Article by Herb Rubenstein, President, Sustainable Business Group 

It has been reported that the fear of public speaking is the number one phobia in America today. There are currently at least 27 books in print on the fear of public speaking.  When you type in “Fear of Public Speaking” in the advance search engine of Googletm, you get 14,100 web hits.  Organizations like Speaking Circles®, Dale Carnegie® and Toastmasters International®, active in 80 countries, are devoted to helping people overcome their fear of public speaking and improve their willingness and ability to give a speech in public..

There are many clinics, workshops, training courses and seminars all designed to help people get over the fear of public speaking.  Some take the psychological or psychoanalytic approach investigating the “causes” or historical contexts for each individual that may give rise to the fear.  Some take the experiential approach, suggesting that if one speaks in public often enough and in a successful enough manner, one will “get through” the fear.  Recent research by Inroads, LLC suggests that the two biggest fears regarding public speaking are:

1. Not being perfect (or good enough)
2. Mentally going blank

This research also shows that the size of the audience has an effect on whether someone experiences significant fear in a public speaking setting. The people surveyed experienced more anxiety or fear when the audience was 50 or more people.

The purpose of this article is to provide insights on a new, successful set of strategies for eliminating, or at least greatly reducing, the fear of public speaking.  These strategies all begin with our “philosophy of public speaking.”

Philosophy of Public Speaking

Early, youthful attempts at public speaking are often “tests” in a school, church or other setting where the youthful speaker expects to be judged and where the goal of the speaker is to pass some test or meet the standards (either implicit or explicit) that key people in the audience have set for the speaker.  These key people include parents, teachers, fellow students and peers.  These “speeches” are often based on the memorization of some text written by others and the speech is given to an audience composed of people whose primary interest in the speaker and the speech is to judge the speaker and the speech rather than to learn from or be entertained by the speaker.

This form of public speaking is unnatural and, thank goodness, uncommon in the real world. This type of public speaking, as a “test,” is just as hard as practicing a speech to a mirror and not losing eye contact with yourself.  This is not what takes place in the real world and the good news is that giving a speech in the real world is a lot easier than the early speaking auditions that we put people though to test them in their youth. 

Three Keys to a Successful Speech

There are three keys to giving a successful speech:

 Connection with/knowledge about your audience
 Clarity about the purpose of the speech
 Knowing your subject matter and presenting it at the right level and tone for your audience.

Based on these key anchors to give a good speech, the rules for overcoming public speaking anxiety become very clear:

The Rules for Excellent, Fearless Public Speaking

1. Know your audience and build a strong relationship with your audience.
2. Know exactly why you are giving the speech or presentation.
3. Know your subject matter and narrow the speech to only a few key topics or themes.
4. Show up for the speech early, with all logistics handled.
5. Prepare the speaker for the event as much as you prepare the speech.
6. Use spontaneity in the speaking process to your advantage.
7. Use visualization (see yourself give a great speech) in the preparation for the speech.
8. Fully grasp that giving a speech is an act of leadership, not a mere performance.
9. Be very clear about the results you want to achieve with your speech.
10. Be prepared to challenge your audience rather than merely having them challenge you. Audiences love to be challenged.
11. Get coaching in advance and feedback after you give every speech.
12. Record your speeches, with video if possible.
13. Keep a written record of your speech, but do not read your speech to your audience.
14. Regarding your “introduction”, be sure to write, or at least approve this in advance, especially if someone else will be introducing you.  Know what will be said in your introduction and tie it into the first section of your speech. Be sure to realize the importance of the introduction.  It prepares your audience for who you are, what you do, why you’re qualified to speak on the topic and why the topic is important to the audience. Make sure the introduction is brief, informative and tied in with the basic theme of your speech.

Never Let Fear of Public Speaking Interfere with Your Desire to Express Yourself

The sources of speaking fears can be unconscious and may have been developed by you many years ago. Having “butterflies” before a speech, before the beginning of any athletic event or whenever your body or brain is called upon to undertake an activity that is unusual and not in your common routine, is actually a desirable state.  Instead of trying to overcome, suppress or ignore these physical feelings we call “butterflies,” allow them to “take their course.”  They often completely disappear as you get into your speech. 

In fact, the major anxiety that you may experience as you begin to think about giving a speech, may fade quickly as soon as you commit to becoming an excellent public speaker or to give an excellent speech on a topic of great importance to you and your audience. 

A second key element to overcoming fear regarding public speaking is to understand that faith trumps fear in life. (Remember the wise old saying, “Fear knocked; Faith Answered; No one was there.”). In order to generate ‘faith’ regarding your speech you must know that for each speech you give:

 why you need to give this speech
 how what you will say in your speech could make a real contribution to your audience,
 what you intend to accomplish by the speech.

Tips on Overcoming Speaking Anxiety

Besides having these strategies in place, here are some proven ways to help you handle public speaking related discomforts and anxieties.

1. In whatever way works best for you, rehearse or practice your speech or performance to get comfortable with it. This could be walking through it in your mind or physically on stage.  Be sure to practice with the same passion and same delivery you intend to use during the real speech.
2. Worry is using one’s imagination in a negative way. Be aware of any negative “self-talk” going on in your head. Instead of imagining things going wrong, imagine them going right.
3. Be aware of negative thoughts or uncomfortable feelings you may have. Just gently notice them. Don’t judge them or fight them.
4. Rather than “labeling” or stigmatizing your butterflies as anxiety or fear, think of these feelings as excitement and enhanced physical awareness.
5. Slowly and easily, do deep breathing to relax your body and mind before your speech.
6. Think of a person in the audience that you know. Imagine seeing, hearing, and feeling that person and the rest of the audience giving you a fine reception at the beginning of your speech and acknowledgment at the end of the speech. See yourself relating to your audience during the speech.
7. Trust that part of you that guides you along and knows exactly what to do.

The Secret of Public Speaking

The major secret of public speaking is that it is a wonderful learning device.  In order to prepare your speech or presentation you will need to learn about your audience, your subject matter and your intended outcomes.  As you speak, your mind will be working for you and you will learn not only from the questions and audience interaction, but you will also learn from the act of public speaking itself. If you surprise yourself by starting to say something during your speech that you did not expect to say when you planned the speech, the odds are that it will be a very good addition to the speech and will be the result of your realizing during the speech itself that you had something important to say to the audience that you had not realized was important to say when you were preparing the speech. Trust yourself to make these “spontaneous” additional comments that come to your mind during a speech as they are the result of your learning, your heightened attention and your being “in the moment” of giving the speech and the learning that led up to giving the speech.

A second major secret of public speaking is that it is one of the purest forms of making a valuable connection with a large audience.  Writing “articles” is another great form of making a valuable connection with a large audience and it may be appropriate to write an “article” or memo and give it to your audience either in advance of your speech or at the time of your speech.

There are some techniques for writing key words or key notes, highlighting certain phrases in your speech and using audio visual support that is beyond the scope of this article that may bear some investigating.  Since every speech has an opening section, and that section is vitally important, here are the basic elements to the art if giving a successful opening section to a speech.  In the opening section of a speech, which should last no more than a minute or two, follow these three rules:

 Say something that only you can say.
 Say something that can only be said on that day in front of that audience, and
 Say something that will show the audience that you know why they are there, that you care about them and that you understand their goals.

From the Book, Kruschev’s Shoe

This is an excellent book for the speaker who wants to improve in a long lasting way.  Legend has it that Kruschev forever regretted this stunt although he captured the world’s attention by taking off his shoe during a United Nations’ speech and banging it on the podium.  Roy Underhill, the author, has identified seven principles of great public speaking.  Most of these are completely ignored or not known to people seeking to become better public speakers, so I have included them in this article.  They are:

1. Tend to Psychological Needs
2. Eliminate Safety Concerns
3. Strengthen the Feeling of Belonging
4. Strengthen Self-Esteem
5. Build Rapport
6. Use More Immediacy In Your Speech
7. Create Meaning
Take the Next Step

Once you fully commit to becoming a good speaker, the next step is to take action and find opportunities where you can begin to speak in public. To find public speaking opportunities take a look at your work, your social organizations, your volunteer activities, your clubs, conferences and government public hearings and find a subject, cause or idea about which you would like to speak in public.  Then get clear that you are an appropriate person to say what you want said. Make the arrangements to get yourself invited to give the speech or get yourself put on the agenda of an event to give your speech. Social clubs like the Rotary or Kiwanis, public hearings, nonprofit organizations and church gatherings are always open to hear someone speak on many topics.
It is worth repeating that it is important to get a coach to help you prepare for the presentation. There are many professional speech coaches and if paying for one is an issue, a friend who is willing to sit and listen to the speech five times and spend a few hours with you is certainly better than not using anyone as a critical sounding board. Then, at the right time, at the right place and in front of the right audience deliver your speech, with passion for the subject matter and gratitude for being given the opportunity to share your views with a public that is willing to listen to you.  Finally, get feedback on your speech and do it all over again and again.


A major penalty of the fear of public speaking is that it shuts people down. Speaking anxiety can have negative consequences on careers and accomplishments.  Over the years, not being able to eliminate or greatly reduce the fear of public speaking can cost a person dearly.

The fear of public speaking is broad in that many people experience it.  However, it is not deep.  It is like a large lake that is only a foot deep.  When you look at it from the shore, it looks huge and deep.  But when you step into it and realize it is only a foot deep, you realize that it is easily manageable.

Finally, we must add one insight about speeches and humor.  The best humor in speeches is situational and spontaneous.  Never tell a joke you hear in someone else’s speech.  Your speech is about your story.  It is your gift to the audience. Remember, “If you are not going to give your own speech, who will?”

The overwhelming majority of  audiences want you to do well, are supportive of you, want to learn from you, laugh with you and truly appreciate the fact that you are taking your time, energy and personal resources to stand up in front of them and share yourself with them.  Don’t be any harder on yourself before your speech or after your speech than your audience will be during your speech.  We hope you find this article useful in your path to giving great speeches and enjoying the process of preparing and delivering speeches in public.

About the Author

Herb Rubenstein is the President of Sustainable Business Group, a consulting firm to businesses and has its headquarters in Denver, Colorado.  He is the co-author of Breakthrough, Inc.: High Growth Strategies for Entrepreneurial Organizations (Financial Times/Prentice Hall, 1999) and Leadership Development for Educators (Rowman and Littlefield, 2009), and the author of Leadership for Lawyers, 2ed. (American Bar Association, 2008), plus over 100 articles on business strategy, entrepreneurship, leadership, and improving how organizations function and deliver value. 

He also served as an Adjunct Professor of Strategic Planning George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University.  He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974.  His email address is and he can be reached at 303 592-4084. For more information about the Sustainable Business Group, see

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Article by Herb Rubenstein, President, Sustainable Business Group, and Adam Levin, Vice-President, Information Experts, Inc.


Obtaining investors or donors (in the nonprofit world) in this market is not easy.  What used to pass for an adequate presentation to a group of investors is no longer adequate.  A mere PowerPoint presentation with embedded excel spreadsheets is no longer the standard.  Investors want entrepreneurs to convey accurately the history of their business operations as well as its predicted future with facts, not assumptions as the key supporting ingredient. 

Investor presentations in 2003 must convey a new level of thoroughness to convince wary, and often burned, investors.  While many books have been written on the art of creating effective presentations, this article summarizes an often neglected area that exists behind the scenes in creating investor and donor relations presentations.  For a more thorough analysis of all aspects of the art of presentations, see the classic How to Create High Impact Business Presentations by Professors Joyce Kupash and Pat Grimes (NTC Business Books, 1993).

Each company, start up or non-profit must decide if it is worth the $5-10,000 investment to bring in a serious communications firm to help create, package and help deliver the investor/donor presentation opportunity to potential investors/donors.  Whether or not you are considering using a communications firm, it is now clear that the investor/donor presentation must lay out kernels of wisdom and the key business facts derived from at least twenty separate documents.  These documents are listed at the end of this article and become the source of information for either your in-house message and presentation developers or your outsourced communication firm that will undertake to create the presentation.

What is clear today is that if you use a communications firm, it must be thoroughly educated about your organization and your organization’s key message.  It must also understand your audience’s characteristics.  By signing a non-disclosure-agreement, NDA, with a communications firm, a company or organization can protect its valuable and confidential information while providing the key information needed by communications firms to prepare winning communication presentations and strategies.  Organizations can no longer afford keeping this information from communications firms working for them and organizations should be wary of communications firms that say they do not need these documents to prepare state of the art investor and donor relations presentations.

The Weaving Process

In the year 2000 story telling became the rage.  Leaders took courses in how to develop a theme, stimulate excitement, build anticipation and conferences like those of the International Leadership Association in Seattle in November 2002, even had a person with a job title called “Conference Weaver.” 

Investor or donor presentations, which usually last only 10 to 20 minutes in their “lecture” format, must do the following:

 Define the problem in the marketplace (or society)
 Show the company’s or non-profit’s capability to solve the problem and stay ahead of the competition
 Show that the organization fully understands the entire set of economic challenges the company or non-profit will face.
 Lay out all of the finances of the organization’s past and future
 Present the management team accurately
 Show the uses of the money being sought
 Explain the return on investment (ROI) projections for each investor or the social returns that will result from the donations.

These facts and projected facts are essential when seeking funds from donors and investors. While facts tell most of the story, the impact of the quality of the presentation can not be underestimated.  As John May and Cal Simons clearly state in their book, Every Business Needs An Angel: Getting The Money You Need To Make Your Business Grow (Crown Business, Random House, 2001), “But he also invested because of the strength of Bob’s presentation (italics in the original), presentations that are world class make a huge difference in the results they produce.”

May’s book presents a thorough explanation of all aspects of the money solicitation process, including a thorough explanation of key elements of the investor relations presentation.  (Much of the book is also relevant to the non-profit organizations seeking large donations from individuals, groups and foundations, although it was not written with this audience in mind).

Ultimately, with regard to a company seeking investors, the presentation needs to be able to answer this simple question from potential investors.

“If I invest x dollars how much am I projected to get back and when?” (The ROI, return on investment, question).

And from the non-profit perspective, the Executive Director or whomever is soliciting the funds must be able to answer the question,

“What will my money be able to provide through your organization?”

Entrepreneurs and non-profit leaders must have presentation materials that can articulate the vision to be made possible by the investment or donation in a way that appeals to investors’ and donors’ emotional side as well as their rational side.  Thus, the presentation needs to weave in the big picture with detailed market research, financial analysis and keen insight into the best organizational structure to implement your vision and the small picture, the child helped, the product’s usefulness or the challenge successfully addressed by the organization described at a personal scale.

As John May stated earlier, investors and donors will also decide whether or not to invest in your company or donate to your organization based, in part, on the quality of the presentation. This includes the look and feel and how the content is arranged and presented.  The investor/donor relations presentation should have a consistent look and feel with all of your organization’s other communication materials.  In order to accomplish this, the presentation design should encompass the following:

• Highly refined, no nonsense look
• Efficient, but no key fact left out
• Balanced, thoughtful presentation
• Direct and honest, without pretense
• Clear reflection of organization’s brand

In order to raise capital from investors or funds from donors, the organization’s presentation must be an integrated communication piece that encompasses all of these elements.

With these principles in mind, the following documents are to be used from the company or non-profit’s files to create effective investor and donor presentations.  If a communications firm is used, these files are shared after the signing of a non-disclosure or confidentiality agreement.  If many of these documents do not exist, Step 1 will be to create them to provide a solid base for the actual presentation.  Without all or most of these documents, the presentation may amount to little more than winging it, a sure recipe for failure in today’s market.  The background documents are:

The Background Documents

1. Current and all previous copies of business plans of the company or non-profit.
2. Outline of the latest research on the competitive landscape for the industry/sector involved.
3. Summary of the recent investments or large scale donations made in this industry by venture or seed stage investors or donors.  With regard to a company seeking investors, it would be useful to provide an explanation of the valuations used to form the term sheets of the other investments.
4. History of all prior investments and donations in the organization.
5. Current operating budget (annual) for the company or non-profit for the past year and all previous annual reports.
7. Resumes of all key personnel on board and expected to come on board over the next year.
8. All graphics, logos, key words and phrases used to describe the company or non-profit.
9. A graphic presentation of the business model employed by the company or non-profit.
10. A graphic that compares the company’s or non-profit’s current or proposed products against all competitors
11. Time line documents showing all milestones that will need to be accomplished to become profitable or in the case of a non-profit to achieve key goals.
12. A memo on all key risk factors dealing with the company or non-profit and the marketplace.
13. A memo on the company’s or non-profit’s risk management strategy and all legal protections for the company’s or non-profit’s branding, logos, technology and intellectual property.
14. All previously used marketing materials of the company or non-profit.
15. A copy of all white papers, research papers, and books prepared by the company or non-profit.
16. A copy of all acknowledgements, press releases, press coverage and articles about the company or non-profit and its principals.
17. Complete financial history of the company or non-profit.
18. Copy of all private placement memoranda used by the company in the past to raise money, including current PPM.  In the case of the non-profit all previous donation solicitation materials.
19. Firm or organization resumes of all outsourced partners (legal, accounting, etc.).
20. A thorough list of frequently asked or anticipated questions with detailed answers.

This article shows that it is no longer business as usual in creating investor or donor presentations.  Backs of napkins and business plans without a strong analysis of the present and future competition in the marketplace will not get funded.  Investor and donor presentations are not a science.  However, they are no longer just an art form and the creation and use of each of these background documents become essential steps in the “homework” necessary to secure the investment or donation from a solid base of investors and donors that your organization needs to propel its growth.

About the Authors

Herb Rubenstein is the President of Sustainable Business Group, a consulting firm to businesses and has its headquarters in Denver, Colorado.  He is the co-author of Breakthrough, Inc.: High Growth Strategies for Entrepreneurial Organizations (Financial Times/Prentice Hall, 1999) and Leadership Development for Educators (Rowman and Littlefield, 2009), and the author of Leadership for Lawyers, 2ed. (American Bar Association, 2008), plus over 100 articles on business strategy, entrepreneurship, leadership, and improving how organizations function and deliver value. 

He also served as an Adjunct Professor of Strategic Planning George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University.  He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974.  His email address is and he can be reached at 303 592-4084. For more information about the Sustainable Business Group, see

Adam Levin is Vice-President of Information Experts, Inc., an award winning communications firm in Reston, Virginia.  He can be reached at 703 787-9100 and his email address is

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Book by Marcus Buckingham and Curt Coffman, Simon and Schuster, 1999

Book Review by Herb Rubenstein, President, Sustainable Business Group


One factor in determining how long an employee is willing to stay with an organization is the quality of the management to whom the employee reports.  Contrary to popular belief the more talented the employee, the more (better) management that employee requires to reach his or her potential.  These and other valuable lessons are published in this book summarizing interviews with over 80,000 managers in over 400 companies performed by the Gallup organization.

