The answer is both, but we enter this world collaborative. We are naturally inclined to work together to create value. But competitive organizational cultures short circuit our collaborative instincts.
Lux Narayan, CEO of the data analytics company Unmetric, analyzed two thousand New York Times non-paid obituaries. In a TED talk, he describes how he used natural language processing on the first paragraphs of these obituaries and found that the word help appeared more than almost any other word.
The lesson is that people want to help. Our instincts are to work towards common goals. Psychologists including Sander van der Linden write about intrinsic and extrinsic motivation. When we are intrinsically motivated, we take action because we want to help or because it’s the right thing to do. In contrast, competition involves extrinsic motivation which is derived externally rather than internally. An incentive system that rewards sharp elbows in an organization is extrinsic motivation.
The more educated people are, the more competitive they are. Our educational system has traditionally used extrinsic motivation to beat collaboration out of us. In high school, we compete to get into college. In college, we compete for admission to graduate school. In graduate school, we compete for grants and fellowships. We enter professions, careers and corporations conditioned to compete.
In smaller communities where many people get jobs right out of high school, people are driven more by intrinsic motivation—and they’re used to working together. They organize fundraisers and cook together at the VFW, fire stations and churches. They help neighbors repair tornado or hurricane damage.
It’s this type of attitude that we need to nourish in companies, higher education, government and in our communities. Aetna CEO Mark Bertolini lit a spark that is taking hold at Aetna. In a "corner office" interview in Sunday’s New York Times, Bertolini describes how drugs and Western medicine failed him after a serious ski accident. His success with alternative therapies propelled him to introduce yoga, meditation and an enlightened approach at Aetna. According to Bertolini, the CFO’s initial reaction was “We’re a profit-making entity. This isn’t about compassion and collaboration.”
Nevertheless, leaders became more enlightened and began paying attention to the struggles of front-line team members some of whom were on Medicaid and food stamps. Aetna raised the minimum wage to $16 an hour and improved benefits. Next the company stopped giving quarterly guidance to investors and focused more on collaboratively creating long-term value.
Studies show we feel good physically and psychologically when we help people. Psychologists calls this the “helper’s high.” There’s no research I know of yet, but I suspect there is also a “Collaborator’s high.”
Fidelity Investments may replace a star-oriented fund management system with a collaborative approach after a consultant's report. As is so often the case when organizations suddenly consider—and often embrace— a more collaborative structure and culture, exigent circumstances precipitated the potential move. I call this phenomenon The Bounty Effect, and I’ve written extensively about it in the book by the same name. The Bounty Effect occurs when an event or circumstance creates a fundamental shift, changes the game and accelerates collaboration.
The Bounty Effect for Fidelity occurred because of two exigent circumstances:
Last year Fidelity reportedly fired Gavin Baker, manager of Fidelity OTC Portfolio, for allegedly sexually harassing a junior female staff member though Baker denies the allegations. This happened against the backdrop of the #MeToo movement. The apparent firing prompted Fidelity to conduct a “cultural review” of its stock picking unit.
The other exigent circumstance is the reported outflow of $40 billion from Fidelity’s actively-managed funds in 2017, according to Morningstar, as investors have increasingly embraced exchange-traded funds (ETFs) and passively managed index mutual funds meaning those linked to the performance of a particular index such as the S&P 500. Active fund management essentially means one star manager with a supporting cast of analysts attempts to beat a particular index. Fidelity built its reputation in the 1980s around successful active managers including Peter Lynch who managed the Fidelity Magellan Fund.
The decline of the “star” fund manager mirrors trends in other industries and throughout workplaces. Before the rise of human resources as a valued discipline, swashbuckling managers made hiring and tactical decisions based on gut and sometimes whim. Executives often made strategy decisions in a vacuum. As HR has become more data driven, the era of the swashbuckling manager has ebbed. Leaders make few decisions without input or at least without consulting HR, finance, IT, communications or some other function. Companies measure everything and everybody which, incidentally, can short circuit collaboration.
