Patience, “The Infinite Game” & Cooperatives

I just finished reading “The Infinite Game” from Simon Sinek. The book is based on earlier work from James Carse in 1986 about understanding the difference between a finite mindset and an infinite mindset. It was a provocative poke at the current state of business and capitalism and the need to ensure that both investors and business leaders are focused on the long game of creating value through their investment choices (for investors) and business decisions (for leaders). Sinek argues that business today talks about “winning” and “beating the competition” and the disconnect that creates in the behaviour of both investors and leaders. In the case of my industry – how do you “win” banking? There must be some secret scorecard for our industry right? Of course there isn’t. Ultimately, he argues that there is no such thing as “winning” in any industry, just arbitrary, near term business metrics that drive leaders and investors to a more short term view of their businesses.

At the same time, I have seen and read many articles suggesting that the global pandemic we find ourselves in will be an inflection point in terms of business disruption and that the behaviour of the consumer has been or will be forever changed. Watching in our own credit union how the pandemic has accelerated the move to digital transactions makes the argument easy to believe. Of course, time will tell if this is truly the “TSN turning point” for digital disruption in commerce. They say that you always overestimate the change that will take place in the near term and underestimate the level of change that will happen over the longer term. I don’t know who they are, but that has certainly been the case in my business career as business has evolved faster than I would have predicted over the longer term course of my career. That’s an easier way to say that I am old 😂.

For me, there are a number of signals that confirm that things are indeed changing. Here’s a few that have been top of mind for me lately:

Capital market shortcomings – Last week, Canadian markets were at virtually the same level as they were pre-pandemic. What?!? Are you telling me that investors believe that an identical stream of future cash flows will accrue to them from the same firms post pandemic as pre-pandemic? Really? On the contrary, I believe they are desperately betting on short term hail mary / efficiency / cost cutting / M & A / etc. will prop up share prices in the near term. Do you think this will incent business leaders to consider the strategic choices of this inflection point or drive for nearer term success that they can showcase as “beating the competition” and “winning” in a down market?

Cheap money – We are operating at historically low costs for money. This also artificially inflates near term success for firms and further, encourages higher leverage positions as money is considered to be on sale these days. That might not be all bad, if the additional cash is used to support new initiatives, research, growth and transformation but watching consumers and businesses and how they are taking advantage of low borrowing costs and where the additional money is being spent, makes me nervous.

Rapidly changing consumer expectations – Make no mistake that the mindset of the consumer is changed. I have read lots about how the health crisis has only accelerated the shift to digital for consumers and that the shift was already underway. Perhaps. But the speed with which consumer behaviour is changing is striking and businesses will need to respond not with tweaks to their model but transformative change. We will no longer have the time to make slow methodical changes to our business and still keep up with what consumers expect.

Growing concern about inequity and exclusion – the current business models have contributed to exclusion and income inequity and those challenges are being surfaced in front of all of us in a really big way. Look around. Every conversation I am in today involves inclusion, equity, diversity and a growing sense that all of us (POC, LGBTQIA2S+, Allies, CIS, Indigenous, Short fat bald guys, etc.) need to come together to make it better. It matters greatly that people feel like they can participate in the economy and have opportunities to succeed.

The demand for transparency / authenticity in business – In a similar way, I believe that we are on the cusp of a new era of expectations around transparency and authenticity in business. That doesn’t mean that everyone needs to be happy with the decisions you make, but what it does mean is that you are open, honest and transparent not just about WHAT you want to achieve but HOW you intend to get there. My sense is that there is a real desire for people to work, engage and partner with businesses that they trust and those that demonstrate values that align with their own. People don’t expect perfection, but they do expect to know what you stand for and they expect for you to try your best to live that everyday.

If we are at an inflection point in terms of business models and transformational changes are necessary to support new ways in which to serve customers and build businesses, then this is also a perfect time to reset expectations and mindsets of  both investors and business leaders. I have a few ideas on how leaders can stay focused on changing their mindset:

1. Purpose: Business were historically created to solve problems and monetize the solution. Today, I believe that businesses and organizations exist to deliver on a purpose. What is your why? This clear articulation of why you exist and what you seek to do is not marketing fodder. It is a promise to employees, consumers and your community about what you stand for and what you will be held accountable to deliver. It is the call that will galvanize organizations, pull people together and inspire them to do great work. In our organization, we have done away with mission, vision and all of that other garbage I learned in business school. Today, in our organization, we have a single purpose and we are united in our passion to bring it to life. It is not a short statement of some metric – it is a moonshot of aspiration that permeates our DNA.
2. Courage: It takes great courage for investors and business leaders to swim against the current. I am speaking next month to a group of young finance professionals on the west coast about changing the “it hasn’t been done that way before” mindset.  I have a few examples in my career of ideas that were pitched and ridiculed that today, seem brilliant. In a discussion with a colleague yesterday morning about this topic, he offered a new book for my reading list that speaks to this same idea. Offering new ideas and gathering momentum around them is hard and few do it well. Why do you think we have a whole industry that has emerged around change management, innovation, agile, etc? How are ideas surfaced in your company and what happens to them and those that propose them?
3. Profit Models vs. Sustainability Models: We have worked hard in our business to think about financial performance through the lens of sustainability. This thinking goes back to a discussion about 15 years ago with a colleague in my former role and has taken that long to think through. Today, we think about how we are performing in the context of how much is sufficient to sustain the business and how much capacity do we have to invest in creating the next generation of ourselves. The amount we have available is calculated in almost real time and is used to accelerate or decelerate as necessary. The model has bled into decision making, Board reporting, pandemic responses, etc. as a more long term way to financially plan in our cooperative.
4. Daily Improvement: Much has been made about agile, minimum viable products, fail fast, etc in current business literature.  I am no expert on all of those things but I believe the root of all of it is in the idea of constant improvement and continually moving towards the purpose of the organization. The products may change, the delivery model may evolve, new channels will be built – but at the end of the day are you constantly moving towards the purpose in #1 above. This is a very different mindset than “winning”. In the end, you just have to keep moving forward towards your purpose.
5. Team: I start presentations about leadership development with a statement “that the business with the best people will win”.  I appreciate the irony in using the term “win” in the context of this blog but just realized that now so will change my statement after this reflection 😂.  The point is that the level of performance of any business is a direct correlation to the diversity, quality and smarts of the people that work there. I have had the luxury of working alongside of some very bright people in my career and some that come from very different backgrounds. The funny thing is that great people tend to follow each other around and there is a gravity that pulls them together. When you are able to find a few of them, more want to join. Working amidst a group of really bright, diverse minds gives you more courage, provides more critical thought and considers new and unique perspectives. I have another blog half written about the change it is taking from me as a leader to more consciously create and then harness the power of diverse teams, so will leave that for another day. Suffice to say that our success has been directly correlated to our level of human talent.

Leading in this challenging environment is hard. When I look back on my leadership journey, this may be the most difficult leadership environment that I will ever face. Will it lead to new thinking, new business models and new strategies for for us to pursue?  Or will this lead to more pressure on near term results, diminished strategic investments, less research and development, less continuous improvement and the pursuit of more efficiency in current business models. I hope it’s the former and I am trying hard to make it so.

The last thing I would offer, and selfishly, is that there are business models that work better in times like this. Business models that favour the creation of long term (i.e. generational) value, that incessantly focus on the customer, that care deeply about the “how” and the impact they have on communities and on people.

It’s never been a better time to be a cooperative ✌️.