The surprising ingredient that makes businesses work better | Marco Alverà

79,617 views ・ 2018-03-06

TED


Please double-click on the English subtitles below to play the video.

00:13
For me, it was not being invited to a friend's wedding.
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At first, I didn't really mind.
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I thought he was having a small reception.
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But then I kept meeting people who were going to the same wedding,
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and they weren't as close to the groom as I was ...
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and I felt left out.
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That really sucked.
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It felt really unfair.
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For my daughters, Lipsi and Greta, it was last week.
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They were taking turns massaging their mom's back
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with a toy for back rubs,
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and then one of the girls felt that the other girl had a longer go.
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That's when I walk into the room
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to find Greta in a rage, shouting, "That's not fair!"
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and Lipsi in tears,
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and my wife holding a stopwatch
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to make sure that each girl had precisely one minute on the toy.
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So if you're anything like me or my girls,
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the last thing that upset you
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probably also had to do with unfairness.
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That's because unfairness triggers us so strongly
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that we can't think straight.
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We become afraid and suspicious.
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Our unfairness antennae stick up.
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We feel pain, and we walk away.
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Unfairness is one of the defining issues of our society,
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it's one of the root causes of polarization,
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and it's bad news for business.
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At work, unfairness makes people defensive and disengaged.
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A study shows that 70 percent of workers in the US are disengaged,
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and this is costing the companies
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550 billion dollars a year every year.
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This is, like, half the total spent on education in the US.
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This is the size of the GDP of a country like Austria.
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So removing unfairness and promoting fairness
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should be our priority.
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But what does it mean in practice?
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Is it about more rules? Is it about systems?
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Is it about equality?
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Well, partly, but fairness is more interesting than rules and equality.
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Fairness works in surprising ways.
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15 years ago, I left a US investment bank
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to join a large Italian state-owned oil company.
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It was a different world.
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I thought the key to getting the best performance
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was a risk-reward system
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where you could give the high performers bonuses and promotions
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and give the underperformers something to worry about.
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But in this company, we had fixed salaries
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and lifelong jobs.
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Careers were set,
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so my toolkit wasn't very effective,
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and I was frustrated.
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But then I saw that this company was producing some pockets of excellence,
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areas in which they beat the competition
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in very tough, competitive sectors.
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This was true in trading,
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in project management --
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it was very true in exploration.
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Our exploration team was finding more oil and gas
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than any other company in the world.
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It was a phenomenon.
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Everyone was trying to figure out how this was possible.
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I thought it was luck,
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but after each new discovery, that became less and less likely.
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So did we have a special tool? No.
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Did we have a killer application that no one else had? No.
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Was it one genius who was finding oil for the whole team?
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No, we hadn't hired a senior guy in years.
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So what was our secret sauce?
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I started looking at them really carefully.
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I looked at my friend,
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who drilled seven dry wells,
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writing off more than a billion dollars for the company,
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and found oil on the eighth.
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I was nervous for him ...
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but he was so relaxed.
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I mean, these guys knew what they were doing.
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And then it hit me: it was about fairness.
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These guys were working in a company
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where they didn't need to worry about short-term results.
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They weren't going to be penalized for bad luck or for an honest mistake.
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They knew they were valued for what they were trying to do,
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not the outcome.
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They were valued as human beings. They were part of a community.
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Whatever happened, the company would stand by them.
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And for me, this is the definition of fairness.
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It's when you can lower those unfairness antennae, put them at rest.
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Then great things follow.
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These guys could be true to their purpose, which was finding oil and gas.
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They didn't have to worry about company politics or greed or fear.
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They could be good risk-takers,
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because they weren't too defensive
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and they weren't gambling to take huge rewards.
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And they were excellent team workers.
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They could trust their colleagues.
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They didn't need to look behind their backs.
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And they were basically having fun.
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They were having so much fun,
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one guy even confessed
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that he was having more fun at the company Christmas dinner
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than at his own Christmas dinner.
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(Laughter)
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But these guys, essentially, were working in a fair system
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where they could do what they felt was right
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instead of what's selfish, what's quick, what's convenient,
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and to be able to do what we feel is right
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is a key ingredient for fairness, but it is also a great motivator.
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And it wasn't just explorers who were doing the right thing.
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There was an HR director who proposed that I hire someone internally
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and give him a managerial job.
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This guy was very good, but he didn't finish high school,
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so formally, he had no qualifications.
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But he was so good, it made sense, and so we gave him the job.
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Or the other guy, who asked me for a budget to build a cheese factory
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next to our plant in Ecuador, in the village.
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It didn't make any sense: no one ever built a cheese factory.
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But this is what the village wanted, because the milk they had would spoil
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before they could sell it, so that's what they needed.
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And so we built it.
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So in these examples and many others,
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I learned that to be fair,
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my colleagues and I, we needed to take a risk and stick our head out,
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but in a fair system, you can do that.
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You can dare to be fair.
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So I realized that these guys and other colleagues
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were achieving great results, doing great things,
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in a way that no bonus could buy.
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So I was fascinated.
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I wanted to learn how this thing really worked,
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and I wanted to learn it also for myself, to become a better leader.
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So I started talking to colleagues, to coaches,
