Transparency
The Egg and I
Ever wonder about the question of which came first, the chicken or the egg? It’s hard to escape the current media about eggs, salmonella outbreaks again! I confess that part of me is a chicken, more than a bit concerned about the eggs. Although the broadcasted data says my eggs are likely to be safe, the current outbreak is disturbing. Egg farmers everywhere are sharing the chilling thoughts of what fear can do to our buying behaviors. A bad egg amongst the good can spoil the lot. It’s not just about eggs, is it? So, what would we be willing to pay for the good eggs? I know all about the value of data in decision making, the power of an objective lens, the better understanding of what risk really means, how it improves performance, and that is all good. That is, in fact, good as long as we have evidence that the data is good, timely, and reflective of what we really need to know for good decisions. So, how do I make up my mind about the eggs, particularly when my grandkids want some “cheesy eggs”? Cooking them thoroughly is supposed to kill the microbial varmints, but the old, “just in case” whispers in. I’m making decisions with second hand information with a cost versus perceived risk imbalance. Does that happen with other decisions we make at home, work, or play? (The golf course counts here)
It’s complicated since good eggs look the same to me as bad ones. What I need to know is inside the shell, and I don’t have the tools or knowledge to check. Here’s the challenge. I only know that eggs are bad by the damage they’ve done to someone and if somehow the word gets out and if the media decides to share it and if I happened to catch the news. Those are lots of ifs. Someone has to crack the shell and eat the egg. I don’t have testing data on the carton, and food safety failures are nothing to ignore. The wonders of science and high tech supply chain systems make eggs plentiful and really cheap. I suppose that applies to lots of other stuff that’s really cheap. So if we were in the egg business, we would want our customers to enjoy our eggs safely, always safely, and come back and buy some more. A history of great safe eggs is important and I would want to make sure only good ones hit the skillet.
But, this is not really an egg problem; it’s a quality management problem. The golden rule of “thou shall not use your customer as your inspector,” has been broken. That’s a rule that is foundational to ethical business practices. When we make a sale, accept an order or sign a contract, we are in fact making a promise that our customer will get what they expect, based on either a standard, a contract, or what we advertise or put on our “boxes.” Accepting a specification is the same as making a promise, and those that don’t intend to keep it but still sell the “stuff” are “fibbers” as my grandkids might say, or something much uglier in our adult language. It’s a real problem in industries where all the suppliers make the same promises and claims.
So, how do we make promises to our customers? How do we keep them? Do we rely on customer failure data to know, or do we know that the likelihood of failure is unlikely? How unlikely? Do we need someone with a badge and a club looking over our shoulder or is our respect our customers, employees, and investors a big enough motivator? There is really no difference between eggs, or cars, or cough syrup, or toys, or the innumerable products and services we provide. A promise is a promise and when we break one and harm is done, it’s on our name and reputation.
• Do we know what we’ve promised, or more importantly, what our customers believe we’ve promised?
• Do we lead and manage from the big print or the fine print?
• When was the last time we checked our processes? Are they about always keeping the promises? To whom?
• When did we last evaluate how effective and efficient our controls are? How likely are we to keep the promise?
• How and when do we decide what is “good enough” for our customers?
• What evidence could we produce on demand that would support our promises and earn the trust of our customers?
“Quality is not an act, it is a habit.” Aristotle
Oh, Now I See!
“I was seldom able to see an opportunity until it had ceased to be one.” Mark Twain.
“Oh, now I see!” It’s a phrase we use so often to convey that we understand, or get it. We use sight as a metaphor for understanding all the time. The word lens is used to mean a channel through which something can be seen or understood. “Mary sees the world through rose colored lenses,” (an optimist, or naive). We are creatures of pattern recognition and our conjuring process requires imagery to put things in place, or to make sense of what we experience or think. We will typically apply what we know (our storehouse of imagery) to what we see and work hard to make sense of things.
