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Ethical Leaders Do Not Say “I Know Nothing”

Categories: Leadership and Management Lessons , Ethics
Sergeant Schultz

Okay, I’ll admit it. I do still enjoy watching Hogan’s Heroes sometimes. In that 1960s comedy about Americans in a German POW camp, one of the most endearing characters is Sergeant Schultz. Schultz, who is happy to have this non-combat job in the German army, avoids getting in trouble so he won’t get transferred to the Russian front. So, whenever he sees or hears the American POWs are up to something he says, “I know nothing” and quickly exits stage right.

Too often today we see leaders who behave like Schultz; they “know nothing.” And with some leaders, it isn’t just avoiding decisions involving ethical dilemmas, it is failing to recognize future dilemmas the organization’s strategies may create for their teams.

Power of Noticing. I recently discovered an interesting book The Power of Noticing: What the Best Leaders See by Max Bazerman. Bazerman, who is a Harvard Business School professor, writes about the impact of what happens when leaders fail to notice or recognize future side effects of business decisions. If you have time, I recommend this Harvard Business School webinar on the book and topic.

One of the examples used by Bazerman is what happened when Walmart buyers executed their buying strategies in pursuit of Walmart’s well-publicized mission – “Everyday low prices.” The case surrounded the Blitz gas can, which once held 80 percent of that market segment and Walmart was the primary customer. In short the gas can sold in Walmart failed to block gasoline vapors effectively and several cases of explosions and deaths resulted. Because Walmart effectively shifts all product liability to its suppliers, the Blitz company had to bear all the financial liability for these incidents.

Blitz later redesigned the can to add a vapor block. They approached Walmart and asked to pass along the extra cost of 80 cents per can to Walmart and the consumer. Walmart buyers, following procedures that supported “Everyday low prices” basically told Blitz to absorb the cost. Blitz couldn’t absorb the cost, so they kept making and selling the same can to Walmart. The Blitz CEO later reached out to the Walmart CEO asking Walmart to participate in a gas can safety campaign and Walmart refused.

Blitz eventually went out of business likely because of the product liability claims and the fact they were controlled by one customer, Walmart.

Bazerman uses this case and others to point out how leaders regularly don’t notice or think about possible negative or damaging side effects of strategies deployed in the spirit of achieving their mission.

My Four Lessons or Takeaways. As I thought about this, here are four of my takeaways.

  1. When your team develops a strategy ask questions about the action plan; probe into possible “harmful” side effects. Recognize that your teammates might tell you all the positive things and hide, downplay, or simply miss the negative things. Recognize the difference between just competitive issues and issues that could do harm.
  2. If you are an optimist by nature and a strategy has any harmful possibilities, assign a “watch dog” role to someone on your team to ask more probing and uncomfortable questions while you are in the room, listening.
  3. Make sure the organization understands your ethical principles and that these principles guide decision-making, strategy formation, and bonus formation.
  4. Remember this – your organization’s compensation system, if designed correctly, will drive behavior. Does your system have the potential to incent people to ignore harmful side effects or to at least think, “I know nothing.”

Bazerman reminds us how easy it is for us to simply fail to notice things and that is one thing we can improve. It is worse, though, to see something and turn away thinking, “I know nothing.” That is either an ethical or a courage issue. I’ll just leave that up to you to think about on your own.

September 08, 2014 16:44
 

5 Lessons from The Bully Pulpit

Category: Books

 

As I read Doris Kearns Goodwin’s The Bully Pulpit this summer, I was awestruck - awestruck by her work and awestruck by the leadership of Teddy Roosevelt, William Taft, and Samuel S. McClure. While Goodwin tells us about these three leaders and others, she also teaches us about the American political and social landscape of 1900.

Here are three very significant forces:

  1. Wealthy industrialists were creating business “trusts” that virtually eliminated competition.
  2. These same wealthy men had figured-out how to use money to buy political clout. This was easily done in the U.S. Senate because Senators were not elected then, they were appointed by each state’s legislature. Local legislative leaders were easily paid off to assure the “right” U.S. senators got appointed. Thus, very few laws could be passed to hurt these wealthy industrialists.
  3. The primary method for Americans to get their information was from print media – no radio, no television, no internet. Newspapers and magazines were important methods of communication and most of them were controlled by very wealthy men.

