Following on from last months’ topic on company culture, I thought I’d share how a new CEO brought about a change in a culture that impacted the company’s success and turned it from a loss maker to a money maker. Many of you will have heard of this man and his story, however, it is always helpful to have a reminder.
Alan who has now retired, joined the new company as CEO and he was brought in to halt the decline to bankruptcy that seemed to be inevitable. The company was in such a bad state that the board unconventionally decided to take on Alan who was from outside the company and from outside the industry. Alan started his career as an engineer and was keen on proven processes to achieve results, he had successfully managed his previous company making it a leaner and more profitable business and the new company hoped he would do the same for them.
The problem is the system, not the people
Although his new board had given him carte blanche to change the leadership team, he advised them that he didn’t think he would need to replace many people. Alan’s initial assessment of the company’s failed management was that it was the system—and not the people—that was the problem. His solution was to use a peer accountability system that had worked well for him in the past. The main part of this system was a weekly leadership meeting he called the “business plan review” (BPR).
Every week, each leadership team was expected to present a color-coded update of his or her progress toward meeting key company goals. Projects that were on track or ahead of schedule were coded green, yellow indicated that there were potential issues or concerns, and red flagged those programs that were behind schedule or off plan.
For the first few weeks everyone came to the meeting with all their goals coded green. The culture of the company encouraged internal competition and no one wanted to admit to being off track or having problems. Initially, the leadership team resisted the BPR. They had important work to do and didn’t have time for these mandatory weekly sessions. They were used to working in their own ‘kingdoms’, where their authority was unquestioned and they were in total control. They usually kept to themselves and stayed out of each other’s way. When the leadership team came together, they were fierce competitors. Alan’s expectation was that they would become skilled collaborators. They would come together for weekly sessions where they would provide honest reports and be accountable to each other. To the leadership team this appeared like a crazy idea and a sure route to unemployment.
One of the leaders, Mark, who saw no value in the BPR complained to Alan that he needed to keep focused on his business unit. He felt the meetings were a waste of his time and detracted from his real work. Alan asked him to trust in the process. Mark felt he should have been the new CEO and that his time with the company was limited. So, he decided if he was going to lose his job, he might as well go out “in a blaze of glory.” His unit had been working on a project that was in serious trouble, and he decided at the next BPR meeting, he would code it red. His colleagues were stunned when he made this announcement at the leadership meeting and felt he must surely lose his job. But Alan seized upon the moment to engage the whole leadership team on how they could collaborate together to solve the business issue Mark shared with the group.
Alan understood that the prime lever of an effective organization is a highly collaborative senior leadership team. Without this lever, it’s probably impossible, to have a collaborative organization. He was determined to transform the leadership team from rivals into a team of collaborators.
Building shared understanding and accountability
Color-coded status reports provide a level of transparency that is sometimes absent from the usual numerical reports, and processing these visual updates as a team instils a discipline of peer accountability that is often lacking in leadership teams. The process of frequently gathering the whole team in one place to review all key goals helps create a shared understanding about the most important issues of the business. But more importantly, it provides opportunities for the team members to collaborate and share their activities to help create extraordinary performance.
Alan was a firm believer in the BPR process because he understood building a highly effective team is not a one-time off-site team-building event, but rather a frequent gathering of the team in the same place at the same time for crucial business conversations. The quality of a team is dependent upon the quality of the conversation, and that means building a shared understanding of the business.
Alan ensured that he created an environment where it was acceptable to honestly report the actual status of key goals. He also persuaded the team that there was no value in false status reports to give the impression that everything is going well for the sake of personal image. When people have a process that makes them feel accountable to each other and is safe to tell the truth about the actual status of goals, they allow themselves the opportunity to support each other to resolve critical issues.
The Alan in this story is Alan Mulally and he became the CEO of Ford Motor Company in 2006. He resigned in 2014. The Mark in this story is Mark Fields who took over from Alan Mulally as CEO.
words | Sylvia Kenna, The HR Dept.