Doug Lennick | Developing Financial & Emotional Competence
In this episode, host Don MacPherson welcomes Doug Lennick, a distinguished authority in leadership and emotional intelligence. Their conversation delves into the intricate relationship between financial acumen and emotional competence, providing invaluable insights for leaders steering their organizations through today's dynamic and often disruptive business environment.
The episode begins by addressing a pressing concern: America's financial well-being. With over $13 trillion in household debt reported at the end of 2017, including more than $800 billion in credit card debt, financial instability is a significant issue. Alarmingly, one in five Americans lacks any emergency savings, and 30% don't have even $500 set aside for unforeseen expenses. This financial anxiety permeates the workplace, with half of all U.S. employees feeling anxious or fearful about their financial situation. Such stress can lead to detrimental outcomes, including increased likelihood of theft and disengagement within organizations.
Doug Lennick, with a career dedicated to developing leaders across various industries, offers strategies to navigate these challenges. He emphasizes the importance of aligning financial decisions with core values, a theme explored in his book, "Leveraging Your Financial Intelligence: At the Intersection of Money, Health, and Happiness." Throughout the discussion, Doug provides practical advice on avoiding dangerous debt, creating a responsible financial framework, and leading effectively in a rapidly changing business world.
Key Lessons:
Embracing Change and Disruption: Doug underscores the necessity for leaders to adapt to change and view disruption as an opportunity rather than a threat. He discusses how technological advancements and economic shifts require leaders to be agile and forward-thinking, turning potential challenges into avenues for innovation and growth.
Cultivating Emotional Intelligence: The conversation highlights the critical role of emotional intelligence in leadership. Doug explains that self-awareness, empathy, and emotional regulation are essential skills for leaders to connect with their teams, foster a positive work environment, and make informed decisions. He shares techniques for developing these competencies to enhance leadership effectiveness.
Demonstrating Courage in Decision-Making: Doug emphasizes the importance of courage in leadership, particularly when making difficult decisions amidst uncertainty. He encourages leaders to stand by their convictions, take calculated risks, and lead with integrity, even when faced with adversity. This courage not only drives organizations forward but also inspires teams to embrace challenges confidently.
Aligning Actions with Core Values: Integrity emerges as a central theme, with Doug advising leaders to ensure their actions consistently reflect both personal and organizational values. He discusses how this alignment builds trust, enhances credibility, and serves as a guiding principle during times of change and disruption. By staying true to core values, leaders can navigate challenges more effectively and maintain organizational cohesion.
Balancing Financial and Emotional Competence: Doug delves into the interplay between financial intelligence and emotional competence, illustrating how leaders can achieve sustainable success by balancing these aspects. He provides insights into making financial decisions that not only benefit the organization but also promote the well-being of employees, thereby fostering a more committed and productive workforce.
This episode is valuable resource for global business leaders aiming to enhance their leadership capabilities amidst the complexities of today's business landscape. Doug Lennick's expertise offers a roadmap for developing financial and emotional competence, empowering leaders to navigate change, embrace disruption, and lead with courage and integrity. By integrating these lessons, leaders can foster resilient organizations poised for long-term success.
Doug Lennick has spent his career developing leaders in a wide variety of industries and exploring how people can make better financial decisions that align with their core values. Doug has authored numerous books including “Leveraging Your Financial Intelligence: At the Intersection of Money, Health and Happiness.”
Don MacPherson
America has a money problem. I'm not talking about the $20 plus trillion in national debt. I'm talking about individual debt. U.S. household debt exceeded $13 trillion at the end of 2017. Half of all U.S. employees are anxious or fearful about their financial wellbeing, which poses great risk to your organization. Our guest today is Doug Lennick. Doug has spent his career developing leaders in a wide variety of industries and helping people make better financial decisions that align with their core values. The first part of our conversation focuses on why people continue to make poor financial decisions and what can be done to create financial competence. The second part of the interview sheds light on what business leaders can do to become more effective in a rapidly changing economy.
Doug, welcome to 12 Geniuses.
Doug Lennick
Thank you. It's great to be here. I knew you needed some non-geniuses, so I'm glad I got to fill that part.
Don MacPherson
Well, I'm sure you will share your genius in your own way. Let's start by talking about America's debt, specifically, our consumer debt of somewhere between $13 trillion and $15 trillion. Have Americans always had high levels of individual debt?
Doug Lennick
No. No, in fact, years and years ago, people had no debt, and they wouldn't buy things if they couldn't afford things. The advent of credit gave people the opportunity to have stuff they couldn't afford. And then what we've done is we've spread that around the world. So, we now do this for other countries too. We let them borrow money they can't afford to pay back.
Don MacPherson
And when did this sort of irresponsible borrowing occur? When did this start?
