2009: “The Economy Falling Off a Cliff…’

A Latin American country manager was facing a huge challenge. Through the first 7 months of the year, current expectations for profit ranged from £2million to £35million, on a business plan of £95million, with a transformational growth plan of £110million. He was having to face the challenge – do we modify our transformation growth plan to be more realistic, or to stick to the plan, recognizing the hill to climb is way beyond anything he or his business had ever done before. “What do you want to do? It is your call.” After a few hours of going back and forth, weighing all factors, including his own credibility, he decided “We won’t change our plan number – because if we do, it will be a slippery slope for the rest of the year.”

With this decision, we entered the leadership team meeting, and he shared his own personal dilemma in deciding what he wanted to do. The leadership team went through their own concerns, and in the end, they were all aligned to the original transformational growth plan. By the end of the year, the business delivered its plan number of £110million, becoming “The Best Performing Business for the Year” in the entire organization.

Role of Accountability in Leadership

In successful execution of strategic growth, accountability, leadership and transformation become inexorably linked. Accountability is an acute and overt manifestation of leadership. Leadership involves accepting and acting on the accountabilities of the position. Transformation is the fundamental changes which will promote achievement of growth. Transformation will not occur without empowering accountability and leadership.

Among the strongest evidence that a business is committed to growing and transforming is that the executives, managers and employees have a new relationship to accountability. In time this new relationship to accountability will be manifested in the performance of the business, relationships with stakeholders and service provided to customers. One of the first aspects in executing growth strategies is establishing empowering accountability. That is, employees experience clear accountability which is designed to enable and support their success. This includes appreciating that failure is natural when groups and teams are taking appropriate risks.

Unfortunately, too many growth strategy execution projects fail because the executives in charge of that portion of the business were unwilling to act in an accountable manner and to establish a context of accountability in the organization. The converse of this is also accurate. Those organizations which have produced stunning financial and strategies results were launched by executives who were tenacious about being accountable, acting in ways to demonstrate the essential nature of accountability, and established a firm context of accountability in the organization. Often this involved acting on direct reports and other executives/managers who were politically connected and well liked, but unwilling to act in a self-accountable manner.

Too often there are executives who philosophize and talk about accountability, but do not act on their accountabilities. Talking about accountability is not the same as being accountable and exercising accountability. It sad to see how many executives talk about accountability, seem to want accountability in the organization, and yet are unwilling to be personally accountable.

Definition of Accountability

The word “accountable” stems from late Latin accomptare (to account), a prefixed form of computare (to calculate), which in turn derived from putare (to reckon). The concept of account-giving has ancient roots in record keeping activities related to governance and money-lending systems that first developed in Ancient Israel, Babylon, Egypt, Greece and later, Rome. The Oxford English Dictionary (OED) defines the word accountable as:

• Liable to be called to account, or to answer for the responsibilities and conduct: answerable and responsible. Chiefly of persons.
• To be counted on or reckoned on.
• Able to be reckoned or computed.
• To be reckoned or charged, chargeable, attributable to.
• Able to be accounted for or explained, explicable.

The term implies “The quality of being accountable; liability to give an account of, and answer for, discharge of duties or conduct; responsible, amenableness.” In business we say that leader accountability is acknowledgment and acceptance of responsibilities and results of the position. Bruce Winston writes that accountability is:

• Willing acceptance of the responsibilities inherent in the leadership position with a commitment to serve the well-being of the organization;
• Expectation that the leader will be publicly linked to actions, behavior, communication, outcomes, performance, and value achieved
• Expectation that the leader may be called on to explain beliefs, decisions, commitments, and strategies to constituents.

The 5 Questions Leaders Ask

Accountability is personal. It begins with the leaders. If accountability is desired, leaders must start by looking in the mirror and asking questions such as:

1) When has your words about accountability been stronger than your actions?

2) Where you have allowed things to exists that you now know was a mistake?

3) Have allowed people around you to misbehave, use company resources inappropriately, to foster ineffectiveness, and ultimately destroy value? If so, who and why?

