Today, I have the honor to talk to Mr. John King. You may know John because he wrote a very important book called “Tribal Leadership”, maybe one of the top 20 books in leadership. And as business is about relationships. If you’re going to understand business, you have to master relationships. Welcome to the show, John…
28) How culture can raise performance 300% or more with John King
Transcript by: Arianne Elnar
Unknown Speaker: [00:00:00] Welcome to Financially Free Podcast with your host, Ney Torres. One of the reasons Ney could retire when he was 25 years old is because he was coached by the best. And now through this podcast so can you.[00:00:20] Ney Torres: [00:00:20] Welcome to the show everybody. Today, I have the honor to talk to Mr. John King. You may know John because he wrote a very important book, maybe one of the top 20 books in leadership. For sure. It’s called tribal leadership. And as business is about relationships. If you’re going to understand business, you have to master relationships. Welcome to the show, John. [00:00:42] John King: [00:00:42] Well, thank you very much, Ney. It’s a pleasure to be here with you. Thank you for inviting me. [00:00:47] Ney Torres: [00:00:47] I think you will be the first one to agree that you made a career of talking about relationships. [00:00:52] John King: [00:00:52] Yeah. I’m pretty much of the point of view that that’s all that there is, and it doesn’t matter what business you’re in. It doesn’t matter what your interest is. It doesn’t matter if you’re working with your family or with the people that you work with in your community or in your culture. The name of the game is relationships and if you have not mastered that high, you’re not going to successfully master your life as a human being, because what it is to be a human being is to be in a relationship. And what we want to do is we want to talk there’s a lot of people who talk about this and and some good and some not so good, a lot of ideas, but I just kind of like to talk about what I’ve noticed that works and what doesn’t work and and work with people on this. I might say to the people who I’ve worked with, let’s say in real estate, because I’ve worked with a lot of people in the real estate, commercial real estate business. And I usually say to them, “You have to understand that you’re in the relationship business and real estate is your vehicle.” So you have this extraordinary vehicle to be in relationship with people, but if you cannot create relationships, you’re not going to create a successful career. You may do transactional professional life but that’s not really a professional life. Your life is as a profession is a process and the process really is dependent upon your ability to create and foster and maintain and expand successful authentic relationships that are based on being a true partner with people. [00:02:43] Ney Torres: [00:02:43] The beauty of let’s call it the process. I call it the technology. I don’t like to call it the systems. I don’t think that’s the right way to describe them, but it could be depending on the context. But what you can do, he is to take a small business, medium business or big business to a different level. And I referred to levels because for the people that have read a book your insight in the book is that there’s different levels where people or tribes in this case, a group of 20 people or more work. There’s level one. Can you explain a little bit, in your own words, the different levels? [00:03:21] John King: [00:03:21] Sure, sure. And actually Ney, I call them stages and the reason I call them stages is because of very, very important a writer and thinker, a man named Jim Collins wrote an incredible book called Good to Great. And it’s a great book on leadership. And what he talked about was he talked about levels of leadership. He talked about level five leadership, and I thought you know. I so appreciate what Jim Collins said that I don’t think what we’ll do is we’ll call them levels. We’ll call them stages. We say how it came about how it came about is how most good things come about. I was failing at something and I was doing okay, but I wasn’t doing as well as I knew that I could do and my clients were not doing as well as I knew they could do it. And I knew that there was something off about it. I went back to doing the basic. If you played football or any kind of sport, let’s say football, and it doesn’t matter how good you are, how professional you are, you go back and you practice the basics over and over and over and over again. So I went back to the basics and the basics in the world that I’m in coming out of the thinking of a man and Peter Drucker. And I was reading Drucker probably for the sixth or the seventh time, but I think these words jumped off the page at and the words were, “That culture eats strategy for breakfast every day.” And when I realized that that was so, and I realized that what I was doing was I was doing probably the gold standard of strategic training for people, but I wasn’t getting out of what I wanted. In that moment, I remember putting the book down and standing up and just saying there was nobody in the room, but saying out loud, “I’m no longer a strategist. I am now in the culture business.” And I didn’t know what that meant. But I knew that it was a whole life change and the way that I thought about my relationship to my work