How Good is Your Judgement?

In a 2016 article Paul Schoemaker and Philip Tetlock remind us that “companies and individuals are notoriously inept at judging the likelihood of uncertain events, as studies show all too well. Getting judgements wrong, of course, can have serious consequences. Steve Ballmer’s prognostication in 2007 that there’s no chance the iPhone is going to get any significant market share, left Microsoft with no room to consider alternative scenarios,” (p.74).

 

There’s a direct link between judgement and accountability. For example in our youth our judgement often goes awry simply because we don’t feel accountable for our actions and hence don’t think things through properly. Even organizations have issues with ‘judgement’ because individuals aren’t held accountable; and hence don’t ‘learn’ to think things through quickly. In fact one of the downsides of command and control style leadership is that these leaders use their power to avoid accountability when it comes to ‘bad’ judgements being made.

 

Schoemaker and Tetlock mention “the experience of a UK bank that lost a great deal of money in the early 1990’s by lending to U.S. cable companies that were hot but then tanked. The chief lending officer conducted an audit of these presumed lending errors, analysing the types of loans made, the characteristics of clients and loan officers involved, the incentives at play, and other factors. She scored the bad loans on each factor and then ran an analysis to see which ones best explained the variance in the amounts lost. In cases where the losses were substantial, she found problems in the underwriting process that resulted in loans to clients with poor financial health or no prior relationship with the bank – issues for which expertise and judgement were important. The bank was able to make targeted improvements that boosted performance and minimized losses,” (p.74).

 

There’s the other side of the coin too – organizations that are so ‘risk averse’ that employees make judgements based on ‘fear of failure’ which rarely leads to optimum solutions for the organization in the short or long term. Most of us learn through the mistakes that we make and through the risks that we have taken in our lives. Being able to take risk is based on values like accountability, but also integrity and excellence, and safety where appropriate. Our core values, if aligned correctly, should be enough to allow us to make those judgements that have risk attached but the rewards are worth it; where even failure has a reward, as we learn ‘what doesn’t work.’

 

Schoemaker and Tetlock highlight how “most predictions made in companies, whether they concern project budgets, sales forecasts, or the performance of potential hires or acquisitions, are not the result of cold calculus. They are coloured by the forecaster’s understanding of basic statistical arguments; susceptibility to cognitive biases, desire to influence others’ thinking, and concerns about reputation. Indeed, predictions are often intentionally vague to maximize wiggle room should they prove wrong. The good news is that training in reasoning and debiasing can reliably strengthen a firm’s forecasting experience,” (p.75).

 

A key cognitive bias is the perceived culture of the company and the perceived impact this culture has on the judgements you make. This perceived culture will be different for employees in different departments; or at different levels or at different stages in their career; as well as the personal values of each of the employees in the organization.

 

Schoemaker and Tetlock remind us that “cognitive biases are widely known to skew judgement, and some have particularly pernicious effects on forecasting. They lead people to follow the crowd, to look for information that confirms their views, and to strive to prove just how right they are. Training can help people understand the psychological factors that lead to biased probability estimates, such as the tendency to rely on flawed intuition in lieu of careful analysis. Another technique for making people aware of the psychological biases underlying skewed estimates is to give them confidence quizzes,” (p.75).

 

We live in a world where judgements that are made can impact more than just the individual making the judgement, but can impact the whole world. Take global warming, a scientific phenomenon that if correct and not ‘checked’ will be the end of the world as we know it. Yet recently the President of the United States broke away from the Paris Accord on Climate Change, claiming ‘global warming’ was a politically driven ‘con’ and that because his grandfather was a Professor at MIT, he had an instinct for science – hmmm, making judgement on a phenomenon that could be the end of life on earth requires patience, accountability, integrity and much more serious debate.

 

Schoemaker and Tetlock remind us of the importance of building the right teams. “Whether a team is making a forecast about a single event or making recurring predictions, a successful team needs to manage three phases well: a diverging phase, in which the issue, assumptions, and approaches to finding an answer are explored from multiple angles; an evaluating phase, which includes time for productive disagreement; and a converging phase, when the team settles on a prediction. In each of the three phases, learning and progress are fastest when questions are focused and feedback is frequent,” (p.77).

 

The key to judgement in the 21^st century, besides the values already discussed is the concept of trust. We need to recruit the right people with the right experience and values; then trust them to make the right judgement calls and trust them to be flexible in their approach so that they will be honest when things start to go wrong or don’t work.

 

The judgements organizations make today shouldn’t just be about short term shareholder value, but about long term sustainable growth. The UK has seen the ‘high street’ change so much in the last 12 months. Retail stores that have been around for hundreds of years closing their doors for good or closing down a large proportion of their stores laying off thousands of employees. These closures are due to poor judgement and now everyone pays, even the shareholders.

 

As we become more technologically advanced; and as we see the divide between rich and poor become even greater, we need leaders, both from business and politics to make better judgement calls for the world in general – otherwise the future could be very bleak.