Doug Lennick
I don’t really know. I would say sometime post World War II. So, prior to that, there wasn't a lot of debt. If you go back to my grandfather's generation, my grandparents’ generation, they didn't really have a lot of debt. In fact, they didn't have any debt. It was pay for it. And then somebody thought, well, what if we loaned people money? I mean, it became an interesting business model. It's not a bad business model, not necessarily a bad thing to borrow money. But what happens is people get caught up in having it now, paying for it later. And a lot of the stuff that they borrow money for depreciates immediately. So, the item they bought starts getting worth less every day and then they still have this debt. Not all debt's good debt. There is what they call good debt. But even that is a little overrated.
Don MacPherson
You were talking as we were warming up for the broadcast here that it's not necessarily the amount of debt that's a problem, because we have a lot of assets as well, but it's the concentration of debt. What do you mean by that?
Doug Lennick
Well, if you look in the private sector in the United States, the assets of private Americans exceed $110 trillion. The debt’s in that $13, $15 trillion. So, by itself, that's not a macro problem. It's not like $110 trillion of assets versus $15 trillion of debt is a problem. That's not a bad number. The problem is the debt is concentrated, and so are the assets. Right now, there's 326 million people in the United States. And if you start looking and breaking it out, 23% of them are Baby Boomers. They control 81% of all financial activity.
Don MacPherson
That's incredible.
Doug Lennick
It's incredible.
Don MacPherson
So, they possess about $85 to $90 trillion of these of $110 trillion assets.
Doug Lennick
Of these assets.
Don MacPherson
Wow.
Doug Lennick
Correct. They're the ones that own everything basically. Now what's happening is the other generations are starting to accumulate some things and there's this intergenerational wealth, but the youngest or the newest in the workforce generation, the millennials, they have a high degree of debt. So, they've got like 10% of all the debt, a little more than that is theirs, and it's education. So, digging out of this is going to be a big problem for many of them. So, what you have are young folks who are overburdened with debt. Then you have a concentration of wealth. And then, currently, what's happening is we're making the spread break bigger. The haves are going to have more, the have nots are going to have less, and so the gap is going to grow, has been growing. That's the problem.
Don MacPherson
Of course, credit cards and credit debt, that's an important part of our economy. Is there a benchmark or a point where an individual's debt starts to become irresponsible? Do you have any sort of benchmark that you can share for that?
Doug Lennick
Well, I would simply say that when you look at your… See, what confuses a lot of people is they think of their gross income, they borrow on their gross income, but they spend on their net. If I make $50,000, but I take home $35,000, I borrow as if I make $50,000, but I actually only make $35,000. You know what I mean? That's what I really bring home. So, I don’t pay back from the 50. I pay back from the 35. What happens… And lenders look at your gross revenue.
Don MacPherson
What has enabled some of this irresponsible borrowing and running up of the debt?
Doug Lennick
A friend of mine from Australia, this guy named Arun Abey, A-R-U-N is his first name, A-B-E-Y is his last name, he wrote a book called How Much is Enough, which was a big success in Australia, and then I helped him launch the book here in the United States. But one of the things that he points out is that in the United States, we spend twice as much money encouraging people to spend money than we spend on educating people.
Don MacPherson
This is through marketing, or how do you break that down?
Doug Lennick
Yeah. So, if you look at all the things that we do to encourage people to buy something, we spend twice as much money getting them to be stupid as we do getting them to be smart. If you took preschool through PhD, and all the expenses in the entire country, and then doubled that, we spend twice as much on getting people to spend money as we do on getting people to be smart about money or about life.
Don MacPherson
About anything, right? You're talking about education in general.
Doug Lennick
Yeah. It's not just financial education. In fact, we don’t do financial education.
Don MacPherson
Well, that's something that I wanted to ask you about is where are they doing that well? Because we'll get into emotional intelligence in the second part of this interview, but in my opinion, and from what I've seen, I think that this country could benefit from much better financial education, starting at a very young age, and also better education around emotional intelligence. So, let's talk about financial intelligence.
Doug Lennick
Yeah. There's no question about that. I mean, we could do a much better job of helping people become responsible with their money and helping them be financially intelligent, which really is how to make smart values-based decisions, responsible values-based decisions with money. We don’t do that. We, by and large, ignore it. And families are reluctant to talk to their children about their financials. So, parents don’t talk to kids. That's off limits. So, kids aren't ever introduced. Some of them get an allowance, some of them don’t, some of them get a kick in the butt, some of them don’t. but there's just generally an aversion to talking openly. In fact, spouses don’t talk to each other. It's one of the biggest problems in marriages today.
Don MacPherson
It's a taboo, isn't it?
Doug Lennick
Yeah. Yeah, you just don’t talk about your money.
