It is collusion that kills our organizations!

by Didier Marlier on Thursday February 12th, 2015

“What do President Obama, Steve Ballmer, CEO of Microsoft, and Olli-Pekka Kallasvuo, former CEO of Nokia all have in common? All three had ambitious and laudable strategies (universal healthcare for the U.S.A., dominating the world software industry and dominating the mobile phone industry respectively), yet all three had serious difficulties in executing their strategies successfully.” This is how Insead Associate Professor Quy Huy starts an interesting article named “An emotional approach to strategy execution”. One year ago, Quy Huy received Olli-Pekka for a courageous interview (both for the academic and for the ex-CEO) on “What Could Have Saved Nokia, and What Can Other Companies Learn?

I strongly recommend you read the 2nd article as it probably applies to many of our organizations, including mine (and feel free to drop the 10’ long video which doesn’t add much). A comment, at the bottom of the article, from an ex-employee provides a provocative insight: “A big reason for failure of Nokia was lack of courage in the top management to act decisively. The writing was on the wall, presentation after presentation internal futurists and external Management consultants had shown the top leadership since 2003 that industry convergence would create huge disruption and shift comparative advantages to new players from internet and PC space. Top management agreed with the assessments multiple times but always went for the “compromise solutions“. Ouch…it hurts but it may explain a lot.

It is collusion that killed Nokia! Collusion and lack of courage to break a strange “schizophrenia”:

  • The top people knew confusedly that a tidal disruption was underway, initiated by Apple and Google. As they did not want to upset shareholders and analysts, nor create an uncontrollable wind of panic with their employees and clients, they downplayed it and went into denial, boasting the superiority of their products.
  • In parallel, pushed by hungry shareholders and the usual “terrorists” called financial analysts, they put their organization under a tremendous pressure for results, through cost cutting and reorganizations at the same time. As the same ex-employee suggests: “Nokia was aware of the external threats. Instead of facing them, it kept reorganising itself. As if, musical chairs would solve the problem”

The article suggests that, in Nokia at that time, existed a strong underlying sentiment of fear. Not the fear to be fired but the fear to disappoint, the fear to be excluded, to suddenly become an outcast. So the stage was set for a drama: The top team did not want to disappoint shareholders and analysts and were putting a brave face. But unsure of themselves, they turned towards the middle management with unreachable targets. Those had become experts at “guessing what it is that the boss wants to hear and hopefully move elsewhere before he finds out”… People at the bottom were increasingly losing faith in their leaders.

This vicious cycle is called collusion. Some of my partners and I even participated actively to it: We were working, at the time for a training firm who had run, for ages, successful leadership development programs for Nokia. When the culture started to shift towards moaning and bitching, when the negativity of the participants joining the programs started to become the rule, we voiced our concern to the Managing Partner so he could go and engage the top management about this alarming drift: “The risk is too high to cross some of the big guys and lose our huge business there!” I shut-up and eventually left that firm soon after, followed by a cohort of my actual associates. And the vicious spiral kept on. This collusion is brilliantly explained by the “Abilene Paradox”, a term coined by psychologist and Professor J. Harvey, describing a situation where all participants take a decision that none of them really, fully endorses or believes in. But nobody has the courage to break the collusion “omerta” (the law of silence, word used by the Sicilian mafia). See here below the trailer of an excellent educational movie made on it…

What is the antidote to collusion? The courage to speak-up! Is it riskless? Can we, as leaders, demand and expect that our people behave like heroes and risk their careers, scarifying themselves for the Common Cause? Some will. But the huge majority won’t.

The onus is on us leaders! How do we break the back of collusion? How do we ensure that people will dare to speak up? How will we instill a culture where challenging the boss or the status quo is celebrated as an act of engagement rather than as the isolated act of a rebel without a cause? How do we “kill the fear”? How do we reduce the “Power Distance” whereby people place us on a pedestal and prefer to “seek permission rather than forgiveness”? I remember the sign on the door of a British CEO in charge of EMEA operations for a large US multinational. It read: “If I disappointed you and you do not tell me, then we are both at fault!” And his behavior was constantly matching his words. People demonstrated a high respect towards him, his door was always open, there was no fear in that organization which was the best in class in this organization…

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5 Responses to “It is collusion that kills our organizations!”

  1. Very rich analysis professor Didier .
    Allow me to add following comment as who lived these segment of mobile telephony of last 20 years. Nokia became leader of segment based upon its high spirit of innovation creating the most easy to use platform for cellular phone on Symbian OS and European Standard GSM reaching 50% of WW share !! But they didn`t believe that customer would accept to have PC function of cellular phone . Apple and Samsung believed on it and move ahead ,it was necessary to develop more heavy OS than Symbian. My understanding is that the defeat of Nokia was of Top Manager who forget why they became leader in so short time and tried to defend the share based upon defensive and bureaucratic way . I don`t believe Apple developed iPhone to defeat Nokia or Motorolla ,but to create a new value,new experience to the market and people but Nokia concern was Apple ,Moto and Sasung and not more the customer or end user.

    Reply
  2. My thesis is that company success resides on the capability to generate value and new experience to the customer ,once the main objective loose these target and became only share value or defeat competitor forgetting the customer it will disapear because the market would not need these company .

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    • Dear Herberto, I fully agree with you two posts. They raise appropriately the question of a company’s Deep Intent. As long as Nokia truly lived the “Connecting People” they seemed to be successfull. Once they drifted into believing they were a smartphone manufacturer,things started to get worse. Have a good week!!!

      Reply
  3. Very much to the point analysis, it grasps the underlying causes.

    It is not about the change in the market situation, competition etc. what always existed and exists and not explains a full story. This visible story part was detaily discussed in a global press and everythere around, however not so many analysis is made on the inner part.

    The biggest paradox: at the time when the top management took care to improve the quarterly results infront of shareholders and the public, the middle management on its own initiative tried to take care of long-term objectives and strategy…

    Logical scenario should be just the opposite and logically it did not work in this way-around. And more unfortunatelly the mid management tried to do this in silence.

    Reply
    • Thank you Simon,
      Indeed I remember a lot of frustration from those days. And keeping silent was being part of the collusion system. Thank you for your testimonial
      Have a good day
      Didier

      Reply

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