end. It shifts from
how far have I come to how much time and opportunity
do I have left?
No matter how good you look, no matter how good
you’ve gotten your family to look, and no matter how
much wealth, fame, power, and position you have amassed,
you will experience a profound lack of fulfillment — the
incompleteness,emptiness,and pain expressed by the common
question:Is this all there is?
Let us be clear: There is nothing inherently wrong with
wealth, good looks, fame, power, or position, but, contrary
to almost universal belief, they will never be enough. And
facing up to that leaves people and organizations disoriented,
disturbed, and lost. No matter how good you look or how
much you have personally amassed,
it will never be enough to avoid
this crisis. Dealing with the crisis of
“Is this all there is?” lies in having a
commitment to the realization of a
future (a cause) that leaves you with a
passion for living.
This principle, being committed
to something bigger than oneself,
applies to corporate entities as well as
to human beings.Value creation for
both is the scorecard for success.Value creation is not the source
of corporate or personal passion and energy.Being committed
to something bigger than oneself is the source of that passion
and energy. Every individual and every organization has the
power to choose that commitment — there is no “right
answer.”It is creating what lights up you and your organization.
FOUNDATION FOUR:
INTEGRITY — A POSITIVE MODEL
Definition:We use the first two definitions of integrity from
Webster’s New World Dictionary: 1. the quality or state of
being complete; unbroken condition; wholeness; entirety 2.
the quality or state of being unimpaired; perfect condition;
soundness.
We use the phrase “whole and complete” to represent
our definition of integrity. Defined this way, integrity is
VALUE CREATION IS NOT THE SOURCE
OF CORPORATE OR PERSONAL
PASSION AND ENERGY. BEING
COMMITTED TO SOMETHING BIGGER
THAN ONESELF IS THE SOURCE OF
THAT PASSION AND ENERGY.

a positive phenomena, not a virtue. There is nothing
inherently good or bad about it, it is just the way the world
is. (We show how morality and ethics are related to our
definition of integrity below.)
An object has integrity when it is whole and complete.
Any diminution in whole and complete results in a
diminution in workability.Think of a wheel with missing
spokes, it is not whole and complete. It will become out-
of-round, work less well, and eventually stop working
entirely. Likewise, a system has integrity when it is whole
and complete.
TheLawofIntegritystates:Asintegrity(wholeandcomplete)
declines,workability declines,and as workability declines,value
(or more generally,the opportunity for performance) declines.
Thus,the maximization of whatever performance measure you
choose requires integrity.
Attempting to violate the Law of Integrity generates
painful consequences just as surely as attempting to violate
the law of gravity. Put simply (and somewhat overstated):
“Without integrity nothing works.” Think of this as a
heuristic:If you or your organization operate in life as though
this heuristic is true, performance will increase dramatically.
And the impact on performance is huge: easily in the range
of 100% to 500%.

INTEGRITY FOR A PERSON (OR AN ORGANIZATION)
In this positive model,integrity for a person is a matter of a
person’s word,nothing more and nothing less.You are a man or
woman of integrity,and enjoy the benefits thereof,when your
word is whole and complete.Your word includes the speaking
of your actions as in“actions speak louder than words.”
HONORINGYOUR WORD
While keeping your word is fundamentally important in life,
you will not be able to always keep your word (unless you are
playing a small game in life). However, you can always honor
your word.Honoring your word is:
1.Keeping your word,OR
2. Whenever you will not be keeping your word, just as
soon as you become aware that you will not be keeping your
word (including not keeping your word on time) saying to
everyone impacted:
i. That you will not be keeping your word,and
ii. That you will keep that word in the future and by when,or
that you won’t be keeping that word at all,and
iii. What you will do to deal with the impact on others of the
failure to keep your word (or to keep it on time).
YOUR WORD DEFINED
WORD 1 – WHAT YOU SAID: Whatever you said you
will do, or will not do (and in the case of do, doing it on
time).
WORD 2 –WHATYOU KNOW:Whatever you know to
do,or know not to do,and if it is do,doing it as you know it
is meant to be done (and doing it on time),unless you have
explicitly said to the contrary.
WORD 3 – WHAT IS EXPECTED: Whatever you are
expected to do or not do (unexpressed requests) and in the
case of do, doing it on time, unless you have explicitly said
to the contrary.
WORD 4 – WHAT YOU SAY IS SO: Whenever you
have given your word to others as to the existence of some
thing or some state of the world, your word includes being
willing to be held accountable that the others would find
your evidence makes what you have asserted valid for
themselves.
WORD 5 – WHAT YOU STAND FOR: Whether
expressed in the form of a declaration made to one or more
people,or to yourself,as well as what you hold yourself out
to others as standing for (formally declared or not).
WORD 6 – MORALITY, ETHICS, AND LEGALITY:
The Social Moral Standards, the Group Ethical Standards
and the Governmental Legal Standards of right and wrong,
good and bad behavior in the society, groups and state in
which I enjoy the benefits of membership are also my word
3
Erhard, Werner and Jensen, Michael C., 2013. “Four Ways of Being that Create the Foundations of A Great Personal Life, Great Leadership and A
Great Organization — PDF File of Powerpoint Slides” (September 12). Harvard Business School NOM Unit Working Paper No. 13-078. Available at
SSRN: http://ssrn.com/abstract=2207782

