Mindful Agility

Business on Fire Part II: Could Business Mindfulness Have Stopped the Failure of Steve Jobs' Protege Ron Johnson at JC Penney?

August 16, 2022 Daniel Greening Season 1 Episode 12
Business on Fire Part II: Could Business Mindfulness Have Stopped the Failure of Steve Jobs' Protege Ron Johnson at JC Penney?
Mindful Agility
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Mindful Agility
Business on Fire Part II: Could Business Mindfulness Have Stopped the Failure of Steve Jobs' Protege Ron Johnson at JC Penney?
Aug 16, 2022 Season 1 Episode 12
Daniel Greening

This is the second episode of a three-part series on fabled merchandiser, Ron Johnson, and how he failed to restore JC Penney to its former leadership in retailing. In this episode we're going to be talking very explicitly about business mindfulness and how it applies.

If you want to understand "business mindfulness," this is the episode for you. If you'd like some background on scaling mindfulness, you'll like Episode 2 on self-similarity (our first full episode). If you'd like to hear our detailed failure analysis of Ron Johnson and JCPenney, that's in Episode 11, the one just before this.

Mindful businesses share a set of six characteristics, which we introduce at the beginning. Then we talk about different examples of each characteristic, from some mindful businesses we know about, such as Toyota and Trader Joe's, and with counterexamples from JCPenney.



  • "DAVOS/SWITZERLAND, 23JAN13 - Janice Marturano, Founder and Executive Director, Institute for Mindful Leadership, USA, speaks during the WorkStudio 'Experiencing Mindful Leadership' at the Annual Meeting 2013 of the World Economic Forum in Davos, Switzerland, January 23, 2013," Photo by World Economic Forum, Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0), https://www.flickr.com/photos/worldeconomicforum/8408308078
  • Women watching sticky notes, image source Copyright-Only Dedication (based on United States law)or Public Domain Certification, https://pxhere.com/en/photo/1431647


  • Daniel Greening, host, agile consultant, software executive
  • Mirela Petalli, co-host, meditation guide, and neurocritical nursing instructor
  • Dan Dickson, business coach, executive and management consultant


Show Notes Transcript

This is the second episode of a three-part series on fabled merchandiser, Ron Johnson, and how he failed to restore JC Penney to its former leadership in retailing. In this episode we're going to be talking very explicitly about business mindfulness and how it applies.

If you want to understand "business mindfulness," this is the episode for you. If you'd like some background on scaling mindfulness, you'll like Episode 2 on self-similarity (our first full episode). If you'd like to hear our detailed failure analysis of Ron Johnson and JCPenney, that's in Episode 11, the one just before this.

Mindful businesses share a set of six characteristics, which we introduce at the beginning. Then we talk about different examples of each characteristic, from some mindful businesses we know about, such as Toyota and Trader Joe's, and with counterexamples from JCPenney.



  • "DAVOS/SWITZERLAND, 23JAN13 - Janice Marturano, Founder and Executive Director, Institute for Mindful Leadership, USA, speaks during the WorkStudio 'Experiencing Mindful Leadership' at the Annual Meeting 2013 of the World Economic Forum in Davos, Switzerland, January 23, 2013," Photo by World Economic Forum, Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0), https://www.flickr.com/photos/worldeconomicforum/8408308078
  • Women watching sticky notes, image source Copyright-Only Dedication (based on United States law)or Public Domain Certification, https://pxhere.com/en/photo/1431647


  • Daniel Greening, host, agile consultant, software executive
  • Mirela Petalli, co-host, meditation guide, and neurocritical nursing instructor
  • Dan Dickson, business coach, executive and management consultant



[00:00:00] Cold Open

[00:00:00] Daniel Greening: So if you can find an obvious cause like without doing any deep analysis and you can promote it among everybody around you, then you can actually get rid of somebody.

[00:00:11] Dan Dickson: That may be part of it, but, maybe the bigger part is somebody proving that it's not my fault.

[00:00:16] Once I've proven that I'm going to. Interested in anymore. 


[00:00:20] Daniel Greening:

[00:00:20] Introduction

[00:00:20] Daniel Greening: Welcome to the Mindful Agility podcast. 

[00:00:23] This is the second episode of what might become a three-part series on fabled merchandiser, Ron Johnson, and how he failed to restore JC Penney to its former leadership in retailing. In this episode we're going to be talking very explicitly about business mindfulness and how it applies to this transformation.

[00:00:43] I'm your host, Dan Greening. My co-hosts today are Dan Dickson and Mirela Petalli. Dan Dickson is a Harvard Business School graduate, corporate executive, and management consultant. I'm a PhD computer scientist, serial entrepreneur and agile coach. Mirela Petalli is a neuro critical care nursing instructor and a secular Buddhism meditation guide. 

[00:01:08] If you're just joining this podcast, let me set some expectations. Most podcasts bring in guests to discuss and promote their latest work. The Mindful Agility podcast, in contrast, is an in progress journey where we bring listeners along with us to explore. 

[00:01:27] We're interested in how to make life and work happier and more productive through mindfulness, the skill of deep awareness, and agile, the skill of rapid experimentation. 

[00:01:39] There's a lot of unexplored territory here. Because we're doing research between episodes, expect a new one every three weeks or so. This one took four weeks. 

[00:01:50] Mindfulness practices help us gain greater insight while agile practices help us get results. Each episode is an agile experiment to see if we can help you, our listener. The journey is half the fun. 


[00:02:05] Daniel Greening: Today, we're going to be talking about a famous retailer, Ron Johnson. As an executive working for other CEOs, Ron Johnson succeeded wildly in redesigning Target stores and building Apple Stores from scratch. But later as a CEO, Ron Johnson crashed and burned. 

[00:02:24] Our previous episode performed a classic failure analysis of JC Penney under Ron Johnson, from late 2011 to early 2013. JC Penney was in trouble due to the effects of the Great Recession on its main customer base, middle-class moms. Ron Johnson was hired to save JC Penney by a board that thought his results at Target and Apple were miraculous. 

[00:02:51] But Ron Johnson brought worse results to JC Penney. He ignored feedback, confident that his radical changes couldn't be appreciated by the board or existing employees. He spent enormous sums without much oversight on travel and administration. He terminated conservative clothing lines, which appealed to its customers. He hired former Apple execs and fired a bunch of people. The newer hipper customers he sought didn't show up. And so Ron Johnson left and the previous CEO took back the reins.

[00:03:28] Why is this interesting? Because viewed through a Mindful Agility lens, we might have predicted the outcome in advance and created a great outcome instead of a train wreck.


[00:03:40] Scaling Mindfulness to Businesses

[00:03:40] Daniel Greening: In this episode, we focus on mindfulness, business mindfulness in particular. How mindful was the Ron Johnson transformation? What would more mindfulness have meant to the outcome? 

[00:03:54] Most people think about concepts like mindfulness or agile from their personal perspective. They have trouble zooming out to see the big picture. For example, in our experience, enterprises composed of agile teams can fail to adapt rapidly enough to meet enterprise scale challenges. So the business isn't agile, even though it has a lot of agile teams. 

[00:04:19] There's a lot of articles lately on business agility. That's to remind people that they have to think about the whole organization, not just the teams

[00:04:29] Mindfulness has the same issue. Just because you offer mindfulness training to your staff, as Salesforce and Google do, doesn't mean the enterprise itself has business mindfulness. 

[00:04:41] Dan Dickson: So here's a question. Can you have a Mindful organization without Mindful people? 

[00:04:46] Daniel Greening: If you think about human beings we have mindfulness and yet our individual components may not be mindful. So it's not like our individual neurons are perhaps conscious of the overall organism. 

