A Lesson in How NOT to Negotiate-The “Fiscal Cliff” and Washington

Yes, we are all (most of us) freaked out by what is happening in Washington. We can all improve our negotiating abilities by watching Washington bumble their way toward the fiscal cliff.

I have taught negotiation for years, including to individuals and corporate leaders, at several businesses, and to members of business SWOT (Strengths, Weaknesses, Opportunities, and Threats) teams. I have worked with groups at an impasse that appeared worse than what is happening in Washington. Many ended up with agreements that got more than either side originally wanted. That's not only possible, it is commonplace, provided people avoid four pitfalls.

Pitfall #1: Confuse a negotiation with a debate. In a negotiation, your goal is a settlement that is the best possible for all concerned. The research is overwhelming that if you take care of the other side's interests, in addition to your own, you will get a better deal, and better future deals, than if you just try to beat your opponent. People often ask me to “play out” a great negotiation. When I do, people ask: When do we get to the good parts? Good negotiations make awful television. No "gotchas," no moments of outrage and no sound bite. What you see is a bunch of people having a cordial and constructive working session around a table.

In debates, the goal is to score points with an audience. You don't really care what the other side thinks or feels. In fact, the more wounded they appear, the better for you (as long as you don't push it too far and make your audience think you are a bully). When people who should be negotiating debate instead, they do lots of press conferences and speak in sound bites, often with laughter in the background.

In the case of the "fiscal cliff" talks, each side complains about the other, releases word that people laughed out loud when seeing what the other side offered, and makes its opponent seem crazy and irresponsible. Debates make great television.

If this were a debate, the Democrats would be winning, according to most recent polls -- most Americans would blame the Republicans if the country drives off the cliff. But since it's a negotiation instead, we're all losing. This approach appears to force the Republicans to give up one of their key points, which takes us to the second pitfall.

Pitfall #2: Go into a negotiation with a few elements you must have, or there's no point in even sitting down. Some of the best negotiators I have ever met work in law enforcement, usually as part of SWAT (Special Weapons And Tactics) teams or teams of behavioral scientists supporting SWAT members. Do people really ask for helicopters and safe passage to Mexico, like in the movies? Last time I asked that question, over lunch with a friend who is a police officer, they burst out laughing. "Not really," was their answer.

"But what would you do if someone asked?" "Get through it," they said, and referred to a technique called "click down". You ask why the helicopter is important. The likely answer would be: "to get away, idiot!" Humor me. "How do you see getting away playing out?" "I want to be treated with respect," might be the answer, and an ideal response to that is, "you have our respect, or else we wouldn't be talking." The person is then likely to talk much more reasonably about what happens next. Why? It is because it was never about the helicopter. It was about respect. When they were shown it, the need for the unrealistic demand went away.

Part of the problem here is that many Republicans signed Grover Norquist's "no new taxes" pledge. I wrote a year ago that revoking that agreement was necessary to deal with our financial situation, and should be done with honor.

To be clear, the fact that people signed this pledge is fine -- it's in line with a political and economic philosophy many of us (myself included) agree with. It is a problem because it prevents responding to unforeseen crises. There was a time when many Democrats would have signed a pledge to not enter wars. That also would have been reasonable, given a philosophy many of us (myself included) agree with. And if the world changed, as it has many times in the last 100 years, the pledge would need to be revoked to deal with Pearl Harbor, the rise of the Nazis or if Syria uses chemical weapons on its own people.

With that agreement in place, the next pitfall is almost inevitable.

Pitfall #3: Confuse positions with core values. I encourage leaders to never bend on their core values, but to make sure it is their values they are honoring, not their gut feeling that their adversaries are idiots. In this case, Democrats talk as if compromise is a core value (it is not), and Republicans talk as if not raising taxes is a core value (it also is not). The way to get past this confusion is for one side to ask why their position (what they say they want) is so important to them. Democrats would respond that compromise is important to get an agreement. Why is getting an agreement important? Because it's our responsibility to get one, they might say. And why is responsibility important? It just is, when a value circles back on itself, we're talking about a core value. And what about the need to increase taxes on people over a certain income level? The core value is fairness.

On the Republican side, why is no new taxes important? Because many conservatives believe that taxes slow growth and discourage investments by small businesses. Why is growth so important? Because people want to grow their businesses, and we all want to grow the economy, but will not if government gets in the way, their thinking goes. And why is keeping government out of the way important? It is because it's about liberty. And why is that important? Because it is -- so it's a core value.

