Why Companies Need A Human Operating System Today

This post is my humble attempt to propose a new human operating system for businesses. One that integrates results with the quality of social relationships. A human operating system that rewards not just performance, but “how” the results were achieved both offline and on digital.

18 min readFeb 14, 2019

Relationship Capital leadership or (RC) is an industry standard of guiding principles and accounting of an individual’s credibility or quality of their trustworthiness with respect to these two types of social interactions:

Declared Commitment Feedback
Appreciation Recognition

Commitments and Appreciation are captured and scored as Relationship Capital Points or RCPs. Each Entity has a Relationship Capital Account in which RCPs are credited. Keep a declared commitment, and your RC account is credited with an RCPs.

The measurement of an entity’s Relationship Capital (RC) is a results-oriented process. Making and keeping commitments is fundamental to earning RC and high-performing leaders and businesses have always understood this. The difference today is the hyper-connected and transparent social world we are in, the speed by which other’s perceptions of you, your product/service, or business is not only very fast but is amplified by brand advocates “word of mouth”.

“People crave trustworthy information about the world we live in.” –Bill Keller

The Purpose and Principles of Relationship Capital Leadership

It’s common knowledge that Benjamin Franklin provided great support and counsel in the drafting of the Declaration of Independence and was sent as a diplomat to France to ask for assistance during the Revolutionary War. He was a skilled man across a wide variety of disciplines such as scientist, inventor, printer, newspaper writer, as well as politician. He is credited with starting America’s first fire department and public library. Ben Franklin’s face is still on the $100 bill. Less commonly known, perhaps, is that Franklin tried to live by the maxims that seem so simplistic in today’s complex world.

In “The True Story of Benjamin Franklin,” author Lee Lothrop shares a story from Franklin’s childhood. When Franklin was a boy, he and his friends decided one day that in order to catch minnows they needed to build a wharf. They found a convenient pile of stones and lugged them to the marsh where the boys usually fished, and soon, with a good deal of effort, they put together a fishing wharf.

Unfortunately, the stones had been intended for the cellar of a new house, and since building the wharf was Ben’s idea, he was punished. Ben argued with his father that since the stones were there and a wharf was needed, he had done no wrong. He did not persuade his father: “The stones were not yours to take, Ben,” said his father. “What is not honest cannot be truly useful.” This incident helped frame his famous saying, “Honest is the best policy” as one of Franklin’s guiding principles for his life.

At the age of 20, Ben Franklin committed to 13 virtues, which he followed devotedly:

“Temperance. Eat not to dullness. Drink not to elevation.”
“Silence. Speak not but what may benefit others or yourself. Avoid trifling conversation.”
“Order. Let all your Things have their Places. Let each part of your Business have its Time.”
“Resolution. Resolve to perform what you ought. Perform without fail what you resolve.”
“Frugality. Make no Expense but to do good to others or yourself: i.e., Waste nothing.”
“Industry. Lose no time. Be always employed in something useful. Cut off all unnecessary Actions.”
“Sincerity. Use no hurtful deceit. Think innocently and justly, and, if you speak; speak accordingly.”
“Justice. Wrong none, by doing injuries or omitting the Benefits that are your Duty.”
“Moderation. Avoid Extremes. Forbear resenting Injuries so much as you think they deserve.”
“Cleanliness. Tolerate no Uncleanness in Body, Clothes, or Habitation.”
“Tranquility. Be not disturbed at Trifles, or at Accidents common or unavoidable.”
“Chastity. Rarely use Venery but for Health or Offspring, never to Dullness, Weakness, or the Injury of your own or another’s Peace or Reputation.”
“Humility. Imitate Jesus and Socrates.”

Ben Franklin conveyed his practical philosophy into all his ventures, including politics, where he was deeply concerned about fraud and integrity. He understood that our republic could only continue if people did away with dishonesty and held on to good principled ethics and participated in community duty. Nonetheless, he understood that few were able to meet this high standard, as he witnessed: “Men largely considered that their own and their Country’s Interests were united, and did not act from a Principle of Benevolence.”