Lenses matter and the choice of lenses have interesting effects on what follows. We believe that lenses allow us to see better, and that is true, but for a very limited and specific range of stuff. The lens is helpful in that it blocks out an infinite number of things we could see or consider so that we get clarity and detail on what the lens puts into focus for us. I’ve looked through telescopes and microscopes, sunglasses and readers, wide angle lenses and telephoto ,,,, all bringing into focus different stuff and making me oblivious to everything else around me. If driving fast, I do no longer see what was in front of me seconds before. Nor should I, be looking anywhere but where it’s critical when driving. Texting while driving is illegal in some states, thank goodness.
In our enterprises, we make choices about lenses all the time. We don’t call them lenses, even though they affect what we see and subsequently interpret. If our lenses are the wrong ones, then we’ll just have to deal with interpreting what we see and worry about what we don’t see. If our lenses cover too much to absorb at once, because we’re driving the business so fast, then we’ll just to trust our luck that we did not miss an important turn-off or on-ramp. If our business roadways are all smooth and devoid of danger or speed traps, then it doesn’t matter so much. If the scenery doesn’t change or we’re not trying to take our enterprise anywhere new, then all is good.
Among our most important lenses are what we measure, how well we measure, how often we measure, and what we do with what we measure. They are important if we do actually do something of value with what we measure in time to make a difference. It does us little good to find out that we missed a turn-off two weeks or a month ago, unless we’re pretty good at u-turns and restarts, except when opportunities don’t wait around for us to u-turn. Also, who decides what to measure, or who interprets what we measure, or who decides what to do with what we measure, or who reports what we measure, or doesn’t report what we measure is likely to matter a whole bunch too.
When we go for our annual physical, all the same measurement stuff applies, and we surely hope the doctor and the lab get it right. I lost a cousin to cancer this weekend because a doctor and a lab got the measurements wrong years ago when they could have done something in time to save Bob’s life.
So, when was the last time you checked the lenses you use at work, home, or play?
“There are three classes of people; those who see, those who see when they are shown, and those who do not see.” Leonardo da Vinci.
What If?
There may be a really big storm brewing. It may be a signal from a political barometer, or positioning, real outrage… not sure, but the thunder is increasing. The last few months have stoked the fires of outrage, anger, frustration, and deteriorating confidence from a public that may feel that they may have been too trusting. Mine disasters are prompting a more diligent review of whether laws were broken and whether responsible regulators did not regulate, or were distracted when they should have been focused. The oil spill disaster is challenging the process of due diligence and the veracity of permitting submittals, leaving people scrambling to solve the should-have-been foreseen or explicitly considered in operational risk assessments. The financial crisis and the ensuing Goldman Sachs nightmare is ringing lots of alarm bells around the public service halls, prompting the questions of, “Did we do enough? Were we diligent in our responsibility? Where will the light of review shine next?” I suspect that readership will skyrocket for Government Accountability Office (GAO) reports that have been ringing the bells for regulatory reform, transparency, accountability, and better oversight for many years. The scary part of a pendulum swinging is that it often has an axe attached at the end. The court of public opinion is a feeding frenzy for responsible and irresponsible media.
The challenges ahead are not easy, simple, or clear insofar as right or wrong, the role of government, and the balance between protecting the public trust and preserving an environment that is economically fertile for business. The polarity of positions makes the task of finding societal answers that are workable frighteningly complex, requiring agile minds, principled players, and strategic balance. The ravages of unemployment and a riskier economic outlook may stoke the fires for those in search of the guilty. Anger and the search for public justice enjoy a history of harming too many innocent in search of the guilty.
For those enterprises where compliance is a large economic investment or burden, consider getting ahead of this storm. For those who were doing “just enough to get by,” change is likely around the corner.
Compliance brings three categories of costs:
• The Cost of Non-Compliance. That is all the bad stuff that happens when someone is caught and held accountable for breaking the rules.
• The Cost of Compliance. This is a really big number that captures all the activities and costs associated with understanding the rules, complying, or doing whatever is necessary so as to not be found in non-compliance. This usually has many, many more hidden costs that the explicitly budgeted costs.