and to the people that I worked with. I started just asking the question, what is culture? I continued to work and over the course of the next nine and a half years, I ended up talking to over that time about 25,000 people, either in lectures or as clients or in classrooms that I was giving. There were 87 different companies that I consulted almost 10 years. And they range from publicly held and privately held and NGOs and sometimes they were school. They were all the way across the board of different kinds of people and what I began to notice where the pattern of how people were organizing themselves structurally and how they talk and the more I looked after the 25,000 after I took the data. That I’d collected. And the insights to that I had, I saw that “wow, people actually fall into five large groups.” I thought at first, I’ll call them levels and then I realized no they’re stages and they evolve and you move from one stage to the next. And as you get better and better at what you do then your relationships with human beings. The structure changes and your language change. So Stage 1, Stage 1 is not a lot of us talk to people who are in Stage 1 because generally people who are in Stage 1, there it’s a small percentage of the population. Mostly, they are institutionalized or they might be incarcerated. These are people who are not making it in the culture, but they have a way that they talk. Now they say a lot of things. They have a full kind of world of vocabulary like you and I have, if you screw a net over everything, you would see that the way that they talk is reflective of their attitude and their attitude is captured in the phrase, “Life sucks.” They really do feel that life is a bummer. I really do feel that if them, as an individual against the world, they’ve never actually figured out that what they need to do is be in relationship with and partner up with other people. So they’re in a deal where there are human beings alienated in the world and their overall conversation. If you woke them up at three o’clock in the morning, it would be lifestyle. Now you to, I don’t do that, but that’s Stage 1. Stage 2 is doing me on a bad day. So every once in a while, you and I have a bad day. And then on that bad day, we are ineffective. So the Stage 1 is called Undermining Stage 2 is called the Ineffective Stage and in the ineffective stage, we’re having trouble connecting with other people, or we’re just simply not connected with other people or the way that we’re connected to other people is we are connected to them in a hierarchical form and we’re at the bottom of the hierarchy. So if you take people at Stage 2, They don’t say life sucks, but they do say my life sucks and their background conversation is I can see that your life works and if I had what you have and you fill in the blank of the word ‘have’, if I had what you fill in the blank, then my life wouldn’t suck, but I don’t so it does. And I’m in a relationship with others. And in this relationship, my experience in the relationship is I’m separate. By my experience in the relationship is that I’m ineffective. My experience in the relationship is that it’s a kind of a master-slave relationship and I’m kind of the slave in this relationship and I don’t like it. I feel like a martyr sometimes, and I feel like they over there won’t let me. So I don’t really feel like I have a lot of power control. So that’s Stage 2. My life sucks. Stage 3 is you and me on a good day. So we go back and forth between good days and bad days. Hopefully we have more good days than we have bad days. The Stage 2 is my life sucks. Stage 3 on the other hand is I’m great and you’re not. And I have the stats to prove it. The person who’s at Stage 3 is basically interested in finding people to dominate and win with. They are playing a game. Stage 2 and Stage 3 are playing a zero-sum game where there’s always a winner and always up lose. And if you’re in relationship with the person at Stage 3, they’re going to do everything that they can, and they will lie to you and steal in order for them to be the winner and you to be the loser. They’re very interested in domination. So whereas the person at Stage 2 has an experience of being separate. The person that’s Stage 3 has an experience of dominating people. So if you think back to when you were about 13 years old and you were going or 12 years old and you were moving from elementary school into middle school the very first few days of middle school is big. It’s unfamiliar. It’s kind of scary. There are older people there who know more than you and have been around and there’s probably a few bullies around and you’re a little kid and you’re having a Stage 2 experience. And until you connect with other people, you will be in Stage 2 after you’ve been there awhile after you’ve gotten past the seventh grade and you’re in the eighth grade and possibly even the ninth grade. There are all of those people that you are superior to. So you’re great and they’re not, and you’re in Stage 3. So Stage 2 and Stage 3 is a natural evolving place because every human being goes through and they pass through it at several times in their life. They pass through it when they go into school for the first time and the first grade, they pass through the stages when they go into the next level of school in middle school or high school or going to college, or your first few days