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TED2010

Chip Conley: Measuring what makes life worthwhile

February 12, 2010

When the dotcom bubble burst, hotelier Chip Conley went in search of a business model based on happiness. In an old friendship with an employee and in the wisdom of a Buddhist king, he learned that success comes from what you count.

Chip Conley - CEO, author
Chip Conley creates joyful hotels, where he hopes his employees, customers and investors alike can realize their full potential. His books share that philosophy with the wider world. Full bio

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Double-click the English subtitles below to play the video.
I'm going to talk about the simple truth in leadership
00:16
in the 21st century.
00:18
In the 21st century, we need to actually look at --
00:20
and what I'm actually going to encourage you to consider today --
00:23
is to go back to our school days
00:26
when we learned how to count.
00:28
But I think it's time for us to think about what we count.
00:30
Because what we actually count
00:33
truly counts.
00:35
Let me start by telling you a little story.
00:37
This is Van Quach.
00:39
She came to this country in 1986 from Vietnam.
00:41
She changed her name to Vivian
00:44
because she wanted to fit in here in America.
00:46
Her first job was at an inner-city motel
00:48
in San Francisco as a maid.
00:50
I happened to buy that motel
00:52
about three months after Vivian started working there.
00:54
So Vivian and I have been working together for 23 years.
00:57
With the youthful idealism of a 26-year-old,
01:01
in 1987,
01:03
I started my company and I called it Joie de Vivre,
01:05
a very impractical name,
01:07
because I actually was looking to create joy of life.
01:10
And this first hotel that I bought, motel,
01:13
was a pay-by-the-hour, no-tell motel
01:16
in the inner-city of San Francisco.
01:19
As I spent time with Vivian,
01:21
I saw that she had sort of a joie de vivre
01:23
in how she did her work.
01:26
It made me question and curious:
01:28
How could someone actually find joy
01:30
in cleaning toilets for a living?
01:32
So I spent time with Vivian, and I saw that
01:35
she didn't find joy in cleaning toilets.
01:38
Her job, her goal and her calling
01:40
was not to become the world's greatest toilet scrubber.
01:42
What counts for Vivian was the emotional connection
01:45
she created with her fellow employees and our guests.
01:47
And what gave her inspiration and meaning
01:50
was the fact that she was taking care of people
01:52
who were far away from home.
01:55
Because Vivian knew what it was like to be far away from home.
01:57
That very human lesson,
02:00
more than 20 years ago,
02:02
served me well during the last
02:04
economic downturn we had.
02:06
In the wake of the dotcom crash and 9/11,
02:09
San Francisco Bay Area hotels
02:11
went through the largest percentage revenue drop
02:13
in the history of American hotels.
02:15
We were the largest operator of hotels in the Bay Area,
02:17
so we were particularly vulnerable.
02:20
But also back then,
02:22
remember we stopped eating French fries in this country.
02:24
Well, not exactly, of course not.
02:26
We started eating "freedom fries,"
02:29
and we started boycotting anything that was French.
02:32
Well, my name of my company, Joie de Vivre --
02:35
so I started getting these letters
02:38
from places like Alabama and Orange County
02:40
saying to me that they were going to boycott my company
02:43
because they thought we were a French company.
02:45
And I'd write them back, and I'd say, "What a minute. We're not French.
02:47
We're an American company. We're based in San Francisco."
02:50
And I'd get a terse response: "Oh, that's worse."
02:53
(Laughter)
02:55
So one particular day
02:58
when I was feeling a little depressed and not a lot of joie de vivre,
03:00
I ended up in the local bookstore around the corner from our offices.
03:02
And I initially ended up in the business section of the bookstore
03:05
looking for a business solution.
03:08
But given my befuddled state of mind, I ended up
03:10
in the self-help section very quickly.
03:12
That's where I got reacquainted with
03:14
Abraham Maslow's "hierarchy of needs."
03:16
I took one psychology class in college,
03:19
and I learned about this guy, Abraham Maslow,
03:21
as many of us are familiar with his hierarchy of needs.
03:23
But as I sat there for four hours,
03:25
the full afternoon, reading Maslow,
03:28
I recognized something
03:31
that is true of most leaders.
03:33
One of the simplest facts in business
03:35
is something that we often neglect,
03:37
and that is that we're all human.
03:39
Each of us, no matter what our role is in business,
03:41
has some hierarchy of needs
03:44
in the workplace.
03:46
So as I started reading more Maslow,
03:48
what I started to realize is that
03:50
Maslow, later in his life,
03:52
wanted to take this hierarchy for the individual
03:54