[00:05:01] Dan Dickson: I guess where I'm going with this is that, um, If we have an organization that is not Mindful. How do we make it Mindful? What are the steps we have to take? And it seems like the first step would be on the individual basis but i'm not sure that's. that's right

[00:05:13] Daniel Greening: Especially since human beings can be mindful, if they become mindful, they gain experience with what that means. And then if they have this capability to scale their thinking to the overall organization, they could help that organization become more mindful. I do believe that is true.

[00:05:36] But I'll draw an example here from my experience as an enterprise agile coach. If individuals in an organization are agile. And if they are both conscious that there's a bigger entity around them, their team or department, and they have the skills and respect from others, they can use their influence to shape the bigger entity to be agile. 

[00:05:59] But I've also seen some great agile teams demolished because the team members didn't have the skills or position to shape the organization. When leaders in the organization didn't understand agile or scaling, they just plowed over some great work in a reorg and agility was lost.

[00:06:19] It's a really interesting question, right? This all area is is potentially interesting. 

[00:06:25] Starting at about 1999, academics at Michigan, Johns Hopkins, Vanderbilt, and other universities started describing. organizational mindfulness. The first thing they had to do was claimed that organizations had a mind. It was both a scientific and philosophical argument because, without an organizational mind, how could you have organizational mindfulness? 

[00:06:51] So they concluded, yes, there is a mind, that these organizations actually have the ability to make decisions, and observe their surroundings, do all the things that we attribute to individual minds. And then through that conception they were able to claim there was such a thing as organizational mindfulness. 

[00:07:13] The driving force initially was high risk industries like nuclear power and oil refining. In these industries, the difference between good and mediocre companies was obvious, because mediocre companies had plants that blew up, literally. 

[00:07:31] These researchers found that mindful organizations had fewer crises. So if you're in one of these high risk industries you've probably been exposed to their work.


[00:07:44] Six Principles of Business Mindfulness

[00:07:44] Daniel Greening: Business mindfulness research has gradually expanded to enterprises generally. 

[00:07:50] I've created a set of six principles to assess business mindfulness and guide its development. You can think of it as a work in progress. 

[00:08:00] First. Mindful businesses cultivate awareness of everything affecting them. Broad, deep awareness provides context to guide better decisions. A typical business will be concerned with customers, suppliers, employees, capital sources, partners, regulators, natural resources, and the environment. Mindful businesses continue to test assumptions, staying uncertain even when everything seems fine. Andy Grove of Intel once said, "only the paranoid survive."

[00:08:36] Second. Mindful businesses accept failure and success with equanimity, staying objective, whether the situation is awful or great. Some related principles are they don't run from failure and they don't celebrate success. They stay cool to analyze logically. They think of each project as an experiment. This is one shared element of business mindfulness and business agility. Even though Mindful businesses are paranoid, they don't have anxiety about it.

[00:09:11] Third. Mindful businesses developed strong causal analysis skills. They appreciate and explore interdependencies. They might use five whys analysis, developed by Toyota, to uncover hidden causes. If you grab on to obvious causes, whenever something awful or great happens, you can fall victim to those who want to deflect blame or claim credit. 

[00:09:39] Fourth. Mindful businesses avoid risky attachments that can be unhealthy and sometimes deadly. They find second sources and alternate approaches when they're highly dependent on a source. This can include employees.

[00:09:57] Here's an example. My dad had an auto shop in a small town. There was an autobody repairer who was incredible at banging out dents, painting, et cetera. And he would also teach the mechanics how to competently do autobody repair. So if the autobody repair was on vacation, my dad's shop could still repair auto bodies. 

[00:10:21] Fifth Mindful businesses acknowledge their role in a greater ecosystem and support that ecosystem. They align the interests of the shareholders, execs, employees, customers, suppliers, funders, partners, society, and the natural ecosystem. That's a lot of departments and people to keep in line, so that's a lot of work. 

[00:10:47] Sixth. Mindful businesses share their philosophy and practices broadly, to make learning and production easier. There are some dramatic examples of this. 

[00:10:58] Toyota taught its revolutionary manufacturing processes to every employee, supplier, and ultimately its competitors. Very wild. 

[00:11:09] We think mindful businesses are more resilient than others, gaining early awareness and making better decisions for healthy survival. Agile businesses innovate faster than their less agile peers. So if you have resilience from mindfulness and innovation from agile that is a powerful combination.


[00:11:30] Assessing Ron Johnson's JCPenney Transformation

[00:11:30] Daniel Greening: Okay. Let's go through these six principles to assess how Ron Johnson transformed JCPenney, whether it was mindful, and consider how more mindfulness could have changed the outcome. 

[00:11:43] M1 Awareness

[00:11:43] Daniel Greening: The first is you have to be aware of what is going on around you.

[00:11:47] Oftentimes businesses get comfortable with their current situation. They have these regular customers, they have suppliers that deliver everything they need. They have employees that have been there forever. They may or may not need capital sources, but if they do need them, someone's always ready to lend them money or give them money for their stock. Their partners, the regulators are all happy, et cetera. And their interactions with natural resources in the ecosystem are thought to be sustainable. 

[00:12:19] Oftentimes we see company failures where they get very comfortable with preexisting relationships, assuming that they don't change. So they don't actually continue to question where is the customer going? How is the supplier's reliability and future reliability? What about employees? Are they happy? They get complacent, they lose their curiosity, and then they get into a catastrophic situation.

[00:12:51] Dan Dickson: Let's use Kodak as an example. You have a company that is convinced that what is happening now is going to happen forever. It's just going to keep happening. And I'm trying to think exactly where the key disconnect would have been because it would've been an alternate technology that surfaced. That ironically they invented themselves.

[00:13:06] Daniel Greening: You mean like digital photography. 

[00:13:09] Dan Dickson: So I guess the would've really been come from the customers because they would've found an alternate source to provide the same benefit.

[00:13:18] Daniel Greening: Yeah. Yeah. And how does this relate to JC Penney?

[00:13:21] Dan Dickson: That's a good question too. They weren't comfortable. They weren't certainly weren't comfortable with their status quo. And their customers had stopped buying. Not because they didn't like the JC Penney concept anymore, but because they were unable thanks to the economic situation caused by the great recession.

[00:13:35] And they were grasping for a different direction and they took that direction, I think, without really aligning with their customers and their employees. . The suppliers may have been a factor because their current suppliers wouldn't have been happy, but I'm not sure that was really the factor in their demise.

[00:13:50] Their new suppliers certainly were falling in line. I think it really focuses on customers and employees and being out of alignment with those two factors.

[00:13:59] Daniel Greening: What was interesting, too, was they deliberately disrupted their suppliers. And as you pointed out in the previous episode, they took their business away from a major supplier that was supplying high demand products. They had a billion dollars in revenue attributed to a supplier of women's clothing and they decided it wasn't fashion forward enough for their new model.

[00:14:26] So they just severed that relationship. That was interesting, it was a customer supplier relationship, I think. I felt like they didn't really spend very much time exploring what their customers really wanted or exploring their employees. In fact, they were ready to replace the employees, too. 

[00:14:50] Dan Dickson: Which is what they did, but let's go back to the the private label example you were using there is that, basically their thought was that, okay, gonna take this away from you, but we're gonna give you something that we think you're gonna like better. However they were wrong.

[00:15:03] Daniel Greening: And never tested it. 

[00:15:05] We got an anonymous review from a JC Penney employee present during the Ron Johnson era. What resonated with you during the previous episode?

[00:15:14] Karen Obfuscated: So what resonated the strongest was the fact that nothing was tested. I mean, it was just, everything was redone at the same time and just the sheer amount of change, the chaos that brought on.