Fidelity would likely argue that “star” managers never made decisions in a vacuum but rather consulted Fidelity’s extensive research team and worked with analysts assigned to each fund. Nevertheless the funds industry—including Fidelity—has historically embraced star culture. And so have such industries as sports, food and beverage, medicine, journalism, the film industry and so many others. The media still goes to bizarre lengths to reinforce star culture, because media decision makers believe that personalities sell newspapers and drive viewership and eyeballs translating into advertising dollars. I’ve even read stories on “star” butchers. And while I appreciate the skill involved in selecting and cutting meat, putting certain butchers on a pedestal feeds a misleading perception that the vast majority of butchers fail to measure up to the so-called stars.
When we turn athletes, chefs, doctors, television hosts, movie producers and others into stars, these so-called “stars” start believing the rules that apply to everybody else never apply to them. This breeds bad behavior. Star culture has also diminished the contributions of people who work with “stars” which makes these people feel sidelined and less likely to provide valuable input. In short, star culture costs organizations dearly. In contrast, embracing a collaborative culture and structure creates value.
If Fidelity abandons its “star” manager system, the question is whether the move is window dressing or real structural change. We may learn that one person never really “managed” Fidelity’s actively-managed funds and that fund management was always an inherently-collaborative process among colleagues despite Fidelity’s marketing so-called “star” managers.
The recent rash of sexual misconduct accusations against prominent men provide a lens through which we can view the death of star culture. For generations, we have bestowed God-like status on so-called stars whether they’re politicians, chefs, entertainers, executives, athletes or show hosts. This exalted status makes “stars” believe they are special.
The #metoo movement is a proxy for rejecting star culture. And now this cultural shift is manifesting in other ways. Viewership for last Sunday’s Grammy Awards dropped 24 percent compared with viewership for last year’s Grammy Awards. We’re tired of stars.
If “stars” like Bill Cosby, Harvey Weinstein, Matt Lauer, Mario Batali, Kevin Spacey, Charlie Rose, Steve Wynn and so many others get a pass on just about everything for being stars, our star culture is responsible for their transgressions. We elevate them to status so rarified that they may believe laws and standards of fairness and decency do not apply to them.
Star culture reinforces the false notion that we achieve great feats by ourselves. Whether the so-called star is a movie producer, chef, tv host, actor or executive, the reality is that he or she succeeds because of others. Nobody achieves great feats entirely on their own. Behind the scenes, many people work to make the movie, the meal, the talk show, the team, the business a success regardless of the “star.”
In The Culture of Collaboration book, I describe the Myth of the Single Cowboy. This is the notion that one self-sufficient, rugged individual can achieve smashing success without help from anybody. When we perpetuate this myth, we make so-called stars feel that they’re a breed apart and can conduct themselves without consequences.
Star culture reinforced by the media and society at large also infects organizations. The result is that contributors who are not considered A-listers get sidelined. Their input and ideas are lost, and value creation suffers. Plus internal competition to become a star increases bad behavior such as sabotaging others and hoarding information.
Our excuse for star culture and for tolerating transgressions is that stars supposedly create more revenue. There is evidence, though, that the financial performance of stars is often overstated. NBC’s Today Show picked up more viewers after the network fired Matt Lauer.
Rejecting star culture is nothing short of a fundamental shift in our society. This shift will impact companies, universities, government agencies and organizations of all types. Smart organizations will get ahead of the curve and take the necessary steps to replace star culture with a collaborative culture
People who become stars often cheat to achieve or keep their rarefied status. Social media is a case in point. One way we measure star power is to count the number of followers on social media. Did we really think that stars are so popular that millions of people read their posts and tweets? It turns out that “stars” and wannabe “stars” pay for fake followers which create fake data on which companies base advertising and endorsement decisions.
A reporting team at the New York Times recently investigated a company named Devumi that sells Twitter followers and retweets. The company reportedly has at least 3.5 million automated accounts for rent. Customers include reality television “stars.”