So, it is at that moment that our central leader, Teddy Roosevelt, enters the picture. And he figures-out how to use the talents of others to deal with these forces and change the structure of the United States forever.

Five Lessons. While I learned hundreds of things from Goodwin’s book, here are five of my takeaways.

1. Power Brokers Never Thought Roosevelt Would Become President. As New York Police Commissioner and Governor of New York, Roosevelt was making life difficult for the powerful New York politicians. He exposed their corrupt behavior and citizens loved him for it. So, to get him out of the way, the political leaders brokered his selection as the Vice-Presidential candidate for President William McKinley when he ran for re-election in 1900. They thought this would get Roosevelt out of New York and everyone knew that a Vice-President has no power and really has no voice. But just months after McKinley was re-elected, he was assassinated and Roosevelt became our youngest President at age 43. He would be the last man the power brokers would have wanted to be President.

2. Presidential Personality Fits. Teddy Roosevelt had a charismatic personality that was very well-suited to the communication demands of the presidency. He loved debate and was energized by human interaction. He loved being President and he enjoyed making things happen. He LOVED fighting with powerful interests who exhibited unethical behavior. He had a thick skin and didn’t care if he hurt anyone’s feelings.

William Howard Taft, who Roosevelt hand-picked to be his Presidential successor in 1908, was a kind, gentle, and thoughtful man. Likely better suited to be Chief Justice, which he was later appointed to by President Harding, he didn’t enjoy spontaneous debate. He preferred to think things through in detail before taking action.

3. Teddy Roosevelt Liked Using the Executive Order. On topics Roosevelt felt were in the best interest of citizens, he would famously issue “Executive Orders,” unless there were laws already on the books prohibiting his action. For example, Roosevelt created 150 new national forests, increased the amount of protected land from 42 million acres to 172 million acres, created five national parks, 18 national monuments, and 51 wildlife refuges – all with the Executive Order. One reason he wanted Taft to follow him into the White House was because he knew Taft had the legal and political skills to convert his Executive Orders into law, which Taft later did.


 

4. Emergence of Populist Muckraker Reporters and McClure’s Magazine. In the late 1800’s the print media landscape changed forever when a leader named Samuel McClure launched a new populist magazine, McClures. McClure recruited the most gifted reporters and writers of time – Ida Tarbell, Ray Baker, Lincoln Steffens, William White – to research and publish stories of corruption and greed. They were really hitting their stride at the same time Teddy Roosevelt was gaining recognition.

5. Roosevelt Used Print Media to Help Bust Trusts. From his early days in politics, Roosevelt knew how to make reporters his friends and use them to advance his agenda. He regularly held private interviews with select reporters, like William White, who he knew would accurately explain his position. Roosevelt would carefully articulate why the Trusts were bad for America. While the Sherman Anti-Trust law had been in effect since the 1890s, no one had the political will to take on the monopolies. Roosevelt did and using his rapport with the media to help, he sued and broke-up railroad monopolies, the Standard Oil monopoly, and several others. The corporate landscape changed forever.

Goodwin also describes the details of the relationship between Roosevelt and Taft, which had its ups and downs after Roosevelt left office. I guess there really was no place like the Presidency for a man with his ego.

After I finished the book, I felt like I knew both men – Roosevelt inspired me and Taft, I liked and admired. I hope you will enjoy the same experience.

August 28, 2014 07:45
 

Three Ways Robin Williams Teaches Leaders About Inspiration

Category: Inspire

 

Like most of you, I will miss Robin Williams. While we all know he was a comic genius and that he has wrestled with depression and substance abuse, we are also learning this week about how he personally reached out and inspired thousands of people with small acts of comic kindness. I even saw a piece this morning about how he communicated with and brought happiness to Koko the Gorilla, who is now apparently showing grief in learning that Williams passed away.

