Engagement and Shareholder Primacy

How is a company supposed to deal with the UN declaration of Indigenous groups’ entitlement to ‘free prior and informed consent’ and meet their obligation to shareholders? These competing values are putting mineral companies in a difficult position when they go to the communities for engagement talks.

What if we stopped looking at them as competing interests, and instead looked to see where they have overlapping interests? First Nations I have known speak of their role as stewards or caretakers of the land. At the same time, Canadian corporate law (Canada Business Corporations Act, Section 122) states that “Every director and officer of a corporation in exercising their powers and discharging their duties shall (a) act honestly and in good faith with a view to the best interests of the corporation and (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances .…”  The indigenous practice and CEOs have in common is a desire to act in accordance with their values. Those values include care, diligence, skill, honesty and good faith.  There is a lot of compatibility there.

An issue of course arises when  ‘the best interests of the corporation’ is predominantly interpreted as shareholder primacy, aka stock price.  Yet, it is not necessarily an either/or choice between shareholder and indigenous peoples. Perhaps what is best for the shareholder has an area of overlap with the respectful treatment of the land and indigenous peoples.  At GEMM 2014, Gold Corp representatives stated that they see themselves as having obligations to their employees, the local communities and their shareholders. Taking into account all these interests is what serves the best interests of their company.

As a matter of fact, the Supreme Court of Canada’s 2008 ruling in the BCE Inc. case illustrated there is space for an expanded interpretation. Here the Court stated: “There are no absolute rules and no principle that one set of interests should prevail over another. In each case, the question is whether, in all the circumstances, the directors acted in the best interests of the corporation, having regard to all relevant considerations.”[i]

The accommodation of shareholder primacy and Indigenous engagement is finding a significant area of overlap as shareholders start to care about the environmental footprint and the conditions that the minerals were produced under. People want their money to make a good return and do good work. Even when consumers buy a product, they want to know that the conditions the metal was produced under were humane and environmentally friendly. Top consumer brands like Apple, Tesla and BMW now demand certification of practices such as fair wages, no workplace violence, and low carbon footprint during the mining process.

Yani Roditis, COO of Gabriel Resources, summed up this current paradigm this way:

It used to be the case that the value of a gold mine was based on three variables: the amount of gold in the ground, the cost of extraction, and the world price of gold. Today, I can show you two mines identical on these three variables that differ in their valuation by an order of magnitude. Why? Because one has local support and the other doesn’t.”[ii]

According to a study, Spinning Gold, by Witold, Henisz, Sinziana Dorobantu
and Lite Nartey2011of the Wharton School at the University of Pennsylvania, increasing cooperation and decreasing conflict with local communities and governments significantly enhances the financial valuation of a company. This finding is backed up with data from the analysis of 50,000 media reports between 1993 and 2008 from 19 companies that cover 26 mines. They found that the sustainability of shareholder value is largely dependent on social licence to operate. Today the best interest of the shareholder is served by caring about the relationship with the local community. And the local community cares about the environment and the well being of their citizens. Gaining community support is not just a corporate social responsibility – it has become an enlightened self-interest. 

At an International Council on Mining and Metals (ICMM) meeting, Bergeron said, “We are moving into a new way of doing business and we need a new type of leader. Maybe it will be a generational change. Or maybe companies will stop being headed by financial people and lawyers and engineers.” The audience became animated, with hands popping up. One person said, “My CEO would tell me that I need to focus more on a strong quarterly report. He would never understand this concept.”

 Bergeron responded by saying, “Then he is wrong.” By the end of the meeting Bergeron was the new chair of environmental and social responsibility for ICMM. Collectively, its members wanted him to keep sharing this message. 

Jamie Dimon, CEO of JPMorgan Chase for more than 12 years, and touted by the New York Times as ‘America’s least-hated banker’, says “JPMC doesn’t give quarterly reports because they give a false sense of security. Investments are made based on up to 10 years of decision-making – and perhaps the impact of the weather in one year. There is no magic to 12 months or three months. The best thing for the shareholder is to be able to take a longer-term view”.[iii]When enough people and corporations adopt this principle, it reaches a tipping point and becomes the norm. 