So it turns out that star culture is related to another unfortunate phenomenon that compromises collaboration: measurement mania and the tyranny of data. Fake data is by no means limited to social media. In command-and-control organizational cultures that foster internal competition and information hoarding, team members get the message that the goal is winning at all costs. In this type of culture, numbers get fudged and corners get cut.
Fake data scandals cost these companies plenty. A recent glaring example is the fake bank account scandal at Wells Fargo. Companies that embrace fake data are often the same companies that promote “stars” and minimize the contributions of others.
Many companies have yet to catch up with our evolving society. Successful organizations use real data and replace star culture with collaborative culture.
Karl Benz is often credited with inventing the first true car. In 1885, Benz built the Benz Patent-Motorwagen powered by an internal combustion gasoline engine.
Did he act alone? Of course not. We collaborators know that nobody achieves great feats by themselves. Karl Benz had help. One collaborator was his wife, Bertha, who funded the project and took a later version of the Benz on its first long-distance journey. Benz’s company eventually merged with Daimler Motoren Gesselschaft.
Now the company that invented the automobile is collaborating to reinvent the truck. At the Tokyo Auto Show last Wednesday, Daimler announced a purely electric truck and bus brand called E-FUSO and pledged to electrify all vehicles produced by Daimler’s Mitsubishi Fuso Truck and Bus Corporation subsidiary.
Some hours later at the Mercedes-Benz Research and Development Center in Silicon Valley, journalists gathered for a briefing. Before the event, Daimler leaders and I had a far-reaching discussion about how Daimler collaborates internally and with partners and governments. We also discussed how electric trucks and buses will change life particularly for those of us who live in cities.
Daimler Fuso’s e-Canter all-electric light truck. Image copyright Daimler. All rights reserved.
Daimler’s Fuso is currently selling the eCanter light truck which it assembles in Portugal for the North American market. 7-Eleven in Japan and UPS in Atlanta are using the eCanter which has a range of 60 miles between battery charges. The optimal use of the eCanter is for deliveries within cities.
“We want to make the cities a better place to live. We want the world to change to the next level,” explained an energetic Marc Llistosella, president and CEO of Daimler’s Mitsubishi Fuso Truck and Bus Corporation. Marc, who is anything but a staid leader, was animated and clearly comfortable climbing aboard the concept E-Fuso Vision One truck and giving us a live tour via real-time, interactive video. The concept truck, which is several years from production, has a 220-mile range between battery charges and carries a payload of eleven tons. This would enable metro and regional delivery routes.
Benoit Tallec, head of design for Mitsubishi Fuso, noted that a central touch display replaces dials and switches on the Vision One so that the driver focuses on the road. He compared the evolution of Fuso trucks to the evolution of boats from sail to steam power in the early 19th Century. Fuso’s technological advances are “the result of a team effort across three continents,” he said.
Daimler FUSO’s Vision One concept all-electric truck. Image copyright Daimler. All rights reserved.
After the discussion and presentation, I hopped aboard the eCanter and drove the quietly-purring vehicle by some of Sunnyvale’s
technology company parking lots as some curious engineers took notice.
Daimler’s E-FUSO unit faces two big challenges: infrastructure for charging trucks and increasing battery range. Overcoming these challenges could one day make electric trucks economically viable for longer routes. While consumers may buy electric cars as much for novelty as economics, truck customers demand a business case that proves electric vehicles create value. Making that case through technology advances and cost reduction will require continued collaboration within Daimler, with business partners and with governments.
Some companies are eliminating remote work or “telecommuting” because they believe their people must share the same physical space to collaborate.
I define collaboration as “working together to create value while sharing virtual or physical space.” But apparently some organizations want to get more physical rather than virtual.
According to a recent Wall Street Journalstory, companies including IBM, Aetna, Bank of America, Best Buy and Reddit have ended or reduced remote-work arrangements as managers “demand more collaboration, closer contact with customers—and more control over the workday.”
