Robert Shiller is the Arthur M. Okun Professor of Economics at Yale University. In this 7 minute video interview from the McKinsey Qurterly, he describes the role played in our economy by “animal spirits,” the subject of his new book written with George A. Akerlof, the Koshland Professor of Economics at the University of California, Berkeley. The text below is adapted from Animal Spirits.

Adam Smith saw that human beings rationally pursue their economic interests, and his economic theories explain what happens when they do. But they are also guided by noneconomic motives—“animal spirits”—which Adam Smith and his followers largely ignore. Sometimes people are irrational, wrong, shortsighted, or evil; sometimes they act for action’s sake; and sometimes they uphold noneconomic values like fairness, honor, or righteousness.

The research is pretty clear. We make totally irrational emotional decisions about almost everything – unless it is insignificant and then we let logic rule. However, once we have made that instant emotional response, we let our minds believe it is analytical and devise reasons to “make it so”. (While a google search will come up with a number of articles on this, I am still trying to locate the source that I prefer to reference.)

Theoretical economists who struggle to understand how people handle uncertainty seem to be converging on behavioral economics. Jack: Straight from the Gut, the title of the autobiography of former GE chairman Jack Welch, sums up this reality: investment decisions are intuitive, not analytical. Intuition, a social process, follows the laws of psychology—indeed, of social psychology. Asking why capital expenditure fluctuates from year to year is a bit like asking why beer consumption fluctuates from one poker party to another.

What all this got to do with Sustainable Change?

We talk about planning change as if we can take into account all the facors. Even if we could anticipate all the possble logical and some of the emotional reactons and develop contingency plans, it may be a futile effort”. (This following in fact not the original quote from To A Mouse by Robbie Burns but the colloquial phase. The proper verse can be listened to by clicking this link.)

The best-laid plans of mice and men often go awry.

Even we really want to see meaningful change we had better start figuring ways to tap unto the human spirit and passion. At 1-Focus we are pretty clear about how to do this through genuine engagement.

Q. What was the most important leadership lesson you learned?

A. I’ve learned to be patient and not lose my temper. 

Patience I have learned over the past five years is my biggest developmental need.  (Such a nice way of putting that I too impatient and easily I loose my temper at my children.)

A colleague, CJ got around to blogging about this this interview and it is always interesting to see the different points that strike us differently.  Patience stood out for me but we did share some other similarities.

I don’t think PowerPoints help people think as clearly as they should because you don’t have to put a complete thought in place.  You can just put a phrase with a bullet in front of it. And it doesn’t have a subject, a verb and an object, so you aren’t expressing complete thoughts.

The higher someone rises in an organization, the more important their intangible qualities become, suggests Delta Air Lines CEO Richard Anderson in an in-depth interview (by Adam Bryant of the New York Times) on the unquantifiable aspects of human capital. How Anderson conducts interviews and what he is looking for is particularly insightful.  While his approach is different, for him some of the key elements he is striving to elicit are:

• a really strong set of values
• a really good work ethic
• adaptability to change
• ability to get along well with people
• a team player
• ability to motivate people

I’ve been doing a lot of thinking about what I call ‘Transition’ – a word I use because I don’t like the word (or even the concept of) ‘retirement.’

I realized that I had become locked into a binary mindset. Either a person retired in the traditional sense, leaving work completely, or continued working well past the traditional retirement age.

I’ve come to the realization that there is a middle ground between total retirement and working fulltime. (I can hear some people saying, “What took you so long?”) In the middle ground, a person continues to work but in a changed role. That’s one part of transition.

Business owners often keep working. They love their work. Work gives meaning to life. It’s a place to go, something to do. It’s the challenge of solving problems, the pleasure of interacting with others, having credibility in the community. And, as owners, they have the flexibility to make choices about their future involvement.

The new economy is forcing many people to reconsider ‘retirement’ and continue working to generate income to make up for the big drop in their 401k and other retirement funds.

For many, it’s the way they have wanted it all along. “I don’t want to quit altogether. I want to keep working but in a different role, at a different pace.”

I worked with many business owners and managers who have faced the same issue. It’s probably the most challenging question professionals will ever have to face. I came to the conclusion that, for many, especially professionals, it may not a binary choice: “Should I stay or should I go?” That’s not the right question.

I say this from my personal experience. When I was trying to decide whether it was time to move on from WENDEL I agonized over my decision for three years. I wrote about some of the issues I addressed in a newsletter article (in the article archives of this newsletter) “Don’t Retire – Transition.”

Instead, ask a different question: ‘How can I keep the company progressing – leaving my legacy – but change my role to enable me to do what I love to do and be free of those other responsibilities that I don’t want to do?” Maybe its: “How can I live a meaningful life while maintaining a reduced role in the business?” Another article (also in the archive) “Approaching Retirement” might help you with your deliberations.

Based on my own personal experience and my work with business owners over the past 20 years, I’ve come to the conclusion that they need to deal with their personal ‘transition’ issues – their ‘new’ role – before they can begin to explore succession planning. If they can’t/won’t clarify their new personal role they are unable to consider succession.

Are you pondering your personal transition? I suggest you start do the following:
A) Define your life goals,
B) Choose your new future,
C) Identify your ‘next steps’ to best achieve that future.

Then, you can address ’succession issues’ that are so important to your legacy.

It’s tough to ponder the whole transition challenge and look at it objectively – to step back from the day to day work and ‘just think about this.’ It’s key to set aside blocks of time, away from the work/business issues, to help give you focus. Maybe a ‘coach,’ someone experienced in addressing this challenge, can help you focus on your strategic life issues and add discipline to the process.

The future will not be the past all over again. It’s going to be different. Now is the time to get prepared!