4) Have you allowed people around you to behave in a way that invalidates what you say you believe and stand for?

5) Have you allowed others not to be accountable because you wanted to avoid a conflict, or you were benefiting in some way from the continued existence of this situation?

These are tough questions, yet candid inquiry into one’s own accountability is essential.

Advice to Leaders

My advice to leaders is that accountability, authenticity and credibility all begin with you and your willingness to accept your own mistakes. This acceptance allows the leader to be bigger than the circumstances, and to talk about openly the consequence of prior actions. Accountability begins in the leader’s chair. If the leader is candid and honest about self, then there is an opening for establishing empowering accountability in the organization.

Accountability works when employees experience it as empowering and as an expression of joint commitment to success. Accountability is not empowering when it is experienced as punitive. As example, it is common to hear a negative tone when managers use the term “Holds others to account”. This punitive tone replaces the power which can be created in a candid conversation for accountability.

Further damage is done to the credibility of management when employees experience “holding others to account” as a version of “do what I say not what I do”. This is perceived by employees as inherently hypocritical since the one who is “holding” does not actually act in an accountable manner nor hold self to account. Remember the expression from a parent who is just before giving a child a whipping and says “This is going to hurt me more than it hurts you”. While this expression may have had some emotional validity for a parent, I have found few kids who actually believed it. Too often that is also the experience of employees who experience “Being Held to Account”.

Empowering Accountability is among the first building blocks executives must install in strategic growth. Accountability is a critical tool for executives in achieving needed growth and value, and then sustaining that growth over time. Employees will be willing to hold themselves to account if the leaders go first. Absent leadership being accountable, the execution of strategic growth becomes a grind.

 

If you want to learn more about what characteristics and roles leadership plays in the success of any organization, download our whitepaper: ‘Successful Strategic Execution Begins With Leaders’.

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The American filmmaker Ken Burns received the Peabody Award in 2013 for his powerful documentary Central Park Five. The film tells a story of a horrible crime committed in 1989. A New York Times critic described the film as follows: “A notorious crime—the rape of a jogger in Central Park in 1989—is revisited in this painful, angry, scrupulously reported story of race, injustice and media frenzy”.

The term “Central Park Five” was given to the group of young men who were arrested, tried and convicted for the violent assault and rape of a woman jogger in New York City’s Central Park. The case was sensationalized in the media. The New York Times described the attack as “one of the most publicized crimes of the 1980’s,” in which five teenaged, black men roamed through the park attacking people. The jogger was a young, white woman working in New York as an investment banker. The woman was beaten so badly that she was not expected to live. After the young men’s trial, they were sent to prison. Justice was served!

Or, so it was thought at the time…

The handling of the case against the Central Park Five is a classic illustration of the disastrous effects of cognitive biases on decision making. Years later, a man stepped forward and confessed to the crime. Burns’ film depicts that the police should have connected Matias Reyes to the crime, since DNA evidence identified him as the sole contributor of semen found in and on the rape victim. The film offers a haunting depiction of the various press reports, which clearly established the guilt of the young black men in raping the white woman. It made sensational reporting and likely sold more newspapers, yet was inaccurate. Justice was clearly not served since these five young men spent years in prison for a crime they did not commit. The City of New York settled the case with the young men for $41 million in 2014. It is easy to speculate how economic and racial biases contributed to so many people getting this case so wrong.

Consequences of Cognitive Bias

While those factors may well have been present, another form of bias – cognitive bias – was clearly present. Cognitive bias is the term used to describe an unintended consequence of routine functioning of the brain. According to Daniel Kahneman, the brain uses two systems. System One is what triggers our automated responses to routine functions. It allows us to spot circumstances and interpret the situations based on past experiences, and rapidly respond based on what worked in the past. System Two is the slower and more thoughtful function of the brain, which we commonly refer to as “thinking.” While System One is a part of thinking, it is so automated that we are unaware of it happening. Our daily lives are made much easier by System One, and the clear majority of the time it functions just fine. For example, if you think about all the activities you performed this morning, such as waking and getting up, most were managed by System One. Your getting dressed, getting coffee, heading off to work or wherever you spent the mornin – most are accomplished by automated, System One thinking. It works well, until it does not.