[00:15:29] To change everything at one time, you know, you got rid of a, a big brand and then you're changing and making all these little sub departments with their own look, their own feel, their own music. All that's gotta be redone in every single store at the same time and chaos ensued.

[00:15:45] So you drove that point home very nicely that it was just nothing was tested.

[00:15:50] Daniel Greening: So my argument about this exploration and knowledge of customers, suppliers, employees, et cetera, is that its primary benefit is it provides broad, deep awareness that can support sustainability. 

[00:16:04] Dan Dickson: I wanna talk about knowledge here, a little bit knowledge of customers specifically. Think about a couple of examples. Number one, I think I've used this in the past with you about the Sony Walkman and how market research studies, at least one I saw proved that the customer would never go for it. 

[00:16:18] The other example is Apple and Steve Jobs. He seemed to know what his customers wanted, even though the customers didn't know it. Take the iPad for example. When that was introduced, everybody was basically including me asking the question, what in the hell is this thing for?

[00:16:32] And how does that dynamic work?

[00:16:35] Daniel Greening: You mean? Like how do we gain knowledge? 

[00:16:38] Dan Dickson: Yeah. So traditional market research. Sometimes just doesn't work and the same thing's really true of employees when you come down to it. How do you understand how your employees are really doing? You do a survey Yeah that's really helpful

[00:16:51] Daniel Greening: Yeah. Yeah. In some companies, we hypothesize that the customer will want something, but instead of going to the customer and asking them if they would want this hypothetical thing we haven't built yet, instead we try to do as best an approximation as we can for the customer and then experiment with the customer and see how they behave.

[00:17:17] So that's one possibility. Of course, there's other possibilities in deepening our knowledge of customers. For example, people have characterized Ron Johnson as being a merchandising genius, right? Because of his previous successes.

[00:17:35] So you may have a merchandising genius and you may, to some extent, rely on that merchandising genius, but that is less of a reliable indicator than actual experimentation with the customer. 

[00:17:49] You scoffed at surveying the customer and rightly so. In surveys, customers often claim they want something, but you usually can't build exactly what they want and you can't count on their demand after you build it. Henry Ford once said, "if I had asked people what they wanted, they would've said faster horses." 

[00:18:11] Dan Dickson: yeah, that is absolutely the point. And it's the classic problem with market research. I mean, how do you gauge what somebody says they will do versus what they'll actually do? And how do you simulate that? You can ask people what they'll pay for something, for example, but you're not going to know until they're actually in a situation where they will take the action. 

[00:18:28] Ironically, Penney actually was in a situation where they could have done this. They could have taken a market and it could have rolled out this brand new, boutique appearance and things like that. They could do a simulation of the new product mix. I mean, obviously there'd be some limitations. Yeah, you need to be realistic as far as suppliers and things like that go. But they certainly could have set up a working prototype, if you will, what these stores would look like uh, roll it out in a given market and try it i mean it's the classic lean startup idea of minimum viable product. 

[00:18:55] Daniel Greening: We talked about Ron Johnson's success with Target. That particular event was an education for Ron Johnson in the customer base for Target, the suppliers, and all that stuff over a 14 year period. So he may not have been conscious of the fact that he was gathering data, but certainly by being in that role for that long, he understood very well what the customers wanted and how he could serve them better. And so was in a great position to apply that knowledge to succeed. 

[00:19:31] The Apple Store concept I think, was developed over a period of years as well. And, as we pointed out previously, he was surrounded by people who are helping him out and providing guardrails and other stuff like that through that success.

[00:19:48] Dan Dickson: It's almost like maybe one way to look at it is you took 14 years of experience at Target and collapsed it into 12 months. And I'm trying to say is that, in other words, when he at day one at Target, now he wasn't VP of merchandising, as you pointed out, he accumulated this knowledge over time he implemented processes and concepts over time.

[00:20:08] In a way it was experimentation. And what what he tried to do at Pennies is effectively go from zero to 100 all at once.

[00:20:15] Daniel Greening: And they were desperate. So they needed some savior to do that. And they got enamored with this idea that this guy was so amazing, 

[00:20:25] Dan Dickson: Mm-hmm 

[00:20:25] Daniel Greening: his previous successes, that he obviously was better than anything they could come up with. 

[00:20:31] Dan Dickson: It may have been true, in the case of the .Board, they didn't really discipline the process to call for experimentation 

[00:20:38] Daniel Greening: Yeah. It could have been a great collaborative effort, but for various reasons, collaboration wasn't how it was done.

[00:20:46] Dan Dickson: Yeah. Think about what we talked about in the previous episode, there were elements of this rollout that could have been successful, but we'll never know 


[00:20:53] Dan Dickson: because 

[00:20:53] they didn't do the 

[00:20:54] Daniel Greening: Yeah 

[00:20:54] Dan Dickson: experimentation. They tried 

[00:20:55] Daniel Greening: right 

[00:20:57] Dan Dickson: and everything collectively blew up.

[00:20:58] Daniel Greening: that's right. I'm looking at this list and I'm going they touched pretty much everything here. Customer, suppliers, employees, capital sources, partners. That's most of the components of a modern business. 

[00:21:13] So interesting. 

[00:21:14] M2 Equanimity

[00:21:14] Daniel Greening: So we also wanna talk a little bit about how mindful businesses accept failure and success with equanimity, staying objective with any outcome. 

[00:21:26] You and I have talked about how individual mindfulness discusses this notion of aversion and elation as being emotions that can interfere with objectivity from an individual perspective. 

[00:21:42] I think we can still talk about aversion and elation from an organizational perspective. Organizations certainly get arrogant when they have had a sequence of success. I think about General Motors, which was the top selling automobile company until

[00:22:03] Dan Dickson: Until 

[00:22:03] Daniel Greening: wasn't until it went bankrupt.

[00:22:05] So I think that elation is a concept that does apply to organizations. And I think this aversion notion actually applies to the previous JC Penney. They had this feeling that " we suck so bad that we have to hire this genius and the genius will save us," but actually what could have happened instead is they could have had the equanimity to say "we're sucking right now, but we need to understand better why and what we can do about it and be very thoughtful about exploring all that."

[00:22:43] It probably didn't help that their CEO was having health problems, but furthermore, it didn't help because the CEO had no successor in mind. So there wasn't a build-up of capabilities and leadership skills that could provide JC Penney with other possibilities and exploring different directions and that sort of thing. It just wasn't there.

[00:23:10] If the previous JC Penney had some equanimity in it, it could bring in Ron Johnson and say, this is our CEO. He's an amazing merchandiser. However, we're gonna surround him with people who can help him succeed with us. And that isn't really what happened.

[00:23:31] Dan Dickson: It became an all or nothing type of a situation.

[00:23:33] Daniel Greening: Exactly. And it could have been Ron Johnson that made that happen that way. He could have said I'm the CEO, and I'm the boss, because he did have that perspective that he didn't join a company because he just wanted to help the company become better. He joined the company because he wanted to experience that CEO role.

[00:23:55] Dan Dickson: that, and also, you look back one of the quotes in our research is that his perception was that they didn't bring me to do incremental things. They basically brought me in to completely change the company. And he saw that as his mandate.

[00:24:07] Daniel Greening: Yeah. That could have been the expectations set by JC Penney itself.

[00:24:10] Dan Dickson: I don't wanna throw this all at him. both sides enabled the other.

[00:24:13] Daniel Greening: And one of them was in the aversion state that would be JC Penney. 