The environmental assessment project is often a place where mineral companies and local communities engage with each other. Imagine if indigenous government and local community input was received with gratitude. People with local expertise are willing to put their time and effort into making the project better. New benefit opportunities are revealed, and potential future problems are discovered and headed off at the pass when space is made for this kind of dialogue.

Companies are sometimes hesitant to talk to local groups because they risk not being able to advance their project. This is essentially saying that they want the ability to proceed even if the locals have a problem with it. This is an exercise of linear power. A shift to circular power would see local community input as a gift intended to make the project more robust. 

One of the foundations of the 2Ways of Knowing (2WK) Framework is the recognition that linear thinking has a default setting to think in terms of either/or. When an issue can’t find a resolution it is often beneficial to switch to circular thinking and say ‘yes we have different goals, and, let’s explore what they have in common.’ Furthermore, redefining the power that drives decision-making, considering both circular and linear options, opens up a whole new set of possibilities.

Linear power: To assert your will, even against resistance.

Circular power: To know yourself, be yourself, and support others in doing the same.


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Efficiency or Resilience: can we have both?


E

Efficiency is the elimination of waste. But what if waste is actually a nutrient in a new system. In this case, efficiency is the elimination of nutrients. Resilience, on the other hand is a measure of how ready we are to incorporate those nutrients. It excels at adapting and benefiting from change. Resilience fosters diversity of approach, and creates some free time as the well-spring of innovation, employee engagement and ability to respond rapidly when environmental conditions change. 

I don’t think we can have both efficiency and resilience without having a framework that allows two opposite yet complimentary things to co-exist.

Here’s the thing. We don’t need to toss our efforts for efficiency aside in our efforts to gain resilience. The really smart organization recognizes that there are benefits of both efficiency and resilience. The bigger challenge is to create a corporate frame of mind that knows when to promote efficiency and when to foster resilience, and how to protect the differences.

Efficiency is a product of linear thinking. It is driven by a goal of reducing resource waste to maximize production and profits. Once we have our goal, we call upon linear power to achieve it. The two go hand in hand. Linear power is the ability to assert our will, even against resistance. Everything that is an obstacle to efficiency becomes an enemy for us to overcome.

When efficiency is highly valued, management becomes the science of reducing waste. Workers become units for productivity. Efficiency benefits from creating low skill jobs that require low training, have less room for error, and low wages.

While efficiency capitalizes on the benefits of objectivity, it fails to realize the benefits of being human. This perspective eliminates the benefits of relationships in customer service, employee work satisfaction and human creativity. Resilience requires a system where there are times when productivity can be set aside because these other values are recognized. Instead of always pushing back against what you don’t want, there need to be time to pull in what delights, enriches and inspires curiosity.

Efficiency gained a foothold in the 1700s when the Industrial Revolution sought to reduce waste and increase production. It was founded on the recognition of the power of each worker doing a limited task repeatedly, and each company becoming excellent at producing one thing. Production was divided in to specialized tasks, each requiring limited skill and reducing the cost of training, wages, and time for transition between tasks. With this specialization, all redundancies were eliminated. The hidden assumption was that operating conditions would remain consistent.

This assumption is becoming less and less valid. When demand shifts, or resource availability changes there is a danger of efficient systems suddenly collapsing. For example, if your company is the country’s leading typewriter manufacturer, and all efforts are on streamlining the assembly line, and improving the ribbons for setting the ink, when the computer is invented, all your efficiencies are suddenly obsolete. 

Resilience requires a system with times when productivity can be set aside because there are other values to pay attention to. Values such as asking what is meaningful today? Instead of always pushing back against what you don’t want (which is always in the realm of the known), there needs to be time to pull in what delights, enriches and inspires curiosity.

Resilience and efficiency require two very different frames of mind. When we recognize this we can create systems that support both. If an employee appears to be staring off into space, it can be recognized as an investment in resilience, which has its benefits when given a place.