Ethical Leadership is the foundation of Earning Relationship Capital (RC)

Ethical Leadership is leading by intentionally doing what is right. The challenge of practicing ethical leadership is that it is difficult to define “right”. Ethical leadership is composed of two sections:

The leader must act and make judgments ethically,
Second, the leader must also lead ethically in their actions, perceptions, and interactions.

Traditionally, the view of leadership has been that the main goal is to increase production and profits. This traditional view of leadership is fading, as more thought leaders in the 21st century are asserting that leaders also have the responsibility for adhering to open standards of moral and ethical behavior. Good leadership refers not only to competence but also to ethics and changing people. [i]

“Ethics is knowing the difference between what you have a right to do and what is right to do.” –Potter Stewart

All leadership is responsible for influencing supporters to achieve an action, complete a task, or fulfill a commitment in a specific way. Effective leaders influence method, encourage change in employee’s attitudes and values, bolster followers’ principles, and nurture the adoption of the leaders’ vision by leveraging strategies of empowerment.

It is understood that the encouraging aspect of leaders can elevate organizational cultures and employee values to high levels of ethical consideration. Ethical leadership requires ethical leaders. If leaders are principled, they can ensure that principled practices are carried out throughout the organization.

Leaders who are ethical demonstrate a level of integrity that is important for stimulating a sense of leader trustworthiness or relationship capital, which is important for followers to accept the vision of the leader. These are critical and direct components of leading ethically. The character and integrity of the leader provide the basis for personal characteristics that direct a leader’s ethical beliefs, values, and decisions. Individual values and beliefs impact the ethical decisions of leaders.

Leaders who are ethical are people-oriented; aware of how their decisions impact others and use their social power to serve the greater good instead of self-serving interests. In ethical leadership, it is important for the leader to consider how his or her decisions impact others.

Motivating followers to put the needs or interests of the group ahead of their own is another quality of ethical leaders. Motivating involves engaging others in an intellectual and emotional or Relationship Capital (RC) commitment between leaders and followers that makes both parties equally responsible in the pursuit of a common goal. These characteristics of ethical leaders are similar to inspirational motivation, which is a style component of transformational leadership. Inspirational motivation “involves inspiring others to work towards the leader’s vision for the group and to be committed to the group”. Likewise, ethical leadership “falls within the relationship of inspiring, stimulating, and visionary leader behaviors that make up transformational and charismatic leadership”. Ethical leaders support followers in gaining a sense of personal competence that allows them to be self-sufficient by encouraging and empowering them.

“The first step in the evolution of ethics is a sense of solidarity with other human beings.” –Albert Schweitzer

Characteristics of Ethical Business Leaders

Ethical behavior, in its simplest terms, is understanding and doing what is right. The difficulty is in defining “right.” Different individuals, different cultures, and different religions define it in different ways. The general treatment of women and mindsets toward slavery in different cultures during different times in history provides prime examples of how what’s “right” can vary.

Ethical business leaders distinguish themselves by doing that which may be difficult, disliked, and even unprofitable in the short-term for the creation of long-term vitality and value. They view the world as interconnected and develop end-to-end solutions to address complex problems that appear in the course of business operations. Rather than routinely extending payment terms to a supplier during economic downturns, ethical leaders study the financial strength of the supplier and/or partner, possible negative impacts to the supplier (as well as to the supplier’s employees and its suppliers — and to the company itself) if payment terms are lengthened.

Ethical business leaders also consider other solutions (e.g., sharing best practices with suppliers and partners) that may require an investment but generate more value over the long term. Ethical leaders extend relationship capital trust to their employees, creating an empowering environment necessary to enable employees, suppliers, partners, and even customers to take the required risks to produce breakthrough innovations. For example, the Ritz-Carlton’s leadership team authorizes each employee to spend up to $2,000 to resolve customer issues at his or her own judgment.

What’s more, ethical business leadership is a renewable human resource and, for this reason, represents one of the most efficient and practical assets an organization can put to use.