 

Finally Schoemaker and Tetlock suggest that “companies should systematically collect real time accounts of how their top teams make judgements, keeping records of assumptions made, data used, experts consulted, external events, and so on. Where well-run audits can reveal post facto, whether forecasters coalesced around a bad anchor, framed the problem poorly, overlooked an important insight, or failed to engage team members with dissenting views. Likewise they can highlight the process steps that led to good forecasts and thereby provide other teams with best practices for improving predictions,” (p.78).

 

References:

 

Schoemaker, P.J.H. and Tetlock, P.E. (2016). Superforecasting: How To Upgrade Your Company’s Judgement. Harvard Business Review, May, p.72-78.

What are Some Basic Mistakes Organizations Make?

In the last 70 years we have seen significant developments in technology – just look at what’s been achieved in the development of computer technologies. For example in 1953, Grace Hopper develops the first computer language, which eventually becomes known as COBOL. Thomas Johnson Watson Jr., son of IBM CEO Thomas Johnson Watson Sr., conceives the IBM 701 EDPM to help the United Nations keep tabs on Korea during the war. In 1954, the FORTRAN programming language, an acronym for FORmula TRANslation, is developed by a team of programmers at IBM led by John Backus, according to the University of Michigan.

 

Then in 1958, Jack Kilby and Robert Noyce unveil the integrated circuit, known as the computer chip. Kilby was awarded the Nobel Prize in Physics in 2000 for his work. In 1964, Douglas Engelbart shows a prototype of the modern computer, with a mouse and a graphical user interface (GUI). This marks the evolution of the computer from a specialized machine for scientists and mathematicians to technology that is more accessible to the general public.

 

Look at mobile technology where the speed of advancements have just been incredible, a trait that seems set to continue in the short term to medium term.

 

The same is true in the medical and health sector, and though we still have to find many more cures, the advancements continue to develop each and every year.

 

So if we look at today’s business organizations and how they are run, how much have they advanced in the last 20 years, let alone the last 70? For example, has customer service got progressively better year on year? Are today’s leaders significantly better than their counterparts 20, 30, 40 years ago?

 

Organizations now have access to so much more information, thanks to the advancements in technology; they have access to hundreds, if not thousands, of training courses on any subject you can think of – but the question is, are ‘we’ getting better at leading and developing business organizations, and if not, why not?

 

I would suggest, for example, that the advancements in business leadership have faded into insignificance compared to the advancements in other areas; where in some areas business leadership has regressed rather than advanced over the last 20 to 50 years. This is partly due to the world changing (not necessarily for the better in some areas); acceptable standards and basic values changing or no longer clearly defined; and a basic lack of accountability at the top of many business organizations on a global scale.

 

Some of the basic mistakes organizations still make in the 21^st Century include;

 

1. Businesses not being customer centric. Where some organizations simply don’t focus on customer service, and in fact are happy to mislead customers and take advantage of them – where the organizations sole purpose appears to be on short-term profit maximization at any cost.

 

The 21^st century customers are also at fault, whereby they stay customers to organizations who treat them badly, often simply because they can’t be bothered with the hassle of changing their accounts to another supplier – possibly telling themselves that ‘all the suppliers are as bad as one another’.

 

Governments and ‘watchdogs’ also fail customers by allowing ‘cartel’ like arrangements between suppliers, which we have seen in energy sectors, mobile phone sectors, banking sectors, to name just a few.

 

Organizations and customers need to start respectively offering and demanding higher levels of customer service; and customer groups just need to realise the ‘purchasing power’ they have as a customer group and start using this to their advantage. Where the advances in technology now give them access to a lot more power than customers had 20 to 50 years ago and beyond.

 

2. Leaders are not inspiring their workforce. Command and control leadership seems to be on the increase – which is so sad to see. The gap between leaders and employees is widening, due to the poor behaviour of leaders – which unsurprisingly means too many employees becoming demotivated, uninspired and less than optimally productive.

 

What’s worse, is that when these poor leaders become aware of their demotivated workforce – they are in complete denial of their direct role in creating the negative culture and actually blame their employees for not caring, rather than looking squarely at themselves and realizing they are the problem.

 

In my view leadership has become too commercialised and we need to get back to the very basics of leadership; where leaders are inspirational, they are transparent, they lead by example, they see an organizations most vital resource as it’s human resource and treat them accordingly, and where they promote future leaders on skills, behaviors, characteristics and values.

 

3. Organizations don’t communicate a fully transparent corporate vision to their workforce. Too many organizations, of all sizes, seems to fail to be transparent, for whatever reason and don’t share their vision for the future – assuming they even have one.

 

This is business 101, where a well thought-out and well communicated corporate strategy and vision, owned by the workforce leads to an inspired and motivated workforce that understands the future and the role they play in achieving that future state. Without communicating a clear future vision, employees can’t even start to ‘own’ it, don’t see how their job supports the successful future of their organization and hence are less motivated to achieve anything.

 

This also links back to the command and control type leader who doesn’t like to be transparent, seeing employees as a resource that don’t need to know where the organization is going and just need to do what they are told to do, when they are told to do it.

 

A transparent vision doesn’t just help employees see the future and how their role supports it; it also allows employees at all levels to contribute to its success and identify potential problems and also innovate solutions long before a command and control driven organization will know they have problems. Front line employees need a direct link to the organizational strategy to ensure constant optimal growth.

