Chip Conley: The 7 Practices of PEAK Leadership

Why don’t we “practice” business? I’ve come to realize that — unlike medicine and law — we don’t think of our profession as business leaders as a “practice.” A few years ago, in the last downturn, I developed the principles of PEAK as an alternative operating model for my business based upon Abraham Maslow’s iconic Hierarchy of Needs pyramid. Reinterpreting this well-known theory of human motivation helped me to see that all stakeholders associated with a company have their own Hierarchy of Needs. My company Joie de Vivre tripled in size during this difficult period and I came to find out that a variety of other transformational companies like Harley-Davidson have used Maslow’s theory as a foundation for their business model.

Business principles are only as good as the practices that back them up. Recently, with the assistance of some good friends, I’ve developed a set of PEAK Leadership practices that can assist any leader or leadership team to move from survival to success and on to being a transformative role model in their industry. When a company embeds these principles and practices in how they grow their leaders, the end result is PEAK performance: a phenomenon of sustained growth — both for the organization as well as for those within the organization.

Practice 1: Embody an inherently positive view of human nature.

The principles of PEAK have their roots in humanistic psychology and a basic belief that man is meant to “be all that he can be.” So, it’s not surprising that the fundamental first practice is assuring that a PEAK leader believes that humans — at their very core — gravitate to goodness when the right conditions exist for them to flourish.

Creating what Maslow called “psycho-hygiene” in a company means focusing on people’s best qualities and believing in what’s been known for a half-century in business as a “Theory Y” perspective on management versus “Theory X.” With Theory X, management assumes employees are inherently lazy and will avoid work if they can. As a result of this, management believes that workers need to be closely supervised and a comprehensive system of controls developed. With Theory Y, management assumes employees may be ambitious and self-motivated. They believe the satisfaction of doing a good job is a strong motivation and seek to create the conditions for the employee to develop their own strengths to be successful. While this latter theory may feel intuitively right to many of us, is your organization still structured in a Theory X style of business?

Practice 2: Create the conditions for people to live their callings.

Great leaders understand there are only three relationships you can have with your work: a job, a career, or a calling. A job tends to deplete you and a calling energizes you. Most employees live in the bartering world of work. The company gives them a compensation package and recognition and, in return, the employee gives their time and energy. Yet, those that are living their calling have moved from external to internal motivation. And, these employees are not exclusively focused on the specific collection of tasks they perform and are more focused on the impact or purpose of what they do. The best hospitals have more nurses living their calling. The best airlines have the happiest flight attendants (Southwest). What are you doing to help your people find their sense of calling in what they do?

Practice 3: Promote and measure the value of intangibles.

In business, we are taught that leadership is all about managing what you can measure, but what’s most easily measurable is the tangible in life. Yet, is it the tangible or the intangible in business and life that creates value? In business, the metrics that track the tangible are well known: your profitability, assets & liabilities, cost structure, market share. Yet, in reality, these tangible metrics are the result of a series of intangibles that drive excellence: brand loyalty and reputation, employee engagement, customer evangelism, the ability to innovate. Great leaders nurture, value, and evolve corporate culture — one of the most valuable intangibles — as a key differentiator for their company. These intangibles are the inputs that drive the tangible output that most companies use to evaluate their performance. In the 21st century, great leaders are learning how to measure and benchmark these intangibles so that they’re not out of sight, out of mind. Which intangibles are most valuable to your business and how are you measuring them?

Practice 4: Ability to move fluidly between being a “transactional” and a “transformational leader.”

Author James McGregor Burns once wrote that, “Transformational leaders look for the personal motives in followers, seek to satisfy higher needs, and engage the full person of the follower.” Yet, most management decisions require only transactional thinking because the goal is purely to optimize existing resources. A great leader is able to move fluidly between addressing the foundational needs that people have, but also helping them see beyond the short-term so that they can be motivated by a compelling vision that helps them transcend their momentary challenges. How much of your time is stuck in the trenches as a transactional leader versus focusing on how to create transformation?

Practice 5: Calibrate the balance between “Conscious” and “Capitalism.”

