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Flatter Organizations with high levels of trust, values, and purpose outpace on innovation, employee loyalty, customer satisfaction and financial performance
Study Also Finds Substantial CEO Disconnect with Employees
on How Companies Work, Especially in U.S.
New York, NY: An unprecedented, global analysis of how companies really work finds that fewer than one in 30 companies are self-governing – but that these rare companies experience profound advantages in the marketplace. It also found that CEOs worldwide have a significant disconnect from their employees about how their companies operate, nowhere more than in the United States.
Released today, The HOW Report looks at how governance, culture and leadership influence behavior and impact performance. The findings are derived from a rigorous statistical analysis of observations from over 36,000 employees at all levels in 18 countries. The report was developed by LRN and independently conducted by the Boston Research Group, in collaboration with Research Data Technology and The Center for Effective Organizations at the University of Southern California. LRN works with companies and their people to strengthen their corporate character and inspire principled performance.
The study identifies three business ‘archetypes’ describing how companies operate: Blind Obedience, Informed Acquiescence and Self-Governance. The study found that while only 3% of companies are Self-Governing, 43% fall into the Blind Obedience and 54% into the Informed Acquiescence archetypes. Those that are Self-Governing perform the highest on every one of the 14 performance outcomes in the study – including higher employee loyalty, customer satisfaction and lower misconduct. Self-governing organizations are also more resilient and observed by their employees to beat the competition, usually by huge margins, on innovation and financial performance.
“We manage what we measure, and as the world becomes more interdependent, it’s critically important to have metrics for how companies really operate—how their people behave and make decisions,” said LRN CEO Dov Seidman. “Our goal was to create hard, testable, repeatable metrics, and we’ve derived a valuable insight: companies that meet the standard of Self-Governance have profound advantages in the marketplace. They have the highest levels of innovation, employee loyalty, and customer satisfaction and the lowest levels of misconduct.”
Among the report’s top findings:
Only 3 percent of companies worldwide are self-governing —meaning that the organizations have high levels of trust, values, commitment to a purpose, and collaboration.
There is a marked disconnect between C-suite executives and the employees they lead. Worldwide, CEOs observe their companies as self-governing three times as often as the overall workforce: 10 percent versus three percent. For executives in the United States, it’s 24 versus 3 percent, tied for the biggest disconnect in the world with Mexico.
That 3 percent minority of self-governing companies has significant advantages over the competition. They experience:
― Higher Innovation: 92 percent of employees observe levels of innovation are high relative to the competition, a 25 percentage point lead over informed acquiescence companies and a 54 percentage point lead over blind obedience organizations.
― Stronger Employee loyalty: 92 percent of employees hope to be working for their company in a year, 46 percent and 12 percent higher than blind obedience and informed acquiescence, respectively. 98 percent would recommend their company to a friend, again far ahead of blind obedience (33%) and informed acquiescence (81%).
― Higher Customer Satisfaction: 99 percent observe highly satisfied customers v. 42 percent for blind obedience and 82 percent for informed acquiescence.
― Stronger Financial performance: 93 percent of respondents observe financial performance greater than their competitors, besting blind obedience by 45 percent and informed acquiescence by 19 percent.
― Lower Misconduct: Only 24 percent of employees observed misconduct or unethical behavior in the last year, compared to 34 percent in informed acquiescence and 47 percent in blind obedience companies.
“These findings have significant implications for CEOs and other business leaders,” said Seidman. “Companies that take their corporate character seriously are the ones who will thrive in the 21st century and be around in the 22nd century. It is our hope that the HOW Report will create a better understanding of how governance, culture and leadership combine to impact an organization’s success and significance.”
In our hyper-connected and interdependent world, LRN believes that the source of advantage has shifted to HOW – how we behave, lead, govern and relate to others. Since 1994, LRN has helped 20 million people at 700 companies meet complex legal and regulatory requirements and inspire principled performance in their operations. LRN provides strategic guidance, practical methods and a knowledge platform for inspiring your workforce.