Don MacPherson
Let me share a profile with you. We've got a person making $50,000 a year, which we know that's gross income. They're probably taking home $35,000 to $40,000 of that money. They've got $30,000 in credit card debt. It's revolving, let's say, it's at an interest rate of 20%. Let's even say it's 12%. Let's give them the benefit of the doubt. And then they've got student loans of $25,000, maybe $35,000.
Doug Lennick
They're dead.
Don MacPherson
Okay. But, but how did they get there? Because they had a decision-making process, right? They have the wrong decision-making process. And we're going to talk about what the right decision-making process is in a minute, but was it that inability to delay gratification? Or how did they get there? What have you seen in your experience?
Doug Lennick
Well, the way they got there is the credit card debt was a matter of getting stuff that they could enjoy now, so I get the benefit of it now. Like, I know a credit card company that opened business in Mexico and they said, “The only thing that the Americans have that you don’t have is a credit card. So, we'll give you a credit card.”
Don MacPherson
That's their marketing strategy.
Doug Lennick
Yeah. It crushed them, crushed the people that borrowed the money. Because once you borrow that money, you can't get out. Then your payments will cripple you pretty much indefinitely. I mean, you have to really get ahold of yourself, and that's very, very, very, very hard. That's the issue. For most people, it's an issue of, I want it now and I can have it now, so I can enjoy the car now, I can enjoy the new couch now, I can enjoy whatever it is now.
Don MacPherson
I don’t use this term lightly, but it's a form of financial slavery. And if slavery is too harsh a term, maybe it's indentured servitude. And while they're enjoying whatever that is, that car, that latte, whatever it is that's accumulating this great debt, there's a chain that's being put around their ankle, around their wrist.
Doug Lennick
Oh yes. Oh, there's no question about it. And people don’t see it. If they're lucky, like, I've had situations in my own family where people accidentally borrowed more than they should have, and then they realized what was happening, and then they go, “Oh, mom, dad.” Now, fortunately, we've been able to rescue them, but a lot of families, they can't rescue them.
Don MacPherson
Most, right?
Doug Lennick
Yeah. The majority of families can't rescue them. And so, then once they're rescued, put them on a responsible path, but it's expensive tuition.
Don MacPherson
Well, you're an expert in the workplace. That's where I've spent my past 20, 25 years is helping organizations get the best out of their employees, so we share that. I want to talk about the byproducts of debt stress, particularly in the workforce. I'm assuming you could cite data on the effect that debt has on an individual's health or personal relationships. But what about performance at work? How does debt affect that?
Doug Lennick
Well, if you connect debt to stress, so it's not the debt, it's the stress. So, financial stress, so adversely affects employment, it adversely affects performance. It, unfortunately, contributes to absenteeism. Because here's what we know, as financial stress goes up, and I created this metaphor, misery to wisdom, so M is the initial for misery. What we know is, as financial stress goes up, one's ability to handle things emotionally goes down. So, our listeners can draw the picture right now. With stress going up, you got an M, stress is going up, one's ability to handle things emotionally goes down. Irrational decision-making and behavior goes up, physical health, emotional health/happiness, and financial health all suffer.
Don MacPherson
They're going the wrong way.
Doug Lennick
They all go the wrong way. When that happens, what happens is absenteeism at work goes up. So, people don’t show up.
Don MacPherson
They just can't deal with it.
Doug Lennick
Right.
Don MacPherson
They just can't add another stressor to their life.
Doug Lennick
Right. They call in sick more often. So, your absenteeism will go up. And anybody can look all this stuff up. This is real, so we're not kidding you. We know for sure that excessive financial stress caused by excessive debt will adversely affect attendance at work, performance at work, physical health, and will exacerbate the health insurance coverages. So, what'll happen is costs are going to go up. So, there's a whole lot of unintended consequences, and it's significant. What we say then is how do you go from misery to wisdom? The answer is you start getting a hold of yourself, you start becoming financially intelligent, you start leveraging your financial intelligence. And when you start doing that, there is an intersection between money, health, and happiness.
Don MacPherson
Okay. And that's what I want to ask about is, what's the solution? What's the framework for responsible financial decision-making?
Doug Lennick
Well, the framework is really to start recognizing that I have to get prepared for the truth, and the truth is uncertainty. So, what we find is that, as people prepare themselves financially for uncertainty, it reduces their stress. So, now we're into wisdom. Now you take that M, turn it over, and now financial stress is coming down, one's ability to handle things emotionally is going up, irrational decision-making and behavior is coming down, and physical health, financial health, emotional well-being, and happiness, all improve. We know, for sure, we have the data that actually say, if you are prepared financially for uncertainty, you will have less stress. If you have less stress, you will be healthier. If you are healthier, you will be more productive in your life.
Don MacPherson
And where can people get started or how do you recommend that people get started?