Resiliency and circular thinking go hand in hand. Here, power is defined by knowing yourself, being yourself and supporting others in doing the same. Companies that value resilience encourage workers to do their work in a way that makes sense to them. Deeply engaged in the customization of their work, employees tend to stay longer, have fewer sick days and find innovative ways to complete their tasks. Diversity is key to resilience, as are relationships and transparency of information.

When a company allows for diversity, small units are created within the larger organization. These units are creating systems that make sense to them. The key is, they then switch to efficiency mode and bring excellence to their method. Along comes a major change in the industry, and for one of those hubs, it has become a real advantage. That hub can teach its method to all the other divisions and pass on the advantage of the years of adjustments that improved their method. This company has a significant competitive boost in an unpredictable environment.

Resilience happened because each group was free to choose how they operated. It was effective because they took their unique method and put it through some efficiency testing. If everyone was constantly changing with no periods of efficiency development, expenses would be high and advantages would be short lived. The successful organizational structure for today supports circular and linear thinking.


The Slippery Slope Myth

No doubt you’ve seen this play out before.  Someone asks for a concession at work, for example, an employee with a sick daughter asks if she can work from home for a few days. The boss considers it but rejects the request because “if we allow this once, then before you know it, everyone will be demanding this.” Thus the “slippery slope” myth is perpetuated. 

Glaciers floating on arctic water

Rarely does anything positive come from decisions like this. The employee is unhappy, her co-workers are probably miffed that their boss showed little compassion (and might treat them the same way), and the boss is likely picking up on the dip in morale since word got out about his decision. Decisions based on the slippery slope rationale are classic lose-lose scenarios.

The inherent problem with this misguided approach is the over-use of linear thinking. The boss is worried about setting a precedent, fearful of the presumed consequences, and worried that his authority will appear diminished if he doesn’t uphold the rules.  In his defense, the boss is likely thinking it wouldn’t be fair to give one employee a break that  he’s not prepared (or can’t) give to all his staff. 

But this is a classic fear-based, clinical approach to leadership that misses the point. (It is also wrong simply on logical grounds because it makes the classic mistake of thinking that one single action will lead to dire consequences as a result). In the example given, providing a specific benefit to one employee will trigger a landslide of similar requests that will damage the organization.  

Linear thinking works well when circumstances call for “either/or” binary decisions, e.g. safety measures, emergency situations, etc). The boss in this scenario thinks he has only two choices: approve or reject the employee’s request.  Comply or don’t comply with the rules. 

This is an example of applying linear thinking when a shift to circular thinking offers better results. In this situation where employees’ sense of wellbeing, freedom of choice and deep engagement are at play, circular thinking can yield more meaningful, helpful decisions.

Applying the “yes, and” principle of the circular world (rather than the “either/or approach of the linear world) can generate goodwill throughout the organization. People will understand that they work in a flexible environment, a caring workplace, a place where being human matters. In this instance, “yes” means we can continue to work well and meet our objectives, “and”, we can do that better by providing staff with flexibility, customization and agency according to their unique needs. Think about it, what is more likely to make an employee do their job well: tell them that rules are impossible to review and adjust, or, provide them with a response that is considerate of their very human needs? 

If this and similar scenarios were viewed through the lens of circular thinking, everything changes for the better. For example, the power dynamic in the circular world is generative. Rather than exerting his will even against resistance (the classic linear use of power and the zero sum game in action), the boss would see his power is rooted in helping himself and others reach their full potential. The employee feels valued and trusted as she works from home, the other staff know that their boss can be compassionate and discerning, and everyone can be empowered by this display of leadership acumen.

Now, you might be doubting this approach, assuming your linear thinking cap is firmly in place. What if the employee doesn’t deliver? What if more employees beat a path to the boss’ door expecting the same generosity? What if not having that employee around hurts team morale or effectiveness? These are serious, legitimate questions. The answer in each case is the same. The boss has to be ready to bring the team together in a spirit of transparency, mutual trust and candor and reframe the questions: What do we do well as a team? How can meet our collective goals and provide flexibility as needed? How can we learn from this experience to become an even more collaborative, trusting and empowered team?