Companies facing challenges are often the first to scrap or reduce remote work programs. In 2013, as Yahoo was struggling, then CEO Marissa Mayer defended her decision to eliminate work from home. Speaking at the Great Place to Work conference in Los Angeles, Mayer reportedly said “People are more productive when they’re alone, but they’re more collaborative and innovative when they’re together.”
No question people are more collaborative and innovative when they’re together, but the point is people can be together virtually as well as physically. Many tools and technologies support high-impact virtual collaboration. Forcing people to endure a daily commute and interfering with their life/work balance reinforces command and control and disrupts collaboration and innovation. Also, remote work lets companies tap expertise regardless of geography. And teams are often comprised of people in multiple regions, so forcing people to work from a company location is unlikely to enhance collaboration within a team. It does make sense to encourage remote workers to spend some time at company locations to spark chance encounters in cafeterias, corridors and break rooms with people outside their teams.
Command and control culture is the opposite of collaborative culture so an organization trying to control team members by keeping them at the workplace short circuits collaboration. Ironically, my research interest in collaboration began in the mid-1990s when I was writing a book on personal videoconferencing. Early telecommuting programs experimented with PC-based videoconferencing so that remote workers could look each other in the eye and talk with colleagues while they were collaboratively working on spreadsheets, documents, design plans and other work. The issue then was whether we could collaborate as effectively at a distance as we could in the same room.
By the time I wrote The Culture of Collaborationbook, the tools and technologies supporting remote work had become pervasive and the culture supporting virtual collaboration had become widespread. People at many organizations were becoming accustomed to collaborating spontaneously from almost anywhere. So the challenge was changing. I wrote:
“Today we struggle to collaborate as effectively at a distance as we do in the same room. Tomorrow the challenge becomes the reverse.”
This is because same-room collaboration tools were lagging behind those used at a distance and people were becoming more accustomed to collaborating from applications on their notebook and laptop computers. Also, “presence” technology provided the capability to find colleagues, check their availability and begin collaborating with them on the fly from anywhere.
Spontaneity and organizational culture supporting ad hoc encounters is critical to creating value collaboratively. In some cultures, this means it’s okay to grab people out of meetings or interrupt their work for on-the-fly collaboration. But in mature companies walking back remote work, often this level of spontaneity is a cultural faux pas. So the most effective way to spontaneously connect in these cultures is often through online chat which can escalate into a collaborative group session (CGS). Organizations create far greater value by moving away from command and control and instead enabling team members to connect and collaborate spontaneously regardless of physical location.
As I demonstrate in my bookThe Bounty Effect, exigent circumstances including disruptive market forces, new competitors, or a regional slowdown are opportunities to accelerate collaboration and emerge stronger from the challenge. Eliminating remote work because of a difficult environment rarely enhances collaboration and instead increases command and control. The more effective approach is to seize the opportunity exigent circumstances provide and adopt a more collaborative organizational structure and culture which transcend physical location.
Once a method used primarily by coders, the hackathon has moved beyond the boundaries of software development. From government agencies and universities to start-ups and Fortune 500 companies, organizations are embracing collaboration hackathons or what we might call collabathons to spark innovation, develop products and services, and improve processes for everything from quality control to recognition and reward.
Collaboration hackathons inspire team members to step away from their day-to-day roles and solve a big problem or brainstorm a new direction with a tangible take-away. The structure of a successful collaboration hackathon mirrors that of a collaborative organization. We’re talking about an ad hoc team that forms for a specific purpose, collaborates, and then disbands. The 7 Success Factors for Collaboration Hackathons mirror the 7 steps in my bookThe Bounty Effect: 7 Steps to The Culture of Collaboration. These are:
1) Plan
2) People
3) Principles
4) Practices
5) Processes
6) Planet
7) Payoff
In the context of collaboration hackathons:
Plan is a problem to be solved, product/service to be developed, process to be created or improved or key question to be answered
People means broad participation in cross-functional collaboration hackathons regardless of level, role or region
Principles are the collaboration hackathon’s value system, the guidelines in solving the problem
Practices put principles into action through everything from a physical environment that fosters brainstorming to tools for capturing and refining ideas and putting them into action. Practices ensure that the hackathon is a collaborative group session (CGS) rather than a meeting.
