silent problem - Without Warning

Posts Tagged ‘silent problem’

Anatomy Of A Catastrophe

Friday, June 4th, 2010

Michael Roberto profiled the anatomy of a catastrophe over at his blog, and I found it to be insightful and definitely worth promoting. Here it is:

1. Catastrophic failures generally do not have a single root cause. They are typically the result of a chain of errors, mistakes, and small failures.

2. People and organizations often downplay ambiguous threats, i.e. warning signs, that crop out in the days, weeks, and months prior to the catastrophe. (Yes, we too often overlook weak signals starring us in the face.)

3. Organizations often have cultures that don’t promote sufficient candor and open dialogue. Thus, people with knowledge about critical risks may not speak up about their concerns regarding a potential failure. (This is an area that organizations could easily correct through training and other easily implementable processes.)

4. People with intuitive concerns about certain risks sometimes are dismissed because they lack extensive data to support their concerns. (It’s easy to dismiss someone under the guise of “You don’t know what you’re talking about.” Most of the time this is correct, however on occassion their wisdom can save the day.)

5. Organizations often overestimate how human and system redundancy they have in place to protect them from catastrophe. (Oftentimes, systems were adequate yesterday, yet insufficient for today’s needs. Finding the time and resources to examine the adequacy of systems and processes is difficult, yet important in a cash-strapped organization.)

6. People often underestimate the probability of what they perceive to be extremely low probability events. (This is where scenario planning can provide insights into the “What Ifs” of your world.)

7. Cognitive biases often distort managerial judgments, contributing to catastrophe. (I would also add that the emotional connection to judgements and decision-making often distort the outcome.)

If and when the BP Story slows and investigations into “What Really Happened” begin to emerge, the storyline will resemble that of Toyota, the financial crisis and numerous other stories. And the conclusion will be, “This too was preventable.” The technology to prevent it was present. The warning signs were present to take precautionary steps. The resources and conviction to move forward is what was missing. Hopefully, some day we will learn the lessons of Silent Problems.

Tags: BP, Michael Roberto, silent problem
Posted in Risk | No Comments »

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.

Tags: edge of what's legal, Poloroid, ponzi scheme, silent problem, Sun Country, Tom Petters
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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.

Tags: economic collapse, Euro, European Union, silent problem, Spain
Posted in Silent Problems, Uncategorized | No Comments »

Toyota’s Who Is No. 1 Challenge

Friday, January 29th, 2010

Everyone knows the challenge Toyota Motor Company is facing with sticky gas pedals. We know that Toyota and its dealers have suspended manufacturing and sales of the affected models. We know that millions of current owners are greatly concerned about the cars they drive to work or use to transport their family. We know that a design fix has been made by Toyota’s supplier CTS, and it is shipping. We don’t know who will receive the limited resource (the new pedal design) first.

So here is Toyota’s Who Is No. 1 Challenge.

The Factory Scenario: If the factory receives the parts first, production facilities can be restarted, 1000s of employees will move back to a normal work schedule, and new cars can be shipped to dealers and ultimately purchased by consumers.

The Dealer Scenario: If the dealers start to receive the updated pedal assemblies first, they can begin installing them on cars in their lots, which will enable new car sales to resume. In turn, plants will remain idol and cars currently in use will remain at risk.

The Customer Scenario: If the customer is the top priority, new pedal assemblies will be shipped to dealers and cars with defective pedals that are currently in use can be repaired, thereby satisfying the needs of the existent customer. In this scenario, plants remain idle, and new cars on dealer lots aren’t available for sell.

The Modification: Toyota and its supplier CTS is talking about providing a modifaction kit for cars currently in use. This would allow updated pedal assemblies to be used by the factory and dealer installs on new cars currently sitting on dealer lots. Will customers be truly satisfied with a so-called fix?

Which scenario will Toyota pursue? Which scenario should Toyota pursue?

It’s a tricky question, because it gets to the crux of “Who is No. 1.” If Corporate Profits are Number 1, factories will receive the assemblies and a few might leak through to the dealers. If the Dealer is No. 1, dealers can begin moving stagnant inventory and keep their sales staff productive. If the Customer is No. 1, consumers will feel valued and might be forgiving.

Now let’s take one additional piece of information into consideration, this being Toyota’s Mission and Values Statements.

Mission Statement

“To attract and attain customers with high-valued products and services and the most satisfying ownership experience in America.”

Vision Statement

“To be the most successful and respected car company in America.”

With everything now on the line. Which next step should Toyota pursue? I believe their next step will truly determine whether or not they live their Mission and Vision Statements. I believe it will define Toyota’s future success, or decline. Unfortunately, it could have all be avoided.

What do you think? Which demand point should recieve the new pedal assemblies?

Tags: CTS, pedal assemblies, recall, silent problem, Toyota, who is no. 1
Posted in Leadership, Risk | No Comments »

Iran’s Growing Silent Problem

Thursday, January 7th, 2010

Silent Problems aren’t necessarily silent, especially in the case of Iran. For close to a year now, large sectors of the Iranian populace has felt that last year’s election was a sham. Incumbant president Mahmoud Akmadinejad stole the election from challenger Mir Hosein Mousavi. In recent months, Akmadinejad’s regime has discouraged civil unrest through physical force and in recent weeks, massive killings.

In the most recent edition of “The Economist” an article titled The beginning of the end discusses the current situation inside Iran. The first couple of sentences capture the essence of the article, NO ONE knows whether the Iranian regime’s latest bout of violent repression marks an ill-judged step towards its own much-merited demise or if it will cow the dissenters into sullen but long-lasting acquiescence. But the violence marks a change in the nature of the struggle that has been fought out since last June’s tainted presidential election.

I’ve been following the Iranian struggles story with great interest. It’s one marked with repression, violence and hope. But there is another reason, it is a case study around how silent problems get solved, even when an oppressive regime is in power. And therefore, I was surprised when I read this sentence.

The fate of Iran will be decided inside the country.

As much as some would like, silent problems rarely fade away into the sunset - lost forever - gone. Instead, they morph and grow more virulent with time. And silent problems want to be seen, heard and become visible. So despite all of the oppression currently underway inside Iran, this silent problem is not going away anytime soon. The eventual outcome is unknown. And yes, the fate of Iran will be decided inside the country.

Tags: civil unrest, Iran, Mahmoud Akmadinejad, Mir Hosein Mousave, silent problem
Posted in Uncategorized | No Comments »

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.

Tags: Leadership, MOCA, silent problem
Posted in Leadership, Silent Problems, Strategy, Without Warning Event | No Comments »

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.

Tags: China, export, import, silent problem
Posted in International Trade, Risk, Silent Problems, Without Warning Event | No Comments »

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.

Tags: entanglement, silent problem, Without Warning
Posted in Leadership, Silent Problems, Without Warning Event | No Comments »

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.

Tags: China, Quality, silent problem
Posted in International Trade, Risk, Silent Problems, Without Warning Event | No Comments »

“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.

Tags: bullies, Carstarphen, Leadership, silent problem, toxic work enviroment
Posted in Leadership, Silent Problems, Uncategorized, Without Warning Event | No Comments »

Rodney Johnson - Without Warning