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Archive for the ‘Silent Problems’ Category

The Real Reason…

Sunday, December 27th, 2009

Comic illustrator Gary Larson published a cartoon several years ago that showed 3 dinosaurs hiding in a corner smoking cigarettes with the caption, “The real reason dinosaurs became extinct.” As we exit 2009 and head into 2010, I’m certain that numerous conversations in restaurants, boardrooms and private residences will delve into “The real reason why corporation XYZ failed.” The list of reasons will be numerous, including:

  • China
  • The banking crisis
  • Industry contraction
  • Obsolesence
  • The wrong people in the seats
  • Poor strategic plan
  • Technology
  • Fate - it was eventually going to happen

The list could go on and on. The reasons numerous and varied. They’re all right, and they’re all possibly wrong. I’m convinced that in many situations, “The Real Reason” will be different from what is believed. To the contrary, many companies will fail because of the silent problems inside their organizations. For instance:

  • What problems were being avoided for years, and eventually surfaced with a bang?
  • What problems weren’t being noticed, simply because the organization had adapted to the situaion? Yet in the long run, compromise could only last so long.
  • What problems were being neglected, simply because a good scenario for solving them couldn’t be found?

What I’m presenting here is simple. Over time, silent problems choke the very life and effectiveness of the organziation into submission. YES, silent problems are nasty if left unnoticed and/or unsolved.

New Years Resolution Suggestion: I encourage every organization to conduct a silent problem audit inside their organization and then take steps to solve them.

Toyota’s Mounting Problems

Wednesday, December 23rd, 2009

Have you ever played a game where your opponent didn’t play fair? For instance, a baseball player that had a corked bat or a golfer that deliberately moved their ball to improve the lay. In each of these instances, deliberate acts (cheating) can change the outcome. Well, this appears to be what Toyota has been doing for over a decade.

Earlier in the week, I wrote about how Toyota’s sales had been declining due to lapses in quality, reputation and design. Today, the LA Times in an article titled Toyota found to keep tight lid on potential safety problems states, A Times investigation shows the world’s largest automaker has delayed recalls and attempted to blame human error in cases where owners claimed vehicle defects

In the wake of Toyota’s announcement of the massive recall (referring to the rash of acceleration problems Toyota vehicles have experieced), The Times examined some of the ways the automaker has dealt with safety problems in recent years and found that:

* The automaker knew of a dangerous steering defect in vehicles including the 4Runner sport utility vehicle for years before issuing a recall in Japan in 2004. But it told regulators no recall was necessary in the U.S., despite having received dozens of complaints from drivers. Toyota said a subsequent investigation led it to order a U.S. recall in 2005.

* Toyota has paid cash settlements to people who say their vehicles have raced out of control, sometimes causing serious accidents, according to consumers and their attorneys. Other motorists who complained of acceleration problems with their vehicles have received buybacks under lemon laws.

* Although the sudden acceleration issue erupted publicly only in recent months, it has been festering for nearly a decade. A computerized search of NHTSA records by The Times has found Toyota issued eight previous recalls related to unintended acceleration since 2000, more than any other automaker.

* A former Toyota lawyer who handled safety litigation has sued the automaker, accusing it of engaging in a “calculated conspiracy to prevent the disclosure of damaging evidence” as part of a scheme to “prevent evidence of its vehicles’ structural shortcomings from becoming known” to plaintiffs lawyers, courts, NHTSA and the public.

As a result, plaintiffs attorneys are considering reopening dozens of product-liability suits against the automaker.

If the allegations in the LA Times article is correct, Toyota has been living a life where Silent Problems (in this instance, problems that are being intentionally silenced) have been a normal operating procedure. The allegations are damaging and now that the silence is broken, Toyota’s image and reputation are being challenged and its loyal customer base, compromised.