Key Concepts in the Book

1. Great managers “individualize.”  They do not try to create one set of rules that applies to each employee, each customer or each situation.  Great managers are “judgment based” not “rules based” decision makers.
2. Each manager must develop and perfect his or her own style and apply it consistently.
3. Managers and great employees must be brilliant at anticipating.
4. Managers must make each employee comfortable with the way they are, not insecure and not be so demanding on the employee that the employee constantly lives outside his or her comfort zone, always insecure and fearful.
5. Managers must listen to employees and be interested in them as human beings, not just tools to achieve quarterly goals.
6. If one is going to fire someone, do it fast.
7. If a manager gives an order, it must be supported 100% backed up by the manager.  Saying “Corporate made me do it,” poisons the well.
8. Managers should make few promises and must keep all of them.
9. Goal of management –turn talent into performance.
10. Profits and a successful business begin by building a work environment that attracts, focuses and keeps talented employees (citing The Service Profit Chain by Heskett, Sasser & Schlesinger.
11. Today, there is no simple and accurate measuring stick to tell how well a manager is doing.
12. Pay for performance systems are vital to high productivity.
13. Workers need 1) to know what is expected of them, 2) have the right materials, 3) must be acknowledged regularly, 4) be listened to, and 5) be able to learn and grow on the job.
14. Great managers do not try to change people.  They hire people that fit into what they need.  Then they maximize the potential of employes.
15. Self managed teams are usually a disaster.  Every team needs a manager, a leader.
16. The distinction between great managers and great leaders is one of focus.  Great managers focus inward, getting the best out of what they’ve got.  Great leaders look outward, toward the future, seeking alternatives, patterns, connections and pursuing a vision that only a few can see.
17. The four basic roles of managers are 1) select people; 2) set expectations; 3) motivate people; 4) develop people.
18. Behavior is generally recurring, forming a pattern.  The manager must discern behavior pattern very quickly.  Behaviors, once formed into patterns, are very difficult to change in the work context without extraordinary interventions and investments.
19. Managers must know and be able to measure the range of performance outcomes that are reasonable to expect in each person and in each job.  Managers must know the minimum, the maximum and the average expected performance level and must set expectations as to what is acceptable, not acceptable and what is to be considered outstanding performance.  This is the setting of standards.
20. Managers must assist workers in learning, knowing what new things they need to know, widening their perspective and focusing them on where they need to excel.
21. Many jobs require precision.  Generally, either a person loves precision or does not consider it important.  Either way, it is difficult to change an adult’s view in this area.
22. The three basic categories of talent are:  1) striving; 2) thinking; and 3) relating.
23. Attitudes and “drive” form key parts of a person’s recurring patterns of thoughts, feelings and behaviors.  Attitudes and drive of workers are very difficult for managers to help employees change.
24. Every job requires a special set of talents and each manager must know what talents are required for each job.
25. Managers are always “on the stage.”  Employees must also act like they are always on the stage.
26. A list of well recognized talents.

 empathy, warmth
 discipline
 precision, accuracy
 on-time
 desire/ability to learn
 creativity
 joyful, happiness 
 realism
 organization  
 coachable
 memory   
 sincerity
 motivation   
 visionary
 leadership   
 planning, strategic thinking
 thinking, insight, focus
 physical strength
 independence   
 trustful
 role player   
 gregarious
 thrifty    
 discernment
 exciting 
 assertiveness
 ethical, honesty 
 long term focus
 short term focus 
 confrontation
 cooperative   
 calm
 flexibility 
 respectful
 confidence  
 responsibility, dependability
 listening, understanding, observing
 drive, achievement focus,
 goal oriented
 courage, ability to perform in         face of fear
 communication (writing, speaking)

27. Managers must recognize those patterns of behavior that lead to success and failure and demand that patterns that lead to success be strengthened and those that lead to failure be eliminated.
28. When creating steps for a company to follow, or “plays” for a sports team to follow, always go from the players to the plays and not vice versa.
29. A manager can describe in great detail the unique talents and strengths of each employee.
30. A manager’s job is to “cast” their employees properly, showcasing their strengths.
31. Managers treat each employee as that employee should be treated, not “like the manager would like to be treated.”  Good-bye Golden Rule.
32. Managers should ask employees how each wants to be treated, managed.
33. Managers should spend the most time with their best, most productive people.  Time = investment.
34. Each employee should be given a unique set of expectations by each manager, often after hearing the employee’s point of view on what should be expected of them.
35. Managers notice and deal with “non-performance” immediately.
36. Managers notice and acknowledge/reward excellent/outstanding performance immediately.
37. Managers should encourage workers to form partnerships with other workers.
38. Managers create “heroes,” by creating and articulating levels of achievement and creating the “hero category.”
39. The key to a healthy, successful career is “self-discovery” – – discovery of what you do/like best and then doing it better and better over time through growth and learning.  Self-discovery is a great source of energy and enthusiasm.
40. Feedback for employees should be constant and should focus primarily on the future.  I call this “feed forward.”
41. Great managers ask “why” when standards are not met and then decide on a course of action.
42. Managers should create performance systems where employees keep track of their own performance.
43. Managers must not micromanage their employees.  Managers must decide the right, sought after outcomes.  Employees must develop the best road for them to achieve these outcomes.


These 43 rules are the new rules of running a business, a non-profit or educational organization.  We hope you find them useful in your organization.

About the Author

Herb Rubenstein is the President of Sustainable Business Group, a consulting firm to businesses and has its headquarters in Denver, Colorado.  He is the co-author of Breakthrough, Inc.: High Growth Strategies for Entrepreneurial Organizations (Financial Times/Prentice Hall, 1999) and Leadership Development for Educators (Rowman and Littlefield, 2009), and the author of Leadership for Lawyers, 2ed. (American Bar Association, 2008), plus over 100 articles on business strategy, entrepreneurship, leadership, and improving how organizations function and deliver value. 

He also served as an Adjunct Professor of Strategic Planning George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University.  He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974.  His email address is and he can be reached at 303 592-4084. For more information about the Sustainable Business Group, see

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by Dr. Jeana Wirtenberg PhD, William G. Russell, & Dr. David Lipsky, PhD
in collaboration with
The Enterprise Sustainability Action Team
Greenleaf Publishing, 2009


Herb Rubenstein, President, Sustainable Business Group,
and Michael Powers, Consultant to the Sustainable Business Group


The Sustainable Enterprise Fieldbook deals with the challenges companies face in this new world focusing on sustainability. The book describes the best practices that have been generated by companies seeking to become leaders in the field of sustainability. The book is the product of the authors and the Enterprise Sustainability Action Team (ESAT), a community of 29 diverse professionals devoted to explaining the missing elements of sustainability and to create a vision for the sustainable enterprise.

At the heart of sustainability is properly assessing and managing risks. In order to asses and manage risk, a company needs to identify all of the risks that its actions create. The company must understand how businesses now operate in a very interdependent world and economy and risk cannot be analyzed by only considering what your company is doing, but the company must assess the cumulative impact of other companies also generating similar environmental, ecological, social, and human risks.

Companies are now expected to understand emphasize a broader, more balanced, array of outcomes, to include social responsibility, environmental stewardship, enlightened human resource policies and practices, and make a profit, all at the same time. Rather than focusing singularly on the “financial bottom line”, the companies vying for the moniker of being the most sustainable companies and organizations are aligning themselves with the sustainability movement.

This book seeks to help create a sustainable future. It includes models, case studies, and examples from a wide range of companies to help leaders, mangers and employees at every level understand the meaning and practical import of the term “sustainability” in the business context. This book makes the business case for sustainability as a key component of all companies’ business practices. It cites evidence that companies with strong social and environmental policies generally perform better financially than companies without strong environmental and social policies.

The authors of the book make the argument that this book applies to non-profits, government agencies, and all enterprises. The book provides many of the tools, techniques, and knowledge necessary for promote wide-spread actions to improve sustainability in business, government, the educational and non-profit sectors, and in every day life of people across the planet.

The book provides various examples of exemplary or “state-of-the-art” sustainable enterprises, and reveals the specific practices that make these companies leaders in the area of sustainability. According to the authors, a state-of-the-art sustainable enterprise possesses the following key attributes:

• A long-term collaborative, “holistic,” systems-oriented mindset
• Integration of sustainable development into the core business strategy
• Activities that do not de-plenish the planet’s resources. In fact, sustainable companies actually seek to regenerate the planet’s capital stocks: natural, social, financial, human, and physical
• Implementation of ethics-based business principles and sound corporate governance practices that consider the rights, and the interests, of all relevant stakeholders, including employees
• A triple-bottom-line strategy that is tied to three broad domains of stakeholder needs: social, environmental, and economic
• Commitment to transparency and account-ability, giving stakeholders opportunities to participate in all relevant decisions that affect them through the company’s actions
• Utilization of influence of the organization to promote meaningful, systematic change among peers, within neighboring communities, and throughout its supply chain, and to the fullest extent of its reach

It is important to note that no single organization was identified as the best example of all sustainability practices. Even organizations that are exemplary in one area may act “unsustainably” in other areas.

The purposed of the book is to serve as a source document to support the creation of a collaborative workspace in which companies and organizations can test and share ideas promoting sustainability. The book gives many reasons why sustainable business practices are needed and are needed now. Some of them include:

• Atlantic Cod – Stocks have collapsed and are not recovering
• Fresh water shortages are expected to grow dramatically
• Rainforests are diminishing at an alarming rate
• 20% of the polar ice cap has been destroyed in the past 25 years
• Human use of resources is 23% greater than the earth’s regeneration capacity

The book also carefully describes the many barriers to sustainability in business including:

• Lack of education of workers and the general populace regarding key facts that argue for more sustainable business practices
• Lack of support from top managers
• Lack of standardized sustainability metrics and measures of success
• Short-term profit motive and short-term thinking in general


Chapter One focuses on leadership and the transformation that is necessary to bring about sustainability as a key driver of business decisions. Leaders need to focus the entire organization or company on appreciating the need for reducing the ecological footprint and degradation caused by the company in order to garner the necessary support from the entire organization to have it adopt and conduct all of its business consistent with sustainability principles.

Effective, sustainable leadership requires the total commitment and active support of top management, as well as those in middle-management positions if it is to be fully internalized. The Chapter provides leaders with insights and examples of how this can be achieved in ways that produce superior results, presenting four distinctive essays that concentrate on theory as well as offering practical business examples that significantly expand traditional ideas of leadership.

The chapter also includes a discussion on the Leadership Diamond by Twomey, which focuses on:

• Integrity
• Mutuality
• Sustainability

These are viewed as the key elements of leadership in a sustainable enterprise. The chapter also includes an essay on the wisdom from ancient traditions that sought to practice sustainability. The chapter concludes with the statement that only people working together can amass the wisdom, intention, and will to create sustainable enterprises.


According to John D. Adams, mental models are the constructs we bring to any situation we are attempting to impact. They include what we know, what we value, what we believe, and what we assume. From these elements emerge a context for action or inaction.
For sustainable initiatives to succeed, every member of an organization must co-create more versatile, inclusive, and conscious thinking patterns. Chapter two offers both theoretical foundations, plus practical insights, for making these substantive changes in organizations that will yield sustainable practices.

In the chapter’s pivotal essay, “Six dimensions of mental models”, Adams develops a continuum comprised of six dimensions of consciousness for assessing and working with mental models:

• Time Orientation: from short term to long term
• Focus of Response: from reactive to creative
• Scope of Attention: from local to global
• Prevailing Logic: from either/or to both-and
• Problem Consideration: from accountability-and-blame to learning
• Life Orientation: doing-and-having to being

Examples are then presented from two companies one in the energy industry and the other a chemical manufacturer  that have transformed their thoughts and actions in response to the needs of the surrounding community. These examples illustrate the difference made by mental models regarding the challenges and opportunities encountered in the process of developing a sustainable enterprise.

The Chapter included with three case studies that provide tools and exercises for effecting mental model changes as well as cultivating personal and group operating systems that support a high-quality, sustainable future. In essence, the Chapter concludes with the idea that we have to change our mental models, the way we think and look at the world, in order to change our business practices to become more sustainable.


Making sustainability central to an organization’s overall strategy is a foundational quality for creating a sustainable enterprise. A coherent strategic framework for sustainability is like an organizational compass. It provides direction and serves to coordinate all of the organization’s activities which contribute to overall sustainability.

Moreover, there is growing evidence that corporate social-environmental performance is positively correlated with to financial and marketplace success. Chapter three reviews this evidence, and provides examples of various ways actual organizations are using sustainability initiatives to improve their financial results.

For example, Unilever’s work on emerging markets is designed to minimize environmental damage, reduce poverty, and make a profit. General Mills, and many other companies, now have a position, Vice-President of Sustainable Development, to measure, promote, and oversee the sustainability oriented aspects of all company operations.

Interface, a large carpet and interior design business, has revolutionized how carpets are made using the principles of sustainability. It has saved over $300 million by moving toward zero waste, creating benign, not polluting emissions, and reducing energy use. Interface halved its CO2 emissions in ten years. General Electric has reduced its greenhouse emissions, and increased its research and development investment significantly in the renewable energy equipment area.

The purpose of the chapter is to help leaders, managers, and change agents better understand how to develop and implement a company wide, integrated sustainability strategy. For most organizations this involves reshaping corporate goals as well as the very nature of their existing strategy.

Much of the chapter is focused on the content and process of developing a sustainability strategy. According to the authors, a good strategy for sustainability must first and foremost be a fundamentally sound strategy for achieving a significant comparative advantage over other, competitive companies. Thus, a good sustainability strategy essentially represents an enhancement of a sound strategic management process. The chapter briefly examines the core elements of such a process, and then discusses the distinguishing characteristics of a good sustainability strategy.

In order to integrate elements critical to developing and implementing sustainability strategies, a universal strategy formulation process model is presented, which consists of the following seven steps:

• Relevant context and business case
• Current state
• Target state
• Setting the timeframe
• Plan of action: charting a path
• Identifying resource requirements
• Implementation approach

Each of these seven steps is designed to increase understanding of an essential aspect of the sustainability process and to help organize the transformation to sustainability under a variety of circumstances. The eight element of any sustainability strategy is the creation of measurement tools and metrics to determine if the strategy is achieving its goals.

The chapter concludes with a Nike, Inc. case study, which evidences various key elements noted throughout the book including: systems thinking, mutuality, collaboration, leadership/champions, employee engagement, decentralized yet integrated internal and external social networks, and aligned performance management systems and metrics.


Achieving sustainability in the 21st century requires fundamental changes in the ways organizations manage enterprise processes and approach customers, markets, stakeholders, stockholders and their use of material resources. Chapter Four discusses the challenges of building an enterprise culture that embraces sustainable development values as well as introduces approaches for making this transition.

Proven enterprise transformational approaches typically rely on creating organizations that accept and embrace:

• deliberate renewal of workforce talent
• responsible use of environmental resource
• alleviation of major societal problems.

One such approach, the FAIR model, provides an orchestrated redesign of organizational “DNA” using four transformational elements:

• Framing
• Aligning
• Igniting
• Refreshing

This model represents the fundamental life skills necessary for any organization to thrive in today’s sustainable development world.

The book’s authors advocate application of an integrated approach for managing the transformation to sustainable development cultures by blending elements of transformational change, project management, participative change management, and adult learning principles. The Chapter notes that change is difficult in organizations and only 25-50% of the change initiatives fully realize expected benefits. Organizations can change only as fast as “the people in them change.”

In order to ensure that all elements essential for successful enterprise change are assessed, addressed, and monitored throughout the transformational change engagement, an iterative transformational change methodology is introduced which consists of three sequential stages:

• Stage 1: Reframing enterprise opportunity
• Stage 2: Reinventing enterprise work
• Stage 3: Implementing future work

The four elements of the FAIR model operate iteratively within each sequential stage. This systematic, systems-level approach to creating and managing change employs principles of modeling at multiple stages and multiple levels of an organization to systematically transform the way every member of the organization thinks about and performs their work on a daily basis.

In other writings by the Sustainable Business Group, we identify a new term that describes this process. That word is “reset.” Companies that want to change into sustainable enterprises often find that no linear or incremental change process can get them there. Instead, the company must go through a “reset” process where the way a company goes about doing things is “reset” in an instant, rather than approached with one small change after another.


Chapter Five discusses the fundamental principles of employee engagement in the context of sustainability management, and provides five in-depth case studies that illustrate these principles.

Case 1: This case study involves the DuPont Plant in Belle, West Virginia. It describes how senior management established conditions for self-organizing at a previously underperforming plant. In a span of eight years:

• Plant performance improved 45%
• Workplace injuries dropped 98%
• Earnings rose 300%
• Plant emissions dropped 87%

Case 2: This case study is about energizing people to create a safer, healthier workforce at Public Service Enterprise Group, an energy company. It describes the multi-stage effort to bring union members and management together with new initiatives for reducing accidents and stimulating creative solutions. Workplace injuries and accidents were reduced by 50%.

Case 3: This case study discusses engaging employees in social consciousness at Eileen Fisher. It describes how the apparel manufacture achieved consistent profitability while remaining devoted to improving the environment as well as the working conditions of the employees of its’ overseas suppliers. Employee ownership has increased. Turnover at Eileen Fisher was reduced to one-half of the industry norm.

Case 4: This case study describes the approach to environmental, health, & safety issues at Alcoa. It describes the efforts of one man and his long-standing campaign to ensure the infusion of safety concerns throughout the company. Employee safety improved six-fold.

Case 5: This case study discussed employee engagement at T-Systems. It describes activities designed to make the organization a sustainable organization, including a grassroots employee effort to deal with intolerable traffic conditions. This effort morphed into an organization-wide change project that spread throughout the entire community, resulting in significant and measureable human and environmental benefits. Specifically, at one notorious intersection where traffic had always been a nightmare, the average waiting time to get through that intersection was reduced from thirty-five minutes to three minutes.

These case studies illustrate how certain well-established psychological dynamics form a foundation for vigorous engagement by employees. They also share a number of strategies and tactics that managers can use to bring about sustainability management with desirable outcomes.

Today, there are employee survey techniques pioneered by McBassi & Company that can determine how sustainably a company’s work force is managed and developed. The scores resulting from the McBassi People IndexTM , a compilation of the employee survey results, represent a very strong and reliable predictor of future financial performance for companies.


The principles of sustainability are now fairly well established in the market place. Designing and implementing sustainability metrics and measurement systems, however, is not as fully developed as the principles. Substantial progress is being made. However, organizations that develop their sustainability indices and metrics, might well find that these metrics will need to be refined, and even changed over time. Some metrics such as reduction of the green house gas emissions will likely stay in place for the foreseeable future. Other human resource oriented metrics consistent with the sustainability principles may evolve over time.

Chapter Six provides an overview of the progress being made on sustainable development indicators, measurement frameworks, and systems at the global, national, and enterprise level.

With the expected evolution of sustainability metrics and indices, the book projects that Corporate Sustainability Reports, will evolve over time as the world’s climate, pollution, human capital, and political conditions change. Certain measures such as a company’s ecological footprint, waste, CO2 emissions, energy use, poverty rate reduction, inclusivity of workers in key decisions, are all expected to remain in the forefront of the sustainability movement. Many organizations identified in this chapter are working diligently on improving sustainability metrics and are making great progress in this area.
Some metrics will constitute some percentage improvement over the past. Some metrics will be measured in absolute terms. Overall, it will take time for consensus to develop on sustainability oriented metrics. Today, there is certainly a strong consensus that companies need to be developing, if not already implementing, solid sustainability metrics. The fact that IBM has created a new, Sustainability Consulting Practice, shows that sustainability has not only gone mainstream, but that is also has significant profit potential for companies, and the consultants who advise them.


Sustainable globalization represents a breakthrough and a fundamental change in the approach of doing business. Unlike conventional globalization, sustainable globalization is principle-centered, operating on foundational values of service, collaboration, and the triple bottom line.

The book’s authors introduce “six lenses of sustainable globalization” which provide a practical framework for understanding sustainability in a global context:

• Economic/financial
• Technology
• Poverty and inequity
• Limits to growth
• Movement of talent
• Geopolitical

These complex and interrelated issues are organized into an integrated whole that takes all six lenses into account. Chapter Seven discusses these six lenses in detail, providing case studies that present opportunities for sustainable globalization.

The chapter concludes with the introduction of the “six lenses for sustainable globalization tool” which provides the reader with a means to assess the degree to which their organization is currently addressing each of the six lenses. In the past one of the drivers of globalization was the “race to the bottom.” Companies could easily go the country with the lowest wages, the lowest level of unionization, the lowest level of environmental regulations, and the lowest level of enforcement of ethics. Today’s globalization may actually create a “rise to the top” where a company is judged in every country by the standards of the country where it does business with the highest standards.


Chapter Eight presents critical themes, representative best-practices, case examples, and implementation tools associated with the topics of collaboration, stakeholder engagement, and the view of the enterprise as a living system operating in an extremely dynamic environment. Other writings of the Sustainable Business Group, including its 23 page book review and commentary on the path breaking 1996 book by James Moore, The Death of Competition, provide great detail on the utility to businesses of viewing themselves as a living system in a dynamic environment.

The first section provides best-practice insights for effective organizational collaboration. The authors examine core collaboration concepts and natural tensions such as trust, control, competition, and network communities. Special attention is given to stakeholder engagement as a core component of any enterprise seeking to become more sustainable. Collaboration can be positive or in some other situations may not be worth the cost, as discussed in the Harvard Business Review on this topic in the April, 2009 issue.
Collaboration must be well planned and executed to produce positive results. Just having everyone, even every stakeholder, participate in discussions regarding a topic is no guarantee of a better plan or a more effective implementation. That being said, there is substantial evidence being generated that shows that when collaboration is well planned, strategies, decisions, and implementation outperform those when a single decision maker or an isolated group of decision makers runs the show.

