Conscious Capitalism and Lasting Organizational Change with Johanna Lyman

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Rebooting Business, Episode 27, recorded in the strange summer of 2020, when the covers came off everything.

Some conversations are weather and some are geology. The weather ones blow through, rattle the windows, and leave nothing behind but a soaked porch. The geology ones settle into the ground beneath the business and keep pressing, slowly and patiently working, long after the microphones have gone cold. This one belongs to the second kind.

In the summer of 2020, five months into a season when the whole country was sitting still and staring at the same four walls, I sat down with Johanna Lyman for episode twenty-seven of Rebooting Business. She was then the Principal Consultant and Practice Leader for Culture and Inclusion at Kadabra, a management consulting firm working the long, unglamorous seam where leadership development meets culture change. She had come to that work the way a river comes to the sea, which is to say by a route that looked like wandering and was actually gravity.

What follows is that conversation rebuilt for reading rather than listening, with the sourcing checked and the record corrected where the record needed correcting. The audio and video remain available at the links further down, and the original episode has not been altered. What has been added is the thing a transcript cannot give you, which is the six years of hindsight that have accumulated since we spoke.

The Long Apprenticeship in Leaving

Johanna’s résumé reads like a series of doors closing quietly and deliberately behind her. She went to the University of Massachusetts knowing since the age of nine that she wanted to buy for a department store, and she did exactly that for roughly a decade before moving to the wholesale side. Then she left, discouraged by what she described as a shortage of integrity in the retail and wholesale markets. She became a certified financial planner on the reasonable theory that people entrusted with other people’s money would have to be honest, and she found instead a profession where the first question asked of any product was too often what it paid the person recommending it.

After about sixteen years in corporate America and leaving three different companies because my ethics were just higher than the ethics of the organizations I worked with, I decided I was probably unemployable.

That line lands as a joke and works as a diagnosis. Every one of those departures was a small act of measurement, a person holding a company up against her own values and finding the company short. She got certified as a coach and hung out her shingle at the beginning of 2005, and she has been consulting and coaching small business owners in some form ever since. The pattern matters because it explains the work. She did not arrive at organizational culture through theory. She arrived through the accumulated evidence of her own exits.

The Book That Named the Thing

In 2013 she found Conscious Capitalism by John Mackey and Raj Sisodia, and something in her recognized something on the page.

That was my sort of eureka moment where I realized there are people like me, there are folks who are interested in doing well as they do good, that want their business to be a force for good in the world.

The framework rests on four pillars, which are a higher purpose beyond profit, a full stakeholder orientation, conscious leadership, and conscious culture. The stakeholder piece is the one that does the heaviest lifting in practice, because it quietly redefines who counts. Anyone and anything touched by the organization becomes a stakeholder, which means the supplier and the neighborhood and the watershed all get a seat at a table that was previously set for shareholders alone.

She also mentioned the financial argument, and the financial argument deserves both its airing and its asterisk. Sisodia’s research on what he calls firms of endearment found that a selected group of purpose-driven companies outperformed the S&P 500 by roughly fourteen times over a fifteen-year window. That figure is real and it is widely cited. It is also drawn from a sample chosen first for humanistic criteria and then examined for returns, which means it demonstrates a striking correlation rather than proving a clean causal arrow. Believe the number, and hold the interpretation loosely.

Elsewhere in the conversation she recommended other books that had marked her, including The Four Agreements, Michael Port’s Book Yourself Solid, and the work of Steven Pressfield. Pressfield’s premise stayed with her longest, and it is worth repeating for anyone who makes things for a living. Your job is to do the work and make it available. How people respond to it is, frankly, none of your business.

Tilling the Soil

We recorded in mid-August of 2020. The United States had just crossed five million confirmed cases and one hundred sixty-five thousand deaths. There was an itch in the national body to do something, anything, to move, and Johanna offered a corrective borrowed from a friend who thinks in seasons.

We’re not harvesting the fruits of our labors right now. We’re tilling the soil, we’re choosing our seeds, like who do we want to be, what do we want to offer once the world reopens.

She refused the phrase new normal and she refused it with some heat, on the grounds that the old normal had been profoundly dysfunctional and did not deserve the compliment of being called normal at all. That refusal turns out to be the spine of the whole hour. Nearly everything she said afterward rested on the premise that the pre-pandemic arrangement was not a healthy baseline to return to but a set of habits that had merely gone unexamined long enough to feel inevitable.