Processes let hackers rapidly prototype and test ideas.
Planet puts communities in the center of the hackathons and inspires hackers to address how their ideas impact the communities in which the organization does business. The Planet step may consider everything from carbon footprint to privacy.
Payoff is the work product of the hackathon which must create value
These 7 steps prevent collaboration hackathons or collabathons from degenerating into meandering “bull sessions” at one extreme or turning into formal meetings at the opposite extreme. With The Bounty Effect’s 7 Steps, collaboration hackathons or collabathons succeed in solving big problems, answering key questions, developing products and services, improving processes, refining ideas and putting concepts into action.
Collabathons can help shift the structure of the entire organization from competitive, command-and-control to collaborative. The possibilities are endless.
I was chatting with Ray Dalio, founder of Bridgewater Associates last Tuesday about the thin line between constructive and destructive confrontation in the workplace. “Confrontation has to be constructive,” the founder of the world’s largest hedge fund told me. "You need to get everything out on the table.” Constructive confrontation is one of the Ten Cultural Elements of Collaboration that I introduced in The Culture of Collaborationbook. It’s also an aspect of Bridgewater’s controversial culture.
Ray had just finished an on-stage interview with Charles Duhigg on Bridgewater’s culture at the New York Times New Work Summit in Half Moon Bay, California. Collaboration was a central theme of the conference that brought together a few hundred chief executives, human resources leaders and others to share experiences, insights and challenges involving organizational culture.
“I want an idea meritocracy. I want independent thinkers who are going to disagree,” Ray told the audience. One way that Bridgewater accomplishes this objective is by capturing ninety-nine percent of meetings on video and making the archived video available to each of its roughly 1400 people at any time. The one percent of meetings not recorded involves personnel issues and proprietary trades.
“The most important thing I want is meaningful work and meaningful relationships, and we get there through radical truth.” Ray’s point is that radical truth and transparency build trust and curb hidden agendas and spin. “There’s no talking behind people’s backs,” according to Ray. “Bad things happen in the dark.” Bridgewater’s meritocracy, he explains, produces evidence which decreases bias and increases fact-based decisions.
Information democracy in which organizations widely share data and information is a key principle of collaborative companies. Trust and constructive confrontation are critical to collaboration. Hidden agendas and spin short circuit collaboration. So it would seem that Bridgewater’s brand of radical transparency would enhance collaboration. Right? Well, that depends.
There’s conflicting information regarding whether all confrontation is thoughtful and constructive at Bridgewater. That’s why I engaged Ray about the thin line between constructive and destructive confrontation and the need to keep disagreements thoughtful. Bridgewater makes performance reviews public and encourages team members to examine themselves before accepting areas for improvement, according to an April, 2014 article in the Harvard Business Review.
Performance reviews, whether public or private, can exhaust an organization and compromise value. Meetings, whether captured on video or not, waste time and energy. A more effective alternative to meetings, which I outline in my bookThe Bounty Effect: 7 Steps to The Culture of Collaboration, is collaborative group sessions in which people co-create something of value.
Self-actualization seems to play a role in Bridgewater’s culture. Rather than check one’s emotions at the office door, team members are encouraged to recognize their emotional “triggers” and to “recognize the challenge between the logical and emotional self” in Ray’s words. Then people can more easily set aside emotional triggers and baggage.
I was curious how Bridgewater's culture resonated with the conference crowd, so I continued the discussion over lunch. Capturing almost all meetings on video for everybody to see is one cultural attribute that fell flat. “That would never work in our organization,” one participant at my table insisted. She explained that her company values privacy and offers private drop-in spaces for on-the-fly interactions. Other attendees expressed similar views.