Business has quite often been seen as a “zero-sum” game. One person’s win is another person’s loss. Taken to the global level, some believe that capitalism’s short-term gains are often to the long-term detriment of the environment and to certain communities. And, at this crossroads, in an increasingly transparent world, this is why great leaders have to think more broadly about the impact of their decisions, not just on the bottom line, but on their broader stakeholders. In many ways, Walmart took this step when they saw their stock price flat line even with sizable revenue and net income growth. Yet, for those socially conscious business leaders, cash flow is the blood that keeps your organization alive. Make sure the basic survival needs of your company are met. How do you balance the priorities of the broader community versus the financial needs of your company?

Practice 6: Focus on your customers’ highest needs.

Henry Ford once suggested, “If I asked my customers what they wanted, they would have said a faster horse.” PEAK leaders and companies understand what the customer wants even before the customer has articulated it and they realize that customer innovation requires a certain amount of mind reading and cultural anthropology. By doing this well (with Apple being the best example in the world), you create a movement and evangelists and reduce your need to spend money on traditional marketing. Are your customer satisfaction surveys just asking the obvious questions that will track their expectations and desires, but not their unrecognized needs? How can you “mind read” your customers?

Practice 7: Lead to PEAK.

Just as a Sherpa does in the Himalayas, great leaders meet their people where they are on the pyramid and help them to see the natural path to the peak. They recognize the value of loyalty and mentoring as a means of sustainable success in business. PEAK leaders champion personal development in tandem with corporate development knowing that there’s a synergistic effect of having a self-actualized individual in the workplace as evidenced at companies like Google. And, most importantly, they embody authentic leadership by being, not just by doing. How are you incubating a collection of great leaders?

Conscious people pay attention. It’s true of spiritual leaders. It’s true of business leaders. PEAK leaders pay attention to the higher needs while not neglecting the base needs that provide a foundation for their organization. Leadership is all about making conscious choices and knowing that the higher you are in a company, the more magnified your decisions and behavior will be throughout the organization.

IBM boosts 2012 outlook after first quarter results

(Reuters) – IBM raised its full year outlook after it posted a 15 percent rise in first quarter earnings on strong demand for its software services and growth in emerging markets.

IBM’s first-quarter earnings beat estimates

(Reuters) – IBM posted first-quarter revenue of $24.7 billion and net earnings of $3.1 billion as the technology and consulting company benefited from strong demand for software services.

Space shuttle Discovery makes final flight to museum

CAPE CANAVERAL, Florida (Reuters) – The space shuttle Discovery made its final voyage on Tuesday: a piggyback jet ride to the Smithsonian National Air and Space Museum annex in Virginia.

Skybox Imaging Raises $70M To Launch Two High-Res Imaging Microsatellites

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Skybox Imaging just closed a massive $70M Series C round led by Canaan Partners and Norwest Venture Partners. Michael Arrington’s CrunchFund got in on the action as well. The new investors join Khosla Ventures and Bessemer Venture Partners and brings Skybox Imaging’s total amount raised to $91 million.

The latest round of financing will allow Skybox to launch its first two high-resolution imaging microsatellites, dubbed SkyStat-1 and SkyStat-2. Eventually other microsatellites will join these two as Skybox surrounds the Earth with imaging satellites. It’s the company’s goal to provide high-resolution imagery of any spot on earth multiple times per day.

The additional funds will also help Skybox hire new talent. The company is currently looking to hire engineers, operation managers and satellite technicians.

“We will also use this capital to expand strategic alliances, position Skybox for initial commercial operations, and to accelerate the development path towards the full constellation of microsatellites,” said Skybox CEO Tom Ingersoll in a statement released to TechCrunch.

The first two satellites are set to launch in the fourth quarter of 2012 aboard an International Space Company Kosmotras Dnepr rocket. Eventually Skybox Imaging claims its constellation of satellites will be able to provide much more up-to-date imagery including high-definition video. I for one welcome our new satellite overlords and look forward to the day that I can inspect the grass in my front yard with a livestream from space.

Happy Birthday, Apple II

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The Apple II personal computer is 35 years old today, a bit of news that I’m sure is either making you feel wildly old or gives you an odd rush of steampunk retro-nostalgia. The computer, launched on April 16 and 17th at the 1977 West Coast Computer Faire, went on to become the definitive machine for primary and high schools everywhere and whose wonky screen and clacky keys brought millions of kids and adults into the information age.