4
Alloway, Tracy and Kara Scannell (2013). “Jury finds Tourre Defrauded Investors”, Financial Times,
August 1. http://www.ft.com/cms/s/0/18098490-f86a-11e2-b4c4-00144feabdc0.html#axzz2f5BKytNd
WITHOUT INTEGRITY
NOTHING WORKS.
(what I am expected to do) …unless I have explicitly and
publicly expressed my intention to not keep one or more of
those standards,and I am willing to bear the costs of refusing
to conform to these standards (the rules of the game I am in).
NOTE: These six categories define one’sWord,they do not
define integrity.
THE BAD NEWS
We can say with great confidence that no one (including
us authors) is a person or organization completely in
integrity. That self-satisfied view is one of the causes of
the universal lack of integrity in the world. To repeat:
the common belief that we have made it as people and
organizations of integrity is one of the major factors
contributing to the systemic worldwide lack of integrity.
The fact is integrity is a “mountain with no top,” so we
had better get used to (and grow to like) climbing. Even
when people (and other human entities, such as banks,
corporations, partnerships, and other organizations) have
some general awareness of the damaging effects of out-
of-integrity behavior, for the most part they fail to notice
their own out-of-integrity behavior. As a result, they end
up attributing the damage from their out-of-integrity
behavior to other causes. They systematically believe that
they are in integrity,or if by chance they are at the moment
aware of being out of integrity, they believe that they will
soon get back into integrity.
However, the combination of 1) generally not seeing
our own out-of-integrity behavior, 2) believing that we are
persons of integrity, and 3) even when we get a glimpse of
our own out-of-integrity behavior, assuaging ourselves with
the notion that we will soon restore ourselves to being a
person of integrity keeps us from seeing that in fact integrity
is a mountain with no top.To be a person of integrity (or
bank or other organization of integrity) requires that we
recognize this and “learn to enjoy climbing.” Knowing
that integrity is a mountain with no top, and being joyfully
engaged in the climb, leaves us as individuals with power,
and leaves us known by others as authentic, and as men or
women of integrity (or organizations of integrity). While
counterintuitive,owning up to any out-of-integrity behavior
and dealing with it with“honor”actually leaves one showing
up for others as a person of integrity. Recognizing that we
will never “get there” also opens us up to tolerance of (and
an ability to see and deal productively with) our own out-of-
integrity behavior as well as that of others.
THE COSTS OF DEALING WITH AN OBJECT, PERSON, GROUP,
OR ENTITY THAT IS OUT OF INTEGRITY
Consider the experience of dealing with an object that
lacks integrity.Say a car or bicycle.When it is not whole and
complete and unbroken (that is a component is missing or
malfunctioning) it becomes unreliable, unpredictable, and
it creates those characteristics in our lives.The car fails in
traffic, we create a traffic jam, we are late for appointments,
fail to perform, disappoint our partners, associates, and
firms. In effect, the out-of-integrity car creates a lack of
integrity in our life with all sorts of unworkability fallout.
And this is true of all our associations with persons or
entities that are out of integrity.The effects are huge, but
generally attributed to something other than the lack of
integrity.
In the Appendix to Erhard and Jensen (2013)3
we apply
these principles to the Goldman Sachs’ experience with
its Abacus Mortgage Backed Securities Scandal in which
Goldman violated 7 of its 13 Goldman Business Principles
(their word to their clients, employees and the world).
Goldman employee Fabrice Tourre was found guilty of
defrauding investors. See Alloway and Scannell (2013)4
. In
addition, Goldman paid a $550 million fine to the SEC
for its actions surrounding its Abacus mortgage backed
securities, a record at that time.Applying the principles laid
out in this paper to Goldman’s actions we conclude that
Goldman was: 1.Out of integrity because it did not honor
its word:violating in part or in whole,7 of its 13“Goldman
Sachs Principles.” 2. Inauthentic because it was not true
to what it holds itself out to be for itself, its employees, its
clients, and the public and 3. Not committed to something
bigger than itself. (We could find nothing in the Goldman
literature indicating that it was committed to anything
bigger than itself.)