Self-Awareness as the Load-Bearing Wall

Ask her where a culture engagement begins and she will not say values, or strategy, or an offsite with butcher paper. She will say self-awareness, and she will call it the linchpin, and she means it structurally rather than sentimentally.

She cited the research of organizational psychologist Tasha Eurich, whose surveys found that roughly ninety-five percent of people believe themselves to be self-aware while only ten to fifteen percent actually meet the criteria. Eurich distinguishes internal self-awareness, meaning a clear view of your own values and reactions, from external self-awareness, meaning an accurate sense of how others experience you. The two are independent. A person can be strong in one and blind in the other, and executives are statistically less likely than their subordinates to be strong in either, largely because seniority filters the honesty of the feedback that reaches them.

What this looks like on a Tuesday afternoon is smaller and stranger than the research suggests. Johanna described it as noticing the tells.

I can’t focus, I’ve got this project that I’m supposed to be working on and I’m on social media and I’m answering text and, oh, all of a sudden I’m going to take my dog for a walk. Those are all signs that our amygdala in the limbic system is hijacking our rational thoughts.

She reached for the vocabulary of Christine Comaford here, whose work distinguishes the critter state of fight, flight, and freeze from the smart state where creativity and problem solving actually live. The distinction is useful precisely because it is unflattering. A leader in the critter state does not feel panicked. A leader in the critter state feels decisive, and that is the whole trouble.

Purpose First, and Profit After

The most common objection she hears is the sensible-sounding one, which is that purpose is a luxury and profit is a necessity, so profit has to come first. She thinks the sequence is reversed.

People get a little confused. They’re like, oh, I can’t focus on purpose because I’ve got to worry about profit. No, no, no, it’s backwards. When you really focus on purpose and you walk your talk and you identify your values and you figure out how do we operationalize these values.

That last verb is the one that separates the work from the poster in the break room. Operationalizing a value means answering a concrete question about observable behavior. How would a customer know we live our value of integrity? How would an employee know? If nobody can name a specific thing that would look different on an ordinary day, the value is decoration.

She was equally clear that this has to start at the top, and she has the scar tissue to prove it. Kadabra was once brought into an automotive parts manufacturer at the middle management level, where the work went beautifully. The problem came when those newly equipped middle managers tried to manage upward into a senior leadership team that had decided the medicine was for other people. The middle got discouraged, and Johanna drew a line she has held ever since. Without a champion in the C-suite, the engagement will not hold.

The Water You Cannot See

Her diagnostic instinct is that no organization can read its own culture, for the same reason no person can grade their own self-awareness. She put it plainly. You cannot see the water you are swimming in.

Exit interviews do not solve this, because a departing employee has every incentive to leave the building politely and no incentive at all to be useful. What she recommended instead was an outside read, typically a short culture survey of ten to fifteen questions followed by focus groups or a cross-section of one-on-one interviews reaching through the entire organization rather than skimming the top of it. Kadabra also used the Everything DiSC assessment, an instrument built on observable traits rather than inferred inner states, which she liked for its accessibility. The point of typing someone as a director style is not to file them. The point is to know that this particular person wants the conclusion first and will trust that the reasoning exists.

She was candid that the findings are rarely comfortable, and she framed the discomfort as the actual product.

There’s no downside, well, unless you consider having to look at the truth of what’s happening. That’s a big downside.

Getting Comfortable Being Uncomfortable

The part of the work she loves most is the part that sounds least like consulting. She takes senior leadership teams and puts them through low-stakes exercises designed to make them practice change rather than discuss it, which she described with a phrase that belongs on a wall somewhere. Training wheels and guardrails, so nobody gets hurt and there are no holes below the waterline.

The teams practice deciding faster, prototyping faster, and generally moving in ways their habits have not permitted. What emerges after a while is the thing she was actually building toward, which is peer accountability. Somebody eventually turns to a colleague and says that this sounds like a limiting belief, or that this sounds like something you have been saying for ten years, and asks whether it is still true. Those questions are heavy. The environment is what makes them askable.

Lean, Agile, and the People Who Never Fire

I asked her what lean management actually means, since the term gets used as a synonym for cheap roughly as often as it gets used correctly. Her answer folded lean and agile together and reduced both to a rhythm. Get to a minimum viable product, put it in front of the market, take the data, refine the target, and go again.

I see so many people, they’re like ready, aim, aim, aim, oh, not ready, okay, ready, aim, aim, and they never fire.

