October 9, 2012 | Being a successful leader requires competencies such as intelligence, skills and knowledge.

But a moral culture may push achievements to even higher levels, said Dov Seidman, founder and CEO of LRN, a company that works with businesses to develop ethical corporate cultures.

Seidman explains how principled behavior -- an idea missing from much organizational lingo -- can lead to profitability in his book “How: Why HOW We Do Anything Means Everything.”

Published in 2007 and updated in 2011, “How” urges readers to look beyond typical measures of success, such as page views or units sold, to focus on the degree of trust and transparency within their organizations.

Seidman believes that such concepts should be integral to any organization that desires to move forward.

“Life is really about progress,” Seidman said. “[And] we know that progress is created and enabled by innovation. … Trust enables … risk taking, which in turn enables the innovation.”

Seidman spoke with Faith & Leadership recently about his theories on behavior and leadership. The following is an edited transcript.

Q: Why is a leader’s behavior as important as what he or she gets done?

In business and politics leadership today, we’ve created these spheres and invented language around these spheres with the idea that it’s an amoral space, such as: “It’s business, so just do it. I don’t care how.”

But we are now in such a hyperconnected, interconnected world, there’s no place to park morality while you create this amoral sphere. We are rising and falling together.

One banker at his desk can lose $2 billion and affect global markets. One vegetable vendor can catalyze a revolution toward freedom throughout the Middle East.

We are in a relationship of dependency, and that’s why I think that we are in what I call the era of behavior.

In this new dynamic, leadership itself is going on a journey from formal authority to moral authority. We are going to follow people because they inspire us with visions worthy of our dedication. They themselves walk the talk and are animated by values.

“How” is a noun. It’s a thing. It’s an ethic. It’s a platform. We can do it, we can scale it, we can invest in it, we can model it, and others can emulate it -- and that’s really the argument. In an interdependent world, the amoral sphere is no longer tenable.

Q: You use the acronym TRIP, which stands for trust, risk, innovation and progress. The core, really, is the idea of trust; why is that so important?

So, I mean, what is life really about? It’s about progress -- however it is we envision progress. It could be in a quest for truth. It could be curing certain diseases. It could be progress in our ability to entertain ourselves.

We know that progress is created and enabled by innovation -- some creation, some interruption, some disruption -- that all progress is created through innovation.

We also know that innovation is enabled by risk taking. Speaking up in a meeting is risk taking, because when you speak, you take the risk that a colleague will think less of you for your ideas. Investing capital to pursue innovation is a risk that you’re not going to get the return. So it’s all about risk taking.

Now, when do people take risks? They only take risks when the room is full of trust. In low-trust environments -- and we’ve measured this -- it’s actually more rational to not take risks.

So trust enables the risk taking, which in turn enables the innovation, which creates whatever progress it is you’re pursuing. That’s what TRIP is about.

Many of us grew up in the tradition of “trust and verify.” We go looking for trust, and we set up elaborate checks and balances and approvals. But according to Aristotle, the virtue of trust lies in giving it away. Through trust, you are giving somebody else the power to do right by you or let you down.

Neuroscientists have actually established that oxytocin is released in the brain of someone who feels like they are being trusted, and they reciprocate the trust in a virtual cycle of trusting dynamics.

We’ve got to give away trust in meaningful, palpable ways. In my company’s performance management system, colleagues rate themselves and we pay bonuses. We trust people with their own rating. We pay bonuses based on what you think of yourself, and not based on what somebody else thinks of you. Giving trust away is the ultimate act of transparency.

Q: How do you engender trust and transparency as values in an organization?

What character is to the individual, culture is to the organization -- that which animates how things happen, how decisions get made, how we treat each other and our customers, suppliers and vendors.

Let’s say that there’s a leader who’s really inspirational, and she says, “I trust you to innovate.” So this person runs off inspired to innovate but needs to get two signatures to spend $8 to innovate. Did you see how the left hand just took away the trust that the right hand gave away?

Organizations are systematic about everything they want to scale: just-in-time inventory, TQM, supply chain management, shareholder relations. The one thing we’ve yet to be systematic about with the same rigor is the human operating system.

How do we really get our hands on all of those levers that shape behavior? Now here’s where morality comes in. When you bring together leadership and culture in a deliberate, strategic way, the company is not just letting culture evolve ad hoc. It is doing culture. It’s shaping culture.