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A MBA CAP Initiative At Work

Sunday, May 31st, 2009

“The CAP Iniative resets the silent problem, resets the questions, and begins to reset the behaviors and actins of the participants.

When an organization or possibly a segment of society faces a silent problem (a problem that is being avoided, neglected or going unnoticed), they can be difficult to solve. In recent months, MBA programs and their role in the financial collapse of 2008 has become an intense discussion (I discussed it here). What role did they play? Should graduates embrace a code of ethics? How should MBA programs change to prevent such situations in the future?

In my book Without Warning, I state that silent problems are different and the most effective means to solving these problems is by creating a CAP Initiative. This is where the solution is formulated and embraced by those closest to the problem. So in the case of MBA programs and their students, the solution should come from the students, not from the institution. Interestingly, this is exactly what is underway at Harvard, and is reported in The New York Times. The oath states:

Welcome to the MBA Oath. The oath is a voluntary pledge for graduating MBAs to “create value responsibly and ethically.” Our goal is to begin a widespread movement of MBAs who aim to lead in the interests of the greater good and who have committed to living out the principles articulated in the oath.

Our near-term goal is to get at least 100 graduating Harvard Business School students to sign the oath. We hope this will a) make a difference in the lives of the students who take the oath b) challenge other classmates to work with a higher professional standard, whether they sign the oath or not and c) create a public conversation in the press about professionalizing and improving management.

Our long-term goal is to transform the field of management into a true profession, one in which MBAs are respected for their integrity, professionalism, and leadership. We hope to see hundreds of thousands of MBAs take the MBA oath, or something like it, as a step towards realizing this vision.

On this website, you can read, download and sign the MBA oath. You can read about us, the history of the MBA degree, and articles about how people think business schools need to change. You can also volunteer to get involved. We hope you do.

The Columbia School of Business has a similar but different code in place along with a website to address issues related to ethics, and be can viewed here. In the Honor Code FAQ section, here is an example:

What does “not tolerate” actually mean?

“Not tolerating” those who have violated the Honor Code means that you feel an obligation to take action on behalf of the School, the alumni, current students and yourself to protect the integrity of the School.  Your individual judgment will need to be applied to the unique circumstances you may face.  Taking action can mean having a one-on-one conversation with those you observe violating some aspect of the Honor Code, notifying cluster leadership, or formally bringing disciplinary action by notifying the MBA assistant dean of student academic affairs or EMBA assistant dean. 

The initiatives now underway represent the starting point, not the end point. Now the wave needs to be spread, and similar initiatives need to be implemented across every MBA program around the globe. However I must state, if it is going to stick, its the students that must be leaders in this initiative. Not the School. Not the professors. Its the students that must lead, embrace and enforce. It will only then have a major impact on the current status of the MBA and its perception. The Harvard MBA group sums up the how and why of a CAP Initiative well. They state:

Who We Are

We are a group of second-year students from Harvard Business School. We aren’t from the administration. We aren’t from the student government. We aren’t part of any formal group. Yet. We are a group of MBA candidates who want our degree to mean something more than it currently does. This oath is our way of laying out the principles of what we think an MBA ought to stand for.

Well stated. Your thoughts?

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Avoiding and Identifying Silent Problems

Friday, May 29th, 2009

I was over at Wally Bock’s Three Star Leadership Blog yesterday where he does a weekly overview of some of the top business blog articles. Wally pointed to the Great Leadership Blog, and the article Would Your Peers Vote For You? As is often the case when I read insightful articles, it struck a cord with me. Simply because it was so relevant to the Silent Problem phenomenon I present in my book Without Warning. The reason being, the individuals closest to a silent problem or a potential silent problem are in the best position to avoid, identify and solve them. Here’s what the crux of the article pointed out.

A few years ago, I attended an executive development program at the University of Virginia’s Darden School called Leadership for Extraordinary Performance. We were all required to do a 360 assessment as a part of the program, using the Leadership Practices Inventory. As we reviewed the results in class, the instructors, Jack and Carol Weber, told us about a piece of research they did. Having conducted hundreds of these programs using the LPI, they decided to do a study to see which rater group – manager, direct reports, or peers – were the most significant predictors of promotability. They tracked down program graduates to see who had been promoted, and compared their 360 scores to those that had not been. The results were surprising them; but by now you’ve probably guessed the answer – it was peers! That was a wake-up call for me, and changed the way I work with my peers and how I think about leadership development.