She connected this back to self-awareness with a neat symmetry, and the symmetry is the insight. You cannot assess your own self-awareness without other people reflecting you back, and you cannot assess your own product without the market reflecting it back. Both are the same refusal to accept an inside view as sufficient evidence. She also offered the test she uses on experts who have forgotten how much they know, which is to explain the thing to a nine-year-old, and to accept that failing the test means the understanding was never as solid as it felt.

Diversity Is the Wrong Word for the Problem

We recorded weeks after the killing of George Floyd, when inquiries about diversity training were arriving at consulting firms in volume. Johanna was skeptical of the reflex, and she named the skepticism carefully. Reading a book has never changed a structure, and unconscious bias training on its own will not solve the problem, though it may be a component of something that eventually does.

The diversity issue is not even about diversity in my opinion. It’s about inclusion and belonging.

Her argument turned on the experience of the individual employee rather than on the composition of the org chart. If a person spends ten hours a day somewhere and does not believe their voice matters, and finds that raising it produces silence and that offering an idea produces the look reserved for people with three heads, that person will not be engaged. Representation without belonging produces a photograph, not a culture.

She then made the business case in the only currency some executives read, which is turnover cost. She cited a figure of roughly one and four tenths times a person’s salary to replace them. The broader research puts the range wider and messier. Gallup and the Society for Human Resource Management both commonly estimate replacement costs between one half and two times annual salary depending on role and seniority, with frontline positions at the low end and leadership at the high, and the Center for American Progress has found costs running as low as sixteen percent of salary for jobs under thirty thousand dollars and as high as roughly two hundred thirteen percent for executive and highly specialized roles. Her number sits comfortably inside that band as a working average for a professional role. It is a reasonable rule of thumb rather than a constant, and the honest version of the argument is that the number is large enough to matter and variable enough to require your own math.

The Farming Problem

I told her about a practice I watched at more than one marketing agency, which insiders called farming. The agency would throw a quarterly evening event with free pizza, free beer, company swag, and an open door. It looked like generosity. It was recruiting, and the crowd was different every quarter because the staff was different every quarter.

I went to those events in college for the food. It took working inside two or three such agencies before the arithmetic became visible, which is that if you have to build a talent conveyor belt into your business model, something upstream is broken. Agencies tell themselves they need new blood because they value creativity. What they usually need is to stop suppressing the creativity of the people already on the payroll, which is a cheaper fix and a harder one.

Johanna added the piece I had not considered, which is that engaged employees are themselves a marketing channel. They bring customers with them. A leader who ignores that is, in her phrase, cutting off their nose to spite their face.

I also confessed to being on the receiving end of the other agency pattern, the one where a president who cursed at the staff would occasionally appear with a fifty dollar gift certificate and permission to take a long lunch. It kept me there another six months at a stretch. Johanna named it in four words.

That is classic Pavlovian training. They can’t tell when it’s coming, but they’ll put up with all sorts of abuse because there’s a cookie there somewhere.

Coopertition

Toward the end she offered a word she has clearly been carrying for a while, which is coopertition, a splice of cooperation and competition. She does not believe in the purely competitive model, and she is unsentimental about why. There is more available than the scarcity frame permits us to see, particularly for anyone offering something genuinely distinct.

Her example was the San Francisco food and beverage industry, which the pandemic had decimated, and specifically a long-running drag dinner show that survived by partnering with a small company making handmade gourmet meals and reinventing the whole evening as a delivery service. The show came to the door with the dinner. That is not a marketing tactic so much as a refusal to accept that the format was the business.

I told her about aikido, which I studied twenty years earlier and which taught me the same thing in a language of hips and falls. The person across from you is not an opponent. That person is your partner, and if you throw them carelessly you will break a finger that belongs to someone who came to practice with you. In marketing the same principle wears a duller name and is called piggybacking, and it works for the same reason.

When I asked why more businesses do not simply do this, since the logic seems obvious, her answer was structural rather than psychological. We are raised and schooled inside a system that rewards a single winner, grades on a curve that requires losers, and mythologizes the rugged individual. The competitive reflex is not a personality trait. It is training, and training can be unlearned.

The Man Who Fell Asleep at His Desk

The conversation ended with a story I have never quite been able to put down. There was a man at one agency, decent, capable, easy to work with, and you could smell the liquor on him in the morning. One day there was a sound like something dropping, and it was his head hitting the desk in front of the monitor.