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** “A self governing organization is one that, according to LRN, manifests high trust; acts and makes decisions based on a set of core values; founds its efforts on a deep commitment to a larger purpose; leads by inspiration (as opposed to carrots and sticks or coercion); and is characterized by transparency, collaboration, and a long term horizon. “
*The HOW Metrics Indices
• Trust
• Collaboration
• Information
• Speaking Up
• Values
• Time Horizon
• Operational Efficiency
• Resiliency
• Inspiration
• Significance
San Francisco, CA, and New York, NY, May 9, 2012 – How can technology and a group of creative minds help build a more human and truly social enterprise that is designed for the 21st century world and restores trust between business and society? This is the big question tackled by the interdisciplinary Reinvent Business hackathon – a collaborative, rapid ideation and software programming event – to be held in San Francisco on June 9-10.
Co-developed by frog and LRN and in partnership with BSR, Carnegie Mellon University, Dachis Group, Fast Company, Net Impact, Silicon Valley Bank, and the World Economic Forum’s Global Agenda Council in Decision-Making, Reinvent Business will bring together a diverse group of software developers, designers, gamers, filmmakers, storytellers, and business leaders to design and build innovative products and services that have the capacity to change corporate behavior from within.
“The Reinvent Business hackathon is built to inspire the humanity inside of our organizations, deepen the connections between business and society, and shape the kinds of positive behaviors we need in a more interconnected and interdependent world,” said Dov Seidman, CEO of LRN. “True reinvention can only happen with multiple stakeholders contributing to the solution, sharing their ideas from the bottom up and not just the top down. We believe in the power of convening. Our hope is that by bringing together some of the brightest minds and passionate leaders we can create sustainable ideas for shaping organizations capable of thriving uniquely in the 21st century.”
Doreen Lorenzo, president of frog, said: “Social technology and design present a unique opportunity to drive higher levels of transparency, empathy, and self-governance within companies, enabling a more human and truly social enterprise. With this event, we aim to create concepts and prototypes for software applications that translate values and principles into concrete interactions and tangible experiences at the workplace.”
Both individuals and teams from companies and non-profits have until May 25 to submit their applications to participate at www.reinventbusinesshackathon.com.
During the two-day event, teams will be organized to brainstorm, sketch, design, and code their concepts to address various areas of opportunities for business transformation. A jury of venture capitalists, marketers, product designers, journalists, and business leaders will work with the participant teams to help them shape their designs, ensuring the greatest levels of quality, adoptability, and potential for positive impact. Confirmed judges include Alexa Clay (Director, Social Intrapreneurship and New Economy, Ashoka Changemakers, and author of The Misfit Economy), Kathleen Edmond (Chief Ethics Officer, Best Buy), Jim Fruchterman (CEO, Benetech), Ted Howes (Director, Consumer Products and Innovation, BSR), Peter Kim (Chief Strategy Officer, Dachis Group, and author of Social Business By Design), Ebele Okobi (Director, Business and Human Rights Program, Yahoo!), and Kal Patel (Executive Committee Member, LRN).
The winning team will receive a cash prize from Silicon Valley Bank and free mentoring from frog and LRN. The concepts and prototypes created at the event will also be promoted by all hosting parties.
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About frog
frog works with the world’s leading companies, helping them to design, engineer, and bring to market meaningful products and services. With an interdisciplinary team of more than 1,000 designers, strategists, and software engineers, frog delivers connected experiences that span multiple technologies, platforms, and media. frog works across a broad spectrum of industries, including consumer electronics, telecommunications, healthcare, energy, automotive, media, entertainment, education, finance, retail, and fashion. Clients include Disney, GE, HP, Intel, Microsoft, MTV, Qualcomm, Siemens, and many other Fortune 500 brands. Founded in 1969, frog is headquartered in San Francisco, with locations in Amsterdam, Austin, Boston, Bangalore, Johannesburg, Kiev, Milan, Munich, New York, Seattle, Shanghai, and Vinnitsa. For more information, visit www.frogdesign.com or follow @frogdesign on Twitter.