It’s a blinding case of the obvious, yet one we too often forget about. It also points out why some of the best leaders are also most in tune with their employees, not just senior management. Peer observation is a powerful business tool. For instance in my book, I state, “It’s the individuals who are closest to the problem who can see ir for what it’s worth.”  

Use and leverage the peer observation tool. It will provide great insight and rewards.

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Silent Problem Inside China

Tuesday, May 26th, 2009

In my book Without Warning, I refer to ISMs as a place where manysilent problems reside. In this classification, ISMs related to gender, race, generation and culture exist.  The challenge for the ISM category relates to how difficult they can be to dislodge. In effect, they’re engrained inside the organization, the culture, the society. And since they’re engrained, they’re difficult to dislodge.

Recently I was reading “The Economist” and came across the book review “Poorly Made In China” by Paul Midler. It states:

Factories will do anything to please. Prices are famously low and production cycles short. His clients returned from their initial trips to China stunned by how quickly factories became proficient and puzzled by how much could be done so well, so fast, so cheaply. They were right to wonder.

Most of Mr Midler’s work is coping with what he calls “quality fade” as the Chinese factories transform what were, in fact, profitless contracts into lucrative relationships. The production cycle he sees is the opposite of the theoretical model of continuous improvement. After resolving teething problems and making products that match specifications, innovation inside the factory turns to cutting costs, often in ways that range from unsavoury to dangerous. Packaging is cheapened, chemical formulations altered, sanitary standards curtailed, and on and on, in a series of continual product debasements.

The first line of defence against compromised products are the factory’s clients, the importers. The moment they begin suspecting a Chinese manufacturing “partner” and want to discover what might be unfolding is the moment they become particularly eager to find people in China like Mr Midler. That suggests they want information. But, as Mr Midler discovers, they are finicky about what is found. When suspicions turn out to be reality, all too often they become unhappy—miserable about resolving something costly and disruptive, yet terrified about being complicit in peddling a dangerous product. This is particularly true if the problems could go undetected by customers. Better, to some extent, not to know.

It’s the last paragraph that spells out the Silent Problem phenomenon and the “why we avoid” stigma. A place where problems reside unsolved and often times, morphing into a new and higher form. When they’re unleashed, they’re commonly toxic. So if you’ve been following “Made in China” news in recent years, you’re likely not surprised that China has strong cultural underpinnings. After all, its a culture steeped in history dating back thousands of years. Yet I find it surprising that many companies look at the cost side of the ledger, while avoiding the risk side. To avoid a Without Warning event such as lead tainted paint in toys, companies must look at both sides of the equation. Risk & Reward. Unfortunately, many companies are just now beginning to understand the risks.

Although I have yet to read Poorly Made in China, this excerpt adds context to this important subject. And if the quality drift is cultural in scope, changing it will be difficult for companies to a achieve.

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Supply Chains Being Stretched

Thursday, May 21st, 2009

I continue to think that the No. 1 challenge to a strong rebound is relates to supply chains and their integrity.  I started this rant several months ago and now some of the main stream media are starting to report on this issue. For instance over at WSJ, they ran a article titled, Clarity Is Missing Link In Supply Chain.  They state:

The reason is now starting to become clear. The world’s complex “just in time” manufacturing supply chains are making it increasingly tough for Zoran, and any other single link in the chain, to know what’s going on just a few links away… The recession has exposed a harsh side effect of the supply-chain system. Because modern industry rewards suppliers with the leanest inventories and fastest reaction times, when economic crisis struck, tech companies up and down the line contracted as sharply as possible in hopes of being the ones to survive.

Most manufacturing and assembly companies are exposed to this problem, whether they like it or not. And when demand turns upward, the real bumps in the road will be exposed. It’s in the best interest of all related parties in the supply chain to increase lead times and expose their projected needs to the supplier partners. If not, a Without Warning Event will occur, which will cause the supply chain and related partners come tumbling down!

