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The consequences of sustained poor or average leadership can have devastating effects on a company, its success, and its employees. We often read about failures of leaders in academic terms (10 Traits Of The Bad Boss, etc.) but to watch in real time how confused or inadequate leadership can destroy the potential of a company is sobering. When leadership fails to adequately address its most critical leadership function, mobilizing the culture toward a common direction, it produces devastating effects.

A practical example was brought to mind when I received the “farewell” notice of a friend of mine. He had been at a company for over three decades and yet he had been unceremoniously “fired” (or involuntary retired as it was termed) by senior leadership. With this particular company, “blaming and off-boarding” of top talent has been a common practice for a long time.

When I read my former colleagues’ departure notice, I thought about several people I knew who had worked for this firm and who had been dismissed. Each of these people indicated their admiration for the company’s core product and its value to them personally and to their clients. Each former employee expressed a strong sense of loss because of their identification with the company and its products even though each of them knew the company and its culture were bureaupathological. Each of the departed ultimately went on to be successful after leaving the company.

How can a company consistently jettison talent when that talent has achieved results over a sustained period of time and when the talent has been fiercely dedicated to the company’s product? Even more puzzling, how can those same employees feel such a sense of loss over leaving a company when they are treated with disrespect?

As with most business dissections, one begins by looking for the core problem. In this case, the search begins and ends with senior leadership. When leadership fails, well meaning or not, there are catastrophic consequences. Yet in this company it was not just one leader that failed, it was a series of leaders over multiple years that failed to move the culture in any significant way.

What were the common leadership problems that transcended time and were experienced by different leadership teams? It appears there was one core issue that created several significant cultural behaviors that in turn thwarted any possibility of real change.

Root Cause: Leadership’s inability to engage the culture

Starting with the founders’ technocratic attitude (they was more concerned about tinkering with the product than building a great organization), leadership teams failed to truly understand how their customers operated and used their product. As new employees were hired, they were ignored while the leaders tinkered with their product. As a result, strategies developed by leadership teams focused primarily on refining and understanding their product more than it did on the customer’s application of their product. In fact the senior leaders distanced themselves from customer relationships, instead leaving that critical interface to individual, and mostly junior, employees. As a result, a senior level data driven point of view on how to position the most significant product never developed. Application of the product was seen as specific to the customer. Therefore tapping this level of value took time and energy that diluted the “pureness” of the core product. As a result, building an internal application capability never existed in the company. True innovation, application and value occurred within the walls of the customer and were only seen by junior employees to whom leadership never listened.
But this is where true value resided.

As a result, the senior leadership team settled into the role of managing the workforce and its acyivities rather than positioning the organization around a compelling future vision.

It should be noted that were multiple efforts to define the proper positioning for the company. This company developed strategies and plans and set goals. They checked off the boxes for all the required leadership activities. But for all of their effort, little, if any movement was created nor results realized. This emphasizes a very important point. There is no one magic task of leaders. When mediocre leaders exist, those mediocre leaders produce mediocre results, whether it is in strategy, talent development or innovation. Simply performing a task does not create success. Simply doing an activity does not mean it is done well. Performing a task well is what matters. High achievers produce significant results while the turkeys check off the boxes (indicating they have done all the required leadership tasks) while they continue to lay eggs.

At the company’s highest point (as measured by revenue and creativity), there was one CEO who properly envisioned a viable way to position the company but it would mean re-inventing the company. Unfortunately this was viewed as a threat by other senior leaders who organized a “palace coupe” and who presented a petition the board of directors to remove the CEO from his position. They told the story that the president’s positioning was moving the company away from its core (pureness of the product was being threatened!). Positioning the company differently was threatening to subordinate leaders and abandoning functions they thought they did well was unthinkable. That success could be achieved in ways other than the one the founders had prescribed was a bet that these mediocre leaders were not willing to make. Unfortunately the board voted out the leader and removed the only chance the company would have to break out of its mediocre mold. After that CEO’s removal, a large number of very talented employees left the company and neither revenue nor creativity never again approached that high water mark.

As a result leadership produces an organization that was constantly confused. While there was always an organization strategy, there was little rigor over direction, priorities and where to spend resources throughout the organization. As a result a number of significant corollary issues stemmed from the root cause.

Culture Issue 1: Blindness

It is significant that when leadership attempts to find root cause, they seldom, if ever, look at themselves. Yet, at least for this company, leadership created and perpetuated the organization’s ongoing self-destructive behaviors. Leadership at this company was never able to come to grips that like the old cartoon character, Pogo, “we have met the enemy and he is us!” Unfortunately, leadership’s blind spot prohibited them from addressing the root cause.