Jonathan Haidt mapped liberal and conservative values in his "Moral Foundations Theory." Liberals (and many Democrats) value care and fairness. Conservatives (and many Republicans) tend to value a broader cluster of issues, including fairness, liberty and authority.

Imagine what would happen if both sides agreed to build a solution to the fiscal cliff based on the core values of growth, liberty, responsibility and fairness. There would be tradeoffs, but that's a much easier process than to sit people down who abhor each other and lock the door until they get an agreement. They might eat each other first.

Pitfall #4: Thinking (and saying) that this negotiation has to be hard.  My years of negotiation consulting, teaching and study have taught me one thing: If you follow a simple process, negotiations can move so quickly that the progress is stunning. President Barack Obama has said an agreement could be done in a week. If the people came together and clicked down on the other sides' positions (what they say they want) and then formed a settlement based on a small set of core values, here's what would likely happen: formation of a plan that would target national policy on the goal of creating a thriving economy, that is as fair to everyone as we can get, because we have the responsibility to give our children something better than we have.

This process could be done in half a day. I have seen it happen in some of the hardest situations in the world in under an hour, when people finally decided to stop debating and start negotiating.

We are facing a national crisis that none of us have chosen. As others and I wrote as the housing crash laid waste to the economy, a crisis is a terrible thing to waste. By "crisis," I mean a situation of uncertainty. We need uncertainty, because without it we would just get more of the same partisan divide, people telling the media (and us) that they could get this done if only the other side was more accommodating and responsible. So the crisis is here. 

We can use this latest crisis to create tribes of leaders -- not just politicians -- in Washington if we demand that they avoid these four pitfalls. Really, this is not that hard.

I would love to hear from you!  What is your take on all of this?

Lessons in Selling

Before I was a business counselor, before I was a senior executive and after I was an engineer, guess what I did for a living? Nope, I've never been a stand-up comedian (Why, got a venue you need filled?) Actually, I was a salesman. No, not the used car kind, I sold high-tech stuff like energy management systems and environmental lighting.

I'm not exaggerating when I say it was one of the best jobs I've ever had. Lots of perks, plenty of freedom, good relationships and the pay was pretty good, too. Why did I stop doing it? Well, I'm not sure I ever really did. I just incorporated those skills into my climb up the corporate ladder.

That's probably the best selling point for getting into sales. Whether you aim to be a top executive, an entrepreneur or just about anything, selling is a critical skill set. It will teach you how to pitch, negotiate and collaborate. You'll learn how to sell your projects, your ideas and yourself. And you'll learn the basics of business and finance.

Learning how to sell won't just improve your career. It will make it easier for you to do all sorts of things you have to do in life, like buying and selling, getting help from customer service people, dealing with insurance companies, negotiating with your spouse and kids, and most importantly, personal finance.

Getting into sales was definitely right up there in the top five decisions I've ever made in my life. That's why I think that every manager, executive and entrepreneur should carry a bag once in his career. Here are five lessons that everyone should learn from sales.

Shut up and listen. Nothing you've read or learned is nearly as important as what the person across from you is about to say -- if you just shut up and listen. Besides, when you speak first, you're giving away information and potentially committing yourself to a position. Always listen, learn and then speak.

Problems create opportunities. The most important opportunities to make a difference are always when things go wrong. How you respond in times of crisis, when somebody -- a customer -- needs you, is a window into your true capability. And that spells opportunity if you rise to the occasion and deliver results.

Business is all about relationships. These days it's popular to demonize corporations. That's ridiculous. People run all companies, and business is all about relationships between them. Organizations and teams are groups of people that interact and operate to accomplish shared goals. There's no such thing as a self-sustaining business.

Your customer always does come first. Customers aren't always on the end of a business transaction. You have way more customers than you think. Call it business karma, but whatever you have going on, whatever you expect to accomplish on any given day, when someone, anyone comes to you with a problem, that's a customer. Help her first.

Understand the decision maker's motives. Whether you're trying to sell a product, promote an idea or accomplish pretty much anything in the business world, there will always be a decision maker. Once you identify him, understand what motivates him, what's in it for him. That's the key to getting anything done.

