Organizational Insecurity

May 2, 2010

I was intrigued by a recent NYT interview with Omar Hamoui, founder and chief executive of the mobile advertising network AdMob.  Hamoui argued that organizational insecurity led to deep resistance to discussing problems:

When people are insecure, they just tend to hide and bury [problems]. The bad news eventually comes out, but it comes out all at once, and in sort of catastrophic form. I’m just much more in favor of conveying all the bad news in real time.

He continues:

If everybody at the company can feel that they’re not putting their jobs in peril by relaying those kinds of things, then you really do get a pretty accurate picture.

This manifests in a distinct culture at AdMob:

…we spend a great amount of time talking about everything that’s wrong. Not because we’re trying to be negative. You can only talk for so long about what’s going well and have it be useful. You can be a lot more productive if you spend time on the things that aren’t going well.

But this is atypical in most organizations, and so when others join the conversation, they need to be trained:

When we would have visitors come to our board meetings, I would have to spend time prepping them ahead of time, basically telling them: “Don’t worry. The company’s not falling apart. Everything’s going fine. This is just how we are.”

I often discuss the need to surface problems (here’s an earlier post on the subject), and whenever I do people get nervous about creating a culture of “whiners.”  They worry that if people are encouraged to bring up problems, particularly if they’re not on the hook for the solutions, then discussions will be reduced to toxic complaining about the other guy.  Hamoui has found just the opposite:

… nobody at AdMob is shy to point out a problem or an issue with a product or service, even if it’s a product or service that they didn’t build or they don’t own or doesn’t fall within their domain. People aren’t shy about bringing up these issues and being fairly demanding that we solve them. I think that that’s led to us being very proactive.

Every company has problems. Surfacing those problems and addressing them quickly is the sign of a healthy, secure organization.  It’s also the sign of an effective leader.  As Hamoui demonstrates, spinning reality and covering up the truth may be the more costly and dangerous path.

Toyota in Trouble (the quick and dirty version)

February 25, 2010

What happened at Toyota? Mr. Toyoda himself summed it up nicely, as the NYT recently reported.  In a nutshell, Toyota thrived when it focused on improvement. When that focus shifted to growth the company ran into serious trouble:

In his prepared testimony, released on Tuesday, Mr. Toyoda said he took personal responsibility for the situation. In the past, he said, the company’s priorities were safety and quality, and sales came last.

But as Toyota grew to become the world’s biggest carmaker, “these priorities became confused, and we were not able to stop, think and make improvements as much as possible,” Mr. Toyoda said.

Toyota earned its place as the most celebrated operations story of the past few decades because of its relentless commitment to surfacing problems.  The entire organization was focused on the same worthy goals of improving its cars and improving the way its cars were built.  This improvement philosophy reached beyond the factory floor and included strengthening relationships with suppliers and partners.  Toyota managers famously helped suppliers, for example, to lower their own costs by using principles of the Toyota Production System (TPS).  Growth followed naturally.

And then the company’s goal became selling more cars than anyone else, and the metric it glorified was sales growth.  This may seem like a small shift — from growth as an outcome of improvement to growth as a central goal — but the moral of the Toyota story is that this pivot can be devastating.  Improvement is a powerful, worthy mission for an organization’s stakeholders.  Growth can be (and usually is) associated with compromises, with winning the game at any cost.  Toyota paid a cultural price for this shift.  For example, instead of helping its suppliers reduce costs through operational improvement, Toyota began to mandate lower prices and left its suppliers to figure out the rest.  These choices created an environment where cutting corners both inside and outside the organization became likely.

I want the spotlight to linger on this story for a long time.  There are important lessons here beyond the fall of a once-mighty competitor.  The most important one may be that a company’s purpose matters, in ways that go beyond hard-to-measure outcomes like employee satisfaction and  customer loyalty.  Purpose infiltrates an entire organization, all the way down to the manufacturing of a faulty accelerator. My deep hope is that Toyota shows us both the cost of getting it wrong and the path back to getting it right.  Frankly, I’m optimistic.  The tradeoffs are now seared into the souls of every single manager at Toyota.  The company has a powerful incentive to return to its roots as a role model for improvement with growth as a manifestation.

Bring Me a Problem (Solution Optional)

April 29, 2009

In what is becoming a consistently provocative column for us, the NY Times recently featured Delta Airlines CEO Richard Anderson as part of its Saturday Corner Office series. Anderson came across as thoughtful, humble, and hopefully up for the task of saving that airline.  Buried deep in the article, however, was a brief statement that worried me.  It was his variation on the theme of “don’t bring me a problem without a solution,'” or in Anderson’s words:

…don’t bring a Rubik’s cube to the table, unless you have an idea on how you’re going to try to get an answer.

Like many other well-intentioned managers, Anderson is getting this one wrong. Finding problems can be a solo sport, but solving the ones that matter usually requires a team effort.  And if we limit the problems that get exposed to the organization to those the observer can handle alone, then we also seriously limit the organization’s opportunities to improve.

As soon as problems are seen as critical inputs to improvement — critical because they reveal the operational path to better performance — then improvement champions will realize that surfacing problems is among their most important jobs.  And they might end their insidiously damaging habit of requiring problems and solutions to be colocated.  Anderson will have a much better shot at saving Delta if he gets unlimited access to what’s going wrong.

I was interviewed about this topic by the Harvard Management Update – the text of that interview can be found here.

Mental Models Towards Problems

February 4, 2009

Learn from your mistakes.  It sounds so nice in theory, but it often breaks down it practice, particularly for Type A personalities. An intermediary step that’s usually missing is first learning how to honor the missteps, as odd as that may sound.  Most of us treat mistakes as toxic, to be avoided at all costs, minimized with good planning and prudent choices. But well-intentioned mistakes are vital ingredients in the improvement process, and they must be honored as invaluable assets. This often requires a big shift in our mental models towards being wrong.

I often hear managers tell employees not to “bring me problems unless you have the solution.”  It’s meant to foster self-reliance and proactive problem-solving, values we like to celebrate here in America, but the attitude can be poisonous to an organization.  If we only solve problems that are co-located with solutions – or put any other diminishing effect on the surfacing of problems – we are dampening our ability to learn and improve.  Surfacing problems can be a solo sport, but addressing problems of consequence usually requires a team.  It is the obligation of leaders to set the tone for employees – to create a culture where problems are viewed as a path to competitive advantage, as a way to learn and innovate at a faster rate than competitors. Leaders must make it crystal clear that embracing mistakes is not an invitation to fail — it’s a radical  prescription to thrive.