in the military or your first few days in a new job. If you don’t know anybody and you’re not connected, then you’re not doing what human beings do best, which is connect and so you will be in a place. So if you have an experience and everybody already has them, that you’re being effective then you are in Stage 2. Stage 3 is called Useful. And what I noticed was that’s pretty much where everybody is and like a light switch or a toggle switch. We can go back and forth with between Stage 2 and Stage 3 all day long, every day. So background vocabulary ranges from my life sucks to I’m great, they’re not to buy life sex again to I’m great, they’re not. And as I was doing this, I noticed that Stage 2 and Stage 3 prize pretty close to 70% of the total population. So as I looked around no matter what my group was. If I took a look at my group, 70 to 75% of them were going to be in Stage 2 or Stage 3. And then I saw groups of people who were doing extraordinarily well. So a Stage 2 is ineffective. Stage 3 is useful, even though they’re the ones we get the prices too. And then I noticed that there were people who were actually fulfilling important function. So Stage 4 is called Important and what I saw about people at Stage 4 is that they were geniuses at being able to work with people. They were able to create partnering kind of situations. It didn’t really matter what the others were doing. They were able to work with them in such a way to say they got the best out of them and this is the level at which leadership began to show up. So Stage 3 tends to think that they’re a leader and they get insulted if you say they’re not, but they’re not. They’re not in any way, shape or form, but it Stage 4 is the beginning of leadership. And the way that they talk is Stage 4. So Stage 1 was life sucks. Stage 2 is my life sucks. Stays three is I’m great, you’re not. Stage 4 is we’re great together and what they do is they form groups, usually small group, a number of three to five people is a really a good number to start with. What they do is they are operating in an environment of respect and dignity and that they appreciate the talents, they appreciate what other people bring. So these people are the first leaders, the people who are at Stage 4 and they realize that their job is just to build and stabilize a Stage 4 group, wherever they go and want to turn their family into a Stage 4 family. They want it in their work group, they want to be working in Stage 4. If they go and they play sports, they do sports in a way that they create a partnership all the way around. And they create a stage for grouping. When they’re playing, it’s not about winning and losing, but what they have done is they have transcended being in a zero sum game and they’ve made a conscious choice to play a non-zero sum game in a non-zero sum game, we’re all in it together and we all win or we all lose together. And so what they do is they put people together and they say, “Hey look, we’re all in this together and we’re going to sink or we’re going to swim together and what we’re going to do is we’re going to work on some kind of project together that is bigger than any one of us and it’s going to take all of us for us to be successful with that. And if we’ve done that we will build and stabilize a stable Stage 4 group.” That’s the process and then there are events. Come along. And the events that come along are opportunities to make his opportunities to contribute on a level that is extraordinary. These opportunities or events are called Stage 5 events. And it’s the world of Stage 5, a number several of Stage 4 groupings come together and they form a team and they create an environment where they can all work together. There may or may not be someone who is the designated leader in this quite often, there is not an official leader, but people do what this genius friend of mine calls leading from their current position. Everybody contributes and everybody is working on the big, what we call the noble cause, and in doing the noble cause they create this Stage 5 experience. In this stage 5 experience, the language of it is life is great and they do that. And then when that’s over, they go back and they continue to work on stabilizing their Stage 4 home, if you will. So that’s kind of the way that it works. And that’s a little bit about the vocabulary. [00:16:54] Ney Torres: [00:16:54] Perfect. So now we shared the same context and now we can ask, I can ask you. I saw somewhere. I don’t remember where, maybe Eric told me that once a company goes from level three to level four, their results jump around 300 to 400%. Is that right? [00:17:13] John King: [00:17:13] Yes. And I will tell you that between you and me and the fence post. Yeah. What we know is that if we can elevate the group that’s working together from Stage 2 and three to Stage 4 and stabilize them there, that minimum, they will produce 300% better with no more effort. And in fact, a lot less because they’re working together and they’re working in alignment. You see it Stage 2 and Stage 3 people are at war and they’re at war because everything is based around agreement. I’m trying to actually dominate you into agreeing to my point of view or my way of doing something or the way that I think is the best way. So agreement is actually a weak distinction to be working inside of the huge, huge intelligence transformation