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…

Aligning investment with reality

HeartBeat

An interesting article appeared at the end of last week, highlighting a shift in thinking towards IT projects within the UK government:

Gov.uk was launched quickly and iteratively, with a new simplicity that has resulted in a website containing fewer than 10% of previous separately hosted pages and is set to save as much as £70m on previous arrangements.

A new online system for people to apply for Power of Attorney on behalf of others had taken 10 working days to procure, 24 days to build and code a prototype alpha system for live testing and a beta was due to go live in two months, he said. The whole project had been commissioned from a small business using the G-Cloud for around £50,000 a year, compared with a quote obtained from one large existing provider of £4m set up plus £1.8m per year

There are two reasons why the costs to deliver an IT project should drop significantly to the established normal. 1. At the tail-end of a previous disruptive innovation, 2. At the beginning of a new one.

hype-curve

The hype curve of innovation applies to just about any industry. A new concept is invented. It starts small and is highly specialised but creates demonstrable value to customers. Such success never goes unnoticed and demand begins to grow. That brings competition and rival proprietary solutions. To begin with, more value is created, usually at an increasing pace as different companies come up with more innovative features to compete with one another. But then a tipping point is reached and, for a short while, everything gets a bit chaotic and messy. Hidden costs emerge, problems arise, competitors get acquired and solutions are suddenly discontinued or dramatically altered. Out of the disruption comes a new demand – standardisation that allows for continuity and economies of scale. And so the market settles down into slow growth, cheaper solutions and small incremental improvements. Until a new disruption comes along.

Building traditional web sites for publishing content are at the end of 15-year innovation cycle. The standards for design and formatting of web content have become so well established that even Microsoft has just about embraced them within the latest versions of the Internet Explorer web browser. Most popular public-facing web sites now follow familiar conventions regarding navigation and page layouts. To consolidate multiple different government departmental web sites under a single umbrella gov.uk web site makes absolute sense and should save a lot of money.

Using agile approaches to software development has grown in popularity in recent years. The goal being to do ‘just enough’ design to build a working solution, and quickly tweak and iterate based on actual usage patterns rather than predicted requirements. It requires far less ‘up-front’ investment due to much shorter planning cycles and usually results in far better user adoption rates. But it doesn’t guarantee a cheaper solution over time. That will depend on the iterations and ongoing development.

Applying an agile approach to business systems is at the early stages of the innovation hype cycle. Some solutions are simply brilliant, but growth in competition means some are not. The disruption and hidden costs are yet to emerge and it’s a little early to be celebrating dramatic savings in annual operating costs. I have already seen one government project that I know is so under-costed, it will take the supplier in question into bankruptcy unless they are able to renegotiate down the line. Yes, the bigger systems integrators were insanely expensive in their quote for what was needed. But insanely cheap is a short-lived improvement.

A comment was made by Tom Loosemore, deputy director of the Government Digital Service (GDS) responsible for the projects quoted above:

“We don’t talk to IT departments other than to ask what legacy can offer”

That’s not a healthy comment and was not well received at the conference where it was made. Today’s IT legacy is just yesterday’s innovations gone stale. I think the GDS could look to the automotive industry for how to better embrace IT as part of doing business. The current approach may be saving a lot of money in the short term (and that’s an understandable driver in the current economic climate) but there are going to be consequences.

Seeking innovative ways to use technology to solve business problems is a good approach. But assuming it is a panacea for all IT projects is not.

References

Platform or Application?

Platforms are often criticised when compared to applications for delivering IT solutions. They rarely offer the same richness of features and can often be more complicated to set-up. But that doesn’t mean they are without their own benefits  Read More