[00:24:18] Dan Dickson: And the elation state effectively came in with Ron Johnson. I mean, he had Target behind him. He had the Apple success behind him. I mean, he was. I'm incredibly self-confident at this point, he had to be. And, I can see him coming and I know what's going on here. I can fix this. And i'm sure that he was convinced he had the answer.

[00:24:36] Daniel Greening: A way to get to that equanimity is to view every project as an experiment. And so if we viewed the whole JC Penney project as an experiment, we might say, "okay, with a real experiment, it could fail or it could succeed. And we wanna be in a state where we can be comfortable with either outcome."

[00:24:59] If that were true, if you were saying, okay, this Ron Johnson thing is an experiment, then you say, " okay, do we really want to bet on a 50, 50 outcome of failure or success with a giant project like this? Or do we want to run little experiments first?" And so when you have that consciousness, that every project is an experiment, one of the things you think about is sub-projects right.

[00:25:29] Dan Dickson: That's correct. nobody, I don't think really looked at this thing that way when Johnson made his grand presentation, Uh, remember this after being there for three months. No one accepted the fact this might fail. Uh, everybody said this has got to work. This is our only hope. And that led to the decision of effectively betting the company on. on this one, call it an experiment

[00:25:49] Daniel Greening: So if you have equanimity, then you can have some comfort leaning into unexpected outcomes.

[00:25:57] So equanimity sort of means that, whether your experiment as a success or a failure, you're comfortable with either outcome. And that gives you the ability to lean into that outcome and say, "why the hell did this unexpected failure occur?" Or "why the hell did this unexpected success occur?"

[00:26:18] Either one benefits from this equanimous perspective that you just lean in curiously and say, how did that happen? And that leads to, of course, better outcomes because you can examine the causes more thoughtfully. 

[00:26:34] Dan Dickson: And objectively 

[00:26:35] Daniel Greening: Yeah, exactly. You're not like attributing it to the genius of someone that the outcome is successful. And you're also not attributing to the stupidity of a particular person that something failed. There's just a complex set of things that usually contribute to an outcome. 

[00:26:53] Dan Dickson: Yeah, I think there was a lot of inertia involved. I mean, that's the whole issue with group thinking the echo chamber effect, isn't it? I mean, I got to believe that some of the board members at least had some hesitation on this, you know, bet the company philosophy. But they were overpowered by the inertia of this situation.

[00:27:10] Daniel Greening: It's too bad we weren't flies on the wall during those board meetings because I'm very curious how they occurred. 

[00:27:16] M3 Causal Analysis Skills

[00:27:16] Daniel Greening: Another thing that I've noticed is that mindful businesses develop strong causal analysis skills. And by that, I mean, when a problem occurs, they explore the causes of that problem in a deeper way.

[00:27:34] So Dan, you and I have applied five whys causal analysis, which was developed by Toyota in the Toyota Production System. And a Toyota factory. That was used to analyze why parts might have come down the factory floor that were flawed or why there were delays in particular situations or so forth. Where we say what caused this problem? And then we say what caused that cause? And we keep doing that until we have a chain of causes that are five causes long. Now you've really explored in great depth, but in order to do that, you actually have to consider what are the interdependencies. So how would that part have gotten to that point in the factory floor? Who was touching it prior to that? Who were the suppliers associated with that? What was the material that was in that part? Other things like that all contribute to a bad outcome potentially. But if we don't go deeper into that, we might just blame the previous guy in the factory floor when it may have nothing to do with that person. 

[00:28:52] Dan Dickson: Mm-hmm

[00:28:53] If you take the five why approach and apply it to the JC Penney situation, the five why would be a really interesting conversation, wouldn't it? you would start with saying, okay, our sales and profits are down. Why? Okay. We've lost our prime customer, which is the middle class mom. Why? There was a recession. Okay. And, you can go upstream from that, but it's really, why did these people stop buying, and what can we do to effectively address that problem. 

[00:29:17] Daniel Greening: You might ask the question, why was there a recession? But another question you could ask is why were we affected by the recession? Because it may be that the supply of materials that JC Penney was offering were not suitable for people suffering from this recession, but there may be other things that JC Penney could supply that would have mitigated that problem for JC Penney. 

[00:29:43] Dan Dickson: That's you can't JC Penney could not have prevented the recession obviously. And they could not have prevented the fact that their target customer had less disposable income, but they could have possibly figured out a way to address that specific problem and not in the nuclear bomb fashion that they did.

[00:30:01] Daniel Greening: Right, yeah. So one of the things that I've noticed about this five whys approach is that oftentimes we make decisions because we think there's an obvious cause for a problem. Sammy was the last person who touched that part and the part was flawed. So let's fire, or, do something with Sammy.

[00:30:25] I've seen it used as a Machiavellian approach to deflect blame or worse to blame somebody else specifically. So if you can find an obvious cause like without doing any deep analysis and you can promote it among everybody around you, then you can actually get rid of somebody.

[00:30:45] Dan Dickson: That may be part of it, but, uh, maybe the bigger part is somebody proving that it's not my fault.

[00:30:50] Once I've proven that I'm going to. Interested in anymore.

[00:30:53] Daniel Greening: In most cases, people are not trying to deliberately get rid of a particular person. They just don't want to be the person that's thought of as the cause. 

[00:31:02] Equanimity contributes here too, because if I am the cause of a problem and we're in an environment where failure or success are not aversion or elation filled events, then we can actually have a thoughtful conversation about, "oh i made a mistake there where i did this thing where i could have done this other thing."

[00:31:24] And then other people can weigh in and say how could we prevent someone in your role from making a mistake like that. And you can now have a thoughtful conversation, where people don't feel threatened by talking about failure. 

[00:31:36] but you have to build that comfort. You have to build that trust in the organization. And one way to build that trust is to do this deeper failure analysis. 

[00:31:50] There is another thing that can happen when you have people who don't think deeply about causes is that someone can appear to be a success. And yet their success was a collaborative effort. And I suspect that's true with Ron Johnson, right? That he's not the only hero here

[00:32:10] Dan Dickson: , but this is not an attempt to take credit away from him, cuz he certainly was a key factor in it. I Could the success at Target happened without Ron Johnson? I don't know. I think it's questionable. Could the success of 

[00:32:21] Daniel Greening: Yeah. 

[00:32:21] Dan Dickson: happen without Ron Johnson?

[00:32:23] I doubt it quite honestly. I think 

[00:32:25] that, 

[00:32:25] well, he definitely led the charge, but in a way it's sort of like what happened to Obama. When he made the remark that he was addressing businesses and saying that, Hey, you're successful, but you got to understand the context in which you're successful and it's not just you independently. And the meaning was that you've got the infrastructure to work here. In many cases, he was referring to the internet. 

[00:32:46] Uh, I'm not taking sides politically, but I think it's an analogous situation. Uh, back in apple, there was a similar thing going on and that's the margins of the product. There was no way you could have done an Apple Store without those margins to work with. So the point is that there are a lot of contributing factors and no doubt, a lot of contributing people. 

[00:33:05] Daniel Greening: How does this relate to JC Penney? 

[00:33:07] Dan Dickson: The idea of that one person was convinced that they and they alone were the key to success. And they weren't really mindful of the other factors that entered into that success. As a result, they were convinced that they could replicate previous success in a different context.

[00:33:25] Daniel Greening: We are referring to Ron Johnson, but the issue here is, if this was a one time event, we might not say that, but of course there's the subsequent event that we're gonna talk about in the next episode, which is enjoy.com and it too had a similar problem.

[00:33:43] Dan Dickson: It was almost the same problem. It was go in and, light the fuse, set the rocket off and don't take the time for incremental moves on this and, make it a learning process.

[00:33:53] I've got this great idea. And here we go.