The second section explores how enterprises act together as part of living systems. Individual and enterprise actions are connected to and interact with the cumulative global flow of goods and services as well as their associated consumption and production of natural, human, and economic capital. Sustainable enterprises can learn to architect participation in these globally connected systems by identifying, assessing and engaging their existing interconnected personal and industrial ecology networks. Applying systems thinking, industrial ecology, and collaborative cultures allows an enterprise to better understand and participate effectively in dynamic and often extremely complex real-world events.

The third and final section of this chapter addresses how the Internet is evolving into a second generation, or Web 2.0, for connecting people through social network communities. Selected network mapping and assessment tools are presented, as well as certain social networks with sustainability-aligned user groups.


Chapter Nine offers various reflections on the ideas presented in the previous eight chapters. The chapter focuses on what has been learned, and lays the foundation for continued learning and sharing with a larger social network of sustainability.


The Sustainable Enterprise Fieldbook is a must read for the company embarking on a sustainability oriented transformation. Even if your company is not planning on promoting sustainability internally, in your supply chain, to your employees, in your marketing, or in your customer education, this book is essential reading because your competitors will be doing this in the future, if they are not already doing it.

The Sustainable Business Group, in its article, Sustainability and The Recession: A Sobering Perspective, has identified in ten situations where the company that promotes sustainability has or soon will have a clear competitive advantage over its competitors. There may be times when deviating from the sustainability principles will be in the short term interest of companies, but it is very hard to argue that deviating from these principles will yield long term enhanced profits or an enhanced market position for any company of a reasonable size. The authors of this book invite further participation by others by visiting

About the Authors

Herb Rubenstein is President of the Sustainable Business Group, Inc., a consulting firm to businesses and governments. He is co-author of Breakthrough, Inc. – High Growth Strategies for Entrepreneurial Organizations (Prentice Hall/Financial Times, 1999) and author of Leadership for Lawyers (American Bar Association, 2008). He has also served as an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University, was a founding director of the Association of Professional Futurists, and is the author of numerous articles on futures studies, leadership and strategic planning.

He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974. His email and he can be reached at 303 592-4084. For more information about the Sustainable Business Group, see

Mike Powers is a consultant at the Sustainable Business Group. He has extensive research, business development, international business, and investment experience. He has collaborated on several books and has written a number of book reviews centered primarily on assisting businesses reach their full potential. He can be reached at 303-895-4555 and

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Article by Herb Rubenstein, President, Sustainable Business Group and
Keith McAslan, Managing Partner, McAslan Consulting


Much work has been done in the area of sustainability in manufacturing in the United States. Virtually everyone agrees that much more needs to be done to improve energy efficiency in manufacturing, reduce waste, improve the development and management of the workforce, and design and manufacture products that use our scarce material and human resources in a more optimal manner. The National Association of Manufacturers (NAM) states on its website:

The NAM and our member companies are committed to working with Congress to establish sensible federal climate change policies that reduce greenhouse gas emissions, while maintaining a competitive playing field for U.S. companies in the global marketplace.

However, on the NAM website as of December 30, 2008 there is not one paper telling manufacturers about any best practices they could adopt to promote sustainability. It appears that NAM has no such task force studying how manufacturing concerns can create their current products in a more sustainable manner or begin to advance the state of the art in designing and producing the next generation of products that are more sustainable, efficient, effective, and less harmful to the environment.

Possibly NAM and state associations promoting manufacturing and technology could undertake and publish detailed research across the tens of thousands of manufacturers to identify the sustainability oriented practices that have helped improve the environment, helped improve the productivity of their workers, and helped improve their bottom line.

The Current Situation

Much information already exists on “green manufacturing.” Conferences are being held. Books are being written. Engineering schools are focusing on sustainable engineering to attract students who can find great jobs in meeting the future manufacturing environments which will be embracing sustainability principles. A guick GoogleTM search reveals the following:

Green Manufacturing News The Latest News on Technologies, Business Practices and Trends!

IndustryWeek – Connecting Manufacturing’s Leaders
Making Green: Sustainability In Manufacturing And The Clean-Tech Economy. Now that the green marketplace has firmly taken root, many manufacturers are … – 46k – Cached – Similar pages –

Sustainability is good business
The main business drivers of sustainability for manufacturing firms make a good strategic concept for improving business performance: … – 11k – Cached – Similar pages – Sustainability in Manufacturing: Recovery of Resources … Sustainability in Manufacturing: Recovery of Resources in Product and Material Cycles: Günther Seliger: Books. – 253k – Cached – Similar pages –

Sustainable Manufacturing
Dec 10, 2008 … Australian manufacturing firms are being placed on a more sustainable footing by our research in eco-efficient technologies and engineering … – 37k – Cached – Similar pages –

File Format: PDF/Adobe Acrobat – View as HTML
This set of slides is a brief introduction to the perspective Act Now brings to Sustainable Lean Manufacturing. This is not intended as actionable advice. … – Similar pages –

Tips for sustainability in manufacturing – 11/18/2008 – Control …
Nov 18, 2008 … Controls engineers have quietly done sustainability related efforts for years; we call them “lean initiatives,” says Pack Expo speaker. – Similar pages –

The Laboratory for Manufacturing Automation
lma. Creating sustainable technologies to innovate manufacturing products, processes, and systems. “A sustainable world… by design”. lma trans. – 3k – Cached – Similar pages –
Sustainable Manufacturing Summit :: Corporate Climate Response …
The Sustainable Manufacturing Summit provides the opportunity to find out how top manufacturers and their customers are lowering their carbon emissions and … – 64k – Cached – Similar pages –

Fifty Sustainability Experts To Speak At Sustainable Manufacturing …
Jan 21, 2008 … Sustainability experts are looking forward to sharing their carbon reduction strategies on April 8th and 9th at the upcoming Corporate … – 48k – Cached – Similar pages –

Green Manufacturing Expo 2009
Sustainable manufacturing, defined as the “creation of manufactured products that use processes that are non-polluting, conserve energy and natural … – 20k – Cached – Similar pages –

Information and Progress

The existence of information, conferences, books, tips, be it from the U.S. or Australia in the examples is an excellent first step in promoting the improvement of manufacturing based on sustainability principles. However, information alone is not sufficient to propel manufacturing concerns throughout the U.S. to begin adopting on a large scale more sustainability oriented manufacturing practices.

One challenge to securing broader and more rapid adoption of sustainability oriented manufacturing processes is that there is no universal agreement as to what “sustainability” really means. Tremendous work has been done on creating very useful sustainability “scorecards” and measures, and this is very helpful. In an effort to give a simple, yet direct definition of sustainability in manufacturing, we offer the following definition.

“Sustainable manufacturing processes deploy the optimal use of material and human resources for the long term to produce the desired product.”

That is the official definition adopted by the Sustainable Business Group concerning manufacturing and sustainability. It is simple and direct and focuses on one key term: Optimal.

When a manufacturing concern can shave one kilowatt or one cubic foot of natural gas use through energy conservation, without creating an inferior product or inferior work conditions, then it is not operating in a sustainable manner because it is not operating in an optimal manner. Even when it can use less energy in peak times, it becomes a more sustainable manufacturing enterprise since peak energy use is by far the most costly (in dollar and environmental terms) type of energy use that exists.

If the employees of a manufacturing concern are not properly trained and educated by the company regarding how to conserve energy and materials use on their jobs, in their homes, their churches, and in their life-style choices, then these employees are not engaging in the highest level of sustainable activities since their actions are not optimal.

These are easy words to write, but brutally hard to implement at the manufacturing plant level or across an entire globalized manufacturing concern.

Where does a manufacturing concern start on the path or expand its already existing efforts toward becoming a more sustainable enterprise? This article begins in a very small way to address this question.

10 Recommendations to Promote Sustainability by Manufacturing Concerns

1. Make the optimal use of human and material resources in the production process, a key performance objective goal of the company with metrics to measure performance along this dimension. These metrics can be produced hourly, daily, or weekly and shared with employees, stockholders and customers. They should become a true source of pride in the company.
2. Create real incentives and rewards for everyone in the company to be more energy efficient, deploy human talent more effectively, reduce materials waste, reduce pollution and green house gas emissions, and promote the design and manufacture of the next generation of products that are more sustainable in the long run. Share in the savings being generated by implementation of a “gain sharing” type program to reward the employees and encourage creativity and savings.
3. Create real disincentives for employees and managers who do not effectively promote sustainability and reach the sustainability oriented targets. Create the accountability systems that will show management and co-workers who these employees are and how their disincentives are meted out to them.
4. Create and support a culture that promotes sustainability in everything the manufacturing concern does. This includes enhanced communication, testing of new methods/technologies and management support combined with a reward system to ensure the employees share a sense of ownership.
5. Reengineer the business plan of the manufacturing concern, adopt new technologies, human resource systems, and financial reporting systems to ensure that the sustainability activities created are cost effective and promote enhanced profitability of the company. A key to the success of the reengineering is assignment of “ownership” – managers must be assigned responsibility and given the resources and support to succeed. Additionally, relook at the manufacturing production schedule and ask the question, “Does it make sense to shift some production from the first shift to the second shift or third shift when there is less demand on the utilities (electric & gas) and rates are typically lower?”
6. Incorporate “externalities” (e.g., pollution for which a company is not charged, waste of materials and disposal of a product at the end of its life cycle disposal for which a company is not charged, etc.) in business decision making.
7. Demand real progress be made starting quickly and increasing cumulatively as the manufacturing concern learns how to become more sustainable. Utilize the heat generated by the manufacturing process to provide supplemental heating to the plant and office areas.
8. Develop plans in three phases: short term – focused on improvements in the next 1-3 years, medium term – focused on years 4 -10 and long term – ten and twenty year plans for getting closer and closer to achieving the optimal use of material and human resources
9. Demand that the supply chain used by the manufacturing concern adopt and implement sustainability planning and implementation. In order to get the supply chain engaged, the business must help define “what’s in it for me”, by providing a cost benefit analysis for the suppliers to use in their ROI calculations.
10. Create “sustainability” as an integral part of the marketing, public relations, reputation, product development and transportation processes of the company. A business that has successfully implemented “sustainability” processes can utilize the success story as part of the sales and marketing campaign as well as communicate it to the community they reside, as a true green manufacturer.

These 10 steps are general guides. Survey your workers to ask them how the company can make real progress toward a more optimal use of material and human resources. Employees know a lot about this topic. Survey your customers and ask them these same questions. Survey your managers and find out not only what their suggestions are, but also identify and promote the managers who will actively promote sustainability and be willing to be held accountable for reaching the sustainability oriented goals of the company.


In today’s recession, a new motto is arising in manufacturing around the world and especially in the United States. That motto is: “Change or pain.” The principles of sustainability promote the right kind of change that will help existing manufacturing concerns survive and new manufacturing concerns thrive as they develop the new products our consumers need and our world requires to promote increased prosperity in a sustainable manner.

The CEO and the plant manager must be the CSC – Chief Sustainability Cheerleaders. Someone in the company must be held accountable for improving the company every year towards the goal of the optimal use of human and material resources for the long run. While every company will take a somewhat different tack toward reaching the goal, the basic strategy for reaching this goal should be very similar across many manufacturing concerns.

Now is the time for Associations, educational institutions, and government agencies that seek to promote the economic improvement and the longevity of manufacturing in the US and throughout the world to gather and disseminate the best practices, hold conferences, educate workers and managers alike, and set their eyes on one simple goal – to help manufacturers strive toward the optimal use of human and material resources for the long run in developing their desired product. Company leaders and even company employees without significant managerial responsibility can help lead this effort in your company, in your industry, in your locale, in your state, in your country, and yes, in the world. The time is now for strengthening the leadership in improving sustainability in manufacturing.

About the Authors

Herb Rubenstein is the President of Sustainable Business Group, a consulting firm to businesses with its headquarters in Colorado. He is the author of two business books, Breakthrough, Inc.: High Growth Strategies for Entrepreneurial Organizations and Leadership for Lawyers, and over 100 articles on business strategy, entrepreneurship, leadership, and improving how organizations function and deliver value. He can be reached at He can also be reached at 303 279-1878. The website for the Sustainable Business Group is

Keith McAslan is the Managing Partner of McAslan Consulting, a consulting firm to businesses providing financial restructuring, turnaround management, interim management, business analysis, merger & acquisition, strategy, finance, accounting and management consulting. Mr. McAslan’s executive experience includes: 10+ years as a CFO in manufacturing and technology, 3 years as a CEO in manufacturing and over 2 ½ years in investment/private equity. He has demonstrated success leading private, public and private equity owned companies and can be reached at 303-520-2493, or

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By Michael Gerber
Book Review by Dr. Jim Hoven and
Herb Rubenstein, President, Sustainable Business Group


The goal of the book is to help physicians be more successful and satisfied in their own practices where they combine the talents of a physician with the skills of an entrepreneur.  He identified numerous types of plans and management techniques that are very valuable to physicians.

Gerber states that a physician should adopt the roles of entrepreneur and manager (what I call “business owner”). Business owners must become quite astute in dealing with money, managing people and planning and operating a business.  Gerber’s main point is that either a business owner runs a business or it runs the business owner.  Your choice.


Gerber states that the following types of detailed written plans are essential to operate a physician’s practice intelligently and successfully.  These plans must be based on the clear understanding of such terms as income, profit, cash flow, equity, turn-key standard operating procedures. These terms are explained in the summary below and well documented in the book itself and include a) Business Plan, b) Practice Plan, and c) Completion (poorly named, as this is an Implementation) Plan.


Gerber assumes correctly that each practice will have a full time manager who is not the physician.  The book provides insightful, basic management principles and practices including the physician must always be somewhat involved in the management of the practice and never abdicate total responsibility for the management of the practice to another person.  Second, the job of the manager is to create robust, standardized systems for everything that is repeated or repeatable in the practice and insure these systems work and are used by everyone employed in the practice. Third, the best and only way to manage people effectively is to make sure they have standardized systems to run and manage. Fourth, Gerber states that the physician who started the practice will need eventually to hire a doctor to help with either the expansion or the continuation of the practice. 

The “new” doctor must be trained by the founder on the standards, values and skills the founder believes are essential elements of the practice and the “new doctor” must accept and reach these standards or this will not ever be a good fit and the new doctor’s role in the organization must be terminated. Fifth, systems require that all key elements be “estimated” including the time, money, and other types of resources necessary to accomplish the tasks that come under that system.  Failing to estimate accurately these key items dooms the system from the start and since all systems in a physician’s practice are/will be integrated, the failure of one system will cascade and disrupt other systems or necessary activities that need to be done well for the practice to be successful.

The Patient Is the Customer

Gerber views patients as customers and provides insights into how to serve patients well and them happy.  When the practice does all of these things, it will grow and the only to promote proper growth is to promote change in the practice. Growth = Change and therefore, change must be embraced (I would say “welcomed”) and done well, not feared or resisted.

Gerber gives physicians excellent time management advice, plus makes the critical distinction between undertaking tactical vs. strategic actions and urges physicians to focus their time and energy on strategic matters more than tactical matters. The book provides marketing advice, advice that will assist the physician in taking action more effectively, become a better decision maker, become a better team leader, and assist the physician in creating over time a practice that meets or exceeds the physician’s long term vision for the practice and the life the doctor wants to lead.  Gerber knows that physicians deserve to have life balance and time for activities other than their practice/business.


The goal of the book is the goal of every physician – create a sustainable, enjoyable, profitable, efficient, effective, and overall excellent practice that meets or even exceeds patients’ needs and expectations.  His book will help your practice be a better place to work and fills an important need in our profession.  His business guidance is wisdom from which our profession can benefit.

About the Authors

Dr. Jim Hoven is Director of Franchise Development, HealthSource Chiropractic and Progressive Rehab.

Herb Rubenstein is the President of Sustainable Business Group a consulting firm to businesses.  The headquarters of the Sustainable Business Group is Denver, Colorado.  He is co-author of Breakthrough, Inc. – High Growth Strategies for Entrepreneurial Organizations (Prentice Hall/Financial Times, 1999).  He also served as an Adjunct Professor of Strategic Planning George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University.  He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974.  His email address is and he can be reached at 303 910.7964

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By Joseph L. Badaracco, Jr., Harvard Business School Press, 1997

Book Review by Herb Rubenstein, President, Sustainable Business Group

In 131 very readable pages Professor Joseph Badaracco invites the reader to become familiar with some of the most insightful and rewarding questions we can ask in our time.  Professor Badaracco weaves questions throughout the book selected from Aristotle, Marcus Aurelius, William James, Frederich Nietszche, Immanual Kant, Machiavelli, John Stuart Mill, Sir Isaiah Berlin,  John Paul Satre, Ralph Waldo Emerson, Peter Drucker and many others.  These questions guide the reader in analyzing and learning from important decisions that three real business people – Steve Lewis, Edouard Sakiz and Peter Adario are faced with on their jobs in the 1990’s.

The Three Case Studies

Professor Badaracco’s three central figures all must make important, life changing choices.  None of them has an easy way out.  Steve Lewis is an Afro-American financial analyst with a great Wall Street future ahead of him and strong pro-civil rights parents behind him.  He is asked to attend (but not join in) a presentation by his company on an important project just because he is black.  He struggles with the tokenism, the false showing of  diversity by the company (especially since he had never even worked on the project) and faces the issue of going to the presentation and getting ahead in his company or not going to the presentation and being left behind.  His approach to analyzing the situation and his resolution of this issue represent a win-win situation that does not compromise his core
value of being treated and judged based on his actions, not on his race.

Peter Adario, another central figure in the book, is a mid-level manager caught in a situation where there is a conflict between his personal values and the professional obligations he has as employee/manager dedicated to serve the best interest of his employer.  This type of conflict occurs on a monthly, if not weekly basis for many managers.  The decision he must make should he fire (or let someone else fire) a talented, female employee, who works 60 hours per week.  The problem faced by the company is that this dedicated single mother is not keeping up on an important account and occasionally misses work due to her family obligations.  One person in the company presses Peter to fire her.  Peter resists.  In reflecting on the situation, Peter realizes that the other employees at this woman’s level are either not married, have no minor children or are part of two parent families where they can devote almost every waking moment and ounce of energy to the company.  Peter directly addresses the issue of how strongly should he and his company stand behind the “family friendly” business environment (which he personally believes in strongly).  He struggles with two very timely questions: 1) “Should he or his company care deeply about sending this worker onto the unemployment rolls?” 2)  “Should the bottom line of the company be the only guiding force in deciding the fate of a hard working, talented, dedicated, single parent employee?”   Professor Badaracco also asks in an enlightening, yet demanding fashion whether Peter Adario should have anticipated this problem in the screening and hiring process and successfully planned for how it would be resolved down the road.

A third central figure in the book is Edouard Sakiz, CEO of Roussel-Uclaf, the pharmaceutical company that developed the abortion pill, RU 486.  The question he must grapple with is “Will his company sell the RU 486 abortion pill or keep it off the market due to protests by anti-abortion groups and the potential for economically harmful boycotts of its other products? 

This question has many underlying questions including: “Who does a CEO/manager represent when he or she makes a critical decision like this?”  Badaracco explores many possible answers including the stockholders, the management or employees of the company, the customers, the nation, and even explores whether a business must or should take into account the best interests of society or the world at large in making such a decision.   Badaracco’s analysis of the Sakiz/RU 486 drama, played out on the world stage, explores a critical area managers must consider every day — “How do you make these tough decisions and protect and enhance your own position and personal power in the process?”

Defining Moments Analysis

Each of the decisions faced by the three main characters represents an important personal, professional and social decision.  The process of reaching and implementing such a decision is in Professor Badaracco’s words, a “defining moment” — a process that “reveals, tests and shapes.” Badaracco criticizes much of what we read today in business ethics as simple guides advising us of the reasons for choosing “right” over “wrong.”  This book suggests that the truly difficult decisions are the decisions between “right and right” that good, thoughtful people must make every day. 

Choosing between two “right” decisions requires first that the decision maker analyze the situation carefully and accurately.  Second, in order to make the “proper” decision Badaracco teaches that the decision maker become very clear about his or her values and how strongly or weakly the decision maker is attached to these values.  Third, the decision maker must become keenly aware of and sensitive to the values of others (especially of others who are powerful).  And fourth and most importantly, the decision maker must be able to analyze carefully and in detail the long term effects or results of making one choice over another.  In each case study in Badaracco’s book, the author makes absolutely clear that the decision maker’s life will never be the same after the decision is made and the defining moment has passed.

