Pass the Word–or Else


As it turns out, Europeans got a bit of a head start having their defective Toyotas fixed. Yoshimi Inaba, head of the company’s North American operations, admitted to a congressional committee last week that in response to complaints in Britain and Ireland, Toyota made production changes to fix the sticky-pedal problem in Europe that were largely complete by January, in other words mostly before the massive recall on our side of the Great Waters.

“We did not hide it,” Mr. Inaba was quoted by New York Times as testifying, “But it was not properly shared. We need to do a much better job sharing what we knew in Europe with the United States to see if there is any danger to American consumers.”  Inaba himself got word only this past month of what his safety-conscious European colleagues were up to.

The Great Corporate Failure to Share Critical Information strikes again. Not to stint on the mixed metaphors, among the myriad ways companies manage to shoot themselves in the foot, it’s a hardy perennial. Much of the time the root problem isn’t mere inadvertence but rather, willful refusal, a slamming shut of the silo windows in the face of some new fact or idea from elsewhere in the organization.

The history of the automobile industry offers many wonderful horrible examples. Most readers will, I suspect, be too young to remember all the hullabaloo made around the launch of the original Ford Taurus back in 1985. We in the press hailed it not only for its innovative design—front-wheel drive, aerodynamic “jellybean” shape—but also for the revolution it represented in how the Ford Motor Co. went about producing a car, not just the engineering but everything from factory layout to labor relations. Blessedly for our gushy boosterism, the Taurus proved a huge hit.

A few years later, though, Ford Motor was back in the corporate doldrums. Ever the idealist, I asked a senior Ford executive, “But what about all those great innovations you pioneered with Taurus? Didn’t they work? Didn’t they remake the company?” “They worked superbly for the Ford division,” he replied, “just as advertised. The problem was they never spread anywhere else in the company. None of the other divisions would change the way they did things.”

One of the reforms that modern corporate strategy brought with it was a set of frameworks that could be applied to all of a company’s businesses, this in part with the hope of giving management a common vocabulary for teeing up issues critical to competitive success across the board. Sharing processes that every corporate unit must take part in is one (admittedly modest) way to combat the Great Corporate Failure. Here are three others:

1. Abolish ludicrous incentive plans that set company units to competing against each other. Schemes that pit the Scranton office against Stamford’s are cheap, easy to maintain, and frequently disastrous. They make matters simple for top management—just set targets according to some common metric (sales perhaps, or a mix of hard and soft measures), gin up a gimcrack numerical rating scheme, at the end of the fiscal year hold a big meeting, announce each unit’s score (bonuses to follow in proportion), watch the winning divisions squeal with delight as everybody else sits on their hands and grouses about unfair the system is.

The big point that such schemes miss is that you’re not supposed to be competing against yourself; you’re supposed to be competing against your competitors. Peer-against-peer plans massively encourage an inward focus for the organization. True, they’re easier to maintain than a system where you have to keep getting up-to-date information on how your units are faring against other companies. But, on the other hand, how likely are you to be put out of business by another division of your own outfit? (Well, maybe when it fails to share….)

Productivity hounds may point to alleged counter-examples such as Lincoln Electric, where—famously—workers are paid on a piece-work basis according to how much arc-welding equipment each turns out. But one thing you won’t see at Lincoln Electric, people who have visited its plants tell me, is one worker sharing his latest insight on how to tweak up production with another worker.

You need not have everyone’s bonus based on company-wide performance but if you have units that need to exchange ideas and info, make at least part of their peoples’ compensation based on the achievement of shared goals, concretely measured.

2. Use elite task forces, their members drawn from different company units, to tackle the biggest corporate issues. Four keys to ensuring such “hot teams” work: Make service on them an honor, a signal that members are tagged for higher glory. Assign them real, knotty, future-of-the-company-determining problems, with tight deadlines and sharply defined “deliverables,” you should pardon the expression. Have top-management sponsorship, active and publicly evident. Act on their recommendations.

3. Make hoarding a crime. I once heard Steve Kerr describe a regime he and Jack Welch had put in place at GE to encourage idea-sharing, this when Kerr was the company’s chief learning officer. The two men had been trying to get unit heads to bring their latest, niftiest business-improving insights to company-wide forums. Nobody volunteered much. Then Kerr and Welch declared as policy that the holding back of ideas would be treated like the holding back of any corporate resource, money for instance—not exactly embezzlement for private use, but close enough to get you fired. Suddenly Kerr’s phone was ringing with calls from people eager to present their unit’s brilliant realizations at the earliest possible opportunity.

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