and apply it to the collective,
03:56
to organizations and specifically to business.
03:58
But unfortunately, he died prematurely in 1970,
04:01
and so he wasn't really able to live that dream completely.
04:04
So I realized in that dotcom crash
04:06
that my role in life was to channel Abe Maslow.
04:09
And that's what I did a few years ago
04:12
when I took that five-level hierarchy of needs pyramid
04:14
and turned it into what I call the transformation pyramid,
04:17
which is survival, success and transformation.
04:20
It's not just fundamental in business, it's fundamental in life.
04:23
And we started asking ourselves the questions
04:26
about how we were actually addressing
04:28
the higher needs, these transformational needs
04:30
for our key employees in the company.
04:32
These three levels of the hierarchy needs
04:35
relate to the five levels
04:37
of Maslow's hierarchy of needs.
04:39
But as we started asking ourselves about how we were addressing
04:41
the higher needs of our employees and our customers,
04:43
I realized we had no metrics.
04:46
We had nothing that actually could tell us whether we were actually getting it right.
04:48
So we started asking ourselves:
04:51
What kind of less obvious metrics
04:53
could we use to actually evaluate
04:55
our employees' sense of meaning,
04:58
or our customers' sense of emotional connection with us?
05:00
For example, we actually started asking our employees,
05:03
do they understand the mission of our company,
05:05
and do they feel like they believe in it,
05:07
can they actually influence it,
05:09
and do they feel that their work actually has an impact on it?
05:11
We started asking our customers,
05:14
did they feel an emotional connection with us,
05:16
in one of seven different kinds of ways.
05:18
Miraculously, as we asked these questions
05:21
and started giving attention higher up the pyramid,
05:23
what we found is we created more loyalty.
05:26
Our customer loyalty skyrocketed.
05:28
Our employee turnover dropped
05:30
to one-third of the industry average,
05:32
and during that five year dotcom bust,
05:34
we tripled in size.
05:36
As I went out and started spending time with other leaders out there
05:38
and asking them how they were getting through that time,
05:41
what they told me over and over again
05:43
was that they just manage what they can measure.
05:45
What we can measure is that tangible stuff
05:47
at the bottom of the pyramid.
05:49
They didn't even see the intangible stuff
05:51
higher up the pyramid.
05:53
So I started asking myself the question:
05:55
How can we get leaders to start valuing the intangible?
05:57
If we're taught as leaders to just manage what we can measure,
05:59
and all we can measure is the tangible in life,
06:02
we're missing a whole lot of things at the top of the pyramid.
06:05
So I went out and studied a bunch of things,
06:08
and I found a survey that showed
06:10
that 94 percent
06:12
of business leaders worldwide
06:14
believe that the intangibles are important in their business,
06:16
things like intellectual property,
06:18
their corporate culture, their brand loyalty,
06:20
and yet, only five percent of those same leaders
06:22
actually had a means of measuring the intangibles in their business.
06:25
So as leaders, we understand
06:28
that intangibles are important,
06:30
but we don't have a clue how to measure them.
06:32
So here's another Einstein quote:
06:35
"Not everything that can be counted counts,
06:37
and not everything that counts can be counted."
06:40
I hate to argue with Einstein,
06:44
but if that which is most valuable
06:46
in our life and our business
06:49
actually can't be counted or valued,
06:51
aren't we going to spend our lives
06:54
just mired in measuring the mundane?
06:56
It was that sort of heady question about what counts
06:59
that led me to take my CEO hat off for a week
07:02
and fly off to the Himalayan peaks.
07:05
I flew off to a place that's been shrouded in mystery for centuries,
07:08
a place some folks call Shangri-La.
07:11
It's actually moved from the survival base of the pyramid
07:14
to becoming a transformational
07:17
role model for the world.
07:19
I went to Bhutan.
07:21
The teenage king of Bhutan was also a curious man,
07:23
but this was back in 1972,
07:25
when he ascended to the throne
07:28
two days after his father passed away.
07:30
At age 17, he started asking the kinds of questions
07:32
that you'd expect of someone with a beginner's mind.
07:35
On a trip through India,
07:37
early in his reign as king,
07:39
he was asked by an Indian journalist
07:42
about the Bhutanese GDP,
07:44
the size of the Bhutanese GDP.
07:46
The king responded in a fashion
07:49
that actually has transformed us four decades later.
07:51
He said the following, he said: "Why are we so obsessed
07:54
and focused with gross domestic product?
07:57
Why don't we care more about
07:59
gross national happiness?"
08:01
Now, in essence, the king was asking us to consider
