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Archive for the ‘Without Warning Event’ Category

China’s Without Warning Nature

Wednesday, August 5th, 2009

Over the past decade, the world has become the go-to country. If you want something manufactured, China is at the top of the list. If you want engineering services completed, China is gaining in stature. Yes, China has become the go-to nation on so many products and services. It has also become an integral component of the World economy.

I’ve written about the woes of China many times (China’s Silent Problem), and we now realize there is a consistent and persistant quality challenge for many products sourced there. To help curtail this issue, the FDA set up a Chinese office and now the Consumer Product Safety Commission is setting up a Bejing office. The AP reports.

U.S. regulators announced plans Thursday to set up a Beijing office to help ensure Chinese exports are safe for Americans following a slew of recalls involving everything from pet food to children’s toys.

The U.S. Consumer Product Safety Commission was seeking to establish a permanent presence overseas for the first time to better cooperate with Chinese regulators and companies so the country’s products are up to U.S. standards, the agency’s chairwoman Inez Tenenbaum said.

However, even as one gets past the quality challenges of doing business with China, bigger and potentially more toxic problem likely exist. For one, political and social unrest is present in many sectors of this vast country. For instance, in this weeks edition of ”The Economist,” an article on the growing labor discontent  is on page 37. It states:

WORKERS’ opposition to privatisation and job cuts is widespread but rarely takes so brutal a form as it did on July 24th in northeastern Jilin province, when steel workers chased down and killed an executive who had reportedly come to tell them that an imminent privatisation of their factory would bring massive job cuts… The incident highlights not only China’s labour discontent but the country’s difficulty in dealing with it. Last year, China introduced a series of labour laws that improved mediation and set up an arbitration process to give workers better formal recourse for their grievances, both individual and collective. Workers have indeed been using the process in greater numbers. But only a small share of disputes are taken up, whereas discontents are multiplying.

China chose to become a world leader for many reasons, including improving the standard of living for its’ people. However as a world leader (which they are), comes with it increasing transparency and disclosure. And with each passing day, one has to wonder if another Without Warning Event like toys tainted with lead, a civil uprising, or an economic bubble will present itself. Yes, China is a world power. However, China also feels like its just a minute away from another Without Warning Event, which will be heard and felt around the world.

LA Museum Of Contemporary Art’s Silent Problem

Monday, July 6th, 2009

Silent problems can become a major disruption when they finally surface as a Without Warning Event. In fact, I’m convinced that silent problems are the No. 1 cause for business failure. If that isn’t a wake up call, it should be!

Today, I read a fascinating story over at Weekly Leader from December, 2008. It discusses the numerous challenges occurring over at the Los Angeles Museum of Contemporary Art. Here are but a few of the interesting silent problem sound bites from the article.

Leading a nonprofit organization is a very tricky endeavor. The ultimate authority rests with volunteer leadership who more often than not are successful, busy people who are not subject matter experts so they must rely heavily on paid staff. The nonprofit executive director often has one of the loneliest jobs in the world because they are responsible for leading staff and stakeholders in advancing the mission, yet they don’t have level of authority their business sector counterparts enjoy. While what we know is based on media, in MOCA’s case, it appears that the director was able to act as though he was the ultimate authority and in order for the museum to experience so many consecutive significant annual operating loses, the trustees were asleep at the wheel. In any case, a dysfunctional board can wreak havoc on an organization and strains between the executive and the board can make matters even worse. So appears to be the case at MOCA. ..  The MOCA story is one of failed leadership, executive and voluntary. Pure and simple.

Failed leadership has become the theme of too many organizations in recent years. These failures cross over non-profit and for-profit boundaries. No organization is exempt. Few leaders are protected. In the end, winners and losers are chosen in a Darwinian environment.

Google Insight

Wednesday, July 1st, 2009

In my presentation, Without Warning, I present the problem, silent problem and without warning trifecta. I discuss how a codependency exists between problems and silent problems. I illustrate how problems that are uncomfortable want to naturally gravitate toward becoming silent. And once they’ve become silent, over time they naturally want to gravitate back towards being visible (If more people understood this dynamic, they’d be less inclinded to pursue the silent problem option). Its as if a bozo switch exists that says to us, “If I can avoid disclosing this problem, I’ll be able to figure a way out.” It’s a seductive safety valve that rarely works, yet is often deployed. The challenge is, the silent problem morphs over time, growing more complicated and tenacious to the point where it wants to be visible. And when this occurs, a without warning event occurs.

