Dear Friends and Colleagues,
I’m delighted that my book, Chasing the Rabbit: How Market Leaders Outdistance the Competition and What Great Companies Can Do to Catch Up and Win, has received welcome accolades in the last few days. The book was awarded a Shingo Prize for Research Excellence, media attention (see links below), and it received a flattering appraisal in Harvard Business Review’s April issue.
NPR’s Frank Langfitt reports on GM’s program of providing new cars to several thousand executives with free gas, maintenance and trade ins as part of the package. Started decades ago, this program probably had the best of intentions behind it: Provide employees with an appreciated perk, have shiny new product out and about as rolling advertisements, and have a way to provide compensation–the value of which is greater to the recipient than it costs the company to provide.
The problem? It has to suppress the cycle of innovation and feedback essential to success in hyper competitive markets.
Why?
When rivals abound, companies depend on discovering market needs faster, developing products and services quicker, and creating delivery systems more rapidly and with greater certainty. What is the problem with this program? It takes key employees (lots of them) out of the sales experience, disconnects them from the service experience, and removes them from experiencing product reliability and long term problems. It is as if the company entered the competitive freeway with blinders on and ear plugs in.
The irony? What was probably once a well intentioned program has to have such negative unintended consequences.
Faced with the challenge of cutting costs, Beth Israel Deaconess Medical Center (BIDMC) CEO Paul Levy suggested that everyone take a hit, in particular to protect the lowest wage earners in the hospital’s employ. The response in the crowded auditorium was thunderous ovation with higher paid people volunteering to forgo raises, bonuses, and to work fewer days (”A Head with a Heart,” Kevin Cullen, Boston Globe, March 12, 2009).
This response is wholly consistent with BIDMC’s efforts to achieve perfect safety by being transparent when systems fail, using that transparency to see problems so they can be solved. Doing so breaks a prevailing false paradigm in health care, replacing it with one that is more accurate. The false paradigm is that success depends on individual inspiration and heroics–most especially by sanctified physicians, through whose hands cure flows. The more accurate paradigm is that everyone, regardless of specialty or rank, contributes to a system larger than themselves and no one succeeds unless the system does as a whole. The BIDMC staff’s enthusiasm reflects their belief that no one is dispensable nor is anyone singularly and solitarily essential.
Managers normally depend on proven, existing approaches for deciding what to do. With the world turned upside down, old answers don’t apply. ‘High velocity organizations’ show how to discover new answers quickly and reliably. Those who learn from them will survive less scathed and emerge strong and fast moving in the recovery. Those who don’t will be dusted.
Please visit my guest column at HarvardBusiness.Org for examples from financial software and manufacturing, services, and other sectors.