Cognitive biases describe those situations in which System One thinking misreads the circumstance. The perception is that this event is like a similar event, which in turn dictates the appropriate response. Since the perception is wrong, so too is the response. Usually, this is of little consequence and can even be humorous. Unfortunately, there are times when such misreads and subsequent responses have negative responses. Daniel Kahneman was awarded the Nobel Prize in 2002 for his application of cognitive biases in economics, which is called behavioral economics. His work describes how biases lead to bad economic decisions. Cognitive biases are also found in flawed business strategies and capital projects. Further, most industrial accidents and disasters have cognitive biases as at least a partial cause.

The Cure is High Reliability Organizing

High Reliability Organizing (HRO) principles describe the methods created to counteract, or at least lessen, the risks from cognitive biases. Some industries like aeronautics, the US military and nuclear power, have successfully used these methods to creat high reliability organizations. Healthcare in the US is now actively using some form of these same organizing principles. HRO principles alter how organizations design the conversations, orientations to pivotal roles and plans for interrupting the biases that naturally occur.

A classic example is an FOD walk on a US Navy aircraft carrier. FOD stands for Foreign Object Damage. The FOD walk involves people from the ship, who do not work on the flight deck. These individuals walk together down the flight deck looking for anything odd or unusual that could possibly damage an aircraft. The reason for the FOD walk is the people who routinely work on the flight deck would be accustomed to these anomalies, e.g., a loose oil can, a frayed wire, and could no longer see these items. If gone unnoticed, such objects could pose serious risks to those working on the flight deck, jeopardizing safe flight operations.

High Reliability Organizations are designed to investigate the unusual with a tenacious commitment to preventing failure. It shapes the mindset. If you think about it, this is starkly different than the mindset in most organizations, where routine is the order of the day based on expectations of “we’re good” and things should work as planned.

It’s hard to know from watching one documentary film, but it does sound as if the New York Police and District Attorney organizations were NOT functioning as HROs in 1989. Had these organizations been following HRO principles, it is probable that jumping to conclusions, rushing to make press announcements and missing lots of clues that challenged the theory of the case would not have happened. Five innocent young men would not have spent years in prison for a crime they did not commit.

Think about your organization and its leadership. Is it designed to deliver high reliability and resilience? Can it avoid rushing to faulty judgements and then avoiding evidence that contradicts these conclusions? If you’re not sure of the answer, then be prepared to face the harsh consequences.

 

Do you want to learn more about transformation change leadership? Download our whitepaper: ‘Transformation Change Leaders: The Biggest Missing Ingredient in Business Today‘

In it learn:

• What is driving the “gap” that exists in Boards of Directors and leadership teams
• The 6 main components of transformation change leadership
• What is causing the shortage of supply

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Perhaps you have heard the expression “A fish rots from the head down”. It is an old proverb of uncertain origin that exists in many different languages.

While this proverb is not anatomically correct, it is a powerful metaphor for lack of leadership accountability in organizations. “When an organization or state fails, it is the leadership that is the root cause”. Among the key roles of top executives is to create the right organizational culture and clear leadership accountability. This culture assures adaptation to changing customer needs, disruptions in markets, growth in value and ethical behaviors by employees at all levels. When there is failure in those expectations, the accountability for failure is assigned to top executives. Likewise, when companies fail to execute growth strategies and transform their organizations, it is because the top executives fail to lead. That is, they fail to be accountable as leaders which in turn translates into lack of leadership accountability in implementation.