What does this have to do with Google. As you likely know, Google as a company is admired and feared. It’s transformed businesses and made others irrelevant. It has helped change the world, and much of the world has adapted to it. So when Eric Schmidt, the CEO of Google speaks, people tend to listen. Jeff Jarvis, author of “What Would Google Do” recently attended Aspen Ideas Festival where Eric Schmidt spoke and Jarvis wrote about it over at his blog, BuzzMachine. Here was my Silent Problem moment.  Schmidt states;

I learned awhile ago that the right way to run human systems is transparency. Problems came from information hiding.

 Information hiding is one of the cornerstones for silent problems and a catalyst for Without Warning Events. Information hiding can and does occur at every level of the organization, from the individual, the group, the division and all the way up to the organization itself. It’s a dangerous path filled with short term gains, yet long term consequences. Just look at the daily news. Individuals as varied as Madoff to South Carolina’s Mark Sanford perfectly illustrate this point. It speaks volumes about the individual and their integrity. But take a moment and see how this actually manifests itself.

Problem > Silent Problem > Without Warning Event

Sanford had a problem - infidelity. He somehow believed he could keep it all silent(maybe there was some comfort that having an affair in a different country could be held in secrecy). And when it was exposed without warning, it ruins his career and potentially his aspirations for higher office.

I’ve seen this over and over again. That is, the problem, silent problem, without warning trifecta. It’s a losing combination where careers are lost and opportunities squandered. Spread the word, and of course if you want to learn more - go to the book, Without Warning.

China’s Silent Problem

Thursday, June 11th, 2009

If I were a newspaper boy trying to hawk newspapers on a street corner in New York City, my mantra might be, “Extra. Extra. Read All About It. China’s Exports Off  26.4%.” Yes, that was the news yesterday. China’s exports off 26.4% in May, when compared to a year ago. Now many economists and other smart people will place this under the moniker, “It’s the economy stupid” umbrella. And this might be the case. However, I’m convinced that a bigger problem lies over the horizon, and this problem is “Quality.” This is China’s silent problem. A problem they are avoiding, since much of it lies in the Culturism silo.

Let’s go back a decade or so and why companies started their sourcing frenzy from China in the first place. This excerpt is from Paul Midler’s book, Poorly Made In China.

Concerns about business risk weighed heavily in the decision-making process. What importers needed to know before they moved their business to China was whether the economy was safe. One important contributing factor was a changing perception of China as a low-risk environment.

There were still economies in the world where an importer could wire-transfer funds and find that the recipient and the cash had both disappeared. Importers who came to China were reporting to others that this sort of thing did not happen. Factories delivered the goods, and outright fraud was more rare than in other corners of the world.

Compared with other economies, China came to be seen as a sanctuary. Latin America remained a place where kidnappings by professional criminals was common. In other countries, you could at least count on having your luggage stolen. Vietnam, which was just next door to China—and which had even lower labor costs—was one of those markets where such stories of petty theft were commonplace.

 The common perception on the street at the time was that “Made in China” was due to low manufacturing and labor costs. In reality, “Made in China” was a hybrid of sorts. Low manufacturing and labor costs. And, it was a low risk country from which to conduct business. This “low risk” perception enabled small to mid-size companies to suddenly enter the import - export marketplace with relative ease, and of course low risk.

Today, “Made is China” is still regarded as a place where low manufacturing and labor costs exist. It remains a low risk country from which to transact business and send business executives to. However, it is losing its low risk moniker when it comes to quality. And this is the Silent Problem that is beginning to face importers in the eye. And as the Chinese export market has waned, quality issues are increasing and becoming more visible. From my perspective, here’s why they’re becoming more prevalent. Chinese companies that are dependent on exports are finding it increasingly difficult to maintain financial stability as exports have waned. Therefore, they’ve been forced to cut corners where ever possible, leading to persistant quality problems for many importers. This may be viewed as short term thinking, yet is one where much of the Chinese culture lives.