Working with business leaders who are exploring their ‘transition’ options has become a focus of my work. If you’d like to explore your situation give me a call.

Peter Wendel

This article first appeared in Peter Wendel Group Newsletter and was published in Organizational Development Network of Western New York, April 22nd 2009.

Here is a short video on Famous Failures – it is a little American and male centric but always good to remind ourselves that failure is an important part of life and growth. Sure all these people are well known today but when they were given negative feedback, it didn’t stop them. Will you let setbacks stop you?

Enjoy.

There will be a place for off site executive development but generally the cost of “classroom” experience has become quite unreasonable.  While we definitely do insist on some face to face meetings (for events like our Post Merger Integration Program, 5 Dysfunctions of a Team Workshop, Visioning or Strategic Planning and Engaging the Whole Processes), we too offer more teleclasses or webinars.

Here are some other considerations that an individual can do on their own or with the support of their organization.  Sorry, but some of these can cost money.

1. Deliberate Practice. Becoming great at anything–sports, science, business–requires ten years of practice and 1,000 hours of practice per year. “Ten thousand hours is the magic number of greatness,” Gladwell argues in his book “Outliners”.  Read this article in Harvard Business Publishing for a more in depth discussion.
2. Coaching.  I am not going to write about all the benefits and ROI here.  You have heard enough about it but coaching from the right source can speed up your development and help you with that action plan.
3. Read. And I don’t mean business books or necessarily fiction.
4. Volunteer. Volunteering is a great way to gain experience in areas where you may not have the opportunity at work.  Not-for-Profits are always looking for individuals who are willing to step forward and take on a leadership role.  It might even lead to a new job.
5. Hobbies.
6. Travel. A number of firms are offering these services to organizations as the article in the Financial Times points out: Travel broadens executive minds. However, you could develop your own strategy with assistance.
7. Mergers. What Makes the Best CEOs? Mergers Can Help. OK, maybe this isn’t at your level or an obvious option (You’d be surprised though that you probably will be involved in at least one merger in your career.)  I couldn’t help adding it for fun and to stress the need for leaders to develop this specific competency – Post Merger Integration Change.   Adapting to change is key to business survival.
8. Getting a Pink Slip. If yo do experience number 7 – it might be followed up with number 8 – a layoff.  Don’t be too discouraged, an article in USA Today suggests getting fired can be an impetus to create new leaders.

Part of the “We Learned the Hard Way So You Don’t Have To” Interview Series. Conducted on January 26th, 2009.

If you are a member of the Transition Club, and logged in, you will be able to access both the recording and the additional resources below.  If not and you missed the call, it has been  archived into the vault of Kim Nishida’s new membership support community.

This is what Kim has generously said about the interview:

Wow! This interview was crammed full of information, tips, and the concepts that can really help you make the most out of LinkedIn, if that’s what you decide to do. I know we could have easily kept talking for 2 hours about this topic.

My thanks to Kim.  If it went as smoothly as it did, it is because Kim was well prepared, sent me some questions, and is a great interviewer.  It was both pleasure and it was great fun.

[private_Transition Club] [private_Associate Network] [private_Guest]

Interview with Roberta Hill on her use of Social Networks – specifically LinkedIn.

Articles and Resources:

LinkedIn Surpassing Facebook for Enterprise-Use Cases

25 Web Resources to Help You Get Your LinkedIn Game On

13 Ways to Generate Massive Success On LinkedIn

Why Social Media Is Worth a Small Business Owner’s Time

[/private_Transition Club] [/private_Associate Network] [/private_Guest]

Each month, one of our colleagues, David Chinsky offers a book review that he puts in his newsletter.  The choice is selected to both engage and challenge leaders as they seek to make a difference in their organizations.
Their pick this month is Outliers: The Story of Success by Malcolm Gladwell.  I share David’s preferences in authors and encourage you to visit his website.

By Guest Author David Chinsky

I must start by saying that Malcolm Gladwell is one of my favorite authors.  As a reporter for The New Yorker, and author of The Tipping Point and Blink, Gladwell impresses with his story telling abilities and easy reading prose.

In Outliers, Gladwell forces us to reassess what “really” accounts for success in life.  By examining patterns that most of us overlook or ignore, Gladwell patches together explanations for success that are both compelling and sensible.

Two of the most interesting chapters in Outliers are “The 10,000-Hour Rule” and “The Ethnic Theory of Plane Crashes”.  Each of these stories help us look beyond the obvious to see what actually leads to success in the world around us.  In a heart-warming epilogue, the author permits us to peek into his own life to see how having the right opportunities in life can explain a large portion of our success.

This gem of a book will alter forever the way the reader thinks of outliers, and present a perspective that will go on to challenge the way we see success in life, ours and that of others around us.

© 2009 All Rights Reserved by David Chinsky & Associates, a management development and executive coaching company.  Visit them at www.theleadershipfit.com

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If you want to get a feel for some of this, here is a 16 minute video from Pop! Tech of Gladwell talking about his new book.  Pop sociologist and best-selling author Malcolm Gladwell has honed in on a profound new question: what separates extraordinary and average people? Discussing findings from his much-anticipated book “Outliers,” Gladwell details how we’re squandering human potential everywhere from the football field to the classroom – and what we can do to change it.

• What does it mean to be transparent?
• Why is it so important?
• What steps can businesses take to embrace it?

“You are the worst person to judge where you need to improve.”

Talk to us at 1-Focus about our 360 degreee Collaborative Leadership Profile and other feedback tools.

We hope you take the 16 minutes to sit back and enjoy this video and message:

“Validation” is a fable about the magic of free parking. Starring TJ Thyne & Vicki Davis. Writer/Director/Composer – Kurt Kuenne. Winner of numerous Int’l Film Festival awards.