08:03
an alternative definition of success,
08:06
what has come to be known as
08:08
GNH, or gross national happiness.
08:10
Most world leaders didn't take notice,
08:13
and those that did thought this was just "Buddhist economics."
08:15
But the king was serious.
08:19
This was a notable moment,
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because this was the first time a world leader
08:23
in almost 200 years
08:25
had suggested
08:27
that intangible of happiness --
08:29
that leader 200 years ago,
08:31
Thomas Jefferson with the Declaration of Independence --
08:33
200 years later,
08:36
this king was suggesting that intangible of happiness
08:38
is something that we should measure,
08:40
and it's something we should actually value
08:42
as government officials.
08:44
For the next three dozen years as king,
08:46
this king actually started measuring
08:49
and managing around happiness in Bhutan --
08:52
including, just recently, taking his country
08:55
from being an absolute monarchy to a constitutional monarchy
08:57
with no bloodshed, no coup.
09:00
Bhutan, for those of you who don't know it,
09:02
is the newest democracy in the world, just two years ago.
09:04
So as I spent time with leaders in the GNH movement,
09:07
I got to really understand what they're doing.
09:10
And I got to spend some time with the prime minister.
09:12
Over dinner, I asked him an impertinent question.
09:14
I asked him,
09:18
"How can you create and measure
09:20
something which evaporates --
09:23
in other words, happiness?"
09:25
And he's a very wise man, and he said,
09:27
"Listen, Bhutan's goal is not to create happiness.
09:29
We create the conditions for happiness to occur.
09:32
In other words, we create a habitat of happiness."
09:35
Wow, that's interesting.
09:37
He said that they have a science behind that art,
09:39
and they've actually created four essential pillars,
09:42
nine key indicators
09:44
and 72 different metrics
09:46
that help them to measure their GNH.
09:48
One of those key indicators is:
09:51
How do the Bhutanese feel about
09:54
how they spend their time each day?
09:56
It's a good question. How do you feel about
09:58
how you spend your time each day?
10:00
Time is one of the scarcest resources
10:02
in the modern world.
10:04
And yet, of course,
10:06
that little intangible piece of data
10:08
doesn't factor into our GDP calculations.
10:10
As I spent my week up in the Himalayas,
10:12
I started to imagine
10:14
what I call an emotional equation.
10:16
And it focuses on something I read long ago
10:19
from a guy named Rabbi Hyman Schachtel.
10:22
How many know him? Anybody?
10:24
1954, he wrote a book called "The Real Enjoyment of Living,"
10:26
and he suggested that happiness
10:29
is not about having what you want;
10:31
instead, it's about wanting what you have.
10:34
Or in other words, I think the Bhutanese believe
10:37
happiness equals wanting what you have --
10:40
imagine gratitude --
10:42
divided by having what you want --
10:44
gratification.
10:47
The Bhutanese aren't on some aspirational treadmill,
10:49
constantly focused on what they don't have.
10:52
Their religion, their isolation,
10:55
their deep respect for their culture
10:57
and now the principles of their GNH movement
10:59
all have fostered a sense of gratitude
11:01
about what they do have.
11:03
How many of us here, as TEDsters in the audience,
11:05
spend more of our time
11:08
in the bottom half of this equation, in the denominator?
11:10
We are a bottom-heavy culture
11:13
in more ways than one.
11:15
(Laughter)
11:17
The reality is, in Western countries,
11:19
quite often we do focus on the pursuit of happiness
11:22
as if happiness is something that we have to go out --
11:25
an object that we're supposed to get, or maybe many objects.
11:28
Actually, in fact, if you look in the dictionary,
11:31
many dictionaries define pursuit
11:33
as to "chase with hostility."
11:37
Do we pursue happiness with hostility?
11:40
Good question. But back to Bhutan.
11:43
Bhutan's bordered on its north and south
11:46
by 38 percent of the world's population.
11:49
Could this little country,
11:51
like a startup in a mature industry,
11:54
be the spark plug that influences
11:56
a 21st century
11:59
of middle-class in China and India?
12:01
Bhutan's created the ultimate export,
12:03
a new global currency of well-being,
12:06
and there are 40 countries around the world today
12:09
that are studying their own GNH.
12:11
You may have heard, this last fall
12:13
Nicolas Sarkozy in France
12:15
announcing the results of an 18-month study
12:17
by two Nobel economists,
12:20
focusing on happiness and wellness in France.
12:22
Sarkozy suggested that
12:24
world leaders should stop
12:26
myopically focusing on GDP
12:28
and consider a new index,
12:30
what some French are calling a "joie de vivre index."
12:32
I like it.
12:35
Co-branding opportunities.
12:37
Just three days ago, three days ago here at TED,
12:39