 

4. Business ethics. Suddenly in the last 20 years – the word ‘sorry’ seems to have become the easiest word (not the hardest). Unethical leaders appear too often these days – ripping off customers at best, and leading to unnecessary deaths at worst.

 

When these ‘bad’ leaders are caught, there seems to be no shame or remorse from the perpetrators – and a simple ‘sorry’ seems to be okay for too many, especially those bodies that should bring these unethical leaders to account.

 

Where are the ethical role models for the future generations of leaders to aspire to be like? In too many cases we are giving the completely wrong impression of leadership to the next generation and this is all we see in the media. Where are we showing what ‘great’ leadership looks like.

 

We need to discuss values more often and openly; what ‘values’ really mean and how they impact organizations and individuals, both in the short and long term. I saw an elderly lady burst into tears the other day in front of an assistant in a store – where she said, I’m so sorry, but it’s so nice to find someone who cares for a change.

 

 

The world is advancing at a phenomenal rate year on year in many sectors and it’s time for business organizations and their leaders to make similar positive advancements for the good of all their stakeholders.

Does Big Business Learn From Past Mistakes?

Do we learn from past mistakes? In today’s global economy does big business look at past successes and past failures of other organisations to help them plan effectively for the future; or is there a sense of arrogance that comes with the large size of some organizations that makes them feel invincible?

 

On 15th April, 2018, it was 106 years since the Titanic sank and leaders should remember and reflect on the comments of the captain, Edward. J. Smith, before the fateful voyage. When asked how he could best describe his, nearly, 40 years at sea, he replied, “Uneventful. I have never been in an accident and I have seen but one vessel in distress in all my years at sea. I have never seen a wreck and have never been wrecked, nor have I ever been in any predicament that threatened to end in disaster of any sort.”

In the 21st century the biggest and most profitable organisations should be the guiding example for the rest of the business community to follow and learn from. Yet these organisations need to be conscious and aware; and not allow their size to make them complacent to their constantly evolving competitive business environment.

 

I know I’ve learnt so much during my career both from my mistakes and learning from the mistakes of others; and learnt that complacency can be a dangerous trait for both organisations and individuals as we go through our career.

It’s nothing new, “for organisations to deceive themselves is neither rare nor random. Charles Frankel, Assistant Secretary of State in President Johnsons Administration in the US (1965-67) concluded that self-deception was not simply a passing problem, but a permanent condition facing all organisations,” (Landau, M. and Chisholm, D., 1995, p.72).

So what can organisations and leaders learn from history and specifically the tragic story of the Titanic?

The Titanic was warned in advance of the increase in ice and the potential for icebergs, but chose to ignore the warnings; as an example, a steward on the Titanic when asked if it was true that the ship was unsinkable, replied “Madam, God himself could not sink this ship.” Large organisations can enjoy the feelings of power and control – and with it the feeling of invincibility just like the Titanic.

After setting sail the Titanic restated its objectives and decided to attempt to beat the record for crossing the Atlantic to impress its shareholders. There was no immediate reward for beating this record (held by its sister ship) since the Titanic was receiving publicity on both sides of the Atlantic. Power and arrogance led to this decision and contributed to the upcoming disaster. Best practice organisations focus on business principles such as sustainable growth and putting the customer first; on transparency and creating cultures that lead to job satisfaction and retention at all levels – an organisation that will provide a ‘luxurious and safe passage’ for all those who embark on the journey.

Finally, the capacity of the Titanic's lifeboats was only 1,178, while the ship was built to carry 3,000 passengers and crew. There was simply no way any more than half the ship's complement would survive should the unthinkable happen. So when the tragedy occurred, only the few survived - only 705 out of about 2,220 escaped to the safety of these craft. The lessons should be self-evident, plan for all eventualities; accurately analyse, assess and manage your organisations risk.

Critical self-evaluation is a basic requirement of excellence in leadership – it takes courage and self-belief – and that is how we will distinguish between the great leaders of tomorrows great organisations and those organisations who are wondering where the iceberg came from – and who to blame for not seeing it coming!

As Pamela Waymack states in her 2006 article, “management’s overconfidence and failure to see its own vulnerability contributed to the sinking of the Titanic. Neither historic track record nor size and prowess are a match for a market in flux. We cannot assume that our organisations are invincible. A seaworthy captain with a spotless record for 40 years was no match for this field of icebergs,” (p.41).

References

Landau, M. and Chisholm, D. (1995). The Arrogance of Optimism: Notes on Failure-Avoidance Management. Journal of Contingencies & Crisis Management, Vol 3, Issue 2, p.67-80.

Waymack, P. (2006). Managing the ice in the waters ahead: Lessons from the Titanic. HFM (Healthcare Financial Management). Vol 60, Issue 7, p.38-41.

Why Do Mergers & Acquisitions Fail?

“Mergers and Acquisitions is a mug’s game” according to Roger Martin “in which typically 70%-90% of acquisitions are abysmal failures. Why is this so? The answer is surprisingly simple: Companies that focus on what they are going to get from an acquisition are less likely to succeed than those that focus on what they have to give to it.”

