Enterprise Success Requires A Clear View Of Actuality
The vast majority of organizations hold some kind of leadership meeting every week. Key members of the company inform the management team and the leader of the organization of successes and progress, and raise concerns about initiatives that are not on the right track, stagnant metrics, or other potential problems on the horizon.
As in all leadership settings, it is critical for companies to collect both positive and negative real-time information to customize strategy and tactics as needed. This is even more important in a crisis.
When Alan Mulally arrived in 2006 as President and CEO of Ford Motor Company, Ford was facing an existential crisis. While many executives would have been warded off from such a serious challenge, Mulally was forced to leave his leadership position at Boeing and move to Ford for precisely that reason: the chance to revive an iconic American company.
Mulally was an outstanding market leader at Boeing, serving as the CEO of the Commercial Aircraft division and leading the development of the Boeing 777 – the most profitable aircraft in the company's history. He also helped guide the company through the September 11 crisis with a transparent, team-based leadership approach. Despite this experience, Ford was a unique leadership challenge.
I recently heard Mulally describe one of his first meetings with the leadership team at Ford. Everyone was prepared with their updates and reported an overwhelming number of “green lights” or initiatives on the right path. However, it was clear that these updates were inconsistent with reality. Although Ford was on track to lose $ 17 billion in 2006, Mulally's key executives signaled that everything was going according to plan. This could only have been the case if it was planned to lose a record amount.
Mulally quickly realized that Ford's previous leadership had created an environment and culture in which leaders felt insecure when sharing bad news or potential problems. As a result, the management team has not highlighted critical issues or brought them to the table for leadership resolution. Ford's management lived in a world of ignorant bliss, compounded by lack of trust and accountability.
Mulally clearly expected his team to value transparency first and foremost. He wanted managers to highlight potential issues – red and amber lights instead of green ones – so Ford can address issues and blind spots openly.
Slowly but surely, Mulally's team came to meetings with less than outstanding reports, and the leadership began to get a better idea of the company's problems. This clarity was critical to Mulally's larger plan to revitalize the company based on clear visions and goals.
Ironically, when Mulally used organizational openness to revive Ford, a regression of transparency at his former employer, Boeing, has now brought the company into a crisis. Even before COVID-19 started, Boeing was struggling with the aftermath of its catastrophic launch of the 737-MAX with massive financial ramifications.
A primary responsibility for each leader is to create an environment of psychological security and trust that enables their team to bring problems for analysis and debate to the surface and to ensure that all ideas can be heard without retaliation or slander. While hiding or downplaying problems leads to more harmonious management meetings, in the long run this leads to catastrophic failure.
That is truer today than ever. Even the most successful companies face major challenges, and company dashboards should be filled with red and yellow lights today to highlight and address these issues. Managers must also encourage new ideas and perspectives to be evaluated and discussed, not to be dismissed. Ignoring problems and running meetings where everyone agrees is a recipe for disaster.
With guidance we harvest what we sow. If you don't offer your team a safe environment to challenge each other and highlight potential problems, you will inevitably sink those problems without warning.
"Show me the incentives and I'll show you the result." – Charlie Munger
Contribution to the Branding Strategy Insider by: Robert Glazer, founder and CEO of Acceleration Partners
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