Beware the tuna sandwich

flickr-tuna-sushi

I went into the boardroom. The chairman was sitting on one side of the table and in front of him was a great platter of sushi which is my favourite food. On my side of the table was a tuna sandwich. That was to tell me that, because I had pushed and insisted upon this meeting, I [the president of the company] was the tuna sandwich in the food chain.

A great 30-minute podcast recently hosted by Evan Davis for BBC Radio 4 looked at examples of managing in a crisis. Each case was completely different but all shared a common theme – the role of emotion (and cultural norms) in decisions, actions and consequences.

The first example was a story recounted by Michael Woodford, former president of Olympus. Mr Woodford had worked for Olympus for 30 years and risen through the ranks to become president of the corporation. His mentor Tsuyoshi Kikukawa – ‘who was like my favourite uncle’ – was the chairman.

Not long after becoming president, Mr Woodford became aware of allegations that Olympus had bought three companies with almost no turnover for over $1 billion. A close business friend translated articles that substantiated the allegations and made them irrefutable. When Mr Woodford spoke to a colleague, he discovered that the chairman was aware of the allegations and had told the entire executive floor to not discuss the article with the president.

The next day, he asked for a meeting with the chairman and it was set for lunchtime, the only available slot. And so he was faced with the tuna sandwich:

And it was a manky tuna sandwich at that, there was no lettuce or crisps around it. A British Rail buffet carriage in the 1980s would not have been proud of this sandwich.

After the meeting, he proceeded with investigating the matter with the accountants. Six letters were written going through the formal process:

It culminated in letter number six when I asked for the resignation of the chairman and the vice president. I knew if they were going to go quietly, which would have been in their interests and for the benefit of the company, that I would have been called to a small meeting. Instead, an extraordinary board meeting was scheduled and I knew there and then I was going to be fired.

The culture of the organisation was to protect the most senior members of the ‘club’. No matter who or what was right or wrong. Within a month, Olympus shares had fallen in value by $7billion wiping 8o% off the value of the company.

Looking back on the experience, Mr Woodford commented:

Organisations have this instinct to protect themselves. Which can be the worst thing. A bad situation can be made ten times worse because of what the organisation chooses to do.  …The day I was fired, people ran with the pack, the new order. That still haunts me today… To become a persona non gratis is very hard to describe. It’s a horrible thing to go through.

Given recent news headlines involving various governments around the world, that is a very astute observation.

The second example offers a fascinating insight into a brand that decided to make a stand in a crisis that risked its reputation in every possible way.

In the late 1980s, the UK was embroiled in the BSE crisis – ‘mad cow disease’. Questions were being asked about whether or not there was a link between BSE in cattle and CJD in humans and whether or not it was safe to consume beef. The scientific facts were inconclusive and scientists were at odds with one another. There was a lot of emotional reporting in the media about the risks, creating growing concerns amongst consumers, particularly families.

At the time, over 80% of the menu in McDonalds restaurants comprised of beef-based products.

With no clear guidance coming from within the food industry, McDonald’s held a scenario planning day to consider how bad the situation was. What was the very worst case scenario and what would be the consequences for the company? It was not a pretty picture.  McDonald’s decided there and then that they would stop selling British beef. All stock would be moved out of all of the stores and somehow they would replace it with alternative supplies. It took 48 hours and was one of the biggest logistical exercises the company had ever undertaken.

For two days, there was little produce left in the stores. And sales barely dropped. People still came into the stores and bought chicken or extra fries instead. McDonald’s felt that it was testament to the power of the brand that people still trusted them and bought whatever food was available. However, it was also made clear that the rest of the industry and the UK government were not best pleased with the decision. A lot of bridge-building was required in the aftermath.

Looking back when asked if McDonald’s had panicked in the crisis, the comment was made:

Crisis management is about being able to make good decisions and being seen to be implementing them. It was the right decision at the right time.

And closing out the interviews, the following observation was given:

You don’t want to manage a successful business as though it is a burning platform. It’s great to be able to respond to a crisis properly but it is better to manage a business in a thoughtful way rather than always be in a fire-fighting situation.

Nokia came to mind with that quote… An excellent podcast (it’s a rather good series in general) and well worth listening to if you can access the recording.

References

Related article


Flickr image: 吞拿魚(金槍魚)壽司 – Tuna sushi kindly shared by Thomas Lok

Utterly unrelated side note: The only dose of food poisoning I have experienced to date was from a dodgy tuna sandwich…

The risk in eliminating risk

Choice

— Update: July 2013 —

Earlier this month there was a news article covering the deaths of two teenagers in a car accident. The cause? It is believed that they were driving dangerously fast in order to get home before a curfew. Missing the deadline would have led to a £100 fine. A lot of money for most students. The car had been fitted (optionally) with a tracking device intended to encourage safer driving. An ill-conceived idea leading to tragic unintended consequences: Insurance curfew blamed for fatal teenage car crash.