One more thing; the toughest thing about selling is that everything happens in real time. The beautiful thing about that is you learn under fire, and that naturally accelerates the learning process. There truly is no better way to learn how business really works.

Nothing happens without a sale: Employment relies on sales; Finance relies on sales; Commerce relies on sales; Engineering relies on sales; every product without regard to shape, form, and function required someone dealing in the art of the sale.  Look around your surroundings, everything around your internal and external sight of vision was sold by a salesperson.  How important is the salesperson?  I would say critical to our everyday life!

The “Fiscal Cliff”-How will it affect you?

The “Fiscal Cliff”-How will it affect you?

The Facts:

As the end of 2012 approaches, business owners, investors, and the public at large will increasingly discuss the possibilities for the coming “fiscal cliff,” a combination of tax increases and spending cuts that will be automatically triggered at year-end unless Congress decides to act. Should our nation’s leaders decide not to act on these matters before the end of the year, here are some of the potential consequences the citizens of the U.S. may face:

1. Ending of the Bush Tax Cuts: In general, this will result in increased tax rates for most. The current tax structure of 10%/15%/25%/28%/33%/35% will change to 15%/28%/31%/36%/39.6% in 2013.

2. Long-term capital gains tax will rise from 15% to 20% and dividends will likely be taxed as ordinary income.

3. The temporary 2% reduction in employee-paid Social Security tax will expire.


4. The estate tax structure will change significantly, with the exclusion for estate and gift tax to drop from $5.12 million in 2012 to $1 million in 2013. Additionally, the top estate tax rate increases to 55% from 35%.

5. High earners (those single filers earning over $200,000, married filers over $250,000, or individuals married filing jointly over $125,000) will be the most affected. For these taxpayers, certain itemized and dependency deductions will be reduced or removed, and the Medicare tax on these individuals will be raised an additional 0.9%. On unearned income, these individuals will pay an additional 3.8% in Medicare tax.


6. Education, transportation, and energy programs will be the hardest hit by mandatory spending cuts set to take place over the next several years.

While none of these consequences are foregone conclusions at this point, our nation inches closer and closer to the coming “fiscal cliff” as the elections have ended and the new year deadline approaches. Unfortunately, much of the debate for finding resolution on these topics will likely be delayed by an arrogant Congress.

The fiscal cliff is a powerful metaphor. It sounds like an impending disaster, but in reality, we’ll wake up on the morning of Jan. 3 and life will be unchanged. Sure, tax rates will nominally be higher, some tax breaks will have been canceled, and the government will be expected to implement major cuts in military and domestic spending. If that continues for several months, it will have an adverse effect on the economy.

But letting the law take effect will also have some real benefits. For one thing, on the other side of the cliff, we’ll be a big step closer to the kind of fundamental reform of the tax code that both Democrats and Republicans say they want. Two provisions that limit the deductions and personal exemptions the wealthy can take — similar to the cap on deductions proposed by Mitt Romney — will come back into effect. Capital-gains rates will rise from 15% to 20%, and dividends will be taxed at normal rates, reducing the incentives for tricks like the notorious carried-interest loophole. And instead of a tax system that produces less revenue as a percentage of GDP than at any time since 1950, we’ll move toward one that is adequate to the needs of a modern, dynamic economy. The fiscal cliff is, all by itself, a budget deal and a step toward tax reform; A flawed and dangerous one, to be sure, but a far superior starting point for a real budget agreement than the temporary rules of 2012.

Once tax rates and other provisions have returned to their previous levels, as planned, Congress and the White House will have a little time to look at taxes and spending and decide how best to keep the economy moving now and in the future. Is it by cutting taxes for low- and middle-income working families, who were hit hardest by the recession and gained little in the George W. Bush years, when most of the benefits of growth went to the top? Or is it another round of tax cuts for those who have gained the most?

Let’s remember also that the fiscal cliff is not a natural phenomenon; it’s the law. None of the tax cuts that will be changed by it were supposed to be permanent in the first place. Some of the cuts — mostly those from the early Obama years — were to provide economic stimulus during the recession. Those should be revisited every couple of years, and if we think the economy still needs a boost, we should renew them for another year or two. But, the bulk of the tax cuts that expire date from 2001 and ’03. At that time, when our country had budget surpluses, both Democrats and Republicans wanted to cut taxes. But Republicans wanted to cut them by about twice as much and to make much bigger cuts for the wealthy than for the middle class. Rather than compromise with Democrats, Republicans twice employed a special rule, known as reconciliation, to use their narrow congressional majorities to push their version of tax cuts through. Because that special rule can’t be used to make permanent changes that worsen the deficit, they had to put an expiration date on those tax cuts. So the fiscal cliff is a long-overdue chance to revisit choices from the past and better address what we need to do for our future.

