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Archive for February, 2009

Food Safety at a Crossroads

Friday, February 27th, 2009

Human nature would like us to believe the incident involving Peanut Corporation of America (PCA) was an honest mistake.  It wasn’t.  The salmonella outbreak involved deception, cover-ups, and lies, where numerous warning signs that something wrong existed.  In the book, Without Warning, author Rodney Johnson describes such an event as a silent problem, a problem that is being avoided, neglected, and in this case, intentionally silenced.

 As is common, when a silent problem is present, individuals closest to the problem know a problem exists.  For example, leaky roofs and a multitude of unsanitary conditions were present at PCA.  And several inside the company knew it had shipped product that initially tested positive for salmonella. 

 What’s the solution? 

 This might seem obvious, but we must realize government oversight will never be the only solution.  The first line of defense must lie in creating programs that empower employees to do what’s right.  This is detailed in the book Without Warning where it states that the first tactic must be to make the problem visible.  This could be achieved by creating a 1-800 whistleblower hotline for employees at any FDA regulated food facility to contact.  The second tactic would make the problem memorable.  I’d recommend the FDA create a series of films, posters and a website informing employees what would be considered an unsafe food environment.  The third tactic would provide the FDA direct access to all testing results from approved laboratories, which they do not have today.

 Only when the government empowers its citizens to do what’s right, will stories similar to PCA be avoided.

Failure DENIED

Thursday, February 26th, 2009

It’s almost been a year since Bear Stearns hit their speed bump head on.  With the thoughtful oversight of the Federal Government, it was brokered, and the entity saved.  Then along came AIG, CitiGroup, Fannie Mae, Freddie Mac and others.  The only one allowed to fail was Lehman Brothers, which most believe was a huge mistake.  Today, more and more companies are bellying up to the “too big/too important to fail” trough.

Is this a trend?

One thing we must realize in this unfolding story is the importance of the media and PR.  It shapes  perception, policy and now the economy.  Yes, the economic stimulus is analagous to Willie Sutton’s famous response to the question why he robbed banks.  Sutton’s said, “Because that’s where the money is.”  Today we realize the banks no longer have the long arm on the money supply, its the Federal Governement.”  And if your business or industry is challenged in the current economic environment, you need to navigate your way to where the money is, a.k.a. the Federal Government.  But here is where this big pot gets really dicey.  You need to talk their language.  What is that language? It’s simple.

  1.  Jobs - save them regardless of the price
  2. National Security - energy, defense…
  3. Too big to fail

So as you scour vaious media, you’ll begin to see how companies are positioning for bailout and stimulus funding.  But more importantly, in too many instances the government will play an evolutionary role with some stamped, “Failure DENIED” on the paperwork.

A Few Good Men

Monday, February 23rd, 2009

Wesley Clark, retired general, former presidential candidate and touted as a possible vice presidential running mate for President Barack Obama was recently named co-chairman of Growth Energy which is described as “a new, proactive group committed to the promise of agriculture and growing America’s economy through cleaner, greener energy.”   On the surface, I found it interesting that an agribusiness association would choose a retired general as their figurehead.  Most of the time, generals find their next career in military related industries.  What gives?

In recent months, the financial health of the once fast growing ethanol industry has been challenged.  For instance, the second largest ethanol producer Verasun is in bankruptcy proceedings, and several others are operating in the red.  To makes matters worse, the industry is quickly approaching the ethanol saturation point at the current 10% gasoline blending cap.  One of the recent stated goals of Growth Energy is to increase the blending cap to 15-20%.

Obviously, Wesly Clark was offered this new, high profile position for numerous reasons, such as his credentials and his ties to the legislative body.  His marching orders are simple. 

  1. Help move the blending cap from the current 10%, to 15-20%
  2. Increase the perceived importance of ethanol as a part of national and energy security
  3. Maintain the current subsidy program in place, which is due for renewal
  4. Position the industry as one that should not be allowed to fail

These are tall orders coming from an industry that could be desperate.  Does Clark have the influence and stature to make it happen?  If you’re an investor in the ethanol industry, you can see the desperate hole you’re in - you have to do something.  But I’m wondering if Clark can make a difference.  From my perspective, he can only maintain the status quo at this point.  Is Clark’s position one of offense, but rather one of defense.  Time will tell.

Compensation at a Crossroads

Monday, February 23rd, 2009

In my book Without Warning, compensation is listed as one of five most likely areas silent problems reside.  On the surface, this might appear to be in error.  It isn’t.  Compensation plans are created to drive behavior and results.  Well designed and thought out plans should create focus and drive positive results.  Likewise, poor plans would drive poor results. 
Well over the past year, many compensation plans have come under scrutiny.  Many that were perceived to be solid, were actually weak.  For example, the financial crisis/meltdown primary catalyst could be tied back to compensation plans.  For instance Bob Sutton in his blog writes about how the incentive plans at Washington Mutual was a driving force behind their financial collapse.  A recent Wharton article discusses incentive plans that have gone.  The reasons for incentive plans are logical, and difficult to argue against.  After all, you want your employees to be focused and do their best work.  However, creating an incentive strategy that drives results without being blindsided years later can be challenging.  After all, we’ve all seen incentive plans go bad, which are really Silent Problems, just waiting to happen.

Success, Risk and Failure

Saturday, February 21st, 2009

The economic crisis is cascascading across geographical boundaries, and across organizations and their core competencies.  Right now, a heads down, do not fail attitudue is becoming pervasive.  Is this a silent problem?  Is this prescription worse than the disease?  Will our ability to survive to tomorrow inhibit our ability to survive into the future? 

Unfortunately when it comes to innovation, a direct link between risk, failure and success coexists.  One might even say, a codependency between them is present.  Here is a video from Honda worth watching.  It illustrates that out of the shadows of adversity, success often triumphs in ways we never thought possible.

 

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