You know, it's amazing how fast time flies.

I can't believe I've been working in companies and organizations

for over 30 years.

In all of that time, I've met a lot of amazing people

from whom I've learned a tremendous amount.

And right now, I want to spend a few minutes talking about

what I've learned in terms of success,

what it's built on, and what we can do to better maintain our success.

I'm going to start with this bottle of water.

I like to drink cold water. This water is warm.

So what should I do with it?

I could stick it in a refrigerator,

or I could pour it in a glass with some ice,

and after a few moments, the water will be cold.

But what just happened?

Did the ice cool the water?

Or what we know from the work

of the classical physicists in thermodynamics

is that, in fact, the heat which is energy, travels

from the warm water to the cold ice,

thereby cooling the water and warming the ice.

What this second law of thermodynamics tells us is the energy always moves

from warm to cold, from being more organized and dense to being random.

Energy dissipates, it disintegrates. This is the basis for entropy.

Entropy is the idea that a system, a closed system, left to itself

will decay, will break down because the energy disintegrates.

Now, this basic law of nature has implications way beyond cooling my water.

I've learned from Dr. Ichak Adizes

that it even has implications for the levels of success

that we experience individually, in our families, and in our businesses.

All of us in here together, we could start a big business,

granted it would be kind of a large startup,

so if you, guys, don't mind,

maybe we will start with the people in the front row right here,

start our company, and as it grows, we can bring other people in.

But we could build a business based on whatever product or idea we have.

And what we would, in fact, be doing is we would be creating a system,

in which we create value;

we transfer that value to customers in the form of sales,

who then pay us for it, and hopefully, we make some money.

That's the idea.

But as we just heard, a system by nature breaks down, the energy disintegrates.

In a system like a company or an organization,

this disintegration happens even faster.

Why?

Because the system is made of people.

We have got our group here that's going to have a startup company,

and in this group, we have very different people

with diverse needs and diverse wants,

different interests, different styles of working and making decisions.

All of that diversity makes us go in different directions,

so we're stretching the organization, or the company, this way and that way,

and so we've got entropy with energy disintegrating,

plus diversity.

And now we've got diversity and disintegration on steroids:

things can break down like that before you know it.

So what do we learn in management education

to try to overcome this disintegration of energy?

What we learn is we need leadership,

we need strong leaders who can keep people focused

and their energies going in the right direction, right?

And these leaders have management tools.

They have vision statements, corporate missions, and corporate values

that they use to keep people focused,

going in the same direction, channeling their energy.

They've got studies in team dynamics and more leadership with more tools

with which we can build a strong and alined group of people.

All of these are valid tools, they all work.

But how well they work, and how sustainable they are

is based on one underlying factor, one thing that has to exist in our group

for these tools to work well and to work for the long term.

That one underlying factor is that we have an environment in our company

in which the people trust and respect each other.

That has to exist.

Because if it doesn't, what happens when we have problems,

when we have serious challenges?

How likely are the people, if they they don't trust and respect each other,

to seek each other out,

to work collaboratively to try to deal with these problems?

But that's what companies need, that's what organizations need;

they need people to work together, to collaborate, to produce innovation,

to move the organization forward, to make it more successful.

The key to getting these people to work together,

to make the organization successful is to have trust and respect.

Now, you know this is true within yourself.

If you think about whatever level of success you currently have,

what is it built on?

It's built on, at the core, your self-respect and your self-trust.

These things give you self-confidence

because you trust in your decisions, you trust in your ideas,

you have respect for who you are as a person and who you are not.

And with these things, you have self-confidence.

Think about the person you know who has no self-respect and no self-trust.

This person will struggle.

And why?

Because they're filled with self-doubt, they're filled with fears,

they have a constant dialogue going on in their head:

"Oh, should I take this decision? I don't know what to do, I'm scared.

What do people think of me? Why doesn't anybody like me?"

And their energy is disintegrating through these different directions.

When will this person start to function?

When they develop some self-confidence.

When they develop trust in themselves, and respect in themselves,

then the self-doubts, then the fears start to subside,

and this conversation, this negative dialogue going on their head,

the voices of dissension calm down, and now what?

The energy is all available to be channeled and focused,

they can go out and become a more productive member of their community,

and have a much better chance of reaching some level of success.

It's no different between groups of people.

If we want a group of people to be successful, to be productive,

to be high-performing,

they have to have trust and respect between each other.

