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Responding to a Silent Problem

Friday, August 27th, 2010

The Gulf of Mexico oil spill story has raged on for upwards of 4-months now. It’s been been a story with anger displayed, heartache captured, concerns emitted and consequences discussed. Yes, it has been a long and arduous 4-months. Yet despite the magnitude of this disaster, it can be broken into three parts, These being:

  1. Exploring the great unknown. “What will be the consequences, if any?”
  2. Shutting the beast down. “This thing is bigger than we’ve been told, can it be shut down? If yes, how soon.”
  3. Gathering information to avoid a similar catastrope in the future. “Every disaster reveals consequences from the unknown. Until its been experienced, its difficult to understand all of the unintended consequences of certain actions and procedures.”

As part of the third stage of this story, the investigation is revealing that numerous silent problems were present. For instance, recent stories reveal that a single engineer may bear a huge responsibility in the blowout.  However, this isn’t the story I’m fascinated with at the moment. I’m intrigued with how the environment is and has responded to this ecological disaster - most of it is a huge surprise - most scientists included. This story is titled, the great vanishing oil spill.

Yes, microbes may become the heroes of the Gulf of Mexico oil spill by gobbling up oil more rapidly than anyone expected.

This leads me to a parallel discovery. As I have worked with organizations and helped them work through their silent problems, I’m always surprised how organizations respond from the effects of silent problems.  And once it is solved, the results can be equally surprising and unexpected. At times, organizations remain devastated for months on end. However more often than not, once the silent problem is identified and rectified, a rejuvenation phenomenon often takes place. Unexpectant individuals step up to the plate with previously unknown skills that can be leveraged. New processes and procedures that were unwelcomed, are suddenly adopted. However most important in this equation, people learn how to speak about the unspeakable, and take action. Quite similar to the little oil eating bacteria at the sight of a natural disaster.

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Silent Problems & Brand Valuations

Wednesday, July 21st, 2010

Market valuations and silent problems - are they correlated to each other?

24/7 Wall Street recently looked at the 10 Biggest Brand Disasters of 2010. Guess what? There is a close correlation to the exposure of silent problems and the loss of brand valuations. On the list:

1. BP: Need I say more.
2. Dell: This company has exposed numerous silent problems in recent years.
4. Sony: I’ve written about Sony and its silent problems numerous times.
5. Goldman Sachs: What can I say other than they’ve created a culture where silent problems are endemic to the organization.
8. Johnson & Johnson: J&J use to be squeeky clean when it came to their brand, now silent problems are eroding it.
10. Toyota: Toyota’s culture of silencing their problems was exposed in a big way in 2010.

The other companies on the list R.I.M. (Blackberry), Adobe, Nokia and Google. Interestingly, each of these are in the fast moving technology arena where a “what’s hot” and “what’s not” mentality can reside. Yet the 6-companies on the above list have direct ties to silent problems. Makes one wonder when the marketplace will finally look at exposure to silent problems in stock valuations.

Adobe:

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Everything Is Illuminated

Thursday, June 3rd, 2010

I watched a neat movie last night, “Everything is Illuminated.”  The story is about Alex, a young American jewish man that goes on a quest to find the woman who saved his grandfather during the Holocaust. If you haven’t seen it, it’s a wonderful story. The quirkiness of the characters make it come to life. It was at the very end that caught my attention though when Alex is reflecting on his journey on his return trip when he reflects,  

I have reflected many times upon our rigid search. It has shown me that everything is illuminated in the light of the past. Alex

When I look into silent problems as far ranging as Madoff, to Toyota, to the financial crisis and countless others, its amazing how everything is eventually illuminated in the light of the past. Or in plain terms - the truth is eventually exposed. And what gets exposed is the numerous warning signs along the way. There was discontent amongst employees. There was a conflict of interest present. There was a bully in the mix that did everything in their power to keep the problem silent. 

I’ve thought of and examined the context of these scenarios many times, and I realize there is a question we should be asking.

How can we illuminate problems in the present - so they can be acted upon?

This is the question we need to pursue, and one I focus on in the book Without Warning and on this blog. Because when we illuminate from the present, we can take action and hopefully avoid or at least mitigate the fallout from silent problems. And more importantly, many of the world’s problems could have been mitigated.

Your thoughts?

