The Foundation Forum. 8th September 2016. Written up with the help of Simon Caulkin.
This particular exploration was built around three big vortices of trust, which we ventured into with the help of some knowledgeable and sure-footed guides.
- Going to war, with Rob Weighill, former Major General & Brigadier who led planning and operations for NATO’s mission to protect civilians in Libya, and who served in Iraq, Afghanistan, Kosovo, Northern Ireland and with the UN in Cyprus. In the early 2000s Rob wrote the concepts and produced doctrine that directly influenced the medium and long term development of the British Army’s organisation and operation, and he then spent time applying its principles on operations with the UK and NATO joint forces command.
- Applying spin, with Robert Phillips, former CEO of Edelman Europe, now leading a new kind of trust-building organisation called Jericho Chambers. They help organisations with communications, leadership and trust in a post-PR world, one where substance and action, listening not transmitting, accepting imperfection and ambiguity all play a central role.
- Industrial deceit and the Volkswagen issue, with Toby Rubbra, Partner at systems thinking advisors Vanguard whose work shows how widespread the assumptions and practices that led to the scandal really are. Toby has been central to the development of their approach and it is a conundrum. They apply profound common sense in helping organisations give customers what they want in ways that cost less, and yet their work has much unrealised potential because the conclusions challenge commonly held ‘obvious’ assumptions about the way things work at work.
Integrity is the most commonly occurring value in the FTSE 100. Yet high profile lying seems so common that the big surprise would be for the flow of outrageous examples to stop.
Yet it’s not as simple as virtue versus evil. It’s not just good or bad people. Somehow good people end up doing bad things. Somehow the systems we’ve created lead us into situations where our actions and their consequences are hard to connect, or hard to take responsibility for. Where inhuman decisions become the norm and arguing for empathy and togetherness feels weak.
In each of the three examples above, apparently benign assumptions lurk behind a chain that leads to disaster. The idea of intervening to stop a crazed ruler wreaking havoc and harm, restoring order and establishing democracy. The idea of communicating the positives and winning attention to bring them to life. And the idea of measuring what matters and rewarding its achievement.
How do such obviously good ideas lead to such obviously bad results? Perhaps for once this really is rocket science? Actually that was part of the Iraq problem, so maybe not.
Each of these examples, when understood beyond the headlines reveals shades of grey to rival steamy best-sellers. Situations are complicated.
Our action in Iraq is now officially a serious mis-judgement with much of the country (Iraq and, now, the UK) in a state of chaos. Libya has gone a similar way. Syria is so obviously a snakepit of interests and agendas that we avoided entanglement, but the cost of inaction is also high and threatens the trust of groups who desperately want help. How can the military, acting with good intent in difficult situations, retain the confidence of the different groups involved – the UK public, serving troops, people in the troubled territories themselves, other countries who are part of the solution, or the problem… Tough to get right!
‘Making a car with a device that detects an emissions test so it can deliberately adjust settings to appear to meet regulatory standards sounds about as clear cut as badness gets’.
But have you tried working for an over-driven boss in a car company, tried explaining that the target can’t be met, that you’re running late and costing too much money? Have you tried being an ambitious boss in a car company, with shareholder expectations that you’ll launch your new models in the US as planned, judging you against your peers who don’t seem to be having problems, having found in your career to date that setting stretching targets and ‘motivating’ people to achieve them has always worked? Have you tried investing in car companies…? And so on.
Whether its cars, hospitals, or PPI scandals we seem to be living in an age where predictably a news item breaks of “cheating”. The equally predictable outcry and response is for more regulation, inspection and for heads to roll. But what’s really going on here? Very little airtime seems to explore the root causes; the assumptions that underpin the system. As Demming learned, 95% of the issues affecting the performance of a system are down to its design and management; only 5% attributable to people. So rather than point the finger at “corrupt” senior executives maybe we need to better understand the management system they are caught up in; one where ever more onerous targets result in schizophrenia between an organisation’s true purpose and the creativity that has to be applied just to survive.