Steve Jobs was 22 when he and Steve Wozniak launched the II. The device, with its eight expansion slots and rapid upgrade cycle, defined the computer as a platform rather than a one-time purchase. You could improve this thing, although I’ve rarely seen any models that were truly tricked out. As Harry McCracken notes, the Apple II and its progeny existed well into the 1990s as a computing solution for many customers.

Not to wax nostalgic, but I still remember typing in long programs into the Apple II and running them just to see them crash and burn because of our sub-par typing skills. A few LIST commands and line edits later and we were up and humming, creating 20 questions simulators and trying to build wonky Spy Hunter clones.

And there was always Oregon Trail. Always.

As I write this, my month old son is panting in his sleep, probably dreaming about something organic and strange. He was been born into a world remade by great men – Jobs, Wozniak, Gates, and Torvalds – who in turn built their castles on the bedrock laid by Bell Labs and the tag team of Richie and Thompson. I still remember the wonder of seeing my first hard-drive powered PC and magic that happened when I went from a Sony Ericsson P900 to my first iPhone. We say technology is all around us, but in a way that’s comforting, at least in the long term.

Kids born in 1975, like me, grew up in a world gently kissed by the promise of technology and then, with the rise of the Apple II and its ilk, we were suddenly swimming in it. I wonder what launched this year that we’ll remember 35 or even ten years from now. Here’s hoping that it’s a technology that will improve our lives in the long run.

Apple and Samsung CEOs to Meet for Court-Moderated Settlement Talks over Patent Issues

FOSS Patents reports that the chief executives of Apple and Samsung, along with their respective general counsels, will meet within the next 90 days at a San Francisco courthouse for a court-moderated discussion aimed at settling the long-standing patent dispute between the two companies. As outlined in a joint statement before the court:

As directed by the Court, Apple and Samsung are both willing to participate in a Magistrate Judge Settlement Conference with Judge Spero as mediator. At Apple, the chief executive officer and general counsel are the appropriate decision-makers, and they will represent Apple during the upcoming settlement discussions. At Samsung, the chief executive officer and general counsel are also the appropriate decision-makers, and they will represent Samsung during these settlement discussions.

The report notes that the settlement talks are “semi-voluntary” in that the court can only compel the parties to meet and talk, but can not force them to reach an agreement. It also in the best interest of the two companies to make their most senior officials available for the discussions so as to demonstrate for the court a good faith effort at resolving the dispute.



Apple would obviously be represented by CEO Tim Cook and general counsel Bruce Sewell, while Samsung would appear to be sending representatives from the parent company including CEO Gee-Sung Choi.


Sprint Goes Green (Yet Again) With The Eco-Conscious LG Optimus Elite

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Well, Sprint certainly seems hell-bent on making this Earth Day one to remember. Not only have they decided to launch the LTE-friendly LG Viper and Galaxy Nexus on April 22, Sprint has announced that they have chosen that same day to release the new eco-friendly LG Optimus Elite.

Unlike the flashier handsets launching alongside it, the Optimus Elite is unlikely to turn too many heads. It’s a strictly entry-level device, though I imagine its $30 price tag (after a $50 mail-in rebate) should help it pick up a little steam among first time smartphowners.

And what exactly does $30 net you these days? Pretty much exactly what you’d expect — a 3.5-inch display, a single-core 800 MHz processor, and a 5-megapixel rear camera, all conveniently wrapped in a body made of 50% recycled plastic. Like its big brother the Viper, the Optimus Elite also runs Android 2.3 Gingerbread, because you apparently can’t be environmentally conscious and up-to-date at the same time.

I’m having a very tough time seeing what’s so elite about this thing, but it isn’t completely without surprises. The Optimus Elite sports an NFC chip and support for Google Wallet, so we cheapskates can finally tap to pay for our Slurpees. Users who take the plunge will also be able to score 50GB of free storage from Box, though I’m guessing it’s the same sort of limited-time deal that Dropbox has in place with partners like Samsung and HTC.

Here’s a quick word of warning though: if you’ve somehow succumbed to the Optimus Elite’s charms, you had best steer clear of Sprint stores comes April 22. You see, Sprint intends to start selling the Optimus Elite on their website and over the phone on the 22nd — you’ll be able to saunter into a Sprint store and walk out with an Elite of your very own come May 18. In the meantime though, I’ll just ball up in a corner and wait for LG to release some of their fabled high-end hardware around these parts.