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The Edge of What’s Legal

Friday, May 21st, 2010

In Minneapolis, businessman Tom Petters was recently convicted of running a $3.5 Billion ponzi scheme. He was a high flyer with a huge presence in the Twin Cities business community. What is interesting about this scheme is that Petters was attempting to pay off all of his debtors by leveraging legitimate businesses such as Sun Country Airlines and Poloroid. But the mountain was simply too high, and then the roof collapsed. One of his key employees turned Petters in and the rest is history. Today in the Pioneer Press, writer John Welbes quotes Hank Shea, a former federal prosecuter and teaches at the University of St Thomas Law School states:

White-collar criminals normally start out with minor transgressions and then progress to more serious crimes. “Don’t be focused on whether you can walk up to the edge” of what is legal.

Yes, the edge of what’s legal is a slippery slope. It’s a finite spot that too many people and businesses explore, only to find themselves unable to pull back from its magnetic force. It’s a spot where some venture in search of a competitive advantage, often with toxic consequences. It’s a spot where many problems become intentionally silenced, creating the long lasting risk of the silent problem phenomenon.

Bottom Line: Be wary of the “edge of what’s legal.” It’s often a trap.

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Silent Problems Play By Different Rules

Monday, May 17th, 2010

Have you ever noticed that problems that have been silenced tend to play by a different set of rules? When a problem that is being silenced is exposed, a strategy to keep it silent appears to be standard protocol. A case in point, I’ve discussed the silent problems over at Toyota repeatedly over that past 6-months. Quite honestly, records reveal that Toyota historically has tried to silence problems. This past week another story surfaced. This one out of the Associated Press, it states:

Toyota officials were looking to attack the credibility of witnesses who testified before Congress about sudden acceleration problems in the automaker’s vehicles, according to a report in Washington Post.

The Post says it obtained documents that show Toyota sought to create a public relations campaign based in part on polling that questioned the integrity of two witnesses. Such polls are used by businesses and politicians to test the weaknesses of their opponents.

The Post identifies the witnesses as Sean Kane, a Massachusetts safety consultant, and David Gilbert, an auto technology professor. Each criticized Toyota’s handling of the problem.

In response, Toyota told the Post it never produced advertisements based on the polling.

When I read stories related to silent problems like these, I’m not surprised by what is considered a possible defense/offense. Everything is placed on the table so to speak. Everything is calculated. Risk and opportunity measured. After all, once a problem has been silenced - a change in the game plan cannot occur midstream. Because this would be considered guilt, which carries a high degree of financial risk and exposure.

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5-Attaboys Displaces 1-Awe S…

Wednesday, May 12th, 2010

The impact that silent problems (problems that are being avoided, neglected, are going unnoticed or are being intentionally silenced) tend to be profound and damaging. Their impact can affect performance areas ranging frm profitability, to employee engagement & turnover, to customer satisfaction. This morning I came across an interesting article by Bob Sutton that highlights this effect. The article is titled Bad is Stronger than Good - The 5:1 Rule. It states:

“Bad is Stronger Than Good”  is the title of one of my favorite academic articles, which shows that negative information, experiences, and people pack a far bigger wallop than positive ones.  I touched on this theme in The No Asshole Rule and dig into in detail in the forthcoming Good Boss, Bad Boss. But perhaps the most important finding for most of us is the research on  romantic relationships and marriages: unless positive interactions outnumber negative interactions by five to one, odds are that the relationship will fail.  Scary, isn’t it?

Several studies found that when the proportion of negative interactions in a relationship exceeds this “five-to-one rule” divorce rates go way up and marital satisfaction goes way down. The implications for all of us in long-term relationships are both instructive and daunting: If you have a bad interaction with your partner, one (or apparently two, three, or four) positive interactions aren’t enough to repair the damage.  It apparently takes at least five — at least over the long-term. Related studies on workplaces suggest, along similar lines, that bosses and companies will get more bang for the buck if they focus on eliminating the negative rather than accentuating the positive (although the latter is important, the best evidence suggests that more effort and resources should be focused on getting rid of bad people and experiences).

When we leave silent problems to sit and ferment, it takes a lot of good will to neutralize them. And in most instances, we come up short. Yes, the odds are against you. In fact I would suggest that the longer they remain silent, the challenge could easily approach 10, 15 or maybe even 20 attaboys to neutralize an entrenched silent problem. That is a high mountain to climb.

This is simply one more reason why silent problems should be dealt with proactively, not reactively. And conducting a silent problem audit is an effective means to completing the task.

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Another Fine Mess - Spain

Wednesday, May 5th, 2010

The formation of the European Union took decades to create and may take only a couple of years to destroy. The foundational concepts behind the Euro were solid, and generally worked well in improving Europe’s position in the World marketplace. However today, everything appears to be unfolding. And the next card following Greece is Spain. In a recent New York Times article titled Spain Seen Moving Slowly On Financial Reforms illustrates what could happen next. Personally, the most interesting aspect of this article relates to the numeous ties to my work on silent problems (problems that are avoided, neglected, going unnoticed, or are being intentionally silenced). Here are a few of the excerpts.

