This article is part 2 of 2 in what I wrote a week ago on “How the mighty fall”. Part one is located here. This article serves to help you understand how mighty and big companies fall and what you can do about it.

Stage 3: Denial of Risk and Peril


As companies move past stages 1 and 2, they will fall deeper into Stage 3 when they begin to ignore accumulated warnings. They tend to overlook obvious data that something is not doing well in their new ventures and believe that things will get better. They continue to bet big on the new ventures while denying the cracks of risk and peril.

Collins shares about how the leadership plays a part in the growth or decline of an organization.

Leadership-Team Dynamics:
On the Way Down versus On the Way UP (Taken from Page 77)

In seven out of the eleven cases, Collins found evidence of externalizing blame during the era of decline. CEOs blame a huge range of factors like the environment, inflation, company hit by strikes, unfair competition and ignorance. While it is true that these factors hit the company hard, the company’s denial of it made it much worst.

Here are the indicators for Stage 3:

1. Amplify the positive and discount the negative.
2. Bet big on new goals without empirical evidence or validation of previous small wins.
3. Erosion of healthy team dynamics. Debate and dialogue is replaced with consensus or dictatorial management.
4. Externalizing blame rather than accepting failures.
5. Obsessive reorganisations within an organisation rather than confronting brutal realities.

Stage 4: Grasping for Salvation


Companies at this stage know that they are in deep trouble and its board of directors look to a new fast moving CEO who will launch a new vision, be the messiah that will save the day. Some look to a dramatic cultural revolution, game changing acquisitions or a number of sliver bullet solutions.

HP exemplified stage 4 behaviour when it launched a conversational $24 billion merger with Compaq. It was a sliver bullet move, hoping that it will be the game changer and rescue them out of their woes.

Behaviours that can exemplify stage 4 or reverse the downward trend

(Taken from page 90)

Every company in Collins’ study indicated late stages of decline that made them grasp for at least one sliver bullet. The stage 4 behaviour worsened the situation these companies are already in. Collins also found out that eight out of the eleven fallen companies in the analysis went for an outside CEO during their era of decline, which usually worsened under saviours from the outside.

Here are the indicators for stage 4:

1. A tendency for sliver bullets or a game changing strategy that will help the organization catapult them out of the decline rapidly.
2. Searching of leaders as saviours, often for charismatic leaders and/or from outside the organization.
3. Introduction of new buzzwords and radical changes. Leaders engage in new slogans, new programs, new culture to align or motivate people.
4. Panic and haste, instead of being calm and disciplined on strategy.
5. Hype before results- leaders tend to sell the future to compensate the lack of current results, initiating a pattern of over promising and under delivering.
6. No sustainability of results. There is a trend of initial positive results but they do not last since there is no cumulative buildup and momentum.
7. Confusion and cynicism of what the company stands for. There is confusion on the ground over what their core values are, the workplace just becomes another place to work, a place to get a paycheck. People become distrustful regarding vision and values as little more than Public Relations.

Stage 5: Capitulation to Irrelevance or Death

Collins remarked that no company that they have studied fell into Stage 5 and each company made their different decisions to reverse its downward slide. By the time a company has moved from stage 1 to 4, those in power can be exhausted, dispirited and eventually abandon hope. Some of the leaders just sell out, in other cases, the organization spirals down to utter insignificance or dies out right.

Zenith Corporation held onto dominant positions in television and radio. For every dollar invested in Zenith at the start of 1950 and held through to 1965 increased in value more than one hundred times, generating cumulative results ten times more than the market. However, over time, Zenith faced problems and threats from the Japanese who were building better television sets at lower cost. They brushed it aside believing that the Japanese were not able to build quality products (stage 1). In addition, leadership succession problems helped to plague the company when a chosen successor died (stage 2).

Zenith also blamed external problems such as the struggling US economy, labour unrest, oil shocks and so forth, rather than confronting its lack of competitiveness (stage 3). Profitability ratios went down to levels not seen in thirty years. The lack of a specific plan and leap into all kinds of opportunities like VCRs, videodiscs, telephones linked to televisions, home security video cameras, cable TV decoders and computers, drove its debt-to-equity ratio to 140 percent (stage 4).