The most basic group in our society is the family.

What happens in a family if the parents lose trust in their kids?

Or if the kids, the children, no longer respect their parents?

This can create a huge problem,

as the family members are now all working to protect themselves from one another.

Now, if in an individual, we build trust and respect in ourselves,

in groups we do it between people.

But how do we do that?

We have our company here.

I can't just go to the founders of the company here and say:

"You, guys, trust and respect each other,"

and expect that will do it, right?

It won't. Why not?

Because trust and respect are not actions, they're feelings,

they're emotions, they're beliefs we have about people.

And for trust, the belief I have about somebody I trust,

is that this person won't do anything to hurt me,

won't do anything to undermine my interests,

and the most trust comes about when I see

that this person's actions which are good for him, are also good for me.

We're mostly likely to get this type of trust

when we have shared interests,

when we're both working towards the same outcome

which is big enough for both of us.

That's a basis for trust.

Think about the person you know who is always working in their own self-interest,

while disregarding your own interests.

Quickly you'll lose trust for this person.

We trust people who take our interest to heart.

What about respect?

To paraphrase the philosopher Immanuel Kant,

who said, in so many words, that respect means fully-recognizing

the right of another individual to think differently from you.

That's respect. How do you show disrespect to somebody?

When you say: "How can you think that? That's crazy! Nobody thinks that way."

What you're really saying is:

"I don't respect your thoughts. I have no respect for your words."

Respecting somebody's words and thoughts doesn't mean you have to agree with them.

What it means is that you listen to them,

you take them seriously, you consider them.

This is treating people fairly, this is treating people with respect,

and this is the basis for learning.

I seek out and learn from people I respect.

I trust people who share my interests.

This is a basis for healthy relationships.

And for healthy organizations, for more successful organizations,

we need healthy relationships within them.

Yet, we you look into organizations, in the companies, what do you find?

You find management against employees,

groups of employees against other groups of employees,

sales against marketing, marketing against production, and on and on.

You find senior management teams that when times get tough

will sacrifice their lower people to protect their own interests.

You get systems and policies in place that breed distrust.

I was talking with the CEO of a manufacturing company, he said:

"Greg, I need my sales people to be more assertive, to take more initiative.

Now they sit and wait for the phone to ring.

They don't go out and build business. I need them to take more risks."

I said: "Yeah, that sounds really important."

So I went and talked to one of his sales people.

He said: "I'm not going to take any risks for this company."

I said: "Why not?"

He said: "Because when I started working here, the first thing I had to do

was sign this piece of paper that says,

if I lose the company any money, I have to pay it back."

The first message from management is

that we have to protect ourselves from you.

I can tell you about an HR director of a local company with 300 people.

She was asked to organize an employee event.

In so doing, she wanted to spend 70 euros to buy T-shirts.

Before she could spend that money, she had to go and get not one, not two,

but three signatures from three different managers

to spend 70 euros.

It's a company that makes millions and millions of euros every year in sales!

And they can't trust a group of managers to make a 70-euro decision.

Compare that to Lars Kolind

who took over as CEO at the Danish hearing aid manufacturer, called Oticon.

When he took over,

he completely dismantled the system of preapprovals for company travel.

Just do it out. And it was worth a little more than 70 euros.

When he introduced his new system, this is what he said, now, pay attention.

He said: "I trust that you know when you need to travel.

So from now on, if you need to travel, just go.

Don't go get approvals from anybody. Just get on the plane and fly.

But keep in mind two things.

One, the travel should and must be related to our mission

to give hearing-impaired people a normal quality of life.

And two, the travel has to be justifiable enough

that you would pay for it yourself, if you had to."

So what happened?

As people started policing their own behaviour,

the company saw its travel expenses drop by nearly 30% almost immediately.

Why?

Because people acknowledged

that they could no longer justify always flying business class.

He went on to turn this 25-million-dollar business

into a half-billion-dollar business over 10 years

by focusing on building trust and respect in the organization.

This is what companies need. This is what we need to build.

We need to integrate people, we need to get people to work together,

so that they will solve problems

rather than look for who's to blame for the problems.

And this is the job of leadership - to get very different people to work together,

so their differences work synergistically,

so that we enrich each other with our differences and learn from them

rather than just fight over our differences.

How does the leader do this?

By creating a culture in which people trust and respect each other.