Can Success Actually Lead to Failure?


In the April 2011 issue of HBR,  Francesca Gino and Gary P. Pisano, write about the urge to celebrate successes in business, and moving on to the next challenge. They suggest that without performing an autopsy in an to determine the specific source of the success, a leader could be setting the enterprise up for failure. This article has resonated with me for two reasons; one is I have witnessed Wall Street firms committing attribution errors daily, two is a recent conversation with one of my clients regarding a particular success being experienced.

The following is an excerpt from my email to the client……

I have been thinking of the results we discussed last week regarding the plants and progress to goal. Recently I read an article in Harvard Business Review (HBR) that really made me think about that success. After we celebrate and high five each other, let’s stop and perform on analysis of our contribution to the success. We use DMAIC when processes go wrong. Why not then when they go right? We used a process to make the decision, let’s scrutinize the process, and learn from this. From where did the source of the success emanate, directly from our process or from another source we had not considered?

Below is a simple model for attribution of the source of outcomes:

Simple Model of Business Learning

Along the horizontal axis there are a range of outcomes categorized in two major groups; undesirable and desirable. Along the vertical axis plot the source of the inputs; internal and external. This provides a framework for ordering outcomes and attributing them to the source of the input. Lest we ignore the existence of happenstance.

1. External source of input refers to “luck, chance, tripping across opportunity”. An example would be big orders from companies who are not being actively pursued by the company, or the economy suddenly springs forward. The challenge here is for the assessor to be as candid as possible. Have you ever stood above a crib of a beautiful newborn and felt the desire to pick that newborn up? This will be the same feeling any assessor would experience when reviewing enterprise success.

2. Internal source of input refers to those choices, decisions, investments etc. made by decision makers conducting the assessment. An example would be discovering a particular plant has been over-stocking raw material inventory, then taking steps to eliminate the practice and reduce or eliminate the value destroyer.

3. Undesirable outcomes are those outcomes of measure reducing resources through the enterprise, or those of measure below a range of expected outcomes. Undesirable outcomes are not always evident. The more common quantifiable sort are those consuming cash, increasing headcount, and reducing other financial metrics. The unquantifiable sort would be those decreasing morale, teamworks, employee or brand loyalty.

4. Desirable outcomes are those outcomes of measure increasing resources through the enterprise, or those of measure within or above the expected range of outcomes. Once again, remember there are non-financial desirable outcomes.

After ordering the inputs and outcomes within the framework above, it becomes evident that business results are sometimes from what we do on purpose and sometimes we were just ‘lucky or unlucky’.

I want to focus on the internal sources of inputs and break those down further to a model of attributions for you to use.

Model of Attribution from Controllable Inputs

I would like to recommend the three of you, focusing on the turnaround of results in the plant and list:

1. What were the controllable inputs?

2. What were the non-controllable inputs?

3. What were the outcomes that were on the low end of expectations?

4. What were the outcomes that were on the high end of expectations?

Controllable inputs are defined as “We did this on purpose, WITH a clearly defined purpose AND clear goal in mind.” An example would be, we made the decision to hand operational control of both plants to someone we trusted would perform and the decisions he made resulted in increasing enterprise value based on a PLAN with desired outcomes established prior.

Non-controllable inputs are defined as “We did NOT do this on purpose WITH a clearly defined purpose AND a clear goal in mind. Or some input from outside the decision maker’s control.” An example would be we promoted someone to operational control of both plants, hoping that they would find and eliminate or reduce the enterprise value destroyers. Another example would be the shipping guy discovers a business practice destroying value, without input from the assessor, takes steps to eliminate the practice resulting in a value enhancing activity for the enterprise.

Outcomes on the low end of expectations are those outcomes below the average of the range expected prior to the input being made.

Outcomes on the high end of expectations are those outcomes above the average of the range expected prior to the input being made.