Each human being on this planet has defining moments.  The book suggests, correctly I believe, that most of the time we pass through life on such a fast train that we do not even realize when a defining moment has occurred.  Even when we realize that a defining moment has arrived we do not stop to take adequate measure, reflect and learn sufficiently from this defining moment to fully understand how this defining moment has “revealed, tested and shaped” who we are as a human being.  Badaracco’s book is designed to fill a gap in our business management literature. 

The gap in the literature is the lack of a proper conceptual and practical framework to use in dealing with defining moments.  Due to the lack of this framework, Badaracco suggests that decision makers can not appreciate the true value of defining moments.  In addition decision makers do not prepare in advance for when a predictable defining moment will occur.  By preparing properly for a defining moment we will not only know ourselves better, but we can improve our decision making ability by planning for success, anticipating the obstacles and even preparing for and overwhelming the opposition to the course that we want to choose. 

Ultimately Badaracco’s framework is designed to allow the reader to take great strides to improving how managers (and commoners) make important decisions in the future.

The Context

In addition to being practical, the book is thoughtful and intellectual.  In Defining Moments Professor Badaracco carefully synthesizes important elements from the works of all of the authors, statesmen and leaders cited above and addresses important questions of our time.  For example, Nietzsche’s question “What is your way?” (which is stated elsewhere in the book- “This is my way; where is yours?”) strongly implies that each of us should have our own way and be our own compass.  The questions raised in analyzing each case study show clearly that important decisions should be made with a careful understanding of the values, goals, viewpoints and intentions of others who have an interest in the decision.  Professor Badaracco states persuasively, “A talent for understanding what facts and events mean to others is especially valuable when managers confront difficult ethical issues.”  Simply put, what is a defining moment for you is probably of great interest and concern to others and if they are stakeholders in the decision making process or the result of the decision making process, it is critical to understand their views on the matter before one makes such an important decision.
This is not just a feel good; everything will turn out all right business book.  This is a book that discusses raw power in meaningful terms: how to measure it, how to use it and how to survive it. Some of the great lessons the book teaches are the value and necessity of “skepticism,” candor, and realism; the need for a manager to identify patterns of behavior quickly; the importance of laying the groundwork for success of employees and endeavors; the need to understand the real power struggles in an organization. 

The book also stresses the significance of being able to play to win and to create and implement business plans that do not fail just because some elements of an approach do not work exactly as anticipated.  Badaracco states that a “plan of action must be robust across a range of possible scenarios and altered circumstances.”  Although Defining Moments does not tell us exactly how to draft, much less implement, such a “robust plan” it certainly gets the reader thinking in the right direction with its explanation of “virtu,” the word used by Machiavelli to signify “vigor, confidence, imagination, shrewdness, boldness, practical skill, personal force, determination and self-discipline.”

Badaracco also seems to side with Machiavelli’s view that “weak leaders and fragile organizations accomplish little in this world for good or ill, because they are preoccupied with survival.”  After examining the need for an organization to be very profitable and very successful, the book exhorts managers to ask the question, “Have I thought creatively and imaginatively about my organization’s role in society and its relationship to its stakeholders?”  Here again, Defining Moments, points the reader in the right direction.


So, what does it take to realize the “potential greatness” of a defining moment? Badaracco’s answers and prescription are straightforward, yet profound.  He suggests that we must have “creativity, persistence, courage, restraint, shrewdness and fairness.”  But Badaracco realizes that these qualities are not enough.  In addition, one must 1) seek a quiet space for contemplation and serenity away from the daily pressures; 2) keep a journal as Marcus Aurelius did; and 3) reflect seriously on one’s past, acknowledging a dozen or more people by recognizing what each have taught us or how each has influenced or contributed to our lives. 

Defining Moments is the beginning of a journey for thoughtful businesspeople which can guide us through difficult choices between “right and right.”  It can improve the reader’s chances of creating that “certain kind of life” that is ethical, sensitive to one’s own values, the values of others and the need for success and profitability.  I recommend the book to any manager, employee, business owner, non-profit executive, parent, minister or rabbi, politician, artist, entertainer, investor or educator who has to make important, life altering choices between two alternatives that are, in many respects, both “right.”  This book takes us far beyond deciding between “right and wrong” to a level of thought, analysis and decision making ability that can transform the way you look at making important decisions and choices in the future.

About the Author

Herb Rubenstein is the President of Sustainable Business Group, a consulting firm to businesses and has its headquarters in Denver, Colorado.  He is the co-author of Breakthrough, Inc.: High Growth Strategies for Entrepreneurial Organizations (Financial Times/Prentice Hall, 1999) and Leadership Development for Educators (Rowman and Littlefield, 2009), and the author of Leadership for Lawyers, 2ed. (American Bar Association, 2008), plus over 100 articles on business strategy, entrepreneurship, leadership, and improving how organizations function and deliver value. 

He also served as an Adjunct Professor of Strategic Planning George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University.  He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974.  His email address is and he can be reached at 303 592-4084. For more information about the Sustainable Business Group, see

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By James E. Moore, Harper Business, 1996

Book Review and Commentary by Herb Rubenstein, President, Sustainable Business Group

I read The Death of Competition for the first time in 1996 and have returned to it often.  Now, thirteen years later, I have decided the basic contents of this book are well worth sharing with our readers and clients.  This book introduced a new way of looking at business in biological and ecological terms.  Jim Moore, the author, is a highly respected business consultant who spent considerable time in Central America studying the forests and ecology after a long and successful career at ATT.  His analytical framework is timeless and insightful. 

This book review and commentary blends the key ideas of Jim Moore’s book with the insights that the Sustainable Business Group, Inc. has gained over the past five years of providing strategy and leadership consulting services.  The central theme of the book is that in order to have a successful business or non-profit organization, the leaders of the organization must learn about and lead the external environment, the ecosystem of the organization as well as get the fundamentals right regarding internal operations.  This book sheds great light on strategic thinking and the role of leaders of organizations from small nonprofits to large scale conglomerates that seek to have customers all over the world.  This book review summarizes each chapter of the book and provides an in depth look at causes of success and failure among organizations and leaders.


A basic premise of the book is that businesses (and nonprofit organizations) work hard on doing their work better, more efficiently and with higher and higher levels of customer service.  While these improvements are necessary, many organizations fail because they do not recognize or deal effectively with the  outside environment.  Failure results from the organization’s inability to “co-evole” intelligently with one’s overarching business and societal environment.  In order for businesses and nonprofits to succeed, they must become knowledgeable about and be able to adapt to their changing environment/ecosystem.  Many products and services face limited lives.  Understanding the social, technological and economic environment and other major factors that influence an organization’s products and services is essential to success in today’s world.  Without it, failure is certain.

Moore shows by example after example that businesses and nonprofits succeed by developing mutually beneficial long term relationships with others in their “business ecosystem.”  Moore acknowledges that the quality and cost/price of the services and products produced by your organization is very important for success.  But Moore’s thesis is that it is equally important for organizations to create strategies so that what an organization wants to deliver into the economy is intimately related to and supportive of what others are doing and will be doing in your ecosystem.  The implication of this is that strategy making must involve having a keen awareness of the “big picture” and finding ways to play a profitable role in it.  The future of organizations will depend, in large part, on the organization’s ability to establish and maintain co-evolving relationships with a network of other contributors to the overall economic scene.  This is the new paradigm in strategy making and makes strategy and leadership intertwined.

Moore believes that too many executives focus their time primarily on day-to-day product and service-level struggles with direct competitors.  They work “in” the business, rather than “on” the business.

The most effective organizations develop new business advantages by learning to lead economic co-evolution through understanding the economic and social landscape (the ecosystem) and by seeking out potential centers of innovation as partners.  Then their role is to  orchestrate the contributions of a network of players under their leadership.  Executives of successful organizations not only lead their own organizations, but they also lead their current competitors, their industries.  They also serve as catalysts who hasten the coming together of disparate business elements into new economic wholes from which new businesses, new nonprofit organizations, new rules of competition and cooperation and new industries emerge.  In effect, they help transform the entire ecosystem in which they operate.

Moore is clear that industry boundaries are being obliterated.  New organizational leaders are renegades, not respecting traditional industry paradigms and partitions.  They upend business and industry models and redraw increasingly porous boundaries. 

Moore explains that a great deal of leadership and business strategy relies on creating shared meaning, which in turn shapes the future.  Moore says “We are witnesses to the next revolution beyond multi-divisional organizations and beyond the invisible hand.  It is the ability in an environment of immense resources, immense plasticity and powerful information systems to make and break microeconomic relationships with enormous subtlety and velocity.  We are entering an age of imagination.”


Today, executives need to think of themselves as part of organisms participating in an ecosystem.  See Boulding, Ecodynamics: A New Theory of Societal Evolution. Dr. Kenneth Boulding presents a similar discussion dating back to the 1970’s. 

A biological ecosystem involves all organisms which interact with each other, plus the environment.  A business ecosystem consists of all of the individuals, organizations, governmental entities, regulations with whom a business interacts, including customers, competitors, media, etc.  The function of an ecosystem leader is to enable members of the community to move toward shared visions to align their investments and to find mutually supportive roles.

The key to a successful ecosystem is a network of mutually rewarding/beneficial relationships.  Each leader of an ecosystem must establish a core capability that can become the basis for providing real value to end customers.  For an ecological initiative even to begin to make sense, it must promise that dramatic value will be realized by the combination of players and contributions involved.  The key to the ecological leader is to bring forward something of very real value to large numbers of end customers.  The ecosystem leader must invest in and generate returns from an ever expanding community of allies.  The ecosystem leader must rediscover and reinforce his/her own strongholds and strive to establish business ecosystems around them.  The ecosystem leader must tie together his/her stronghold sub-ecosystems to branch out into unchartered waters.  The key to business success today is to identify the “undefended hill” –some aspect of value creation where the niche is becoming important and no player has made a really strong stand.  Leaders commit themselves to putting together the required competencies.  They make the investment and effort required to dominate the niche.  They work with many partners to create a defendable position for themselves and their organizations.


In biology, “mutualisms” occur when one species’ actions help another species.  Often mutualisms occur when competitor’s begin to work together.  This co-evolution of these actions actually aid the competitors in becoming stronger and more likely to survive.  An important lesson this ecological truth has for business and nonprofits is to illustrate the importance of creating and promoting mutualisms.  A second lesson is for leaders to learn that they need to try and convert their organization’s antagonistic, competitive relationships into mutualistic ones.

Moore believes and provides examples showing how real wealth comes from finding new, more efficient and effective ways of doing business.  Such progress can only be attained by understanding one’s ecosystem, broadly defined.  The spaces between status quo, business as usual and its forward looking alternatives are the breeding grounds of primary wealth, for consumers and producers alike.  And the breeding grounds for growth of nonprofits.  The integration of knowing what is needed in your environment, knowing all of the technologies that are available to help the organization develop and deliver new products and services (with a reasonable margin) and the ability to sell into newly created markets brings wealth and sustainability to organizations.  What is usually missing for organizations is the means of designing a workable program that will bridge these gaps time and again with sufficient regularity to maintain a leadership position and to help out the organization when its old products and services are losing their growth trajectory.

A new ecosystem and its paradigm have the power to bring about a fresh consensus in a market about what are desirable goods and services and how to buy them.  The new measure of leadership consists of generating broadly agreed upon “values and influence.”      Leadership requires an expression of and steadfast commitment to key personal values. 

Leaders must become vital members of various organizations within their immediate ecosystems and must also seek to become vital members of other ecosystems.  Leaders, in the business, political, nonprofit and educational worlds all must be keenly attuned to the social and business ecology where they live and work. 

Leaders must seek to create dramatic value to customers, clients, constituents and all stakeholders in their ecosystem.  Leaders must seek alignment of the community around a shared vision of a desired future, work on the road map and identify the key contributions required to achieve the sought after goals. 

These leadership dimensions require a dramatic change in the way leaders do business on a day to day basis.  Leaders must design business relationships to bring in the most powerful players and contributions possible.  Leaders must be the both the producer and the choreographer, working to assure the creation of new benefits for the ecosystem as a whole.

Competitive advantage in the new world stems from knowing when and how to build profitable ecosystems, and from being able to steer them to lasting growth and continuous improvement.  New ecosystems require leaders who can work across traditional organizational and cultural lines to form a compelling vision that transcends company, industry and often national lines.

The key to the creation or leadership of an ecosystem is the recognition of and ability to harness the driving power of its invisible assets, including community goodwill and innovation.  These assets, when tapped properly, translate into legions of creative people and organizations, innovating, co-evolving and extending the influence of the organization and its leadership over the entire ecosystem.  Leaders must become ultra-sophisticated at developing business models for their respective organizations, communities and ecosystems.

Innovation requires customers and supplier partners to work well together.  This places a premium on learning to manage a very wide community or network of organizations, in which all the players share a vision about how to make the innovation happen.  Indeed, the major factor today limiting the spread of realized innovation is not a lack of good ideas, technology or capital.  It is the inability to generate, manage and command cooperation across broad, diverse communities of players who must become intimate parts of a far reaching process of co-evolution.

To create innovation one must be conscious of two arenas – what your organization provides in terms of goods and services (your direct contribution) and the preferred ecosystem itself after the leadership of the ecosystem has transformed the industry. 

Moore, building on Porter’s work believes there are seven levels of competitive advantage:

1. customers
2. markets
3. product/services
4. processes
5. organizations
6. stakeholders
7. government and society

Rubenstein and Grundy add “industry mindset” to this list.  One who best understands an industry mindset and its current limiting effects, will have a competitive advantage over those who just take for granted that that’s the way things are (and will be), without challenging this mindset.


New value is created by creatively linking business elements with symbiotic relationships.  Early business ideas galvanize a small number of supporters, who inject additional ideas, capital and if the ideas can demonstrate benefits, this process will cultivate still more support.  As it grows, more and more players take their roles in a newly forming and expanding ecosystem.  The plan has to anticipate them and have the role for them.  Leaders must anticipate what needs to be done to take their ecosystem to the next level.  Leaders need a plan for their organization’s own products and services and they must seek to develop a plan for their entire ecosystem. 

A simple example of this occurred in 1998, when a great cabaret singer came to Growth Strategies, Inc. to assist her in improving her career in Washington, D.C.  Because she had small children, she would not travel extensively to support her career.  After analyzing the situation, GSI became acutely aware that there was not really very much cabaret business in the D.C. metropolitan region.  Therefore, GSI’s first job was to work toward getting cabaret, itself, more strongly entrenched in the Washington metropolitan area.  Our client, joined up with others, formed an informal association of cabaret singers and began to try to stimulate demand not only for her talents and skills, but also the talents and skills of her “competitors.”  One year later, on the front page of the Washington Post “Weekend Section” was the story of the “New Cabaret Scene” in Washington.  Having built up a “business ecology” through working with her competitors, the budding cabaret singer then had a much better chance for success in the Washington metropolitan marketplace.

When a company or organization is just starting out to make a name for itself where there is already some form of a market for its goods and services, the organization should start with precursor products which are specifically designed to draw customers into a co-creating, co-evolving relationship with the company or organization.

In the new ecosystem one needs:

1. A supply chain
2. Complimentary products
3. Identification of customer and lead supplier competencies
4. Identification of capabilities
5. Identification of potential relationships
6. Make excellent choices about how and when to establish these relationships.
7. Take the initial set of starting elements, elaborate upon them creating a rich community of interdependent organizations.
8. Sequence all activities properly.
9. Be knowledgeable about and sensitive to the current state of capability within an ecosystem.

Moore, then presents his basic framework for the stages of organizations.  The stages are a very useful analytical framework since strategy decisions will depend in large part as to what stage an organization in currently experiencing.  The basic stages are:

1. Pioneering (Vision) – when the basic paradigm of the ecosystem is being worked out.
2. Expansion (with the goal of market domination) – when the community broadens its scope and consumes resources of all types.
3. Authority (and the inevitable challenges to authority) – when the community architecture becomes stable and competition for leadership and profits within the ecosystem gets brutal.
4. Renewal (or death) – when continuing innovation must take place for the community to survive or death.

Each stage has particular developmental challenges.  Each stage requires particular talent and resources to resolve.  In each stage, leaders define and redefining cooperation and competition differently.


Stage One – Pioneering/Visioning

Leaders must identify particular seed innovations that will create radically better products and services.  The goal at this stage is create proof of concept, unmistakable evidence that your organization (or you personally if you are the sole inventor) have created a viable and exciting alternative to the status quo.  One must create value that is much superior to the status quo, sometimes 10 times the value of status quo products and services, either in cost cutting or in top line benefits in order to gain quick, widespread acceptance.

Leaders at this stage must integrate resources in new combinations and redefine the nature of the value for the customer.  Leaders must establish the capabilities for creating value more effectively than any other approach that is currently on the market or will be coming to the market in the next six months. 

Leaders must have a strong supply and a strong value chain.  A value chain is the set of activities required to produce a product or service and get it to market where each part of the supply chain adds more value to the final product or service that exists in previously developed value chains.  Leaders must benchmark their organization’s capabilities. 

Leaders must ask themselves what opportunities are there for dramatic product or service  improvements in their industries and nonprofit sectors.  They must ask what performance dramatic improvements can be obtained from the workforce, machinery and financial capital.  Leaders must be able to recognize all of the direct and complementary capabilities that are currently not being tapped to their fullest in their organizations and ecosystems including:

 technologies
 customers and customer segments
 markets and market segments
 regulatory regimes

Leaders who can conceptualize “value chaining” then are able to develop and implement the right strategies for mixing and matching capabilities, processes and organizations to invent new offers, capabilities, networks, and eventually, new ecosystems.

The key to this stage is designing and implementing an offering that customers will desire at a price point that makes it profitable for your organization to deliver the goods or services in large quantity.  As a former President of Battelle, a multi-billion dollar nonprofit used to say at the start of every meeting: “Battelle is a not for profit organization, but it is also a not for loss organization.” 

In stage one, the visioning stage, leaders must be somewhat protective of their ideas, while at the same time learning everything they can from others.  This protectiveness gives way to strong, evangelical spreading of these same ideas in Stage two.

Stage Two: Expansion of an Ecosystem

At this stage, a leader has developed an ongoing operation and has established proof of concept and proof of profitability (or proof in the nonprofit that funding is available and cost overruns won’t break the bank of the organization).  Leaders at the beginning of this stage need to begin to identify a core set of synergistic relationships and invest in increasing their scale and scope, just as the cabaret singer did earlier.

Leaders and organizations know that expansion is a must for survival.  Leaders and organizations identify and find cost effective ways to meet demand.  They stimulate demand by advertising.  They link up with appropriate suppliers or tie up available supply of key components or related products and services and make sure that the ecosystem begins to support the leader’s position. Leaders and their organizations must identify how much demand exists in their natural market.  They must know what other products and services are entwined with those offered by your organization.  In order to achieve market dominance, the organization must design a system to meet all of the demand for the organization’s products and  services.

The first rule of stage two is to plan adequately to establish a critical mass of sales and activity within whatever market boundaries within which the organization plans to participate.  At this stage leaders must beware of the inter-ecosystem struggles for potential customers, suppliers and partners.  At this stage an organization’s goal must not just be market expansion.  It must be market domination.

Stage Three: Authority and Challenges to Authority In An Established Ecosystem

One result of stage two is that your organization becomes part of the establishment, if not the establishment.  Such organizations and its leaders must become central to the communities it serves.  One’s community at the end of stage two must broadly defined. 

As stage two merges into stage three, the architecture of the new ecosystem and its communities becomes more fixed.  The agreements and relationships among the participants that compose the business ecosystem become fixed reference points around which the community organizes its work.

Those organizations which have achieved great success in stage two, have done so, in part, because their leaders became original members of the new establishment, the new ecosystem.  Early in stage three, the goal is to maintain one’s authority within the business ecosystem.  Leaders and leading organizations must maintain and fortify their ability to shape the future direction and investments of the ecosystem’s key customers and suppliers.  Leading organizations must maintain bargaining power over other members of the ecosystem.  In stage three maintenance and defense of authority are the key challenges for the leader.  Dominant designs are product, service and process designs that become the industry standard and are widely accepted and built upon by others. 

Stage Four: Death or Renewal

Stage three, which will be revisited below, involves significant, inevitable challenges to the leader’s and the organization’s authority.  Stage four is where the sands again shift very quickly for the organization and its leaders.  Trends like deregulation and diffusion of technology are increasing the rate of improvement and transformation in business and often dislodge leaders and leading organizations who do not keep up with technological progress.  For every successful, established business ecosystem, there are dozens, if not hundreds, of entrepreneurs plotting to create new alternative ecosystems that will blow it away.  They will often use new technological developments to give them a competitive advantage over the stage two winner.