we had a simulcast of David Cameron,
12:41
potentially the next prime minister of the UK,
12:43
quoting one of my favorite speeches of all-time,
12:46
Robert Kennedy's poetic speech from 1968
12:49
when he suggested that we're
12:52
myopically focused on the wrong thing
12:54
and that GDP is a misplaced metric.
12:56
So it suggests that the momentum is shifting.
12:59
I've taken that Robert Kennedy quote,
13:02
and I've turned it into a new balance sheet for just a moment here.
13:04
This is a collection of things
13:07
that Robert Kennedy said in that quote.
13:09
GDP counts everything from air pollution
13:11
to the destruction of our redwoods.
13:13
But it doesn't count the health of our children
13:16
or the integrity of our public officials.
13:18
As you look at these two columns here,
13:21
doesn't it make you feel like it's time for us
13:24
to start figuring out a new way to count,
13:26
a new way to imagine
13:28
what's important to us in life?
13:30
(Applause)
13:32
Certainly Robert Kennedy suggested at the end of the speech exactly that.
13:36
He said GDP "measures everything in short,
13:39
except that which makes life worthwhile."
13:42
Wow.
13:45
So how do we do that?
13:47
Let me say one thing we can just start doing
13:49
ten years from now, at least in this country.
13:51
Why in the heck in America
13:53
are we doing a census in 2010?
13:55
We're spending 10 billion dollars on the census.
13:57
We're asking 10 simple questions -- it is simplicity.
14:00
But all of those questions are tangible.
14:02
They're about demographics.
14:05
They're about where you live, how many people you live with,
14:07
and whether you own your home or not.
14:09
That's about it.
14:11
We're not asking meaningful metrics.
14:13
We're not asking important questions.
14:15
We're not asking anything that's intangible.
14:17
Abe Maslow said long ago
14:19
something you've heard before, but you didn't realize it was him.
14:21
He said, "If the only tool you have is a hammer,
14:24
everything starts to look like a nail."
14:27
We've been fooled by our tool.
14:30
Excuse that expression.
14:32
(Laughter)
14:34
We've been fooled by our tool.
14:36
GDP has been our hammer.
14:38
And our nail has been a 19th- and 20th-century
14:41
industrial-era model of success.
14:44
And yet, 64 percent
14:47
of the world's GDP today
14:49
is in that intangible industry we call service,
14:51
the service industry, the industry I'm in.
14:53
And only 36 percent is in the tangible industries
14:56
of manufacturing and agriculture.
14:58
So maybe it's time that we get a bigger toolbox, right?
15:00
Maybe it's time we get a toolbox that
15:03
doesn't just count what's easily counted, the tangible in life,
15:05
but actually counts what we most value,
15:08
the things that are intangible.
15:11
I guess I'm sort of a curious CEO.
15:13
I was also a curious economics major as an undergrad.
15:15
I learned that economists measure everything
15:18
in tangible units of production and consumption
15:21
as if each of those tangible units
15:24
is exactly the same.
15:26
They aren't the same.
15:28
In fact, as leaders, what we need to learn
15:30
is that we can influence
15:32
the quality of that unit of production
15:34
by creating the conditions
15:37
for our employees to live their calling.
15:39
In Vivian's case,
15:41
her unit of production
15:43
isn't the tangible hours she works,
15:45
it's the intangible difference she makes
15:47
during that one hour of work.
15:49
This is Dave Arringdale who's actually
15:51
been a longtime guest at Vivian's motel.
15:53
He stayed there a hundred times
15:55
in the last 20 years,
15:57
and he's loyal to the property because of the relationship
15:59
that Vivian and her fellow employees have created with him.
16:02
They've created a habitat of happiness for Dave.
16:05
He tells me that he can always count
16:08
on Vivian and the staff there
16:11
to make him feel at home.
16:13
Why is it that
16:16
business leaders and investors
16:18
quite often don't see the connection
16:20
between creating the intangible
16:23
of employee happiness
16:25
with creating the tangible
16:27
of financial profits in their business?
16:29
We don't have to choose between
16:32
inspired employees and sizable profits,
16:34
we can have both.
16:37
In fact, inspired employees quite often
16:39
help make sizable profits, right?
16:41
So what the world needs now,
16:44
in my opinion,
16:46
is business leaders and political leaders
16:48
who know what to count.
16:51
We count numbers.
16:53
We count on people.
16:55
What really counts is when we actually use our numbers
16:58
to truly take into account our people.
17:01
I learned that from a maid in a motel
17:04
and a king of a country.
17:07
What can you
17:09
start counting today?
17:11
What one thing can you start counting today
17:13
that actually would be meaningful in your life,
17:16
whether it's your work life or your business life?
17:18
Thank you very much.
17:21
(Applause)
17:23

