Suppose your company is heading for a cliff. What’s more important staying the course or survival? Painted in stark terms, it’s easy to say “change course”. But in offices across the country every day, people at all levels soldier on through bad decisions and lead their companies toward cliffs of varying degrees of severity.
Why is it so hard to do the right thing?
As the saying goes, the fish stinks from the head down. If your company has a hard time cutting it’s losses, it’s probably because you, as the CEO, have made it impossible for your managers to change direction without hurting their careers. As a result, small and correctable mistakes get covered up and become catastrophic. If the problem starts from the top down, so must the solution. It’s up to you to create a culture that can acknowledge problems and react to them quickly. This is central to the art of being an effective, long-term CEO of a profitable company. (And yes, that’s the goal that most of us strive for longevity and profitability.)The Wall Street Journal recently told a story of how Christopher McCormick the CEO of L.L. Bean up in Maine reversed coure on a pretty major initiative. The company had gone pretty far down the road toward building a new call center in a small Maine city. They had a building. They were building the team. They were on their way–when they hit a major bump in the road. A major cell phone company had also decided to open a call center in the same small town. For a variety of sound reasons, McCormick decided that his company would be at a long term disadvantage in recruiting a great work force. Then he came face to face with one of the biggest leadership challenges–changing his mind.
His staff had worked hard to create a top-flight facility and meet schedules and budgets. Changing direction could cost as much as $500,000– a big hit in any company. And the city fathers of the affected town orchestrated a huge outcry. It would have been easy to push ahead and paper over any problems. Instead, McCormick did the right thing. He asked his team to put their energy into developing a new plan. The story has a happy ending. The new facility will be up and running and they’ve cut the possible cost impact. More importantly, McCormick believes that he’s taught his company some important lessons.
Four Tips From L.L. Bean’s Experience
In the Wall Street Journal article (which ran on 2/6/06) McCormick suggests four tips for encouraging better decision making in your company:
First, encourage consideration of multiple alternatives.
Second, discourage people who champion a single idea
Third, evaluate alternatives objectively
Finally, don’t worry about past cost; look for the best, long-term solution.
I really like these tips and heartily endorse them. They are in synch with a concept that I call “metrics driven innovation”. I’ll talk more about that in my next post.