• The Cost of the Fear of Non-Compliance. This one is very nasty as it captures all the unnecessary, just in case, better look it over, get more reviews, run it by the lawyers, get lots of extra approvals, let’s have a meeting, and endless tons of costs and constraints heaped on because we are afraid of getting in trouble.
Far too many of the assurance and compliance systems rely on “detect and correct.” The unfortunate consequence of control and contain systems that rely on downstream checks and inspections is that they will always fail to some degree. That means that sometimes we learn that we’re dead before we learn that we’re sick. Yep, failure is what tells us that something is wrong. The smarter folks are applying the principle of “predict and prevent.”
Now, what if the yoke of regulation and compliance is about to get heavier, and those who are responsible for guardianship of the public trust are under greater scrutiny, might they also be thinking about their own fear of non-compliance? What’s the cost to everyone else if that is true?
Where are our enterprises? Is this something to think about, or something to think through?
“A man does what he must – in spite of personal consequences, in spite of obstacles and dangers and pressures – and that is the basis of all human morality.” Winston Churchill
We Trusted You!
Watching the US Senate Congressional hearings this week, I almost felt as if I were at the cinema watching a fictional drama. One of those movies where the villains were conspiring to wreak global havoc and the world was rescued by a heroic figure that brought it to light. I wish it were fiction, but alas, there were no heroes, and in fact, there may have been some villains indeed, and many of us can attest to the havoc wrought on the global economy. Sadly, the villains were people who had the trust of many and that trust was abused. While this issue seems to cut across multiple arenas of betrayed trust, be they elected, ordained, or contracted, they all manifest tribal behavior. This behavior has a broad range of nuances, but a common gene is present, the gene that creates hubris and disrespect for those they were supposed to serve and protect. This betrayal of trust will bring on anger and wrath that will swing the hammer of cynicism and regulation, and that is a shameful consequence. It is a saddening consequence for the overwhelming numbers of good, principled, decent, serving individuals, be they legislators, priests, automakers, or bankers.
But the hearings this week were with the top of the Goldman Sachs house, and the anger it has unleashed has only begun to unfold. What we witnessed was tribal behavior, one with its own language, heroes, culture, and their own paradigms of what is right or wrong. I won’t use the word values because that word is often aligned with positive and ethical behavior, and it does not seem to fit what we observed. Tribal behavior is fascinating, particularly, if you can be a spectator rather than a participant. It is almost inescapable in organizations where cultures that emerged are shaped by organizational or functional objectives, recognition, rewards, and a sense of entity that breeds an entitled behavior. These inescapable affinities are so powerful that they can create intellectual inbreeding, powerful paradigms, and degenerative “we versus them behaviors.” When really bad, winners display hubris and disrespect for others, and losers retreat into denial, protectiveness, or nostalgia. Scary, isn’t it?
Maybe we’re at the cusp of a new era. Historically, sea changes can start just like what we may be witnessing. Some are called revolutions because the rate of change accelerates from the gradual movement from one set of parameters and behaviors to another. The current economic parameters are undeniably multipolar and there is the juxtaposed coexistence of strength and fragility. A thread unraveling in Greece or Spain can tug hard at our pessimism and constrain our appetite for opportunities. Overlay that multi-polarity and interconnected fragility with contempt and mistrust of those who should be trusted to advise and guide our investments, a retreat into investment shrinkage is not hard to imagine.
Years ago, Warren Buffett warned us that the complex instruments that had no value, but derived their price from other instruments and risk analyses, would eventually bring catastrophe, even without disreputable actions. The Goldman Sachs hearings demonstrated legally scripted double-speak, tribal arrogance, and a belief that anything goes, as long as cleverness trumps all. What was not evident was any sense of social responsibility or remorse for undeniable harm done. History has not treated such behaviors with forgiveness.
As we look ahead, what about our organizations?
• Do our customers trust us?
• Do we earn that trust?
• How do we make decisions that have social or societal consequences?
• How do we strike a balance between principles and profits, growth and damage, today and tomorrow, or financial rewards and ethical responsibilities?