The down side of capturing almost all meeting video is that people may put on game faces whenever they’re in a “live” meeting room and that formality takes hold. In contrast, informality enhances collaboration which is why so many businesses have been hatched while doodling on napkins in bars and cafes. Floor proceedings in the U.S. House of Representatives and Senate were once far less formal before these bodies allowed television cameras. Now there’s greater transparency but less collaboration across party lines.
Sometimes collaborators create greater value for the organization during small, private collaborative sessions either through technology or in the same room. Making video capture of these sessions widely available but optional may create the greatest value for collaborative organizations.
Clearly, radical transparency works for Bridgewater. Could the firm’s industry play a role? “You have to be an independent thinker in markets because consensus is built into price,” explains Ray. Then again, challenging the status quo creates value in many industries.
For organizations adopting collaborative structures and cultures, there’s much to learn from Bridgewater. But what works for one company in a particular industry may fall short for another company in a different business. Trying to implement a carbon copy structure and culture would undoubtedly be a mistake.
I was in northwest Ohio this summer where Trump yard signs were everywhere and Clinton signs were practically nowhere.
What changed? The increasing role of data.
Most Clinton staffers apparently believed that targeted election canvassing and social media produce greater results than yard signs, campaign buttons and bumper stickers. And the data suggests that physical signs have only a slight impact on campaigns.
The Hillary Clinton campaign favored online ads like this one over yard signs.
The lack of Ohio yard signs was a shock in that I covered presidential campaigns in Ohio during my early career as a reporter for WTOL-TV, the CBS affiliate in Toledo. Yard signs always dominated the landscape during election season. For voters looking around for clues of which way the wind is blowing among friends and neighbors, yard signs matter.
Yard signs illustrate how data and common sense can diverge. Common sense suggests that campaign signs, particularly those on residential lawns, have a significant impact. Many people vote for the candidate their friends and neighbors support. And regardless of ads and chatter on social media, there’s nothing quite like the real-world visual reinforcement of a candidate’s signs dominating one’s street or neighborhood.
And Ohio is by no means the only state that lacked Clinton yard signs. Published reports indicate that Trump signs dominated rural Pennsylvania. Last January, Wired profiled Edward Kimmel, a part-time campaign photographer and Clinton supporter, who noticed the visual shift from previous presidential campaigns in Iowa. Kimmel voiced concerns about the impact a lack of signs might have on voter turnout. Kimmel was prescient.
A tyranny of data short circuited the Hillary Clinton campaign and contributed to Donald Trump’s victory. From the bubble of its Brooklyn Heights headquarters, the Hillary Clinton campaign apparently viewed yard signs as obsolete in the age of targeted digital canvassing and social media.
The Clinton campaign is just one example of how relying exclusively on data can compromise value. Wells Fargo emphasized measurement over common sense, and its reward system encouraged team members to cut corners and open unauthorized accounts for customers as I detailed in my September 13, 2016 post. The company is now paying the price in fines, lost business and compromised reputation.
A Donald Trump for President campaign yard sign in West Des Moines, Iowa. Photo by Tony Webster. Licensed under CC BY 2.0
Measurement mania and the tyranny of data are nothing new. In my most recent bookThe Bounty Effect: 7 Steps to The Culture of Collaboration , I write about the myopic approach dubbed “management by measurement” which dates back to the so-called Whiz Kids. In the 1940s, the Whiz Kids were junior faculty from Harvard Business School recruited by Charles “Tex” Thornton to run the Statistical Control unit of the Unites States Army. The group included Robert McNamara, who would later become president of Ford Motor Company, secretary of defense and president of the World Bank.
The Whiz Kids applied statistical rigor in running the army, and later Henry Ford II hired the team to bring a similar data-driven focus to Ford. The Whiz Kids also introduced bureaucracy and hierarchy and developed rules requiring that, among other things, memos from vice presidents must appear on blue paper to highlight their importance.
The Whiz Kids sacrificed long-term value for short-term targets by limiting investment in new equipment and R&D. Plus Ford’s products suffered when plant leaders failed to prove through numbers the necessity for new equipment. Ultimately, this myopic focus on data led to foreign competition from companies that focused as much on engineering and production as on finance.