In their grasp for salvation, Zenith stumbled upon a new opportunity that made them great again. They became the number two maker of IBM compatible personal computers. However, even with their success, they were dragged down by their television business, which deteriorated their financial position and cash on hand dropped to five percent of current liabilities. This lead to the selling of Zenith to Bull Corporation.

How do you recover when your organization faces decline?

Collins shares his insights on how you can make a difference by the following methods:

1. Understand how other great companies fall and learn from their mistakes.
2. There is hope that even when companies fall in stage 4, they have proven that they could recover from it. Examples like Nucor, Nordstrom, Disney and IBM fell but bounced back.
3. Never give in and be willing to change tactics. Never give up on your core purpose. Be willing to kill of failed business ideas and even close big operations when they fail to produce results.
4. Never give up on your core values and what you stand up for. Be willing to embrace loss, endure pain but never give up faith that you will prevail.

PS: I have prepared a book summary as a PDF so that you can download it and read it in its entirety. You can download it here.

Popularity: 4% [?]

I will be holding a few talks on Public speaking and how you can connect with people from the stage. Do you know that public speaking is the number one fear and is ranked higher than dying itself. But what if you could overcome that fear? What if you were to speak infront of audiences, how do you engage the audience and make them feel for you? Most people can speak, but how many actually do well? This little preview will help to share quick and useful tips that will accelerate your speaking capabilities and charm your audience!

Workshop Synopsis:

• What you are missing out if you are not able to speak publicly.
• Learn ways to emotionally connect with your audience from the stage.
• Experience a speaking tip to overcome your fear of public speaking.
• How to influence people from the stage and get them to constantly listen to you.
• Learn different ways of starting a speech and how to end it well.
• Learn the one important tip that will change your whole speaking style.

Workshop Details:

Workshop Date: 19th January 2012 (Thursday)
Workshop Duration: 2 hours (7:30pm to 9:30pm) (Registration from 7 pm onwards)
Workshop Fee: Complimentary
Workshop Venue: Wealth Directions Office (9 Penang Road #13-15 Park Mall S 238459)

Who needs to attend this workshop:

Those who desire to gain an unfair advantage over others, these could include professionals, leaders, sales personnel or anyone who wishes to improve public speaking and influence over people.

Registration:

To register for this workshop, please email your Name, Mobile Phone Number and email address to

coach (a) deepimpactonline (dot) com.   It is spelled this way to avoid automated spam.

Please email us ASAP to grab your seat now since there are limited seats.

About the speaker:

Kenneth Kwan is a keynote and motivational speaker employed by corporations to stir desire with their audiences. He has personally spoken to 6700 people and has travelled to 6 countries. Clients like Ministry of Manpower, Sime Darby, AIA, Ricoh, Immigration and Checkpoints Authority and many more have invited him to excite and inspire their staff.

He has also been featured over National Radio, 938FM and has eight articles featured in the Straits Times and HR magazines. He seeks to help you make an impact, not an impression.

What do people say about Kenneth Kwan:

“This program got me started to do something which I always avoid. It makes me face my greatest fear and I found that it is not so difficult after all.”

Chelsia Lim, Relationship Manager

“We may have witnessed great speeches but what Kenneth has done is to distill down the techniques so that we too can move and inspire from the stage.”

Serene Loong, Investor

 “It’s a really great experiential learning experience. Your techniques added my knowledge in these areas.”

Hendra, Software Development Engineer

Come and meet me in person and do register for this special workshop at. Include your Name, Mobile Phone Number and email address to

coach (a) deepimpactonline (dot) com

See you!

Popularity: 2% [?]

Over the long holidays, I took the liberty of reading How The Mighty Fall by Jim Collins. It always intrigued me to find out how large companies, with rich history and successful businesses can actually slowly reach to a stage of decline. I mean these are companies who are well known and have brilliant staff working with them, and yet can catapult into oblivion.