Doug Lennick
These things all sound really trite because I say, instead of buying a lottery ticket, let's say you go in three times a week and put $5 down and buy lottery tickets. I've never bought a lottery ticket by the way. That doesn't make me, especially, wonderful. It just means that I understand the odds of me taking that money and putting it in the bank are better than the odds of me taking that money and buying a lottery ticket. People that work at the lottery, I would say, just save that money. It's going to go slow and you're going to think, “Wow, if I just won the lottery…” I know. If you just won that $155 million...
Don MacPherson
Yeah. Well, I think a lot of people are looking for hope. That's what the lottery is selling.
Doug Lennick
You have to change behavior. Behavioral change is really hard. We know a lot about behavioral change. And the human being, we're wired to repeat behavior. And however old you are, or I am, or any of our listeners are, it's taken us our entire lives to be just like we are. So, it took you your whole life to be just like you. Even if your children want you to change your behavior, because I had a daughter who was telling me I should do something different as recently as yesterday because… That I limp too much. I get that. Even when someone who loves you says it's time to change your behavior, it's still hard. It's not easy. You have to accept that behavioral change is hard, but your mind can override the brain's impulse to repeat behavior.
Don MacPherson
Perfect. So, I want to ask about that. And I want to ask you about delayed gratification, marshmallows and change. And then we’re going to end this segment. Yes.
Doug Lennick
I haven’t heard about that for a while.
Don MacPherson
You haven't, but it's-
Doug Lennick
I know the experiments.
Don MacPherson
You know the experiments. So, why don’t you describe the marshmallow experiment? And I also want you to address those who ate the marshmallow and if they had the ability later in life to change. Maybe you can talk a little bit about the marshmallow experiment, what it is.
Doug Lennick
Yeah. Here's what it was. For those who are unfamiliar with this, this is several decades old. So, they started an experiment, and I can't give attribution, I can't remember who ran the experiment. But what they did is they brought a bunch of little kids into a room. And the only requirement for being a participant, if you were a kid, is you had to like marshmallows. If you didn't like marshmallows, it wasn't good because then you wouldn't care. But if you liked marshmallows, then here was the deal. They would put a marshmallow on the table between us, and they would say, “Now, I have to get up and I have to leave, and I'll be gone for a little while. That marshmallow is there. That's your marshmallow. If you want, you can eat it. But if you wait until I get back, I'll give you two marshmallows.” If you can delay your gratification in essence, you don’t say that to a six-year-old kid, but you say, “If you can wait, I'll give you two marshmallows instead of one.”
Don MacPherson
That's a good return. Sometimes we have to wait seven years for that sort of return.
Doug Lennick
Absolutely, it's a great return. And so, what then they would do is they'd leave the room and these little kids would sit there and they'd look at that marshmallow. Some of them would get up and they'd go stand in the corner so that they wouldn't have to see the marshmallow, because they thought, if I see the marshmallow, I'm going to eat the marshmallow. Some of them would pick up the marshmallow and they'd nibble on it a little bit. Some of them would just eat the marshmallow. And then they, longitudinally, for like two decades, they followed these kids. And they discovered that the kids that could wait were the kids that had the most success in life broadly. They had better family lives. They had better social lives. They had better professional lives. And the people that couldn't wait, the people that couldn't control the impulse, those little kids that couldn't control their impulses, they had a much rougher ride.
But the wonderful thing is you can actually teach impulse control. And you can teach that to little kids, and you can teach right from wrong, little kids. There's a lot of interesting little techniques you can use with little kids, red light, green light, yellow light. Red light is stop. Green light is go. You learn that fairly early in life. You learn that red light, stop. Yellow light, caution. Green light, go. You teach little kids, you could teach little kids how to take the concept of red light, yellow light, green light, and apply that to decision-making.
Don MacPherson
That's great. And by the way, it's Stanford University.
Doug Lennick
Oh, it’s Stanford.
Don MacPherson
And the professor was Walter Mischel.
Doug Lennick
Oh, thank you.
Don MacPherson
You're welcome.
Doug Lennick
See, you did your homework. I didn't know you were going to ask me that, though, but I still…
Don MacPherson
Well, it's one of my favorite studies. Stanford always is doing interesting things, but that was from the late ‘60s, early ‘70s. When we come back, we're going to talk about leadership, leadership effectiveness. That's an area of expertise for you as well. We talked about changing children. Now we're going to talk about changing adults. So, we'll be back in a moment with Doug Lennick, CEO of Think2Perform.
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All right, we are back with Think2Perform CEO, Doug Lennick. In the first part of the interview, we discussed responsible financial decision-making. In this segment, we are going to discuss effective leadership in a rapidly changing world. Doug, even more than for your expertise in financial behavior, you're known for leadership development and executive coaching. I'd like to start with the issue of senior leadership trust. The Edelman Trust Barometer indicates that only 52% of Americans trust business as an institution. Research that my colleagues and I did at Modern Survey polled 8,000 full-time U.S. employees and found that only 47% said they trust their senior leadership. Why is trust so dangerously low in the C-suite?