Admittedly, this approach can be challenging at first, and there may be stumbles along the way as circular thinking takes root. But if all these experiences are seen as integral parts of growing together, they complement the organization, not diminish it.

The slippery slope approach is based on rules, not relationships, on power controlled, rather than shared, and on precedent trumping growth and creativity. But sometimes the principle of fairness, inherent to the slippery slope rational, is over-rated. Companies and organizations have learned that they can flourish, retain committed, gifted staff and attract good people when trust, empowerment and collaboration matter more than inflexible rules, controlling bosses and exaggerated fear of unintended consequences. In the linear world, risks are avoided and growth stunted, but in the circular world, risk is embraced and growth facilitated. 

Written by Laurie Anderson

A New Road for EAs?

Linear leadership understands power as the ability to assert your will, even against resistance.  In this mindset, the environmental assessment (EA) process is linked to the licencing process as a watchdog for potential problems. It seeks to protect the environment, even against economic drivers. It is also a stopgap, if you will, for government excessively asserting its will. Government holds the authority to licence a project. In this scenario, why not link EAs and licencing? They are conceptions of the same project, the same data-set, and the same way of knowing power, namely linear. 

The EA provides a neutral body to bring in information from an array of sources, collate it and make recommendations. The licencing process makes a decision based on the government’s conception of good governance. Good governance often means providing project certainty. After considering of the relevant factors, the limits of an activity are defined for the duration of the licence. Proponents can rely on their ability to conduct activities into the future, as long as they are in compliance with the terms of a licence. These terms are measurable, predictable and consistent.

In a 2WK world, the circular manifestation of good governance would also be considered. This is powered by knowing ourselves, being ourselves, and supporting others in doing the same. In other words, it is a transformational circle, with the ability to be responsive to changes. It leads to resilience when environments are unpredictable and gains the ability to capitalize on potential benefits as they arise.

Rapheal Benke, a macroeconomics experts with Proactiva Results gave a great description of the evolution of environmental assessment processes at a recent UN conference. They began by conceiving themselves as a part of the licensing process, responsible for identifying obstacles to overcome, as mentioned above. Next, EAs were linked to the licencing process as a forum for optimizing design and consideration of sustainability.  The axis of discussion became aspects like dam construction, transportation routes, the carbon footprint and social impacts. Then the big shift happened. Circular power began to find its place. The understanding of sustainability shifted to become the quest to find ways to benefit local communities through the assets and skills of the company. No longer is it enough to do no harm. Companies want to create a legacy of benefits in other sectors such as farming or manufacturing. This generates circular power – the desire to support other is being all that they can be. It becomes reciprocal and continues to generate mutual benefits in unexpected ways.

Realizing the full benefits of the shift requires a de-linking of the EA process from the licencing process. This allows the EA to operate under circular power dynamics, while licensing utilizes linear dynamics. Projects could then enjoy the benefits of both ways of knowing! 

Under circular power dynamics, the EA process would start well in advance of the licencing process. The parties would begin discussions at the point where there is time to build relationships, and generate trust. They take an interest in knowing and growing in understanding of each other, and working to support each other in fulfilling their values and creating shared benefits. When this is done long before thousands of dollars are spent, people are much more willing and able to find ways to accommodate each other.  

A circular environmental assessment process would be interactive and ongoing. Every time a new endeavour is proposed for a region, or an innovative process is found, it is shared with the regional hub to explore the potential benefits. That’s right. People would abandon certainty and welcome an iterative process rather than a one-time gateway. This creates the potential to consider how a change might be accommodated or provide a mutual benefit. The EA process would create a forum for all interested people to join the discussion. It would see itself as a facilitator of inclusion, transparency (including removing barriers to information), and conveners of good discussion. In short, they would form a hub that facilitated good relationship, good information exchanges and consensus decision-making, where appropriate.

Consideration of cumulative impacts would suddenly be possible. The forum would explore the potential for benefits to the new comer, the carbon footprint, the local economy, the company, and the collective. The discussion could result in an agreement between the parties and/or a proponent initiated, community supported, application to amend a licence to facilitate a benefit. 

