Mar 192018
 

Around the world, strategy workshops—also known as retreats or breakaways—are a favourite way to plan and review business strategies. Run them well, and they can play an extremely positive role in your firm’s success. Do it badly, and they’re a waste of time and money.

Having facilitated hundreds of them over the past 30 years, I’ve learned some valuable lessons in how to make workshops work. Here are some guidelines:

1.    Be clear about why you need a workshop at all. Why do you need to to discuss your strategy? What specific challenge (opportunity or problem) must you deal with? What should the outcomes of your deliberations be? Some executives have thought these questions through and can provide a useful brief to whoever will facilitate the discussion. But a surprising number are astonishingly vague, and even C-suite colleagues differ in their expectations. Many CEOs routinely jot “Strategy breakaway” into their diaries at the start of each year, and then scratch for a way to justify spending time and money on taking their top team away from the office for a couple of days. Their agenda typically centres on a review their existing strategy, how they’re progressing towards it, and what they need to do next, and no brief is complete without emphasis on “blue-sky thinking” or “disruption.” And, hey, there has to be room for “team building” and “motivation.”

But this generic template is no guarantee of success. In fact, without careful thought and preparation, and expert design, it may lead to boring and aimless conversations which in no way improve a firm’s competitiveness. And even if a good time is had by all, many people are likely to leave feeling, “What the hell was that all about?”

So what, exactly, should it be about? That’s Decision #1.

2.   Get the right people into the room. Since strategy informs everything a company does and the way it does everything, and since it’s widely seen as a top-management function, I t’s not surprising that only top teams get invited to most workshops. But this can be a costly mistake.

When CEOs ask me, “Who should we include?” I almost always say, “Everyone.” And I’m not kidding. Firstly, because you never know who’ll offer the most valuable insights or the best ideas. Second, because I think it’s important to have everyone hear the same message at the same time, as communicating it later is always a hassle and poor communication is a major cause of strategy failures. And third, because being invited sends a powerful message that “You matter. You’re important. We need to hear your opinions and ideas.” (While not being invited sends an equally powerful message: “You don’t matter. You’re not important. Your opinions and ideas aren’t worth anything.”)

Obviously, you won’t always be able to invite everyone. There will be times when you do need to confine sensitive discussions to just a few people. Or there might be logistical issues. Or it might be impractical to take everyone away from their jobs. Or doing it might be unaffordable.

But remember: the  first—and biggest—challenge in implementing your strategy is to take your people with you. Without their support, the wheels will spin and performance will be disappointing. Fat strategy documents and detailed strategy maps will be of little help. Yet while it’s an article of faith for senior executives to say, “People are our most important asset,” it’s a fact that more often than not, when it comes to strategy, they’re an afterthought.

3.  Recognise that people have different views of strategy, and confusion can kill a strategic conversation. Ask almost any group of even the most seasoned managers to define strategy and how to “do it,” and you’ll get an array of views. They walk into the room not only with different mindsets and different views of why they’re there, but also with different opinions on what strategy is all about and how to craft it. One person thinks competitors are the problem, while another says it’s a lack of R&D; one believes they should rewrite the mission statement, while another argues for developing some scenarios; one likes the idea of Porter’s “five forces,” and another votes for a debate about “blue oceans.” They zig-zag between visions and missions, from strengths to weaknesses, from threats to opportunities. Not surprisingly, this leads to poorly-informed and haphazard conversations that end with ambiguous intentions rather than firm decisions,

4.   Keep it simple. Keep it brief. This should be the guiding principle in every company. Strategy is partly a matter of analysis, choices, and decisions—and largely a social process. It’s easy to complicate, so you can easily make it impractical and unworkable. And although you might be tempted to chuck everything into your strategy, don’t fall into that trap. Simple language makes the right actions much likelier than wads of complex verbiage. A few clear ideas beat a laundry list of to-do’s every time.

START WELL TO END WELL

If your organization is to be a winner, you have to tap into the imagination and spirit of your people and they must all pull in the same direction. So they need a shared understanding of your strategy, and they must know what’s expected of them personally, and by when.

Getting their support starts from the moment you begin crafting your strategy. And it’s most likely when:

  • Your company has one strategy toolkit with just a few tools in it.
  • Your people speak a common strategy language.
  • They own the strategy.

