Wednesday, August 18, 2010

Self-Destructive Behavior

Have you ever heard a new pronouncement from a company’s executive management team and just thought that it makes absolutely no sense? Or that what they think they’ll achieve with this pronouncement is clearly not what they’ll get? You just know that you will shortly have a ringside seat to a slow train wreck. Sometimes you just have to shake your head and think, “What are they thinking?” The problem is that often they’re not thinking. They’re engaging in self-destructive behavior, and they don’t even know it.

People often engage in personally self-destructive behavior such as excessive smoking, drinking, drugs, gambling, overeating, etc. Too much of anything can be bad for you, and can become addictive and self-destructive. But individual self-destructive behavior generally directly impacts the individuals themselves and more indirectly their family and friends. It generally does not adversely impact their community at large.

When companies engage in self-destructive behavior it impacts everyone in the company, most of whom are not part of the decisions leading to the self-destructive behavior.

Here are some real life examples of mine:
  • What would you call it when a fast-growing company has over 35% of its business with a single big and often mercurial company? They recognize the risk this poses, but like the continuing revenue stream. Then that big company decides they can design their own product more cost effectively, thus virtually overnight reducing sales in your company by over 35%, resulting in large layoffs and a desperate fight for survival? To some extent this situation was not directly under their control, but the possibility was always recognized and not adequately reacted to. I’d call this self-destructive behavior.
  • What would you call it when two senior executives, in a company growing at over 35% per year for more than the past 3 years, call all of engineering and product management into a room and one tells them he just doesn’t have any faith in them? This engineering and product management team has conceived, developed, and released a large variety of new products in just the past year that constitute almost 90% of current revenue! Way to build up morale and encourage a positive attitude! I’d call this self-destructive behavior.
  • What would you call it when the other of these two senior executives at that same meeting says that despite the continuing 35% per year annual growth, since the market is growing at 70% per year, 35% growth is simply not enough and is totally unsatisfactory? The facts were that the market was indeed growing at 70%, but that was due to new entrants seeing the market opportunities and jumping in with both feet. Few of the competitors were seeing anything close to the 35% annual growth this company was. And the huge market bubble causing that over-sized market growth broke shortly thereafter, causing growth to plummet. I’d call this self-destructive behavior.
  • What would you call it when the executive team at a company holds weekly meetings involving all departments in the company to purportedly review the status of all the current projects underway, but in reality to pit one department against others and take potshots at the losers? These became so bad they became known as the “Bataan Death March Meetings” (see also Start Spreading The News!). Not surprisingly, this company’s senior management practiced the “Floggings will continue until morale improves” management philosophy (see also Floggings Will Continue Until Morale Improves!). I’d call this self-destructive behavior.
  • What would you call it when a fast-growing private company announces publically that they’re growing at over 45% year-to-year and at the same time makes a conscious decision to cap raises for its employees at a maximum of 2.5%? The consequence of the 2.5% cap is that most employees, regardless of whether their performance is good or bad, get the 2.5% increase, de-motivating the strong performers. This company also provides bonuses for strong performers, but bonuses don’t add to base salaries and usually disappear when growth slows. If these employees seek jobs elsewhere, their current salaries put them at a disadvantage to peers from other companies whose raises have not been capped at a low rate. I’d call this self-destructive behavior.

The examples can be endless:  
  • Companies can be too distant from their customers and non-responsive to their needs. They assume the business is theirs by right and nothing will take that away. This can be especially true with large companies.
  • Companies can be too close to their customers and react to their every whim rather than to strategic directions company should be moving in. This is typically truer with smaller companies.
  • Companies, like some parents, can try to be their employees “best friends” focusing everything they do on satisfying their employees, often to the detriment of their customers.
  • Companies, like other parents, can ignore their employees, thinking only of themselves and nothing of their employee’s interests. Or worse, can treat their employees like slaves where punishment is meted out and nothing is ever good enough. See the floggings example above.
  • Companies can ride the market they’re currently in for too long a time, only to see that market dwindle away and find they’re still making buggy whips when horseless carriages are the wave of the future.
  • Companies can provide products for what they believe the market will become, only to find that that market never develops, and they’re left wondering about how good things could have been.
  • And so on.

I would be very interested in hearing your examples of companies’ self-destructive behaviors. Please feel free to comment with your examples. No people’s or company’s names are necessary, or even wanted. Just describe the self-destructive behavior and the adverse impact it had. It can be cathartic and give you a chance to vent!

So what can you do about it when you spot self-destructive behavior in your company?

If you have good relations with one or more of the executive team members, or with someone else who has good relations with them, meet with them and ask to talk off the record about what you and others in the company see as self-destructive behavior and the damage it will likely cause.
  • Perhaps they saw the potential benefits of their decision, but not the potential costs.
  • Perhaps they saw the potential costs but didn’t recognize the full magnitude of damage of those costs.
  • Perhaps it was one member who convinced others, against their better judgments, to make the bad decision, and your feedback can provide supporting evidence to overturn the bad decision.
  • Perhaps the decision can’t be changed entirely, but the most onerous parts of the decision can be adjusted to significantly reduce the adverse impact.

Whatever the case, make clear what you see as the full impact of the unintended consequences of the decision (see also Be Careful What You Wish For! and Walk a Mile in Your Boss’ Shoes!).  

All too often there is little you can do. A decision gets made for reasons the executive team feel are valid, and no evidence to the contrary can make them change their minds, or they’re too stubborn to change directions once a decision has been made. In those cases you have some hard decisions to make:
  • Do you simply ignore the decision and keep working in willful ignorance and bliss? (see also Looking Down versus Looking Up).
  • Do you live with the self-destructive behavior and try to do what you can to make things better?
  • Do you live with the decision and take whatever adverse impact it causes in order to hold on to your job, at least for the time being? (In a tough economy this could well be the best of the alternatives you see.)
  • Do you keep working, but start looking elsewhere for another position? 
  • Do you decide that you simply can’t live with the decision and leave without another position to go to, at least for a while?

Some self-destructive behaviors on the part of a company are survivable, and some are not. Only you can decide what you can live with and what you can’t. Only you can decide the magnitude of the impact on you of your company’s self-destructive behavior.

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