About LRN: Inspiring Principled Performance
Since 1994, LRN has helped 17 million people at 700 companies worldwide simultaneously navigate complex legal and regulatory environments and foster ethical cultures. LRN's combination of practical tools, education and strategic advice helps companies translate their values into concrete corporate practices and leadership behaviors that create sustainable competitive advantage. In partnership with LRN, companies need not choose between living principles and maximizing profits, or between enhancing reputation and growing revenue: both are a product of principled performance. LRN works with organizations in more than 100 countries, and has offices in New York, Los Angeles, London, and Mumbai. For more information, visit www.lrn.com or follow @LRNinc on Twitter.
About the Reinvent Business hackathon
Co-developed by frog and LRN and in partnership with BSR, Carnegie Mellon University, Dachis Group, Fast Company, Net Impact, Silicon Valley Bank, and the World Economic Forum’s Global Agenda Council in Decision-Making, the Reinvent Business hackathon will take place on Saturday, June 9 – Sunday, June 10 at frog, 660 Third Street, San Francisco, CA 94107. Apply online at www.reinventbusinesshackathon.com and follow @Reinventbiz on Twitter.
Contacts
Sabrina Sandalo
frog
Tel +1 415-489-3120
sabrina.sandalo@frogdesign.com
Kathleen Brennan
LRN
Tel +1 646-862-2055
kbrennan@lrn.com
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Once seemingly distant from consumers, utilities are now fighting for customers' attention and developing business models to improve engagement.
Gas prices continue to be a central focus on the presidential campaign trail, as demonstrated by last month’s posturing over oil subsidies. Regardless of your politics, however, the taxpayer dollars at stake pale in comparison to the benefits of energy policy choices now being made by our military leadership.
Monday, April 30, 2012
CONTACT:
Amanda Carufel | amanda.carufel@lrn.com | 212.725.4848 x3288
Lauren Hodapp | lhodapp@fenton.com | 202-789-7750
New York, NY: LRN announced today that it has made two new additions to its team: Kal Patel, who has been named a member of LRN’s Executive Committee; and Mats Lederhausen, who has joined the company’s Board of Directors.
“I’m honored and thrilled to work with Kal and Mats, two innovators and visionary leaders who inspire me,” said LRN CEO Dov Seidman. “I believe that the source of corporate advantage today is HOW – how we behave, lead, govern and relate to others. Throughout their careers, Kal and Mats have both demonstrated the ability to transform how business works, and their leadership will be invaluable for both LRN and our Partners.”
Patel will lead the expansion of LRN’s business globally and will be based in the firm’s London office. He brings extensive executive experience and a reputation as an innovator, strategist, and inspiring leader. As a senior executive at Best Buy, he spearheaded the company’s innovation and global expansion, heading up strategy, emerging business, Best Buy Venture Capital Fund, and ultimately serving as President of Best Buy Asia and CEO of Five Star, Best Buy’s business in China. Before joining Best Buy, Patel was a top advisor to C-suite executives as a partner at Strategos consulting and principal at KPMG.
“The next decade is an inflection point for organizations and governments globally,” Patel said. “So much depends on how leaders approach the challenge. LRN is building a powerful wave for discovering the human capacity for the most innovative 21st century companies.”
Lederhausen brings over two decades of senior executive level experience, from his years as chief strategist at McDonald’s, Chairman of Chipotle to starting his own investment firm BE-CAUSE, which focuses on building businesses with a "purpose bigger than their products®". At McDonald’s, Lederhausen served as head of global strategy, shepherding the company through new growth initiatives and playing a key role in shaping the agenda that has helped McDonald’s complete one of the most successful corporate turnarounds in recent history. Lederhausen is a shareholder in LRN.
“LRN is on the cutting edge, with a winning philosophy to transform the way companies think about doing good and doing well,” Lederhausen said. “I have been an admirer of LRN for many years, and I couldn’t be happier to join the Board.”
LRN works with companies and their people to strengthen their corporate character and inspire principled performance. In our transparent, hyperconnected, interdependent world, the source of advantage has shifted to HOW – how we behave, lead, govern and relate to others. Since 1994, LRN has helped 20 million people at 700 companies meet complex legal and regulatory requirements. LRN provides strategic guidance, practical methods and a knowledge platform for inspiring your workforce.
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