For these reasons, I believe in starting a workshop with two building blocks:

  1. A short “Making sense of strategy” presentation—to suggest the tools and provide the language. It clarifies what strategy is about, what can be expected of it, and how it’s best created and implemented.
  2. “Strategy snapshot”—which captures the essence of the firm’s situation, options, and strategic priorities. It gets conversation going, and since the workshop delegates provide much of the information on which it’s based, they’re involved from the very start.
THE “STRATEGY SNAPSHOT”

To prepare for a workshop, I need to be thoroughly briefed—at least by the CEO, and perhaps by other senior people, too—and see whatever strategy documents you might have. I may also see various parts of an organization, talk to industry experts, customers, and suppliers, and spend time on desk research. And I reply heavily on questionnaires which are sent to everyone who’ll attend the strategy workshop—and maybe to  wider audience who won’t be there. This not only brings many voices into the process, but also gives people a sense of involvement and meaning. It also gives me a deep understanding of why a firm is where it is, what issues really affect its performance, and where the strategic conversation needs to go.

Then, looking at your business through the lens of my knowledge and experience, I develop a “strategy snapshot” from what I’ve learned and what it all seems to imply. This usually takes much longer than the workshop itself, but it always pays.

There’s no beating about the bush. My conclusions, comments, questions, and advice during a workshop are often provocative, and maybe uncomfortable. They untangle complex issues, make people face reality, and assist them in reframing the way they see things. They also enable us to cut straight to the chase and deal with what matters, instead of wasting workshop time trying to surface issues and figure out how to begin.

Your most urgent need may be to get back to basics and fix them. Or perhaps to counter a competitive threat or cut costs. Or maybe you should review your supplier network, rethink your “difference,” intensify your innovation efforts, redesign your business model—or even radically reinvent your business.

The “strategy snapshot” points to where the focus should be. In just a few slides, I sum up your firm’s current situation and its challenges—and suggest possibilities for action. 

This guides our debate, gets you and your team talking about the right stuff as quickly as possible, and leads to a simple, sound, and practical “strategy story.”

(Of course, you could argue that all consultants do this—hence the old joke that a consultant is someone who steals your watch and then tells you the time! But if you want someone who can cut to the chase, challenge your assumptions, push back against easy answers, and ensure a rich and robust strategic conversation, we should talk.)

BALANCING FIXES, CAPACITY-BUILDING, AND BLUE-SKY THINKING

Every business has to attend to countless short-term issues, while at the same time preparing for the future. You have to manage the present and the future concurrently—not sequentially. So improvement and innovation are both imperatives. How you balance your time between each depends on your circumstances.

The priority for some companies should be to “get back to basics”—they need to urgently fix what’s broken or not working optimally, drive down costs, ramp up productivity, or hire more sales people. Others should make tomorrow’s customers, investments, technologies, and value the focus of their strategy discussions. Mostly, though, it’s a bit of both.

Striking the right balance makes all the difference between success and failure.

I’ll help you find it.

TAKE-AWAY SLIDES FOR FAST EXECUTION

Companies love strategy documents. By now, though, there’s plenty of evidence that they’re almost always a waste of time and paper. Writing them takes longer than a workshop, and things change so fast that they’re out of date before they’re done. They get in the way of reality and destroy agility. They mostly wind up on a shelf or in a bin.

I’ve written plenty of them, but I now I hardly ever do. Instead, I capture all key decisions on a handful of PowerPoint slides, and give you a set immediately. That way, you can start executing your strategy right away. And you can keep adjusting your story quickly and easily to suit new circumstances.

FLEXIBILITY, NOT A FORMULA

I look at every consulting assignment through fresh eyes. Unlike many consultants, I never try to “force-fit” concepts or activities that are just plain wrong for you.

The process described here is not cast in stone. I’m not stuck on a single method or tied to one concept, and I won’t drag you through a prescribed set of steps. Strategy is too dynamic for that. Your needs are different to those of other firms; what you need to focus on today is not the same as yesterday. So I make sure that we do only what’s most appropriate to get you the best possible strategy. From start to finish, there’s a sensible mix of structure and flexibility.

  •  19/03/2018
Jan 312013
 

One question I’m constantly asked, by both consulting clients and business school classes, is, “When should you review and possibly change your strategy?”

A second question—one that’s almost never asked—is just as important: When should you rethink the way you make strategy?

The answer to both questions, as with most others in management, is “It depends.”

There is never a “right” time to take a fresh look at your strategy. After all, strategy is a dynamic activity. You may create it at a specific moment, but you execute it over weeks, months or years—and meanwhile, things change constantly both inside and outside your organization.