This shows that companies, no matter how successful they once were, can slowly or quickly spiral towards its destruction if they are not careful. By learning how the mighty fall, we can start asking better questions like how can decline be avoided? What are the stages of decline? How can my company reverse course?

In Collin’s research project of more than four years, he has uncovered five stages of decline that is consistent with the studied companies:

Stage 1: Hubris Born of Success

Stage 2: Undisciplined Pursuit of More

Stage 3: Denial of Risk and Peril

Stage 4: Grasping for Salvation

Stage 5: Capitulation to Irrelevance or Death

Companies that were evaluated based on the criteria that Collins and his research team had were the following:

A&P. Addressograph, Ames, Bank of America, Circuit City, HP, Merck, Motorola, Rubbermaid, Scott paper and Zenith.

Not all of them fell into bankruptcy, but a lot of them fell to stage 4, with except of Merck. In is important to take note that at the point of writing the book, HP and Merck might have already reversed their steep decline and show improved results.

Here are the explanations in greater detail of every stage:

Stage 1: Hubris Born of Success

Pride comes before destruction. Stage 1 starts when people become complacent with their success and sees success as an entitlement. They fail to remember what made them great and take it for granted that what has worked before could work again. They make statements like “We’re successful because we do these specific things”. Instead they should be focusing on “We are successful because we understand why we do these specific things and under what conditions they would no longer work.”

Collins cites the story of Motorola who invented StarTAC cell phones, which were the smallest phones in the world, using analog technology where digital slowly became the next wave. Motorola became arrogant and did not listen to the market, stating that “43 million analog customers can’t be wrong.” Their arrogance gave their competitors a growing market share and they fell from being the number 1 cell phone maker in the world to only having 17% share by 1999. By 2003, the number of employees dropped to 88,000- losing nearly 60,000 jobs from their 2001 figures.

Here are the indicators for Stage 1:

1. Neglect of primary flywheel: Leaders get distracted by other exciting potential earnings that they fail to focus on what make them great in the first place. They made a diversion and failed to improve their primary flywheel (their primary business).
2. Losing passion of their primary flywheel.
3. Focusing on practices and strategies that worked in the past and not the fundamental reasons for its success.
4. Refusing to attribute ‘luck’ random events. They think that success was due to their superior qualities of leadership and enterprise.

Stage 2: Undisciplined Pursuit of More

Reeking in their pride, companies pursue new ventures which promise better revenue and growth. There is nothing wrong with that, the problem is that it is done at the cost of reducing their focus on their core business and what made them successful. They started to pursue more and more new ventures that could generate money, without growing their team with the right people for the growth.

Rubbermaid aimed at introducing new products everyday, 365 days a year, while entering a new product category every twelve to eighteen months. Growth will come from doing a lot of new things, new geographies, new technologies, new joint ventures and new product innovations. The constant press and drive towards growth made Rubbermaid unfocused. For the first time in 1995, it reported its first loss. By then, the company closed six thousand product variations, nine plants and 1170 jobs.

Here are the indicators for Stage 2:

1. Excessive growth that is not sustained will lead to the breaking point in an organization.

2. Undisciplined discontinuous Leaps: The enterprise makes dramatic moves that fail at least one of the following tests:

a. Do they ignite passion and fit with the company’s core values?

b. Can the organization be the best in the world at these activities or in these arenas?

c. Will these activities help drive the organization’s economic or resource engine?

3. Easy cash erodes the discipline that sustained the company in the first place.

4. The company becomes bureaucratic and people increasingly thinks of jobs rather than responsibilities.

5. Poor succession planning and inability of grooming next generation leaders.

6. Excessive focus on personal interests or ego, rather than what is good for the company in the long term.

PS: I will post part 2 in the following week. If you can’t wait for it, I have prepared the book summary as a PDF so that you can download it and read it in its entirety. You can download it here.

Popularity: 3% [?]