 

The logic is sound and sensible, yet in a world of corporate greed the trend has become more towards the former, i.e. ‘what are we going to get from this?’ It’s sad, to say the least that today’s leaders are more business savvy; and some notable failures include, “in 2015 Microsoft wrote off 96% of the value of the handset business it had acquired from Nokia for $7.9 billion the previous year. Meanwhile, Google has unloaded for $2.9 billion the handset business it bought from Motorola for $12.5 billion in 2012. HP has written down $8.8 billion of its $11.1 billion Autonomy acquisition; and in 20111 news Corporation sold My Space for a mere $35 million after acquiring it for $580 million just six years earlier,” (p.44).

 

The problem was “Microsoft and Google wanted to get into smart-phone hardware, HP wanted to get into enterprise search and data analytics; and News Corporation wanted to get into social networking. When a buyer is in take mode, the seller can evaluate its price to extract all the cumulative future value from the transaction – especially if another potential buyer is in the equation. Microsoft, Google, HP, and News Corp paid top dollar for their acquisitions, which in itself would have made it hard to earn a return on capital. But in addition, none of them understood their new markets, which contributed to the ultimate failure of those deals,” (p.44).

 

One issue with the approach of seeking acquisitions for the sole reason of what the organization thinks it can get from it, means that it’s unlikely the organization will ask ‘how can we contribute to its future growth’ and ‘do we have compatible cultures so that the leadership will fit and be a positive influence (rather than a destructive force)’ – all they see is their ‘dream’ of dollar signs and just lose complete focus in the frenzy for profit maximization.

 

Sadly the focus on mergers and acquisitions has become very polarized – taking place for two very basic reasons (1) the perceived financial gain for the ‘buyer’ (and often, only, with a short term focus) and (2) the feeling of power it brings to the ‘buyer’ – i.e. I’m more powerful than you – I’m buying you. The very real danger with this approach is that the culture of the acquisition company has often already turned negative on the ‘buyer’ long before the acquisition is finalized and is often so ‘broken’ that the acquiring company don’t have a chance of turning the culture around.

 

It’s simple human psychology – but since the buyers ‘eyes’ only see the dollar signs, they forget that it’s the human capital that makes the company a success. Failing to ‘buy over’ the employees with the deal ultimately leads to a total disaster and a lose-lose for everyone involved; and yet too many organizations, who should know better, continue on this destructive path.

 

The current trend on only focusing on short-term wealth creation loses sight of the very basic human aspect of all successful businesses and is a sorry reflection on how blind today’s corporate boards and shareholder institutions have become to the very basic fundamental ingredients of business success.

 

Yet as Martin highlights “if you have something that will render an acquisition company more competitive, however, the picture changes. As long as the acquisition can’t make the enhancement on its own – ideally – with any other acquirer, you, rather than the seller, will earn the rewards that flow from the enhancement. An acquirer can improve its target’s competitiveness in four ways: by being a smarter provider of growth capital; by providing better managerial oversight; by transferring valuable skills; and by sharing valuable capabilities,” (p.44).

 

This is where the smart money should be investing in organizations and their leaders who look at how they can add true value to the acquiring organization. This is the win-win scenario and if ‘sold’ correctly during the acquisition process will lead to a positive culture and an excited ‘joint’ workforce – looking to be ‘stronger’ together than they were apart. This isn’t about ‘power’ but synergy.

 

Finally Martin mentions how “right now, CEO Mark Zuckerberg is hailed as a business genius, Facebook has become one of the most valuable companies in the world, and his shareholders are perfectly happy to watch him fork out $21.8 billion for a company (WhatsApp) with a handful of engineers and $10 million in revenues. As long as the stock price keeps rising because the base business is prospering, acquisitions don’t have to actually make sense. But history shows that when things turn sour for the base business – think of Nortel, Bank of America, WorldCom and Tyco – shareholders start looking more closely at acquisitions and asking, What were they thinking? That’s why it pays to have a strong strategic logic for your acquisitions, even when the market isn’t asking for it. And what the acquirer puts into the deal determines the value that comes out of it,” (p.48).

 

References:

 

Martin, R. L. (2016). M&A: The One Thing You Need to get Right. Harvard Business Review, June, p.42-48.

Do You Work in a Trusting Environment?

Trust is one of those words rarely discussed in the work place, yet it has a huge impact on performance, talent retention and sustainable growth, to name just a few elements. All the leaders I’ve respected in my career have been men and women I genuinely trusted, amongst other great attributes; and the high performing teams I’ve been involved with also had trust as a key element in their successful make up.

 

Paul Zak in a 2017 Harvard Business Review article found that “building a culture of trust is what makes a meaningful difference. Employees in high-trust organizations are more productive, have more energy at work, collaborate better with their colleagues, and stay with their employers longer than people working in low-trust companies. They also suffer less chronic stress and are happier with their lives, and these factors fuel stronger performance,” (p.86).

