Transparency

“We can’t manage a secret”-

Alan Mulally, Ford CEO

I often use driving a car as a metaphor for running a business. It is quite a fitting metaphor, with many applications. Here is one more. Imagine that your car runs well, you have a well-defined destination and route, and a skilled driver. But the windshield and all of the instruments are covered with a frosty screen. It would be challenging to keep the car on the road, much less get to the chosen destination. That is what it is like when management doesn’t have good access to relevant and important information on their company’s path to its destination.

There can be several reasons why management doesn’t have access to this data about the direction of their organization. They simply may not be looking. They may not have a reasonable method of gathering or interpreting the data. They may not realize which data are the most vital to track. But what if the information being fed to management is not reliable? What if this was being done deliberately?

In an interview in the Puget Sound Business Journal, Ford CEO Alan Mulally shares how the windows and dashboard he was using to run Ford were not just frosted, but blacked out. Shortly after arriving at Ford four years ago, he instituted a Thursday morning meeting with managers from all over the company. They updated their business plan which called for a dismal $17 billion loss. They developed 300 charts which they reported on each Thursday. The charts were color-coded such that green meant the measure was on track, yellow was a problem, and red a crisis.

At an early Thursday morning meeting, all of the charts were green. Mulally stopped the meeting and said, “Team, we’re going to lose $17 billion and all the charts are green. Is there anything that’s not going well here? So we can’t manage a secret, we’ve got to be honest with each other and it’s going to be OK.”

A couple of weeks later, one brave manager showed up with a bright red chart. Mulally stood up and applauded him, and asked what the rest of the team could do to help him. In mere moments several suggestions were offered. In two weeks this manager’s chart was yellow, and in another week it was green. With transparent glass in his windshield and clear vision of his dashboard, Mulally and his team have done a remarkable job of turning Ford around.

Tips

Are you able to see your dashboard clearly? Are you getting relevant and accurate data and interpretation? If not, how can you do so? The story told by Mulally brings to mind several tips:

  • If all your metrics say your company is doing well but your financial statements suggest otherwise, something is wrong. Similarly, if all the managers report that things are going well but you don’t think so, something needs to change. If your charts are green and your customers are unhappy, you are in trouble.
  • Promote transparency with transparency. Lead by example. Be especially transparent in revealing the lack of transparency in reporting metrics.
  • Create a culture where giving bad news does not result in the messenger getting shot. Even if the bad news is the result of the messenger’s mistakes, do not tie any negative consequence to the communication itself.
  • Capitalize on team solutions. When the manager first showed the bright red chart, Mulally didn’t shake his figure at the reporting manager, asking him what he was going to do about it. Instead, he offered the assistance of everyone in the room. And it worked. Who knows how long that single manager would have struggled to solve the problem within his own part of the organization. But with the help of others, the solution took only days.
  • We should focus on solutions, not blame. Clearly Mulally inherited a culture where the primary focus was to figure out who to blame. Instead, we should react to problems with solutions.

By Dave Bartholomew