Dec 2021Brad D. SmithEntrepreneurshipVenturesArticle

The Five Principles of Leadership: Principle #5 is Pay-It-Forward

In an earlier post, I shared a definition of leadership that I believe best articulates what is required for leaders to succeed in the fast-moving 21st Century. In doing so, I foreshadowed a framework derived from more than three decades of benchmarking, learning, applying and adapting. I call it “The Five Principles Leadership” – Potential, Purpose, People, Playbook, Pay-It-Forward, and committed to devoting the next five articles to diving deep into each of these “P’s”, sharing lessons learned, best practices and pragmatic tips for implementing the model in our daily leadership habits and organizations.

With this backdrop, this is the fifth of the deeper dive articles – paying it forward.

I am fond of Mark Twain who once said that “a wise man learns from his own mistakes; a genius learns from others.”

I am fond of Mark Twain who once said that “a wise man learns from his own mistakes; a genius learns from others.” The role of a leader is to ensure those around us are “geniuses,” passing along all of the wisdom that has resulted from our mistakes and failures, so they can move forward with that accumulated knowledge and make new mistakes. I’ll focus this article on how leaders must pay it forward, leaving the team and the organization better than they found it.

There are three primary ways leaders can pay it forward in their day-to-day roles: (1) assuming the role of a leader-teacher, (2) role modeling their personal true north to set the example, and (3) ensuring the organization operates in a socially responsible manner.


The Role of a Leader-Teacher

One of the most important roles in leadership is the collection and sharing of knowledge across the organization. In today’s world, we live in a constant state of information overload, and it is the role of a leader to distill and differentiate between “noise” and “signal.” This requires a leader to develop a teachable point of view (TPOV) on major topics and trends. A TPOV is the leader’s perspective on the implications of relevant data or the company’s position on a major issue, and includes a combination of ideas, values and emotional energy.

As the adage goes, you cannot beat a story with facts … you can only beat a story with a better story. The leadership myth that you win minds in one-to-many settings, but you win hearts one-to-one is untrue. Storytelling allows you to win hearts and minds “at scale.” If you want to change a culture, you have to change the stories being told.

Three critical capabilities enable a leader to be an effective storyteller: (1) story-listening, which is the practice of creating an inventory of moments when an experience causes you to have chills (jot down those inspirational movies, songs or personal experiences for future use); (2) story-triggering, when your actions or words cause others to tell stories about you at a critical moment (i.e., the famous story of the Nordstrom employee accepting a loyal customer’s tire for a refund even though Nordstrom didn’t sell tires, simply because Nordstrom always does right by the customer – a metallic tire hangs famously from the ceiling of the Nordstrom flagship store in Manhattan to remind everyone of Nordstrom’s commitment to customers); and (3) story-telling, when you develop the skill to effectively bring the combination of these elements together to tell the right story and/at the right time. It takes practice, but storytelling is one of the most powerful tools in a leader’s toolbox, and can be an effective way of distributing information and creating a culture that pays it forward.


Role Model Your Personal True North

Another favorite Mark Twain quote is “the two most important days in your life are the day you are born, and the day you find out why.” For most, we seldom take the time to reflect on whether our actions are adding up to the impact we hope to have in life. Thankfully, there is a process for “discovering your why” which I described in this article. The desired output of this process is your personal True North, or mission statement. It is both therapeutic and focusing. It is also critical to complete as a leader. We have all come to understand that tone is set at the top. Once you have developed a clear articulation of your “why,” work hard to be that person and align your decisions and actions in support of the change you seek in the world.


Social Responsibility

The Business Roundtable recently created news by publishing a perspective that alters the decades-long belief that a CEO’s role is to simply maximize shareholder value. The thought leaders from today’s most innovative and successful companies challenged this perspective as being insufficient and outdated, and published an alternative doctrine that suggests that while a “CEO’s work is to generate profits and return value to shareholders, the best-run companies do more. They put the customer first and invest in their employees and communities. In the end, it’s the most promising way to build long-term value.”

Today’s generation of socially and globally informed stakeholders have grown to expect companies to clearly articulate the social good they seek to provide in society. Institutional investors have followed suit, requiring companies to publish their Environmental, Social and Governance (ESG) scorecards, while directing their choices in which companies they will invest based upon the companies’ track record in these critical areas. What was once viewed as “doing good” has now been proven and mandated as “doing good is good business.” The odds are now stacked against your company if you fail to operate in a socially responsible manner.

The best practices of companies that do this well make social responsibility a core value in the company. They set the expectations that the company and its employees will be stewards of the future, and will do their part to make the world a better place. They see it as a privilege to help others and they do it wholeheartedly. Many now back this commitment by providing every employee with a certain number of hours/year paid to volunteer to any philanthropy of their choice, and often match their monetary donations. These are becoming the new “benefits packages” that prospective employees are seeking, and social responsibility is increasingly becoming the differentiator for which company a prospective employee will choose to join in the competitive talent war. The message to all leaders and companies is simple, operate in a socially responsible manner or perish.

Paying it forward is a critical principle of today’s leadership. It is often said that how the team or company performs two years after your departure is the most telling indicator of your effectiveness as a leader. The responsibility falls to each of us to leave things better than we found them, and to ensure those who follow us are even better prepared.

What leadership practices have you found to be most effective in paying it forward? 


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