[00:33:56] We're gonna go big time. And was the philosophy.

[00:33:59] M4 Mitigate Risky Attachments

[00:33:59] Daniel Greening: The fourth characteristic of a Mindful business is noticing and mitigating risky attachments. I think of these as dangerous dependencies. 

[00:34:09] Businesses can be attached to people. If only one employee knows how to do something and they're difficult or expensive to replace, the company is vulnerable. Businesses can also be attached to suppliers, if there's only one source for a component. Businesses can be attached to customers, if we serve only one narrow market segment. And businesses can be attached to a natural resource, if there are limitations or regulatory restrictions. 

[00:34:39] Mindfulness thinks of virtually everything is impermanent, including everything we're attached to. When those things are taken away the business can suffer, unless we plan for that inevitability and mitigate the risk. 

[00:34:53] There are some great historical examples of mindful companies, from the perspective of attachment, anyway. 

[00:35:00] M4.1 Risky Attachments: Horizontal and Vertical Integration

[00:35:00] Daniel Greening: Standard Oil, for example, first built out its refinery business across multiple states, largely through acquiring other companies. That reduced Standard Oil's dependency on a single state. It was less vulnerable to changing regional demand and to state specific regulation. That was an example of a business growth technique called horizontal integration. 

[00:35:27] But Standard Oil still had risks of supply disruption. As a refiner, it was dependent on oil drillers, oil fields, and oil transport. Those companies were elements of its supply chain. Standard Oil then started acquiring those. 

[00:35:45] And finally it had dependencies on its customers, which, because it was a refiner included fuel transport after refining and fuel stations. Standard Oil then started acquiring those. This technique of acquiring companies along the supply chain from raw materials to customer is called vertical integration. 

[00:36:10] Historians could argue that Standard Oil was ultimately broken up into regional companies. But those companies continue to thrive today. So these two types of integration reduced risky attachments and led to much greater sustainability of Standard Oil. 

[00:36:28] M4.2 Attachment Risk: Second Sourcing

[00:36:28] Daniel Greening: Another approach to mitigating attachment risk is to establish second sources. Dan Dickson I'm betting you've done this or at least have seen it. 

[00:36:38] Dan Dickson: One example was when I was on the board of a major wine distributor. There are always primary and significant name brands that comprises a big part of your revenue. And sometimes they just stopped distributing through a given distributor, for a variety of reasons, not ill will, not because you did something wrong. It just happens. 

[00:36:54] And you just have to be prepared for it. Uh, it's a little more complicated because it's not just an automatic second source. You've got multiple sources. But you. I need to be able to position other products and other brands to replace the brand that migrated away. 

[00:37:07] Daniel Greening: How did you do that?

[00:37:08] Dan Dickson: Well, there are a couple of things to consider. When a particular brand goes away. You can't replace it overnight, but you can help promote other brands to take their place. And not focus too much on a single primary supplier at the expense of secondary suppliers. 

[00:37:21] You need to basically nurture and support all of them so that people are in a position where they can fill the gap as needed

[00:37:27] Daniel Greening: Were there any other situations where a second sources played a role for you?

[00:37:31] I certainly saw this at GE and I saw it in both directions. What I mean by that is that there were tough situations where we were relying on a single supplier. And on the other hand issues where we were some one else's sole supplier. So we are on the other side of the equation. 

[00:37:45] A lot of the people I met in purchasing at GE and other companies were convinced that their role was to hammer the hell out of suppliers for the best possible terms in that last drop of blood. Period. 

[00:37:56] The problem with that attitude is that these people aren't there to support you if circumstances change should like, for example, shortages all of a sudden pop up. And, uh, this happens more often than people tend to realize. 

[00:38:06] Dan Dickson: I think there's more than just second sources. It's respect for your sources, and being mindful of that in terms of, collaborating with them, as opposed to just demanding from them, 

[00:38:17] Daniel Greening: If you have your specialist source, or even if you have two sources, if you don't keep them healthy, you're gonna be exposed to risk there, too.

[00:38:27] Dan Dickson: If somebody that needs the same product comes in to your source with a better deal, and is more accommodating and things like that. And all of a sudden, they say, I've only got X amount of capacity. I'm gonna give it to this other party. It's a team type of collaborative relationship.

[00:38:41] As opposed to, one side running the relationship. And I think there's gotta be respect for that. 

[00:38:45] Daniel Greening: Dan you've mentioned the US, itself, having some high risk dependencies on supply chains. Is that relevant here?

[00:38:55] Dan Dickson: Let's look at what's happening right now in semiconductors. 

[00:38:58] Our primary source of advanced ships is Taiwan. And that could easily be shut off because of geopolitical factors. I really don't understand why it took this country so long to wake up to that threat. Maybe people just refuse to accept the reality. Everything seemed to be fine. It just kept on going. Uh, this actually might be one of the good things that happened because of COVID. People were forced to recognize the fragility of the supply chain. Things that were taken for granted just no longer worked. 

[00:39:22] M4.3 Risk Mitigation:T-shaped people

[00:39:22] Daniel Greening: I want to shift gears a bit and talk about T-shaped employees. These are folks with high competency in one area, they're highly skilled in that area, but they aren't ivory tower specialists because they develop functional competency in other areas. And when we realize we have a specialist, with no other people as backup, we've got to teach more people that specialty.

[00:39:49] Dan Dickson: And the culture needs to support that. Let's say, I'm the subject expert on a team. If someone has a contribution in my area, I need to welcome that, not resist it. 

[00:39:58] Daniel Greening: You have to work hard to promote information sharing. 

[00:40:01] For example, when I was at Citrix, I had two roles: managing agile project managers and managing the user experience team. Our user experience team was highly competent and they were in demand from all over the organization. There were like 23 people in that team. That's pretty big for a UX team, but the team was still slammed. Citrix was known for its user experience. I realized we couldn't just keep adding folks to that team, because it wasn't healthy to have one department as a bottleneck. 

[00:40:36] So I told the UX team we need to teach other people how to do competent UX work. My argument was that if we weren't available, developers and web teams were going to make UX decisions on their own. If we were the standard bearers, literally creating UX standards and teaching other people to do a decent job, we could focus on the critical UX issues in the company. 

[00:41:04] The first thing I encountered was resistance. That this is our job, we are skilled in this area, and no way could anyone outside the UX department do a decent job. I had lots of conversations about this. We should hire more people, et cetera. 

[00:41:22] I had to create this sense of comfort around teaching and standardizing. But ultimately it did happen. The outcome was better than I thought. We started having exchanges between software engineers and user experience people. So the software engineers became moderately better at UX, as I'd hoped. But engineers also taught the user experience people how to do a little programming. 

[00:41:50] After they did that, the user experience folks could program a very simple user experience prototype, and then hand it to the programmers. And sometimes the programmers would say, "oh my God, this is awesome. I'm just going to copy this code. You gave me a prototype. But it's so good, we're going to use it in our actual product." 

[00:42:12] See how that T-shaped employee notion mitigates attachment risk? As long as people feel safe and the company creates a nurturing environment, it makes work more fun too. In companies like that, you are learning every day. 

[00:42:28] I don't think people in the executive level realized what happened or how great that was. It was something that just appeared and people thought it was created by magic or something. This experience and others like it have convinced me that philosophically powerful things, like agile and mindfulness, you have to teach top level execs or they won't realize or appreciate what they've got.

[00:42:53] Dan Dickson: It needs to be all levels of the company. for example, if I am a CEO or I am a senior executive and then somebody does something really great, do I recognize the individual or do I recognize the team? The rewards and the credit have to go to the team, not to the individual. It doesn't mean that you disparage anybody's individual contribution, but you've gotta have respect for both. 