Let’s say you develop a five-year plan. Let’s say, too, that you’ve laid out in great detail what you expect to happen in your world from year to year, what you must do, and what results you will get. You bind that story into a thick document, and start moving.

In no time at all, though, the assumptions you made about the future turn out to be wrong. You try to execute your plan as well as possible, but the world you designed it for is not the world you find yourself in. There are many surprises. Things don’t go as smoothly as you’d like. Problems distract you. New challenges engulf you.

Politicians fighting for voters seem intent on making life tough for business. The economy  grows and slows. Regulators keep you on your toes with a string of new laws and adjustments to old ones. Machines fail. People present you with a constant flow of problems. Suppliers let you down. Competitors surprise you. Customers change their spending habits. And so on.

The result is, you spend more time fighting fires than thinking about the future. You miss some of your targets. And you realize that that you’re doing a lot of things that no longer make sense.

There’s no point in persisting with a strategy that’s out of kilter with the world. So you need to rethink what you’re doing. But it’s not enough to do it at long intervals, or as a one-off response to factors that have popped up on your radar screen.

NEW REALITIES DEMAND A NEW STRATEGIC CONVERSATION

If 2011 was a year of astonishing tumult and upheaval, 2012 is bringing even more of it. “The new normal” is defined by austerity, volatility, and surprise, and much of the world will struggle for years through “The Great Contraction.” At the same time, we face rapid and radical shifts in politics, society, the environment, regulation, and technology—and in customer and competitor behavior.

Today, virtually every market—for any product or service—is an emerging market demanding fresh insights and ideas.

To survive and thrive in this new era, companies need to take a new look at the purpose and role of business, what “value creation” means—and which stakeholders really matter. They need to out-learn and out-run the competition. They need to understand the “rules of their game” and excel at them, while simultaneously making innovation a way of life. And they need to balance long-term capability building with short term action.

Strategic thinking is a living process. Strategy is a here-and-now view of where and how you’ll compete, which will almost inevitably have to change faster than you might imagine. So you need to review it constantly, to be sure you’re dealing in the best possible way with emerging conditions.

But it’s not enough just to re-look at the assumptions you made and the decisions and choices that followed. The content of your strategy is obviously important. But equally important—and largely overlooked—is the way you got to it. In other words, the way you think about strategy.

Right now, job #1 for most executives is not only to reset their strategies, but also to rethink what strategy should do for them and how they use it. That’s job #1 for me too!

 This is no time for business as usual. Neither can you risk strategy as usual.

 
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  •  31/01/2013
May 272012
 

It goes without saying that leaders are driven to succeed—to do the best they can for both themselves and their organizations.

It also goes without saying that they expect their people to succeed—to do well in the jobs they’re paid for, meet and exceed targets, handle projects effectively, produce new ideas, create constructive relationships with colleagues and business partners, develop the people around them, reach their own potential, and so on.

Yet all too often, leaders set themselves and others up to fail. They “throw sand in the gears” of their organizations, by creating conditions in which under-performance is guaranteed.

That’s a hell of an indictment, so let me explain it.

For more than a decade, I’ve encouraged my clients to reduce all their strategies to a few goals and a series of 30-day action plans with specific people responsible for each result. This has four critical benefits:

  1. It forces people to break work down into “do-able” chunks, and to focus on the few things that really matter rather than the many which otherwise crowd their agendas.
  2. It puts immense pressure into an organization, as 30 days isn’t long and there’s no time for wheelspin. When it’s clear exactly what needs to happen, by when, and whose name will be called, people have to put their heads down and get moving.
  3. It enables you to see, very quickly, whether your strategy is on track or needs fine-tuning, and how the people responsible for various actions are doing. Fast feedback and accelerated learning let you deal with problems and opportunities in as close to “real-time” as possible.
  4. It enables you to quickly praise or reward people for a job well done, or guide, sanction, or replace those who don’t deliver. So the very process of driving your strategy becomes a powerful performance management process. And because success does lead to more success, celebrating some quick wins provides important motivation.

Making plans and assigning work is the easy bit. The hard part comes when you start reviewing progress. For that’s when things either get a boost or fall apart.

Every time you bring your team together, you have an opportunity to either turn them on or turn them off. The way you craft and conduct your conversations will either bring out the best in them or the worst.

