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‘If you can’t do it, we’ll find somebody who can’ can be disastrous

Recent corporate scandals and mishaps should remind us that what can feel like the creation of a pragmatic sense of urgency in the “C-Suite” can translate into deeply dysfunctional behavior farther down the organization.

Just today, Samsung announced with (one presumes) deep embarrassment that rather than being able to fix their exploding Galaxy 7 note phones that they intended to cancel all production of the devices.  Observers blame the intense pressure on the development team to come up with the newest, sexiest, original designs in the light of the release of a new iPhone design dismissed by many as “dull.”  The entire production system was put under pressure and although the cause of the problem is  not yet known, it seems clear that a deep hunger to take share from Apple and build its reputation as an innovator contributed.

Then of course, we have the still-unresolved mess at Volkswagen, in which software that allowed the company’s cars to cheat on diesel emissions tests was widely deployed.  Some 11 million vehicles (that we know of at any rate) are affected and the costs to the company are jaw-dropping.  The blame?  Leaders who instilled fear in their teams for not meeting ambitious goals for cost, fuel efficiency and emissions.

And let’s not forget the small matter of some 5,300 Wells Fargo employees being fired for scams such as opening fake bank accounts for customers, moving customers’ money into those accounts and helping the bank pocket the resulting overdraft and other fees made possible by this behavior.  With new evidence being released that the CEO and Board knew that this was going on for some years before it became a public hot topic, one has to question the reliability of their internal controls and the trustworthiness of their judgment.

These are just three high profile cases in the news when the (often laudable) pressure to drive high performance goes awry.  What leaders need to remember is that without equally strong pressures to speak the truth, to reveal problems, and to work as a team to resolve them, the consequences can be disastrous.

A recent editorial by Lou Gerstner, legendary for turnarounds at IBM and RJR Nabisco, reminds us of something we should never forget:  Company leaders create and reinforce culture.  In a phrase often attributed to Peter Drucker:  Culture eats strategy for breakfast.

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