Slow Decision Making: A planned merger has stalled between two weak savings banks in Galicia, in northwestern Spain, illustrating the reluctance of the Spanish government to take a firmer hand to its financial problems. The longer consolidation is delayed among the banks, which are saddled with losses on loans to the construction industry, the more expensive it may be to deal with them.

 A Problem Neglected: José Luis Rodríguez Zapatero, the center-left prime minister, presented an austerity plan this year based mostly on measures that would not kick in until next year at the earliest. The measures include spending cuts amounting to a modest 2.5 percent of gross domestic product. But Mr. Zapatero may no longer be able to wait. Just as he has been unable to force the savings banks, Caixanova and Caixa Galicia, to consolidate before the situation deteriorates further, he finds Spain increasingly vulnerable to forces beyond its control.

A Problem Avoided: To date, Mr. Zapatero’s policies have rested on the hope that the economy would begin to recover soon and that the jobless rate would average no more than 19 percent this year. Yet the jobless rate has already reached 20 percent, according to government statistics for the first quarter released Friday, almost double the level when Spain’s recession began in 2008.

A Problem Avoided: Indeed, Mr. Zapatero has shown little inclination to force change on his people. In late January, his government proposed pushing up the retirement age to 67 from 65 to help cope with the costs of a rapidly aging population. After a series of protest marches, the plan was put on the back burner.

The silent problem matrix I describe in my book explains and predicts what happens when they finally surface. Their toxic nature is a result of neglect and avoidance. The key is how to surface these issues early in their formation, and how to take action. Silent Problems are playing an increasingly important in world markets and the future of economic progress.

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And What About Those Silent Problems in the News

Monday, April 26th, 2010

It’s been a year since my book Without Warning first came off the presses. Since then, the incidences and case study possibilities relating to what I refer to as Silent Problems (problems that are being avoided, neglected, going unnoticed or are being intentionally silenced) seems to be growing exponentially. And the stories I’m referring to are front page news. Maybe that isn’t all that surprising due to the explosive nature of silent problems when they do finally become visible - Without Warning.

Over the past couple of weeks, news items that would fall under the umbrella of being a silent problem are worth noting. Here are just a few of the high profile cases.

  1. Porn at the SEC: One would think that the Federal Governement would have an effective I.T. strategy in place to prevent the viewing of porn while at work or with government owned computer equipment. Well, the SEC proved us wrong and received another black eye for incompetence. The Washington Post states, “Dozens of Securities and Exchange Commission staff members used government computers in the past five years to access and download pornographic images, according to a summary prepared by the agency’s watchdog.”
  2. Goldman Sachs on Winning: Goldman was considered the investment banking firm you could trust. Well, all of that has changed over the past 6-months or so, and its going to get even more complicated as Goldman e-mails show how crash turned into cash.
  3. Ratings Agencies Exposed: I guess we shouldn’t be surprised that the ratings agencies also have some dirty laundry now being exposed. From the Financial Times article, Rating Agencies’ Nixon Moment, “As one Moody’s managing director wrote to his superiors in 2007, the company’s errors, made it look “either incompetent at credit analysis, or like we sold our soul to the devil for revenue, or a little bit of both…” “Jason is looking into some adjustments to his methodology that should be a benefit to your folks,” wrote a Moody’s employee to a Chase banker.The bankers seemed fully aware of the competitive pressures the rating agencies faced - and they knew how to game them.”"E-mail from Moody’s chief risk officer to Raymond McDaniel, CEO, October 2007 - ‘[N]o body gives a straight answer about anything around here . . . how about we come out with new [criteria] or a new stress and actually have clear cut parameters on what the hell we are supposed to do.”

The list could go on including stories about the Catholic Church, Toyota and others. However the storyline is the same. A problem is avoided because it is too costly, potentially too damaging or simply too time consuming to solve. Over time, the problem grosw in size and magnitude, and jumping off the treadmill is too costly. And just like a volcano, when it blows the impact is devastating, extremely disruptive and costly. Such is the case of silent problems in the real world.

Keith Wendell, the new CEO at Harley Davidson puts it in perspective when talking about the tough decisions he had to make at the firm. “There is not one of us who wakes up in the morning and says, ‘Wow, this is another opportunity to ruin someone’s life,’ ” Wandell said. “. . .  But you cannot turn your head and look the other way when there are issues that are going to ruin the company. I wish we could be totally clear about that.”