‘As for spin, enough time has yet to pass to have forgotten the £350m NHS Boris-bus, the rejection of experts, the promise to trade freely while also taking back control’
Or indeed the need for an emergency budget if we voted out, from the other side of the fence. Just say what it takes, have a bit of fun around the edges, write it off as natural electoral bluster.
Luckily we had some knights in high-gloss armour to give us some hope, although we weren’t promising easy.
So to the discussion itself – three ways of looking at why good people acting with the best of intentions do bad things.
British soldiers caught up in the maelstrom of Iraq or Libya, managers who connived in fiddling emissions data at Volkswagen and Brexit voters might seem to have little in common. But as participants discovered at a wideranging, probing Foundation Forum on 8 September, each of these in their way is a telling reflection of a very ‘today’ phenomenon, a facet of what has been called our posttruth, post-trust age.
As described by Rob Weighill, soldiers in Libya found themselves not just protecting civilians, their official mandate, nor even fighting for their lives, but also having to make instant strategic choices in the midst of the operation that had ramifications far beyond the battlefield and their pay grade. At VW, noted Toby Rubbra, engineering managers dealing with emissions policies, under fierce competitive and performance management pressures, effectively had to make a similarly strategic choice: customers or shareholders? The Brexit vote, finally, was a massive kick up the arse from voters who had had it up to here with an elitist political system that had simply shrugged off their choices in last year’s general election and (Michael Gove was intuitively right) no longer trusted a word uttered by an ‘expert’, even when it was true.
The latter example was drawn by Robert Phillips, who quit top PR firm Edelman in 2013 to write a book about the industry self-explanatorily entitled Trust Me, PR is Dead. Phillips argues forcefully that the trust crisis is also a truth crisis, which traces back to fake leaders who believe they can camouflage their fundamental inauthenticity, the non-congruity of their words and actions, by spin. Yet the result of this obfuscation is always corrosive. As Weighill put it: ‘Strategic indecision combined with an absence of clear political vision forces strategy to be developed and enacted from the bottom up rather than the top down. Accountability becomes ambiguous, responsibility is forced downwards, authority drifts … and confusion reigns’.
So is trust dead, gone with Downton Abbey and the simpler age of deference and social certainty that fostered it? Is a trust-deficient society the inevitable result of human shiftiness – ‘the crooked timber of humanity, [out of which] no straight thing was ever made’ – now systematically outed by citizens, journalists and Twitterati, enabled by the instant global reach of social media?
Over the evening a more nuanced conclusion began to emerge.
Trust is an outcome of behaviour and action, not a message or something that can be created by CEO fiat. Likewise its opposite, mistrust, which is a rational response to cheating, lying and broken promises. There is plenty of research evidence to say that humans aren’t fundamentally liars, cheats or self-interested shirkers. But they are malleable, as the chilling results of Stanley Milgram’s 1960s experiments, referenced by Rubbra, famously showed. Expectation plays a huge part in behaviour, trust tending to breed trustworthy behaviour, while the reverse is also the case. (Hence the ‘supervisor’s dilemma’, in which close surveillance is observed to generate the bolshy behaviour that justifies not only the initial discipline but a further tightening of the screw.)
If lying, broken promises and muddle on the lines of our three examples are so prevalent in business and politics, we need to understand why they happen. Is there a common structure?
It turns out that there is. In any organisation, suggests Vanguard’s Rubbra, there is a necessary, although often neglected, link between purpose (with a small ‘p’) – what it exists to do for the people it is serving or providing for – and the measures, targets and incentives it uses to manage by.
In a strictly practical sense, how can an organisation judge how well it is performing if it doesn’t have an express purpose to measure performance against? Absent (as it often is) an unambiguous purpose, the measures that appear to matter most fill the purpose vacuum. These are often financial at the top level, sales or otherwise activity-based further down (make x sales this month, x calls today, see 95 per cent of A&E patients in four hours). There is thus a tension between the purpose from a customer point of view (solve my problem) and purpose from the day-to-day manager’s angle (make shorter calls even if they don’t solve any problems, ensure no one is counted as waiting more than four hours in A&E so find some imaginative ways of counting).