Prediction: When Silent Problems of the Ice Box variety escape, the resultant impact is huge. What was once under control, is now out of control. Every word is dissected, every claim challenged, every decision questioned. I’m convinced that Toyota is in bigger trouble than most can even comprehend. Don’t be surprised if Toyota is the next G.M. 

Denial

Thursday, December 10th, 2009

Denial is a powerful word that connotates  a multitude of emotions. Its also a word that tends to get people and organizations into trouble. Unfortunately the transformation from Denial to Acceptance comes with much baggage, and commonly occurs too late. Too late to make a decision. Too late to pursue an alternative path. Too late to make an impact. Too late to survive its rath. Yes, denial too often becomes a, Too Little, Too Late” scenario. 

It’s no surprise that denial is at the heart of the Silent Problem phenomenon impacting many organizations today as I have written about repeatedly, which is why I found an article that delves into Denial over at Harvard Business, titled, Four Tools for Defeating Denial intriguing. Here are a couple of the excerpts.

Arrogance of power fuels denial. Executives flush with memories of past successes sometimes think that they are above the facts, that the facts don’t apply to them. Deniers prevent change when they give lip service to problems but reject solutions that would require sacrifice or wrenching turns… Deniers gain followers because the “no change; carry on as usual” message is comforting. Doing nothing different or nothing at all — is easy. Everyone has silent veto power. Deniers can simply sit on their hands, miss meetings, lose reports, or let timetables slip. Presto! No change.

Whatever a change agent’s cause — global warming, ending risky financial speculation, reforming pay to reward performance, corporate culture change, or innovation in an established institution — confronting denial is essential

Denial is simply stated, “Trust me, we don’t have a problem.” And without a problem, there is nothing to solve, nothing to discuss and no next steps. In effect, it has been silenced and that’s why its so dangerous! If you’re not looking, you will either adapt to the scenario (which makes the situation normal over time) or it will suddenly hit with great force, which I refer to as a Without Warning Event.  If you want to counter denial, you must follow these four steps (which are in my book Without Warning.

  1. Make the Problem Visible and Memorable: You must turn denial into a problem and then make it visible and memorable for everyone to see. Once this has occurred, its difficult to state that a problem doesn’t exist.
  2. Create a Sense of Urgency: Once the problem is visible, its important to create a sense of urgency. If you don’t, the problem can easily fall back into a state of denial. The easiest means to creating a sense of urgency is to ask this simple question. “What is the risk of doing nothing?” This question will get the problem on track.
  3. Allow Anger, Avoid Fear: If you attack denial, you may have many reasons to be angry, such as why didn’t we deal with this earlier. The challenge is to leverage anger for the positive (i.e. getting your team energized), but avoid fear, which can debilitate your team and your effort.
  4. Influence: When you attack denial, you’re ability to influence will be essential. It’s how you help make the problem visible, but also obtain the resources to get the problem solved.

Bottom Line: The premise of silent problems inside organizations and their impact on performance is gaining acceptance. How companies deal with denial is critically important to the future viability of every organization. Make it happen.

Executive Read

Sunday, December 6th, 2009

Every Sunday, the St Paul Pioneer Press asks a local business leader what they’re reading and why. This week, Jeff Prouty of the Prouty Project  reviewed my book, Without Warning. Here is the article.

Who: Jeff Prouty, chairman and founder of the Prouty Project, a Minneapolis-based strategic planning and organizational development firm.

What: “Without Warning: Breakthrough strategies for solving the silent problems taking aim at your organization,” by Rodney N. Johnson

Why: After reading a book, I can always tell how much I gained by the number of Post-Its, dog-eared pages, underlined quotes and starred segments. Without Warning is a 127-page book filled with compelling stories  and pithy quotes that can help leaders begin thinking about their game plan for 2010

The book’s premise is that many businesses and organizations have silent problems - problems that are avoided, neglected or altogether unnoticed - taking aim at productivity and profitability. These problems are ready to attack without warning as people adapt to the problems rather than solve them.