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When is a Problem a Problem?

Monday, February 15th, 2010

There is a major challenge facing every business today. The concept is simple. The question however is difficult to answer.  “When is a Problem a Problem?” For instance,

  • When does a problem employee become a real problem vs. just a problem employee?
  • When is a process that is problematic, truly a problem?
  • When is a product that fails, become a problem vs. just an anomaly?

The “When is a Problem a Real Problem” question trips up companies every day, and costs billions in lost revenue and brand erosion. Answering the “When is a Problem a Problem” question is not simple, and in many respects, it is simpler to answer a different question. That question is, “What prevents a problem from being recognized as a problem in the first place?” Here are a few scenarios.

When Feedback Loops are  Weak: Feedback loops are put in place to provide transparency across an organization. When feedback loops are weak, transparency is sacrificed and real problems are allowed/encouraged to become silent. Creating strong feedback loops must be viewed as an integral asset for every organization and leader.

When Weak Signals are Not Heard: Collective intelligence and knowledge commonly emerge from weak signals. It’s how the dots are connected, wise decisions made, and problems commonly identified. Organizations that don’t listen to, nor honor the weak signals present in their organization are prone to big problems surfacing without warning. Leaders must seek out and honor the weak signals in their organization, and then investigate whether they’re a problem or not.

When Goals get in the way of Problem Identification and Solutions: Goals commonly blur the line between “what is right” and “what is important.” Achieveing goals is important, and can overshadow the solving of problems, which at times is “what is right.” When goals get in the way of doing “what is right” the end is near. Leaders must learn to navigate these divergent themes, and make the “what is right” decision when it is the right path to pursue.

When Organizations become Insular: Organizations can easily insulate themselves from reality. Focus can be an asset, and at times a liability. When organizations insulate themselves, their ability to identify “when is a problem a problem” challenge is greatly weakened. Leaders must avoid being trapped by holding onto a myopic view of their organization. Instead, they must be in constant search of the truth.

When the Delievery of  Bad News is not Encouraged: In effective problem solving, “bad news” has to be your friend - not your enemy. Too often, organizations and their leaders avoid bad news. When bad news surfaces, it is often a major distraction. Bad news can interfere with goals, tasks and strategy. Bad news is often are unexpected and can lead to unexpected consequences. Despite these negatives, leaders must encourage the delivery of “bad news.” It is our ”reality check” conversation from our employees and customers that can alert us to small problems early - before they become large and toxic.

Leading a business is challenging work, filled with unexpected events. And there is one event that can steer an organization off course with ease, Silent Problems. As I’ve discussed before, these are problems that are being avoided, neglected, going unnoticed, or are being intentionally silenced. One way silent problems are identified early-on is by recognizing when a problem is a problem. I ecourage you to implement and embrace these principles when is a problem a problem principles.

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We’re Listening Now

Tuesday, February 9th, 2010

Are we simply hypersensative about everything and anything Toyota today? We’re we highly insensitive to anything Toyota (at least regarding quality) two months ago? I believe both to be true, and both are working in concert with each other, which implies quality issues that were being avoided or neglected (Silent Problems) are going to be front page news for the foreseeable future. And more importantly, any complaints regarding safety will receive ”Urgent” priority. For instance, a report over at Bloomberg,

Toyota Motor Corp.’s Corolla, the world’s best-selling car, is being reviewed by the U.S. after driver complaints about steering, according to a government spokeswoman.

The National Highway Traffic Safety Administration has recorded more than 80 complaints about Corolla steering for 2009 and 2010 models, according to the agency’s online database.

“We are reviewing steering complaints with the Corolla,” Karen Aldana, a spokeswoman for the agency, said in an e-mail. NHTSA wants “to determine if a safety defect investigation is warranted, as is standard procedure with all complaints.”

In essence, the silence barrier has been broken. And once the barrier is broken, the floodgates will open. This is exactly the state of being Toyota is living in, which goes back to the Can You Trust Toyota  issue I wrote about earlier this week. The safety regulators don’t trust Toyota. The press doesn’t trust Toyota. And most importantly, the consumer is learning to distrust Toyota. Such are the dynamics of Silent Problems when they finally surface, and most analysts are simply underestimating the dynamics at play here. One would think that things couldn’t get much worse, yet this is what’s happening, which I’ve been stating for well over a week.

Bottom Line: Toyota is quickly becoming a textbook case around how silent problems begin, evolve and eventually explode. How silent problems are dealt with is of critical importance to every organization and is addressed in the book Without Warning.

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