that happens at Stage 4 is that people give up having to force others to agree with them or to resist the domination of agreeing with other people and they actually choose to align. And what they do is they align on something that is outside of them that is bigger than them. I’ll give you an example of how that happened in my life, where the insight came from. I was married and we had a daughter. My wife’s name is Kathy, my daughter’s name is Krista and Kathy and I, and Krista we’re living. We were a happy little family, but it was time for us to really Krista was beginning to talk, walk, and we really needed to pay attention to what we were doing with. Well, Kathy was a child psychologist and her father was a pediatrician. He founded a very famous clinic and her mother owned a dance studio and they taught children how to dance. So Kathy, he had been in the environment of teaching children and working with children all of her life since she had been a little child. On the other hand, I was not that guy. I was just kind of like take it or leave it. And I literally kind of felt that Krista is a great kid and if we just kind of pour water on her head, she’ll grow up and she’ll be great. So Kathy felt that there needed to be structure and I felt that there needed to be no structure and we were arguing about it and the arguing was actually beginning to threaten the marriage and it was getting louder and louder because it was more and more and more important to Kathy that we put structure in and it was more and more important to John that I’d be right about now we just put water on her head. So one day, we were arguing and in the middle of the argument, probably Kathy, I don’t know where it came from, but probably Kathy, one of us asked the question, how do we want Krista to turn out when she’s 18 years old? And in that instant Kathy and I began to talk about how Krista was going to be in 16 more years, what she was going to look like, what kind of a person she was going to be, how she was going to be a great daughter. She was going to be a great sister. She was going to be a great friend. If she met a boyfriend, she had a boyfriend who was going to be a great girlfriend and she was going to be a great wife and a great mom. That’s what we were raising. And then the second that we became a line, the argument disappeared, and Kathy and I became committed to a stage for project work for the project, raising this child so that she turned out as a great citizen, as a great wife, as a great mom, as a great daughter. So what we saw was that the power’s in aligned and it’s Stage 4, what happens is you go from the Stage 2 and 3 environment of people fighting over agreement, and arguing over agreement to the Stage 4 environment of people being aligned on a project that is greater than them and then working towards that. Then the moment that we saw that it was suddenly okay with Kathy that I was just kind of like, “Hey, just for water on her head, it’d be a great dad.” And it was okay with me that Kathy was, “Oh, we got to put in this structure and this structure and this structure.” Because we knew that we were working on the same goal. [00:21:27] Ney Torres: [00:21:27] I understand. Can you guide me a little bit as a value investor or somebody that sees the numbers and sees the building and says, “Well, this building is worth X.”? There’s a different level in value investing, which is judging character. Like for example, I do not understand how Lulu Lemons sells. It has such a good track record. People love them so much. It’s just looks at the financials and I’m like, I don’t get it. How do I look into that? [00:21:58] John King: [00:21:58] Well, I think that you have to go back to something really fundamental, Ney. What is fundamental for me is where I do is I usually go back and I take a look at the thinking of the great philosophers and the person that I look to in this case is Aristotle, Aristotle wrote a letter to his son, his son was named Nicomachus. His father was named him Nicomachus and so his father taught him and he taught his son and he wrote a letter and it was called the Nicomachean ethics. In the Nicomachean ethics, he talked about virtue and he said to his son, he said, virtue, the word virtue in Greek actually means excellent. He said virtue, so excellent. Bill’s character and character is what unfolds your destiny. So he was saying to him this is my point of view or what I want to share with you about these 11 different virtues. And he said, “What we’re trying to do is we’re trying to raise you as a young man of character.” He said there are just looking at friendship. You said there are three different levels of friends. He said the first one is friendships of pleasure. You said that would be you and I really enjoy doing the same thing. We enjoy going out to dinner, maybe you and I enjoy going to sporting events together. Maybe we enjoy playing games together. Maybe we like to go bowling or play pool or go ballroom dancing or something like that. But what we like to do is we like to do things that give us pleasure. He says, that’s the lowest level. You said that the next level, and this is generally the level that people are in when they’re in business is the level of utility. That’s the level of what’s in it for me, where people are measuring the other person, if I do X with you, you do Y with me is a negotiation on to