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Chip Conley - CEO, author
Chip Conley creates joyful hotels, where he hopes his employees, customers and investors alike can realize their full potential. His books share that philosophy with the wider world.

Why you should listen

In 1987, at the age of 26 and seeking a little "joy of life," Chip Conley founded Joie de Vivre Hospitality by transforming a small motel in San Francisco’s seedy Tenderloin district into the now-legendary Phoenix. Today, Joie de Vivre operates nearly 40 unique hotels across California, each built on an innovative design formula that inspires guests to experience an "identity refreshment" during their visits.

During the dotcom bust in 2001, Conley found himself in the self-help section of the bookstore, where he became reacquainted with one of the most famous theories of human behavior -- Maslow’s hierarchy of needs, which separates human desires into five ascending levels, from base needs such as eating to the highest goal of self-actualization, characterized by the full realization and achievement of one’s potential. Influenced by Maslow's pyramid, Conley revamped his business model to focus on the intangible, higher needs of his company's three main constituencies -- employees, customers and investors. He credits this shift for helping Joie de Vivre triple its annual revenues between 2001 and 2008.

Conley has written three books, including his most recent, PEAK: How Great Companies Get Their Mojo from Maslow, and is at work on two new ones, Emotional Equations and PEAK Leadership. He consults widely on transformative enterprises, corporate social responsibility and creative business development. He traveled to Bhutan last year to study its Gross National Happiness index, the country's unique method of measuring success and its citizens' quality of life. 

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