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to headhunters and neuroscientists,
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and what I discovered
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is that what these guys were up to and the way they worked
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is really supported by recent brain science.
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And I've also discovered that this can work at all levels
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in any type of company.
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You don't need the fixed salaries or the stable careers.
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This is because science shows
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that humans have an innate sense of fairness.
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We know what is right and what is wrong
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before we can talk or think about it.
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My favorite experiment
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has six-month old babies
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watching a ball trying to struggle up a hill.
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And there's a helpful, friendly square that pushes the ball up the hill,
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and then a mean triangle pushes the ball back down.
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After watching this several times,
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they ask the babies to pick,
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to choose what to play with.
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They can pick a ball, a square or a triangle.
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They never pick up the triangle.
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All the babies want to be the square.
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And science also shows
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that when we see or perceive fairness,
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our brain releases a substance that gives us pleasure,
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proper joy.
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But when we perceive unfairness, we feel pain ...
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even greater pain
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than the same type of pain as if I really hurt myself.
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That's because unfairness triggers the primitive, reptile part of our brain,
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the part that deals with threats and survival,
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and when unfairness triggers a threat, that's all we can think about.
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Motivation, creativity, teamwork,
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they all go way back.
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And it makes sense that we're wired this way,
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because we're social animals.
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We need to be part of a community to survive.
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We're born so helpless
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that someone needs to look after us until we're maybe 10 years old,
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so our brain evolves towards food.
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We need to be in that community.
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So whether I like it or not,
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not being invited to the friend's wedding,
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my lizard brain is generating the same response
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as if I'm about to be pushed out from my community.
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So science explains quite nicely why fairness is good
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and why unfairness makes us really defensive,
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but science also shows that in a fair environment,
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not only do we all want to be the square,
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but we tend to be the square,
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and this allows other people to be fair in turn.
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This creates a beautiful fairness circle.
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But while we start off fair ...
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one drop of unfairness contaminates the whole pool,
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and unfortunately, there's plenty of drops in that pool.
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So our effort should be to filter out
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as much unfairness as we can from everywhere,
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starting from our communities, starting from our companies.
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I worry about this a lot because I lead a team of 3,000 excellent people,
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and the difference between 3,000 happy, motivated team workers
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and 3,000 clock-watchers is everything.
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So the first thing I try to do in my fairness crusade
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is to try to take myself out of the equation.
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That means being aware of my own biases.
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For example, I really like people who say yes
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to whatever I suggest.
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(Laughter)
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But that's not very good for the company
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and not very good for anyone who has different ideas.
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So we try to actively promote a culture of diversity of opinions
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and diversity of character.
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The second thing we do is a little more procedural.
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We look at all the rules, the processes, the systems in the company,
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the ones we use to take decisions and allocate resources,
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and we try to get rid of anything that's not very clear,
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not very rational, doesn't make sense,
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and we also try to fix anything that's limiting
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the transfer of information within the company.
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We then look at the culture and the motivation for the same reasons.
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But my point is that however hard you look at the rules,
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the processes, the systems -- and we have to do that --
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but however hard we look,
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we're never going to do enough to get to the real essence of fairness.
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That's because the last mile of fairness requires something else.
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It's about what people's emotions are,
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what their needs are,
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what's going on in their private lives,
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what society needs.
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These are all questions and elements
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that are very hard to put into a spreadsheet, into an algorithm.
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It's very hard to make them part of our rational decision.
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But if we miss these, we're missing key important points,
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and the outcome is likely to feel unfair.
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So we should cross-check our decisions with our fairness center switched on.
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Is it right that this guy should get the job he's really hoping to get?
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Is it right that this guy should be fired?
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Is it right that we should be charging so much for this product?
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These are tough questions.
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But if we take the time to ask ourselves
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whether the rational answer is the right one ...
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we all know deep inside what the answer is.
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We've known since we were babies.
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And to know what the right answer is
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is pretty cool for decision-making.
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And if we turn on our hearts,
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that's the key to getting the real best out of people,
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because they can smell it if you care,
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and only when you really care will they leave their fears behind
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and bring their true selves to work.
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So if fairness is a keystone of life,
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why isn't every leader making it their priority?
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Wouldn't it be cool to work in a company that was more fair?
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Wouldn't it be great to have colleagues and bosses
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that were selected and trained for fairness and for character
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and not based on 60-year-old GMATs?
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Wouldn't it be nice to be able to knock on the door
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of a Chief Fairness Officer?
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We'll get there, but why is it not happening now?
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Well, partly, it's because of inertia,
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partly, it's because fairness isn't always easy.
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It requires judgment and risk.
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Drilling that eighth well was a risk.
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Promoting the guy who didn't finish high school was a risk.
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Building a cheese factory in Ecuador was a risk.
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But fairness is a risk worth taking,
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so we should be asking ourselves,
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where can we take this risk?
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Where can we push ourselves a little bit further,
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to go beyond what's rational and do what's right?
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Thank you.
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(Applause)
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