“Leadership is much more an art, a belief, a condition of the heart, than a set of things to do. The visible signs of artful leadership are expressed, ultimately, in its practice.” –Max Depree

Ethical Leadership in Business Organizations

In organizational communication, ethics in leadership are foundational. In their decision-making, business leaders must consider how it will affect other people, not just how it will benefit them. The greatest leaders display their values and their ethics then evangelize them in their leadership style and activities. These activities consist of articulating comprehensive and truthful information, where there is a personal, professional, ethical, or legal obligation to do so. When leaders practice ethics, they gain the earn relationship capital trust (respect and admiration) from employees; with the gratification of understanding, they are making the most moral choice. If a leader never reveals to others, the “why” in their actions or decisions, this can be viewed as a sign of mistrust.

Unethical actions in the workplace include anything from taking personal phone calls while at your desk, to lying about the status of a payment, to taking office supplies for your personal use. Most organizations have an ethical code, which is usually a document of rules that tell you what behaviors are acceptable and what are not in the workforce.

For your business organization, you might want to let employees know your values or guiding principles at the start. Such sustainable principles can be, collaboration, support, honesty, quality, efficiency, achievement, and commitment.

“Action indeed is the sole medium of expression for ethics”. –Jane Addam

Abraham Lincoln — Relationship Capital Leader and Chief

Noah Brooks was a Washington correspondent for the Sacramento Daily Union for the last two and half years of the Civil War. These responsibilities frequently brought him to the White House to cover Abraham Lincoln. Brook’s journalism was pro-Union, pro-emancipation, and pro-Lincoln. The following recollections begin with a report from Brooks dated 7 November 1863, a vivid description of the President performing the type of constituent duties that modern chief executives abandoned long ago. Next, are abstracts from a piece Brooks wrote for Harper’s New Monthly Magazine after Lincoln’s assassination, and then pieces from the full-length biography he published in 1888. [ii]

When the president lives in town he commences his day’s work long before the city is astir, and before breakfast consumes two hours or more in writing, reading, or studying some of a host of subjects, which he has on hand. It may be the Missouri question, the Maryland complication, the Rosecrans removal question [issues of border state loyalty and the future of a Union general-ed.] or the best way to manage some great conflicting interest which engrosses his attention, but these two best hours of the fresh day are thus given to the work. Breakfast over; by nine o’clock he has directed that the gate, which lets in the people shall be opened upon him, and then the multitude of cards, notes, and messages which are in the hands of his usher come in upon him. Of course, there can be no precedence, except so far as the President makes it, and as a majority of the names sent in are new to him, it is very much a lottery as to who will get in first.

The name is given to the usher by the President, that functionary shows in the gratified applicant, who may have been cooling their heels outside for five minutes or five days, but is now ushered into a large square room furnished with green stuff, hung around with maps and plans, a bad portrait of Jackson over the chimney-piece, a writing table piled up with documents and papers, and two large, draperied windows looking out upon the Potomac and commanding the Virginia heights opposite on which numberless military camps are whitening in the sun.

The President sits at his table and kindly greets whoever comes. To the stranger he addresses his expectant “Well?” and to the familiar acquaintances, he says, “And how are you today. Mr. ____?” though it must be confessed that he likes to call those whom he likes by their first names, and it is “Andy” (Curtin) [governor of Pennsylvania — ed.], “Dick” (Yates) [governor of Illinois — ed.], and so on. [William H.] Seward [the secretary of state — ed.] he always calls “Governor” and [Montgomery] Blair and [Edward] Bates [postmaster general and attorney general, respectively — ed.] is “Judge”. The rest is plain “Mister,” never “Secretary.”

With admirable patience and kindness, Lincoln hears his applicant’s requests and at once says what he will do, though he usually asks several questions, generally losing more time than most businessmen will be trying to understand completely each case, however unimportant, that comes before. He is not good at dispatching business but lets every person use more time than he might if the interview were strictly limited to the real necessities of the case. In Lincoln’s anxiety to do equal and exact justice to all, he excludes or delays those who might see him sooner if he did not try to do so much. No man has a kinder heart than Abraham Lincoln and all who meet him go away thoroughly impressed with the preponderance of those two loveable and noble traits of his character.