• Are our values clear to our employees, customers, and communities? Would an impartial observer conclude likewise?
• How much regulation have we earned? At what cost?
Thoughts?
How Did You Get So Ubiquitous?
“Never in the field of human conflict was so much owed by so many to so few.” – Winston Churchill, House of Commons, August 20, 1940. Many recognized this as the timeless phrase describing the valiant effort by the British Royal Air Force Fighter Command during August 18th, 1940. It has come to represent the Battle of Britain and lives among the legendary victories, Agincourt, Trafalgar, and Waterloo. The Battle of Britain was very different, strategically, tactically, and operationally. The Battle of Britain developed a fascinating strategic application that becomes ever more relevant, Strategic Ubiquity.
Under the genius of Air Marshall Sir Hugh Dowding, the RAF Fighter Command overcame overwhelming odds against the behemoth German air forces. Dowding did so through technology, stealth, organization, managing awareness, resource dispatching, and mostly agility. I will leave the details to those willing to invest in further reading as many hundreds of books abound. The principle of Strategic Ubiquity manifested the ability to “be everywhere” with much fewer resources than thought possible. The strategy also generated a world class pull system for delivering aircraft long before the Japanese could spell Deming or develop what we apply as Lean. Again, this is a different tickler for the curious. This strategy incorporated leveraging the agile integration of cross-functionality and achieved measurable synergy, one plus one equals three; even more for the curious …
At this time in military history, great powers (military or commercial) relied on quantity, power, and mass as a strategic hammer with which to overcome the opposition. More, everywhere as deployed resources, that could battle it out until consumption won out or size scared the opposition into submission. RAF Fighter Command under Dowding harnessed the power of more information, deployed to the right people, specific to the purpose of the specific people, and in time to act. It was “predict and prevent” rather than “detect and correct.” Downing’s resources, his “chicks”, always feigned to be too few, but were able to be where they were needed, when needed, with as close to real time data and awareness as then unimaginable. The few, through agility, were able to execute against the many. The strategy did not completely lift Clausewitz’s “fog of war”, but did much to see through it. It was not a software thing, it was a process thing. It was an agile thing…
Strategic Ubiquity is something very doable. With the right focus, discipline, and follow-though, the leverage created by technology can be game changing. There is a way to think about it, plan it, deploy it, measure it, and sustain it.
Agility is much more than an athletic term and ubiquity is more than being everywhere. Strategic Ubiquity is about being at the frontiers where and when the business battles are fought, not everywhere where battles may be fought. A few (300) agile Spartans along with a few thousand supporting Greek city-states in the Second Persian War picked the straits of Thermopylae for good reason. Agility put the right resources with the right focus, discipline, follow through and technology to achieve a strategic objective of delay. It was not Strategic Ubiquity circa 550 BC, but Dowding’s Fighter Command made it happen in the summer of 1940.
Today’s dynamic business environment demands capability on multiple fronts and challenges how to plan, build capability, and then have sufficient agility to win. It’s harder and too expensive to be big enough to be everywhere. Garrisons, be they business or military are places where waste is born and bred.
‘Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.’ Sun Tzu
Think About It!
Have you ever thought about how we think, particularly the kind that leads to decisions? What drives important decisions? How do we know if we made the “right one”? As we enter into the New Year, how will we decide how to navigate ourselves and our enterprises successfully?
How we approach this tends to fall into two major categories (with some dangerous variations within). First, there’s the type of thinking that comes from experience. We observe and experience, develop some pattern describing the experience and tuck it away for reference. When we believe we recognize the pattern, we pull that memory out and make some conclusion about what is in front of us. Some people can store lots more patterns than others, have longer memories and can capitalize from that. It’s called inductive thinking and people with “good” inductive thinking can market that as experience. Hiring practices validate that the marketplace places a positive value on that. Experience is not always good, nor is experience a sure bet, so some further prodding and poking is usually a good idea. There are some areas where inductive thinking can be very valuable, particularly when there is little time available for decision making. It is a subjective realm, nonetheless.