‘If, as Rubbra says, ‘you combine measures that distort behaviours with hierarchical power you end up with a really, really quite interesting, dysfunctional situation.’
W. Edwards Deming, the godfather of the systems approach, was thinking of this when he estimated that 95 per cent of the issues affecting performance were down to the design of the system itself and 5 per cent to the individual. As for dysfunctionality, he added that ‘People with targets and jobs dependent upon meeting them will probably meet the targets — even if they have to destroy the enterprise to do it’.
This of course is exactly what happened at VW, Enron, Lehman Brothers and many more. In Libya, as the House of Commons foreign affairs committee has just made clear in a damning report, differing views on the purpose of the intervention among NATO allies left commanders on the ground struggling to decide whether to prioritise civilian protection or regime change, as some national governments wanted. In the event, by using the former to cloak the latter, but without any of the planning for postconflict resolution that should have gone with it, politicians handed the military an impossible task and ensured that even the goal of civilian protection was unachievable. As actions diverged from promises, trust at home and abroad withered, creating the strategic vacuum now exploited by warlords and extremists of all stripes. In the very different context of the UK referendum on Europe, reckless promises over the aims of Brexit triggered a result with incalculable consequences for the UK economy – and possibly even greater ones for political society if, as now seems certain, some of outcomes voted for are mutually exclusive.
As Rubbra’s analysis suggests, one part of breaking out of post-truth cynicism is overcoming dissonance over purpose. This isn’t always easy.
In business, self-serving assumptions about maximising profit or shareholder returns often override customer concerns – one FTSE CEO quoted by Phillips started every board meeting with the question, ‘Who do we f*** today?’ In the military, as Weighill admitted, the high testosterone levels needed for battlefield success become an obstacle at head office when the job is reconciliation or nation building.
Nor can it be done by regulation or legislation (as the government seems intent on doing with proposals to make boards answerable for white-collar fraud, for example), which simply add to the compliance overhead while barring the door behind a long-departed horse. And regulation has nothing to say about the insidious but in the long term more debilitating problem of flagging workforce engagement, currently running at record low levels. As Phillips insisted, trust is created by actions, not words, and it has to come from internal mission. In the end, he says, ‘what we need is intelligently placed trust and intelligently refused trust’, and that can only be based on three simple elements: real honesty, competence and reliability of those in charge of organisations.
A second part of the remedy, building on the first, is reinforcement.
If trust feeds on itself, then the manager’s job is twofold: first, to recruit people who can be trusted to take initiative, collaborate and put the purpose first – who are themselves trustworthy. The second, in the words of LBS’ late Sumantra Ghoshal, ‘becomes one of designing an organisational context that encourages people to act in desired ways: away from free-riding and shirking to the exercise of initiative and creativity; away from selfishness and opportunism to cooperation and collaboration; and away from inertia and apathy to flexibility and continuous learning’. An interesting example here is the so-called sharing economy, whose proponents claim that the incentives it provides for reciprocal trustworthiness, together with the move from owning to sharing, could be the harbinger of a new, internet-enabled era of trust in business.
That’s as may be. But oblique and hard to achieve as it is, we should remember why trust is worth pursuing in the first place.
High-trust environments are inherently less rule-bound, more flexible and carry less management overhead in the shape of value-sapping compliance and monitoring activity. They are more pleasant and more creative to work in. Soldiers who couldn’t unthinkingly trust each other would be incapable of fulfilling their primary military task, let alone complex post-combat ones. And no one contemplating the turmoil of international geo-politics can avoid the conclusion that the inability of governments and voters to trust each other on what to do about Syria, Iraq and other global hotspots has left us with what Weighill called a ‘world of pain’.
Indeed, a post-trust, post-truth world might not just be unpleasant – it might be impossible to live in. ‘It is happier,’ said Samuel Johnson, ‘to be sometimes cheated than not to trust.’