The Clinton campaign is by no means the only organization blinded by data. Organizations in every sector and industry suffer from measurement mania that impedes collaboration and value creation. In The Bounty Effect, I detail Five Measurement Counter-Measures to prevent data from short circuiting collaboration and compromising value. One of them is “perform a common sense reality check.”
Had the Clinton campaign used common sense to check its data, yard signs might have sprouted in the industrial Midwest and, more broadly, the campaign might have adopted a message that would have resonated with swing-state voters.
Regardless of level, role, region, organization or sector…never rely on data without a common sense reality check.
Inheriting shoe boxes full of photos presents challenges. You can leave them in the garage or attic gathering dust. You can argue with siblings about who keeps the photos, who scans them, and who shares them electronically with everybody else. You can hire a professional photo organizer. Or you can collaborate with professionals and incorporate their techniques into your system.
That’s what Epson has done. And that collaboration has helped produce the FastFoto FF-640 photo scanning system which Epson is
The Epson FastFoto FF-640 scans and organizes photos. It’s the result of collaboration.
releasing today. The system combines what Epson says is a one-photo-per-second photo scanner with image organizing software. Epson’s Jack Rieger demonstrated the system a couple of weeks ago during a pre-launch briefing at San Francisco’s Le Meridien hotel. Rieger described Epson’s collaboration with the Association of Personal Photo Organizers (APPO). “We took the best of their techniques and embedded them in software,” explained Rieger, a chemical engineer and former film designer and digital product marketer for Kodak. These techniques include file structure and hierarchy for automated sorting of photos, a file naming system, a capture date that reflects the date the photo was taken, and searchable metadata which is the data about the data.
According to the Association of Personal Photo Organizers, 1.7 trillion printed photos “languish in boxes and containers.” Each month, people take another 10 billion pictures globally resulting in what the association calls “photo chaos.” APPO says it equips its more than 500 members who are independent professionals to “rescue” and organize all these photos. Now APPO has a new tool color in its palette of organizing tools.
“This is groundbreaking, something that was not possible before,” Rieger insisted. The scanner features a 30-photo auto feeder and scans the front and back of the photo to preserve any writing on the back. The software automatically restores and corrects the color of old photos. Plus the system ties in with frequently-used services including Facebook, Dropbox and Google Drive to enable collaboration among friends and family. So the sibling who inherits the photos can more easily digitize, organize, and share the anthology and collaborate on the collection with other siblings, relatives and friends.
Tools and technologies never create collaboration, but they can enhance and extend collaboration. This is true whether we’re developing a slide show with siblings or producing a product with colleagues. And the Epson FastFoto FF-640, a product developed through collaboration, also enhances collaboration among its users.
Wells Fargo CEO John Stumpf will testify before the Senate Banking Committee next Tuesday about the company’s sales practices. This word comes less than a week after Wells Fargo agreed to pay $185 million in fines from the Consumer Financial Protection Bureau, the Comptroller of the Currency and the City Attorney of Los Angeles. So what went wrong?
Well, I’ve seen similar disasters in other companies when the structure—and, yes, the culture—of the organization encourages competing with colleagues and cutting corners rather than collaborating with colleagues, customers and partners. The key building blocks of the organizational structure are principles, practices and processes. We get clues about Wells Fargo’s principles from its written “vision and values” which include:
“Our ethics are the sum of all the decisions each of us makes every day. If you want to find out how strong a company’s ethics are, don’t listen to what its people say. Watch what they do.”
So what exactly did Wells Fargo people do to cost the company $185 million plus untold damage to its brand and reputation?
According to the Consumer Financial Protection Bureau, Wells Fargo opened over 1.5 million unauthorized deposit accounts and may have funded these accounts by transferring funds from existing customer accounts without consent or through “simulated” funding. This practice generated about two million dollars in fees from 85,000 accounts. The CFPB consent order also states that Wells Fargo submitted credit card applications, ordered debit cards and enrolled consumers in online banking without customer consent. Clearly, this behavior represents at best a disconnect between principles and processes particularly the reward system process.