Johnson encourages readers to look out for the following yellow flags, which often are telltale clues of something lurking below the surface:

  • Slow decision-making
  • Unnecessary complexity
  • Busy people with insignificant results
  • Incomplete information
  • Low performance standards
  • Spun answers versus straight answers
  • Quesiness in your stomach.

Johnson shares real-life examples of leaders tackling silent problems. I loved the one about Continental Airlines where the new CEO held an all-employee ceremony in the parking lot to burn the nine-inch policies and procedures manual as a way of creating a sense of urgency to eliminate the stifling bureacracy and start over.

I recommend reading this book as 2009 winds down to stretch every leaders thinking for proactive strategies in the New Year.

Too Big To Succeed?

Wednesday, December 2nd, 2009

The “Too Big To Fail” debate has been rampant for well over a year now as institutions like GM, CitiGroup, AIG,Chrysler and numerous others have essentially failed, only to be rescued by the US Government. Lack of leadership. Ineffective risk management. Rogue teams with few controls. Bloated cost structures. These are a few of the reasons why they failed. But what isn’t being offered up as a reason is this:

Were These Companies Were Too Big To Succeed?

Earlier this year The Hacket Group reported:

Most Companies Have Failed Agility Test; Three out of Four Global 1000 Companies Cannot Drive Cost Reductions That Match Declines in Revenue, Profits.

The world’s largest companies have for the most part failed in their efforts to reduce the cost of functions such as Finance, IT, HR, and Procurement over the past year, exacerbating the impact of dramatic declines in revenue, profits, and earnings, according to new research from The Hackett Group, Inc.

Hackett’s analysis of the latest financial results of nearly 200 of the 1,000 largest public companies in the world that have reported Q2 2009 financial information showed that only one company in four was able to manage their Selling, General, & Administrative (SG&A) costs in line with revenue reductions over the past 12 months.

While these companies saw average revenue reductions of 23.7 percent, they were only able to cut SG&A costs by 6.7 percent. As a result, SG&A costs as a percentage of revenue for Global 1000 companies have risen significantly over the same period, going from 12.6 percent of revenue to 15.5 percent of revenue. Hackett’s research found that typical Global 1000 companies (with $26 billion in annual revenue) are losing out on up to $1 billion in annual cost savings as a result of this lack of agility.

Yes, agility is an important component fo every company, especially during an economic upheaval. However, as you look at companies like CitiGroup, GM and others that have become exposed in this economic downturn, what words come to mind? Personally, words like inept, clumsy and bloated come to mind. And as I’ve written many times before, large companies are ripe for “silent problems” (problems that are avoided, neglected or go about unnoticed) to germinate, grow and potentially explode into a Without Warning event. The only way for large organizations to remain healthy is for them to be vigilent in the prevention of silent problems in the first place and the discovery/solving of them if they’ve already occurred.

Bottom Line: The Too Big To Fail debate should also include a debate about Too Big To Succeed. Only when the counter weight in this debate occurs can wise decisions be made before they become Without Warning Events.

Wasting Away in Sonyville - Part 2

Tuesday, November 24th, 2009

Yesterday, I viewed Sony as a brand name that was worth the price. Today, I wonder if Sony is wasting away in a place called Sonyville, a small imaginary island in the South Pacific. It’s a land filled of yesterday’s achievements and devoid of today’s reality. It’s a land with tall buildings, smart people and smart titles. It’s a land that took decades to build and just maybe, it’s a land with many similarities to GMville.

I’ve written about GM many times and it was and is a corporation filled with silent problems. Today, I’m inclined to believe that Sony  could follow suit. In the past year, i found their customer service to be terrible. Their products are nothing special. And companies like Apple are gaining market share. 

Could it be that Sony is wasting away in Sonyville, and silent problems are at the center of their universe?

I wrote these words back on July 8th - some four months ago. This is what Reuters wrote about Sony and their dismal outlook last week.