Doug Lennick
I was going to say that's pretty high.
Don MacPherson
Well, I should say we segmented it. So, 47% said they trust their senior leadership. But when you look at companies over 10,000 employees, it's closer to 40%.
Doug Lennick
Yeah.
Don MacPherson
Very large organizations.
Doug Lennick
Yeah. I think a lot of it is based on what employees observe from senior leadership. So, the behaviors they observe, the decisions they see be made, and so I think it creates some concerns about trust. In fact, the younger Stephen Covey wrote a book called The Speed of Trust, but his dad, Stephen Covey, who I was fortunate enough to get to know, and who was kind enough to actually endorse one of my books. He didn't endorse a lot of books. And so, he endorsed Moral Intelligence, but I learned a lot from him. Not just his 7 habits, but from talking with him, spending time with him. He used to always say that trust is a function of character and competence. And someone could be competent and lack character. And therefore, they were not trustworthy. And someone could have high character, but not be competent. And they were, therefore, not trustworthy.
I think where most of the trust issues fall is in character. When Fred Kiel and I wrote Moral Intelligence and then Moral Intelligence, 2.0, and then he wrote the book, Return on Character, which he wrote without me, great book, longitudinal study. We looked at moral principles, one of which is integrity. And when you have it, you produce trust. One of which is responsibility. When you have it, you inspire the workforce. Third of which is compassion. When you have that, you engage the best efforts of people, you attract and retain people. And the fourth is forgiveness, which is the ability to let go of mistakes, move on so that you can innovate. Even though integrity is the one most directly associated with trust, it's really the combination of them all.
Basically, the data say that, when executive leaders demonstrate they care about people, which is compassion, and they do so with integrity, so they keep their promises, they tell the truth, they stand up for what's right, they do things like that, then they have great trust. I was fortunate, one of the great leaders that I had a chance to work for recently retired as CEO and chairman of American Express, Ken Chenault. I reported to Ken for a number of years and supported him worldwide. I had a department of nobody, basically, but I did a lot of stuff around the world and got to work in a lot of different places.
One of the things that was impressive to me was, at one point, there were a lot of things that were going on in the early 2000s, including 9/11. And he and I spoke about, so what's about 9/11? Then there were other things that came as a result of that. Eventually, there was a time when the company needed to lay off some people. And he got all these wonderful notes from displaced workers. You'd think…
Don MacPherson
How did he do it?
Doug Lennick
He did it because they were writing little notes. I read a lot of the notes that these people loved working for Ken. They appreciated his honesty.
Don MacPherson
But they were laid off.
Doug Lennick
But they were laid off. But he cared about them.
Don MacPherson
How did he handle it? How did he do it differently than other CEOs have done it?
Doug Lennick
He told them, “I care about you and I'm and I feel for you.” I've had other situations where-
Don MacPherson
So, he did it in a compassionate way.
Doug Lennick
Yeah. I mean, so he could do the organizationally responsible thing, because when you're running the company, you've got a lot of constituents. You've got your shareholders, you've got your customers, you've got your workforce. And then you've got the community at large. You have to juggle that whole thing. It's not just about shareholders. People will trust you if you actively demonstrate that you care about them, even if you have to let them go, and sometimes you do. That's sometimes what happens. Sometimes it's for a performance reason, sometimes it's for a business… Because I always say the purpose of business is no more to make money than the purpose of life is to breathe. But if you quit breathing, it's going to ruin your day.
Don MacPherson
That's a bad end game, yes.
Doug Lennick
You don’t wake up to breathe. You breathe to wake up. And you don’t make money. You make money to be in business.
Don MacPherson
Stay in business. It's fuel. It's fuel for the business fuel.
Doug Lennick
It’s fuel for the business.
Don MacPherson
Right.
Doug Lennick
Sometimes people get confused by that. I think a lot of leaders don’t do a very good job of articulating it, but when they do, people buy into it.
Don MacPherson
I want to introduce a hypothetical situation. Let's say you're an existing CEO and you have this 40% of your employees trust senior leadership. What would you do to set a foundation to regain their trust?
Doug Lennick
Well, there's a couple things I would do. One is I would, if I had the data, I would say, “I have this data that says somehow I've lost your trust. So, one, thank you for telling me. That's hard to do. So, thank you for letting me know. Two, I want to share with you how I think about things.” Now, this assumes, by the way, if you don’t really believe this, don’t do this. So…
Don MacPherson
Don’t fake it.
Doug Lennick
Don’t fake it. No, don’t fake it.
Don MacPherson
You'll get exposed, right?