Wells Fargo’s “vision and values” cover everything from ethics to doing what’s right for customers. But written “vision and values” and mission statements don’t tell the whole story for many companies. Often, the real principles that govern an organization are unwritten. These principles manifest in break rooms, cafeterias, meetings, “off-site” sessions and sometimes during dreaded performance reviews. At best, Wells Fargo’s unwritten principles echo its written values and the problem is a disconnect between principles and processes that culminated in widespread abuses.
At worst, the company’s unwritten principles are something like “win at all costs” and “loyalty above all” which by some accounts were the unwritten principles of Lehman Brothers. Lehman, once the fourth largest investment bank in the United States, no longer exists. Neither does Enron which embraced the principle of following orders without questioning them. The wrong unwritten principles or a disconnect between the right principles and processes can start small with, say, approving mortgages for people who don’t qualify and culminate in a near collapse of the financial system.
Many organizations espouse collaborative principles while short circuiting collaboration and value creation through reward systems that reinforce internally-competitive, command-and-control behavior which can easily morph into cutting corners and illegally fudging numbers. Along the way, trust dies among team members and ultimately among customers, partners, regulators and others. This happens in industries ranging from financial services and healthcare to manufacturing and technology. And it doesn’t help that increasingly team members across multiple industries prefer to interact with devices and computer systems rather than with their customers.
Why would the third largest U.S. bank by assets—and a favorite stock of Warren Buffett—risk its reputation by cutting corners? The most likely answer: to keep the squeeze on team members through a reward system that the bank believed would deliver ever better quarterly returns.
When I hear analysts and others suggest that a company has a secret sauce shrouded in mystery that delivers outlier returns, alarm bells reverberate in my brain. This is also true of financial advisors touting a particular investment. In 2009, Warren Buffett suggested in a Fortune interview that there was something special about how Wells Fargo does business. “The key to the future of Wells Fargo is continuing to get the money in at very low costs, selling all kinds of services to their customer and having spreads like nobody else has.” This sounds sort of like a secret sauce—and there go the alarm bells. Sometimes there’s a reason why a company is an outlier. Mostly, what Buffett was referring to is the Wells Fargo practice of cross selling which is simply selling more products to existing customers. It turns out that cross selling involved phantom sales. Wells has told some team members to stop cross-selling amid the crisis.
So how can Wells Fargo be fixed? The company has fired more than 5000 employees, because of the illegal practices. But is the real problem these team members or the company’s principles, practices and processes? Wells Fargo CFO John Shrewsberry apparently feels it’s the former. Shrewsberry reportedly told the Barclays Global Financial Conference in New York on Tuesday that the team members who committed the illegal acts were “at the lower end of the performance scale” and they were trying to hold onto their jobs.
Wells Fargo senior leaders are missing the point. The real villain is the reward system they created or approved that drives the behavior of team members at bank branches. This system apparently rewarded employees for opening accounts regardless of whether customers funded these accounts with new money. What value does this create? None. In fact, it likely costs more to open and ultimately close an unauthorized account than to do nothing. It makes little sense to blame bank branch employees for trying to retain their jobs when senior leaders have likely created principles, practices and processes that prevented more than 5000 people from acting ethically, selling products and creating value.
As its CEO prepares to testify before the Senate Banking Committee, Wells Fargo announced today the company is eliminating sales goals for retail bankers. Fixing the reward system without systemic repair may help for a while, but a lasting solution requires a more comprehensive approach. I’ve learned that trying to change an ingrained culture fails without changing the organizational structure.
The unfolding crisis provides an opportunity for Wells Fargo and many other companies in multiple industries with similar issues to replace an obsolete organizational structure while revamping the flawed reward system. This involves focusing like a laser beam on the key building blocks of a value-creating collaborative company: principles, practices and processes. Only then can the culture evolve.
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