Your thoughts and insights welcomed…

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The MBA Dealership

Wednesday, May 20th, 2009

Good things can emerge from recessions . Opportunities that would have normally been impossible to achieve during good times. One of those “good things” is exposing the MBA dealership. Yes, I said MBA dealership because in many respects this is what they’ve become. They bring in product, spruce it up a little bit, and then put it out on the lot for sale. And the top dealerships like Harvard, Wharton, MIT, Stanford and others are recognized as the top MBA dealerships in the US .  This is based on salaries when their students obtained when students exit their lot. Obviously, the “Value Add” component is sought out by the by some of the brightest and most talented students on earth. During their period in residence, they receive instruction on statistics, process & procedures, and optimization, but not necessarily the artistic nature of business. They learn about finances, and how to make them go zoom, zoom, zoom. They learn about leadership, not necessarily how to effectively lead. They may learn about ethics, not necessarily what it means to be ethical (fyi, a mojority of MBA students admit to cheating while earning their degrees). And of course there is the club. That place where fraternal brothers and sisters meet in their post-MBA years, connecting them to the world.

Over the past decade or so, new MBA dealerships have been constructed, and existing dealerships upgraded. Dealership demand from incoming and outgoing students grew. The pump was primed and the machine well oiled, and the dealerships rose to the occassion. The dealership was bustling, students were challenged, and graduates compensated for their time and hard work.    However, here is what I’m pondering. Has the MBA dealership been tainted by the recent financial collapse of world markets? Has demand for MBAs from the financial centers around the world declined? Has the perceived value of an MBA diminished? Are Business Schools to Blame? Are business schools the solution?\

Time will tell what the answer is to some of these questions. However, early indications aren’t good (see BusinessWeek report). I’m positive a huge wakeup call has been issued to the MBA dealerships and their students. What do you think?

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Jim Collins & Silent Problems

Monday, May 18th, 2009

In recent months, it appears that “failure” and learning from them appears to be a fresh theme in business books. For instance, Jim Collins just came out with “How the Mighty Fall.” Although I may not be a huge Jim Collins fan, he is a great writer that is able to sell his ideas. And How The Mighty Fall will be no different. Interestingly, Collins speaks directly to the heart of Silent Problems in his Stage 3 analysis. From Business Week: 

Stage 3: Denial Of Risk And Peril:As companies move into Stage 3, internal warning signs begin to mount, yet external results remain strong enough to “explain away” disturbing data or to suggest that the difficulties are “temporary” or “cyclic” or “not that bad,” and “nothing is fundamentally wrong.” In Stage 3, leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data. Those in power start to blame external factors for setbacks rather than accept responsibility. The vigorous, fact-based dialogue that characterizes high-performance teams dwindles or disappears altogether. When those in power begin to imperil the enterprise by taking outsize risks and acting in a way that denies the consequences of those risks, they are headed straight for Stage 4.

The role of Silent Problems and the resultant Without Warning events are paramount in every organization. Those that deal with them upfront have the Good to Great mentality.

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Delivering Bad News

Friday, May 15th, 2009

There is an art and a science to delivering bad news. At the very least, there should be honor and grace associated with the act. Unfortunately, recent news reports on several fronts would suggest that this curriculum is absent at most MBA schools, including the likes of Harvard… For instance, on May 14th Chrysler delivered the bad news to some of their loyal dealers, and then GM followed suit a day later. This is what Blomberg reported,

May 14 (Bloomberg) — A half-century of Chrysler car sales ended when Eldon Howe received a delivery from United Parcel Service Inc. That’s how Howe learned that his Beacon Sales Inc. in Charlotte, Michigan, was among the dealers targeted to be shuttered as bankrupt Chrysler LLC prunes its retail outlets in a restructuring led by Italy’s Fiat SpA.

“We got the letter today from UPS,” said Howe, 78, who founded Beacon 55 years ago in the central Michigan city about 110 miles (177 kilometers) west of Detroit. “I’ve done this all my life,” he added. “I haven’t done anything else.”