Top Three Inspirational Leadership Lessons from Robin Williams’ Characters. Fortunately for fans, he left us with hundreds of characters we will forever remember. I have often used small film clips from his movie characters in my leadership courses. I use these clips when we talk about “inspiration” – which is one of the four most important characteristics of admired leaders. So here are three leadership inspiration tips from three of Williams’ characters.

3. In Good Morning Vietnam, Williams played Adrian Cronauer, who inspired soldiers with his relentless humor during the most trying of war circumstances. His character was popular among his soldier listeners, but not his insecure supervisors. At one point in the story he refuses to go back to work as a protest of supervisory censorship. During this break he meets soldiers on the road in one of the worst fighting areas in Vietnam. They ask him to do an impromptu broadcast, which he does and he sees how it inspires them. He then goes back to work and dedicates this Louis Armstrong song to them. This series of the movie’s best clips ends with his impromptu broadcast scene.

Leadership Inspirational Tip – Recognize the importance humor plays in helping people get through challenging times.

2. Williams played the role of Patch Adams in the film of the same name. While the movie has many interesting and thoughtful turns, the inspirational moment comes when Adams tells the medical board that the role of a doctor is to “treat a person” not a disease. Adams was facing charges at the medical board for teaching his caregivers and patients at his unlicensed medical facility how to “care for someone else.”

Leadership Inspirational Tip – Work hard to understand what each person on your team needs and how each motivates herself/himself. Even when you are leading a group, think about the individual.

1. I think when Williams portrays English teacher John Keating in Dead Poets Society, he teaches us two important lessons. The first lesson is when he stands up on the desk to show the students the importance of putting yourself in a different position so you can see things from a different perspective. And the second lesson, the film’s most famous, is when he has the students listen carefully to a black and white picture while William’s whispers, “Carpe Diem, seize the day, boys. Make your lives extraordinary.” He teaches us that motivation comes from inside and each of us can choose to make our lives successful.

Leadership Inspirational Tips – Put people in different positions so they can grow and widen their views, and encourage individuals to seize new opportunities. Both of these will inspire people.

As I watched these and other Williams’ clips again, I couldn’t help but feel the many ironies between what his characters said and the very sad circumstances that ended his life. One thing is for sure – his creative portrayals have given all of us many inspirational leadership lessons.

August 13, 2014 22:06
 

Demoulas Supermarket – Can an Ego Kill Market Basket?

Category: Ethics

 

When I read this past weekend that the current executive team at Market Basket ordered their workers back to work today or they would be replaced, it confirmed for me they didn’t get it. Unless Arthur T. Demoulas gets back in charge quickly this week, employees aren’t going to return and neither are many of their customers. (As this goes to print Arthur T. has offered to go back-in and run Market Basket.)

Sadly, it appears the personal ego of Arthur S. Demoulas, which has been formed and worn down from years of family disputes, has caused this spectacle. And while he is not the first family member resenting being left out of running a family-business, his recent leadership will go down in future case studies as an example of what happens in family businesses when personal egos clash with a business success formula.

Historical Background. In March I wrote about the largest and oldest family-businesses in the United States and that Demoulas Super Markets, which was founded in 1917, made the list at #15. It is estimated that before the recent problem they had annual sales of nearly $4 billion, operated 71 stores, and employed around 25,000 employees.

The current dispute is really between two grandsons; both named Arthur in honor of the founder. Each present day Arthur is a son of two brothers (George and Telemachus), who bought the original business from their parents in 1954. George died in 1971; his son is Arthur S. Demoulas. Telemachus took over running the business then and in 2008 his son, Arthur T. Demoulas, was elected President.

It is common in family-businesses that when one partner dies or leaves the business and the responsibility of running the business falls on the shoulders of the remaining partner, resentments on both sides emerge. The person left running the business and bearing all the stress, especially in the early years, feels he or she deserves more of the upside in the future. The family of the other party eventually feels left out and if they learn the other side is benefitting more financially than their side, their resentment grows. This is clearly the case with the Demoulas family and there have been many widely published legal disputes over the years.

