When Bad Business May be Good for Business
Roger D’Aprix, my friend, former colleague and author of the new book, The Credible Company, recently asked some business leaders and consultants what we think the impact of today’s events will be on leaders’ communication styles, especially as it relates to openness. Will it increase or suffer, he asked.
Here’s what I said based on client work and conversations I’ve had with business leaders around the world. In short, I’m optimistic that some good can come from the bad. Let me know what you think.
- The catastrophic impact of egregious business practices is stimulating a “fix it” backlash that will likely continue for some time. The pendulum is swinging toward openness, then will moderate as things cool down—or warm up.
- Many leaders who were burned are adamant that they’ll never again be put in the dark or victimized by other lousy leaders.
- In nearly 30 years, I’ve never heard so many business leaders talk about the need to better connect with their people. Throughout a recent day spent with leaders of a Fortune 100 company, the most common words and phrases I heard were “restore trust,” “better connect to our people,” “tell the truth,” and “cut the corporate BS.” (This is consistent across industries we’re working with–grocery, online search, consumer package goods, manufacturing and financial services.)
- Companies are re-examining the role of their leaders, emphasizing results and how they get those results. And they’re putting teeth into their talk by tying how leaders get results to compensation.
- Open book management is gaining renewed interest. Pioneered by Jack Stack at SRC Holdings, open book management focuses on creating businesses of business people where all employees have access to huge amounts of financial information and are expected to use it to drive up performance.
- Many leaders want to do more with less. Their reasoning: We can’t add people but we can increase the number of high performing people. We need to invest in the people we have with some certainty that our investment will pay off.
Creating a Trust Culture
This month’s Harvard Business Review contains a special spotlight on trust. I commend two articles in particular: “How to Be a Good Boss in a Bad Economy” and “The Uncompromising Leader,” about leaders who refuse to choose between people and profits.
Obama’s Leadership Style
President Obama is giving leaders permission to open up and tell the truth, or so it seems to this one-time political junkie. He demonstrated vulnerability when he admitted he “screwed up” some cabinet nominations. And on his recent foreign trip, he acknowledged what we all know anyway–America is less than perfect. Taking public responsibility for one’s actions has always been a characteristic of strong leaders.
An increasing number of leaders are accepting the reality that open systems trump closed systems. More seem to “get it” that the right communication among team members saves money, improves quality, service, speed and flexibility.
Rules of Thumb
Fast Company founder Alan Webber says in his new book, Rules of Thumb: “If your company is still a closed system, here’s your choice: do you want to play the role of Konstantin Chernenko or Mikhail Gorbachev: If you want to be on the right side of history, you’ll embrace open systems.”
Do Ask; Don’t Tell
I learn from clients every day, but one of my biggest lessons occurred when I worked with General Motors and Toyota in the same year.
I consulted to former GM CEO Rick Wagoner and his leadership team when Wagoner headed North American Operations (NAO) during the mid-nineties. We were asked to help introduce the concept of “common” to the organization. To GM, common meant building multiple car models on the same “common” platform, thereby improving efficiency, economy and the like. Nice idea in moderation, but GM took it to the extreme by applying common to car design, resulting in cars that were…common.
Coincidentally, about six months after the GM project, Toyota hired us for a project in their Georgetown, Kentucky plant.
There have always been gigantic differences between GM and Toyota, but the one that struck me most was that while GM told our consulting team how they wanted us to do our work, Toyota asked us how they should do what we were proposing. GM wanted reports and recommendations in styles and formats that represented the way GM had always done things. Toyota refused to put constraints around how we did what we did.
In short: GM told us what to do and how to do it. Toyota asked us what they should do and how to do it.
Over the years, I came to realize that leaders in other client situations who regaled me with all the great stuff they were doing were probably the ones who needed the most help. The leaders who asked a lot of questions were more than likely running a pretty good operation.
It doesn’t always work this way. But, I’ve found over the years that it’s about 99 percent of the time.
A Reader Asks…
Q. Our CEO wants to blog. What do you think of his idea?
A. I think a lot of CEOs want to do what other CEOs are doing. I try never to give leaders answers I think they want to hear, but I do try to ask questions that will help them come to the right business decision–as in whether to blog or not. I also try to appreciate that they have multiple demands on their calendars and that while I may personally think something is very cool, my goal is less about promoting cool than about helping leaders use their calendars to create and sustain winning organizations.
So, a question I would have is why is it good for the customers and shareholders that you and your CEO spend time, energy and money on a blog? There may be perfectly good reasons, but he may not have thought them through. He might just want to blog because “everyone’s doing it.” In my mind, that’s not a good enough reason when you’re investing finite resources.
I’d suggest that your CEO, with your help of course, make a priority list of his objectives (outcomes). Rank the list in order, based on how much each item adds value to customers or shareholders. You don’t have to be rigorous here–just educated guesstimates. Then identify specific activities that will create those outcomes. There should be reasonable strong cause and effect relationships between what he does and the outcomes he’s looking for.
If blogs come out on top, so be it. If they don’t, you’ve helped him stay focused on what’s important to his, your and the organization’s success.
Let me know how it comes out.
Jim Shaffer