 

Worse still trust is a word customers hardly use anymore where in fact distrust seems to be the rule rather than the exception. I’m still amazed that organizations and leaders feel that trust isn’t an attribute worth focusing on; and don’t care if they and their organizations are distrusted. Yet Zak highlights how “leaders understand the stakes – at least in principle. In its 2016 global CEP survey, PwC reported that 55% of CEO’s think that a lack of trust is a threat to their organization’s growth. But most have done little to increase trust, mainly because they aren’t sure where to start,” (p.86).

 

Trust is actually very healthy in all aspects of the business equation – it’s not just important for the business-customer relationship, but has a huge impact inside the organization too. Zak highlights how “neuroscience shows that recognition has the greatest effect on trust when it occurs immediately after a goal has been met, when it comes from peers, and when it is tangible, unexpected personal, and public. Public recognition not only uses the power of the crowd to celebrate successes, but also inspires others to aim for excellence. And it gives top performers a forum for sharing best practices, so others can learn from them, (p.88).

 

The problem with trust is, as we know, that it takes time and a constant effort to develop a trusting environment, probably even more so in the 21st century, and yet that same trust can be eradicated in a split second. It seems that too many leaders either simply don’t want to put in the effort to build trust in their workplace or feel that ‘trust’ limits their leadership style – where the latter is a very scary but real fact in today’s business world.

 

The thought that some leaders would feel that ‘trust’ limits their ability to lead should be something more academics and subject matter experts are discussing openly. The signs are everywhere, an over-promoted to fearful of showing their weaknesses and too scared to ask for help and development, limp through their leadership role using mostly power, with a pinch of ‘fear’ and find a distrusting environment makes it easier for them to lead; and I’d even suggest in some cases they purposefully create the mistrust.

 

I mentioned in the first paragraph how the high performing teams I’ve worked with in my career have all had ‘trust’ as a key attribute; and looking back it wasn’t even something the team consciously worked at. It was simply a team of skilled and principled people, who wanted the best for the organization and that was our primary focus. We felt great once the objective was achieved and had leaders who recognized our successes. Zak mentions how “when a manager assigns a team a difficult but achievable job, the moderate stress of the task releases neurochemicals, including oxytocin and adrenocorticotropin, that intensify people’s focus and strengthen social connections. When team members need to work together to reach a goal, brain activity coordinates their behavior efficiently. But this works only if challenges are attainable and have a concrete end point; vague or impossible goals cause people to give up before they even start. Leaders should check in frequently to assess progress and adjust goals that are too easy or out of reach,” (p.88).

 

Further Zak highlights how “only 40% of employees report that they are well informed about their company’s goal, strategies, and tactics. This uncertainty about the company’s direction leads to chronic stress, which inhibits the release of oxytocin and undermines teamwork. Openness is the antidote. Organizations that share the ‘flight plans’ with employees reduce the uncertainty about where they are headed and why. A 2015 study of 2.5 million manager-led teams in 195 countries found that workforce engagement improved when supervisors had some form of daily communication with direct reports,” (p.89).

 

It genuinely saddens me that one has to write articles about an attribute like trust – where even without the science, we know ‘trusting’ environments are better than ‘distrusting’ ones. As Zak mentions “the brain network that oxytocin activates is evolutionarily old. This means that trust and sociality that oxytocin enables are deeply embedded in our nature. Yet at work we often get the message that we should focus on completing tasks and not making friends,” (p.89). Why, even when we know something is right, are we prepared to settle for less. We know how long it takes to build a trusting environment – and we know how much harder it is to rebuild trust, if the trust has previously been broken. We also know there comes a point where it’s virtually impossible to rebuild trust without fundamental changes in the makeup of the group.

 

So let’s draw a line in the sand. Shareholders, corporate boards and executive directors make it your mission for 2018 to build a trusting working environment – the benefits both in the short and long term will be well worth it for all of you.

 

Zak highlights how “high-trust workplaces help people develop personally as well as professionally. Numerous studies show that acquiring new work skills isn’t enough; if you’re not growing as a human being, your performance will suffer. High-trust companies adopt a growth mindset when developing talent. Some even find that when managers set clear goals, give employees the autonomy to reach them, and provide consistent feedback, the backward looking annual performance review is no longer necessary. Instead, mangers and direct reports can meet more frequently to focus on professional and personal growth. Assessing personal growth includes discussions about work-life integration, family and time for recreation and reflection. Investing in the whole person has a powerful effect on engagement and retention,” (p.90).

 

Reference:

 

Zak, P.J. (2017). The Neuroscience of Trust. Harvard Business Review. Jan-Feb. p.84-90.

Do Ethics Matter?

It seems that not a week goes by without the reporting of unethical behaviour in business and politics. Yet most organisations usually have a list of corporate values on their hallowed walls somewhere – but does the constant stream of scandals mean that the only place you can find corporate values in the 21st Century is on walls, rather than in the hearts of leaders and employees, where they belong? It definitely seems that organisations are failing to move their values from ‘wall plaques’ to actual living entities within their employees, at all levels, in business (and politics for that matter).

 

As citizens of the world we have to decide the kind of world we want the next generations to inherit and then teach our children accordingly. If greed and unethical behaviour is going to be the rule rather than the exception, as it seems to be – then we might as well take the leap and start develop our children to be excellent liars and cheats; giving them a head start into the business world they will eventually join.

