You Don't Believe It?

We repeat -

People and how they think and behave are the only thing that really matters in any business or organisation.

If you ever had any doubts about this - our case is being proved in public!

We thank the RFU for demonstrating so many aspects of this matter so graphically.

We can see Behaviour Failures in 20 out of the 26 criteria of this dimension. This is an organisation that, by the criteria of commercial Comparative Competitive Strength, would be teetering on the brink of The Abyss.

The Cost of Behaviour is brought to you by Steve Goodman, Tony Ericson, Terry Murphy and Barbara Craven, the founding partners of Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different resultsthat Make the Big Differences that Transform Results.

This series looks at the corrosive and far reaching effects for business profitability, and even survival, of failures in behaviour. It challenges all those that believe in “don’t rock the boat”.

You might also be interested in our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other four blogs at our web site link page.

When the pie was opened, they all began to sing!

In our last post, we looked at the unfolding drama of the News of the World telephone hacking scandal and how it highlighted the increasing awareness of the business impact of behaviours.

So how does News International, seen through the lens of the news reports, compare against our criteria for the Cost of Behaviour? There are two sets of costs – the “hard” costs, actual outgoings as defined by Crosby, and the “soft” costs, the behaviours that either contributed, or (hidden) have yet to be recognised. We won’t cover all the criteria – just a selection of headlines:-

Direct Costs – these are the ones that Crosby originally identified

Actual Financial Expenses - The massive expenses of closing down NoW.

Consequential Costs

Opportunity Cost - Losing financial control of BSkyB - a huge loss for the Murdoch family

Customer Recovery Cost - Wait and see just how huge this may be

Customer Loss Cost - All those NoW and disgusted Times readers

Compliance Costs

Enforcement Costs - All those lawyers and private detectives – wow! - All those payments and kickbacks coming home to roost. - Jail for some – more to come probably.

Behaviour Costs – may either have contributed to or will add to Direct Costs

Relationship Costs

Conflict Costs - Who is telling the truth? How long will it go on?

Secrecy Costs - How does closing the NoW compare to owning up in 1988? We bet no one looked at this - we suspect that no one dared (see Adduced Behaviour)

Egotism Costs - Surely not? Or did key people think they were above the Law?

Blame Costs - Who will ever trust who again?

Organisation Costs - How many people are currently not doing the jobs the Shareholders think they are paying for? How much talent is heading off elsewhere?

Comprehension Costs

Focusing Costs - What did News International think the problem really was? And when and why did that change? Has it really?

Ignorance Costs - The problem for James Murdoch is that if it isn’t this ...

Incompetence Costs - ........ it will be seen as this

Avoidance Costs - Who, and how many, actively kept their heads down?

“Bottle” Costs - What will all this eventually cost the “whistleblowers”?

Motivation Costs

Energisation Costs - How will the leadership of News International regain the respect and the trust of their key management?

Initiative Costs - Did all this happen just because a small number of individuals “got out of control”? Does anybody think so any more?

Mis-Incentive Costs - How were the people directly concerned being “rewarded” or “recognised”? What effect did this have? And now?

Judgement Costs

Micro-Dumbness Costs - Sending investigators after plaintiff’s lawyers.

Macro-Dumbness Costs - Trying to play the “Deniable Plausibility” game in a ship full of professional leakers.

Stupidity Costs - Simple - doing illegal things.

Adduced Behaviour Costs - How much of all this might have been caused or made worse by reluctance of key executives to tell the Murdoch Family news they thought they would not want to to hear.

Consensus Fallacy - Tom Watson MP’s “Omerta” theory? We think possibly not.

It is clear from even this cursory analysis that although the direct costs have been massive the worst is yet to come when the Costs of Behaviour come to be counted. The big question is how this organisation is going to be able to become effectively functional again after all the damage to relationships, motivation, trust and perception of judgement.

This is a leadership disaster which will require the shareholders to take a long and hard look at the whole top layer of management. How many individuals will be able to demonstrate that they are truly not contaminated by this affair? How many chose carefully not to see or not to hear? How many did not have the courage to challenge what they did see or hear? How many may now be found to have acted as craven courtiers grovelling before the thrones of the powerful?

We do not think the answers will be encouraging – just think back to the aftermath of the last Media Mogul scandal. The challenge for News International will be to transform the quality of internal communications and relationship management starting from the top down. That will take a lot of courage – have they got it – is there anyone left on the bridge to exercise it?

On a broader scale, we think there may be big questions to be asked about the influence and control that majority shareholder individuals should be allowed to have in public companies.