Whether store closures were warranted is not at the heart of the issue. Many of these stores likely should have been shuttered. However,Chrysler weazled out by delivering bad news via letter via UPS. Excuse me, but I’m appalled at the very act. What about the loyalty that their dealers extended Chrysler during the good and bad times. Yes, there is the “Legal” and then there is the “humane and respectable” means of doing things. Unfortunately, this speaks volumes about the condition of Chrysler, its leadership team, and why it might not not deserve to survive going forward.

In Obama speak, here is what I want to know.

  1. Who came up with the letter idea?
  2. Who runs Chrysler at the moment, accountants and lawyers?
  3. Can Chrysler ever be trusted?

Relationships have been broken with a letter. Is there a reason why Chrysler should be trusted in the future?

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Silent Attrition

Thursday, May 14th, 2009

Organizations, their suppliers and their customers are constantly morphing and changing.  New products enter the marketplace, new value propositions tested and fresh incentives designed to stimulate demand created. The marketplace is in a constant state of flux.  Add into the mix today’s uncertain economic landscape What was good yesterday is considered mediocre today.  By the time a business figures this out, the markets moved.  The result, a Silent Problem that becomes costly on so many fronts.  For instance, I just came across this article over at Forbes titled, Executives Have No Idea What Customers Want. Here are but a few tidbits.

Nearly half of consumers (47%) say they don’t believe company executives understand their experiences, citing problems such as rude customer service staff or employees who provide the wrong information or never solve the customer’s problem. More than one-third (41%) of the customers who take the time to complain don’t think companies listen to or act on their feedback.

But that doesn’t mean customers are doing nothing. On average, more than half will defect–leaving a company flatly–based on bad customer experiences, without ever telling the company why.

And the problem doesn’t end there. Nearly nine out of 10 customers will tell their friends and colleagues about their bad experiences, creating a negative ripple effect in the prospective customer base that has serious implications for a company’s future success. Yet the executives we surveyed thought that only 20% of customers shared the news about their bad experiences–a significant mismatch with the customer view.

And the biggest misunderstanding among executives? If customers don’t complain to them, it means they don’t have a problem and everything is fine. This is the silent but deadly company killer.

It’s the last paragraph that captures the essence and danger of silent problems, “If customer’s don’t complain to them, it means they don’t have a problem… This is a silent but deadly company killer.”

Surprised? You shouldn’t be. Today, many companies discourage customer feedback by putting in phone systems that are difficult to navigate and virtually impossible to lodge a complaint. They create corporate websites that promote their products, yet don’t have a section to lodge a complaint . Companies create customer service departments, yet complaints fall into a black hole. Yes, many companies live in a ”feel good” environment where complaints are not sought, much less allowed.

If you want to know what your customers are thinking, provide them access by allowing for their voices to be heard. If you don’t, a Without Warning Event is likely just around the corner. Beware!

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A Problem That Is Already Half Solved

Thursday, May 7th, 2009

Southwest has and continues to be a much admired airline and company, despite its recent economic downturn. They have been a leader on so many fronts, especially as relates to moral and empowering employees to do whats right. Yes, Southwest reinvented the airline industry. So I was surprised when I read a Bloomberg article titled, “Southwest Slows Growth as Slump Dents ‘Golden Shield.’” This was my special nugget as relates to Silent Problems.

Southwest’s losses have been due in part to its strategy of locking in fuel prices in advance, as far out as five years. Masterminded by Kelly, the contracts helped ensure profits as prices rose. They became a liability when fuel rates tumbled 65 percent last year after a July 3 record.

In December, Southwest replaced its hedging contracts to minimize future losses. It has since resumed hedging, and now goes out only as far as 24 months.

‘Dangerous Competitor’

“One of the neat things about Southwest is that they have problems, but they recognize them,” said Michael Boyd, president of aviation consulting firm Boyd Group in Evergreen, Colorado. “That means the problem is already half solved. That makes them a very dangerous competitor.”

Wow. Words of sage advice. Yes one of the goals of being a leader is to position your organization to become a “Dangerous Competitor.” And one of the best paths to becoming a “dangerous competitor” is to simply solve the problems that your organization interfaces and deals with on a daily basis. Avoid the desire to avoid. Tackle those tough problems up front. And put the problems behind without fear.