 

But if we genuinely want a world where ethical values are the rule – then we really need to start standing up to the constant stream of unethical events around the globe and start holding people and organizations to account. We, that’s the global ‘we’ of consumers, have the power to make significant change if we really want to. Politicians and the media know the power we have – which is why they are constantly trying to keep us divided – as they know if we come together and use our consumer power, we can make more change in a day than any government or multibillionaire makes in a year (or more) – just simply through our combined buying power.

 

We’ve been brainwashed into believing ‘this is the world we live in’; ‘we can’t change anything’; etc, but we have to stop believing this rhetoric and start ‘fighting’ for the world we want for our children and their children.

 

As an example of the stream of scandals and unethical behaviour I just researched two days, Friday 8th September and Monday 11th September and looked at some of the unethical practices being reported in the media; some of which I’ve shared below.

 

We’ve seen the report of a young British mother who is suspected of running a massive tourist sickness scam that allegedly defrauded the industry of at least 9.2 million British pounds. She is alleged to have controlled touts who enticed hundreds of British holidaymakers in Majorca to make false sickness claims against hotels on the island over the past three years (Graham K Madrid, The Times, Fri 8th Sept, p.5). On the same day the Times reported how two retired footballers are alleged to have invented ‘ghost learners’ to steal 5 million British pounds meant for training apprentices.

 

The environment editor of the Times, Ben Webster, reported how Tesco has been accused of holding on to millions of pounds that should have gone to charity from the proceeds of the compulsory 5 pence charge on disposable plastic bags. The retailer retained 3.4 million British pounds last year to cover the ‘cost of administering donations’ unlike other major supermarket chains, which did not deduct any of the proceeds for that purpose, (p.8, 8th Sept).

 

Mark Bridge, the technology correspondent of the Times, highlighted how ‘virtual assistants’ are at risk from hackers. Where researchers in China have found that cheap off-the-shelf technology could compromise virtual assistants from companies such as Apple and Amazon, potentially enabling criminals to instruct them to carry out tasks for their own illegal ends. Imagine situations where ‘psst, Alexa, unlock the back door. And Siri, transfer $1,000 to bank account number …..’ Where criminals could use ultrasonic sounds to ‘whisper’ commands and take over voice-activated electronic devices such as smartphones, (p.17, 8th Sept).

 

We had David Bond and Emma Dunkley on the 8th September reporting how staff at Bell Pottinger have been told that the scandal-hit PR firm is likely to go into administration as early as next Monday, after attempts to find a buyer failed. Co-founded by Margaret Thatcher’s favourite advertising executive Tim Bell in the late 1980’s, Bell Pottinger has been battling for its future after the PR industry’s UK trade body expelled the agency for at least five years over the Gupta controversy. In a damning report, the Public Relations and communications Association concluded that its messaging for the Guptas targeted wealthy white individuals and corporations in South Africa and was likely to inflame racial tensions, (p.12, FT, 8th Sept).

 

Sarah Harris, Jack Doyle, Daniel Martin and Tom Payne, reported in the Daily Mail on 11th September how demands were growing for the Government to slash the ‘outrageous’ interest rates of up to 6.1 per cent levied on student loans. Chancellor Phillip Hammond is being urged to use his next Budget to help students by at least replacing the outdated inflation measure used to set repayments – the Retail Prices Index (RPI) – with the historically lower Consumer Price Index (CPI). Its adoption could save students as much as 18,000 British pounds over their lifetimes, according to recent estimates. Last month Theresa May’s former joint chief of staff, Nick Timothy, described higher education as an ‘unsustainable and ultimately pointless Ponzi scheme’ that burdens graduates with debts and needs radical reform, (p.10, Daily Mail, 11th Sept).

 

Ilan Ben Zion, from Tel Aviv, reported how the controlling shareholder of one of Israel’s largest supermarket chains was arrested on suspicion of corruption. Rami Levi, chief executive of Rami Levi Chain Stores Hashikma Marketing, as well as a local politician, another businessman and a reporter were detained for questioning for alleged fraud and breach of trust involving the owners of a shopping mall and the local municipality; according to a police statement, (p.14, FT, 11th Sept).

 

Ben McLannahan, from New York, reported in the Financial Times how emerging markets are hit by financial crime curbs. The global regulators’ assault on terrorists, tax dodgers and money launderers is sapping vitality from a host of emerging market economies, according to the private-sector arm of the World Bank, as big banks cut ties that could expose them to sanctions. Over the past few year’s banks such as HSBC, BNP Paribas and JPMorgan Chase have paid billions of dollars in fines for failing to keep tabs on criminal activity, while spending heavily to increase their routine flagging of suspicious transactions, (p14, FT, 8th Sept).

 

At the political level you had Laura Pitel from the Financial Times in Ankara reporting how New York prosecutors have charged a former Turkish economy minister with taking millions of dollars in bribes in order to conceal a scheme that bypassed US sanctions. Where Mehmet Zafer Caglayan is accused of receiving cash and jewellery as part of an international operation to trade billions of dollars of gold with Iran, (p.3, FT, 8th Sept).