[00:43:13] M4.4 Attachment Risk: JC Penney

[00:43:13] Daniel Greening: Let's not forget to talk about JC Penney here. What attachments did they have? And what did they do to mitigate attachment risk?

[00:43:22] Dan Dickson: Certainly you had an us versus them philosophy.

[00:43:25] You had the new echelon come in, the Apple employees and so forth. 

[00:43:28] Daniel Greening: it it, wasn't a team. It was a bifurcated

[00:43:32] guess 

[00:43:32] Dan Dickson: it wasn't a team period. I'm not sure exactly what the criteria was for firing people, to be honest with you. It was because they couldn't get with the program is because we're spending too much money on them.

[00:43:42] I don't know. but the layoffs were massive, and the question is, was that, a sort of, a situation, because there was a refusal to accept the fact that these people could become more T-shaped, in the new management way. 

[00:43:55] Daniel Greening: You and I recall that Toyota was the developer of the just in time process, the idea that someone could order a car, with all its options, and then Toyota would scramble to create that particular car for you. It led to the creation of this Toyota Production System . 

[00:44:16] So General Motors was not using this technique and they had a really problem factory in Fremont, California. They shut down that division. The problem was that people were doing drugs on the shop floor. There were a lot of sabotage issues . And GM just decided we've had enough of this. We're gonna shut this thing down. 

[00:44:44] Then after it was shut down for about a year, Toyota was very interested in establishing factories in the United States to help it avoid customs costs and other things like that. 

[00:44:57] They went to GM and said, Hey GM, why don't you and we partner on a factory and we'll produce Toyota cars and we'll produce GM cars on this factory. And GM said that's interesting because we have this building over in Fremont to do this. And they said, that sounds great. Let's partner on that and we'll teach you how to do just in time manufacturing.

[00:45:24] One of the things that Toyota did was say, why don't we use your old employees? And GM was surprised by that and told Toyota that would be a ridiculous idea because the employees were terrible employees. 

[00:45:41] And Toyota said, you know what, let's do it anyway. Let's see how it goes. And we will train all of these employees who had been laid off. They rehired the old employees. They flew them all to Japan. They taught them the Toyota Production System in Japan. Then they flew them back to Fremont, California. They started working, and within six months, the most reliable cars that were produced by GM were coming from this plant, called NUMMI. 

[00:46:15] This is an example where managers attributed poor employee behavior to bad employees, rather than bad management. But Toyota demonstrated that good management can create good employee behavior from the same people. 

[00:46:32] I think of that because I'm thinking of JC Penney. I'm thinking about all of these employees of JC Penney, who just want a stable career. They want a happy family life and so forth and so on. If JC Penney had that perspective that we are gonna keep these employees and we're gonna build them up to be the healthiest, most awesome employees ever, they could have done that, but that would take time. And that would have meant that they understood what kind of employees they wanted on the floor of the stores.

[00:47:08] That could have been a teamwork model that they could have used, but that doesn't seem to be what they did.

[00:47:14] Dan Dickson: We've got the numbers in terms of how many people they let go. 

[00:47:17] Daniel Greening: How many were there? 

[00:47:18] Dan Dickson: 19,000 or something like that. It was a huge number.

[00:47:21] But the question is what they had to hire people to take their place and they didn't all come from Apple. This is something we may wanna look into a little bit deeper. What were the reasons for letting these people go and who did they replace them with? Was it a missing skillset or was it just strictly economic? I don't know. But obviously they did not go through the effort.

[00:47:41] They created the small I team, which is Apple parlance. And so initially they gave lip service to the idea of respecting the current employee base and bringing them along. But those people were mostly let go too.

[00:47:54] M5 Align Ecosystem

[00:47:54] Daniel Greening: The fifth characteristic of mindful businesses is that they recognize they have an internal and an external ecosystem. They work hard to align both of them towards a shared mission.

[00:48:08] Toyota's a particular example of this. They have a five year goal. They share that throughout the organization, they ask people in the organization to weigh in on how their department, their team, or they, as an individual will contribute to this five year goal. How will they learn? How will they mature and how will they develop things in the future?

[00:48:36] And so that discussion goes up and down the organization for a few months, I believe. And then they try to adjust the overall goal of the organization if there's a lot of pushback against it. But they also try to help people on the ground in Toyota to understand where they might go, as the company approaches this goal.

[00:48:59] So that internal alignment is also relevant for a business in its greater ecosystem. So with its shareholders, its executives, its customer, suppliers, funders, partners, et cetera. Does it think about the ecosystem and try to place itself in that environment, and also educate elements of that ecosystem to use it effectively?

[00:49:27] Dan Dickson: You know, 

[00:49:27] this sort of goes into the topic of the, not just telling somebody what to do, but helping them explain why it's important that they do it. This can actually extend to customers. Let's look at JC Penney as an example, 

[00:49:39] They changed their pricing model from a promotional model to a three tiered pricing system. I think on a financial standpoint, this actually was a better deal for the consumer, but the consumer didn't perceive it that way.

[00:49:51] And so I think this falls into that general area in terms of not just doing something and okay, this is what we're gonna do. This is what you're gonna do. It's more in terms of, Hey, understand what this means to you. I think that could have made a huge difference in this one.

[00:50:04] Daniel Greening: They could have brought the customer along with them on their journey, and probably the customer would relate to that better.

[00:50:11] Dan Dickson: I know they tried, there were these advertising campaigns and so forth, but that just isn't deep enough and it wasn't incremental enough. It wasn't experimental enough. It was gonna take a while. It's like you and I have talked about that, the whole perception and it's a deep rooted perception of the value of promotional prices.

[00:50:27] Wow. I got a deal. hard to bring somebody along and it may not have been doable. I don't know. But 

[00:50:33] Daniel Greening: Yeah. 

[00:50:33] Dan Dickson: could have tried harder.

[00:50:35] Daniel Greening: Yeah. I imagine one thing that they could have done is taken a region and apply this new business model in that region. And then actually talk to customers, or maybe even assess how much they were spending on different things in the store in relation to what they were doing before, or whether they were happier with the products and other stuff like that.

[00:50:56] Now you get evidence that you can share with customers in other regions, as you roll out this strategy and they may get very excited about it. 

[00:51:06] Dan Dickson: There's another way to look at it too, is that rather than throw a switch and go from one model to the other model, you evolve into it and, you take certain product categories, I don't know. There's bunch of different ways you could approach it.

[00:51:18] But just to do this drastic kind of a change, the perception of the part of the consumer is that I'm not getting the deal I used to get. I'm paying more for this. And even if that wasn't in fact, the case. So that's basically a situation of understanding the ecosystem and working within it, as opposed to trying to just, summarily change it. 

[00:51:34] Daniel Greening: Yeah. As I was thinking about this idea that aligning the interests how does it help the organization? There were two parts. So one is that aligning the interests, of course, makes everything smoother based on what you're currently working on. But the act of trying to get that alignment requires you to have communication processes that go up and down the organization that go outside the organization with customers and others.

[00:52:06] That act is developing an alignment skill and that alignment skill will help this organization in the future if it needs to change rapidly, because it now has a communication channel with its customers, with its suppliers, with its employees, and its funders, and all that stuff. 

[00:52:26] So that skill allows it to more rapidly, turn the ship. You know what I mean? If there's trouble if you encounter some kind of big risk in the business ecosystem, you can adapt rapidly because you already have those channels of communication and they already trust you to do the right thing. Does that make sense?

[00:52:48] Dan Dickson: Yeah, I'm just thinking about exactly how you established those channels though. That's not easy.