In the world on the other side of the fiscal cliff, Democrats and Republicans will have no choice but to work together on tax cuts that will be fairer to the middle class and encourage economic growth. And then, over several years, we have an obligation to look closely at Medicare in particular and figure out how to slow the growth of health care costs in that program. That work can only begin on the other side of the fiscal cliff.

Personal Opinion:

To barge through this political gridlock and get the parties into position for real compromise, I hereby suggest they go over the cliff.

The implications would not be felt for several months, giving time for making amends. Both sides would have "held out to the end," satisfying their most ardent flag-wavers. The threats of tax hikes and spending cuts would be real, putting politicians on the spot without time to dally.

And the challenge would become one of adding benefits and mitigating tax pain, a much easier proposition than reducing benefits and adding pain before the deadline.

Republicans would agree to reinstate tax cuts for everyone except individuals making more than $200,000 a year and families making more than $250,000.

Democrats would agree to more entitlement program reform than they would before the cliff deadline.

Today's admonitions are based on worst-case implications if the tax hikes and spending cuts go fully into permanent effect, which is not in the cards, regardless. Let both sides jump in the soup together by letting the cliff deadline pass. Then we'll see the fur fly, and at the end of a few weeks all hands will wring out the kind of compromise solution they can't reach until dawdling is not an option. The changed political dynamic will bring it on. The fiscal cliff will have done its tactical duty.

So, you Thelma and Louise’s out there; What do you think?

Selling Your Business

Many business owners today fail to have a succession plan in place.  When it is time to enjoy the fruits of your labor, most business owners decide to put their business up for sale.

Here are a few things to consider before selling your business:

1. Have Independently Verified Books and Records Ready for Review

Buyers want proof of the sales and profits that the business has made in the past. And they will trust the information more, and critique it less, if the information is independently verified. This will also increase the number of potential buyers.

2. Price It Right

 

A business owner's natural tendency is to overprice their business. It happens all the time. While the price might look good to the owner, interested buyers won't express interest. They don't want to spend time negotiating down to a price that is more reasonable so overpriced businesses will sit on the market a long time and, perhaps, not even sell.

Due to this, it's best to involve others when setting a business's sale price. The term "others" could include additional executives from within the company, it could involve the company's trusted accounting firm or it could seek the expertise of business brokers who know how to value a business. Should an owner seek any outside professional service to value the company, there will be a cost. Most likely, the cost will be more than made-up for with a quick sale at the right price.

3. List Furniture, Fixtures, and Equipment

Buyers will want a complete list of equipment and will inspect it to ensure that everything is in good working order. Take the time to do these inspections prior to selling a business. Polish things up, have maintenance and repairs complete prior to putting a business on the market. This will give a prospective buyer less leverage for negotiating when the time comes.

4. Obtain a Professional Third Party Valuation

No one wants to spend unnecessary money when they are preparing to sell a business. But the facts on investing in the services of a business broker to independently value a business cannot lie. According to a recent study, companies that utilize a third party valuation when selling a business have an 80% chance of selling at a higher price. Those that do not choose to use a valuation not only miss out on a higher sale price, they reduce their risk of selling at all. The same study concluded that organizations that don't use a business valuation or mergers and acquisition services only stand a 17% chance of a sale.

5. Offer an Attractive Lease

Buyers will want a quality lease on the business's space. Whether the existing lease is assigned or a new lease is drafted, make this an attractive aspect of the deal.

6. Great Appearance 

Nice looking businesses sell first! Buyers deduct large amounts from their offering price for businesses that are in less-than- top shape. Keep the premises neat, clean and in good repair. And if it's not, clean things up before going to market.

7. Sign a Covenant Not to Compete with the Buyer 

A legitimate concern for buyers is the possibility that the previous owner may become a competitor of theirs after the business sells. Offering to sign a non-compete that includes an appropriate limit on the proximity and timeframe of such competition is appreciated buy buyers and is also considered a reasonable within business negotiations.

