Adopt an 'upstream' business model to achieve sustained financial performance

By Jim Nortz
BridgeTower Media Newswires

You and a friend are having a picnic by the side of a river. Suddenly you hear a shout from the direction of the water – a child is drowning. Without thinking, you both dive in, grab the child, and swim to shore. Before you can recover, you hear another child cry for help. You and your friend jump back in the river to rescue her as well. Then another struggling child drifts into sight ... and another ... and another. The two of you can barely keep up. Suddenly, you see your friend wading out of the water, seeming to leave you alone. “Where are you going?” you demand. Your friend answers, “I’m going upstream to tackle the guy who’s throwing all these kids in the water.”

This is the first paragraph in a recently published book by Dan Heath entitled “Upstream.” The story is a public health parable the author adapted from the original, which is commonly attributed to Irving Zola.

In “Upstream,” Heath extols the benefits of solving problems before they happen. This is not a new idea. In 1736, Benjamin Franklin famously advised fire-threatened Philadelphians that “An ounce of prevention is worth a pound of cure.” Similarly, in his popular book, “The Seven Habits of Highly Effective People,” the late Stephen Covey observed that the most effective business professionals focus the majority of their attention on matters that are important but not urgent (like workplace safety enhancements and professional development), thus reducing the frequency of encountering issues that are urgent and important.
Few would quarrel with the wisdom of Heath’s, Franklin’s or Covey’s observations. But there’s something about our human nature that makes it difficult for us to put these principles into practice. The world-wide failure to heed the health care community’s strong recommendations to prepare for and prevent global pandemics is a particularly excruciating example of this tendency.

To his credit, in “Upstream,” Heath goes beyond merely parroting Franklin’s centuries-old maxim or repackaging Covey’s recommendations by providing concrete advice about how to implement an “upstream” business model. Specifically, using real-life examples drawn from over 300 interviews, Heath recommends business professionals seek answers to the following questions in the context of their business operations:

1. How will you unite the right people? (Surround the problem. Use data for learning.)

2. How will you change the system? (Fight for systems change. Change the water.)

3. Where can you find a point of leverage? (Get closer to the problem.)

4. How will you get early warning of the problem? (Deploy sensors. Look for predictors.)

5. How will you know you’re succeeding? (Pre-game your measures. Use paired measures.)

6. How will you avoid doing harm? (Look beyond the immediate. Close feedback loops.)

7. Who will pay for what does not happen? (Align incentives. Stitch together pockets of value.)

I refer you to the book for a more fulsome explanation of how you might leverage this question-set to implement an upstream business model at your firm. To do so, in addition to reading the book, you’ll need to take your business’ unique circumstances into account. However, there is one upstream imperative that is common to all businesses regardless of size or industry sector: building and sustaining a strong ethical culture. See below my response to Heath’s question set for some guidance on how you can achieve this objective.

1. How will you unite the right people?

Answer: Build and sustain a strong ethical culture grounded in respect, responsibility, honesty, fairness, and compassion, the “Five Core Moral Values” that are essential for optimal human relationships and organizational performance.

2. How will you change the system?

Answer: Develop and implement new hire standards, performance evaluations, incentive pay and leadership training grounded in the Five Core Moral Values.

3. Where can you find a point of leverage?

Answer: Anonymous, six-question 360 reviews of company leadership regarding the degree to which they are trusted and model the Five Core Moral Values.

4. How will you get early warning of the problem?

Answer: Benchmarked, anonymous ethical culture surveys that solicit employee views on their colleagues’ and leaders’ fidelity to the Five Core Moral Values.

5. How will you know you’re succeeding?

Answer: Increased employee engagement and job satisfaction. Increased productivity. Higher customer satisfaction. Increased investor confidence. Lower employee turnover rates. Reduced rate of policy violations and employee relations issues. Reduced rate of government enforcement actions.

6. How will you avoid doing harm?

Answer: Ensure that the means by which employees are recruited, incentivized, and evaluated is fair and unbiased.

7. Who will pay for what does not happen?

Answer: Employees and leaders whose behavior causes needless dysfunction and suffering in the workplace because of their disrespectfulness, irresponsibility, dishonesty, unfairness, or callousness. Those who are unwilling or incapable of modeling or acting in accordance with the Five Core Moral Values must be asked to seek employment elsewhere.

Because sustained business performance is dependent on the quality of relationships between employees and other stakeholders, there is no “ounce of prevention” or “upstream” intervention more potent than building a strong ethical culture. Moreover, it costs virtually nothing to implement this strategy and the return on investment is significant. Building and sustaining a strong ethical culture not only reduces compliance risks, it also fosters a great place to work and an economic ecosystem that will help your firm thrive over the long term.

—————

Jim Nortz is founder & president of Axiom Compliance & Ethics Solutions. He serves on the Conscious Capitalism Rochester Board of Directors, is a member of the International Association of Independent Corporate Monitors and is a National Association of Corporate Directors Fellow. Jim also is a former Board member of the Rochester Area Business Ethics Foundation (“RABEF”) and the Ethics and Compliance Officer Association (“ECOA”). Nortz can be reached at jimnortz@AxiomCES.com.