In this new world, when someone offers new information of possible benefits or hazards, the proponent would receive it with gratitude knowing they are increasing their ability to bring their best effort to the project. They are gaining the benefit of a diverse range of perspectives.

Jill Bolte Taylor’s Story

From a circular perspective, there are two ways of knowing because that is what we experience. This is valid even without scientific study or expert advice. Linear thinking wants external, objective, repeatable evidence.

brain-atrophy

Jill Bolte Taylor, a neuro-anatomist, actually experienced her brain shifting between what she described as her left brain and her right brain during her stroke. Lucky for everyone, she lived to talk about and write about it in her book My Stroke of Insight. As a result, we have this example of two perspectives on the same event. One experiential, the other scientific. It is amazing to hear a neuroscientist describe these two radically different states of mind from first-hand experience. (Notice she didn’t feel herself shift between five or even three different states of mind. She experienced two distinct ways of being in the world.)

She was able to vividly describe the different sensations as the stroke completely cut off one aspect or her thinking, or the other. In one moment, Bolte Taylor describes caring deeply about the present moment. She felt connected to her body and the energy in everything around her. This flooded her with feelings of curiosity and love. The world made sense because we are connected, we are beautiful, and we are enough. She felt happy and just wanted to stay there.

Then it all shifted and she became very focused on finding details and more details to categorize and organize. This effort was in aid of a drive to increase the predictability of her environment. She wanted to take what she knew about the past and use it to navigate the future. She saw herself as separate from the external world and objectively driven to control it through goal achievement. In this mindset she focused on the goal of getting help.

This left-brain activity turned out to be lifesaving because just then Bolte-Taylor had moments left to figure out how to get help before she died. Fortunately, she achieved her goal.[1]

Jill Bolte-Tylor’s description of the experience of moving between her right and left brain is essentially describing what I call linear and circular thinking. There is remarkable similarity between what I observed and interpreted and her findings. We both recognized states driven by fear or love. We both saw the fear based world as objective, either/or thinking, and linear. The circular world is more subjective, focused on making connections (saying yes, and) and grounded in the moment with an interest in what is meaningful.

[1]

Are You a Circular or a Linear Thinker?

Have you ever been in a conversation and felt like you’ve just been hit by a train?  Or, that the person you are talking to is from another planet, and there might be unicorns and endless time there?  These are extreme cases, but I do sometimes find myself in a discussion where I feel that there are assumptions being made that I don’t agree with or even understand.  It makes it hard to join the discussion.

The root of this disconnect may be that a circular thinker is meeting a linear thinker and they’re not recognizing their difference.  Each of these modes has a set of operating conditions that are intuitively being applied.  When this profound point is not recognized, and people are in different modes, the conversation can go off the rails very quickly.

Here’s a quick quiz to determine your thinking style.  Imagine yourself facing a challenge.  Does column one or column two  feel like the best way to proceed?

Column One                                        Column Two

1. Define the goal                            1. Gather and welcome everyone affected

2. Develop a strategy                    2. Ask each person to express their feelings

3. Make a plan                                  3. Interactively share information

4. Set time lines, costs, tasks    4. Recognize a pattern, follow an idea

5. Activate the plan                          5. Give language to what is meaningful

6. Measure progress                        6. Respond to the information and redesign

Column one is a linear thinking process and column two is circular.  Some of you may have seen yourself more drawn to one mode or the other.  This can be the result of a cultural norm or a personal comfort zone. Scientists often think linearly while artists think circularly; men on average lean towards linear thinking while women are more circular; aboriginal people traditionally practice circular thinking while westerners tend to think linearly.

Possibly you answered “it depends.”  This makes sense because biologically we are all capable of both styles of thinking. Both are highly valuable when applied to the right situation. If you want to build a safety net, achieve a goal, have accountability, efficiency or loyalty, you want to engage in linear thinking. If, on the other hand, deep engagement in your work, creativity, transformation, gratitude, effectiveness, or happiness is what you seek, you want to be in circular thinking mode.