Review meetings need to be both respectful and robust. So on the one hand, people must be treated decently. They must be listened to and given the sense that they are valued and their ideas count. But on the other hand, they need to know that your purpose is not to create a “social club” or win a popularity contest.

This is about work and results and progress. Everyone must know that they’re expected to deal in facts and well thought-through opinions, and that there’s zero tolerance for blaming, bluster, bullshit, or excuses.

I’ve sat through any number of these review sessions, in companies of many types. Some leaders get things right: people come well prepared, the conversation is informative and constructive, and they leave feeling positive and knowing exactly what they need to do next. But often, things break down quite quickly.

Typically, everyone pitches for the first meeting. The first few people to report back do it well. Mike, Sue, and Dumesani seem to have a grip on things and achieved what they had agreed to. And they’ve thought about what they need to do in the next 30 days. They get a “thank you” and a pat on the back. Smiles all around.

But then there’s a hiccup. Damien couldn’t do what he should have because he was still waiting for budget approval. Or a supplier had let him down. Or he’d had to deal with some emergency or other. Or he hadn’t been able to recruit a key person because the headhunters hadn’t come back to him. Or the IT guys hadn’t delivered. Or Jeff or Derek or Sam or whoever had been away for much of the month and hadn’t been available to discuss certain issues. Or…

What the leader should do when this happens is come down hard on the individual, question each of his “reasons” and make him explain why he couldn’t do something about them, demand that he take his plan for the next 30 days 100% seriously, and make it clear to everyone that such behavior is not acceptable. In other words, the “rules of the game” must be firmly established right from the get go.

What the leader actually does when she gets the ducking and diving is say, “Oh, OK. Thanks, Damien. Well, do try to sort those things out and get things moving before the next session. Now, let’s move on. Who’s next?”

In that moment, the leader has done two extremely dumb things: first, she has taught Damien that not meeting commitments is acceptable, that non-performance doesn’t matter. (And she has thanked him for letting the team down!) But even worse, she has taught the whole team the same thing. So her very first review session has set the tone for trouble.

When the next meeting comes around, one or two people don’t show up and more of them report that they haven’t done what they promised. Even fewer pitch for the third meeting and there’s a longer list of excuses. Meeting four gets called off because too many call in to say they can’t make it. Meeting five gets rescheduled a few times, but then doesn’t happen at all.

Game over!

Strategy reviews are, in effect, training sessions. You can make them work for you or against you. Clients who use my 30-day planning process say it’s the best thing they’ve ever done. The pity is that things so often start with a bang but end with a whimper. And that clever executives keep wondering why executing strategy is so hard, when it’s they who enthusiastically agree to a sensible way of working then show they didn’t really mean it.

Effective leadership requires tough love. Leaders need to show empathy, foster teamwork, and be unfailingly polite to their people. But they also need to instill discipline, enforce compliance with agreed procedures, and show courage in handling those who play fast and loose with their organization’s future.

Notions like “servant leadership, “principled leadership,” and “values-driven leadership” are all popular. However, if they’re not leavened with firmness, they cannot possibly drive performance and results. Being nice is no substitute for managing. Empowering people does not mean simply letting them loose and leaving them free to do or not do whatever they choose.

The buck stops on the leader’s desk. He owes it to himself to use the power of his position to make things happen. If he doesn’t, he’ll undermine himself because his people will know in a flash and lose respect for him.

If bad habits are allowed to creep into a business, it’s hard to get them out. Only the leader can stop them in their tracks. And strategy review sessions offer the ideal forum for doing it, because they usually involve senior people who, in turn, teach the rest.

Of course, virtually any other get-together—even those chance encounters in the passage where people share ideas or update each other  about projects—provides a similar opportunity. But the discipline, structure, and status of a 30-day review makes it special. Not to be wasted.

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May 232012
 

Every company today faces growing uncertainty and complexity. Executives are under increasing pressure. Employees are nervy, and many are not fully engaged in their work. So how do you stay competitive and keep producing results?

What you don’t need now is another complex formula. So instead, here’s a simple checklist to remind you of what’s really important and to keep you focused.

Keep it on your desk. Pin it on your wall. Share it with your team. Use it in your meetings and strategy review sessions. And if you think it’s just too simple, read it again, and ask, “Is this what I do?… Is this the way we work around here?… What must change?”