8. Have a Good Reason to Sell

Cautious buyers will want to know why the business is being sold; primarily because they want assurance that there is nothing wrong with it. Rather than hope such a topic won't come-up, address it first and have a good answer ready. Even if the reason notes some business troubles, the buyers will appreciate up-front honesty and can proceed in discussions knowing their dealing with an honest owner.

9. No Surprises!

Give interested buyers ALL the facts up front. Most negatives can be overcome if known by all parties from the beginning.  

Lessons to be learned-The Petraeus Affair

The unfolding scandal involving General David Petraeus is not confined to the upper echelons of the U.S. military -- it also has been a recurrent drama in the corporate world, felling top dogs at dozens of companies from Hewlett Packard to Lockheed. Yet while the sexual proclivities of top executives pose a risk to corporate value, rather than to national security, such scandals have common themes -- and similar lessons, experts say.

Aside from ordering chastity belts for corporate chief executives and generals, what can be done to reduce the chance that an indiscretion will damage an organization? Here are five lessons of the Petraeus affair, along with five measures that companies can put in place to avert similar scandals or mitigate the damage that existing indiscretions might be doing now.

Power corrupts; Absolute power corrupts absolutely. This statement is no less true today than it was when first muttered by Lord John Emerich Acton in the 1800s. Understanding this basic tenet of human nature is why the U.S. government is set up with three distinct branches, each of which provides a check on the others. It's also why corporations are supposed to have powerful and independent boards of directors who can actively oversee top managers, says Paul Hodgson, chief research analyst at GMI Ratings, a corporate governance research firm.

"Power is an aphrodisiac," he says. "Part of the problem is that the power that's given to the president or CEO gives them the impression that rules that apply to other people do not apply to them. Reduce that power and you reduce those problems."

The key here is oversight. Every company needs to have an active, independent chairman of the board who is in no way beholden to the CEO. That chairman needs to be empowered to gather information about what's going on in the organization from sources other than the CEO. And he or she needs to be both able and willing to issue warnings when problems are minor and punishment -- including termination (with the approval of the rest of the board) -- when they become significant.

It's lonely at the top. Top leaders often become isolated from the rest of their organizations, sitting in expansive offices, surrounded by other corporate executives who are either too like-minded or too fearful to provide a dissenting opinion. "Leaders don't have enough confidantes who are willing to say to them, 'What the heck are you thinking?' " Says organizational culture expert David Gebler, author of "The 3 Power Values: How Commitment, Integrity and Transparency Clear the Roadblocks to Performance."

Corporations can and should set up a system where leaders hear "devil's advocate" opinions, whether that's from members of the board or members of the staff, Gebler adds. If necessary, they should designate a member of the staff to prepare and present a dissenting view just to get the conversation going. "Whether it's Elliot Spitzer or David Petraeus, if they had somebody saying 'what are you thinking?', I think they would have been better able to fight the temptation."

Risk takers take risks. One reason why many corporate leaders in high-profile positions seem to take chances with their personal lives is because the creative problem-solvers who land in top positions tend to be risk takers by nature. Taking risks can lead to great success, but the more successful risks an individual takes the more likely he or she is to fail to recognize risk as risk, says Beverly Flaxington, a career advisor and author of "Understanding Other People: 5 Secrets to Human Behavior."

Wise organizations couple creative problem-solvers with practical mentors or confidantes, who can point out flaws in a leader's thinking before it's too late.

Delay magnifies problems. A leader must be the role model for all employees, Gebler says. When he or she doesn't live by the rules, it creates a trickle-down effect that spreads impropriety throughout an organization. Moreover, employees may see a lack of personal integrity on the part of the CEO as something that eventually affects them, reducing their loyalty to the company. "People begin to wonder, if a leader can treat loved ones like that, how will he or she treat us?" he says. "Without trust, a leader has no authority."

When board members discover a problem, they must act quickly and decisively, adds Hodgson. "You need to have a strong board and clear rules that are consistently enforced," he says.

Humility protects. If power corrupts, a little humility can help protect an organization, Flaxington says. Some companies require executives to occasionally leave their top-level jobs and spend a day or two on the front lines -- answering phones, waiting on customers, working the factory line. These programs not only help the executive see what the average worker confronts each day, but also can provide a better perspective on his or her role in the company. And it can foster better communication between rank-and-file employees and the executive suite.

Should business owners want to create jobs?