Read on and learn about:

1. the Volkswagen example
2. the Wells Fargo example
3. the elements of ‘Leadership Accountability’

Volkswagen

“Rotting from the Head Down” or failure for senior managers to be accountable as leaders is all too common. There is a steady stream of corporate scandals in which one can only be amazed at the seeming denial and naivety of executives. Did Volkswagen executives really think that their illegal software patch would never be discovered? Or was it, “They may find out but it will not be on my watch”. Where was the Volkswagen Board in assuring the presence of strong leadership accountability? We can only imagine, but we can see the unintended consequences. Perhaps the consequences are best reflected in this photo from Der Spiegel Spiegel with the title “The Suicide” which reflects the view of Volkswagen essentially killing itself.

 

Wells Fargo

Did the executives at Wells Fargo believe that their punitive, high pressure tactics on employees would not produce undesirable behavior toward customers? Why did they not investigate when reports of employee’s bad behavior began to emerge? How is it that 5,300 employees were fired related to these issues and the Wells Fargo Board did not notice? Who was assuring proper leadership accountability was in place? Doesn’t that indicate the executives knew there was a problem with phony customer accounts being opened which produced unwarranted fees for the bank? Why did they wait to act until they were caught by a federal agency? Did the CEO actually think that no actions but being contrite in front of US Congress would carry the day?

 

All of these questions defy logic for respected executives who are highly paid. Yet these sorts of events have gone on for decades and continue. Consider that “a fish rots from the head down” comes from the lack of leadership accountability in the organization. I’m not talking about accountability policies which are written by lawyers and adopted as yet another part of the management processes. These large companies likely had such policies and yet did not affect the behaviors of top executives.

What is Leadership Accountability?

The “Rotting Fish Head” comes from an unwillingness to act in an accountable manner and to establish a context of leadership accountability in the organization. The converse of this is also accurate. The transformational organizations which have produced stunning financial and strategic results were led by executives who:

• Were tenacious about being accountable,
• Acted in ways to demonstrate the essential nature of leadership accountability, and
• Established a firm context of leadership accountability in the organization. Often this involved acting on direct reports and other executives/managers who were politically connected and well liked, but unwilling to act in a self-accountable manner.

Too often there are executives who philosophize and talk about accountability but do not act on their accountabilities. Talking about accountability is not the same as being accountable and exercising leadership accountability. It sad to see how many executives talk about accountability, seem to want accountability in the organization, and yet are unwilling to be personally accountable.

Accountability and leadership are inexorably linked. Accountability is an acute and overt manifestation of leadership. Leadership involves accepting and acting on the accountabilities of the position. One of the first values which must be present in an organizational culture is accountability. Among the strongest evidence of sound leadership is that the executives, managers, and employees have a new relationship to accountability, and this new relationship to accountability is manifested in the performance of the business, relationships with stakeholders, and service provided to customers.

While the phrase “a Fish Rots from the Head Down” is not anatomically correct, it does provide a visual metaphor for the importance of a culture of accountability and powerful leadership from top executives. Further, Volkswagen and Wells Fargo serve as painful reminders of how well respected companies can damage their brands, customers, employees, financial performance and shareholder value with actions that can only be described as “Dunderhead”!

 

Do you want to learn more about transformation change leadership? Download our whitepaper: ‘Transformation Change Leaders: The Biggest Missing Ingredient in Business Today‘

In it learn:

• What is driving the “gap” that exists in Boards of Directors and leadership teams
• The 6 main components of transformation change leadership
• What is causing the shortage of supply

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While at our cottage in Ontario, Canada this summer, my wife and I had the pleasure of watching hummingbirds zooming around our property. They fly so fast they can be hard to see. We wanted to see them up close. I remembered that in the garage there was a hummingbird feeder that was left behind by the previous owners. We cleaned it up and my wife was going to make a sugar mix. However, our kids had purchased a packet of official hummingbird food at the local store, so we used it. The food was in powder form and we mixed it with water. The water was bright red, just like it showed on the package. We proudly hung it on the limb of a tree near our house so we could watch it from inside the kitchen. We had other bird feeders in the same tree, which were covered up with birds of all sizes … plus a couple of naughty squirrels. For the next week, we did not see one hummingbird at the feeder. We did notice them zoom by, but we were never able to really see them. We returned to Texas with not a single good view of a hummingbird.