The Cost of Behaviour is a powerful tool to test and challenge the perceived organisational health of a company. In Comparative Competitive Strength terms, News International conducted itself as it saw itself to be, as an Excellent company – they were mistaken. As the tawdry reality has turned out, they had the management and operational culture, the smug arrogance, the undisciplined under achievement of a Comfortable organisation and will now find themselves a Constrained business as the massive costs of this debacle slowly and inexorably roll in. Tragic, avoidable and wasteful.

The Cost of Behaviour is brought to you by Steve Goodman, Tony Ericson, Terry Murphy and Barbara Craven, the founding partners of Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different resultsthat Make the Big Differences that Transform Results.

This series looks at the corrosive and far reaching effects for business profitability, and even survival, of failures in behaviour. It challenges all those that believe in “don’t rock the boat”.

You might also be interested in our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other four blogs at our web site link page.

Four and twenty blackbirds baked in a pie ...

As I was watching the TV News about the News of The World phone hacking scandal, and listening to the multiplicity of claims and counter claims, the savage sound bites and accusations of innocence, ignorance and incompetence, I was reminded strongly of a primary school playground. I remembered my children’s frequent cries of “Oh [Brother’s name]!, “Oh, [Sister’s name]!”, and their regular and passionate protestations of the other’s guilt – we loved it at the time and still laugh about the memory. We know and cherish how children behave, but it is disheartening to see and hear influential and powerful adults doing the same.

In fact, in business terms it is worse than sad, it is wasteful. We are utterly passionate about reducing waste, it is one of the most cancerous of business costs. It reminded me that The Cost of Behaviour remains one of the largest and least understood hidden costs of business today.

Philip Crosby was one of the fathers of the Quality Revolution, the set of ideas that has transformed manufacturing and service performance all over the world, and that is starting to creep into the unwilling and resistant environment of public sector services. Like many other truly great ideas, Crosby’s was very simple – he asked “What is the Cost of a Quality Failure?”

The application of this simple question drove manufacturing industry through the Quality & Reliability transformations that, for example, helped the Japanese Motor Industry devastate its European competitors. The same happened in Consumer Electronics and progressively in many other industries. Now we all expect that what we buy will work, and keep on working – and we have consumer protection laws to support those expectations.

Eventually, the same thinking spread to the management of Service Performance and, in many sectors we are now beginning to have significantly different expectations than even as recently as, say, 10 years ago. Just think about telecommunications for example – at last customer service is improving fast and customers are making buying decisions based on experience and not just on tariffs. Many mass retailers have twigged that they have to deliver not just “best prices” but also a good experience. We, the great British Public, are starting to have common expectations about the behaviours of those who supply and serve us. In many sectors, business management are struggling to catch up – better not mention the Post Office or most of the Banks.

The businesses that are going to prosper, with employees who will have a more certain future, are those who outperform expectations consistently and sustainably. They are what we call “Beyond Excellence” and they make much more money than anyone else (all of which has been proved by extensive research, but we won’t get into those details in this blog).

We have learned from experience, backed by that extensive research, that how an organisation thinks and behaves, the deep seated managerial and behavioural values and competences of a business, are the main differentiator of whether over time they will substantially outperform their competitors and successfully withstand unpleasant surprises.

The Cost of Behaviour is a powerful tool to test and challenge the perceived organisational health of a company – it asks the same question as Crosby but in a different context – “What is the Cost of a Failure in Behaviour?” We have identified a hierarchy of Costs of Behaviour.

They include, because of course they still apply, the existing Quality Failure Direct Costs

• Consequential Costs (4)
• Compliance Costs (4)
• Inefficiency Costs (6)

But now we introduce the added dimensions of Failure of Behaviour Costs

• Relationship Costs (6)
• Comprehension Costs (7)
• Motivation Costs (5)
• Judgement Costs (8)

As you can see, there are subcategories within each, the number of which is indicated in the brackets.

In every case, just as in Crosby, the category describes the adverse outcome that results from a failure of behaviour as described. For an example in the Comprehension category - an Avoidance Cost might be the cancellation of an order after avoiding taking a phone call from a dissatisfied customer.

It is going to be interesting to see how this News International story looks when viewed through the insights these Cost of Behaviour criteria can offer us. We’ll do that in our next post – watch this space!.

The Cost of Behaviour is brought to you by Steve Goodman, Tony Ericson, Terry Murphy and Barbara Craven, the founding partners of Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different results that Make the Big Differences that Transform Results.

This series looks at the corrosive and far reaching effects for business profitability, and even survival, of failures in behaviour. It challenges all those that believe in “don’t rock the boat”.

You might also be interested in our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other four blogs at our web site link page.