Doug Lennick
Yeah. I mean, if you don’t really care, don’t say you care. That won't play. But if you do care, say you care. And it's okay even to be emotional, but just say, “Hey, I am sorry that this is the reputation that myself and my senior team have developed. And, for whatever reason, we've earned it and we want to earn our way out. So, I want to share with you the things… Because trust, to me, is a function of self-awareness, self-disclosure, and discovery. So, I'd like to rebuild the bonds. I want to share with you the things that I care most about. Let me tell you what my values are. My values are family, happiness, wisdom, integrity, service, health. Now I've disclosed and I've shared that with you. I want you to actually pay attention to me.”
“And if you see me behaving in ways inconsistent with my values,” or like at Think2Perform, our values are people, integrity, growth, excellence. “If you see us behaving in ways inconsistent with that.” And by the way, I have personally been called out on that. And as hard as it is to hear it, it's better than not hearing it. Because once I know, I can do something, so I want to be aware of my own situation. I want to disclose it to you. And then I want to discover yours. I want to find out what matters to you most. And so, this whole notion of values-based leadership is really very powerful, very strong.
Don MacPherson
One of the things that I find really interesting about that is completely accepting the results, right? And not spending any energy or any time on, well, that's your perception, I know what the reality is.
Doug Lennick
Yeah. Right.
Don MacPherson
Which I find a lot of leaders typically do is-
Doug Lennick
Oh yeah. I've tried that.
Don MacPherson
You have?
Doug Lennick
Yeah.
Don MacPherson
Doesn't work so well.
Doug Lennick
No.
Don MacPherson
Do you know Ray Dalio?
Doug Lennick
No.
Don MacPherson
Oh, okay. CEO and, I think, founder of Bridgewater Associates.
Doug Lennick
Yeah. I know who he is.
Don MacPherson
You know who he is. Yeah. Actually, what you were talking about reminded me of one of his principles, which is complete transparency. He allows people, at any level within his organization, to call him out on something, and he completely accepts it.
Doug Lennick
Yes. Well, yeah. That's how I feel. I mean, I had an organization, I wasn't the biggest guy in the world, but I had 17,000 people report up to me. And I said, “Here's the deal.” And I told all the people this, I said, “Our culture is this. I want anybody to be able to talk to anybody about anything at any time. And I want to tell you what I believe and I want to tell you that I genuinely want you to hold me accountable.”
Don MacPherson
That completely removes ego from the equation, which is really difficult to do.
Doug Lennick
Yeah. Exactly. What I had janitors talking to me, I'll tell you, for sure, and I loved these people, and I knew them by name. Take the time to get to, people like their names, by the way, get to know people.
Don MacPherson
They do like their names. Yeah, I think it's the sweetest sounding word, right? By 2020, half the U.S. workforce is going to be comprised of millennials. That means that… Well, at the same time, about 10,000 baby boomers are retiring every day.
Doug Lennick
Until 2029. In fact, interestingly, the millennial population is the only group that's larger in numbers than the boomers.
Don MacPherson
Than the boomers. Right.
Doug Lennick
But by a little bit.
Don MacPherson
So, we are going to see a huge shift in leadership experience in our organizations. My question is, what one piece of advice do you give first-time managers?
Doug Lennick
I basically say how effective you are at influencing others, which is what leadership is about. Leadership is everything you do to influence others. And leadership and management are not synonyms.
Don MacPherson
Right. So, what's the difference?
Doug Lennick
One is managers are appointed by people who have the authority to appoint them, and leaders are chosen by followers. Leaders are actually people someone wants to follow. They are influenced by leaders. And so, I say how effective you are as a leader, as an influencer is a function of how effective you are at managing yourself.
Don MacPherson
So, you can't be a train wreck at home or at work and expect to have a big following.
Doug Lennick
No. If you can't manage yourself well, don’t expect that you're going to influence anybody very effectively. I mean, you'll influence them.
Don MacPherson
But not in the way you want.
Doug Lennick
No.
Don MacPherson
So, define self-management.
Doug Lennick
Well, self-management is essentially, how do you know you're managing yourself well? I answer that by saying, people who manage themselves well, align their reality, their thoughts, and their actions, and their emotions, to the extent they can, consistent with their goals and consistent with their values. I will know I'm managing myself well when I'm thinking and doing what I need to think and do, regardless of how I feel, which is where we get into emotional competence, so, however, I feel, if I feel frustrated, I still can decide to do the right thing. If I'm anxious, if I'm angry, I can still do the right thing. So, I can still think and do what needs to be done to honor my sense of purpose, achieve my goals, and do so consistent with principles and values.