In a program that we conducted for Exxon Mobile, 82 people from 8 companies were gathered in Capella Singapore at Sentosa to emphasize their commitment to safety and share about their safety processes.

In the afternoon, 10 teams of people competed in an Adventure Race to outwit, outlast and outdo each other in a series of team building challenges.

Here’s a short video that on the fun they had:

If you have any needs in the areas of Adventure Races and Team Building, please contact us.

Popularity: 2% [?]

Raise Your Game 2012 is an event where professionals gather to learn techniques on how to achieve greater success at work and how you can be totally effective. It will cover topics like:

How can I become an even greater leader?

How can I handle office politics?

How can I speak with more confidence and credibility?

How can I increase my focus on my goals?

How can I build even stronger relationships?

How can I persuade and influence effectively?

How can I deliver a pitch that really packs a punch?

In addition, Raise Your Game 2012 will also launch a new book “88 Essential Secrets that will Impact Your Success at Work” by Marshall Cavendish International. I am proud to be one of the authors who has contributed to it and will be speaking in a panel with other speakers on their areas of expertise. My topic is on “Creating a highly motivated life” which is about how to constantly motivate yourself and find success in all that you do. We all know that being highly motivated is a trait that all successful people have but how do you do it consistently? My section addresses that.

Date: 16 Feb 2012 (Get your SUPER EARLY Bird discount before 16 Dec 2011)

Time: 0845-1730hr

Place: Holiday Inn Orchard, Cavanagh Road

Please join us in this one day seminar which will entertain, inspire and teach you new principles to Raise Your Game in life.

See you there.

PS: Since I am a panel speaker on that day, I am able to bring in ONE more person at $198. Do let me know if you are keen on it. Email my colleague at jennifer (a) deepimpactonline (dot) com to tell her that you are keen. Its first come first served. 

Popularity: 2% [?]

Trainer Bob Pike uses a magic formula in his trainings which is the 90/20/8 rule. He mentions that most adult audiences can listen with understanding for 90 minutes, listen with retention for 20 minutes and we need to involve them every 8 minutes.

My tried and tested rule for all the corporate trainings that I have done is a little different. I have modified it slightly because over time, people’s attention span has decreased.

My magic number for training is ridiculously simple but yet extremely effective. I call it the 20 minute rule. After speaking to adults for 20 minutes, we need to involve the audience and induce a ‘state change’.

Question: What does involvement and state change mean?

Actually its simple. Involvement will mean to get the participants to do something with you while state change means to change the current state of condition they are in. This means if they are sitting straight, they move around or move something in their bodies that will change the current state they are in. Here are the different ways I induce a state change in an audience:

1. Get participants to echo what I write on flipchart board.

2. Get the audience to turn to a partner and say a catch-phrase, eg. “Habits determine your success level” or “Success leave trails.”

3. Get participants to take part in activities, either in pairs or group level.

4. Allow them to discuss with their partners on their action steps.

5. Give time to process their thoughts by writing it down.

(This is not an exhaustive list and there are hundreds of ways to do it but these are the ones that I use a lot during my talks.)

Why 20 minutes? You might ask. Well, that’s a good question.

You see, the Hippocampus, part of the limbic brain is that part that pays attention. A person’s attention is calculated using the following formula:

Attention span = (Age/2) + 2 mins     [Note that the max attention span is 22 minutes]

Therefore, using 20 minutes is a pretty good gauge and is easy to monitor.

Hope this helps you when you speak to audiences or conduct your own training. Have fun!

PS: I will be launching my new DVD soon on “Stirring & Connecting with your audience, anywhere, anytime” which will launch in 5 December 2011. It is a DVD that teaches you how to engage and stir the emotions of your audience. Most people can just talk but how many can actually stir your heart? More information will be released soon about it.

Popularity: 2% [?]