  1. Your #1 challenge as a leader is to take your people with you. So create a climate for high performance and engage them constantly in a rich, robust conversation.
  2. Accept complexity, but simplify everything you can. Cut through clutter and focus on the few things that make the most difference. You have limited resources and a lot to do, so don’t try to do everything and be everything to everybody.
  3. Know what you’re aiming for, and spell it out loud and clear and often. Make sure your entire team understands your purpose, strategy, values, and priorities. You can never communicate enough, so keep repeating yourself.
  4. Focus on your “right” customer … forget the rest. Create clear criteria for defining your “right” customer (industry, size, growth potential, reputation, buying power, ease of doing business, ability and willingness to pay, what they can teach you, etc.) Make these criteria clear to all your people. Be ruthless about customers that don’t fit—they’re a dangerous distraction and you can’t afford them.
  5. Get your “basics” right. Put “gas in your tank and air in your tyres” and do what you must to get your “engine” firing on eight cylinders, not four. Strike a balance between consistently meeting customers’ current expectations and surprising them with something new, better, or different.
  6. Relentlessly drive value up, costs down. It’s the only way to compete.
  7. Learn from everything you do, and share new insights with your whole team fast. The more you learn, and the quicker you do it, the more adaptable your company will become.
  8. Hold your course. Be boringly consistent and persistent. Don’t be tempted to zig-zag. Sustainable strategy might be an impossible dream, but you have to repeat yourself for some time to hone your performance and build key resources and capabilities.
  9. Be ready to change when you must … then do it with everything you’ve got. Gather all the information you might need. Think about what you might need to change, and how. Develop the strengths that will matter. Practice, practice, practice. And when the time comes, don’t dilly-dally—go for it!
  10. Pace yourself … when you think it’s time to make a new decision, ask, “Is this really the time? If it’s not, wait. Sometimes, doing nothing is best. In another day, week, or month, you’ll have more information and a clearer picture of what you need to deal with. And it’s quite possible the risks you see right now, or the challenges you think you need to respond to, will have come to nought.
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  •  23/05/2012
Mar 172012
 

When Greg Smith, a 33-year-old London-based Goldman Sachs executive director published reasons for his resignation in the New York Times on March 14, he was scathing in his criticism. In a knife-to-the-heart Op-Ed piece heavy on praise for himself, he wrote:

“…I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.”

“…culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief”…

“It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets,’ sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s Work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding.

“I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.”

Andy Rosenthal, the Times editorial page editor, told The Huffington Post that Smith had approached them about writing the article. “We checked him out,” he said. “…the whole idea of Op-Ed is to generate debate and discussion, so the more, the better.” The article has certainly generated plenty of both. Its all over the internet and according to BloombergBusinessWeek, book agents and publishers are keen to sign a deal with him.

THE FIRST RESPONSE

According to the NYT, Smith’s “wake up call to the directors” exploded “like a bomb” within Goldman. “He just took a howitzer and blew the entire firm away,” said one observer. Within a day, investors stripped $2.15bn from the bank’s value.

As happens in this age of instant opinions, citizen journalism, and social media, the story “went viral.” The public and the media quickly added fuel to the fire with a mixture of praise and condemnation. Smith was variously described as “brave,” “reckless,” “foolish,” “disgruntled,” and “disloyal.” The fact that he’d held back his resignation until he’d been paid his $500,000 bonus for 2011 drew snide jabs. But journalists who dug into his background and talked to people who knew him when he was growing up in South Africa reported that he had a reputation for integrity.

A Bloomberg News item in the San Franscisco Chronicle tackled Smith for his naiveté, implicitly supporting Goldman and saying what many business leaders no doubt thought:

“It must have been a terrible shock when Smith concluded that Goldman actually was primarily about making money. He spares us the sordid details, but apparently it took more than a decade for the scales to finally fall from his eyes…

“We have some advice for Smith, as well as the thousands of college students who apply to work at Goldman Sachs each year: If you want to dedicate your life to serving humanity, do not go to work for Goldman Sachs. That’s not its function, and it never will be. Go to work for Goldman Sachs if you wish to work hard and get paid more than you deserve even so. (Or if you want to make your living selling derivatives but don’t know what a derivative is, as Smith concedes in passing that he didn’t at first.)”

Forbes columnist argues that this event is a mere a storm in a teacup, and says the excitement over it will soon blow away:

“So what should our reaction to this be? No, not as clients of the firm, that’s obvious. Similarly for the management, what they need to change is obvious. But what should we, the people out here in the public and political square be trying to do about the company?