Neuroscience has shown us that there are two fundamental ways we can choose to view the world.  My geology professor, Bob Mason, used to say “there are two kinds of geologists; ones who say this is just like (fill in a deposit name), or ones who say this is nothing like…. The rest are fence sitters, just gathering useless information.”

We are biologically designed to either pull in what we love or push away what is detrimental or a waste of time.  Antonio Damasio‘s research at the University of Southern California found that a huge volume of information reaches our brains every day.  We must attach an emotion to any piece of information we want to remember. Only then is it available to us in decision making.  This is why tests are so effective.  We attach a fear based emotion to all the information required to get the grade.  Without the fear it is just a bunch of data.  Another way to learn is to engage with the material with curiosity.  Attaching this love based emotions also embeds information and makes it available for future use.IMG_2536

Fear-activated emotions lead to a linear style of thinking. Here logic, focus, objectivity, and discipline push back against the danger fear has identified for us.  Without this instinct we could not survive.

Circular thinking focuses on pulling in more of what you want.  It is rooted in a drive to be inclusive and transparent – a belief that the answer will come when everyone is included and a diverse array of thoughts are considered.  It subjectively seeks to find what is meaningful and allow that understanding to infuse everything we do.  WIthout circular thinking we could not change, feel contentment or develop relationships.

This blog is going to explore how knowing you are applying circular or linear thinking can make a difference to you in big and small ways.

Written by:

Kim Hudson

The Movie Arrival is All About 2WK

Louise and Ian, a linguist and a scientist, are rushed by helicopter to the site of an alien arrival. Somehow they have to decode the alien communication system, or as Louise would say, have a conversation with them. The US Army, and indeed the world, wants to know ‘What is your purpose on Earth?’

20161020171048arrival_movie_poster

Louise wants to learn their language because it is the heart of how they think. The Army thinks that will take too long.

The whole movie is this kind of juxtaposition of linear and circular thinking. Louise is subjective. She constantly learns through her feelings. She experiences them fully, allows them to permeate her consciousness, and then awakens to the meaning they hold for her.

 

Ian is all about breaking things down into their base parts to find a logical reason for why they have assembled in the way that they have. He wants to know the operating principle that makes things predictable. And sometimes he finds it.

 

The armies of the world are all about linear power. They have ways to assert their will even against the will of others. The challenge is to determine where the line is. When is the danger significant enough for them to use major force?

Once an aggressive move is taken, they are geared up to use the advantage of time and take the first strike before there is retaliation. It is unimaginable that there is a love based world where no matter what your behaviour you are worthy of love. Love is offered not because you work hard or you’re family or even because you exist. Love is offered because it is the nature of the person offering.

The news reporters are looking for the elements of danger so they can report them. They are bound by a duty to report the facts and are held accountable by their peers. This keeps a degree of control over the development of fear. The problem is they report the fact in a fear inducing way and leave the viewer to fill in the emotional parts. The biggest problem with the army and the news and most of the men in the movie is that they have a one-world view. It’s actually ironic because they have evidence of another world right in front of them. It exists in the form of the aliens and in the radically different way that Louise sees the situation. They are always looking for evidence of danger. They never awaken to the possibility of love.

But the really scary part is the social media that spins an emotional frenzy of fear and leads to anarchy in the streets.

I don’t want to give any spoilers for this movie so I will say something that will only make sense after you have seen the movie. Consensus decision-making is not the power of a veto. Consensus decision-making is when a group of people decide they will leave no one behind. They will stay in the circular world of connection no matter what the disagreements between people. There is a build -n trust of group wisdom inherent to this standpoint. A trust in the process over productivity: together we will know what is the right thing to do. The answer exists somewhere in the overlap between our independent perspectives.

Finally, I think there is a brave assertion in this movie that men and women view the world differently. One of the best lines in the movie is at the end. I was reminded of the Cherokee Proverb that says ‘The job of a woman is to lead men to their souls. The job of men is to make women safe to walk the Earth.’

Oh, and before I go, I would give this movie two big thumbs up! It is definitely worth watching. Make sure you have time to discuss it afterwards. It is very thought provoking.