In Sydney Finkelstein’s classic study of corporate collapses, Why Smart Executives Fail, the evidence that business leaders would have needed to avoid fiasco was available to them in every one of the cases that the author and his team examined. The book was written in 2004, yet the problem it highlights persists. My colleagues and I have spent almost 20 years examining crises, including Hurricane Katrina and the current coronavirus pandemic. In these situations, too, the cracks in organization, system, and community foundations have often been clear to see, if leadership had been looking. But despite warnings, leaders have been unable, or unwilling, to give credence to the risks. They overlooked or ignored them — and the cost of their inaction has been high.
The root of this issue is legacy thinking from the industrial age, when organizations were perceived as linear, fairly static systems. Knowledge and authority resided at the top, and flowed downhill through rigid hierarchies. Executive status was derived, in part, by being the person with all the answers. Despite the emergence of matrix management and other approaches to flatten hierarchies, and talk about moving beyond command-and-control leadership, the model remains deeply entrenched.
Interestingly, executives readily accept the dynamics of external markets, over which they have little control, as customers embrace a new “must have” product or as investors suddenly sour on a certain sector. Yet they fail to see how the same behaviors manifest internally, within their own organizations. They prefer the illusion of control and high degrees of predictability. However, just as with external markets, the chance of any new initiative, product, or service being spot-on from an internal perspective right from the start is actually quite small. If you’re a business leader, to think otherwise is to pretend that you’re capable of some miracle of perfection.
Instead, you should embrace a different way of knowing the organization: as a complex, adaptive system. A basic tenet of such systems is that no one person knows or controls everything. These systems can achieve a high degree of order through self-organization and robust feedback loops. As an executive, your charge is to not only send strategy and other guidance outward but also, and equally important, to be attuned to the signals that come back — the good, the bad, and the ugly — and be ready to respond.
You should embrace a different way of knowing the organization: as a complex, adaptive system. A basic tenet of such systems is that no one person knows or controls everything.
Michael Beer, professor emeritus at Harvard Business School, has been looking at internal feedback loops for some time. He and colleague Russell Eisenstat first described their process for ensuring that unvarnished feedback makes it up to the top in a Harvard Business Review article in 2004, and Beer has revisited it in his new book, Fit to Compete.
Beer identifies “silent killers” — much like plaque in a person’s arteries — that block and distort the flow of meaningful information in an organization and thus compromise its health. Beer told me, “I have found that executives don’t hear the truth because they don’t know how to do it. They think, ‘I know what I want to do, and I want to get it done rapidly.’ They don’t know how to get the collective voice [of the organization] in a disciplined, coherent way and that they see as valid. [But] if they hear from only one person, any dissonance is easily dismissed.”
To make sure your feedback loops don’t become blocked or distorted, here are three key actions you can take.
Focus on clarity. Beer told me that one of the most common silent killers in an organization is a lack of clarity around strategy, values, and priorities. He noted that although things might seem well-defined to the few at the top, they can quickly become fuzzy as they’re translated down and across the organization, and beyond, to strategic partners and other key stakeholders. And competing priorities a level or two below the polished strategy statement, where it gets executed, are common.
Creating a safe way for people to ask questions and share feedback is also important to fostering clarity. “Most people want to do the right thing,” Beer said. “And most know what frustrates them in doing it. However, they often don’t have a place to express that something makes no sense or conflicts with another process or priority.”
If your organization is crystal clear and consistent about objectives and operating principles, you can recontextualize what might otherwise seem like a “complaint” as an attempt to improve individual and collective fulfilment of the mission. The feedback highlights confusion that can then be resolved.
Banish the “HPPO.” Although formal lines of authority are always going to exist in organizations, it’s important to create processes that put titles aside. There’s a natural tendency to defer to the highest-paid person’s opinion (HPPO) — or highest ranked or degreed. The U.S. military banishes the “HPPO” through its After Action Review (AAR) process, which has four simple components:
1. What was supposed to happen?
2. What actually happened?
3. What would we do the same way next time?
4. What would we do differently?
By focusing on the alignment between intentions and outcomes — and how to better align them in the future, too — you de-emphasize individual heroics or shortcomings and emphasize your organization’s system design and resourcing. Avoiding blame and shame also fosters the flow of feedback from the bottom up and increases employees’ willingness to learn and engage.
I have read many AARs. Most hew tightly to operational details — what was done. The learning is even richer, though, when the process includes the human factors — how the group functioned as a team. You might discover, for example, that no one wants ever again to have to scramble because of a late component delivery, even if they are happy about how they pulled together to prevent calamity.
Destigmatize mistakes. Much has been written about the benefits of psychologically safe environments and embracing failure as an opportunity for learning. These ideas were brought home to me when I interviewed Jimmy Dunne, managing principal at investment bank Sandler O’Neill (now Piper Sandler) for my recent book. When I asked Dunne how he managed the chaos of a financial trading operation, he said, “Bad news finds me fast.” He explained that being able to quickly identify what’s wrong helps him keep the bank on track, and he also said that he would never fire anyone for making an honest mistake, because the hurly-burly of financial markets makes perfection impossible. In Dunne’s view, the best way to protect customers and their assets is by rapidly surfacing missteps. And protecting customers and their assets safeguards the firm’s reputation.
So recast “trial and error” as “trial and learn.” As difficult as it might be, it’s smarter to accept fallibility and prime yourself and your people for regular recalibration than to aspire to (or pretend to achieve) perfection.
The truth always finds its way to the surface. Denying it or being too slow to accept it can result in avoidable errors, poor performance, and even scandal. Leading requires the willingness to hear the truth, the discipline to encourage communication from all directions, and the courage to face the facts. The alternative to handling the truth might be even harder: the inevitable consequences of not handling it.