And this is why China has a Silent Problem of immense proportion. And if it continues, it begins to change everything.

 

GM’s Silent Problem - 30 Years Old & Running

Tuesday, June 9th, 2009

On Jan. 21, 1988, a General Motors executive named Elmer Johnson wrote a brave and prophetic memo. Its main point was contained in this sentence: “We have vastly underestimated how deeply ingrained are the organizational and cultural rigidities that hamper our ability to execute.” from David Brooks in the Quaqmire Ahead at the NYT.

In coming months, a slew of articles, books and case studies will emerge about the ultimate demise of GM and Chysler. These once mighty institutions epitimized US ingenuity and manafucturing capability. They were about design and marketing. They were powerful, and massive institutions. However their fall from greatness is not a lonely chapter. It’s been preceeded by numerous other once mighty instituions. Just look at the original 30 firms that made up the DJIA. How many remain?

Allied Chemical, American Can, American Smelting, American Sugar, American Tobacco B, Atlantic Refining, Bethlehem Steel, Chrysler, General Electric Company, General Motors Corporation, General Railway Signal, Goodrich, International Harvester, International Nickel, Mack Truck, Nash Motors, North American, Paramount Publix, Postum Incorporated, Radio Corporation of America, Sears Roebuck & Company , Standard Oil (N.J.), Texas Company, Texas Gulf Sulphur, Union Carbide, U.S. Steel, Victor Talking Machine, Westinghouse Electric, Woolworth, and Wright Aeronautical.

So it should be of little surprise that GM and Chrysler are underwater today. The primary reason for their failure is spelled out byElmer Johnson’s evaluation. “We have vastly underestimated how deeply ingrained are the organizational and cultural rigidities that hamper our ability to execute.”

For every organization, anything that hampers its ability to execute is huge. It’s like going up to bat knowing the bat you chose is too big, and the likelihood of a strikeout high. As I’ve studied organizations, interacted with leaders and given presentations, I’ve come to realize that silent problems (problems that are avoided, neglected or go unnoticed) are an integral component of how an organization is able to execute. Simply, as the number of silent problems grows inside an organization, the ability of the organization to execute diminishes proportionally. This is why solving silent problems are so important, and integral to the short and long term performance and viability of the organization.

Yes, silent problems were an integral component as to GM & Chrysler’s demise. After all, silent problems eventually become Without Warning Events, which can derail almost any organization for a period of time.

Bottom Line: High performance organizations deal with silent problems when they’re small.

Entanglement - A New Name For A Silent Problem?

Friday, June 5th, 2009

I was reading an article over at dimbulb. Yes, this is the name of the blog by Jonathan Salem Baskin. It’s a marketing blog, and always seems to have an interesting perspective. Well today’s entry was a little out there in left field and discussed an area of science called entanglement. You’ll have to read the blog entry to appreciate how he ties it back to marketing. It states:

Researchers have recently proven that a quality of the unseen quantum world called entanglement can happen also at the microscopic level (i.e. the size of stuff in the regular world).   

Entanglement is really strange.  What happens is that two particles can get mated (how that happens is a bit of a mystery), and then communicate with one another not just faster than the speed if light, but instantaneously.  This is a really, really big mystery, because it violates a few cardinal laws of physics: nothing can travel faster than the speed of light, at which point an object’s mass should become infinite.  And since light itself has a speed, being instantaneous is something that just doesn’t happen in Einstein’s relative universe. 

Personally, I find some of this stuff I don’t understand, much less comprehend really fascinating. But then dimbulb turned my head with a bright light. Baskin notes;

It turns out that everything there doesn’t really exist at all, per se, but rather hovers in a state on indeterminacy, only collapsing into something observable when somebody observes it. 

Wow… As I’ve discussed in my book and on this blog numerous times, this is exactly how certain types of Silent Problems exist inside organizations, a.k.a. they hover in a state of indeterminacy, only collapsing into something observable when somebody observes it (except I likely didn’t state it that poetically). And thats why silent problems are problematic and opportunistic. I’ve experienced it many times, the silent problem is right under our nose. And unless we become obervationally focused, it too often escapes our sight. And when this occurs, the problem turns toxic and eventually emerges as a Without Warning Event.