work out in my favor, especially it’d be okay if it worked out in your favor, but it definitely has to work out in my favor. Utilitarian relationships, most business relationships are at the Utilitarian level. Utilitarian level is level two and three. That’s what the Utilitarian level is. Stage 4 is at the level of character. Character is something that is a female. It is where you look at this person and you realize that this person got my back, that this relationship is something that is based on something that is far deeper than just what’s in it for me and that I’m not in a conversation with them. That is kind of my way or the highway. It’s a conversation with them where you can count on me, your dreams, your hopes, your aspirations are safe with me that as a matter of fact, I will do what I can do in my life to help you get to your dreams and your hopes and your aspirations, because that’s the way you’re interacting with me. You’re interacting with me to help me with my dreams and my hopes and my aspirations. So how we judge our relationships with one another is by character based and character driven relationship. What builds that is virtue. And so he said to his son, basically, if you’re going to be the kind of person that’s going to make the contribution as a human being in your family, in life, in government, in your investing in this case. You want to be in relationship with other people where you actually have an experience of their character because their character is what’s going to unfold. Your relationship and character are what’s going to unfold into your destiny in relationship with that person. So what I do is I train people to upgrade their business conversation from Utilitarian conversation to character-based conversation. And if you look, you’ll see that there are not as many opportunities out there, but the opportunities are much richer and much more powerful. You take Eric, Eric has a huge respect for and character-based relationship with Charlie Munger and with Warren, what am I saying? [00:26:08] Ney Torres: [00:26:08] Warren Buffett. [00:26:09] John King: [00:26:09] Warren Buffett. Yeah. I it’s funny when I say Warren, I had a character-based relationship with a man named Warren Bennett. I always go to that. Yeah. Well, Warren and both start with a B, so I have to stop, but Charlie Munger and Warren Buffett have a character-based relationship. And if you take a look at their value, the values based investing that they do Berkshire Hathaway does and you listen to what Munger says or what Bennett, when I do it again, Buffett says what Buffett says you lift some through their words and you see that they only invest in character based investments. They invest in companies with people who know what they’re doing. They invest in people who actually understand their product. They don’t want to run your business for you. They just want to own your business. And so what they do is they invest in you and they’re investing in your character as much as they’re investing in kind of the principle articles of what your business is about. They’re the leader in my mind of character-based investing, which some people call called values-based investing and stuff, people call activist investing. So I teach the same thing. It’s a slightly different kind of investment because it’s the investment of human to human in relationship. But I say that if we don’t have character-based relationship, then I’m not really interested in being in business with you. I don’t know if that answers your question. [00:27:49] Ney Torres: [00:27:49] Yeah, it does. It does. Yeah. I’ll have a lot to think about. Well, John, thank you very much. I really appreciate it. We’ll let you close with that idea. Takes five minutes. Now, it takes 20 years to create a reputation and five minutes to destroy it. Character is — [00:28:06] John King: [00:28:06] Let me think about that. I really appreciate you making it, giving me the opportunity to share some of my ideas with you. It was very gracious of you and I wish you well. And I’m looking forward to hearing the interview [00:28:23] Ney Torres: [00:28:23] Can you please let us know where can people find you? [00:28:25] John King: [00:28:25] Oh yeah. Super easy since all I care about as partnerships and relationship, if you will email me at johnkingpartners, all one word, email@example.com that would be probably the easiest way to get me. I can also be reached through Eric at, what does he call it intelligentinvestor.com. I can be reached through something called the MindSuite all one word, M-I-N-D-T-H-E-M-I-N-D-S-U-I-T-E.com and I’m a number of websites, but that’s one of the main ones that I use. So yeah. johnkingpartners.com. No, firstname.lastname@example.org. [00:29:13] Ney Torres: [00:29:13] Thank you so much for your time. See you on the next occasion. [00:29:16] Unknown Speaker: [00:29:16] Did you learn something today? How can you apply your insights? What’s next for you? The fastest way to make things happen is to just share this podcast episode with more people that may find it valuable to talk about it with them and surround yourself with likeminded people. Hope you found this valuable. Don’t forget to subscribe. See you next time. This podcast references opinions and is for information purposes only not intended to be investment advice, seek a duly licensed professional for investment advice.