Doug Lennick
And when I'm doing that, I say I'm living in alignment, and then I am managing myself well. My point of view on leadership is the most effective leaders live in alignment and they help the people they influence do the same thing. So, what I try to do is align what I think and do with my goals, my sense of purpose, and my values, and the principles. And I try to help everybody around me do exactly the same thing. If I can do that, the better I'm at that. The better I do that, the more engaged my workforce is. The more engaged my workforce is, the better the performance of our organization is. You give me an engaged workforce and I'll give you high performance.
Don MacPherson
What one piece of advice would you give a first-time CEO?
Doug Lennick
I would say, first thing you should do is get in touch with your people, find out what they want for themselves, which we call WDYWFY (“What Do You Want For Yourself”). Position yourself as an enabler. Think of yourself as somebody who is there to help the people around you succeed. Surround yourself with successes. I was always, always, the least educated person on my team when I was a senior exec. I didn't graduate from college till I was 57. I'm 66. I had I Ivy League, MBAs. I had PhDs. I had all that. I was never intimidated by having more well educated, smarter people around me than me. My whole thing was, if you do really well, people will think I'm doing well. That's what I would say to a first-time CEO. It's not about you.
Don MacPherson
This next decade is going to bring us incredible new technologies. I'm talking about artificial intelligence and sophisticated robots, wearables, 3D printing, etc. Things are becoming more widely adopted, these technologies are. How do you anticipate that the leadership competencies will be altered by an effective leader over the next decade or so as a result of these technologies?
Doug Lennick
That's an interesting question, Don. I would say, I'm not sure that the human condition is going to change significantly with the technologies. I think human beings will remain emotional beings. I don’t think we're going to be Dr. Spock anytime soon. And even in the end, I think Dr. Spock got emotional.
Don MacPherson
Not a big fan, but I think I do remember that episode. Yeah.
Doug Lennick
I mean, I think this notion that-
Don MacPherson
We're talking about the Star Trek Dr. Spock, right?
Doug Lennick
Yeah.
Don MacPherson
Yeah. Okay. Not the baby doctor.
Doug Lennick
Not the baby doctor.
Don MacPherson
Not the baby doctor. Okay.
Doug Lennick
No, no, exactly. I mean, I'm thinking that even though people are thinking we will become an emotionless species, I don’t believe it. I don’t think it's going to happen, certainly not in the next 10 years.
Don MacPherson
But doesn't emotional intelligence become even more valuable?
Doug Lennick
Yes. Yes. But that's more about being emotionally intelligent versus being emotionless. Emotional intelligence isn't the lack of emotions. It's the awareness of the emotion.
Don MacPherson
No, that's my point. I think it becomes even more important.
Doug Lennick
Yes. Oh yeah. I think that's an interesting point. So, I would say the differentiators will continue to be and, even more so, emotional and moral. Your sense of this ability to handle yourself well under pressure and be emotionally competent, and then being morally competent, and I always say there's a difference between moral intelligence and moral competence. One can be morally intelligent and morally incompetent in the same moment. Meaning. I'm doing something that I know is wrong. That's the incompetence. Knowing it's wrong is the intelligence. So, having it is one thing, acting upon it is another. I think that, increasingly, the differentiators will be moral and emotional. Cognitive and technical competencies will be table stakes.
Don MacPherson
I want to bring that back to the beginning of this segment; you were talking about trust and you were talking about competence and character.
Doug Lennick
Yes.
Don MacPherson
Doesn't character become amplified or the importance of character become amplified?
Doug Lennick
Yes. Absolutely.
Don MacPherson
In the first segment, we talked about the marshmallow test, or the marshmallow experiment, and how you can change children and their behaviors. What are the most effective ways of changing adults? I want to position this because I do believe that the technologies that I mentioned, artificial intelligence, are going to change the way we live and work.
Doug Lennick
There's no question.
Don MacPherson
And those people in the workforce who choose not to be adopters or who choose not to elevate their experience and their knowledge will be left behind, and I'm very worried about this.
Doug Lennick
Yes. They, in fact, will. I will say that one of the concepts that I worked on and we've worked on at Think2Perform is what we call the four Rs (Recognize, Reflect, Reframe, Respond). These are neuroscientific ally proven to work. The neuroscience is the study of the brain and how you can rewire your brain as an adult. And we now know that the adult has more ability to change than we have, heretofore, given ourselves credit for. A lot of us grew up hearing, you can't teach old dogs new tricks. That's not true. The adult brain is more malleable. It's more changeable. And we now know that, well into people's 90s, and we're starting to get new data on people above the century mark, the centenarians, people can keep rewiring their brains.
So, I'll give you four quick things. We call them the four Rs. The first is to Recognize. The way the brain works, incidentally, is practice makes permanent. Practice does not make perfect. Whatever you repeatedly think, whatever you repeatedly do, gets wired into the habit center of your brain. But the first R is to Recognize. Recognize what you are thinking. What am I thinking right now? How am I feeling right now? What am I doing right now? Recognize. Recognize, what's Don thinking? How's he feeling?