[00:52:52] Daniel Greening: Exactly. So I think about the communication structure for employees in Toyota, having already established this mechanism to gain alignment around a goal, they have a communication structure that allows individual employees to provide feedback to executives and vice versa. It's just such a great model.

[00:53:15] And similarly, if you can establish that with customers, Trader Joe's is a, an example of a company that communicates a lot with its customers. What is that thing called? 

[00:53:26] Dan Dickson: Fearless Flyer.

[00:53:27] Daniel Greening: That fearless flyer newspaper that tells you about all the great stuff that they've got, but they just communicate at a very high level with their customers.

[00:53:37] And. . I always remember that thing from 20, 30 years ago. And they're still doing it.

[00:53:43] Dan Dickson: Trader Joe's as an interesting company. I can't say I've studied them, but I've certainly experienced them as a customer. My understanding is that they're rated as one of the best places to work. 

[00:53:52] And they are certainly customer centric. You start asking about a product that just open a box for you. And here says here, try some. They accept returns with no questions, but you gotta be careful with that, because again, that leads me back into Penney. 

[00:54:03] And one of the mistakes they made is that they put in a a Nordstrom program we'll accept any return without a receipt. And what people were doing was basically walking into the store, grabbing something off a shelf, walking over to a cash wrap and saying, oh I'm returning this.

[00:54:19] And they were getting, basically robbed blind. So the question is, how do you manage some of these things that maybe on the surface sound like they're great relationship builders, but in, in the act of implementation, they can be problematic. 

[00:54:31] Daniel Greening: If your customers are robbing you, you have an alignment issue there. The customer should benefit from a healthy local department store. Folks robbing the store and JC Penney's inability to prevent it, is a value alignment problem.

[00:54:47] Dan Dickson: One of my biggest issues with when we consulted to a couple, grocery chains was the trust of the employees, specifically on the cash register. And basically it was one person, the one cash register they walked away cash register would shut down.

[00:55:02] And the contrast to that was a store out in Tucson, which I loved. And it was a good size market. And any one employee could jump onto any cash register and basically, smooth out the the checkout process and customers really enjoyed that because anytime you had more than two or three people in line, another cash register would open, somebody would jump in, but the response on the companies we were consulting to, oh, we could never do that because you couldn't trust the employees they would steal money. 

[00:55:29] So I'm trying to think about how the culture impacts your ability to deliver some of these benefits, because it certainly worked at Nordstrom.

[00:55:38] It gets back into the teamwork thing , we all are part of this common objective 

[00:55:43] I think it's a mutual respect that's involved.

[00:55:45] Daniel Greening: You mean like the customer feels like a member of the jC Penney team? 

[00:55:50] Dan Dickson: I feel that way at Trader Joe's.

[00:55:51] Daniel Greening: Costco has this similar return model and there's definitely people that exploit that. REI is another example. However, they go for higher end customers. So the amount of the abuse of that is probably quite low, but nevertheless, I've heard of these things happening at both of those institutions.

[00:56:12] Dan Dickson: You can track things like that and not be onerous about it. The bestsellers wine chain. I ran for a while. We had that you bring a bottle back. I don't care if it's empty or not, and if you didn't like the wine we'll replace it or refund.

[00:56:23] These are relatively small stores, but you effectively tracked. And if somebody did it to an excessive extent, you basically cut 'em off. There 

[00:56:31] Daniel Greening: Yeah. 

[00:56:32] Dan Dickson: as firing customers. It's not a pleasant thing 

[00:56:34] do, but 

[00:56:34] I always get into these arguments about is the customer always right or not. And if the fact is no, they're not always right. There's some people that will take advantage of a situation, but you shouldn't penalize your broader customer base just because of the actions of a few. You gotta take a little bit of a risk and get burned on a small scale, to provide the benefit to the greater percentage, the greater majority of your customers.

[00:56:55] Daniel Greening: And it benefits everyone in a sense other than I suppose the people taking advantage of you.

[00:57:00] Dan Dickson: And it makes your associates feel better. People like to help other people. That's really what the reality is. And they like to have the decision-making capability so that they can provide these benefits. And to give people that responsibility, you've got to be able to have a mutual respect. I saw this in these two large grocery operations. There was a complete lack of trust. Complete lack of respect for the employee base. And it worked both ways 

[00:57:25] Daniel Greening: No one did that five whys analysis that said, we can't trust our folks in these other regions. Why is that? We don't have a way of tracking the bad actors in the employees. So they could have created solutions to that, just as you said, with Trader Joe's and Costco, being able to track customers that abuse the system would solve that problem and then continue to make this easy flowing thing for good actors, which is exactly what you want.

[00:57:58] M6 Teach Philosophy and Practices Broadly

[00:57:58] Daniel Greening: Okay lastly what you see in mindful organizations is that they promote and teach their philosophy broadly, sometimes even outside the company.

[00:58:09] If you go to Toyota, for example, the Toyota Production System is taught to everyone in the organization and they use this system, when it's practical, to just do things on a daily basis. So they know exactly what to do when a flawed part comes down, a production line. They have to pull this cord, and the cord makes this alert sound, and some managers come, and then they have this discussion about what to do with this flawed part.

[00:58:40] So everybody knows, in Toyota, that's what you do when you encounter a problem. They've written all this stuff down, and they promulgate it throughout the organization. This creates, of course, alignment, which we've already talked about, around the processes that people use, but they also create kind of an expectation and a regularity about work. And it becomes a philosophy that they can adopt not only at work, but also in their life outside work. Have you seen that in an organization before?

[00:59:14] Dan Dickson: I tried to promote that idea at the wine chain I was talking about before. And we had some success with it in terms of the elements we're talking about with the mutual respect and so forth. I'd have to think about that.

[00:59:25] Daniel Greening: But of course we've seen it in Toyota, and then it's the most profitable, most productive auto manufacturer in the world now. And then we also see it in software, because Scrum is often a process methodology that is adopted throughout an organization. And by doing that, employees can move from one team to another and have some expectations about what they'll see. So it creates an internal mobility because everybody knows that's how you do it.

[00:59:57] Lean startup is similar, right? It's experimenting with customers. And if it's well taught in an organization, you realize that lean startup can be used in almost any department to experiment with whoever is the quote customer unquote of your department. So it may even be another department of the organization, but experimentation becomes part of your DNA because it's actually written down in the philosophy of the organization. 

[01:00:26] I don't think many companies have these well-maintained broadly promulgated philosophies, but i suspect successful companies do.

[01:00:35] We did some searching for JC Penney philosophy and practices, any kind of published mission or ethos. We couldn't find any unified philosophy or approach at all. I'll contrast that with some other companies. If you search for Nordstrom philosophy, you'll find that John Nordstrom instructed his staff to provide service that the customer needs even before the customer knows it needs those services. If you search for Trader Joe's philosophy, you'll find its About Us page, which goes into great detail about how it does things and how those things benefit the customer.

[01:01:14] But on JC Penney, we found nothing. 

[01:01:18] It might be worthy of our time for some future episode to talk about operationalizing philosophy. How many companies do this. 

[01:01:27] Dan Dickson: We've pointed to Salesforce a few times. It'd be interesting to dig a little bit deeper into them and then deeper into Trader Joe's for that matter.

[01:01:33] Daniel Greening: Oh yeah. That's true. We have a lot of candidates that we suspect are mindful.


[01:01:40] Summary

[01:01:40] Daniel Greening: Thanks for joining us in our exploration of business mindfulness, with Ron Johnson and JC Penney. We aren't the only folks interested in this topic of business mindfulness. If you look at our show notes, you'll see some scholarly references. 

