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The Hidden Roots of Corporate Dysfunction

By Chatham Sullivan | Small Business

Some years ago, I worked with a number of companies facing seemingly intractable problems. These ran the gamut: out-of-control politics, breakdowns in strategic-planning processes, the senseless complexity of matrixed environments. (Insert your own frustrating example here.) Although each of these dysfunctional situations was vastly different, they all shared a handful of characteristics.

They were vexing. They were persistent. And they were self-defeating.

I wondered, “Why does this happen?” So, over the next five years, I devoted a good portion of my career to answering that question. The work culminated in a new book, called The Clarity Principle: How Great Leaders Make the Most Important Decision in Business (And What Happens When They Don’t).

Here’s what I found.

I discovered that there is a big difference between what people say about what’s going on and what’s really going on. On the surface, each issue had been tagged by executives as a so-called ‘people’ problem. A fight between marketing and sales could be understood as a turf battle rooted in the incompetence of the individuals involved or explained away by a catch-all reference to ‘culture.’

But, if you listened carefully, you would notice that participants couldn’t shake a more pervasive feeling that something deeper was broken. I invited the leaders involved to drop all pretensions about having pre-set answers and just dig into the problem. I simply asked, “What’s really going on here?”

It turned out that  beneath each so-called “people problem” was a business problem. These organizations were deeply confused about the answer to that quintessential textbook management question, “What business are we in?”

The question took many forms depending on the organization. Are we in this business or that one? Do we serve this client or another? Do we play this role in the market or that one? Do we compete on this capability or that? Are we one firm or many? In the context of shifting markets, quickly aging business models, complex company politics, and conflicting pressures, these companies had not made a clear choice about what business they were in. It turned out that the dysfunctional behaviors were actually symptoms of an underlying disease–an identity crisis.

The roots of the crisis eventually led me to the executive suite. After an hour of difficult conversation about issues plaguing the enterprise, particularly its excessive number of conflicting priorities, the Vice President of Strategy put his finger on the problem by soberly declaring, “We are collectively afraid of making the wrong strategic decision about the business.” A hush fell over the senior team as if a family secret had just been laid bare.

Why the secret? What is there to be afraid of? Shouldn’t decisions like this be obvious and follow the logical process of looking at the numbers, surveying the market, evaluating strategic options, and making a choice? Isn’t this just business?

Usually, making big strategic decisions just doesn’t work that way. Decisions like these have an emotional component that defies the rational. Choices about identity generate strong feelings of loss and risk. Some people will win while others will lose. The secret in this case, as in many others I encountered, was that the organization’s leaders had avoided a decision because they couldn’t accept the unnerving trade-offs that would accompany a choice of this kind. The Vice President hadn’t just outed the group’s non-decision; he had implied that they were colluding to avoid it. This was the heart of the crisis.

The antidote to the identity crisis is as simple as it is difficult. In case after case, leaders who achieved clarity and overcame dysfunction in their organization ultimately had to take a stand on the business. With their colleagues, they confronted head-on the frightening prospect that choosing one path for the business meant foreclosing others. This feat required that most basic leadership capacity–the courage to choose.

Having the courage to choose might seem simple and naïve considering the complexity of business today. Many leaders believe that it is far wiser to hedge, compromise, or wait it out. But taking responsibility to choose can be the most courageous and profitable thing they can do.

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