The recent sequence of massive vehicle recalls by General Motors, started by the decade-old ignition switch flaw that was buried for more than a decade within the thick GM bureaucracy even though it is linked to a reported 13 death, highlights a key challenge for leaders. Specifically, how do you create a culture that causes bad news to quickly get reported and acted upon.
GM’s relatively new CEO commented in her recent testimony to a congressional committee: “Sitting here today, I cannot tell you why it took years for a safety defect to be announced.” That is a silly statement if you think about it; since it is dead obvious why. People don’t like to deal with bad news, and they particularly don’t like to go into detail about it with their boss.
Target, the giant retailer, is another recent example of a company that has suffered a major blow due to bad news being bottled up, enabling bad things to happen. In July, 2013, Target’s IT security experts installed some very sophisticated malware detection tools in Target systems. On November 30, 2013, hackers inserted malware to capture credit card numbers of customer transaction with Target. The detection tools immediately spotted the malware and alerts were instantaneously sent to Target’s IT security team. Amazingly, the news didn’t get acted upon by anyone. The next thing to happen was on December 12 when federal law enforcement officials contacted Target about an apparent credit card breach originating in Target systems. It then took Target three more days to confirm the problem.
What should a leader take away from these two similar examples? Here are some thoughts:
1.) Realize that humans are wired to be very reluctant to deal with bad news – They believe that conveying it to others, particularly up the chain of command, will reflects negatively on them. Hence, this is not something that you train people once and the issue is gone. It is an ever-present challenge.
2.) Constantly talk and probe up and down the ranks, seeking to understand what is not going well – This requires a leader to regularly walk around, talking to folks at all levels, while not being non-judgmental and making it clear that you want to hear about problems and different points of view.
3.) Speed is an absolute necessity when concerns are uncovered – Fast data collection and decision making needs to replace the usual involvement of layers of management, usually leading to big delays.
GM and Target have suffered massive corporate damage, demonstrating the incredible importance of this issue.