BL 32: Before the Crash
Warning: Only Bold Leaders address the problems to prevent a crash...Trust me! The investigation typically reveals known organizational problems that were never addressed. Today we will be discussing the top 3 challenges and how to prevent the crash: Communication Failure, Process Failure, and a Failing Organizational Culture
Everyone needs to understand their role in preventing failure. They must be willing to say what no one else wants to here. They must address and fix process failures and leaders must develop a culture that allows for these actions.
If you cannot effectively listen to opposing views and identify your organization’s weaknesses, you are destined to fail! Just look at congress….
Everyone in the organization knew that he broke the rules, but nobody was willing to tell the boss because he was so experienced and respected.
I honestly don’t know how many times I heard this phrase over a 10 year period as a crash investigator, as a commander and as a consultant for numerous companies I don’t know how many times I have walked into the President or CEO’s office and heard the same words uttered about challenges the organization faced.
I think it’s important that we put this into context. In 2001, I received a call that forever changed how I thought of organizational leadership and the unwillingness to address known challenges. A helicopter had just crashed in a river with 4 souls on board. Fortunately, they all survived. The crash was preventable. I quickly packed my bags and headed to the crash site. We assembled the investigation team and began our work. In every crash investigation we first eliminate all potential mechanical issues to ensure there is not system problem that will endanger others flying similar aircraft. Part of this process is to interview everyone associated with the flight. The interviews revealed 3 very specific organizational problems which contributed to the crash. Problems with the crew were communicated, but not addressed. Known processes were not followed by the organization and the organizational culture allowed for the problems to exist.
The challenge for leaders is to understand that their organization may have similar problems. In many cases the leaders themselves are the problem. I think the most epic failure of all times is Enron. Leaders lied, cooked the books and violated the law. The failure of Enron drove numerous changes in the way companies account and operate. It was preventable.
NPR best tells the story of ENRON’s epic collapse. Throughout the late 1990s, Enron was almost universally considered one of the country's most innovative companies -- a new-economy maverick that forsook musty, old industries with their cumbersome hard assets in favor of the freewheeling world of e-commerce. The company continued to build power plants and operate gas lines, but it became better known for its unique trading businesses. Besides buying and selling gas and electricity futures, it created whole new markets for such oddball "commodities" as broadcast time for advertisers, weather futures, and Internet bandwidth.
The Enron story was perfect for the dotcom-driven stock market boom of the '90s. With its roots in the utility business, the company enjoyed a solid reputation for old-economy stability. But unlike other energy companies that didn't "get it," Enron thrust itself headlong onto the Internet. The business press ate it up; so did Wall Street, sending the stock into the stratosphere. At its peak, Enron was worth about $70 billion, its shares trading for about $90 each.
All that came crashing down starting last October, when the company admitted that it had misstated its income and that its equity value was a couple of billion dollars less than its balance sheet said.
The company, it was revealed, had made about a dozen "partnerships" with compa