The key challenge in stage four is continuous product, service and process improvement.  All leaders and organizations must focus their attention and investment on creating networks of competencies and relationships that will meet four tests:

1. Establishing a system and sequence of symbiotic relationships that result in the creation of something of real value relative to what else is available.
2. Establishing critical mass as the ecosystem expands across the available customers, markets, allies and suppliers.
3. Lead innovation and co-evolution across the ecosystem.
4. Ensuring that the business sustains continuous performance improvement to avoid becoming obsolete.

Both cooperation and competition are important in the ecosystem.  A holistic approach to leadership required is the shaping of co-evolution.  In the renewal stage, leaders must look beyond the industry in which they operate for innovative contributions.

Mastering business evolution means to influence the future.  Companies need to become able not simply to operate their current business models but to envision those of the future.  A company must marry ideas of what to do to meet customer needs with ideas of how to do it.  An ecosystem takes a mixture of factors – technological, capital, managerial and regulatory to survive.

Stage two is the dramatic expansion battle.  The pioneers of an ecosystem who continue to lead in stage three must lead from principles and continue to create products with increasing value. 


Skillful planning is required to anticipate needs and the problems that lie ahead.  One way to look for new product ideas or service ideas is to track surprising, and even renegade uses of technologies, such as Napster.  The ultimate aim of leading business strategists is to manipulate predictably the assembly rules of business ecosystems.  The fundamental cycle of entrepreneurship is the conversion of ideas and opportunities into value for customers and profits for investors.  In researching and strategizing one must establish a program of directed learning that is able to reflect deeply upon the “experiment” as it is being undertaken.  Leaders must seek in stage one to understand value creation within the context of the new possibilities.

In Stage one, the leader must find a set of interdependent relationships in which to participate in the creation and realization of the vision.  Stage one participants must establish a center of learning and experimentation.  Leaders  must be able to articulate the dream.  Stage one is where the visionaries galvanize customer support and participation, creating “pioneer customers.”

In stage one, an organization’s business or strategic plan must identify major trends in the industry or industries that are leading up to the success of the organization’s proposed venture.  The business plan should identify why the leaders of the organization are uniquely suited to accomplish what others are not even trying to do.  The leaders must be shown to be experienced in a way that directly enables them to be able to implement the business plan successfully.  The business plan must conceive of a particular set of resources and relationships that, if put together, would be far superior to what is currently available in the chosen market.

In stage one, it is important to choose customers and customer segments that support learning and improvement.  Microsoft’s use of thousands of “beta testers,” free volunteers who found bugs and contributed billions of dollars of value to Microsoft as it created new software products, was a brilliant use of this strategy. 

Stage one customers must realize that the organization is beginning a new venture and all of the bugs will not be worked out from its inception.  There must be intense customer interaction to learn from the customer.  Customers must be faithful.  Leaders must create a buzz or early customer interest.  There must be a goal early on to land a key name or what is called a “reference-able” client.  This is not easy.  Jack Biddle of Novak and Biddle Venture Capital Funds states that it takes a start up $100,000 in marketing dollars to land a significant first order from a Fortune 100 company. 

Customers and the innovators must perceive the dramatic potential of the innovation even during the embryonic period when it is only partially formed.  The press, media and what leaders write for public consumption in magazines, journals, on websites and newsletters is critical to success of the Stage one establishment of an ecosystem.

It is important to have the organization’s innovation trajectory well planned. Initially, the organization can offer precursor products.  Stage one products are not the final products/services in terms of quality or functionality.  However, these products and services must be very valuable in their own right.  The product/service must be able to be easily incorporated in the world of the customer, with the customer bearing little risk at this stage.  The problems and challenges that customers are experiencing must be clearly stated and the solutions offered by the organization must be specifically tailored to their needs.  The price must be within the customer’s tolerance level for spending on solving the problem.  There needs to be a clear plan for product and service improvement that the customer can believe in so that the customer buying your product, in part, is buying it for what he or she is now receiving and in part for the expected future benefits of the new business relationship.

Stage one must be characterized by a quick pace of product and service improvements.  These improvements must be planned and they must be phased in.  Assets and activities must be deployed in the proper manner, adding increasing value over time.  The technology employed must be reliable and certain, yet newly available and state of the art.  Suppliers of material and financial capital must have trust in the organization and be eager to serve the new market.  Suppliers must be capable of rapid expansion.

At this stage one must invest in business processes that can eventually be scaled up.  In stage one, leaders must document all business processes in writing as they are being designed and when they are changed by implementation forces.  Stage one organizations take a mock up of their services and products to potential customers.  Stage one organizations may use beta testers or give their products and services away for free in exchange for guaranteed feedback.  This feedback is essential since it allows the organization to reflect, experiment, get more feedback, experiment again and keep the process moving in a scientific manner documenting all inputs, reflections, modifications and new products/strategies that result from this process.  As the initial designs are implemented, the organization will converge into traditional business processes such as product/service development, marketing, sales and customer service.

One of the most important strengths in stage one is generated by the amount of business and organizational process knowledge that is carried around in the heads of leaders.  At some point, this knowledge must be put in writing, in process form and communicated to trusted others.  Then, as the organization grows, organizational differentiation (different people doing different things) must be established in an orderly way, without turf battles.  At this stage the organization must demonstrate sophistication in a manner that insures that the community knows that your organization, now a  stage one leader, is going to go somewhere.

Leaders must now begin to establish an organizational architecture that promotes creating allies and strategic partners.  Usually new ecosystems emerge on the edge of a current one, or are grafted upon it or come about because of a transformation of some aspect of an existing business or industry.  Stage one ecosystems depend on the generation and co-evolution of multiple new organizations.  Thus, a key part of the stage one challenge is to come up with an initial architecture that gains the stage one ecosystem support it needs without unduly swamping it or distorting its operations drastically from the original vision.

Partners, suppliers and customers must work harmoniously with each other under the leadership of the organization seeking stage one success.  The network must be guided and be able to learn together.  The system of governance must be fair and powerful and disputes must be arbitrated quickly and efficiently.

The lead organization must provide the structure for the alliance among the players.  The lead organization must provide end-to-end performance oversight.  The lead organization must make sure that a key portion of the value it creates cannot be replicated easily by others and is not a likely future target of successful competitors.

Strategic partners at this stage are created with written agreements that call for joint activities and a sharing of risks, rewards, roles, responsibilities and investments.  In the for profit world, one can use allocation of ownership interests and other forms of business relationships to cement relationships with key supporters.  In the nonprofit world, revenue and other resource sharing agreements can be the glue that forges a strong bond between and among nonprofits. 

At this stage, identifying and working with key stakeholders is critical.  Five conditions define the ideal stakeholders:

1. They must be real movers and shakers in the broader environment and marketplace.
2. Their support must preclude involvement in competing ecosystems.
3. The collaboration and effort they will give to the stage one organization should be central to their overall interests.
4. Each stakeholder must have complementary, rather than competing interests.
5. There must be a shared ethic that allows all stakeholders to work together without anyone cheating the other.

Ultimately, the stage one organization’s leaders must decide how to lead the revolution.  Strategy and tactics must be mapped out to recruit others to help create a full, rich ecosystem.  How others are recruited and enrolled has important implications for the emerging architectural structure of the ecosystem and the ability of the organization to move successfully from stage one to stage two..


Colonization – the process whereby an initial community of pioneer species transforms itself into a robust, dynamic ecosystem.

The readiness to sustain itself through slow periods of growth and limited cash flow and the ability to expand rapidly are the two critical issues early in stage two.  An organization needs the ability to scale up the ecosystem to provide value to a broad base of customers.  It must be clear on the long term value of the new product/service. 

Organizations must be able to deal effectively with the problem that in order to use the product or service the “start up” costs (be they financial or learning” may be prohibitive for the customer, the suppliers or even the stage two growing concern itself.  This can be especially true for the organization if its products and services generate value over the long run, but the costs/expenses associated with producing these products and services are generated primarily in the short run.  Sometime it makes sense for one of the larger members of the ecosystem to subsidize the entry of these players with some sort of long term loan or capital investment.   Although the new organization seeking to dominate a field may have to give up some of its financial return, power or decision making authority, such financial support may be essential to help keep initial costs to customers reasonable in the early stages of expansion.

Stage two expansion has tripped up many an organization.  It is one of the reasons why the distance from “founder” to “flounder” is often a very short distance.  Leaders of stage two expansion must be process, quality and mass production experts, even in the se service industries.  Organizations at this stage must be able to replicate value over large quantities.   Quality control must be built into all systems and must include tests that show that the product or service is of consistently high quality.  How do you guarantee high value results every time?  One approach is at first, limit supply to the deeply committed customer.  Have a waiting list.  Have measures/criteria to cull out the best prospects for customers.  Be able to grow rapidly, but make no mistakes that cut quality.

Key questions at stage two rapid expansion include:  How to achieve great economies of scale?  How to insure that profits will be reinvested wisely in expansion and growth?  What do you outsource?  What are the right activities and right sequence of initiatives to expand the ecosystem without wasting a lot of time and energy.

During stage two expansion, key challenges to an emerging ecosystem are:

External – –

 How do the leaders differentiate our ecosystem from current ecosystems?

 One answer is to pay special attention to the sequence of customers, markets and products pursued.  Leaders must know the buying needs and attitudes of early and subsequent customers.  The ecosystem stage two leaders now lead must adapt to serve these existing groups as well as create new groups of customers.

Internal – –

 How can a stage two organization avoid  imploding under the heavy burden of growth?

 The best answer is that scaling and replication require well designed, standard processes and well managed organizations.  Also, finding the right capital at the right price with the right set of conditions attached is critical in stage two expansion.

 Growth requires establishing marketing channels that are guided by your organization and have allegiance to it. 


An organization’s product or service should spark a personal revolution.  The ecosystem the organization’s leaders build must foster excitement and opportunities for individuals within the system, and for customers.  To remain vital after the beginning, a species of products must be developed, all complimentary, yet diverse.  These new products can not all be envisioned in the beginning of stage one.  Often new value (product) is identified and pursued by outsiders who come to the ecosystem seeking help for their own purposes.  Outsiders become insiders.

Leaders must create a framework for participation.  Expansion is fundamentally about getting new partners to join the economic opportunity.  Expansion is only secondarily about growing one’s organization.  Partners help to fill out and enrich the ecosystem’s total package of value and by having partners, leaders keep them from joining or forming another ecosystem.

An ecosystem must have an openness to allow contribution, to allow those to see the opportunity and propel themselves with motivation to join up.  Evangelizing is the key way to do business for leaders of stage two organizations.

Leaders must decide, in all stages, who else needs to be involved, find ways to recruit them and maintain structure, incentives and fair play in the community.  In growth organizations, then a key question is how will others, be invited and allowed to participate?  Holding on to all power and decision making authority is the wrong medicine for growing organizations, especially in stage two growth.  Leaders must create the framework for participation that draws in and coordinates the efforts of disparate actors.  The ecosystem must be so attractive that people and companies and resources self identify themselves for inclusion and seek out the leadership.  The leader must be open to suggestions from others about new directions to move with the new resources.

One must establish a strategy for long term leadership and involvement of the newer partners. 

What is a new ecosystem that becomes well molded as a result of stage two growth?  It is a new framework for cooperation and co-evolution – a new set of synergistic relationships which is formed and maintained and provides competitive advantages over alternative arrangements.  Leaders know how to adroitly utilize existing ecosystems to provide powerful advantages to this new ecosystem, this new set of relationships. 

Leaders must define the stakeholder groups  broadly.  Leaders must understand the full extent the organization is part of a larger ecosystem, with linked products and services.  Learning this external information must be part of the organization’s formal research and development strategy.


The business or nonprofit microclimate – – that little sliver of the market where an organization  starts, provides protection for the organization.  Leaders know to start small and build an ecosystem exquisitely tailored to specific micro-conditions. Ecosystems benefit from wide membership, scale and continuous innovation. Ecosystem to ecosystem battles permeates stage two competition. 

To win an ecosystem match your ecosystem must:

1. Be higher performing
2. More diverse
3. More robust
4. Master the distance effect-metaphorically nudging your ecosystem closer to other potential participants and encouraging them to contribute.
5. Inject diversity and richness as you grow in size.
6. Make better links with other ecosystems, accelerating the growth of a world of mutually beneficial relationships.
7. Create and defend ecosystem boundaries, building them where none exist and shoring up those that do.

There are three ways of establishing defensible boundaries:

1. Find ways of deeply involving customers in your ecosystem.  Encourage psychological identification and membership, day to day dependence and recurring, regular engagement.
2. Dominate the market and the marketing channels.  Absorb all the demand with a market and set the prices of the organization’s goods and services as low as possible to keep others out.
3. Create offers that provide total solutions, which meet all of a customer’s needs in a particular category.

Leaders can identify all potential sub-markets and know how to partition the market to serve each sub-market with exactly what it wants.  Since stage two is characterized by rapid growth, it will not be even.  Stage two organizations need to store ample cash and have ample lines of credit to offset temporary downturns and allow for rapid expansion

As the organization expands, its leaders must learn to manage remotely.  There are three key elements to succeed in managing remotely:

1. Build a set of incentives and measures that ensure the commitment of employees and managers.
2. Manage communication and information throughout the network, including shared learning.
3. Establish efficient distribution systems that allow for joint purchasing, shared facilities, a network of networks.

Stage two rapid expansion supports stage three success.  It gives an organization both authority and a leadership mantle.  Wal-Mart began to tell its suppliers how to price, how to sell, how to be managed (parallel communication systems, etc.) and established joint ventures with suppliers such as electronic ordering systems that linked the two and kept out third parties.

To create boundaries around your products and services, an organization must create close connections to customers so they will not accept the incentives of competitors. 

The goal of every organization and its leaders must be to add value to people.  The current goal of the University of Chicago, created by its new President, Don Randall, is to reduce pain and suffering on the planet.

When a business ecosystem is powerful enough to reshape the social ecology of a local community (or a national community) what responsibilities does it have?  How much does it have to contribute to charities, improve social welfare, employ the community, continue with losses in some areas?  These are questions leaders of organizations will face in stage three.

Since success is ensured by the designing and building of an ecosystem in which the organization and its leadership thrives, the business case has been made by organizations must invest in relationship building, conduct public campaigning, contribute to the knowledge in their fields and support their communities.  All this is necessary to be at the center of the ecosystem and to succeed.


The “red queen effect” is a principle that states: for an evolutionary system, continuing development is needed just in order to maintain its fitness relative to the systems it is co-evolving with. (Source: Principia Cybernetica Web).  See also, Escaping the Red Queen Effect, by Stuart A. Kauffman, McKinsey & Company, Inc.  The McKinsey Quarterly, 1995 Number 1, pp.118-129 this article can be found at:
While quantitative growth will continue in early stage three, qualitative, structural change within the organization and the leadership of an organization slows down dramatically.  Products and services, business processes, and organizational arrangements have become established and are harder to change.  The architecture of the community has emerged with stability.  This stability has a profound consequence for leadership and strategy-making.  Once an ecosystem becomes stable, new entrants with new processes, new technology, new value propositions, new visions begin to jostle for position in the ecosystem.  As fresh participants join the ecosystem, rancorous leadership struggles may erupt when the interests of traditional leaders and the new combatants drift apart.  These leadership battles may erupt first internally within the leading organization, or may come from challenges to the organization from outside.

From the standpoint of the leaders in stage three, competition within the ecosystem and within the organization itself heats up with leaders vying for leadership and bargaining power.  Innovative leaders become frustrated by the increasing stability and resistance to change of the ecosystem architecture and the squeeze on margins.  They fight.  Moore says “Cooperation becomes ever more important in these intramural squabbles.”  Yet, it becomes more scarce.  In stage three the rules of competition and cooperation change markedly from the previous stages.  Allies fight.  If the leader stops driving innovation, the leader’s power will erode quickly.  If the leader pushes innovation too fast, the system will either resist the drive for change or buckle under the competing pressures for change and stability.  Longtime incumbent contributors (near leaders) will try to hold onto their declining businesses.  However, as the ecosystem strains more and more (demand declines) they eventually cut back, downsize, retreat and move from vertically integrated companies to disintegrated companies via outsourcing, spinoffs and other strategies. 

Leaders in stage three – challenge to authority – are faced with a critical question: How does a leader keep expansion and innovation percolating in stage three in spite of the pressures for stability and the energy that must go into defending the organization from attack? 

To do this leaders must:

 keep the entire ecosystem innovating
 keep themselves beyond reproach
 insure that their organizations can not be attacked for financial irregularities or other illegalities
 ensure that retention of employees remains high and continue to improve the value proposition for their products and services
Customers in stage three are constantly learning and becoming more discriminating.  New alternatives are popping up. They can reduce their reliance on the dominant leader.  Thus, in stage three, ideally, the community gets more value for its money.  The ecosystem has more money and capital, more talent, players and new ventures are launched every day.  At this stage only new innovation that substantially improves the performance of the ecosystem will continue to fuel large scale growth.  In a biological environment, all plants, species, etc. are evolving, becoming better and if one is not improving, it will be taken over by the other improving plants, animals and become extinct.  This is the red queen effect.   Innovate or die is the motto of the jungle.  Unfortunately, 2002-2003 shows us that often when companies or nonprofits can no longer innovate to create value for the customer, they begin to manipulate the financial books and records and if caught, quickly go into a downward spiral and lose their leadership position in the stage three ecosystem.

In stage three, cost cutting, in the categories of sales, administrative and general costs, is a way to stay ahead for a while.  It is merely defensive.  Cutting prices and maintaining margins is the goal.  But it is a short run solution.  Big firms, IBM, Apple and Sony always take a new look in this stage at cutting the burdensome cost structure associated with market development and expansion.  Outsourcing and retreating to their core competencies are typical choices in stage three for the big players.

But there is a limit on this type of activity.  The winners in stage three are the companies that learn how to influence the structure and evolution of their business ecosystems and opportunity environments.  Clear cut winners and losers emerge in stage three.

The keys to becoming a winner in stage three are improved value position and maintenance of bargaining power with customers and vendors.  To win an organization and its leaders must be vital and essential to customers, the community and the ecosystem.  The products and services offered by the organization must now become a “necessity.” High bargaining power comes from having something the ecosystem needs and from being the only practical source.  A patent, location, reputation and brand, quality differentiation, enhanced customer experience or the lowest price can give organizations the sole-source protection they seek.  Advertising,  product knowledge and precise trademarks help loyalty.  But generally constant innovation in creating value which is critical to the whole ecosystem is the key to success in stage three.  An organization, be it a nonprofit or for profit, must achieve “price/performance improvement” to be successful.  To obtain high margins, your organization must set the standard in the ecosystem.  To sustain high margins, the organization must differentiate its products and services in tangible, recognizable ways and continue to build relationships with thousands of other businesses and customers.

The major potential sources of bargaining power include:

1. Developing an innovation trajectory and economies of scale;
2. Criticality–making sure that your contribution is valued with distinction by the end customers as well as other members of the ecosystem;
3. Embeddedness–the marrying of your own products, business processes and formal and informal organization with those of the rest of the ecosystem.  To accomplish this, an organization must work with the other firms to advance the structure and conventions of the ecosystem and continue to improve the framework of cooperation and co-evolution.

Thus, a key question in stage three is “How can your organization develop an innovation trajectory where offerings keep improving over time through performance improvements and improved customer service?”  This requires the orchestration of many individual and organizational capabilities, a plan, a timetable and a total understanding of all new, available technology. 

Embedding is a strategy that organizations use by making other products rely on yours, joint production, marketing, a marrying of your product to the industry.  An organization must have a permanent campaign to reinforce criticality and embeddedness.  Innovation trajectory + criticality + embeddedness = bargaining power, stable, growing revenues and high gross margins.


Stage three success is the result of a permanent campaign in several distinct areas:

Customers – Have a campaign to teach your organization’s current and potential customers about the contribution your products and services make, how they create value in people’s lives.

Markets – Dominate them.  Invest in capacity building. 
Offers and Processes – Create relationships with other firms, being very important to each link you create.  Be at the center of each activity.  Lead when you can; follow when you should.

Organizations – Invest in building understanding and appreciation among members of the wider business and political environment.  In order to be a strategic planner, one must get a grip on the whole business, the whole evolving ecosystem, where it is and where it is headed. 