[01:01:57] You have to twist your mind a bit to think about business mindfulness. First, you have to think of a business as a giant, intelligent being, composed of a bunch of humans. 

[01:02:08] Mindful businesses spend a lot of energy cultivating awareness of their entire ecosystem. They don't assume their customers, employees, suppliers, capital sources, partners, or regulators will stay the same. They are a little paranoid about it. 

[01:02:26] Mindful businesses hone a sense of equanimity about success and failure, so they can assess outcomes with a cool logic. They think of everything as an experiment. 

[01:02:37] Mindful businesses develop causal analysis skills, so they can deeply understand why an outcome occurred. The academics describe this, diplomatically, as quote, a reluctance to simplify interpretations unquote. 

[01:02:56] Mindful businesses look for risky attachments. Since they're aware of their ecosystem, they can see what those might be. And they use a variety of techniques to mitigate risk. We talked about a bunch of those: horizontal and vertical integration. T-shaped employees. Second sources. 

[01:03:17] Mindful businesses use their awareness of their ecosystem to align all the elements in it. We talked about some interesting examples from Toyota to Trader Joe's. 

[01:03:30] And finally, mindful businesses promote and teach their philosophy. We're less certain about why they do it. Maybe it's a by-product of their alignment efforts. But they end up teaching competitors and everyone else standing around, if they're paying attention. The less mindful competitors probably aren't. 

[01:03:51] We talked about JC Penney and Ron Johnson along the way. It's not surprising that there was a lack of business mindfulness in the actions he took. We think the outcome could have been much better if he would have used these principles. 

[01:04:06] Credits


[01:04:07] Daniel Greening: Between episodes we're exploring and researching the next episode. In agile fashion, we aren't perfectly sure where we'll be, but we think it will be about Ron Johnson and enjoy.com. Unless a whole pile of you weigh in that you want to hear about Toyota, Trader Joe's, or someone losing their keys. 

[01:04:29] Following the close, Mirela Petalli will guide a meditation about organizational mindfulness. If you'd like to use our meditations in your daily practice, we also offer them separately in the Mindful Agility Meditation's podcast. 

[01:04:46] Many thanks to Dan Dickson for joining us in this episode. 

[01:04:50] We also have a guide, the Mindful Agility community, a Facebook group. We meet occasionally and sometimes excerpts from those meetings end up in our podcast. We'd love to have you join. 

[01:05:03] If you want to help us out, our priority is building a bigger audience. If you liked this episode, please pass it on with your recommendations to friends in social media, email, or if you're still using a telegraph, we'll take it. But take a picture and send it to us so we can post it on our own social media. 

[01:05:23] I'm Dan Greening. See you next time. 


[01:05:27] Meditation Greeting

[01:05:27] Daniel Greening: if you're still with us, Mirela will guide an optional 10 minute meditation to use open awareness to see how our individuality comprises many different sub-components. And how we ourselves are a component of a bigger system, kind of like an organization. 

[01:05:46] Mirela Petalli: Thank you for taking this time to meditate with us today. 

[01:05:52] Mindfulness is the skill of becoming aware, of noticing what is happening in the present moment. While we may be often aware of what is going on, the practice of mindfulness is not simply about noticing our thoughts, sensations, emotions, and the environment around us, but rather about noticing without judgment, and with curiosity, acceptance, and a kind and compassionate attitude. 

[01:06:29] Meditation Introduction

[01:06:29] Mirela Petalli: In today's meditation we'll start by practicing focused awareness on our breath and then we'll move on to open awareness. 

[01:06:40] Studies have shown that the practice of open awareness meditation helps us cultivate a non-judgemental and non-reactive attitude. When we practice mindfulness this way both in our daily practice and in our everyday activities and interactions, we get closer to seeing things as they are, we can consider different viewpoints and solutions, recognize and reduce our biases, make objective assessments about ourselves, others, and what is happening. We can be more creative, and then ultimately, we can act more skillfully, and contribute to the wellbeing of ourselves, and those around us. 

[01:07:34] We'll practice open awareness by paying attention to our moment to moment experience and see if we can cultivate an attitude of curiosity, non-judgment, acceptance, kindness ,and compassion to whatever is happening. 

[01:07:57] During the meditation you might notice your mind wandering, judging, commenting, being restless or sluggish. That's perfectly natural. That is what minds do. We notice it, become curious, and even have a light humorous attitude about it, and then let it go. 

[01:08:21] You can find the corresponding discussion in episode 12 of the Mindful Agility podcast at Mindful Agility dot com 

[01:08:34] And now let's start. 

[01:08:39] Meditation


[01:08:39] Mirela Petalli: Find a comfortable position. Either sitting or lying down. 

[01:08:57] You can close your eyes or keep them slightly open, focused downward in front of you. 

[01:09:06] Let's start by taking a few deep, long, slow breaths, to settle in our bodies and relax. 

[01:09:20] Now allow your breath to return to normal. 

[01:09:33] Find a spot where you feel the breath the most, either the tip of your nose, upper lip, chest, or your belly. 

[01:09:46] Notice the breath coming in. 

[01:09:51] Notice the breath coming out. 

[01:09:58] Keep your attention on a breath this way for a little bit. 

[01:10:04] If you get ,distracted either by thoughts, sounds, or sensations, notice it without judgment and bring your attention back gently to the breath. 

[01:10:19] There is no need to try too hard to focus. 

[01:10:25] We just want to be aware that we are breathing in. 

[01:10:31] Aware that we are breathing out. 

[01:11:34] Now bring your attention to your whole body. 

[01:11:39] Your body is sitting or line down. 

[01:11:45] How is your body feeling? 

[01:11:54] Spend some time being curious about what sensations are there. 

[01:12:05] You feel any tightness? Discomfort. Pressure. 

[01:12:13] . Pain. Numbness or tingling. 

[01:12:21] Your body is working for you all the time. 

[01:12:36] Your body is a wonderful organism where every single, visible or invisible part is important and is constantly working, collaborating, exchanging, contributing to the whole. It's co-creating life. Your life. 

[01:13:05] Take a moment to feel your body and appreciate everything that it does for you. 

[01:13:27] As you keep your whole body in your awareness notice the body breathing. 

[01:13:49] We have expanded our awareness and instead of being mindful of the breath at one point, we are being aware of the whole body breathing. 

[01:14:04] Does this feel any different than when you were focused on your breath at one point only? 

[01:14:29] Now I invite you to expand your attention even more to include the environment you are in. 

[01:14:38] Notice, what is there? 

[01:14:41] What's the temperature? 

[01:14:47] Any sounds? 

[01:14:56] If your eyes are open, what do you see? 

[01:15:04] If your eyes are closed, I invite you to open them now and look around you. 

[01:15:20] You can use gentle labeling as things come to your attention. 

[01:15:30] Seeing. Hearing. Breathing. Sensations. Emotions. Thoughts. 

[01:15:45] You may notice that your attention is being pulled in every direction. Or that a sound, a thought, a sensation is strong and is, keeps your attention longer. 

[01:15:59] That's okay. 

[01:16:01] We try to keep an open awareness by allowing things to come and go without becoming too involved in them. 

[01:16:11] Imagine you were sitting at the edge of a river. 

[01:16:18] Your awareness is watching as the river flows by. 

[01:16:24] There is a sense of calmness stillness as you watch and listen to the water flowing. 

[01:16:40] Continue to practice this open awareness for awhile on your own. 

[01:17:45] Now let go of the meditation and bring your attention back to your body. 

[01:17:51] Notice your body breathing. 

[01:18:01] When you're ready you can get out of meditation. 

[01:18:04] Thank you for taking this time to meditate with us today.