Admiring Actualized Companies

Fifty years ago, Abraham Maslow wrote, "Where fear reigns, enlightened management is not possible." More recently, the management consulting firm Accenture revealed the results of a study that showed that companies have "emotional fields" that can immunize them from the kind of fear that is plaguing most companies today. Accenture's Jane Linder says, "Emotion is the silent partner behind organizational success especially when it comes to the capacity for continuous renewal. Although executives may regard effective project management as something that demands rationality in the extreme, Accenture research has established a direct link between employees' emotional engagement and performance."

This will come as no surprise to anyone who has hung out in a company in a death spiral. The contagious emotion of fear (which is usually a ripple in most companies, but has become a tsunami) shuts down creativity, productive communication, and the sense of team spirit that one tends to find in those companies that are able to transcend the difficult times. As the CEO of a company that was on the verge of a financial meltdown seven years ago, I know that the solution requires a certain healthy "psycho-hygiene" which allows a company and its people to build on small successes and believe that they can rise above the times.

Building on success is what you'll see on the cover of this week's Fortune magazine; it's the annual cover issue of the "World's Most Admired Companies." In the era of bad banks and incompetent insurance companies of historic proportions, it's hard to imagine that Fortune could round up 50 companies from around the world to make this list. But, one look at the list and I was sold. The top four companies -- Apple, Berkshire Hathaway, Toyota, and Google -- were all profiled in my book, PEAK, as companies that operate under principles that resemble Maslow's Hierarchy of Needs of human behavior. In fact, six of the top eight companies are organizations that I suggested were self-actualized in my book (this includes FedEx and Southwest Airlines also).

So, what makes a company self-actualized? Almost all companies today are seriously focused on their survival needs. In fact, some of these companies make odd decisions out of being ruled by financial fear. How can you explain that many airlines now charge their customers for soft drinks, pillows and blankets and one European airline, Ryanair, has even mused about installing pay toilets on their planes? At what point does the customer value proposition become a joke? These faulty flyers are so obsessed by their need to financially survive that they don't recognize that they are seriously upsetting their customers and, even their limited remaining customer credibility, in the process.

I had the good fortune of observing Southwest Airlines CEO Gary Kelly hand out peanuts during a flight recently and was able to spend ten minutes with him in the back of the plane asking him about why his company chose to take a different path (and they've even made it into a marketing campaign of "no hidden fees"). Surprisingly, he didn't say that Southwest's reluctance was primarily due to the fear of how their customers would react. Instead, he reminded me who in their company would probably be most barraged by the likely customer complaints. Gary Kelly said, "There's a reason our flight attendants appear happier than those at the other airlines. We take them into account when we make key operating decisions in our company. I'm not sure our competitors do the same." It is quite telling that there was no other U.S. airlines on Fortune's list.

Great companies create the conditions for their employees to live up to their potential. In fact, great leaders visualize the potential in their employees and actualize that potential into reality as former CEO and co-founder of Southwest Herb Kelleher did with his secretary Colleen Barrett (Colleen is now the President of the company!). Southwest Airlines flight attendants are more likely to be living their calling. United's flight attendants probably are just living through a job. Toyota's execs imagined the Prius. Google is able to recruit the best and the brightest with an actualization-focused culture. Apple creates evangelist customers who truly feel transformed by using Apple's products.

The companies we admire are very similar to the people we admire. They are passionate, smart, resilient, trustworthy, original, and forward-thinking. They are "being all they can be." They are able to transcend the survival-driven fear of the moment and instead focus on the higher success and transformational needs of their employees, customers, vendors, and investors.

Chip Conley is the Founder and CEO of Joie de Vivre Hospitality and the author of PEAK: How Great Companies Get Their Mojo From Maslow.

Comments

[orthomentor]

In a democracy, the driver for the eupsychian organization is, perhaps, "SOCIO-act­ualization­" because it would follow Ben Cohen's saying, "The community supports that business that supports the community." Maslow knew that we are all individual components of a great social gas (stolen from Aldous Huxley) and maximizing synergy is the goal. I agree with his idea of redefining profits and costs as stated in "Eupsychian Management." Else, we will always have to deal with the greed of the lower forms.

[KillTheMessenger]

Yes... but, there are some devils in the detail. The Prius is Toyota's immune system reaction to the Clinton Administration's billion dollar "next generation vehicle" program which was punted on by US car makers but explicitly excluded foreign companies and lead them to believe that there would be a new vehicle class emerging in the US which they had to compete in. The car is innovative, well designed and, as a business strategy, wonderfully executed. However, it is not as genuine a product as some of Apple's or Google's.

I believe Southwest Airlines is doing comparatively well because they made the right call on oil prices a couple of years ago and got through the worst of the oil price peak without too much financial harm.

[Alex Pattakos - Huffpost Blogger]

Hi Chip, Nicely said. And, as you well know, Maslow ultimately concluded that self-transcendence was the human soul's highest "need," which reflected more the spirit of my mentor, Viktor Frankl. Maslow's wife, Bertha, and his research associate put together his final thinking along these lines in the book, "The Farther Reaches of Human Nature." Thank you for your post! Alex

[peterhjones]

Alex, I also wondered about the concept of self-actualized company's per Maslow's B-values. The qualities of passion, smart, self-reliant are things we admire, but are not truly representative of self-actualization or transcendence. Actualization is personal fulfillment of potential, which perhaps the founders and some leaders of the PEAK firms have found. But as you say, transcendence takes it further, and I wonder if other firms would better represent the B-values of Maslow's Farther Reaches. What companies or institutions represent the meaning of Truth, Justice, Harmony, Beauty, or Peace?

Maslow also was a strong advocate of a management style he called Eupsychian. This predates participatory management by many years. It also is not quite the style of Apple or even Google, companies with strong founder and engineering cultures. I'm not sure what institutions are good examples of these higher values, but I'd say we need to set our sights higher than the current crop. Working with the creative professions, I know why people leave Apple and Google. Its fine to have heroic examples, but they are often the same ones. Let's hear from the small firms that have created lives of deep meaning for their people. Alex, do you know of some good ones?

[Chip Conley]

Alex, Your book on Frankl is one of my favorites of all time. Would love to connect with you one of these days as I'm working on a new book that has a Frankl reference.