The usefulness of this post mortem of success is determining the following; Where we got ‘lucky’, Unintended Rewards; Where we are good, High Competency; where we need focus, Low Competency; and avoiding the “doing things over and again, expecting different results,” intended Consequences.

Something I have seen and continue to see throughout my career; I like to call call it the Spiral of Death. Something will happen that produces Unintended Rewards. The belief becomes that it was due to High Competency on the part of the assessor. The decision is then made to apply internal resources deliberately and surprising to everyone, outcomes decline. The last step is the starving of resources to the input and acceptance of low desirable outcomes. And this is how we get unexceptional results from common business practice. Or another way of saying this is “does anyone remember why or how we started doing X?”

Knowing the results came from Unintended Rewards presents the decision makers the opportunity to determine if outcomes can be sustained and whether or not to dedicate company resources. Also learned from this, is the Company capable of finding opportunities and exploiting them. A valuable trait indeed!

Another usefulness of this exercise presents to you where choices are made that yield results you want, the process and practices from that go to High Competency and reveal your company’s decision making competencies.

Where the Low Competencies are revealed is an opportunity to evaluate whether the outcomes can be increased, or if the resources can be better allocated elsewhere. This could be the worst of the scenarios as this indicates where resources are being expended and the results are below the desired outcomes.

Confronting the Intended Consequences, will enable the firm’s resources marginally to be applied to potentially more sustainable High End Desirable Outcomes, remove distractions from the company’s workforce, and focus the decision makers on experimenting with more promising ventures. Depending on the intensity.

This is a tough self reflective exercise for the leadership of any company to do. The fundamental attribution theory becomes practice when we accept the credit for successes and assign the failures to someone or something else. I experienced fundamental attribution theory daily in my early career when working as a financial advisor. Clients would take the credit for the stocks in their accounts that went up in value and blame me for the ones that went down. This exercise ranged from day to day; to month to month; from purchase to sale.

Jim

Advertisements

The “Cost” of Bad Customer Service


Today, I encountered a glitch with the US Airways web site. I am a Chairman Level customer with them and try to fly them as often as possible. Their direct competitor for my business is Delta. Delta offers; on board WiFi; more than one power outlet in the gate area; and more flight options. Yet, Delta has Atlanta. And only those readers who are frequent flyers understand the Monte Carlo scenario that is Atlanta.

So I spend with US Airways between $30,000 to $50,000 per year flying to my clients. Today a US Airways customer service representative committed the following acts that drive us all crazy;
1. She did not listen to the reason for my call.
2. She told me to call someone else.
3. She never asked me for the error code to tell me what I did wrong or how to correct it.
4. She hung up on me.

I then called back, spoke to the supervisor. He did the following;
1. Listened to what made me call in the first place.
2. Asked me the error code.
3. Told me how to fix it.
4. Acted like he cared about the other rep hanging up.

He apologized to me. I told him the apology should come from the one who hung up. And further, after the flight this week, they will lose my business if she does not apologize directly to me.

He asked if I recorded her name. I had not, it was mumbled and I never thought someone in customer service with US Airways would just hang up on someone! After telling him I know that they record the calls, and can look at the records to see who answered the call. (He checked my Chairman account to see if she accessed it to ‘tag’ her and she had not).

I then took him through the math of his next decision.
1. The cost of looking up the information = -1 hour X $50/hour = -$50
2. The cost of coaching her = -1 hour X $50/hour = -$50
3. Lost Revenues if they don’t = low end ann budget = $30,000
(I realize that $50 is overstating it, plug in any reasonable number you want).

They can save $100 and lose $30,000. The next step is theirs, but at least $29,900 hangs in the balance. Choose well Jovan!

Inspired Sales Leadership


Just completed a call with one of my clients. They report they are experiencing the best quarter in sales in over 17 years. The Principal I spoke with was so excited. They have tried several consultants and several methods of improving sales over the years. When we built focus and credibility around the sales effort with accountability as mortar, the magic happens.