In an Inc. Magazine article on the hot-button topic of job-creation, by veteran entrepreneur and contributing editor Norm Brodsky, Brodsky's position is that, while he and all good business owners are happy when they can give people jobs, creating new jobs isn't -- and shouldn't be -- a goal. I'm a long-time fan of Brodsky and his down-to-earth advice, and an admirer of his tremendous business accomplishments. But I don't fully agree with his argument, or at least the way he frames it.

In his piece, Brodsky focuses on job-creation as it relates to overhead and productivity. He says "no one operates a company with the goal of maximizing labor costs," and of course in that regard he is right. We business owners naturally want -- and are generally obliged -- to generate the highest possible return on every dollar we spend. That means getting the most we can out of our real estate, machinery and people. Certainly no one has "increase rent" as a business goal, and Brodsky is saying the same thing in his labor cost argument. He is looking at the expense angle (the very conservative approach with which I almost always agree), rather than the investment view of hiring.

Let’s look at it a different way, and I don't think it is semantics or nuance. To my mind, creating jobs is a legitimate and even important goal, based on the reasonable assumption that a good businessperson knows not only what is best for the business today, but also what will make it grow tomorrow. All businesses are limited by their available resources, with money and time (people) being at the top of the list. For most, growth beyond a certain point requires more of both.

An article, “Veterans' unemployment -- a national disgrace 6 keys to your employees hearts” Google pays dead employees - can you beat that?

Going back to the rent analogy, no business owner wants to increase his occupancy costs when all other things are equal. But many dream of a bigger factory, warehouse or office that will allow them to increase capacity, offer new products and services, and otherwise take them to the next level. Yes, it's a chicken-and-egg thing: It's incumbent on us to do the most we possibly can with our existing resources, yet those resources also create limitations.

As Brodsky says, we must "constantly search for ways to maximize the productivity of the people we have, rather than adding to head count." Again, he's right if you look only at today's results. But if you know (or at least believe) that adding a new sales manager, shift supervisor or driver will put your business in a different, better place, creating those jobs should be a very real goal.

Some people will say I am confusing a want with a need -- in other words, you hire people because the growth of the business requires it; "backfilling" rather than "paying it forward," if you will. But the two aren't mutually exclusive. Yes, on a day-to-day basis you should try to hire optimally, in sync with your business, and maybe for some businesses that's enough. I fully respect Mr. Brodsky's financially disciplined argument and his acumen, and his successes speak for themselves. But sometimes it's wise not to count every single bean.

For many of us, having job creation, as a goal is not altruistic, it's critical. How many small business people have said "if I only had someone to..." knowing that creating that new job would make new things happen, open new doors. I can't hire people every day, but not a day goes by that I don't want to, and I assure you it's not because I want to make less money.

Adding employees is unquestionably a double-edged sword. On one hand, it is a risk like any other investment: If the employee doesn't produce results that justify the hire, productivity is diluted, and her job (and perhaps others) may not last long. Turnover is painful and expensive. But on the other hand, making the right forward-looking hires at the right time, and accepting the initial overhead impact, can be critical to growing your business, so I submit that creating new jobs can and should be a legitimate business goal.

I could get into much broader, philosophical arguments, like the long-term value of helping to grow the consumer base by putting money in people's pockets. Hiring supports a healthy business "ecosystem" for all of us, and unemployed people don't buy what we sell. But that's a very big and very different discussion.

Finally, though you won't find it in any business book, I think that as long as your business is healthy and can meet its existing responsibilities, creating jobs is, well, good karma. It's one of the great privileges and rewards of owning a business. And even if you don't buy the "what goes around comes around" angle, you should know that the value of hiring goes beyond getting more work done. It also contributes to a positive culture and reputation, and it's good PR, all of which have very real worth.

Oh, and boy, does it feel great to give someone a job when you can?

Attitude of Great Leaders

The most common feedback I get about my management counseling, is, "I thought this was going to be garbage, but I was surprised -- it's really good!" People say that as if they have given me a great compliment. But such faint praise is actually a serious personal criticism, and one every we all need to take seriously.

Would a surgeon feel about good a patient telling them: "I assumed you didn't know what you were doing, being a surgeon and all, but you correctly removed my gall bladder, not my left leg!"

Except that the critics are right. Most of what passes for leadership advice is fluff -- platitudes, repackaged conventional wisdom and broad principles that lack any rigor.