Don MacPherson
The interesting thing about that is it sounds so simple, but I don’t think very many people do it.
Doug Lennick
Oh no, almost nobody does it. And simple and easy are not synonyms.
Don MacPherson
No, actually they work against each other quite often.
Doug Lennick
It's very simple, but it's very hard.
Don MacPherson
Right.
Doug Lennick
Second R is to Reflect. Reflect on what? Reflect on the big picture, reflect on your values, reflect on what's most important to you, reflect on your goals, reflect on that. The process of reflecting will calm the emotional center and improve the probability of you making a rational decision. Third R is to Reframe, which just means I might have to change what I'm thinking. This is really, really hard. People hate changing what they're thinking. As a growing human being, pursuing your potential, it's very likely that there are going to be some things you discover that make you think differently about what you used to think.
Don MacPherson
So, we've got Recognize, Reflect, Reframe…
Doug Lennick
And the fourth R is Respond, make a choice. And the choice could be to do nothing. You don’t always have to decide to act. Sometimes the right choice is to not do anything. I think I'm going to just keep my mouth shut.
Don MacPherson
So, this is a perfect segue into the last question that I want to ask you. It's a quote from one of your books, my favorite quote.
Doug Lennick
My favorite author.
Don MacPherson
In your book, you said, and I think this might have been The Simple Genius, “But happiness is a state of mind, not a state of affairs.”
Doug Lennick
Yes.
Don MacPherson
Essentially, you're saying that you can choose to be happy. You don’t have to wait for the conditions to be perfect for you to be happy. You actually can make a choice, which is amazing.
Doug Lennick
Well, and I would say this, happiness, the thing that I throw in the middle that isn't in the quote is happiness is a state of mind contingent upon a person being true to his or her beliefs. So, if I honor my values, then it's not a state of affairs. And that's why we have data that say 30% or more of people on or below the poverty line, consider themselves happy and thriving, even though somebody has told them, “You have no right to be happy. You don’t have any money.”
Don MacPherson
Right. I noticed this, one of my favorite countries to travel to has been Guatemala. And I've been there three times, not for a while, but…
Doug Lennick
Is that where you take 8 million tennis balls?
Don MacPherson
I've taken a lot of tennis balls and racket balls and given them to the kids. But you will notice in this country, or at least my experience has been, it's been a while since I've been there, but these kids have nothing. They have a stick, and they have a rock, and they're playing, and they're happy, and they're smiling, and-
Doug Lennick
And they didn't have to buy the stick at the store and buy the rock.
Don MacPherson
They didn't. And nobody told them that they can't be happy. It's beautiful. But I love this, happiness is a state of mind, not a state of affairs. My question, and let’s close on this, is how have you used this maxim in your leadership coaching?
Doug Lennick
Well, in my leadership coaching, I always say, as long as… And part of how I've used it is, I say, “Happy people perform better.” If you're happy, you're better at every dimension of your life. You're better as a partner, a husband, a significant other, a father, you're better as a friend. Happy people just are better at everything. And so, I point out, happiness is selfish. Because it's yours. I mean, you get to be happy. It's like, “Huh, I feel guilty when I'm happy.” Well, get over it. It's okay to feel happy. In fact, you can't give away that what you don’t have. So, what I do is I tell people, “If you are happy, you can help other people.
Don MacPherson
People. That's exactly right. It's an enabler. It's infectious.
Doug Lennick
Yeah. I mean, I can't give you something I don’t have. If I'm miserable, I can't give you happiness. But if I'm happy, I might be able to help you achieve happiness.
Don MacPherson
Yeah, it doesn't always work.
Doug Lennick
No.
Don MacPherson
It's not perfect, but-
Doug Lennick
Almost nothing works always.
Don MacPherson
That's another one that I liked. Well, Doug, this has been fantastic. I appreciate your time today. And thanks for being a genius.
Doug Lennick
I wrote the book, The Simple Genius You, but the genius is the reader, not the author.
Don MacPherson
Where can people find you online?
Doug Lennick
They can just look me up, Google me, Doug Lennick. Wonderfully enough, I'm the only one in the world that anybody has been able to locate. Unlike some names, where if you Google the name, there's about a thousand of them. There's one Doug Lennick, so you can Google me. You can also go to our website, hink, the word, think, 2, the number, 2, perform.com, think2perform.com. That's it.
Don MacPherson
That's pretty easy.
Doug Lennick
Yeah, Doug Lennick, L-E-N-N-I-C-K, for those of you who are wondering how to spell it. It's not Lennox. I don’t own any of that.
Don MacPherson
All right. Thanks again, Doug. This has been fantastic.
Doug Lennick
Thank you, Don.
Don MacPherson
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