“What we’re seeing is a weakening of Sony’s brand power. That’s especially clear in North America where its market share has fallen sharply. The situation is so bad it almost makes me want to cover my eyes,” said Chibagin Asset Management’s advisor Fujio Ando.

“They no longer have products that are unique and can control the market,” he said.

If that isn’t a wake up call, it should be. Because today, Sony is a company with grand ideas of how the world is and how it should be. If the world aligned with that vision, Sony would be the No 1 electronics company in the world. Instead, the world has changed, and Sony is growing increasingly irrelevant. They’re an organization filled with Silent Problems as I’ve detailed in my book, Without Warning. Over the years their products have become commoditized, yet have retained the overhead of an innovation company. Rather than being a step ahead of their competition, they’re now a step behind .

Yes, Sony certainly appears to be wasting away in Sonyville.

Saturn’s Silent Problem That Grew

Sunday, November 8th, 2009

The days for Saturn are over. The once bright light for GM to “get it right” turned into another costly failure. There are many reasons, which authors, bloggers, academia and industry analysts will discuss for years to come. However, the role of silent problems, especially as relates to GM’s culture, is an essential component to the story. For instance, in a recent Wharton article titled “Saturn: A Wealth Of Lessons From Failure” had this to say.

Hrebiniak says that “Saturn fell prey to the culture of GM…. It was buried in GM’s old culture of inertia. Saturn had made innovation a corporate strategy. But what happened over time? GM diminished Saturn’s standing as a separate entity and all the benefits that came from that.”

Saturn was possibly the most agressive and innovative idea that emerged from the GM mothership ever. However, the gravitational pull of that mothership never let it totally escape its cultural wrath. It’s too bad, because it had a chance of being something special.

Bullying & Ponzi Schemes

Wednesday, November 4th, 2009

It seems that every state in the union has its front-and-center local news story. In Illinois, its an ex-governor that’s awaiting trial on corruption charges. In Minnesota, we have a couple on center stage; Denny Hecker a car dealership mogul and Tom Petters, a high profile businessman. In Tom Petters case, his trial just entered the courtroom this week, and its already positioned for some theatrics, and unusual insights around how a Ponzi scheme is kept silenced and is maintained. A story in the Pioneer Press titled “Petters lenders tell of early suspicions” holds some interesting insights. Here is part of the story.

Jack Morrone, who in 2000 was an auditor with GE Capital, testified that Petters Co. had borrowed $45 million from the lender and used the money to buy consumer electroncs or other goods. He said the goods then were sold to Costco and other major retailers. But Petters Co. was late repaying the money, and GE Capital wanted to know why.

Petters blamed Costco, saying the warehouse chain was late payng him for the goods.

At one point in the fall of 2000, CE Capital representatives decided to contact Costco directly. But after a Costco executive reviewed the purchase orders sent to him from GE Capital, he told the lender the purchase orders didn’t come from the retail giant.

Soon after, Paul Feehan, a regional manager at GE Capital called Tom Petters for an explanation.

“(Petters) was very irate, yelling and screaming, lots of curse words,” Feehan testified Thursday. Petters was upset that GE Capital had contacted Costco directly and let Feehan know it.

“It was just a scathing button kicking he gave me,” Feehandsaid. “He was very adamant that I stay the hell away from Costco.

In a later call, Feehan said, Petters told him “you guys are too much aggravation. I just want to end our relationship.”

As I noted in the book Without Warning regarding an Icebox Silent Problem, “Through manipulation, intimidation, or a lack of transparency, the problem is placed in hush mode. Anyone who challenges that directive might be dishonored and even threatened with their life. These problems aren’t being resolved,. They’re simply being micromanaged inside an icebox where anyone threatening to leak them are frozen out.

Bottom Line: Ponzi schemes are an intricate network of finely tuned and disciplined checks and balances. The holders of the scheme understand the consequences of being caught, and will do anything to keep it in the icebox.