In my book, Without Warning, I present why problems are avoided, and why that’s Dangerous. Secondly, I discuss how problems that are avoided rarely fix themselves, but more importantly, how they morph and turn toxic over time. And third, why silent problems tend to be the most dangerous problems of all. Because when they finally surface, they in effect become a Without Warning Event. This is why this book is essential reading to everyone striving to become a dangerous competitor.

Are you up to the challenge and the task?

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“Is she a bully, or just a bold leader?”

Tuesday, May 5th, 2009

More than half the top administrators in place when Meria Carstarphen became St Paul Public Schools superintendent in 2006 have left. At the same time, the senior administration has expanded, fueling a 20 percent jump in salary costs for that group. To Carstarphen’s critics, these numbers reflect a bullying management style that has driven away valuable staff, combined with costly administrative reorganizations of questionable value. Carstraphen declined to comment for this story, but her defenders say the turnover is typical for an organization undergoing change…  by Doug Belden, Pioneer Press, May 3, 2009

This story raises an interesting and challenging question,”Is she a bully, or just a bold leader?” Personally, I’ve followed Carstarphen’s leadership style from a distance. I’ve interfaced with several leaders inside the St Paul Public School system. I’ve attended school referendum meetings where Carstarphen was present. But who gets to decide the answer to this important question? The school board? The teacher’s union? Staff? Students? Public opinion? If an answer is important, what metrics should be utilized?

As I’ve studied leadership related silent problems inside organizations and written about them excessively on this blog and in my book, Without Warning, the answer to the question, “Is she a bully, or just a bold leader?” is really quite simple. They’re generally both - a bully and a bold leader! For instance I write in Without Warning,

You’re often caught in a mental tug of war deciding between, “This is what I like vs. this is what I dislike about this person.” While the lines may be distinct, they’re rarely conclusive. The “what I like” side of the equation frequently wins out, which means you compromise on numerous other fronts. This in essence becomes a problem that is visible, yet it is being avoided.

From my viewpoint, the bully and bold leader statements fit. In public, my experience supports that she is brilliant on every count. Charming. Outgoing. Engaging. Personal. Decisive. Her vision for a new future bold and proactive. But behind closed doors, stories referenced in the news article and listening to top lieutenants in the district also appear to be true. Words that describe this side include; brutal, forceful, demeaning, autocratic, toxic, intimidating and micromanager. And the mere fact that this story surfaces upon her departure is similar to many silent problems and without warning events.

While the Carstarphen story is newsworthy, it’s not unique. When I meet with clients, I often listen to similar stories with great regularity. Each story is unique, yet the same. The story goes something like, “I work for an individual that is brilliant, yet no one can stand to work for him/her. Moral is down and the work environment is toxic. However, they are brilliant.” Unfortunately,these stories commonly are not being resolved, but rather, only silenced and neglected. At least until the point where they reach a boiling point and it’s unleashed without warning. Yes, bullies can be bold leaders and vice versa. And they can create a huge challenge for an organization.

What to do?

First, it is the role of the board or other outside leadership entity to seek out the truth. This is achieved by going after the truth with a vengeance. For instance, what is the turnover rate? What is happening with customer satisfaction? Does  a current 360 assessment exist? What are the rumors around the water cooler? Each of these and other data points will begin to quantify and qualify the problem, if one exists.

Second, if issues surface that are of a concern, attack them head-on. Show them the results that surfaced and put a performance improvement plan in place with clearly identified and measurable objectives. Hold them accountable. If they aren’t achieved, move to step three.

Third, if progress isn’t achieved, make the tough choice. Either accept the bully problem for what it is, and do nothing, thereby accepting the consequences that might result from it. Or, create a plan that deals with the problem, which often means developing a plan to move them out of the organization.

People problems tend to be highly contentious and at times, controversial. However, the data relating to toxic employees (including bully leaders) is conclusive, they’re costly. Under most scenarios, they need to be moved out of the organization or be placed in a position where their brilliance shines through, yet diminishes the toxic side of the equation. Top performing organizations are led by leaders that surround themselves with brilliant people. They’re difficult to find and easy to lose.

Go ahead, tell me your story.

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