Read on and learn,

1. What do Hummingbirds have to do with cognitive bias?
2. What is ‘confirmation bias’?
3. What are the consequences?

Attracting Hummingbirds at Home

Once home, we made a wonderful discovery. Several hummingbirds were active in a flower bed in front of our house. They were also very fast in flight, but would linger on flower blooms long enough for us to get a good look at them. We could even take photos and videos. We noticed these hummingbirds were smaller than those we had seen in Canada, but so were some of the other birds. The Blue Jays in Canada look just like the ones in Texas, except they are much larger. Maybe that is because they are getting ready for the cold winters?

The color of our hummingbirds was brown. We could not remember seeing other brown hummingbirds, so of course we went inside and searched on Google. There were many beautiful, colorful photos of hummingbirds. But, none matched the size and color of ours. The few that were somewhat similar in appearance were from the west coast, mostly California. Nothing near Texas. We wondered if we had discovered something new. Maybe we should edit the photos and send them to the Audubon Society?

The next day, my wife called. She was laughing so hard. As she was looking more closely at the photos we had taken of our hummingbirds, she noticed the legs did not look quite right. The angle was not what she would expect. Then upon closer inspection, she noticed a set of hind legs. It turns out our hummingbirds were moths. Once again, Google was used. There is quite a large section on moths that look like hummingbirds. The photos of moths on the website looked just like our “hummingbirds!”

Confirmation Bias

Perhaps you have heard of confirmation bias, a type of cognitive bias. The definition is:

con·fir·ma·tion bi·as
noun: 1. the tendency to interpret new evidence as confirmation of one’s existing beliefs or theories.

My story of the hummingbird is a classic example. My wife and I were outside working in our yard near this flowerbed. One of us noticed this activity on the blooms and called it a hummingbird. From that point on, the confirmation bias was in place. Our comments and observations all reinforced our belief that we were looking at a hummingbird. As happens with confirmation bias, other evidence or inputs were dismissed or ignored. Discovery of the mistake happened long after the fact. In this case, nothing bad happened. The worst that could have happened is that I called the Audubon Society to report this new discovery, only to be referred to a back-office desk that handles “goofballs who cannot tell the difference between a bird and an insect.”

Consequences Can Be Severe

The consequences, however, of confirmation biases are often more severe. I have observed bad business strategies that were based on confirmation biases destroy millions of dollars in shareholder value. Confirmation biases often contribute to accidents and injuries. Further, confirmation biases have been a big contributor to major environmental mishaps and industrial disasters.

Confirmation biases, like many of the cognitive biases, cannot be controlled through additional training and tighter processes. While this seems obvious, most companies are still hoping their management processes and training will do the trick. It will not. It’s too bad, since innocent people are continue to be killed and maimed by incidents caused by confirmation biases. Damage to the environment is also massive, e.g., impact on the Gulf of Mexico from the Deepwater Horizon oil spill. There are many other such examples related to chemical plants, exploration sites, pipelines, and refineries. When these disasters occur, the companies are in shock. Something they thought could never happen just happened. After initial response to the crisis, companies begin the task of investigating what happened…getting to the root cause. Predictably, the answer is to blame individual workers for not following procedures. The predictable solution then put forward is to fire the individuals (if still alive), rewrite the already complex process, and install new technology. Rarely is there awareness or examination of the role cognitive biases played in causing the incident. Often cognitive biases were at the heart of the cause, but were ignored since cognitive biases are not easily understood or tangible.

Fortunately, the moths that were so cleverly disguised as hummingbirds did not cause injuries or capital damage to my home. Too often, we are not so fortunate in business settings, where the potential consequences of confirmation biases can be much more severe.

 

Do you want to learn more about transformation change leadership? Download our whitepaper: ‘Transformation Change Leaders: The Biggest Missing Ingredient in Business Today‘

In it learn:

• What is driving the “gap” that exists in Boards of Directors and leadership teams
• The 6 main components of transformation change leadership
• What is causing the shortage of supply

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