To be a leader of an organization, one must give speeches and tell the story of the organization over and over.  One must also deal with those who have competing ideas about where the future of an entire ecosystem is headed.  These competing visions have dramatic consequences for the margins, and the power of the respective players.

As one does strategic planning in any industry ask:

1. What are the current and most likely future organizing paradigms for products and services in this sector?
2. What constitutes a total offer?  What roles do various companies and individuals play?
3. Who are the thought leaders and what are their interests?  How do the leaders of our organization become thought leaders?
4. What assets and capabilities do the current leaders possess?  What assets and capabilities do the future leaders need to possess?
5. What do these qualities tell me about how they will seek to shape the future products, services, processes and organizational arrangements in this environment?

For your own organization ask:

1. What is our own capacity to contribute?
2. What core capabilities for continuing innovation do we have that might help this ecosystem and its members attain its goals?
3. How unique is our potential contribution?  How differentiated is our product or service?
4. At what rate can we improve it over time?  What processes will help us improve it faster?
5. What sorts of competitors and substitutes will we face who are either striving to take our organization’s leadership role or trying to prevent us from achieving a leadership role?

Thus, in each stage, a leader must:

a. Design the role for one’s self and your organization.
b. Design the role for your inner circle of advisors who advise your organization and you personally.
c. Design the role for all those necessary to meet the vision that you and your organization have.


Stage three challenges yield inevitably to stage four results – renewal or death.  Rising new ecosystems and innovations imperil mature business communities.  Leaders and organizations may have slowed down the innovation process too quickly and not kept up with new technology.  Customers may have  changed buying patterns. Government regulations may have changed.  For many reasons, stage three can leave companies in a position where it appears that they can not effectively compete any longer in the new world.

New leaders pop up in stage three.  They bring primary colonization skills to an uncharted landscape.  They purchase assets cheaply in a dying ecosystem and reuse them.  They bring in increasingly vital talent to their organizations who seek to challenge the existing stage three survivors.  Their organizations may be in stage one themselves, but they are a potent force.

In stage four an organization often has to aggressively refocus itself on those markets and economic micro environments that best suit it.  By reducing overheads, by focusing resources, by targeting the appropriate niches, ecosystems may extend their life.

There are several key strategies for dealing with stage four issues:

Organizations need to survey the opportunity landscape and understand the current power players and their interests and assets.  Assess their alternative visions for the future in the following ways:

a. What is the new regulatory situation? (e.g., Sarbanes-Oxley)
b. What is the overall condition of the sector of the economy?
c. Who are the customers?  How are products/services sold today and in the foreseeable future?
d. How are offers made to customers?
e. What are the prevailing prices for goods and services both in your organization’s supply chain and for the finished goods and services that your organization puts into the marketplace?

Develop valid information about the performance of the whole business ecosystem.  The following questions must be answered:

a. What is needed and what value is to be create if this ecosystem succeeds?
b. How can this be measured?
c. What factors are required for success for all of the partners in the ecosystem?
d. How might these factors be influenced to improve performance?

Leaders must organize themselves and their campaign so that they can impact the critical aspects of the business ecosystem that require transformation.  Leaders must address the whole problem and need a charter to take responsibility for the most important sets of co-evolving factors and actors.  Leaders must rebuild their powerful platform of influence in the ecosystem.

In stage four, true breakthroughs come through investing in the collection of information and the generation of knowledge and insight that sit conceptually above organization-specific paradigms.  They encompass the visions and expectations of how the future ecosystem in a particular area will develop and grow.  Leaders  must develop a strong analytic framework that helps them understand the evolving ecosystems, their relative strengths and predetermined picture of the future.  Only by standing above the fray can one be able to glean ways to invest to improve gains for customers and foster the conditions for renewal of the organization and the ecosystems.

In stage four, key questions for any analysis of a current ecosystem include:

1. How does our organization measure success?
2. How does our organization properly establish the scope or boundaries of the ecosystem being transformed?
3. How does our organization identify, understand, and affect the actual creation of value in each ecosystem?
4. How does our organization evaluate a portfolio of possible investments in ecosystems across the landscape?


Stage four requires new measurements of success. It is a challenge to gather accurate measurements of the performance of an ecosystem.  And it is an even greater challenge to measure the performance of an organization as a whole.  Statistics measure discrete activities, not value or performance of an entire organization.  How does your organization measure performance or value as the customer experiences it?  How often does your organization have access to these measurements and at what is the cost of producing them?


Leaders create a business or nonprofit ecosystem, one that must be renewed to survive.  It must gain new sources of innovation and value creation.  These innovations must exceed the performance of the alternative ecosystems it will compete against.  Informed leaders must describe how the new innovations will work, how they will create value.  And leaders must decide how this innovation will lead to a continuous innovation trajectory that will drive the transformation and renewal of this ecosystem. 

Leaders must consistently ask the question: Is the ecosystem reform worth the effort?  Would  time and money be better invested in a new and alternative ecosystem?  Compare the costs and benefits of renewal and the costs and benefits of new and emerging business ecosystems based on dramatically different approaches.  This comparative analysis allows us to make a determination of whether to invest in renewal or in alternative ecosystems.

In general, value is theoretically high, but practically low in stage one. Value is high in theory and practice in stage two. Value increases in early stage three, but at a decreasing rate. Value is either renewed or plummets in stage four. (Note the huge losses that United Way suffered in early stage four over the past several years).

When an organization is in stage four, leaders must determine whether they, with the support of the remaining ecosystem, can turn up the value-improvement trajectory again.  This will usually require either selective or wholesale insertion of new ideas, technologies, value propositions and approaches.

In order to organize for action in stage four, leaders must create a portfolio of initiatives, balancing investments in old and new ecosystems to maximize one’s chance of effective positioning for the future.  The old and new ecosystems may share resources, assets, and support each other.  Thus, leaders take advantage of the creative opportunities presented by the coexistence and co-evolution of such multiple centers of synergy and vision-sharing ideas, stimulating constructive competition and adapting to varying market segments and economic microclimates.


Stage four change requires respect for the magnitude of the task and the investments required.  One must be knowledgeable about the contributions the stage four organization has made to the world, yet understand fully that their methods are becoming obsolete.    Strategic plans and strategic planners teach the organization how to succeed.  They do not attack the old ways.  They help organizations transform themselves to be ready to adopt new, higher value approaches.

Leaders in stage four must ask the question: What are the talents and resources required to accomplish large system change or reinvention?  Leaders and strategic planners in stage four  must undertake the following:

1. Detailed financial and technical analysis of sunk investments and their ability to contribute to the future of the organization.
2. Successfully present the organization’s ability to change to other large-scale organizations interested in assisting the organization in implementing change, in persuading customers, vendors, new board members and other individual members to embrace the new paradigm for the organization.  These are different skills from market development, people development, and management.

The sheer magnitude of the task of converting the old requires a person who can give hope and structure to the mission.  Leaders in stage four must engage all of the stakeholders and participants to come together with a heartfelt devotion to doing something arduous.  This can not be a time for excuses or “can’t do” leadership.  Resource constraints, including lack of money, human capital or strategic partners can not be used as a scapegoat for the organization as it seeks to reinvent itself into something bigger and better than it ever was, when it had money, human capital and strategic partners.

Stage four leaders must find an organizational platform that lets them address the full dimensions of the ecosystem, as well as the wider opportunity environment.  To lead and manage effective change, one must:

1. modify consumer attitudes and behavior
2. modify employee attitudes and behavior
3. reshape offers
4. reshape processes
5. reshape organizations
6. address and satisfy stakeholders
7. reshape markets
8. understand exactly the regulatory, policy environment and consider the relationship of the new ecosystem to society’s values.

If educated consumers lead the way, who is there to educate the consumers?  The answer, of course, is the stage four leader.


Strategy and strategic planning comprise the art of bringing values and resources together to influence and shape the future.  Leadership is the new challenge.  One’s ability to influence the future is the measure of leadership.

Organizational learning and large system change requires a holistic approach based on a clear analysis of the most minute details of the organization, industry and ecosystem.  All this leads to the paradox:

An organization can become more ambitious than it has ever been in changing itself and its ecosystem, effecting a large system change.  At the same time when boldness is a minimum requirement, using this process reminds us, and humbles us, about our somewhat limited abilities to manage, change, transform these extended systems, ecosystems, interlinked, hyper-linked industries/governments/socio-political relationships, in any conventional manner.  Leaders should be in awe of the magnitude of the job, yet not deterred from seeking to find and exercise the right levers to drive major change.

Leaders are newly empowered in an era of environmental and social challenges and change due to new communication and analytical technologies.  Leaders can now imagine wholesale improvements in an industry and ecosystem and create immense improvements in value for millions of people. 

Some leaders may not yet have the authority or resources, yet want the responsibility to make the changes, to realize the vision.  Every serious leadership position requires shouldering responsibility and then creating a campaign to achieve influence.  No serious challenger initially comes with the authority on the scale required to achieve the change sought.  There are too many independent players coevolving in networks.  There are too many communities with varying levels of leadership (or non-leadership) governing or influencing their behavior.  All must be moved into a new ecosystem to replace the previous ecosystem.  This is the new role of a leader.

We are coming to the end of the supremacy of the engineering point of view that has dominated management thinking and has been so successful.  “The best way to predict the future is to invent it,” says Alan Kay of Xerox.  But, few can accurately predict the future and even those few need substantial assistance to invent it. 

Leaders are now embracing pattern recognition, anticipation and shared responsibility and influence as key steps to influencing or inventing the future.  They realize they need to take action on many dimensions and be more responsive to their environment, their ecosystems and the coevolving capabilities of other members of their ecosystems.  They listen first, understand second, plan third and lead fourth.  They use the new management formula: Recruit, Organize, Manage, Deploy (ROMD).
How do organizations and individuals balance their interest and their imperative to shape the future with a prudent respect for the limits of their abilities to do so?  The answer lies in how organizations and leaders build a personal and organizational ecology of leadership.

The Relationship Between Strategic Planning and Personal and Organizational Leadership

Given that the business and nonprofit organizational environments are not going to slow down, leaders and strategic planners must ask, “How do I and how does my organization increase my personal (organizational) capacity to cope with the external environment, to lead it, to prosper in it?”  “How does the leader and the organization develop a strategic plan to increase the organization’s ability to stay in the center of the game?”  How does the leader and organization continually improve personal and organizational capacities for judgment, action and creation of value at an ever increasing pace?”

For the individual, Moore suggests that one important answer lies in creating a personal ecosystem – a way to take the spark of your own creativity and vision and gather others with whom one can share dreams and plans.  This personal ecosystem should be an informal group of associates who allow a person to extend his or her range of learning and impact.  How to select the people of your ecosystem and how to allow them to self select into your ecosystem are key questions.  This personal ecosystem will be critical for leaders in the future to serve as sounding boards, advisors and mentors.

On an organizational level, the new ecosystem is created via a new board of directors, trustees or advisors, possibly a new accounting, auditing team, new customer feedback loops or consultants who Andy Grove calls “the objective set of eyes” that every leader and every organization needs.

Leaders will insure that their organizations have a kitchen cabinet – several trusted friends and associates with whom one can share dilemmas, challenges, bounce around ideas and develop hypotheses/strategies/constructs about how to move forward?  These kitchen cabinets must be free of influence of the leader.  They must be capable of telling the truth to the leader.  The purpose of the kitchen cabinet is not to help a leader implement action, but to promote perspective and honest reflection.  This is a network for getting the questions right and not necessarily for answering them.  Moore believes that such a group is essential for success for leaders in today’s environment.

This personal ecosystem produces a learning system that joins idea exploration with rigorous analysis. Jim Moore credits much of the success of the founder of the Muppets, Jim Henson, with Henson’s ability to create, nurture and grow his kitchen cabinet throughout his career.

In addition to the kitchen cabinet, Moore states that leaders must nurture another group – the one that actually makes and implements the changes necessary to survive and grow.  This group stretches from board members, to senior management all the way to the shop floor or service provider or volunteer in the nonprofit context. 

Moore suggests that as a diagnostic exercise one should list who they have in their personal ecosystem.  What areas of expertise are covered or are missing?  Some areas may be sparsely populated.  Some areas need extra personnel because the leader is better at one aspect than the other.  Who have you known in your past that can be brought back and how?  Can you define or even explain their role or give them the flexibility to play the part they want to play.  How do you as the leader link up a state of the art information system with your personal ecosystem?  How does your personal and organizational ecosystem assist you and your organization in developing excellent strategic plans?

How do you strengthen your personal or organizational ecosystem?  Leaders can increase the effectiveness of their ecosystems by recruiting even a few strong new members to our personal or organizational ecosystem. Leaders can experiment with the composition and the framework and methods of communication.  Thus, leaders can create an extended organization around themselves, yet remain the fulcrum that is allowed, and even encouraged, to extend the leverage of the leader.

This requires investing personal time in experimenting with ways to leverage a personal or organizational ecosystem.  The complexity of strategic planning and managing has outstripped the ability of any one person to carry out the mandate of leadership alone.  Adding people to the conventional hierarchy will not work.  One must have a new paradigm of working relations with others in the world.  This new paradigm must be focused, but not hierarchical.  It must be an ecosystem made up of independent, yet interdependent parts.

We need new models that better extend our scope of action and learning.  “More companies die from indigestion rather than starvation,” says David Packard.  Make sure that the elements that become part of a personal or organizational ecosystem work together and nourish both the leader and the organization.

As leaders put their personal and organizational ecosystems in a wider context, they must also invest in expanding and deepening personal and organizational learning systems.  Leaders and strategic planners must begin to experience problems more holistically, looking over the edges of boundaries.

For example, there is no boundary such as business and society (or for religious people, religion and society).  Businesses and non-profits depend on customers, regulatory policies, values of the society.  Economic systems are subsets of the biological.  Biological are dominant, necessary.  Without them, there is no economic system.

Businesses concern themselves with forming economic ecosystems and innovative ideas.  Business systems are formed by and become the embodiment of the interaction among the potentials of technology, the values of society and the preferences of individual customers.

Social ecosystems, like churches, non-profits follow the same rules with values more attuned to caring, mutual support and human development rather than profit making companies, though all must be attuned to economic innovation and competitive advantage.

The values of the biological ecosystem or environment are:

 Diversity
 Complexity
 Richness
 Competition within a frame of a wider co-evolutionary tapestry

The key question today is how our organizational ecosystem will relate to our social and biological ecosystems?  How can we resolve value conflict going forward?  How will non-economic values be represented?

Henry David Thoreau said “Obey the law that reveals, not the law revealed.”  Look behind the ideas, the laws and ask where they came from.  Moore’s book suggests that the study of ecology connects us with the multilevel, nested, constantly transforming nature of reality.  It has great relevance for the world of business.


Today, our capabilities outrun our abilities to understand them.  We are capable of destroying the world, but may not understand how not to.  We can not turn back the clock on our capabilities.  We must find ways of gaining a better understanding as leaders and strategic planners of business and economic ecosystems.  Moore suggests we start by developing personal ecosystems, or by developing some other means, to embrace our powers in a positive fashion.  We must develop ways to augment, improve, crystallize, enhance, replicate, communicate, revitalize, reenergize and speed-up our thinking and focus our great talent on thinking about the right things, the important things, the things that make a difference for the betterment of the planet.  Moore says studying ecology and applying its principles to every strategic task is a good start down this road.

About the Author

Herb Rubenstein is the President of Sustainable Business Group, a consulting firm to businesses and has its headquarters in Denver, Colorado.  He is the co-author of Breakthrough, Inc.: High Growth Strategies for Entrepreneurial Organizations (Financial Times/Prentice Hall, 1999) and Leadership Development for Educators (Rowman and Littlefield, 2009), and the author of Leadership for Lawyers, 2ed. (American Bar Association, 2008), plus over 100 articles on business strategy, entrepreneurship, leadership, and improving how organizations function and deliver value. 

He serves as a Lecturer at the Global Energy Management Program of the University of Colorado Denver.  He also served as an Adjunct Professor of Strategic Planning George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University.  He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974.  His email address is and he can be reached at 303 592-4084. For more information about the Sustainable Business Group, see

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Article by Herb Rubenstein, President, Sustainable Business Group, and Anne Stanton, President, The Norwich Group, Inc.

In 2000, the following prediction was made by IDC and reported by PR Newswire:

“According to the CRM Market Forecast and Analysis prepared by IDC, the world’s leading provider of information technology data and analysis, the total CRM market will reach $12.1 billion by 2004, representing an annual growth rate of 29.9%.” 

Hindsight is such an eye opener and although we have not completed 2009 data, it is highly unlikely that the customer relationship management (CRM) market will reach anywhere close to $12.1 billion dollars in 2009, much less 2004.  In a recent study available by Gartner Group it was concluded that “Most CRM initiatives fail to deliver the expected value because enterprises have not mastered this rapidly evolving business competency at a strategic level.” reported in 2003 that in 85% of all cases, CRM users could not show any quantifiable results and 12% of all CRM installations were complete failures.  CRM is extremely challenging and to justify CRM’s multi-billion dollar price tag users of CRM will need to treat CRM as both a “discipline” and as a predictive tool.

CRM in the Beginning and “Middle Ages”

Customer Relationship Management is as old as business itself.  Legend has it that Herbert Marcus of Neiman Marcus once said, “There is never a good sale for Neiman-Marcus unless it’s a good buy for the customer.”  In order to understand the current shortcomings of CRM, we need to evaluate the strengths of previous incarnations of CRM systems.  One story from what some of us would consider the Middle Ages (the 1960’s) regarding CRM will show how history puts the capacities of CRM today to shame.  Consider this case analysis from the personal observations and experience of one of the authors:

The setting is a shoe department in a large successful retail store of upscale clothing.  There were no computers.  The store had no electronic databases.  Inventory was taken on paper.  The salespersons kept small notepads which had information on their best customers.  The notepads included rudimentary information including name, address, phone number and shoe size. 

Every few weeks a new style of shoes would arrive.  The shipments of 36, 48 or 64 pairs of a style only included a few pairs per size/width in order to allow the shoe to stock as many styles as possible.  When the shoes came to the store, the shoe salespersons, who had state of the art customer relationship management systems in their little notepads, did the following:

• They studied the product (often they were not told in advance what was ordered by management or when it would arrive)
• They looked over their list of customers in their little notebooks
• They decided which customers from their list might like this pair of shoes
• They pulled the size from the shelf (or even pulled it while the shoes were still in the carton from the factory or shipper and before the shoes were put into “inventory’)
• They called the customer and told them about the shoes and asked if they could personally deliver the shoes to their house
• They put a slip of paper with their own name on it in the place where the shoe would go into inventory that stated that the shoe was being “shown” to a customer
• They did not charge the shoes at this time to the customer
• They drove the shoes to the customer and left them there for a few days
• They called the customer and asked if the customer wanted the shoes and if she said no, they arranged to pick up the shoes the next day.  If the customer said, yes, they asked if the customer wanted to put the shoes on “lay-a-way,” pay cash, or charge the shoes to the company credit account (This was before the days of bank credit cards).
• Then, the shoe salespersons either booked the sale or put the shoes back into inventory

That was CRM in the 1960’s.  Now you can see one reason the CRM of today is greatly inferior to the CRM of the 1960’s.  The CRM of the 1960’s was all about direct service.  Today, it is more about management analysis.  Analysis does not sell anything, never did and never will.  Service sells.  Analysis can predict what will be sold, but in the 1960’s it was very rare to be able to do predictive analysis with customer data, especially individual customer data, since it was impossible to compile the data or run mathematical formulas on the data.

While this 1960’s CRM system was great in terms of service, it had severe shortcomings, especially from management’s perspective.  First, only the salesperson was deploying CRM.  Management had no idea what was going on at the customer interface level.  Second, management did not use the knowledge of the salespersons in figuring out what shoes to order, since in the 1960’s management did not ask the salespersons what kinds of shoes their customers wanted or in what quantity.  Third, the retail store level management, above the shoe department level of management, was totally clueless about the knowledge the sales people had and thus, they could never predict accurately what the sales figures would be for the shoe department in upcoming months for particular styles of shoes. 

This led to substantial waste and when shoes could not be sold, even at half-off sales prices, they would be jobbed out at less than 10 cents on the dollar of their cost.  And, at the corporate level, above the retail store level, no information from a CRM system like this was of any use in determining how to allocate resources across stores.  All in all, while this CRM system was great for the shoe salesperson and their lucky customers, it was useless for management in making buying and financial decisions.  And since all of the information in this CRM system was in the heads of the salespersons and their little notepads, it was what we call “wetware,” that knowledge that exists only in people’s minds.  (Wetware is the grey matter between our ears).  No surprise, then, that when the salesperson left the company, the customers followed the salesperson to the next shoe store.