Prove your worth

In one sentence, here's how to become a better leader and make your organization more effective: Do what the evidence says to do, and then go beyond what's known and imagine what's possible.

I'm an empiricist (in the same way some people are Republicans or Democrats). That means I make decisions based on data, not just on what others are doing, not on philosophy or intuition, and definitely not on what most people are doing. If the data says an action will get a better result, empiricists try their best to do it.

When leaders become empiricists, they are guided by all available evidence, letting that data tell them the right thing to do. When they reach the edge of the cliff of what is known, they jump off, creating visions or futures of what can be. The result is great companies, like Agilent Technologies, Intuit, or Edwards Life Sciences-- all companies that have impressed me with their focus on empirical decision-making.

What often surprises people in "empirical leadership" sessions is that there is an emerging new way to lead. It doesn't require believing anything other than empirical data. It gets better results than what's dominated the field for the last century. Employees love it, shareholders enjoy the benefits and the methods delight customers.

Ignorance isn't bliss

The problem is, we don't do it. Here's what typically happens instead:

We hire people based on the number of years of industry experience they have, and then wonder why our company is just like our competitors. We tell people to be inspired by the company vision, when they had no role in setting it and will never be asked their opinion about how to make it better. We ask employees to do as they are told and to feel empowered while doing as we tell them -- and wonder why they think executives aren't very smart.

We ignore learning styles when we put people in jobs, and then try to figure out why people are always scrambling to catch up. We focus people on bringing their weaknesses up to the company standards instead of building on our strengths, and wonder why our company isn't best in class.

We learn what our competitors are doing (called "best practices") and do the same, and scratch our heads about why we aren't leading our fields. We work sitting down rather than moving around, and complain about the 3 p.m. energy drain. We discourage power naps.

We praise employees who respond to email in minutes, almost guaranteeing that people aren't thinking about the long term. We tell people to add more responsibilities without giving them someone to offload some of what they're doing, and wonder why they aren't thrilled with their increase in responsibilities.

Company vending machines are filled with products that make employees obese and slow thinking. We have corporate retreats where the executives lecture from Power Points, rather than engage in discussions.

We issue orders (like "fly coach"), while executives fly first-class and hope no one notices. We reward our top performers with a raise that is barely above the average, and can't figure out why we have a motivation problem.

We hire for skills, not values, and then wonder why we don't have good teams. We make decisions about what companies to acquire based on strategic or operational synergies, ignoring culture, and then wonder why the two groups don't integrate.

We tell people how they're doing in the same conversation that we ask them how they'd like to develop, and can't figure out why they aren't more passionate about their personal growth.

We hire consultants to tell senior management what most employees already know. We elevate decisions to the highest possible level, and wonder why we have organizational cultures where people don't think for themselves.

We tell people it's safe to fail and fire those who don't hit their numbers when they try something new. We turn culture and values over to the human resources department rather than the CEO owning the effort, and can't figure out why no one takes the effort seriously.

Where the evidence leads

Now here's what we shoud do if we implemented what the evidence says to do:

We'd turn control of the company over to the values that the employees share. This would mean starting with the employees we already have, and discovering what principles, for them, "without which, life wouldn't be worth living."

We'd seek places in the market where our values and strengths would give us the ability to earn high margins and win the loyalty of great customers.

We'd find intersections among what we're uniquely good at doing, our values and those needs for which people are willing to pay a premium.

We'd hire only people with both the skills for the jobs and the values that match the employees we already have. CEOs would own "organizational culture" in the same way most own EBITA (earnings before interest, taxes and amortization).

We'd make decisions based primarily on cultural alignment, not just on opportunities for integration through cost cutting. Companies would run experiments, in which the goal was actionable insights, and we'd turn that learning into the next decisions we make. Decisions would be made at the lowest possible level, and closest to the customer.

We'd build loops of communication from the customer to the people making decisions, so that each decision becomes more informed, faster and brings us closer to maximizing our potential as a company.

If leaders were empiricists, this description would be normal. So why isn't it? Two reasons. First, what passes for "leadership training" often amounts to personal philosophy, platitudes and motivational speeches, rather than practices grounded in evidence Second, the change needs to start at the top. Most of the CEOs I know are empirical leaders, and their companies are almost always considered best in class.

Empirical leadership should extend to our personal lives, as well.