There is another kind of thinking that has to do with the world of math and data and science (real science, not the subjective pretenders…). It requires evidence that is measurable and leads to the quantitative practices where many people will reach the same conclusions when presented with the same data. This kind is deductive thinking and there are lots of professions and methodologies that are built upon deductive thinking. It’s very powerful, learnable and very scalable. It too has limitations in that the person who engages in deductive thinking must learn how to do it correctly and not all of us learn or remember well. Experience here is important insofar as we can use it to demonstrate competence in the applications of the rules and tools. It is supposed to be the objective realm, subject to our ability to measure correctly. Memory also plays a role here. I would be challenged to apply much of what I learned in engineering school decades ago with any confidence.
Variations of the two types of thinking, comingling, and the influences of biases are always at play, so certainty or absolute correctness is elusive. There is however a dangerous type of thinking we may all be subject to. It’s called wishful thinking. We know it well and if we are practitioners in it, we now it’s capability to disappoint. We bring to bear what we have in deductive and inductive capabilities and we put the right bit of optimism and conjure really great scenarios. Sometimes wishful thinking blinds us to lots of really good inductive signals and deductive facts along the way. Some misapply the meaning of positive thinking to the process and don’t survive to tell about it.
So what is the right mix for the upcoming year? We know that there has been a lot of change amiss. The financial rules of engagement have been rattled by poor inductive, pseudo-deductive and far too much wishful thinking so as to create a fair bit of timidity. The way we are interconnected and interdependent in a multi-polar world present us with new data and rules as to what may or may not work. So how do we decide?
- Are we planning for a good year? Why so? Why not?
- Is uncertainty scary or energizing?
- What opportunities does a new playing field present?
- What do we induce, deduce or wish for 2010.
Happy New Year and Good Hunting!
What’s the Score?
Have you ever balanced a scorecard? What did you do? How did you decide what balanced meant? What did you do with the scorecard? Did you win? Was it a competitive win or was it a within the scorecard win? Would an outsider evaluate you as a winner without seeing your scorecard?
The balanced scorecard has been a source of lots of debate and consulting armies going about guiding organizations on keeping score. My observation has been that too often the exercise has amounted to filling data into a predetermined template from what data is available and accessible with follow on work to “interpret” what the scoreboard means. What continues to nag me is the distractions that some predetermined “balanced” views may precipitate.
First, no two categories are ever equal. But if you try to make them equal on a scorecard, you will get unintended consequences. The more something is claimed in a slogan, the less likely it is true in measurable practices.
“Employees are our greatest asset” is a statement of value, not a measure of opinions that are captured in an employee satisfaction survey score. What does the scorecard really measure? I would argue that, if asset quality matters, maybe it should measure how quickly we acquire good assets, secure the most out of the earning capacity, and then how quickly we dispose of bad assets. However, political correctness and actually treating people as assets is challenging and likely look bad on surveys. A scorecard would be sensitive to what the game is and how people are to be utilized at what stage of the game. The categories are dynamic as well as the numbers. Take a hard look at what tracking “training hours” does within very large organizations. You will find some interesting compliance systems that actually govern the speed of learning (check the on-line stuff) so that the scorecard hours are achieved. Yes, we are willing to slow down the quick studies and reduce their productive time for the sake of the “score.”
Financial strategy is even more dynamic and much more complex. What we desire to emphasize on the balance sheet or the income statement is very different for industries, organizations, health, global economy, volatility, growth, risks, competitors, asset mix, exposure … to name a few. So, the scorecard categories and weights are dynamic, not static, so the scorecard structure is not structural, but fluid. A structured scorecard in a dynamic environment will always lag the signals and thereby trigger responses inappropriately. Does it enable or constrain the best decisions? And, we can’t use the scorecard to score itself.
Customer satisfaction is a fascinating score to evaluate, if it leads to better decisions in time to make a difference, where it needs to make a difference. How often have we observed what appears to be poor business decision making in order to appease a “customer tyrant” for fear of low satisfaction scores? We all have. So again, the complexities of a dynamic world require sufficient agility in the relationship between what matters virtually so that the “score” leads to proper action. Again, what does balance in the score really mean and what does it really drive in behaviors? Does the statistical “dulling” effect hide the scary customer stuff happening on the fringes where risks are born and changes are incubating?