“Nothing of course, we should be doing nothing at all. For one of the great joys of this mixed capitalism and free markets system is that mistakes like those allegedly being made by Goldman Sachs are self-limiting, indeed, self-correcting.”

Of course, Goldman—the target of much criticism in the past few years—quickly denied Smith’s accusations:

We were disappointed to read the assertions by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman think about the firm and the work it does on behalf of our clients.”

WHAT’S NEXT?

So where do things go from here? How will Goldman deal with Smith and the continuing fallout? What does this drama mean for other banks—and, indeed, for other companies of any kind? (And let’s not forget to ask, how will Smith’s career be affected?)

Unfortunately for banks, they’ve made themselves a juicy target for outrage. When Smith’s article appeared, a lot of people probably thought to themselves—or said to others: “I knew it. Here we go again. Scumbag bankers. Can’t trust them an inch. Bastards got bailed out, but keep stealing our money!” So what’s likely out in the “public and political square” is that this story will get so much airtime it will be impossible to ignore. The media will continue to make a feast of it. Politicians and regulators will seize the chance to sound off, and maybe try to force change. The anti-capitalist, anti-business crowd will jam the infosphere and the profit motive will take another beating. Smith’s act will become a popular dinner table topic, the stuff of business school class debates, and a trigger for massive introspection at both Goldman and other firms.

Business leaders need to tread carefully through this minefield. The CEO of Morgan Stanley told his staff not to circulate the Smith piece. Jamie Dimon, CEO of JP Morgan Chase & Co., sent word to his people that they should continue to act in the above-board way they always had. In a widely-publicized e-mail, he warned:

I want to be clear that I don’t want anyone here to seek advantage from a competitor’s alleged issues or hearsay—ever. It’s not the way we do business.”

You can bet the bosses of other financial institutions have sent similar messages to their staff and clients, and will spend a lot of time and money trying to distance themselves from the blast and confirm that they’re above reproach. And you can bet that a lot of people, from spin doctors to corporate governance gurus, from HR executives to career coaches, from management consultants to IT security experts, will hop onto the bandwagon and make new work for themselves.

Make no mistake, this event has huge implications. It affects not just financial institutions, but all of business.

THE DIFFICULTY OF PROTECTING A REPUTATION WHEN YOU CAN’T PROTECT SECRETS

One of the most important social trends of the past half century has been the move towards openness and transparency. That’s a very good thing. But it doesn’t make life easy for business.

Windows to the internal workings of organizations are being forced wide open. Largely as a result of scandals at Enron, Anderson, and many other firms, corporate governance has become a growth industry. Firms are required to provide more and more information about themselves. They face a growing number of regulators and a growing tide of regulation, vigilant law enforcement agencies, and courts that are under pressure to impose severe sanctions for shenanigans.

News-hungry media are quick to spot wrongdoing. Consumer hotlines not only give disgruntled customers a voice, but also make it likely that one complaint will trigger a shitstorm of others. Facebook, Twitter, YouTube, blogs, e-mail, instant messaging, and other social media make it increasingly hard to keep anything under wraps, and easy to be a critic or spread dirt. And reasonableness, objectivity, balance, and truth do not always prevail.

Wikileaks, has created awful problems for governments, the military, corporates, and individuals by splashing confidential material all over the internet. A growing community of criminal hackers break into government and business databases, and don’t hesitate to fraudulently use credit card details or post personal information on the web.

Whistleblowers like Greg Smith have long been a concern to employers. But if once they were vilified, they’re now encouraged, protected, applauded, and rewarded—true social heroes. Their motives don’t matter; the fact that they’re insiders, and therefore must know what’s going on, gives their views credibility and clout. And in a verbal war between a whistleblower and a company’s leaders, the underdog invariably wins most sympathy and support.

Dealing with anonymous attackers is no easy task. Fighting back when your attacker is a valued member of your team, apparently with nothing to gain by opening up—and apparently of unquestionable integrity, too—may be worse.  The reputational damage that follows leaks is hard to contain or fix. A carefully-crafted image that has taken years to establish can be shredded in an instant.

VALUES DON’T GUARANTEE “GOOD” BEHAVIOUR

Surveys show that public trust in companies and their executives is at an all-time low. The trust level in many teams is also nowhere near where it should be. So what now? Do you demand that your new hires all sign confidentiality agreements? (And how enforceable are those, and do you really want to explain yourself in court?) Do you require the same of the people you already employ? How do you deal with those who refuse? How do you deal with violators?