From Wetware to Software

One of the goals of the current versions of CRM is to change valuable customer related data from wetware to software and from software to corporate knowledge. This knowledge can only now exist in a written, stored, accessible and analyzable format that allows management and the sales teams to use it to understand more fully the past and current business environment and to shape and predict future business results.  CRM today is so much more than the tool that one buys off the shelf or the tool that one develops using expensive software consultants who integrate it into an enterprise wide data collection and analysis system.

CRM software when used properly helps create a playing field for good business practices.  In order for CRM to be an integrated part of a very successful business model it requires serious players, just like any other winning game played at the professional level. This human component needed to plan, design, tweak, deploy, organize and analyze CRM software and generate data requires a discipline. 

CRM systems can never be just an “add-on.”  Management’s involvement in bringing a CRM software system to a company, or large non-profit, must start well before any “go/no go” decision is made to buy the software tool.  Management must understand what it takes to use technology to increase profits and change the business paradigm. Months before the decision to integrate a CRM system is made, management must agree on the exact results it wants the CRM system to produce.  Management must quantify these results.  Management must know exactly where it wants the company to expand sales. Management must know exactly what the company’s niche is or will be.  Management must carefully carve out the description of the most ideal customers, those customers worthy of tracking and analyzing through a CRM system. 

Without a regular reassessment of a company’s profit zone and ideal customers, management’s views of the market become stale and no CRM system will lead them to the current set of “top tier” customers or suggest the best and most timely offerings to improve the chances of getting a company’s customers to buy the exact product at the exact price the company wants to sell them.  

Thus, a CRM system, in the planning stage, must be based on accurate answers to such key questions as:

 Who can best benefit NOW from the special skills, services and products that the company has to offer?
 What is the best way to approach them?
These questions, in addition to the questions listed below, must be precursors to any successful deployment of multi-million dollar CRM systems, require strategic planning and high level buy in to achieve a state of the art successful CRM roll out.   

Defining Your Customer – The Key Questions

 Who are your ideal customers? Who are your ideal prospects? How big and numerous are these customers or prospects? How many offices do these customers or prospects have? What is the management team’s style? When were they last in the press? Do you get their company newsletter? Who are their customers and what products do they offer? What are their pain points? What are their business goals? Who is their ideal customer? What does their strategic plan (either written or still stuck in wetware) suggest they will buy from you in the foreseeable future?

Training – The Key Questions

What training and appreciation for CRM will be required by our sales persons and management in order to maximize the likelihood of a CRM system implementation contributing positively to the organization’s bottom line?  How will our sales persons, armed with this system, know how to approach a client or potential client and bring back the data we need find to put into the CRM system and at the same time do what it takes to close the sale?  How will the added duties of putting all potential clients and their data into our CRM system impact our employee’s workload and how can we prevent it from overwhelming them?  How will the need required by many CRM systems for all of our employees to log all sales and service be met? What about related scheduled appointments, impromptu meetings, input written comments on all appointments and the “status” of all clients and potential clients?  How will all of this new data entry work impact the “real job” of selling and servicing the client or prospect?  How do we get the “buy in” of all key users of the system?  How do we insure that the system rapidly dispenses information to all key users that is a 5x or 10x return on the time, energy and pain that a CRM system causes them to deploy in the name of “working for the system”. 

How do we properly train employees to use and benefit from the CRM system and what is the right budget for this training? How will the CRM system we deploy compare with the system our competitors will be using in six months or a year?  How will our customers be impacted if we ask them for significant data for input into our CRM system? Will our customers or clients require training and does our company have either the market power or relationship capital to get our customers to comply with our requests rather than merely going to a competitor with less onerous “customer requirements? 

CRM – Data Requirements

It is essential for an organization planning to use a CRM system, to determine exactly what data constitute the most important inputs into the CRM system.  The answers to this question will vary across industries, companies, customer sub-segments, and salespersons. The answers will also vary across products that have different sales cycles and require different sales approaches.

For example, one of the authors learned some time ago that the Lane Furniture Company in the 1960’s used a unique analytical system to predict future sales of furniture.  With its stable and growing market share, the Lane Company needed to predict the overall level of sales of furniture in the US market six months in advance.  Through “data mining” of data on many industries that it purchased and obtained from publicly available sources, the company’s statisticians (the data miners of their day) figured out that the strongest predictor of furniture sales six months in the future was the current month’s national, regional and local new car sales figures.  The relationship was a negative one.  That is, the lower the car sales were for the current month, the higher furniture sales would be in six months.  Armed with these data properly interpreted, Lane consistently make the right moves about what to stock in inventory, when to buy other companies with excess supply or capacity and when to advertise to a receptive market.  Lane used data that would comprise part of a comprehensive and well thought out CRM system, broadly defined, as a predictive tool that gave it an “insight advantage” over their competitors.  By Lane feeding this data analysis to employees and managers, their sales force had the intelligence to know when to hit the pedal pushing sales with advertising and sales force expansion and when to hit the brakes with their sales efforts.  This information was critical to a company like Lane, because it could not get customer level data that allowed it to predict which customers would be buying furniture in the next six months or allow it to predict, using customer level data, how much furniture would be bought in the aggregate in the coming six months.

Conversely, EMC, the data storage company, is able to get significant customer level data.  EMC gets the proposed IT budgets of some of its major customers three years in advance.  This allows EMC to know, or at least accurately predict, exactly what each of its major customers is planning for IT and storage requirements over the next three years.  This gives EMC a strong advantage over other data storage companies who are not able to get their hands on such intelligence from their customers.  And, while Wal-Mart does not ask for any data from its shoppers, it demands huge amounts of data from its “real customers,” the vendors who think they are selling to Wal-Mart, but who are actually buying a sales opportunity from Wal-Mart.  Both EMC and Wal-Mart have significant market power. Lane had great statisticians analyzing national sales data from every conceivable vantage point, well before other furniture companies were contemplating augmenting their sales force with national level sales predicting analysis.  CRM augments the sales force with predicting analysis.

CRM Today

CRM today is about tracking and analyzing explicit information about current customers and sales prospects. The software products require a hard cash investment and significant time, as shown above, which must be budgeted accurately over several years.  Unlike many other software products, CRM software needs to be deployed in a rigorous, disciplined, coordinated manner to achieve any promised potential. The collection of data and the storage of such CRM data are not beneficial unless the data collected are accurate and the right data, collected at a reasonable cost, analyzed diligently, reported in a clear and timely manner, and kept secret from the competition.  The value of the CRM generated data is like the value of any intelligence the CIA might get.  The data and their analysis are worthless unless one has the capability to develop and execute winning strategies based on the data analysis. 

Thus, an organization must, at the outset of considering using a CRM system, decide whether the main goal of the CRM system is to guide future behavior of the employees of the organization to shape the future (increase sales, number of satisfied customers, number of new leads generated, reduced turnover of key sales personnel, etc.) or to predict future sales so that the company can position itself appropriately to meet the expected demand.  For a CRM system to provide both types of services (predicting the future and helping shape the future) to a company or large non-profit a huge undertaking must take place and one that understands that these two uses of CRM are separate.  Using CRM in both of these ways at once, (predicting and shaping the future of sales for the organization) may even require separate, but integrated planning teams to pull off this type of “daily double.”

CRM – At Midlife

Once a CRM system has been implemented and is being used with some success in an organization, there is no “cruising.”  Like in car racing, there are walls and opportunities to crash at every turn.  Once CRM has reached a midlife, which may be three years from conception and two years from the original implementation of a major CRM package, the entire CRM software and processes need to be reassessed.

Some companies at this stage have run utilities to clear fields of certain data within a CRM database and start over in the clean collection of such data because of misunderstandings and changes around the definition of a given field. Certainly user defined fields are the most susceptible to miscommunication and are important to check, but other fields can also be interrupted differently by different people. There is a tendency of data to become more and more corrupted and inaccurate as the process gets older and employees learn how to cut corners and cut the data input costs of the onerous system.  Without rigorous oversight over data input, a CRM system can easily go awry and lose its power either to predict the future or help a company use this strategic intelligence to shape the future.
CRM – Examples of the State of the Art

Hallmark used its CRM system to track credit card purchases by shoppers.  When a shopper purchased a product on March 15th of any given year using their credit card, this purchase was recorded. In the following year as March 15th approached a note was sent to the customer thanking that shopper for last year’s purchase. This note gave Hallmark an additional sales opportunity to offer similar products to that specific shopper using appropriate timing. Many people who shop at Hallmark have annual needs to purchase date sensitive gifts. This predictive model allowed Hallmark to predict these annual buying sprees as well as help push potential customers into the actual customer category.  This system of CRM shows a thorough understanding of both uses of high level CRM systems using easily available customer level data.

Another example of using customer level data includes a large insurance company that had a corporate rule preventing customers from changing agents. This rule was developed to avoid fostering a culture where there was competition among insurance agents within the same company over current clients.  This insurance company was extremely good at cross reference data. Then they had a need to review “failure to renew” rates when they noticed that their renew rate trend was way below industry norms. The company looked through its CRM data to find any relationship it could to understand more fully why customers were leaving their agents and buying insurance with another company.  The company found, to its great surprise, that the best predictor of whether a customer would renew or not was the age difference between the customer and the agent.  The wider the age difference, the more likely the customer would not renew the policy.

Armed with this knowledge, the insurance company then developed a number of new policies. These policies were sensitive to age discrimination laws and were designed to find the best ways for the company to match customers and agents of similar ages. This newly found knowledge also supported creating age specific marketing messages and marketing placement based on age specific niches.

CRM – Uses beyond Tracking and Promoting

CRM systems can give companies much more power for forecasting future sales and for promoting product and services.  CRM systems must be able to show companies that if they do “2X”, then a successful, predictable result will occur.  CRM systems can help identify these levers that a company can deploy to increase business.  In many businesses, including the real estate sales market, there are formulas for sales prediction. These include calculating the number of cold calls made versus how these translate into a number of sales.   Detailed sales processes, studied over time statistically and supported by sophisticated CRM systems, can show that when a sales force functions in a certain way, the sales results hit a certain level of return which will be higher than if the company invests in other ways to promote it’s products.  This analytical function is critical as the cost of salespersons and sales materials that do not add value to the company are no longer tolerable in this hotly competitive marketplace. 

Predictive Capability

For large companies, millions of records can be processed in the blink of the eye and sophisticated analytical formulas can be run in mere seconds. Storage and retrieval technology including data warehousing and OLAP routines are providing analysis on a daily basis to companies with offices or stores all over the world. Newer technologies are moving to instant or real time analysis.  Data access at remote locations and 24×7 time frames now yield insights at an ever accelerating rate.  Technology is now available so that years of data properly analyzed can yield patterns and trends that were not available to the human mind just a decade ago. Such patters are being used in the music industry to predict hits and are especially important when a sales period for a product can be merely months, if not weeks.  Fewer mistakes are being made in predicting sales forecasts by the state of the art firms because of CRM technology. This is the true potential of state of the art CRM systems — forecasting based on years of pattern and unknown, but predicted variables.
CRM as a Discipline

It is well known that the development of every hour of stand up training or education, properly done, takes 40 hours of development time.  And for e-learning systems properly created, (not talking heads or simple PowerPoint or word presentations that offer little over giving a student a book), it takes 125 hours of development time for each hour of an e-learning presentation.  This is the discipline that is behind state of the art training. 

A similar level of discipline must lie behind each CRM application.  CRM is an easily corruptible, hard to maintain, focused approach to information gathering and analysis.  CRM can have opponents who will actively seek to destroy not only its value within a company, but its entire basis for validity.  It will cause dissention within every organization that tries to deploy it.  And, unless an organization is capable of mustering and sustaining the discipline to spend millions and wait for months or even years to see positive results, then high level CRM software may not be right at this time for your organization.
CRM’s Potential Impact on Users

When purchasing a CRM system beware of the “OBNU” phenomenon – “Owned But Not Used.”  There may be numerous elements of any CRM system that are irrelevant to your organization;  however, OBNU is a warning sign that you may be buying more horsepower than you will ever use.  A court recently upheld a $50,000 license fee charge by PeopleSoft to a customer who never opened the software or installed it and informed PeopleSoft a day after the software arrived that it did not meet its needs. 

Plans for CRM systems must be comprehensive.  They must chart the move of every person in the organization who will touch or will be touched by the data going in, the information coming out and the customer who is the ultimate beneficiary of such a system.  In fact, each CRM system must have the customer’s interests in mind.  It does not do any good to identify the customer who might buy the shoes as soon as they arrive at the store, if there is not a salesperson or delivery service able to get the shoes to the customer’s house the same day as the phone call comes from the salesperson.  Without a marriage of a customer service system to a customer relationship system, a company could easily have great insights and no ability to act on them with the speed required in our fast-paced world today.

There are success stories to CRM system implementation. CRM Software is but a tool and the implementation and use of a good tool is as important as good equipment in any professional endeavor. As with most endeavors, this particular tool requires a total immersion from management down through all the players on the team and a discipline that produces winning results.

About the Authors

Anne Stanton is president of The Norwich Group ( She has worked with technology companies; accounting firms and companies and consultants for more than 18 years, analyzing and helping businesses of all sizes use their available resources more effectively. She most recently was executive vice president of Commercial Logic, Inc., and is a member of the AICPA’s Top Technologies committee. Anne’s e-mail address is and she can be reached at 802-249-2616.

Herb Rubenstein is the President of Sustainable Business Group, a consulting firm to businesses and has its headquarters in Denver, Colorado.  He is the co-author of Breakthrough, Inc.: High Growth Strategies for Entrepreneurial Organizations (Financial Times/Prentice Hall, 1999) and Leadership Development for Educators (Rowman and Littlefield, 2009), and the author of Leadership for Lawyers, 2ed. (American Bar Association, 2008), plus over 100 articles on business strategy, entrepreneurship, leadership, and improving how organizations function and deliver value. 

He also served as an Adjunct Professor of Strategic Planning George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University.  He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974.  His email address is and he can be reached at 303 592-4084. For more information about the Sustainable Business Group, see

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Article by Herb Rubenstein, President, Sustainable Business Group

“There is no formula to relationships.  They have to be negotiated in loving ways, with room for both parties, what they want and what they need, what they can do and what their life is like.”
Morrie Schwartz, Tuesdays With Morrie by Mitch Albon


This article is based in part on my participation at an event where Julio Olalla gave an address sponsored by The Georgetown University Certificate Program in Training and The World Bank in Washington, D.C.  The contents of this article include many concepts expressed by Mr. Olalla in his presentation combined with many concepts which I have learned over many years of serving as an executive coach to organizational leaders and students at the Universities where I teach entrepreneurism, strategic planning and leadership.

Julio Olalla is a leader in the field of coaching. He is a lawyer from Chile who has changed professions to head up a world-renowned school of coaching operating in North and South America. He has coached over 35,000 people and certified over 1,000 people as Master Coaches through his programs on two continents. His work centers on fostering improved communication, supportive learning environments and improved productivity and satisfaction in the workplace.   The goal of this article is to combine the insights that we have discovered at Growth Strategies, Inc. in our executive coaching practice with the insights offered by Mr. Ollala in his presentation.

Improving the Ability to Work Together

A major goal of coaching is to improve one’s ability to work successfully with others.  One of Olalla’s essential ideas in this regard is that an “organization” is a conversational network. In order to work effectively in improving organizations one must become attuned to the conversation that is going on in the organization.

A second idea stressed by Olalla used to help people he coaches become more successful in organizations deals with the biology of cognition. For coaches to be effective, they must know how those they coach learn in a physiological sense as well as how they learn intellectually and emotionally.

A third idea that coaches must master with those they coach is to learn how those they coach, and the organizations in which these people operate daily, view and interpret both the past and the present. Today, with people having more information today than ever before, people without realizing it much more quickly (and possibly more permanently, interpret this information.  Sam Donaldson, the news reporter, recently stated in a seminar that reporters are giving out so many stories, many of which including conflicting facts, that people’s and organization’s ability to interpret these stories is being pushed to the limit.  And as Olalla and many others have documented, people do not react to the facts; they react to their interpretation of the facts.  Since interpretation drives behavior and a coach’s job is to assist people with improving behavior and the results of behavior, a great coach must understand how people and organizations interpret “reality.

Since many interpretations of past facts are strong barriers to both future action and learning, the coach must be able and willing to assist people and organizations in improving their interpretation skills. Assisting people in improving their ability to “interpret” reality, allows people and organizations to converse more effectively, learn more effectively and ultimately, act more effectively.  Today’s literature on “learning organizations” often fails to grasp that the purpose of learning is to create wisdom. Learning itself, when it is successful, creates wisdom and we must take as an article of faith that wisdom creates better action and better results.  Thus, a coach’s road must include aiding clients and their organizations become aligned with the goal of attaining wisdom.

Learning, for many, has been given a role in life today that is inconsistent with the history of its role throughout generations. Today, learning, for many, has been placed outside of the fundamental concerns of our lives and outside of the major concerns of the organizations in which we work. When issues arise, people and organizations seek to devise technical solutions to the issue, and often fail to address the issue and how the issue or problem or challenge arose in the first place. Typically, even when a technical solution solves a “problem,” neither the solution nor the process of developing that solution does not create the learning necessary to resolve the issue in a way that improves the individual or organization’s capacity to deal with the next set of issues when they arrive.  Coaches can guide their clients to consciously use their learning in a cumulative way so that it is generalized to the point of having applicability to tomorrow’s problems.

Learning Environments

Today there is a strong emphasis on the learning organization. What will create effective learning in an organization? Olalla and the “learning organization literature” describe the keys to creating a learning organization. They are:

• Enthusiasm for learning
• Respect and dignity for each individual
• Pleasure being derived from work and the relationship with the organization
• Attention to all that can be learned from the verbal and body language, mood and culture of organizations and individuals
• Undertaking and promoting new conversations
• Addressing issues in ways that were previously unthinkable
• Creating and supporting a strong demand or hunger for learning and questioning with individuals and organizations
• Identifying the barriers, or lack of interest, to creating great questions
• Limiting the rewards for explanations and questions
• Allowing individuals and organizations to expand the space of “I don’t know” as part of the conversation

Olalla emphasizes that learning cannot take place either efficiently or effectively in an environment of fear and uncertainty. Where there is fear and/or distrust, high levels of learning are impossible. Where there is respect and dignity, learning is inevitable.  Thus a coach, should inquire and observe with an inquisitive mind the elements of fear and uncertainty within individuals and organizations.

Coaching and Personal Development

People often go into organizations as workers wanting to serve other human beings, but after time this desire to serve others dries up. In order to become effective coaches and to improve the inner workings and productivity of organizations, we need to understand the dynamic behind why this desire to serve others dries up within the individual.  Usually the causes of this “drying up” or “burning out” are in the organization, even more than the individual.  Thus, as Durkheim the father of sociology repeatedly taught, to understand the individual, one must learn and understand the social and organizational context(s) within which that individual lives and works.

Personal coaching is the discipline designed to promote effective work at the individual level in an organizational context. Effective work is a function of a purpose, a commitment to realize a strategy to recruit, manage, organize and deploy resources efficiently to accomplish the tasks necessary to achieve the purpose.
Teaching differs from coaching in that the typical model of “teaching” is where one person delivers information to another. Training differs from coaching in that the goal of training is usually to impart some skill or system to another person or organization who will master this skill through repetition.  The essence of coaching is to guide the client to bring forth the best of his or her skills, knowledge, commitment and to discover his or her talents rather than just get some new skills, talents, information or even knowledge from someone else, like the coach.  Coaching leads a person to develop him or herself, not add some new layer onto him or her self through taking some insight from the coach.

Coaching often requires explanations.  Explanations can be powerful to take an idea to the next level. A coach must be very aware whether an explanation serves a client as a gateway or barrier to an idea or concept at a higher level.  Thus, coaches must be great listeners and must coach their clients to become better and better listeners.

The Model of Coaching

When coaching takes place, there is a coach, an observer (who is the client or “doer’), action and results. At all times in successful coaching, the coach and the doer sees and assesses the results, uses this feedback and through guidance and explanations from the coach, the doer creates a new platform of thinking, reasoning, perception and/or commitment, that allows the doer to revise and improve the doer’s actions.

