Notes: The Leadership Crisis and the Free Market Cure, by John A. Allison

THE THEME OF THIS BOOK IS THAT THERE IS A SET OF ETHICAL principles that is consistent with the laws of nature and the nature of humans that is the foundation for individual success and happiness. These same principles are applicable to organizations and to society. …In this overall context, this is a book about leadership in the pursuit of happiness, at the individual, organizational, and societal level.

One of the reasons independent thinking is critical is that it makes two important attributes both possible and necessary: responsibility and creativity. The most important meta-psychological decision you can make is to choose to be responsible for yourself. If you view yourself as a victim in any respect of your life, you are giving your power away. If you are a victim, someone else has to change to make you happy, and you cannot change anyone else.

Something very important most people know, but do not want to admit, is: we are all alone. At least at the level of consciousness we are all alone — sorry. Therefore, only you can be responsible for you. It is not possible for anyone else to be responsible for you. In the end, you control you. The other side of this concept is also true. You cannot be responsible for anyone else. This leads to a classic parental error and a classic managerial error.

If you have employees who refuse to become personally responsible, replace them. Lack of responsibility is unacceptable in an organizational context. I believe the single most important issue in our society today is personal responsibility. A free society is fundamentally dependent on personal responsibility.

Happiness has to be earned. Societal systems that encourage dependency destroy the capacity of individuals to achieve genuine happiness. The choice to be dependent is the choice not to be happy.

The cultural context was that the only thing not subject to change was our vision, mission, and values. Everything else was open to improvement.

Entrepreneurs take the ideas of engineers, scientists, and academics and turn their ideas into reality. Without entrepreneurship, there is no progress. In order for individuals to be creative, to innovate, they must be able to pursue their truth.

Free markets answer the question whether an idea is good or bad based on the reaction of the consumers of the product or service that is being created.

There was an invention in the late 1700s that was more important than fire or the wheel. This revolutionary invention was a combination of the rule of law and individual rights, both economic and political, which is capitalism.

At the business organizational level, in a true free market, profit is the desired outcome. Profit is simply the difference between the value of what we produce and the cost of producing it. The bigger the profit (long term), the better.
One should never apologize for making an honest profit. Apologize for taking a loss. Losses represent destruction of wealth. Profit is the creation of wealth and the source of human well-being. It is critically important in a business organization to defend the concept of justly earned profit. Otherwise, its employees will not be able to morally defend their work, which will undermine their productivity.

The only true natural resource is the human mind.

The most important type of knowledge to have in the twenty-first century is the know-how to think critically, to reason, and to make objective decisions based on the facts. Critical thinking ability is the defining knowledge/ skill in our world.

The ultimate societal incentive is freedom. Once basic (and limited) rule of law is established, liberty is the most empowering incentive of all.

In the long term, we cannot consume more than we produce. The real economic issue is production — that is, productivity. The three pillars for productivity at the individual, firm, and societal level are knowledge, tools (capital), and incentives.

One of my themes is that the same sets of principles that are applicable for individual happiness are also essential for organizational success and for societal flourishing.

The concept is to develop your principles outside the “heat of battle” and then to consistently apply those principles in the heat of battle because you know that living these principles improves the probability of being successful and happy.

I tell college students that they should make decisions consistent with a life expectancy of 100 years. Integrity requires that one hold the long-term context.

Adherence to values and character is more important than performance.

In an organizational context, to be objectively proud of yourself you must be productive toward the accomplishment of the mission of the organization. So in order to be proud of yourself in an organizational context, you must be ethical and productive.

Generally, the best policy, personally and organizationally, is to undercommit and overperform.

My observation is that the most impactful leaders are neither humble nor arrogant. The best leaders are objective about their strengths and weaknesses. They have self-confidence based on a rational self-evaluation.

The primary manner in which you earn self-esteem is by living your life with integrity and living your life consistent with your values. This is why integrity is so important.

In order to earn genuine self-esteem, you must believe at a very deep (subconscious) level that you are capable of being a good person and that you have the moral right to be happy.

“How does this relationship benefit me?” But you should also ask, “How will this relationship benefit the other person?” Because if the relationship is not beneficial to the other person, in the long term it will not be beneficial to you. Finding ways to create win-win relationships is a foundational tool for success and happiness.
And, of course, it is in your self-interest to help the people you care about, who are objectively of value to you — your family, friends, coworkers who share your values, and so on. If you love your children, supporting your children is not a sacrifice, because you love them. In fact, love is the ultimate expression of selfishness.

Strong team players intellectually reflect on how their individual work impacts the rest of the team and acts to optimize the whole team’s performance.

It is interesting how many organizations promote individuals from technical jobs to management roles without leadership training.

The goal in educational experiences is to teach the appropriate skills while relating the educational experience to the organization’s vision, mission, and values. Every training process is designed to make this integrated connection. If you have highly trained employees, it would be foolish not to allow them to maximize their contribution because they do not have authority to act.

A classic failure is to decentralize without appropriate training. This typically results in poor decision making, which creates a negative reaction that ultimately results in more centralized bureaucracy … the general rule is the farther the decision is from the customer, the less information is available to the decision maker and the less likely the decision maker can consider all the customer’s needs.

To reiterate, participative management can be very destructive if it becomes a popularity contest, driven by internal politics, and/ or if it results in groupthink. It is critical to discipline the leadership process by making decisions based on the facts, which are rational and objective. Leading in a participative management environment is far more difficult than authoritative leadership because it requires persuasion and integration.
Participative management is the most difficult leadership style to execute, but it also has the best results over the long term. This is because there is more information in the system and more differing perspectives and better execution when individuals are involved in the decision-making process.

One of the more fundamental strategic decisions an organization must make is its customer value proposition. Value (V) in this context is the relationship of quality (Q) to price (P): V = Q/ P. For this purpose, quality, price, and value are all as seen from the customer’s perspective.

Maintaining the value proposition relative to customer expectations is critical to brand success.

It is extraordinarily important that all processes in the organization be aligned to deliver the value proposition that the customer expects.

EVERYTHING CAN BE DONE BETTER. THERE IS ALWAYS AN opportunity for continuous improvement.

Unfortunately, some individuals view the suggestion that something can be done better as criticism. It is not necessarily criticism. Everything can be done better.

…after a base level of compensation, maybe $ 100,000 per year in today’s dollars, the value of having money falls significantly. Nevertheless, earning money is tremendously rewarding, even if you give it all away. Earning money in a free society is a symbol of productivity and has a meaningful psychological reward. It is the earning, not the having, that is valuable.

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