Current Status. For my readers outside New England, here is a brief update on what has happened. The ownership of the business is not split 50/50. After a court-ruling in the 1990s, the Arthur S. Demoulas side of the family owns 50.5% and the Arthur T. Demoulas side holds the minority balance. Last month the Arthur S. side announced they had fired Arthur T. as President. They hired an outside management team and rumors circulated that Arthur S. was not happy with the company’s profitability and its “low-price” strategy and generous employee benefits.

Obviously, this move presented a huge risk to employees and they reacted strongly. Store managers and employees staged demonstrations and at every Market Basket in New England there were many employee picketers with signs saying “Bring Back Arthur T”. Their objective was to convince customers not to shop at Market Basket in hopes that this would force ownership to re-hire Arthur T. because employees knew he would take care of them.

The employee walk-out and picketing has certainly achieved one objective – customer traffic is down a reported 90% and they are losing millions of dollars a day.

What Have I Learned? Watching this carefully over these weeks I have learned many things – here are three.

First, when a leader’s strategic actions threaten the livelihood of a large percentage of employees, he or she had better develop a strategy in advance for how to deal with side effects.

Second, while the employee walk-out and picketing is certainly forcing shareholders to change their decision, there may be unintended customer side effects too. Some of the customers not shopping at Market Basket are not doing so because they don’t want the hassle of “crossing” the employee picket line, not because they feel a particular bond with the workers. They have historically shopped at Market Basket for lower prices. These customers are finding other retail options and their buying habits are likely being altered. Also, with many suppliers being financially hurt, it is likely Market Basket will face higher prices in the months to come. And this will impact their profitability and may make it difficult for them to continue to be the low price choice. How these side effects will impact Market Basket’s eventual recovery are unknown.

Third, beware of egos when structuring and executing succession plans. One person’s dysfunctional ego can trump a successful business formula.

This story is still evolving and one way or another, its success formula is being altered. In a year or so we’ll see whether one person’s ego can kill a successful business formula.

What do you think?

August 05, 2014 18:24
 

Choosing Armstrong to Walk on the Moon

Category: Core Values

Source: NASA

This week I have enjoyed looking back 45 years to the first moon walk, which happened at 10:56 PM on Sunday, July 20, 1969. I was a camp counselor at Goshen Scout Camps in the hills of Virginia at the time. Being very interested in astronomy and space, I rigged-up the black and white television in the staff administrative building and watched the live feed with a few other interested counselors. I remember at the time wondering why Neil Armstrong got to go first.

Why Did Neil Armstrong Get to Walk First? There were three men on this Apollo 11 mission - Neil Armstrong, Edwin “Buzz” Aldrin, and Michael Collins. Armstrong and Aldrin were the two astronauts who traveled down to the moon on the moon landing module, Eagle, while Collins remained with the command spacecraft revolving around the moon overhead.

Armstrong, who passed away in 2012, was the first person to walk on the moon. Most sources agree that NASA chose him for three reasons. First, he was in the best seat to exit once the craft was on the moon. Second, he was the mission Commander and most senior.

And, third, and more quietly reported, Armstrong had the more humble personality to best live with this honor over his lifetime. And now that I think about this, I rarely remember seeing Armstrong in the limelight. But Buzz Aldrin has loved the limelight, and is often seen on television, like Dancing with The Stars a few years ago.

Don’t forget Michael Collins. As I wrote in a prior blog, Astronaut Michael Collins is often forgotten. He was the command module pilot of this Apollo 11 mission. He was the one who piloted the command spacecraft and orbited the moon waiting for Armstrong and Aldrin to finish "playing" on the moon. He made 25 orbits around the moon and endured 45 minute communication blackouts each time the craft went dark on the opposite side of the moon. I think that, too, took courage.

The leadership stories that emerge from the first moon landing and walk are many. And these stories blossomed because of how NASA selected and determined the best roles for its astronauts. What have you read?

July 23, 2014 14:46
 
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 ABOUT STEVE WOOD

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Steve Wood is the President and Chief Executive Officer (CEO) of Leddy Group and Work Opportunities Unlimited Inc. (WOU). In addition, Steve provides strategic planning and organizational development consulting services to clients.

 

Prior to joining the company, Steve spent 17 years in the banking industry where he was promoted to Senior Vice President and Senior Commercial Loan Officer.
 

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