Thus, to repeat an earlier point when we were discussing interpretations, a critical function of the coach is to understand how the observer (the  doer) observes the world and how the organizations in which the doer operates observes the world. In order to address that matter fully, the coach needs to understand “How did the doer become the type of doer that he or she is? And, “How did the organization become the way that it is?”

Coaches need to both understand the world through their eyes and they need to listen carefully so they can understand for the ways that those they coach understand the world.  Coaches must be able to cross the bridges of these “understandings” without creating a n in surmountable backlash by the doer or the organization.   This requires substantial diplomatic skills on the part of the coach.

Coaching As A Change Process

In order to change the action, the result, coaches must assist the observer/doer in changing in fundamental ways.  They must also, in some cases, prepare the doer to change his or her organization, especially its pattern of interpreting reality.  Otherwise, coaches are merely working on the symptoms. It is never enough, when coaches want to improve results, merely to give information. If coaches just give information, even if that information is acted on, the change in results is temporary. When there is isolated teaching or training, based primarily on the giving of information, there is often no permanent, useful change, that the doer or organization experiences in a sustainable manner.  When there is some change followed by actions that effectively undo the positive changes, resignation sets in, builds its own momentum and becomes a strong  predisposition toward no positive action occurring in the future.

Coaching is fundamentally and initially concerned with the observer, the doer, more than with the results. Coaching enlarges the vision of the observer/doer in order to enlarge the things that the doer will be able to see as possible that previously did not seem possible. By seeing something as possible that one, at the individual or organizational level, did not see as possible previously, there is growth of the individual and there is the substantially increased likelihood that what the doer now sees as possible will become a fact in the future.


Generally we “explain” phenomena by saying, “This is what happened and why.”  It can be as simple as I ate a large bag of potato chips and gained a pound.  A teacher could explain the large bag of potato chips has 3,500 calories and for every additional 3,500 calories eaten, all other things being equal, a person will gain one pound of weight.  That is very useful teaching, but it is not coaching.  Coaches need to be able to understand and to coach in a way that allows the observer/doer to understand the observer/doer’s relationship with the phenomena of eating the whole bag of potato chips.  The does must be led to understand by the coach that he or she was “cause” (or responsible) in creating that activity in order for the coach’s coaching on the subject to be used effectively by the doer.

Innovation or change is impossible when we believe that we had no part in making something the way it is.  Yet, we often tell the story of what happened in a way that is designed to shield ourselves of being cause and of being responsible for what took place.  How many car accident stories start out, “I was running late and had to get to…” when a person being coached on how to not drive into car accidents surely needs to start off the story as to why he or she was running late or believed he or she “had to” get somewhere by a certain time.  To the extent people are stuck in the explanations, “this is the way it is”, that shield them from being “cause” or being responsible for all of their actions and the results of their actions,  innovation is not possible.  Coaching must also get at the source of why change or innovation is not occurring before a coach can effectively coach another person to change, innovate or be more successful.


A key to financial success is the ability and willingness to take intelligent, calculated, entrepreneurial type risk. An individual or organization’s view toward risk and their predisposition toward risk will be a great factor in determining its ultimate level of success.  In the K-12 educational sector, there is very little risk tolerance and the results of this sector have been very disappointing for some time.  Administrators will not risk letting teachers teach subjects in ways the teachers think best.  And schools are not willing to allow students to be very innovative in their approaches to the subject matter.  The new era of “accountability” in schools is likely to further reduce a school’s willingness to take risks. 

The Role of Language/Linguistics in Coaching and the Change Process

Language has several important dimensions:
• Language as the creator and documenter of distinctions
• Language as commitment, the speech act
• Requests
• Demands
• Offers
• Declarations
• Assertions
• Assessments
• Questions
• Etiquette

An assessment is not an assertion. An assessment is an interpretation.  An assertion is a reporting of what one believes are the facts.

An assessment is a judgment.  Often that judgment is concealed to the speaker who believes he or she is making an assertion, especially when the speaker tries to make their judgments and opinions sound like facts.  Assertions often retard new ways of thinking about something and this, in turn, will have the effect of retarding change.

An important tool of coaching is to constantly bring in distinctions that challenge the current assessments that an individual, or a collective organization, holds.  These distinctions must be introduced diplomatically and in the weight example, a simple distinction, like for each large bag of potato chips (the 3,500 calorie per bag variety) that you do not eat that you would have otherwise eaten, (all other things being equal), you will save yourself 3,500 calories and you will weigh one less pound.  And one less pound to you is valuable to you because….. where the doer fills in the rest of the sentence.

The effective use of linguistics is essential in coaching. Language gives us the ability to make distinctions. The distinctions we make create or limit our ability to make observations. Our language creates or limits our ability to listen (listening is an audible observation that impacts on the individual or organization). The distinctions and observations we make create our culture, since culture is defined by the common set of distinctions and observations made within an organization and society. Culture results from a sharing of distinctions in a manner so a group of people experience the same observations and listening and look at and see the world in the same way.  This is why when someone yells “Fire” in a crowded night club, everyone goes to the doors as fast as possible.  We all know what someone yelling
”Fire” means in a crowded nightclub and it means exactly the same thing to everyone there sober enough to understand.

Coaches must be aware that their clients and the organizations where their clients live and work often lack many of distinctions that exist in others and in other organizations.  Coaches must assist their clients create and expand their ability to make distinctions.

Language with a broad range of distinctions reveals.  But language with only a few distinctions, often conceals.

Effect of Language and Physiology on Emotion/Moods

There are emotional levels within individuals and organizations.  Coaches and doers must learn to read and understand them.
Emotion is a basic building block to behavior and helps guide and control each individual’s and each organization’s fundamental predisposition toward action/inaction.

Some emotions, just as some words in a language, do not work in support of some actions. Some emotions even prevent some actions from taking place at all or cause the action to be “half-hearted” or destined to fail right from the beginning.  Below are several emotions explained as distinctions:

• Resentment-a secret promise of revenge
• Fear-a concern regarding an anticipated loss
• Sadness-concern over actual or perceived loss

Fear predisposes people not to take action because of the doubt that fear causes. Often, people are afraid of their fear, afraid to act in the face of fear.  Some people fear quitting smoking cigarettes to such a great extent they don’t even try or take more time between their cigarettes.  Then, sometimes these same people, one day, just stop and do not have the results they feared and wondered why they did not quit long ago.  Similarly, people are often fearful of leaving their job or city only to find, with some real glee, that the next job or city is a real delight.  Fear is very powerful and coaches must recognize it even if the doer does not.  It takes substantial coaching and diplomatic skills to educate a client/doer that he or she is not acting due to fear when that person is not ready, willing or able to notice or acknowledge this fear.  The ability of a person through coaching to begin to recognize his or her own fear or sadness (which also depresses one’s predisposition) opens up great pathways to learning, to becoming a better observer and becoming a more successful doer.

Emotions give individuals and organizations pain and cause individual and organizational suffering. Coaches must seek to get to the root cause of the pain and suffering and the emotions that accompany them before a coach and a doer can identify the best approach to improvements.

Emotions are the shift in one’s mood that people experience in association with a certain event. Most people blame the event for the emotion.  Many “explanations” are stories that people tell about an event with a subplot that the thing that happened made them feel a certain way and that feeling or emotion caused them to act in a certain way.  This is a very common story and a coach must often encourage his or her client to accept the distinction that no event or outside source, per se, causes any emotion or shift in mood. It is our interpretation of that event, the meaning that we attach to the event, or even the way we choose to describe or not describe that event (the “I can’t talk about it syndrome”) that affects our mood or the moods of our organizations dealing with situations.  Once people can separate out the factual situation from their reaction, they are much more powerful in dealing effectively with a situation.  One good example is that when people see a police car come up from behind them with their lights flashing and they are speeding, they often get very scared, tense, their breathing changes or stops and they grip the steering wheel tightly which further tenses up their body, maybe for the entire rest of the day.  One does have the power in that situation to observe that they might be “getting a ticket” and it might cost them some time and some money and they will be just fine afterwards so there is really not much to get twisted into knots about when the police car comes up from behind you. 

Coaching a person to react more consciously to situations rather than letting their emotions get gripped by facts of a situation is a great strength of good coaches.  It opens up tremendous possibilities for action, improved action and results on the part of the doer.  These are some of the reasons why it is so important for coaches to know how individuals and organizations interpret events.

Emotion is a fundamental basis of relationships. Coaches and doers need to deal with emotion at the individual and the organizational level because before learning can take place, the emotions of an individual or organization must be assessed and addressed.  And if found, not to be supportive of the desired learning, action or results sought by the doer or the doer’s organization, the coach’s role must be to elicit from the doer and the organization the fundamental causes and contributors to the state of the emotion.  This is not a step in coaching that can be skipped.  Getting to this deep level of uncovering emotions need not be a long and drawn out process, like psychotherapy, but it must be done adequately to allow the doer and the organization to see the emotion and to see its negative impacts and to see that the doer and the organization can create new and different emotions that will foster better results.

People develop over time regular or consistent moods, regular dispositions toward life, and behavior patters which predispose them toward certain behaviors and away from other behaviors.  Coaches must be able to see these patters very quickly and guide their clients to seeing these patterns.  Coaches help people “catch” themselves by transforming a non-thinking doer, into an observer/doer.  Once someone is able to observe not only the language, body and verbal, the distinctions that others make, the culture that exists, but also observe the emotions that lead and guide all of these “things,” then the observer/doer is much better equipped with taking the actions and changing the emotions quickly enough to produce better results.

One’s physical body is an important part of their environment for many reasons. How we stand, how we walk, posture, etc. all affect our mood(s) and our ability to learn. There is a coherence/congruence between our ability to formulate certain concepts (our conceptual territory), our physiology, our mood and our use of language. A coach must be a careful enough observer of the client to know how the positioning and posture (and physical condition) of a client’s body effects the doer.  Often the doer will be clueless about this and may reject out of hand any suggestion of a relationship of body position and ability to think and act.  Each coach must observe the client’s receptiveness to this new set of distinctions and guide the doer to testing these distinctions out for him or herself in a manner that allows the doer to learn the truth of these interrelationships.  The ultimate teaching of this line of understanding is that very often, In order to change results, we need to change our behavior, which means we need to change our ideas and learning and in order to do that, we must change our body position and body conditioning.  This is not easy for many people to accept since changing one’s “normal” body position, much less one’s body conditioning, requires a huge amount of vigilance, determination, observation skills and intentionality on the part of the person who want to change their behavior and achieve better results.  But, like the conversation we just had on emotion, this is a step that can not be skipped in the coaching process if maximum results are going to be achieved by the doer in a reasonable amount of time.

Coaching and Leadership

The art of leadership is to align the predispositions of all participants in support of reaching the vision/goal. When one helps improve the doer’s capacity to direct their emotions in given situations, rather than be at the effect of them, great energy and great results are often unleashed.

In distinguishing between the ways things are (the unchangeable things in the short run) and possibilities, Olalla uses the words “facticity” and possibility. Often people and organizations oppose what is, oppose facticity.  They say, it should not be that way, and by doing so use up some of the precious energy they could be using by saying, “This is the way it is, and we are going to change it.”

If we oppose what “is” we create resentment and if we create resentment we are predisposed to not being able to “see” possibilities that exist or us in changing the current situation. If we accept what is, accept this “facticity,” in Olalla’s terminology and endorse it, (not as what is right, but as what is true or real), then we should experience the emotion of inner peace, which is a very strong place or perch from which to view the world of possibilities. The emotion or mood of peace is the inner sense of acceptance and a great promoter of creativity. Coaches must work with their clients to achieve this very strong position of accepting what is, only for the purpose of using what is as the proper place from which to commence change to improve actions and results.  If the map on the wall says, “You are here,” (assuming the map is accurate and you are really there), and you either don’t like it, you get mad at this fact or you reject this truth and believe it is false, you have made it much more difficult to get to where you really want to go.  Coaches are “you are here” signs at every moment for their clients.

If we oppose or reject possibilities, our resultant mood is resignation. Coaches facilitate acceptance of facticity (I prefer the word “reality”) in their clients. Only when facticity or reality is accepted as being true, can real learning, learning for possibilities and improved actions take place. The coach creates the context for the doer’s increasing willingness to quickly see, understand and accept what is and by doing this goes a long way toward assisting the observer/doer promoting success in the doer’s life and in the organizations in which the doer operates. The coach does not define success for the observer/doer. That is the doer’s job.  The entire process of the doer defining success for him or herself or for the organization to define for its self, is essential to the effort to insure that the observer/doer does not become dependent on the coach.  By creating the success goal, the doer not only owns the goal as his or her own, he or she begins to “identify with” and “bond with” that goal.  The more that goal becomes intertwined with the identity of the doer, the more likely success becomes.  For example, when the “smoker” who has smoked a pack of day for 20 years, begins the process to quitting smoking and goes without a cigarette for two whole days, if the smoker can say with certainty and confidence, “I am not a smoker!” or “I would never smoke a cigarette!” then the person is very well along their way to never having a cigarette again.  On the other hand, if the most the person can say after two days is, “I am trying to quit smoking,” then, this type of statement can only come from someone who identifies themselves as a “smoker,” because a non-smoker never has to “try to quit smoking.”  So, it is more than just good etiquette for the coach to insist that the client/doer create the goals for the client.  It is an essential element of the client developing a new identity which supports the actions and emotions that will lead to the desired result of the client.

Certainly, there must be alignment between the coach and the observer/doer as to what constitutes success, because if the coach thinks the client can do either a lot more or a lot less in the time frame or budget/resources/capability of the client, the coach must help the client explore the feasibility of reaching the client’s goals.  Coaches do have a responsibility should someone say, I will not eat anything for two weeks and will lose 20 pounds to inform them that this strategy is often tried, but rarely successful over the long run.  Suggesting to the client that 20 pounds over 10 to 20 weeks may be a more feasible approach, still allows the client to create the goal with some advice from the coach..


Context provides meaning to language and actions. If an organization punishes mistakes or teaches people not to act when in doubt, it will create a context of fear, a context that heightens the focus on the potential negative consequences over and above the potential positive consequences.  Coaches should advise their clients on how to see context, even when the clients are acting at full speed within the organization and generally impervious to the context in which they are operating.


Olalla suggests that we must go beyond tolerance of others who are different from ourselves.  He says “tolerance” is simply delayed rejection. The goal in organizations, per Olalla, should be to promote full acceptance of those who are in some ways are different from others. In order to do this, differences must be viewed as possibilities and benefits and not problems or challenges. In order to transform one’s view of someone as being a problem because they are different, to the view that differences constitute a strength, people must recognize that the way we see things (different as bad, inherently inferior) is not the way they are, they are merely an interpretation. Each person has a different set of eyes, a different lens through which they observe the world. (Einstein’s Theory of Relativity applied to every day life). We must ask each other to “lend me your eyes so I can see the world as you see it?” This is essential for effective coaching.  Coaches must see the world through the eyes of those they coach and ultimately, clients should be able to see the world through the coach’s eyes, as well.

Differences can create energy, which can be turned into creativity if there is dignity and trust. Different people and different types of people bring different “assets” to life, to organizations. The tensions created through differences can energize and need not create conflict.

However, if we hold the point of view that differences are the causes of our problems, then, we will try to live life according to that maxim and cut ourselves off from the much more powerful paradigm that there are differences, there will always be differences among people and we should use those differences to the best advantage of all individuals and all of our organizations.

The Big Picture & Big Questions

People and significant organizations are now beginning to look at the big picture and ask big questions. This is in direct response to a current crisis in meaning as we have more and more things and know less and less what makes us happy and what makes organizations work in this commodity filled world.


“Vision” means to see and by the word we mean in the business or coaching context the ability to imagine possible worlds. Our ability to imagine these possible worlds is an aligning force to making the “possible” or “potential” world become a world in fact. The “ground” or infrastructure to make vision a reality is strategy.  Strategy is the link between what we want the world to be and making it that way.

We can not be so pessimistic or “realistic” as to kill off people’s dreams. The only way to be the author of our own lives and the author of the future of the organizations in which we work is to share our dreams, enroll others in our vision and be enrolled in others’ visions of a better world.  In order to enlarge your vision and sense of possibility in this world, the key strategy is to share meaningful distinctions.

Effective Action

Effective action is the result of good coordination, communication, consideration and conversation between people. We must focus on the ontological, the foundation of effective thinking. Positive thinking is not particularly helpful if it denies actual reality and sugarcoats it with wishful thinking about what is and what will be.  To improve coaching and improve the world, we do not need to change reality immediately, we need to change our view of reality to emphasize potential rather than barriers.  We must bring to this thought process the right emotions, the right body and body posture, the right set of lenses through which we see the world and, most importantly, we must develop realistic strategies to achieve the world that we want to exist in the future.

Effective action will result when through coaching we bring into being a new kind of observer/doer. In order to promote effective action there must be an ease of conversation about everything in an organization. Truth must be told easily and often and believed.  An organization’s inability to achieve effective action is often a function of its inability to have a successful conversation.

“Conversation” means to change together. When one engages in a real conversation, one does not know in advance where it will arrive or where it will conclude. Today, we are full of answers and information. What is needed for effective action and for learning environments is that the participants be full of questions. Effective action is the result of living out of both creativity and certainty (vs. fear and scarcity).

Leading is partnering. Effective action requires completion of tasks.  When we in an organization state that we will complete a task, others have a right and duty to rely on us carrying out that task in a timely manner.  For many people, doing this on a consistent basis will require us as individuals changing our views of and our relationship to the tasks we say we will do.  Telling someone you will do something and doing it without fail, must rise to the level of “sacred honor” or at least to the level of “giving one’s word.”


Trust operates at two levels:

• Assessment of sincerity, truthfulness–the ethical side
• Assessment of capacity-the management side

People fail the trust test in the area of sincerity when we believe the public conversation they have (what they tell others) and the private conversation they have (what they are really telling themselves) is neither consistent nor congruent. Credibility is a key element of trust on both the ethical and the management sides. Without trust there can not be an effective learning environment nor can there be an effective organization.

We must not confuse trust with being naïve. Prudence must not be confused with distrust. At the organizational level, we must find ways to overcome distrust and resignation.  The best way of doing this is to emphasize the importance of doing what you say you are going to do in every situation.  Coaches can play a large part in assisting people transform their willingness to back up what they say they will do with the action necessary to actually do it.


Understanding a person or organization’s relationship with/attitude toward failure is critical in coaching. If a person or organization blames some external event or force, if a person or organization blames some form of differences between people or if a person relies on “excuses” as the explanation for failure, then the person is attempting to make themselves superior to their failure “for free,” without taking responsibility for their actions and the results (or lack of results) of their actions.  These types of explanations serve as a dodge. These explanations use language to hide rather than reveal. These explanations stop learning.  They negate effective coaching.


Throughout this journey, this journey of coaching and being coached, we conclude where we began.  This article provides insights to guide the coaching process.  The most important insight is that each coaching relationship is different.  While there is much to be gleaned from strategies designed to achieve:

 learning how to promote trust
 improving observation and listening skills
 assisting someone in creating an empowering vision
 working with people on setting goals
 aiding others in developing robust plans to achieve these goals
 helping open the observer/doer’s eyes to new and greater possibilities

there will always remain Morrie Schwartz’s dictum – “There is no formula to relationships.”

Coaching is the ultimate relationship.  It requires skill, knowledge, friendship, patience, devotion, caring, investment, consistency, creativity, passion, strength and even love, as Morrie defines it.  He says, “Love is when you are as concerned about someone else’s situation as you are about your own.”

Finally, all coaching relationships should have one thing in common: a strong feeling of mutual respect between the coach and the observer/doer.  Mitch Albon got it right.  Coaching begins and ends with the framework:

Dear Coach…
And the coach’s reply –
Dear Player…


About the Author

Herb Rubenstein is the President of Sustainable Business Group, a consulting firm to businesses and has its headquarters in Denver, Colorado.  He is the co-author of Breakthrough, Inc.: High Growth Strategies for Entrepreneurial Organizations (Financial Times/Prentice Hall, 1999) and Leadership Development for Educators (Rowman and Littlefield, 2009), and the author of Leadership for Lawyers, 2ed. (American Bar Association, 2008), plus over 100 articles on business strategy, entrepreneurship, leadership, and improving how organizations function and deliver value. 

He also served as an Adjunct Professor of Strategic Planning George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University.  He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974.  His email address is and he can be reached at 303 592-4084. For more information about the Sustainable Business Group, see

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