Now, for those that feel this is going in the direction of winging it and data anarchy, not so. Score is important, but balance cannot always be predetermined or should be hard-wired in dynamic environments. If life is quiet and stable and predictable, this may be an irritating and irrelevant sounding blog posting. I don’t know anybody like that anymore.
The questions that we should be vigilant about measurement and scorekeeping must be configured around decision making only. Data is useful for what I am about to decide. That’s it. The scorecard, scoreboard, or dashboard must fit the game we are playing and where and when we are playing it. Balance can be a dynamic challenge for multinational entities in a multi-polar world.
This should be exciting, if we agree. It is exciting because technology today enables transparency at the speed of light. Our interconnectivity and networked interconnections have the capacity to render a view to enable dynamic balance. Balance is a consequence of judgment and agility. Both require virtual transparency that grabs new and relevant lenses to look at what is happening when the decisions can alter the future most effectively.
Thoughts?
Just in Case
Just in case. When packing for a travel, what did we add to the bag as we said, “just in case?” Did we sufficient “in case” stuff that we paid extra weight fees for our baggage? When walking into the closet and seeing a wardrobe assortment spanning 6 years and 50 pounds ago, do we hesitate before reaching for something to put into the give-away bag saying, “maybe I’ll wear it keep it, just in case?” How about the files we keep in our desk drawer or in a section of our hard drives, just in case? Do any of the books on our shelf look brand new and unopened after a decade of taking up space, but we keep them, just in case? Are we saving five year old magazines for “when I have some time to read them?”
When setting standards or targets for performance, how large are the “safety cushions” of time we put between when we are done and when it is due, just in case? When preparing a presentation, how many additional slides do we build with details and tangential data, just in case? When ordering materials, printing out decks for a meeting, ordering food for a meeting, setting inventory levels, how much do we add for just in case? Just in time belongs to the confident, but just in case belongs to the fearful. How about our staffing and resource loading? Do we staff up for not coming up short on a peak day, just in case, then find things to do on the slack time?
Management by “just in case” is expensive. Not only is it expensive in inventory, it is costly in added complexity, capability decay, waste, but actually the creation of resource scarcity and often very poor fit. Just in case becomes the catch all phrase for the uncertainties in life, be they rational or irrational, be they quantified or not. How often do we ask the question, what will this cost in opportunity if the just in case doesn’t happen? There are plenty of data and tools that abound to rationally address tangible inventory and the science of supply chain management can transform much of the visible.
Let’s think about the opportunities lost because of just in case.
- What did we not do while spending our time on just in case?
- What did we not consider that was relevant because of the focus on the irrelevant baggage of just in case?
- How much of our focus is dulled because of lugging lots of just in case in our minds or in front of our eyes?
- How many resources sat idle in the wrong place on the wrong topic while we ran into scarcity where it counted because of just in case?
- How much time and how many resources did we tie up or consume on training too many on too much because it was easier to deploy something to a shotgun approach, just in case?
It’s a challenge. Focus is hard and hard choices are what engage our brains and challenge our habits. We may be at a really interesting fork in our lives. It may well be the fork where the direction we chose will require all of the focus, discipline and follow-through we can muster to succeed.
- How much baggage can we afford to bring along?
- Do the reasons or fears that determined what we brought along for “just in case” still determine what we should bring along for tomorrow?
- What are the factors that should determine tomorrow’s just in case?
- Are they determined by the consequences of what happened last time?
- How does the virtual and connected world change all of this?
Throwing the Flag
Those who follow sports know that the quality of officiating is receiving much needed and overdue attention. In fact, there is one officiating team in NCAA Football that is currently sitting on the bench for terrible calls in very important games. In fact, the poor officiating may have determined the winners and losers. Sports are a great place to talk about poor measurement because we’ve all seen it. With the advent of better technology and high definition instant replays some of the boo-boos are much more evident. Competent people in the business of evaluating performance of any type are very aware of the impacts of measurement and very skeptical of any decisions people make …. Measurement issues surround us …. I used the word competent intentionally because those that don’t pay serious attention to the quality of measurement and render opinions, advice, or recommendations on data or information are dangerous people to have on board.