 

Joe Leahy and Andres Schipani, from Sao Paulo, report how the Brazilian supreme court ordered the temporary arrest of billionaire Joesley Batista, who in May revealed he had secretly taped a conversation with Brazilian President Michel Temer allegedly discussing bribes, has been ordered to face at least five days in jail alongside close associate, Ricardo Saud. “There are multiple indications …. Showing that they were part of an organisation dedicated to the systematic practice of crimes against the public administration and money laundering” supreme court judge Edson Fachin said in the order, (p.2, FT, 11th Sept).

 

And of course not surprisingly on the same day, 11th Sept, Joseph Cotterill, Southern Africa correspondent for the FT highlighted how Robert Mugabe’s spy agency secretly controls a diamond mine in Zimbabwe’s Marange region that has enriched the president’s allies and funded state repression, according to anti-corruption campaign group. The evidence, gleaned from company records and secret documents linked to CIO, will reignite fears that a hole of up to $31 billion in reported revenue from Marange has enriched the country’s political elite and the ruling Zanu-PF, (p.4, FT, 11th Sept).

 

As I start to wind down my own career and think of retirement, I’m genuinely concerned for the future of business and politics; and the generations to come after me. In my lifetime I’ve seen a dramatic change in business behaviour, mostly for the worse. I do wonder how long it will take us to work together as consumers to make positive change and make a real difference throughout the business world, for the generations to come.

I don’t believe (or don’t want to believe) the reported argument that that the current generation don’t care – I actually believe they do. The problem is we are ‘divided’ and until we come together for the greater good, these greedy, unethical people and businesses will be laughing at how gutless we all are, all the way to their offshore banks.

At the moment I think history will look back very poorly on the current world we live in and how much ‘crap’ citizens are prepared to take – let’s stop being divided and come together to make a difference; and lets starting living our corporate values today.

Is Transparency the Missing Link?

I started my career nearly 40 years ago now and remember my first job as if it was yesterday. What I distinctly remember from that time is the transparent cultures that I worked in. I remember feeling part of the organisation even as a young inexperienced graduate as the organisations leadership made me feel a valued part of the organisation, where my thoughts and inputs were actively sort by my manager on a reasonably regular basis.

 

Obviously there was confidential, high level information that wasn’t so transparent, often until after the fact, but that didn’t bother me, as I genuinely felt that I was a ‘cog in the organisational wheel’ albeit a very small cog and part of both a small departmental team and a much larger organisational team. 

 

When I talk to employees today, however, they often tell me that they feel that they are seen simply as a ‘warm body’ filling a position, to do as they are told and do not feel that they are employed for their thoughts and ideas. It seems, sadly, that transparency is not a business principal that is embraced by many 21^st century leaders. I wonder why?

 

There definitely seems to be a negative trend, back towards command and control leadership which is really sad, as this leadership approach does not build strong organisational cultures. Organisations that encourage or turn a blind eye to this negative style of leadership may feel that their choice is validated because they get the results they want – but they naively don’t appreciate the cost in terms of ‘lost’ employer loyalty, innovation, and performance. Because the allure of the power that comes with the command and control style – these leaders blindly continue on their path, believing that they are solely the ones who have any brains in the organisation – and that employees are there to do as they are told; and not to think or question ideas.

 

These command and control leaders fear transparency as they believe it will show their weaknesses and shortcomings; and as individuals who can’t stand solely on their ‘work record and skills’ need ‘power’ to keep them in their leadership role – and the ‘perceived feelings’ that this brings. Hence they avoid transparency and create a ‘brick wall’ between themselves and the employees they ‘lead’ – allowing them to operate with perceived impunity. In the end command and control might get results but it doesn’t get optimum performance, sustained growth and innovation – business principles that are vital in today’s cut throat world of business.

 

Because command and control leaders are rarely transparent, this just fuels the distrusting culture even more, creating a very negative environment for their employees who simply adopt a ‘survival’ culture until they either find an alternative job or until they retire. Creating, in the end, a lose-lose situation for everyone – if only these modern day leaders had the courage to open their eyes and see it.

 

Transparency is the ‘competitive advantage’ between organisations and leaders you want to work for and those you strive to avoid or escape from. Transparency is one of the key elements of what organisational cultures should be all about. For example some of the benefits of transparency include;

 

It opens up a trusting relationship between leaders and employees;

It allows employees to contribute and innovate towards clear goals and objectives – a win-win for everyone;

Employees feel part of ‘something’ and feel valued – hence this helps with talent retention;

Day-to-day business discussions focus on genuine ‘pro-active’ honesty in all aspects of the work cycle – where, for example, mistakes aren’t hidden but transparently embraced and actively learnt from; and

Transparency makes an organisation a ‘rich’ place to work in, learn and develop your career.

 

It seems in today’s hectic global business environment that too many organisations have let poor leadership become the acceptable norm – often because once in place these leaders surround themselves with incompetent people who will follow them and be the ultimate ‘yes’ men – pushing out the best talent – but sadly still getting good enough results to remain in post.

