new criteria for effective leadership

The Identity Effect –

Shape a better company and a better you by marshaling the 8 building blocks of leadership

The story in brief

I The Logic

II The Roadmap

III The Science IV The Opportunity

I The Logic (is radical)

“Problems cannot be solved at the same level of awareness that created them.” Albert Einstein

The assumption

Humans and organizations are fundamentally different “beings” who have different needs that must be met in different ways in order for them to succeed.

The Logic (is radical)

A long and successful history of divide-and-conquer

• Frederick Taylor – the scientific method

• Time-managed, assembly line efficiency

• Henry Ford: “All I want is men’s hands”

The (radical) fact

When it comes to understandingthe deepest needs of organizationsand individuals, each is a mirror image of the other…

…exactly what is that need?

The need to create value and be rewarded for it

in return …

And what traits must both “beings” – the human being and the corporate being – possess in order to satisfy this essential need? …

8 Traits: The Building Blocks of Identity

• Autonomy

• Differentiation

• Change

• Stewardship

• Purpose

• Alignment

• Brand

• Sustainability

The source – The 8 Laws of Identity

The Law of Being (Autonomy)

The Law of Individuality (Differentiation)

The Law of Constancy (Change)

The Law of Will (Stewardship)

The Law of Possibility (Purpose)

The Law of Relationship (Alignment)

The Law of Comprehension (Brand)

The Law of the Cycle (Sustainability)

If organizations and individuals have the same fundamental need …

… then, they should be led in the same fundamental way.

And, so, why not?

• Unexamined assumptions

• Lack of framework

• Few tools

• Inability to measure

II The Roadmap (unfolds)

Dow’s growth challenge –1999 • $18 billion+ sales • For years, only GDP growth (3 – 4%)

The Roadmap (unfolds)

1. Autonomy The Law of Being One’s ability to live depends first upon defining one’s self as separate from all others. Self: Strip away the labels Organization: Forget the competition (for now)

Autonomy for Dow… “Forget”… • BASF• DuPont• Rohm & Haas

2. Differentiation The Law of Individuality One’s natural capacities invariably fuse into a discernible identity that makes one unique

Self: Unearth what you love Organization: Clarify unique capacities, not just strengths

Differentiation for Dow…

• A genius for “life-changing” customer relationships

• A passion for scale

• A bias toward the essentials of life

• A talent for “whole system” thinking and action

• An obsession with improvement

3. Change The Law of Constancy Identity is fixed, transcending time and place, while its manifestations are constantly changing. Self: Make the connections that explain past events and foreshadow your future Organization: Identify patterns of value creation over time

Change for Dow…Dow has flirted with its societal impact since its inception:

Food Calcium sulfide (for fruit trees); agchem business, 1908Improved acetic anhydride yields Saran, 1928-45

Health and MedicineAcetylsalicylic acid (aspirin), 1916Nicorette developed (help quit smoking), 1983

Transportation Butadiene, isoprene (rubber substitutes – tires), 1914

NASA’s Apollo 8 protected during reentry by Dow epoxy resin heat shield, 1968

4. Stewardship The Law of Will Every being is compelled to create value in accordance with their identity. Self: Commit to the path revealed in what you’velearned so far Organization: Trust your instincts; stay the course

Stewardship for Dow… “We’re struggling to grow…

We need a north star – to know what we do beyond making resin pellets, styrene and the like. If we have an identity, we need to know what it is and what it may tell us about our future.”

- Bill Stavropoulos, former Dow CEO

5. Purpose The Law of Possibility Identity foreshadows potential. Self: Follow the signs of joy.

Organization: Clarify your value-creating potential.

Purpose for Dow…

To constantly improve what is essential to human progress by mastering science

and technology

6. Alignment The Law of Relationship People and organizations are inherently relational, and those relationships are only as strong as the natural alignment between the identities of the participants. Self: Take stock of who matters and why Organization: Connect with people and companies who will want what you have to give

The roadmap (unfolds)

Alignment for Dow

Employees (create value)

Customers (purchase value)

Investors(finance value)

Suppliers Communities

Government Unions

Direct

End users

Society

Analysts

Portfolio managers

Shareholders

7. Brand The Law of Comprehension One’s various capacities are only as valuable as the perceived value of the whole of that being. Self: Declare yourself on the strength of your gift Organization: “Go public”

Brand for Dow…

Employees Chemicals, plastics and agricultural products are what we make, not who we are. Dow is a consumer essentials company.