I did not have the seniority to handle it, so I went and found someone who did, and told them plainly that this was happening and that it was theirs to solve. What they did was better than I expected. They drove him home that day, and they offered him a probationary arrangement contingent on his attending meetings and bringing back proof. Johanna called that a really human way to address something, and then she asked the question that had not occurred to me in twenty years of retelling it.

What kind of pressure was that poor man under?

It was a high-stress agency job with daily collateral deadlines and no slack anywhere in the calendar. That is not an excuse and she did not offer it as one. Her point was narrower and harder, which is that we are not all evenly resourced against what happens to us, and that the first move available to a leader is to look at the human before looking at the performance. Everything else in the hour, the purpose work and the culture assessments and the low-stakes practice at being uncomfortable, is scaffolding built to make that first move possible on an ordinary day rather than only in a crisis.

What Has Changed Since This Conversation

This episode was recorded in August of 2020. Several things said in it have aged, and one or two were imprecise when spoken. They are corrected here rather than quietly edited out of the transcript.

Johanna Lyman is no longer at Kadabra, and Kadabra no longer exists as it did

At the time of recording she was Principal Consultant and Practice Leader for Culture and Inclusion at Kadabra, and she mentioned during the interview that the firm was mid-rebrand. In the years since she has continued as an independent leadership and executive coach and is now based in Massachusetts rather than the Bay Area, working across executive coaching, leadership development, and diversity and inclusion practice. The wearekadabra.com domain referenced throughout the original post now redirects to Learn Lead Lift, the framework and book platform of Wendy Ryan. Readers following that link will not find the consultancy described in this conversation.

The researcher is Tasha Eurich

In the audio the name is given as Tasha York. The self-awareness research described belongs to Dr. Tasha Eurich, organizational psychologist and author of Insight, whose surveys produced the ninety-five percent versus ten to fifteen percent finding cited above.

The neuroscience vocabulary belongs to Christine Comaford

The critter state framing is rendered in the audio as Christine Cummingford. The correct name is Christine Comaford, whose book SmartTribes introduced the critter state and smart state distinction.

Small business failure rates were badly overstated, by me

During the interview I said that ninety-five or ninety-nine percent of small businesses fail within three to five years. That is wrong, and it is one of the most durable pieces of folklore in American business. The actual figures are sobering enough without exaggeration. Roughly one in five new establishments closes within the first year, and about half are still operating after five years. Federal data from the Bureau of Labor Statistics and the SBA Office of Advocacy have put the five-year survival rate near fifty and fifty-one percent consistently across decades and across states.

The forty percent prediction did not come true

I cited a widely circulated 2020 projection that upwards of forty percent of small businesses would not survive the pandemic. The reality was serious but considerably less severe. Federal Reserve researchers examining official data found that although more than seven hundred thousand establishments closed in the second quarter of 2020, a large share of those were temporary, and the surge in closures was followed by a surge of openings from the third quarter of 2020 onward. Estimates of genuinely permanent excess exits cluster closer to four hundred thousand nationally, and academic work using California tax administration data found closure rates spiking in the first half of 2020 and then reversing strongly in the third quarter. Small businesses were hit disproportionately hard, and they also rebounded disproportionately fast.

The George Floyd case has since been adjudicated

At the time of recording the killing of George Floyd was still a pending matter. Derek Chauvin was convicted of murder in April of 2021 and later pleaded guilty to a separate federal civil rights charge, so the language used in this conversation is now legally as well as morally accurate.

SCORE is a partner of the SBA, not a division of it

I described SCORE, where I served as a certified small business mentor, as a division of the U.S. Small Business Administration. SCORE is a 501(c)(3) nonprofit and a resource partner of the SBA, funded in part through a cooperative agreement with it. The distinction matters to anyone trying to understand how the mentoring is funded and governed.

The turnover figure is a range, not a constant

The one and four tenths multiple cited for replacement cost is a defensible working average rather than a fixed rate. Current guidance from Gallup and SHRM places the range at roughly fifty to two hundred percent of annual salary depending on the role.

One attribution could not be verified

Johanna credited the gardening metaphor about tilling soil and choosing seeds to a friend whose name is not clearly audible in the recording and could not be confirmed through public sources. The metaphor is presented here without attribution rather than with a name we cannot stand behind.

Listen to the Full Conversation

The complete episode remains available in both audio and video form across the platforms below. The conversation runs a little over an hour.

 

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