Doing vs. Thinking – A case for corporate culture change

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by Prabhakar Gopalan

If you have been following the news lately – two CEO actions might rank at the top of the absurdity list for CEOs in corporate America acting without thinking.

HP’s CEO Leo Apotheker announced HP was exiting the PC business without a plan on what HP was going to do with the business or its customers.  Reed Hastings announced Netflix was going to split into two companies against consumer criticism over its recent pricing changes.

A systemic problem

You could overlook these actions as one-off errors.  I would argue these are actually systemic problems in how decisions are made in corporate America.  When you have boards that are ineffective, advisors (consulting firms) that produce nothing but PowerPoints loaded with graphs and charts from freshly minted MBAs with no real world experience or insight, partners busy selling business, and a culture where CEOs are expected to be corporate saviors, you end up with too much power in the hands of one person or group of people who lack empathy and a systemic understanding of their decisions and impact.

The way we have dysfunctional organizations structured today is the following – lots of powerless doers and a hierarchy of powerful decision makers.  The doers actually go and get real work done.  The decision makers simply make decisions with no understanding of action or result.  These are the wordsmiths and spin factory engines that feed the media and the public with hastily made PowerPoints and press briefs created by PR factories dedicated to the cause of the corporation.

Back to the question on Apotheker and Hastings.  Why did they act this way?  Was it lack of empathy for their users?  Was it because they lack the ability to listen? Was it because they had poor advice?  Was it because their leadership team was ineffective?  What motivates people to make such hasty and bad decisions?  Is it power?

In fact, Hastings decision seemed so hasty (no pun intended) that Netflix didn’t even check for the ownership of Twitter account Qwikster or make an effort to acquire it before making the announcement.

I want to point to two resources that speak on power, corruption and empathy that are worth looking at in this context:

Exhibit A is a recent article in Wired magazine – How Power Corrupts. It concludes:

The larger lesson is that Foucault had a point: The dynamics of power can profoundly influence how we think. When we climb the ladder of status, our inner arguments get warped and our natural sympathy for others is vanquished. Instead of fretting about the effects of our actions, we just go ahead and act. We deserve what we want. And how dare they resist. Don’t they know who we are?

Exhibit B is a book by Harvard Business School professor Rakesh KhuranaSearching for a Corporate Savior: The irrational quest for charismatic CEOs. Rather than write my own review of this book, let me quote the top reader review on Amazon for this book :

A brutally honest look at what is wrong with how CEOs are chosen in America today. I read an advance copy of this book and could not believe it was allowed to go to press. Dr. Khurana certainly has put his professional aspirations on the line to be so bold, but this is the kind of book that makes a difference in the world.

This book presents what I considered some amazing and enlightening information not normally available to ordinary people. We can read about the stupefying emoluments, titanic disasters, and spectacular firings of CEOs in the popular press, but it is hard to find out the inner workings of how these people got into these positions of influence to begin with. Many of the academic treatises on management I have read seem like distant observations from an ivory tower. Refreshingly, parts of this book sounded to me like the information came from furtive phone calls late at night.

Of course, part of the problem is that the foxes are already in charge of the chicken coop. I, too, would recommend this book to members of corporate boards responsible for the performance of top executives. There are plenty of brilliant executives who should be promoted based upon sound character and true leadership ability. Everyone knows that in many cases this is not happening, but Dr. Khurana has identified the defective process that underlies the problem. It is up to boards of directors to learn about and correct their mistakes.

The final page of the book uses an analogy from the Wizard of Oz about drawing back the curtain to shed light on the inner workings of power, and Dr. Khurana has done a good job of this. His book is to CEO succession as Sinclair Lewis’ “The Jungle” was to the meat packing industry–it will turn your stomach and make you cry out for change if you read it.

Let’s not forget that there are managers  that handled similar circumstances with much better outcomes not just for the companies or its shareholders, but for the users, customers and the larger market as a whole.  IBM exited the PC business gracefully with a clear plan.  Google and VMware raised prices recently but acted responsibly against user backlash.  How often do we see these kind of actions?

So what is the solution?

The solution isn’t more regulation or oversight.  That is just putting more watchers instead of doers.  What we need is a radical change in corporate culture.  A culture of transparency, empathetic and systemic understanding of problems, decisions and impacts, inclusive and collaborative decision-making across the entire organization.

Unless we change organizational design, flattening meaningless structures, hierarchies and letting people who do the work make the decisions collaboratively and transparently, we will see these managerial overheads bring down value quickly and irreversibly.

Prabhakar Gopalan

Tweet this: Doing vs. Thinking – A case for corporate culture change #leadership #innovation #prodmgmt

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