The Foundation’s View
As the views coalesced but while they were still hot from the potato oven we found ourselves drawing three conclusions that might be useful:
Not just leaders but all of us need to be honest about uncomfortable truths, and to understand the consequences of wanting or voting for or supporting an attractive sounding but flawed promise. What do we mean? Toby described the ridiculousness of ambulances queuing up outside the A&E Department of a hospital he worked with, doctors and nurses running between building and vehicle, while the patient waited on board. Why? Because once admitted the clock starts ticking, and the four hour maximum waiting time kicks in, with serious consequences for the people involved if it is breached. Of course the waiting time might be more than four hours counting properly, but that’s not what’s measured, and the fear of failure was now keeping ambulances tied up and unable to respond to more calls while energy and attention are diverted from what really matters – cared for and recovering people – to something that doesn’t.
Why was the target introduced? Because after one or two long waits and the associated horror stories someone said ‘this should never be allowed to happen again’. And everyone agreed. Well intentioned. But leading to the debacle above. It would have been more useful to say that this might indeed happen again – it is impossible to design a system that never has some probability of an extremely unusual incident. Sadly it is easy to change a system so it no longer works towards what ultimately matters, in this case getting injured people to feel better again as swiftly, painlessly and easily as possible. But would we accept ‘that might happen again’ as a message…?
All of the issues described had in common confusion and obfuscation around the real purpose of the organisation or the mission. Some countries want to protect Libyan civilians, others want to kill Gaddafi, and they aren’t able to agree. So they set a mission and then try to influence to adjust direction. If you’re leading the mission with troops whose lives depend on you – both now, in the field of battle and later, when returning home to scepticism around perceived failure – how do you make decisions and follow them through consistently? As actions start to diverge from promises, trust at home and abroad withers.
‘In a commercial environment the same things happen. Publicly and in internal forums the customer comes first, but in smaller meetings where the real work is done it’s different.’
Getting approval for emissions performance on time and on budget comes first – profit, volume and market share are what matter most in practice. If you want to keep your job and your sanity you find a way to make it happen. It seems to be how it works around here. And the dissonance between advertising ‘Clean Diesel’ and producing diesel that’s quite deliberately and illegally dirty somehow diminishes. At least until it’s all exposed to daylight, when it becomes hard to work out why there isn’t a single evil individual behind such a clear-cut mis-deed. Mis-aligned purposes, overt and implied, caused the whole trail of events that followed. They established the system people were working in, and the system led to disaster.
Aligning the purpose of what we all, as customers, workers and members of society want with the ways organisations operate seems just too hard. How can we reverse the assumptions around western business, politics and what we view as success? How can we move from the directly quantitative or unrealistically aggressive (defeating an enemy in Afghanistan for example) to something that starts with people and the relationships between them?
This is about changing a belief system, the invisible set of assumptions held by groups of people about the way the world works, that leaks out in the words we use, the offices we work in and plenty else we take for granted as ‘normal’. Beliefs move slowly. But 30 years before this Forum, we would have been in a smoke-filled room. Asking people not to light up would have been madness. Now it’s the other way round.
We are optimistic. We think the belief system is changing, from the issues we describe, towards something better balanced. It won’t happen in a linear way, and no one person can strike the decisive blow. But little by little, including from conversations like these, new ideas are becoming more confidently held. In 30 years’ time the world will work very differently in this regard
About The Foundation
The Foundation is a management consultancy specialising in growth. We help clients address big organic growth challenges; growing faster, growing into new markets or fending off threats to growth.
What these challenges share is the need to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren’t challenged.
We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value.
This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different.
By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get round beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success.
We most often answer three questions:
1. Developing new propositions
2. Improving customers’ experiences
3. Developing customer-led strategies for broader issues such as increasing retention or lifetime value
Our clients include HSBC, JLR, O2, M&S and ebay, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money proposition, and giving Morrisons a competitive direction contributing to their return to growth.
Behind our work our most distinctive characteristic is our team and their outlook. Each individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well.
This link will take you to more information about our Forum events: http://www.the-foundation.com
Charlie Dawson (Founding Partner):
firstname.lastname@example.org / +44 7785 268 859
Terry Corby (Partner)
email@example.com / +44 7446 173 137