Hi Everyone! I am so excited to share with you that you can officially follow me, Kenneth Kwan in social media. The reason why I use  the social media platforms like Twitter and Facebook is because its a great way to connect with people. I will also be able to follow up with questions in a faster manner and also share my personal thoughts about personal development and growth. Moreover, I recognise that people have different mediums in which they absorb information better. Some like to be engaged in facebook or twitter, while others just prefer email. Whichever suits you, its fine with me. I am just creating avenues to see how I can add more value to you.

In addition, when you LIKE my facebook page, you can download my Radio Interview with 938FM on “Does Motivational Programs Really Work?” (Its really good stuff!)

Its always been my desire to influence people to display excellence in all they do. I hope to be a constant positive influence to you and your team members. So, I hope you will follow me and LIKE my Facebook page. By doing this, I hope to be able to inspire you to reach your potential.

Here are my accounts (Just click on the images):

See you on the Social Media Side!

Popularity: 3% [?]

How do great leaders inspire action? What are the secrets of communication behind great companies and personalities like Apple and Martin Luther King?

Watch this video to understand why people buy into what you do. Find out what compels people to be drawn into your mission and become great fans.

Popularity: 5% [?]

The death of Steve Jobs rocked the world as he was considered one of the world’s most innovative men. Under his leadership, Apple has never been short of creating beautifully designed products that has wowed the world and also becoming of the world’s most valuable company (US $341 Billion as of 10 August 2011).

When I first heard the news that he passed away, in my mind I was asking my friends, “Are you kidding?” A quick search on the Internet yielded much talk about his demise and even apple website created a webpage for him.

Here are some life lessons that I have personally learnt from him:

1. Its not about how well you start in life

Steve Jobs was born out of wedlock and put up for adoption for birth. In fact, he mentioned in one of his talks that he was so poor that he had to sleep in the floor of friends’ rooms during his college days. In addition, he earned little money for food after returning Coke bottles. Furthermore, he had to walk seven miles every week across town to the Hare Krishna temple for the Sunday feast. If such a person like Steve Jobs could face adversity and still make it in society, what is our excuse?

2. Education level is not the most important.

For the man who ran the most valuable company in the world, interestingly, he actually did not finish his degree education. In fact, he dropped out of Reed College after only one semester. Steve mentioned that his short stint in college was an impactful one because “If I had never dropped in on that single calligraphy course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts.”

A little known fact about Steve Jobs was the fact that he was listed as either primary inventor or co-inventor in 338 US patents or patent applications related to a range of technologies from actual computer and portable devices to user interfaces (including touch-based), speakers, keyboards, power adapters, staircases, clasps, sleeves, lanyards and packages.

3.  It’s not what life throws at you but how you make out of it.

The experiences faced by Steve were also rather dramatic and could be a potential storyline of a soap opera. In 1985, two years after recruiting Apple’s new CEO, John Sculley, Jobs was literally kicked out of the company out of the company he founded. This was due to deterioration in Job’s working relationship with Scully and resulted in an internal power struggle that Jobs lost. However, Jobs claimed that being fired from Apple was the best thing that could have happened to him. He said, “The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”

The time away from Apple also gave Jobs time to start a new company called NeXT, which was to develop high-end computers at expensive prices. The company did not do so well in sales but it influenced future software developments, particularly the MAC OS X.

In 1986, Jobs bought The Graphics Group from Lucasfilm’s computer graphics division for the price of $10 million. The company decided that it would give up selling its unprofitable Pixar Image Computer and concentrate its efforts into computer-animated films. This company was later renamed as Pixar.

Pixar’s partnership with Disney was a commercial success and it bought many great films such as Toy Story, A Bug’s Life, Toy Story 2, Monsters, Inc., Finding Nemo, The Incredibles, Cars, Ratatouille, Wall-E and Toy Story 3. Finding Nemo, The Incredibles, Ratatouille, WALL-E, Up and Toy Story 3 each received the Academy Award for Best Animated Feature.

None of this would have happened if he were not fired from Apple.