According to Smith, Goldman has a culture problem. He has just provided the culture-change crowd with new inspiration—and a new promotional drum to beat.

One of their favorite tools is values. “Values-based management” (not the same thing as value management) or “managing by values” is a hot fad, and thanks to Smith, just got hotter. The theory is that if you spell out how you expect your people to behave, they’ll stay on the straight and narrow, be nice to each other, bust a gut for customers, and produce innovations galore. But that’s a very big “if.” And anxious executives should beware: changing culture is never easy and always slow, and values are no silver bullet. So while we’re in for a noisy debate about all this, and opportunists will make pots of money peddling “new” ways to make things better, don’t expect miracles.

Most values statements include the same handful of terms—”integrity,” “respect,” “innovation,” “service,” “responsibility,” “teamwork,” “accountability.” Yet precisely what these mean is often open to interpretation. And you have to ask: if this guff  features so strongly in business books and leadership courses, if so much prominence is given to it in company documents and presentations and on office walls, and if it’s discussed so often and so seriously in team-building sessions and strategy workshops, why is “walking the talk” so uncommon?

The first reason is that it’s damned difficult. (The 10 Commandments haven’t done too well, have they?) It’s one thing to say that companies would solve many of their problems if they “just did the right thing,” but it’s quite another to actually do it. Values that sound so right when you adopt them are almost certain to clash with future circumstances, and what then? How much “flexibility” should you tolerate? When and how should you bend the rules? After all, values can’t be cast in stone … or can they? Should everyone be allowed to bend them, or just a special few?

The second reason is that all too often the very people who espouse a set of values are the ones who violate them. And are seen to violate them. They set a bad example—”Do what I say, not what I do.” Perhaps they never really believed in those values in the first place, but needed something to improve their company’s performance and thought a values statement might do the trick. Or maybe they were just humouring the HR department. Or they just wanted to be seen to be standing for the right things and to be in tune with the latest management thinking.

Individual and groups all have values of one sort or another. These may be either implicit or explicit. But it’s sheer delusion to think that merely drafting an explicit set of values will keep a company out of trouble. Take another look at Goldman’s response to Greg Smith:

“We were disappointed to read the assertions by this individual that DO NOT REFLECT OUR VALUES…”

This begs several questions: What exactly are those values? How were they defined and how are they communicated? Who champions them? How rigorously does the firm test itself against them? What sanctions exist for violating them?

It also illustrates the high probability of mixed messages about this very central, very potent subject. Leaders do not always send consistent signals. People interpret things differently. And they misinterpret things very easily.

For all the value in  values, there’s also a risk in making a big deal of them. When you tell your team that you expect them to adhere to a certain code, every word immediately becomes a potential rod for your own back. From the minute you utter them, the people around you listen, watch, and wait: “Oh yes … let’s see if she really means this.” And if you’re not 100% resolute and consistent in your own behaviour, their response will be, “If she was so serious about those values, but then didn’t stick to them, what else is she not being honest about? How can I trust her about anything?”

DID SMITH DO THE RIGHT THING?

It’s easy to be critical of corporate behaviour—and much of it deserves major criticism. Whistleblowers do have an important role to play in exposing corporate misdemeanors and ensuring that executives are held to account. But while Smith complains that “It makes me ill how callously people talk about ripping their clients off,” he also admits, “I don’t know of any illegal behaviour…” No doubt, we’ll hear more about that. Meanwhile, several clients have commented on the internet that they use Goldman because it gets results for them.

Smith spent 12 years at Goldman, in New York and London, so had plenty of time to choose to leave. For at least a decade he “recruited and mentored candidates through our grueling interview process”—most likely in the last 10 years of his career there, not the first. So how was he able to suppress his growing disgust at Goldman’s ethos and its leaders, and what did he tell those young people? Why did he agree to keep selling something he abhorred?

In his essay, he makes a strong effort to establish his own bona fides, but doesn’t say whether he ever spoke up before he savaged the hand that fed him. We’re left to guess whether the practices that caused his disappointment in Goldman in any way helped him earn his bonuses.

Smith isn’t the first person to leave a firm in a public huff. He won’t be the last. But his use of the New York Times to strike at his employer was a particularly spiteful move.

The Greg Smith/Goldman Sachs case is a special one in many ways, and the story is a work in progress. It has a long, long way to run.

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  •  17/03/2012