8. Sustainability The Law of the Cycle Identity governs value, which produces wealth,which fuels identity. Self: Surrender to the pull of identity Organization: Make identity the cornerstone of leadership

The roadmap (unfolds)

Sustainability for Dow

“Sustainability requires making every decision with the future in mind. It is our relationship with the world around us - creating economic prosperity and social value, while contributing to the preservation of our planet.”

Dow …

1999 • $18+ billion sales • For years, only GDP growth (3 – 4%)

2009 • $50+ billion sales • Since1999: 13% annual growth rate

III The Science (emerges)

The Identity Impact Survey (Summer 2009)

• One-year effort

• 1,941 respondents

• 5 companies (21 candidates)

$50MM to $8 billionGlobal and domesticPublic and privateB2B and consumer

• Sophisticated psychometrics

The Science (emerges)

The main finding:

‘Identity strength’ is a leading indicator of business performance…

(IIS + OIS)> EE = VC

Individual Identity Strength (IIS) has a powerful, positive effect on employee engagement (r = .500)

The impact of Organizational Identity Strength (OIS) on engagement is even greater (r = .666)

Together, IIS and OIS have a major impact on employee engagement (r = .686)

Where does identity strength come from?

What’s the payoff?

In sum, identity strength reveals a company’s current value-creating capacity …

…Which has vital business implications

Constrained value creation

•Handcuffed performance•Inefficient strategy deployment•Limited innovation •Overpromise, under-deliver on brand•Low-traction culture•Lower investment value

High value creation

•Superior performance•Effective strategy deployment•Efficient innovation•Strong brand•Strong culture•High investment value

Low value creation

•Sub-par performance•Ineffective strategy deployment•Depleted innovation•No meaningful brand•Dysfunctional culture•Low investment value

Pent-up value creation

•Limited performance•Inefficient strategy deployment •Limited innovation•Brand confusion•Diffuse culture•Lower investment value

The science (emerges)

What is “Identity-based management?”

A comprehensive system for aligning the interests andactions of organizations and individuals around value creation

IV The Opportunity (is now)

…To create fundamentally healthier, higher-performing organizations, based upon their value-creating potential

• Authenticity

• Integrity

• Resilience

• Efficiency

• Endurance

The Opportunity (is now)

Seven attributes of the identity-based organization:

• Value creation is the common cause

• Business results are measured in relation to identity strength

• Identity influences strategy, including M&A

• Identity informs culture and talent management

• identity shapes brand

• identity disciplines innovation

• Identity strength indicates investment value

What about “change?” The identity-based organization: • Tolerates change

• Grows through change

• Fosters change

New logic, new order…

The economic universe + The identity universe =

Law 1 Law 2 Law 3 Law 4 Law 5 Law 6 Law 7 Law 8

Company Ratings for Each Law

(Being)Autonomy

(Individuality)Differentiation

(Constancy)Change

(Will)Stewardship

(Possibility)Purpose

(Relationships)Alignment

(Comprehension)Brand

(Cycle)Sustainability

W = VCi

W = Wealth VC = Value Creation

i = Identity

Thank you!

www.theidentitycircle.com

Identity, the human phenomenon

Identity, the organizational phenomenon

The science (emerges)

Does this “logic” make sense?

And the effects of identity strength can be exponential.

What are the possibilities the “science of identity” holds?

Where does this identity “roadmap” lead?

What are the rewards – and the risks – associated with this opportunity?

“Value”… The proprietary contribution one is capable of making: • In the marketplace

• In the world

• Status quo (assumptions)

• Awareness

• Framework

• Tools

• Metrics

new criteria for effective leadership

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radical fact

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law ofconstancy

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