 

It needs a strong CEO, with a strong board, to constantly challenge and investigate their ‘real’ company culture rather than the one that is portrayed by those in positions of power – as there may be a real difference between perception and reality, which can have a huge impact on an organisations future. A lack of transparency is like a cancer slowly eating away and ‘killing’ the good parts of an organisation.

 

Often by the time organisations find out that their middle management is not that good, it’s way too late to do anything about it – as by now all the really good talent has already left.

 

Leadership comes from the top and hence so does transparency. As a leader you need to ‘get out’ and meet you employees – have genuine and transparent one-on-one chats with them to find out what the real culture is like – and then you can more easily adapt and respond.

 

Just by getting out and having genuine, meaningful, transparent conversations with your employees will go a long way to developing a transparent culture; from there you can build a very special organisation. Why not give it a go today, you won’t regret it…..

Has Mediocrity Become the New Business Standard?

What’s happening to organizational standards? It’s hard to pick an exact date, but I’d suggest that prior to the financial crisis many organizations, of all shapes and sizes, were striving to evolve and improve on a year by year basis. There were certain areas of the business that organizations were trying to constantly evolve and it wasn’t just around the product or service offering, but around areas like customer service, quality and the brand or external image. Organizations were striving to develop or enhance their reputation and performance; and were focused on sustainable growth.

 

Yet since the financial crisis and the continual growth of social media – the drive to enhance customer service seems, for example, to have come to a sudden halt. Even high end ‘luxury’ brands aren’t looking long term any more, but just focusing on the moment and the desire to maximise short-term income, even at the expense of the potential for long term customer loyalty.

 

For some reason organizations and business schools are promoting the idea that customer loyalty doesn’t really exist and hence now ‘preach’ that trying to ‘create’ loyalty is a waste of time, money and effort. And this is the biggest mistake organizations are making – the selfish focus on short term profitability, is leading to a decline in the focus on sustainable growth and the business environment is becoming more of a constant short-term ‘hustle’ to entice customers to buy their products and services.

 

A short-term focus is a very mercenary approach to business, but this seems to be becoming the rule rather than the exception. The impact this has on the organizational set-up and organizational culture is astronomical – yet when you analyse the set-up and culture you need for a short-term only focus you can sadly see the attraction.

 

A short-term focus doesn’t only imply a scant regard for customer loyalty, but also implies a scant regard for employee loyalty too. With a short-term focus organizations just see their employee base as a resource to maximize short-term profitability and nothing else – the advantage of this short-terminism, is that you don’t have to worry about investing time and effort into talent pipelines and succession planning, as you don’t see your workforce as a long term investment. If and when people leave you either replace them internally or recruit from outside, but it’s done on a case-by-case basis and not some fancy business methodology.

 

The other advantage of this short-term outlook is that you don’t need to recruit the ‘best’ anymore just basically a ‘warm body’ that can ruthlessly pursue short-term goals, with the added advantage that you don’t need – in fact don’t want – great leaders, you want leaders who can implement command-and-control behaviours with their employees just to get the job done.

 

Organizations accept that some customers may be upset – in fact if there isn’t a reasonably high percentage of unhappy customers, then they actually know they are doing something wrong; as in ‘their world’ there are plenty of ‘new’ customers in the sea and they perceive customers as not being that bright in the first place; and even if the service or quality isn’t as good as ‘advertised’ they know a proportion of the ‘upset’ customers will still be dumb enough to come back and buy again, as it’s ‘easy’ for them.

 

Business has become so easy for short-term focused leaders, as customers have become less caring and believe it or not, actually expect poor service these days. In fact if the customer doesn’t ‘see’ mediocrity they might even think something seems too good to be true. Hence there’s no doubt that it’s today’s customer base that is encouraging this acceptability of mediocrity in the workplace.

 

Same goes for culture – short-term focused organizations simply don’t care about building a positive organizational culture, it’s just not important to them. The culture they want is one where employees focus on short term profit maximization at all costs and nothing more.

 

This makes business life so much easier as building or transforming a culture takes real time and effort; as well as a unique skill set. So not having to worry about a strong, positive culture that allows for sustainable growth is manna from heaven for today’s short term focused, weakly led, organizations.

 

What’s worse and is the cherry on the cake, is that the younger generations actually see these new mediocre business practices as the new definition of ‘business excellence’ and are redefining the norms and expectations of business. Leaders who wouldn’t have stood a chance in a ‘sustainable’ long-term view organization are now seen as today’s strong leaders as they drive their employees to meet ruthless short-term targets.

 

Of course, if you don’t understand the concept of sustainable growth, customer loyalty, etc. what chance do you have of developing a future focused organization – it would just be a foreign concept to you and without the skills you wouldn’t even know where to start.

 

History has shown us that industries and organizations evolve over time – but we all need to take a long hard look at the current direction being taken by too many organizations of all shapes and sizes.

A short-term focus creates an organization that operates at a level of mediocrity, it fails to develop true leaders and in the process creates a talent pool of weak, mediocre leaders that simply know no better.

 

This has all been allowed to happen over the last few decades as customers have demanded less, complained less and accepted a lot less. The future of business is in our hands – we can demand excellence to force organizations to strive for it – or we can accept mediocrity and that’s exactly what we’ll get.