4. Live each day as if it was your last.

When he was much younger at the age of 17, he read a quote which affected him a lot, “If you live each day as if it was your last, someday you’ll most certainly be right.” Since then for the past 33 years, Jobs looked into his mirror every day of his life to ask, “If today were the last day of my life, would I want to do what I am about to do today?” If the answer has been “No” for too many days in a row, he knew that he needed to change something.

He also mentions in his address to Stanford students in 2005, “Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”

Jobs also reminded them that “Your time is limited, so don’t waste it living someone else’s life” and “have the courage to follow your heart and intuition.”

We are constantly being surrounded by people telling us what to do with our lives and also we may also at times in our lives, want to live the lives of other people. Live a life that you really want and have courage to live it.

5. Connect the dots in life.

Jobs reminds us to connect the dots in life. Every thing that has happened in our lives happened for a reason. We have to “trust that the dots will somehow connect in your future.” Perhaps you have gone through many things in life and wondered why it had to happen? It could be repeating another semester in school, studying the wrong course, wasting 3 years in a company that didn’t improve your career or getting a lousy boss that treated you like dirt. All these ‘negative’ incidents in your life could actually be the turning point of your life from that point on!

It is my firm belief that every thing that happens to us right now is to prepare us for the future. In one of my blog articles, I mentioned about how at the age of 17, I started off as a volunteer of a youth organisation and did a lot of program planning and emceeing. I wouldn’t dare to say that every program I ran was incredibly successful but learnt a lot from the ones that failed or didn’t generate interest from participants. Later did I know that all these were necessary to prepare me for the role as a trainer and then much later to transit into being a public speaker.

Everything happens for a reason, the only thing we need to do in our lives is to make sense out of our experiences and try to connect the dots.

6. To be a trendsetter, you can’t rely on focus groups.

Steve Jobs was one of the few people that didn’t really believe in focus groups. This was contrary to most business philosophies that you had to ask people on what they wanted in their products.

“None. It’s not the consumers’ job to know what they want.” – Jobs responding to whether he did market research for the iPad.

However, most people in life don’t know what they want, especially if they have never seen it or even conceptualised a new product before. Steve relied a lot on his intuition about how people liked things and the way they operated them. This sense of intuition that he had was really ahead of his time as he could see into the future and helped created demand for products that were in his head.

For example, before the launch of iPad, most people were skeptical of Apple’s ability to compete in the market and its lack of experience in producing such devices. Even the internet was flooded with comments on the name of the iPad. However, when it was launched, it created a storm of people who wanted to own a piece of  it. It was one of the best selling products Apple has ever created and is believed to dominate the market share for the next 5 years.

7. Always acknowledge the work of your staff in front of the rest.

In most of the Macworld keynotes of Steve Jobs, I recall watching many times where Jobs will usually ask everyone in the hall to give a huge round of applause for his staff who has worked so hard to make things happen. He even thank their families, loved ones, spouses, partners for being there to support his staff in their work.

In a lot of the team building activities that I run with my corporate clients, I ask members of the team to publicly acknowledge and give each other praise. This meaningful activity has helped team members to express what they always wanted to say but yet have no opportunity for it. This also created a moment where some people actually cried and hugged each other. It created a sense of belonging and appreciation for the work that they have done.

8. Show passion in what you are doing

Steve has always showed passion in what he does. In all his keynotes, he always  talks about Apples products and “hopes that you will love it as much as we do”. You realise that they are not sharing just a product, but a labour of love that resulted in a product.

9. Set out to change the world

“I want to put a ding in the universe.” – Steve Jobs

 

“People sometimes have goals in life. Steve Jobs exceeded every goal he ever set for himself.” - Steve Wozniak, Apple co-founder, on Steve Jobs

 

“Here’s to the crazy ones,

the misfits, the rebels, the trouble makers,

the round pegs in square holes.

The ones who see things differently.

They’re not fond of rules,

and they have no respect for the status quo.

You can quote them, disagree with them, glorify or vilify them.

About the only thing you can’t do is ignore them,

because they change things.

They push the human race forward.

And while some may see them as the crazy ones,

we see genius.