Is the petitioner a poor widow who wants to be a writer in one of the departments? The President has read her credentials and asked a question or two in his quiet and shrewd way. He takes a card on which he writes a plain request to a cabinet minister to give the bearer what she craves, and the grateful woman goes out, blessing the good-natured President whose very next act may be to receive a distinguished foreign diplomat whose government is hovering on the doubtful verge of an American war; or it may be a Brigadier wanting a promotion, an inventor after a contract, a curiosity hunter with an autograph book, a Major General seeking a command, a lady with a petition for a pass to Richmond, a cabinet minister after a commission for a friend, a delegation asking an impossibility, or a committee demanding an impertinence; it may be all or any of those who come next, and the even-tempered statesman who patiently sits there, interleaving the dull details of business with a good-natured joke or anecdote, must wisely and quickly decide upon questions which vary in importance from a small favor to a humble dependent to the adjustment of one of the momentous national interests of the times.

No man but Mr. Lincoln ever knew how great was the load of care, which he bore, nor the amount of mental labor, which he daily accomplished. With the usual perplexities of the office, he carried the burdens of the civil war, which he always called “This great trouble.” Though the intellectual man had grown meantime, few persons would recognize the hearty, lighthearted, genial, and wiry Abraham Lincoln of earlier days in the sixteenth President of the United States, with his stooping figure, dull eyes, care-worn face, and languid frame.

It was this incessant demand upon his time, by men who sought place or endeavored to shape this policy that broke down his courage and his temper, as well as exhausted his strength. Speaking of the “great flood-gates” which his doors daily opened upon him, he said, “I suppose I ought not to blame the aggregate, for each abstract man or woman this his or her case a peculiar one, and must nr attended to, though all others be left out, I can see this thing growing every day.” And at another time, speaking of the exhaustive demands upon him, which left him in no condition for more important duties, he said, “I sometimes fancy that every one of the numerous grist ground through here daily, from a Senator seeking a war with France down to a poor woman after a place in the Treasury Department, darted at me with thumb and finger, picked out their special piece of my vitality, and carried it off. When I get through with such a day’s work there is one word can express my condition, and that is flabbiness.” There are some public men who can now remember, with self-reproaches, having increased with long evening debates that reducing “flabbiness” of the much-enduring President…

It is generally agreed that Mr. Lincoln’s slowness was a prominent trait of his leadership; but it is too early, perhaps, to say how much of our safety and success we owe to his slowness. It may be said, however, that he is today admired and beloved as much for what he did not do as for what he did. He was well aware of the popular opinion concerning his slowness but was only sorry that such a quality of mind should sometimes be coupled with weakness and vacillation. Such accusation he thought to be unjust. Acknowledging that he was slow in arriving at conclusions, he said that he could not help that; but he believed that when he did arrive at conclusions they were clear and “stuck by”. He was a profound believer in his own immovable of purpose and took pride in saying that his long deliberations made it possible for him to stand by his own acts when they were once resolved upon.

No man was ever more free from affection, and the distaste that he felt for form, ceremony, and the personal parade was genuine. Yet he was not without a certain dignity of bearing and character that commanded respect. At times, too, he rebuked those who resumed too far are his habitual good nature and affable kindness…

An old acquaintance of the President, whom he had not seen for many years, visited Washington. Lincoln desired to give him a place. Thus encouraged, the visitor, who was an honest man, but wholly inexperienced in public affairs or in business, asked for a high office. The President was aghast, and said: “Good gracious! Why didn’t he ask to be Secretary of the Treasury and have done with it?” Afterward, he said: “Well, now, I never thought M. had anything more than average ability when we were young together — and he wants to be superintendent of the mint!” He paused, and added, with a smile: “But, then, I suppose he thought the same thing about me, and here I am.”

Abraham Lincoln is a great example of ethical leadership. Honesty, Respect, and Empathy was core to his character. So much so, it was also a burden to be so open that others would try to take advantage of his generosity, which drained his energy and lowered his trust. How would today’s citizens view this behavior if Mr. Lincoln accepted open Skype Calls?

Enron Corporation, Business Lessons learned from a Breakdown in Ethics

Enron Corporation was an energy company that turned into a huge enterprise. In 2001, the company collapsed due to scandals and bad leadership. The reason why they failed was due to the fact that the company had no assets related to energy. Enron was able to legally offer fuel at a set price for future years when they had no control over the future price. Even though there were no legal obligations, executives at Enron ran the company until fuel cost them more to purchase then what costumers bought it for.