Chrysler & its Silent Problems

Sunday, November 1st, 2009

Cash for Clunkers. Automotive Bailouts. Clean Car Technology Investements. Saturn Fails. Everyone knows the domestic automotive industry has been in a turmoil for many years, but I have to wonder, “Is there anyone steering the ship at GM, Toyota, & Chrysler?” I have mentioned repeatedly that GM, Toyota & Chrysler have been huge silent problem sinkholes for years. They’ve had cultures where problems were avoided and their silence embraced. This is a huge challenge in today’s marketplace.

In today’s paper I couldn’t help but read an AP article titled, “Why so quiet Chrysler execs?” Its a silent problem expose at its finest. Here are few of the excerpts.

Chrysler has been sending its dealers back to class, reminding them about the importance of courtesy and communication. Always return phone calls. Limit wait times. Open doors for customers. But the automaker isn’t following its own advice.
Dealers are left to wonder what they’ll be selling this time next year, even as they struggle to unload unpopular models from their lots.
The lack of communication is a symptom of an automaker so focused on its grand plan that it may be overlooking the basics of running the business. The lack of information is compounded by frequent shuffling of managers.
Dealers are impatient for details of Marchionne’s five-year plan - to be announced on Nove. 4. Many say calls to headquarters have gone unreturned…
The silence is a sign that Fiat was unprepared to take over Chrysler, said Aaron Bragman, an auto industry analyst  with IHS Global Insight.

This story simply reinforces what I and many already knew, “Chrysler is in Trouble!” The reason they’re in trouble is multifold, especially the lack of leadership. I however am convinced that a major source of their demise relates to the silent problems that have been allowed to fester and morph and multiply over weeks, months and decades. Silent Problems are the equivalent of the hemlock tonic being passed around and consumed in too many organizations.

The way out of the woods is dfficult. The means to staying out of the woods is to complete a Silent Problem Audit, and begin to address the silent problem issues before they turn into a Without Warning Event.

Silent Problem Exposed in England

Wednesday, October 21st, 2009

Famous Canadian philosopher Marshall McLuhan once wrote, “We look at the present through a rearview mirror; we walk backwards into our future.”

Today, silent problems are one of the greatest “rearview mirror” challenges facing every organization, every business, and every public institution. Such is the case surfacing in England, and reported about by Scott Eblin on his Next Level Blog. Scott reports:

Well, the story that’s dominating the UK’s headlines and airwaves this week is a controversy over how members of Parliament used their expense accounts for items like housekeeping, gardening and, in one infamous case, the digging of a moat. Sounds sort of outrageous doesn’t it?  The back story, as my cab driver explained it to me the other day, is that when Margaret Thatcher was prime minister she wanted to give a pay raise to the MP’s but knew that wouldn’t fly with the public. So, instead, she adjusted the expense reimbursement schedule for MP’s so it was much more liberal and ended up significantly supplementing their incomes.  That was all going along swimmingly for the past 20 years or so until earlier this year when the husband of the Home Secretary watched a couple of porn movies on the family telly and the cable bill was submitted for reimbursement under the MP expense plan. You can probably figure out what happened next… In case you can’t make it out, the passenger car is carrying 3 or 4 people holding prime minister Gordon Brown masks in front of their face. The sign across the top of the car reads, “All Aboard the Gravy Train.”  As the Brits might say, “Simply brilliant!”

It’s obvious that an “offline” compensation program is doomed to failure, or what some might call, a scandal. It wasn’t a problem waiting to happen, it was a problem that had happened, it just took 20 years to surface. Now that it has surfaced, there is 20 years of baggage associated with the problem, which only gives it staying power and front page presence.

I’ve said it numerous times before on this blog, silent problems are the most dangerous problems of all. Because once they do surface, there is a lot of pent up emotion attached to them. “Beware” is the word of caution to those who are considering or holders of a silent problem.

Be the one to see it coming!

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Without Warning - Rondey Johnson

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