Whilst the theory was sound, life can be messy. Would anybody prefer a teenage driver to risk speeding to beat a curfew or risk staying put in a vulnerable location to avoid a fine or driving ban? Legislation to eliminate one risk created another, possibly worse, in its place.

— Original post: September 2010 —

Heard on the radio this morning and currently one of the headlines on the BBC News web site: New driver restrictions would save lives:

Newly qualified young drivers should be banned from night-time motoring and carrying passengers of a similar age, Cardiff University researchers say… “graduated driver licensing” for those aged 17-24 could save more than 200 lives and result in 1,700 fewer serious injuries each year.

The research in question is road accident data from 2000 to 2007 that suggests one in five new drivers crashes within the first six months. So the plan is to try and eliminate the range of conditions that led to the accidents? That’s just delaying taking responsibility for your actions.

Rather than attempting to ban youngsters from certain driving conditions, which would be both expensive and impossible to police, I’ve a better suggestion – advise parents to not pay for driving lessons or buy cars for their children. From my own informal observations, people who have to earn and save money to pay for their own driving lessons and to buy their own car (and then save for another six months to afford the insurance) will treat it with a lot more respect and will therefore be less likely to crash (the insurance premium alone will be a sufficient deterrent for most).

Trying to eliminate risk through legislation is, at best, an inefficient approach. And at worst, can make matters worse – the law of unintended consequences is particularly active in systems involving people. Cue link to information systems 🙂

When deploying intranets and collaborative web sites, the issue of security and permissions is always a challenge. Many organisations want to lock down access to everything, i.e. you can only access documents you have explicit permission to use. It’s a risk avoidance strategy. Research could probably justify it by showing you that one in five new employees leak data during their first six months… The more effective solution for that scenario would be to improve your recruitment process.

Whilst some information does need to be tightly controlled – particularly anything of a legal and/or sensitive nature involving personal information – it is usually a small percentage of an information system. Manage that percentage as an exception rather than the rule and don’t apply rigid security by default. In attempting to eliminate the risk of someone seeing something they shouldn’t you risk making it difficult for everyone to see everything they need. That is not a good outcome for a system that is supposed to improve productivity and collaboration.

Disaster in the Making

Good editorial in The NewScientist (10th Sept 2005, print ed. online requires subscription), highlighting the dilemma with natural disasters:

…Terrorist attacks may or may not take place, but some natural disasters are inevitable. We don’t know when they will happen, but happen they will… There is a clear mismatch between forecasting natural disasters at some indeterminate time in the future and the short lifetime of local and national governments in modern democracies… The Asian tsunami and the disaster in New Orleans show clearly that the political processes for handling disaster prevention are failing badly.

One option is to measure the success of diaster prevention. How many times has the Netherlands’ system of dykes protected it from disastrous flooding? How many lives have they saved, and how much money? In November 2002, when a 7.9 earthquake struck Alaska close to the trans-Alaska oil pipeline, there was no leak and no environmental disaster because the pipeline was built to withstand quakes. What value should we put on such a design?

The article goes on to mention that the Thames flood barrier has been rasied 80 times in 23 years in part thanks to the estimate that a serious flood in London could cost taxpayers £30billion. So it is possible to measure success by what does not happen… but it’s not easy. Look at the Y2K issue – the fact that nothing happened led to people criticising the amount of money spent on it. Maybe too much money was spent, but the whole point of Y2K was to prevent anything from happening. Sometimes, we can be a difficult species to please.

That fear factor is a real challenge though, and one that leads to bad (or manipulative) decisions. Witnessing terrorist acts evokes more fear than being told climate change is estimated to cause the sea-level to rise by 0.8cm per year…

Better Risk Management

Great article in The Economist (print edition: 20th August 2005), showing how BAA took a new approach to risk management to help keep the Terminal 5 project on schedule and budget. (Something that the UK is not renowned for when it comes to construction projects – think Millennium Dome and railway track upgrades for starters… and then there’s that football stadium in Wembley)

In a nutshell, BAA analysed previous project disasters, and concluded that tying contractors to compensation payments for late delivery and failures might generate money but doesn’t get an airport built. Instead of requiring suppliers to include risk payments in their quotes, the payments are put into a central fund. If the job is done on time, the suppliers get a share of the fund. If there are problems, they are solved using the money from the fund. This also encourages suppliers to work together to fix issues, since all will be affected by reductions to the central fund. BAA says that 80 – 85% of the jobs on site are being completed on time, compared to an industry average of 60%.

There’s more info in the article (including analysis of the potential negatives from this approach), but what a good idea! And what a great way to foster collaboration and cooperation across your supply chain, using a carrot rather than the usual stick.

Article is available online (at time of posting) here:
Blue Skies Thinking