The conclusion to the Enron case, according to New York Times writer, Ms. Heesun Wee[iii], smart CEOs will realize that an honest, transparent, and trustworthy culture is an effective way to do business. In addition to its efficiency, it will also bolster employee morale and ultimately guard shareholder value.

You can have all the money in the world, but if you are not a moral and ethical person, you really have nothing. …. Abraham Lincoln.

A Human Operating System for Digital World

In this hyper-connected world, only a small percentage of business leaders are active in building their social credibility on LinkedIn, Twitter, and/or Facebook. It has been safer not to do so, but those perceptions are changing. It is now becoming riskier for a business leader’s reputation and success by not engaging on social media. In February 2008, a virtual team of passionate Relationship Capital volunteers was formed from across the United States, Canada, and the United Kingdom on Skype. We are all big believers in the benefits of social networking and were interested in how to grow and sustain high quality trusted social relationships on the Internet and measure social credibility with open standards of Relationship Capital (RC).

Here are some of the compelling questions we asked the “Why” of Relationship Capital (RC) interaction process and measurement:

Ever wonder what the value is of your LinkedIn contacts vs. your Facebook contacts?
What is more valuable to you — 500 LinkedIn contacts or 100 face-to-face networking contacts?
How do you build commitment in your relationships?
Can you quantify the character of people in your network?
How do you measure the ROI of your networks?
Beware of big social networks! Is bigger always better when it comes to networking?
How do you measure the commitment of your network contacts?
If networking were baseball, what would be your batting average?
If your relationships were the only evidence you could proffer in court, how would you fair?
How many frogs do you kiss in your networking to meet your prince or princess? Are you a frog or Royalty?
How many leaders bring value to business via their personal networks?
How many business relationships end in divorce? What is the cost of these divorces?
Can you improve the longevity and value in your business relationships?
When is a network like a river?
When is your virtual reputation like Coca-Cola?
Does the Golden Rule “add up” for you?
What’s the power of your network?

These questions provided insight as to the problem we were trying to solve. Relationship Capital (RC) is a measure of the quality of a social relationship. In other words, it measures trustworthiness with industry standards.

“Educating the mind without educating the heart is no education at all.”-Aristotle

A Deeper Dive on Relationship Capital Leadership Principles

As we started to discuss how to define Relationship Capital (RC) Leadership on our group Skype calls, it became very clear to all of us that in order to consistently earn RC, an individual needed to follow agreed-to guiding principles in their social interactions online or offline.

As business leaders start to focus on elevating their business cultures to compete & behave more effectively understanding and practicing these principles will be foundational to leading and winning with high RC trust.

Relationship Capital (RC) Guiding Principles

RC Honesty
RC Accountability
RC Responsibility
RC Respect
RC Support
RC Trustworthiness
RC Emotional Boundaries
Relationship Capital Honesty

Training and professional services dedicated to educating, training and implementing Relationship Capital (RC) Purpose, Principles and Mastery are growing as leaders seek sustainable business models through culture transformation. These RC principles are reinforced when committed to and practiced by individuals and teams within the organization and across the ecosystem. And these principles are also reinforced in predictable reliable business processes and enabling technologies that people interact with every day.

“I love the man that can smile in trouble, that can gather strength from distress, and grow brave by reflection. Tis the business of little minds to shrink, but he whose heart is firm, and whose conscience approves his conduct, will pursue his principles unto death.” -Thomas Paine

Conclusion

The emergence of social business makes interactions and behavior transparent for all to see and judge. It will be these judgments or perceptions that will have a profound impact on your organization’s culture and level of trust. In fact, these perceptions have always been critical in offline business, but it is through the implementation of open standards of Relationship Capital (RC) and the sharing of these perceptions across social media that will reveal your cultural behavior and guiding principles. This can either attract or repel high-quality customers, employees, partners, and suppliers to you. Many business leaders now understand that their traditional business models will no longer sustain success.

There is a growing demand for Relationship Capital (RC) education, training, and implementation services collaborating with business leaders, employees, suppliers, and partners to implement the standards and best practices. Successfully implementing this human operating system in our business organizations that integrate and rewards purpose, performance, and relationship capital has never been more important.