Because the people who are crazy enough to think they can change the world,

are the ones who do.”

Apple’s 1997 ‘Think Different’ ad

I believed that Steve completely managed to fulfill his wish of changing the world. Many of us today are living so much differently with how much he influenced society with its gadgets.

My question to you is whether you have found your purpose in living and made up your mind to change the world. Well, if you think you are crazy enough to think you can, you might just be the one to do it.

Change the world, one step at a time.

Popularity: 11% [?]

What are your core values?

When an organisation becomes bigger over time, it needs to have systemic ways of engaging the different functions each individual staff. That is why we have policy and manuals. This helps to ensure a proper way of doing things and also how each department communicates with each other.

While many organisations tend to focus on technical competencies and software that improve performance, most of them tend to neglect one of the most overlooked components of a structure that governs the behavior of the organization, its Core Values. Some companies call it principles, beliefs or philosophy of values. This in my opinion is a strong binding adhesive that will hold the company together and also determines how each department or colleague will communicate with each other.

People don’t tend to remember their company core values. It’s because these values tend to have zero meaning to them. They tend to be reserved for management talk, where department heads talk about once in a while during speeches but is not usually translated down to the operational level. In fact, most organisations hire for competency, rather than for core values. They are not able to see the link of how core values can add to the bottom line of their organisation.

Core values are important.  Without values, there are no clear guiding principles to how people will base their decision making process. When that happens, decisions are made based on what they feel is right. This is also pretty much subjective compared to the kind of staff your company has.

If you have a group of colleagues that place a high value on maximising profits, all their decisions will be made to support that value that they hold on to. Alternatively, if you have another group of colleagues that places a high value on environmental sustainability, your company might be spending a lot of your efforts and time in ensuring that your work will reduce the waste generated and impact to your environment.

However, if you put these two groups of people together with a different set of values together, what do you think will happen? Decision-making might be slowed. Arguments might arise because of differing values. One side might want to maximise profits at the cost of the environment, while the other side wants to reduce profits by taking care of it.

Therefore, it is important for an organisation to be clear of its values. To let it be a binding force that will help everyone in it to make the right decision in the face of differing views. Values should be clear and must give clear principles to make the right decision. This is even more important especially when situations are dire and difficult decisions have to made.

Being clear about your core values is sometimes a challenge. Being consistent in following through with them even when it threatens your financial success is even a bigger challenge.

Can you recite all the core values of your company?

Let’s examine  a case study on Johnson and Johnson’s Tylenol crisis and what we can learn from it.

Case Study- Johnson & Johnson’s Tylenol Crisis  

In 1982, Johnson & Johnson’s Tylenol, the leading painkiller medicine in the United States commanded a 35% of the over-the-counter analgesic market share. It contributed almost 19% to the company’s profit during the first three quarters of 1982. In October 1982, seven people in Chicago were reported dead after taking extra-strength Tylenol capsules, and a widespread panic ensued about how widespread the contamination might be. It was reported that one individual succeeded in lacing 65 grams of the deadly cyanide into Tylenol capsules, 10,000 times more than what is needed to kill a man. Immediately after the incidents, the company’s market value fell by $1 billion dollars.

Suddenly, with no warning, Johnson & Johnson found itself with dilemma of the best way to deal with the problem without destroying the reputation of the company and its most profitable product. James Burke, the chairman of Johnson & Johnson at that time, reacted to the negative media coverage by forming a seven-member strategy team immediately, and their strategy guidance from Burke was first “How do we protect the people?” and second “How do we save this product”.

Although the company knew they were not responsible for the tampering of the product, they assumed responsibility by ensuring public safety first and recalled all of their capsules from the market. They alerted consumers across the whole nation not to consume any type of Tylenol product, which is about 31 million bottles and a loss of more than $100 million dollars (Lazare, Chicago Sun-Times 2002). In fact, when similar incident happened in 1986, Johnson & Johnson immediately removed all capsules from the market permanently until the company done something to provide a better product protection. The cost was a high one.