Let’s stay with college football for a little longer. Bad calls lead to new conditions that redefine all of the subsequent plays. Some calls don’t end up having terrible consequences, but others do. (Apply these points to everything else … work, play, health, safety, purchases, promotions, politics, war ….) Let’s take the bad call that changed the outcome of the game.
- Rankings changed among the competing teams
- Who played at bowls changed along with the commensurate compensation and attention? Also, all of the people who went to bowls changed, … , the travel, vacations, and lots of other secondary and tertiary order effects.
- Coaches got fired, hired or moved. Lots of the press chimed in labeling winners and losers. Life changing events took place ….
- Different kids got recruited by different coaches….. And on and on and on….. the dominoes keep falling …
- This was due to just one bad call (measurement) that changed the game, just one game.
Apply that to any professional sport, the gambling industry, and the lives of the happy and despondent whose lives revolve around the sport … it continues. There is good and bad from all of this …but it is different. So the better team doesn’t always win, and it wasn’t from poor performance….
Now, how about business performance? Have we considered just how much is impacted by poor measurement? How many big and small decisions alike were made on the shoulders of a bad call? Was the bad call on the shoulders of bad information or data? How about performance appraisals, promotions, demotions and the like? Any capital spending decisions made on poor data? Did we ever spend bundles fixing something that wasn’t broken beacuse our data was crap?
Sports are changing and some for the better as our measurements improve.
How about what we do?
The Real Deal
While driving this morning I caught some news on the radio. One disturbing bit of news reported that a large defense contractor in Great Britain is facing potential fines of over $1 billion for alleged bribery paid in pursuit of business. This contractor is a major supplier to the US Department of Defense and the alleged acts took place outside the US. Still, the news should be disturbing to all of us. Many have heard the line, “That’s just the way it is over there. If you want to get business, you have to play the game.” The government of the United Kingdom does not agree! So, what’s the net value of that business when we deduct the penalties and fines? What will that do to their competitive position over the next ten years? Will people understand that bribery is abhorrent here, but acceptable there?
To the overwhelming number of ethical and principled firms, this is not about you!
After this last year of colossal failures in the financial system and unrepentant players, what should we expect from captains of industry? Last year we heard a similar line, “Everybody’s doing it. If we don’t follow suit and make the loans, we will not get our share of the money to be made.” Where is the money now?
I’ve read many written statements of values, ethics, behavior, and respect for investors, customers, employees and the public at large. So, how do we know they are more than paper? How should we know? The very saddening answer is that more regulation will precipitate. More controls, inspections, reports, hearings and constraints on productivity and value creation. What’s the real cost to the many precipitated by others? Do we really believe that we should know because a regulator will tell us it is so?
I know organizations that live, breathe and behave in accordance with great values and ethical standards. They are successful, competitive, and a magnet for people seeking employment. In fact, I wrote about one a few months back, May I have a word with you? …. Values. These folks are the real deal.
Let’s go back to respect for the stakeholders. How will the stakeholders benefit if those values and behaviors are the real deal?
- Investors will benefit from the confidence that their moneys are not sitting on a time bomb waiting to destroy returns and long term value.
- Customers will benefit because their prices don’t carry the burden of graft and decisions are easier when the integrity of the supplier is unchallenged by a clean track record.
- Employees will benefit from never facing a choice between earning a livelihood and behaving in alignment with personal values and beliefs about honesty.
- Society at large will benefit the most from the reduced costs, increased employment and better value without the burden of regulation and constraints to growth.
The list of benefits is big, too big for a blog.
So, who decides what is next? Who has the responsibility?
Let’s ask the person in the mirror for starts. How will that person make choices today? When we ask the same question tomorrow, what will be the answer?