What does a modern leader look like? We asked some of today’s top
executives their thoughts on leadership, the challenges leaders face,
and why being disruptive is more important than ever.
PROFILES IN LEADERSHIP

here has been a shift in what’s expected of leaders over the last 30 years. No longer can a leader just keep a steady
hand on the rudder of an enterprise. Today, leaders are expected to cut a new path in the marketplace for their
organization, to disrupt business as usual. They are expected to have a bold vision of the future and marshal
the forces that it will take to get there. No one understands the shift in what it means to be a leader better than
those who are actually leading. That’s why we talked to several of today’s top leaders and asked them about the
challenges they face, how they overcame them, and the importance of disruption. What we found out was eye
opening, and educational. These leaders had several characteristics in common. They are not just visionary,
they are at work making sure a particular future is possible. The future they seek is bold, compelling,
and captures the very essence of winning. They take time to build trust and bring people along
— speaking authentically and operating with consistency and integrity. They encourage inventive
and unorthodox action. They build their company’s culture, then they build it some more.
— Shideh Sedgh Bina
WHAT ARE SOME OF THE UNIQUE CHALLENGES
THAT LEADERS TODAY FACE, AND HOW SHOULD
THEY ADDRESS THEM?
Resources are much more limited in my industry today than
before.Regulations cover nearly everything and are changing
constantly. Currency fluctuations have a massive impact on
international businesses. These issues can be addressed by
developing and following a long-term vision for the business
and building the capability in the organization to understand
the strategy, know each unit’s role in delivering this strategy,
and setting up processes which enable action, with a clear
understanding of each unit’s freedom to act.
WHATARETHETHREE OR FOUR FACTORSTHATARE
MOST CRITICALTO MANAGINGASA DISRUPTIVE
LEADER? HOW DOYOUADDRESS EACH ONE?
Having a clear vision of the future — Requires long-
term focus on the key factors to deliver.
Challenging employees to be better than they think
possible—Supportingrebelsandpeoplewiththecommitment
to deliver.
Forgiving mistakes and learning from them —
Requires clear examples to be credible.
IN A RECENT INSIGNIAM EXECUTIVE SENTIMENT
STUDY, 87% OF EXECUTIVES SAID THAT
INNOVATION WAS CRITICAL TO THEIR CONTINUED
COMPETITIVE ADVANTAGE,YET ONLY 15% FELT
THEIR ORGANIZATIONS WERE WELL PREPARED
TO DELIVER THE REQUISITE INNOVATION. INYOUR
OPINION, WHY IS THERE SUCH A DISPARITY?
The speed of business is accelerating. Most organizations
thrive on what they have done well in the past. This difference
creates the issue. Few organizations support and reward
innovation in a clear way.
CANYOU QUICKLY SHARE SOME OFYOUR
LEADERSHIP CHALLENGES AND HOWYOU
ADDRESSED THEM?
When I started in my new job, most people believed our
most advanced development project was too late and too
expensive to develop. I identified the key success factors with
a cross-functional team approach and challenged them to deal
with the issues.A year was cut from the time,and cost reduced
significantly.As a result, a partnership deal was possible which
delivered significant short-term revenue.
WHAT HAVEYOU DONE TO CREATE THE
CONDITIONS FOR SUSTAINED INNOVATION INYOUR
ENTERPRISE?
Not enough! More process is needed and the support of the
true innovators should be clearer to the whole team.
DR. DAVID EBSWORTH
CEO, GALENICA LTD. // CEO, VIFOR PHARMA //
CHAIRMAN OF THE EXECUTIVE COMMITTEE, GALENICA AG

Insigniam Quarterly Winter 2013 - Disruptive Leadership

Insigniam Quarterly Winter 2013 - Disruptive Leadership

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Insigniam Quarterly Winter 2013 - Disruptive Leadership