However, the company quickly won praise for its swift and appropriate action. Along with nationwide recall and alert, Johnson & Johnson established relations with the Chicago Police, the FBI, and the Food and Drug Administration, which allowed them to play a part in searching for the suspect and preventing further tampering. The company was given much positive coverage for their handling of this crisis.

After the crisis, Johnson & Johnson unleashed an extensive marketing and promotional program to bring Tylenol back to its number one position. Burke said: “It will take time, it will take money, and it will be very difficult; but we consider it a moral imperative”. Within five months of the disaster, the company had recovered almost 70% of its market share for the drug – and the fact this went on to improve over time showed that the company succeeded in preserving the long term value of the brand. In fact there was some evidence that some consumers who were so reassured by the steps taken by the company, they switched from other painkillers to Tylenol.

The reason Tylenol reacted so quickly and in such a positive manner stems from the company’s mission statement – a credo written by Robert Wood Johnson in 1940s. He stated that the company’s responsibilities were to the consumers and medical professionals using its products, employees, the community’s where its people work and live, and its stockholders. Johnson & Johnson’s responsibility to the public proved to be its most efficient public relations tool. They have showed themselves to be prepared to bear the short term cost in the name of consumer safety, and this has undoubtedly established a strong trust relationship with their customers – which became the key to the brand’s survival.

From the example of Johnson and Johnson, we can derive that making principled decisions based on your values can actually yield financial success and high trust among your customers.

Values should be something that all leaders should consistently share about in their daily decision-making. It is something that must be caught, rather than taught.

Recruiting people based on values

In my work with companies, there are some of them who also make hiring decisions based on values. This is interesting as most companies basically just make their decisions based on what I mentioned earlier, skills and knowledge. They view that skills and knowledge can always be learnt, however, having a staff that is aligned with their corporate values is indeed difficult to find.

In the book “Good to Great”, the companies listed as going from good to great have a common attribute, that is they are consistently disciplined in waiting the right person to come aboard their company. They do not hire people when there is an urgent need for a replacement but are willing to wait, even for many months, for the right person to come along.

Should ‘profits’ be a part of your core values?

Before you start thinking that values have got nothing to do with earning money and profits, let me assure you that profitability and sustainability is important as well. Unless you are a charity or non-profit organisation, most companies are called companies because they exist to serve a need and also make money in the process. There is absolutely nothing serving people and earning money from it (or even tons of money from it).

In some companies that I work with, I usually observe what their core values are. If there is no hint of earning profits as one of their core values, I might question the importance of the values of the company.

In one group of companies that I worked with, I talked to the Group Director and found out that their core values meant little to them. This is because profitability was not one of their values. When most of the time they are talking about an important value that is not listed down onto their values statement, I start to question what is the relevance of the other values. She confessed that the values were there simply because it was a ‘company’ thing to do and that business consultants constantly asked them to include them. Is this common in your company?

What would you do?

1.  You realised that some of things you need to do are not consistent with your core values. What will you do?

2.  If one of your core values is to create mutually beneficial relationships. However, your project has overrun its deadlines and incurred cost along the way. Your boss asks you to ‘squeeze’ your suppliers by asking them to reduce their claims to you. What will you do?

3.  How will you help a new colleague understand your company’s values? What if they say that its only management talk and is not people to everyday living?

4.  How do you hire a person who exhibits the values of your company? What kind of questions will you ask?

ACTION STEPS:

1.  Get your team to start memorising the core values of your company. Seek to find relevance in making decisions based on your company’s core values.

2.  Make your core values practical in your work. Find linkages on situations that happened in your country and ask your colleagues what should have been done using the framework of your core values.

3.  Ask your colleagues whether do they see you demonstrate the core values of your company at work? Do they see you living up to it?

NOTE: If you strongly feel that everyone in your organisation needs to live by its Core Values, do ask how Deep Impact can help you to make a impact in creating highly experiential activities that will help them to remember them.

Popularity: 12% [?]