In my 20 years working with some of the world’s top professional services firms, I have seen firms fly high and I have watched firms crash and burn.
All the firms had highly educated people, great client relationships, and money coming in the door, but so many of them never reached and/or sustained their potential—financially or reputationally. Why?
I have come to recognize that people, like all growth opportunities, come and go. Brand relevance ebbs and flows. Competencies grow and die. The one thing that never changes is a firm’s culture. But, the idea that “culture eats strategy for breakfast” is not new. Peter Drucker said that more than 50 years ago. Simon Sinek recently rode a popular wave of culture euphoria by asking the profound question, “What’s your Why”? It is a mandatory question for firms to not only ask themselves but to honestly answer. I have worked in and consulted with firms that subscribe to both of these popular mindsets. Yet, they were still plagued by disengaged workforces, client churn, brand weakness, and underperformance.
Why? (pun intended)
Systems simply reflect and reinforce the existing culture.
In my experience, while many issues leading to underperformance can be “systemic,” the system is seldom the cause. Systems simply reflect and reinforce the existing culture. Ultimately, culture is just a collection of mutually reinforcing worldviews. Whose worldviews? First, it’s the founders(s). Second, it’s the restructured view of the “qualified” executive team that sends him/her to pasture. Third, it’s a minion of partners pursuing the “brass ring” of their own worldviews. Collectively we call this “leadership” and by leadership, we mean individuals—partners or business leaders—wielding power.
READ: Does Your Firm Have the Confidence to Be an Industry Leader
Culture shapes behavior—and leaders create culture. Not with posters, slogans, and mission statements, but with every human interaction. Not because people are watching. Not because they are “incentivized” to. They are doing it whether they are rewarded or seen. Leaders create cultures that reflect who they are.
Leaders create cultures that reflect who they are.
I have seen partners fire people to save their own hides. I have witnessed others, to their own detriment, help their top performers pursue dreams elsewhere. I have seen trifling partners take down others just to look good and others take a quiver full of arrows for their teams. I saw firms sold simply to line executives’ pockets and others sold to provide more opportunities for people and clients. I have watched incompetent, political partners stick around for years and I have said goodbye to talented ones as they left for opportunities more consistent with who they were as human beings. I have seen haughty partners build thriving practices by exploiting others and humble leaders grow both business and people with compassion and service.
The ends we live for shape our lives and our firms. Cultures don’t change and systems do not self-correct. Neither can coerce change. Only individuals change. Change comes from within and it comes only when an individual opens himself or herself to it.
The purpose of a leader is to BE THE EXAMPLE.
This is why I believe firms need leaders who are:
- High-minded
- Humble
- Realistic
- Objective
- Wise
- Straight-forward
- Shrewd
- Vigilant
- Sagacious
- Deliberative
- Decisive
- Bold
Firms need leaders who are, in a word, prudent.
Prudent leaders steward prudent firms.
Prudence is THE cardinal virtue of a great leader and the most misunderstood and maligned leadership quality today. It is not an SNL comedic punch line, a risk-averse mindset, or an archaic metaphysical diatribe. Prudence is wisdom gained from experience and knowledge that is expressed in realistic actions. It is the habit of making the right decision, at the right time, for the right reason.
Prudence guides the virtues of courage, self-control, and justice. It gives us the ability to sacrifice today’s gain for tomorrow’s greater gain. Prudence requires us to choose a path greater than individual ambition and bottom-line profit. You do not develop the coveted and self-proclaimed corporate value of integrity without prudence.
READ: Prudent Decision-making
Contrary to popular misunderstanding, prudence has nothing to do with playing it safe—quite the contrary. Prudence most often demands that we make more courageous choices than conventional wisdom and business mindsets would lead us to take. It is easy to judge what is “good” and what is “bad.” Prudence judges what is “best.”
“From the past, the present acts prudently, lest it spoils future action.”
—Titian from “Allegory of Prudence”
Prudent firms live by a different code.
While “What is our Why? is an important question, prudent firms ask themselves more vital questions:
- Who do we want to become? What kind of firm do we want to be remembered as?
- What goals do we have for the firm?
- What do our goals say about us? Do they point to selflessness, big-heartedness, high-mindedness? Or do they point the other way?
- What is our firm’s driving philosophy? Power? Money? Prestige? Service? Humility? Personal growth for our people? Some special impact on the world?
- What elements of undesired philosophies or behaviors have wormed their way into our firm’s daily life?
- What will we leave behind as our legacy?
Prudent firms:
- possess magnanimity and meaning.
- seek the truth — even uncomfortable truth.
- focus—on what matters most to their culture, their people, and their clients.
- build the habit of making the “best” decisions into their DNA.
- think and act boldly.
Takeaway
Prudence has fallen out of favor. In light of our ludicrous political environment, the unending news of sexual assaults, unconscionable corporate scandals, and our societal pressure to keep acquiring “more,” now is a good time for prudence’s resurgence.
Be the example.