As an example, when one person resigned from this company, the president asked him to reconsider his decision. (He had been nominated for partner and how could he turn that opportunity down?). The employee explained that he believed there were several significant problems that caused concern and he explained each in depth. When he was through, the president told him he did not agree with that assessment of the issues. Six months after the employee resigned, the president called and asked him if he was ready to admit he had made a mistake and return to the company. The employee asked the president if the problems discussed at his exit interview had been addressed. The conversation was abruptly terminated.

Culture Issue 2: Highly critical

While this company’s product was exceptional, it fostered a very critical (in the bad sense) climate. This critical climate had at least three aspects.

First, since the primary customer relationship existed almost exclusively at the employee level, each employee was in a position to provide individual observations about what his or her customers needed. This resulted in dogmatic views about how best to position the business for future success. The problem was all the messages were different because each company’s applications were different. As a result, there were a myriad of internal messages, usually contradictory, often negative and, when aggregated, always confused about the proper direction of the company. As employees climbed on the bandwagon of one view or another, different camps solidified in the organization.

Second, any time significant results were achieved; many in the company (leaders and employees alike) would criticize the team and the approach that produced the result. Individuals felt they could have designed or delivered the work better and offered ways in which, if they had been consulted, the result would have been much more significant (and more strategic). An atmosphere of intense negativism and criticism developed. Even when leadership gave recognition, it was never considered genuine because the culture very quietly but powerfully second-guessed any approach.

Third, and maybe most important, the critical culture produced an arrogant and autocratic attitude in the organization (leaders and employees alike). This stemmed from the belief that each individual felt he or she had the right formula to make the company successful. If only he or she was the leader, the company would achieve its potential. As a result, there were multiple messages and voices in the company; all vying for attention and all believing it spoke the “truth” (but seldom in love!).

Culture Issue 3: “Flavors of the Month” Employees

Since everyone was in agreement that something better was possible, leaders constantly looked for the “right” answer. Unfortunately they often looked for the solution in the form of a “guru”. Leadership would hire a new employee or leader and quickly herald him or her as the “savior” of the company. This individual would talk forcefully about what needed to be done to succeed. Over time as each “savior” proved to be incapable of producing or sustaining significant change, their “halos” were tarnished and ultimately their demise celebrated by the culture. (To be fair, when new employees were brought into the company to add their expertise, the critical nature of the culture focused in how their new ideas would not work, thereby minimizing or totally defeating potential contributions).

The side effect to this issue was the diminishing of the worth of current employees who felt their considerable knowledge and their opinions were not listened to or valued.

Culture Issue 4: Out of Control Capabilities

The company used a performance system that was designed to reward accomplishment as well as personal growth. Personal growth was linked to salary and achievements were linked to bonus. While employees were encouraged to build their capabilities, there was nothing to guide that effort. Without meaningful organizational or talent strategies, decisions around capability development were left to the employees’ discretion. As a result, capability development efforts never consolidated to produce core competencies or increased achievements. Many resources (dollars and hours) were wasted. The lack of results only reinforced leaderships’ belief that current employees were not the “right stuff”. (After all look at the company’s commitment to capability development!). When it was time for promotions, the metric of revenue was preeminent. (Of course there was an 0n-going debate over whether the revenue was “good revenue or bad revenue” but in the final analysis, dollars alone ruled the day).

Culture Issue 5: Failure to Align

All of these issues culminate in one critical result. No leader was ever able to focus and align the culture’s effort and focus, talent development and resources toward a common strategic position and direction. Activity existed but it never aligned to a strategy to form a powerful force. Teams existed but they were small and inwardly focused around individual customers and projects. Any effort to reward or recognize performance was seen as arbitrary or inconsistent since a common direction, against which alignment should have occurred, did not exist. Additionally, since strategic direction changed with every new senior leader, and often several times under one leader, sustained growth never occurred. To use an analogy, all the parts were present and lay on the garage floor but they never were put together to form a car.

Lesson

On one hand, this company had a product that should have propelled it to greatness. On the other hand, this company should have gone out of business a long time ago. Only because of their one excellent product were they able to hang on for decades. The culture is now so inbred that the company is now un-leadable. As a result, talent continues to be off boarded, people are blamed for lack of success, meager results are obtained and confusion still reins. That is the worst leadership failure of all, the inability to harness talent toward a common goal. The sad part is the company professes to help other organizations be successful while it cannot save itself.

So which came first, bad leaders or bad cultures? It depends on whether one starts the company or inherits the leadership role.

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