TOR-
WHAT IS EQ? EQ is emotional quotient, a measure of emotional intelligence. The ability to be in touch with your own emotions and the emotions of others and work with them productively. IQ can be described similarly as the ability to access your own ideas, the ideas of others and work with them productively. IQ is thought to be 40% to 80% hereditary (various studies disagree as to the level) EQ is regarded as virtually totally learnable. WHY IS EQ IMPORTANT? Daniel Goleman‟s work on EQ uncovered its importance in business success. There is a high correlation between EQ leadership success in business. As a fun aside, there is a higher correlation between high IQ and schizophrenia than high IQ and business leadership success. Goleman‟s research shows IQ is necessary to a certain level, beyond that EQ is the differentiator.
1
TOR-
THE ELEMENTS OF EQ Goleman describes 5 elements of EQ.
Motivation is now starting to be thought of comprising a separate aspect called SQ – spiritual quotient or MQ, meaning quotient. It is the ability to be connected to your meaning and connect with the meaning of others productively. People will do extraordinary things when it is meaningful (fly planes into buildings). Long hours and difficulty are not a chore when it is meaningful. Meaning is a great source of individual and organizational energy. Victor Frankl, a concentration camp survivor in his famous book „Man‟s Search for Meaning” observed that those who survived the camps were not those physically strongest or with greatest intellect, but those with the greatest meaning to live. High motivation environments are both high on EQ (“I feel valued, trusted, there is open communication, I am developing in this team) and high on meaning (SQ) (“What we are doing is challenging, almost impossible, it really makes a difference”.) A simple way to have people self discover this is to ask them to consider a peak work experience from their career [As an exercise ask them to talk to the person next to them about a peak career experience. What was distinctive about it] 2
TOR-
The words people use as distinctive always include high meaning (SQ) and high EQ. People are “wired” for 4 types of experiences. High performance taps into them all.
HOW DOES EQ AND SQ RELATE TO OUR WORK? In 2 ways. Firstly, in helping clients build their own leadership capability. A high EQ/SQ environment is significantly more productive. Secondly, in our own way of working, EQ/SQ skills are essential characteristics of high performance consulting. Another way I have come to think of the leadership challenge both we and our clients face is to say that we are moving from management to management AND leadership. Management skills are more IQ based and include capabilities such as: ¶ Developing new ideas, approaches ¶ Structuring process and systems to support them ¶ Project Managing ¶ Measuring, monitoring success. Very McKinsey as we have known it. Leadership is the art of getting these things listed above to happen in a world where business is about working through people. Getting people motivated to perform better and develop faster. Leadership requires three sets of skills: ¶ Relational – many of Coleman‟s EQ elements come together to create a relational capability ¶ Adaptive – open to change one‟s self and help others change as we move through the four stages of growth in any skill more easily 3
TOR-
This is a significant aspect of what our people in McKinsey actually do with clients. In the PLI we have been developing tools for each of these stages of adaptive leadership ¶ Inspiring – Inspiration in leadership is primarily about meaning and congruence. Helping people connect their brick with the cathedral is inspiring. After all we are all just making bricks. Ever explain to your kids what you do? (Make phone calls, draw charts, really all bricks.) The questions that gives energy is why? The noble purpose we all seek. Inspiration does not have to be flashy, charismatic. More powerful and lasting in business is congruence. “That over time I live true to the meaning I espouse”. This is the essence of your wonderful quip „Don‟t tell them you‟re funny, tell a joke‟.
WHY IS THIS SHIFT TO MANAGEMENT AND LEADERSHIP HAPPENING NOW? We are all comfort seeking beings. We do not make changes unless our life conditions require it. Organizations as groups of people are comfort seeking too. Life conditions of organizations are changing dramatically requiring changes in leadership style. An elegant way I have seen to talk about this is to use Richard Barrett‟s seven levels thinking. Richard was the values co-ordinator at the World Bank. He studied the 4
TOR-
values of hundreds of companies and realized they fit into seven categories. These categories mirror Maslow‟s work on the hierarchy of personal needs.