For instance, take a look at the headlines in the WSJ or business section for a newspaper. In fact Jim Collins talks about it in his new book which I reported here . Bottom line: Silent Problems are the most challenging type of problem and oftentimes can only be identified when one begins to conciously begin to observe them.

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.

“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.

Job Accountability & Compensation

Thursday, April 23rd, 2009

When I started my authorship venture several years ago, I stumbled across a concept which I eventually typecast as “Silent Problems.”  In my book Without Warning, I identify 5-key areas where silent problems exist in an organization. They are:

  1. Compensation
  2. Communication
  3. People
  4. Systems
  5. ISMs (race, gender, age…)

So it’s of little surprise that much of this blog reinforces and expands on the ideas offered in the book Without Warning. As an avid reader and silent problem scout I come across articles that expand and further refine the concepts. For instance, I received my S + B (Strategy & Business) newsletter today and two articles of interest were included.

Getting Rid of Grades to Boost Performance
Most companies grade their employees’ jobs using some kind of ranking or rating system based on job evaluation. The grades assigned are intended to assess fair pay for people doing the same work, and are usually public, like the letter grades of schools. In theory, these systems are supposed to help people manage their careers, by providing a comparison of jobs and individuals’ competence across a large organization. But in practice, they have a terrible side effect (a silent problem): They end up adding to the costs of bureaucracy, frustrating employees, and undermining leadership development… 

The second article relates to compensation. It is a working paper over at the Harvard Business School. Here is the intro over at S + B titled Incentives and Unintended Consequences

What if the current financial crisis were a result of poorly conceived goals? By paying mortgage brokers and loan originators on commission and then encouraging them to meet unrealistic sales goals, could banks have unwittingly precipitated their own demise? The authors of this paper believe this may be the case, and suggest that the tendency to focus too much on setting and attaining goals may be more common, and more dangerous, than we realize. Whether it’s quarterly revenue targets for sales executives or publishing quotas for tenure-seeking professors, performance goals are one of the most widely used tools for motivating employees. Citing examples such as the Enron Corporation scandal — which was set in motion when traders were remunerated for manipulating the energy markets to increase revenues for the firm — the authors argue compellingly that placing too much emphasis on performance goals may encourage unethical or unnecessarily risky behavior. They show that unattainable stretch goals can demoralize employees or encourage them to focus on one narrow part of their business at the expense of others. Although the authors agree that setting goals is an effective method to track achievement, they suggest that it be used in moderation.
Here is the full working article over at Harvard Business School titled Goals Gone Wild.
As history has illustrated and the future will continuously demonstrate, silent problems are a challenge inside every organization and are a primary factor behind economic failures around the globe. The sooner mankind accepts that silent problems are a normal part of our economic landscape and then put into action tools to ferret out and fix them the better.
Note: I identify several tools in the book Without Warning which is available at Amazon here to help achieve this desired outcome.

The Next Shoe to…

Monday, April 6th, 2009

Its been a year since BearStearns was brokered in a last minute deal. California institution IndyBank followed. Then Lehman Brothers, AIG, Washington Mutual and others. Today, the marketplace has stabilized and rebounnded off its lows. We’re out of the woods - Right?

Over the past week, its encouraging to see signs that things are improving, however I have to wonder if another shoe could fall.  If you’re reading this post, you likely know someone whose credit card limits have been lowered - substantially. In years past, credit cards were an efficient and effective source of capital and provided the necessary cash flow to start and grow a business. Its also been a source of capital for consumers in good times and bad. That source in many instances has dried up and no longer a credible source of money.

And this is where the next shoe comes into play. To regain its footing, the marketplace needs consistency and adequate financial resources.  Do we have this? There is an interesting article over at Forbes. Steve Forbes interviews Meredith Whitney, one of few that saw the mortgage exposure and resultant financial meltdown of a year ago.  Its well worth the read. She may very well be foretelling a Without Warning Event.  At least now, we should be aware of the potential for such an event.

Be the one to see it coming!

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Without Warning - Rondey Johnson

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