The CEO‟s management task of the 1970‟s was to create a culture with a good dose of survival, relationships, and a little best practice. Since the 70‟s a number of major shifts have occurred: ¶ Globalization and transparent capital markets – driving a dramatic shift to “best practice” cultures. McKinsey has ridden that shift being a major driver of best practice ideas and approaches globally. In our clients it has lead to the rise of the “scientific manager”, - analytic, strategic, demanding. Best practice cultures can be hierarchical and ordered ¶ Information revolution and talent preferences – the information revolution has meant the creation of wealth through ideas. Ideas wealth requires higher interaction quality. Coupled with the incessant drive of the global, transparent market, a new business culture has been emerging which is based on best practice and is participative, co-creative. The CEO and top team can‟t work out the answer and tell everyone what to do anymore. Instead the speed of change and customer expectations requires 5
TOR-
everyone in the organization to be improving the business and the customer experience continually. (Jan Carlson from SAS‟s 40,000 moments of truth). We do this by creating vision and values that act as a set of boundary conditions for action. Then we empower and trust people to make changes and decisions. This empower-trust environment requires a higher EQ/SQ environment. Research shows that as a job becomes more about wealth through ideas and interaction, the gap between average and high performance is growing. Research at Princeton showed the following: the difference between top 10% and average performance in jobs of increasing information and interaction is growing. The final column is from a study Michael Jung speaks of in SAP Germany where the top 10% of their software teams is 8 times more productive than average.
6
TOR-
The McKinsey War For Talent research shows that talented people want to work in business cultures that are both best practice (high IQ) and open and trusting (high EQ)
Barrett‟s level 5 “organizational” is about a business culture that shares ideas across units. It is McKinsey‟s global knowledge sharing based on a mindset of “global trust based partnership”. Again it requires more EQ/SQ. Level 6 is community. This is now becoming a big issue in many of our clients. Why? People are becoming systems thinkers. The non-systems thinker says “Show me the best shoe, I‟ll buy it”. The systems thinker says – “but it was made in a sweatshop. I don‟t want it”. (The Nike problem). Systems thinking is growing on the planet. A study by Paul Rae of the Institute of Noche Science has shown that in 1960, 1% of the U.S. population were systems thinkers. In 1997 it was 24%, growing at 1% CAGR. Systems thinking is driving community and business cultures. So a leader today has a very different task to the 1970‟s. He or she must balance survival, relationship, best practice, organizational and community values. This also requires a new leadership paradigm in organizations. In Barrett terms this is a shift from levels 1-3 with a focus on some best practice to an “AND” leadership culture of strong best practice with participative, development, and systems thinking.
7
TOR-
The leadership challenge then is to create “AND” leaders. A best practice leader (the manager) with participative leadership (the servant leader). Capability building – Capability building can be in two types: technical capability like marketing skills and leadership capability that are appropriate to the life condition of the corporation. The enormous global forces business is experiencing demands enormous shifts in leadership capability.
THE ANZ EXAMPLE Using the Barrett approach, we can ask people in an organization to choose words that most represent their experience at work. These words each resonate or belong at a level of Barrett allowing us to simply diagnose the organizations “thinking”. Here is the ANZ at the beginning and one year into the program. You can see the shift that can occur.
8
TOR-
The shift in meeting productivity is a reduction in egoic / territorial behaviour (increasing EQ).The shift in honesty is about emotional authenticity for consequence management. Notice, “perform or out” has become a top 10 value in the previous chart (same idea). Here are some further results from the ANZ work.
9
TOR-
In addition, witness the shifts in living the values (congruence) and community (systems thinking) in the ANZ case. This is across 26,000 people in 1-2 years.
10
TOR-
As we can see both the quantum and the time frames are dramatic.
DISTINCTIVE; VALUES BASED, INNOVATIVE Ian, I am firmly of the belief that coupled with McKinsey‟s high IQ/best practice culture, the “AND” of a high EQ/SQ culture will make us truly distinctive and allow us to lead another first for business and our profession globally.
11