3 Ways Managers Can Keep a Business from Failing

It’s remarkable to see huge companies go up in flames due to managerial failure.  And yet it happens regularly.  Why?

Frequently, the cause of managerial failure is rooted in corporate culture.  Managerial failure often springs from a lack of humility, curiosity, and open-mindedness that is reflected in the attitudes, language and behavior – the culture – of the people in a company, and in particular, the company’s leaders.

For example, a company fails to notice and respond to the changing marketplace or to opportunities to bring about disruptive innovation in its industry.  The failure leads to declining revenue and profit.  Costs must be cut in order to survive.  People lose their jobs.  The company fails to recover and sells itself or closes its doors for good.

Are there “red flags” that might indicate the effect your current corporate culture is having?  Ask yourself the following:

1.      Are our leaders consistently seeking the opinions and ideas of others then considering what they hear before making decisions?

2.      Is it safe for people who are not in positions of power to speak up if they have something important to share?

3.      Is information freely shared among people throughout our company?

When the answers to the three questions are “yes” there will be a high degree of “knowledge flow” in your company’s culture.  When the answers are “no,” your company will be accumulating “knowledge traps” that will eventually sabotage performance and put your company at a higher risk for managerial failure.

Knowledge Traps Are Like Cholesterol

Knowledge traps represent relational breakdowns that prevent knowledge that exists in your company from reaching a decision-maker who needs it to make the best decision.  Absent a piece of knowledge flowing to the right decision-maker, there is a higher risk that a poor decision will be made.  Knowledge traps are like cholesterol in the human body.  Too much cholesterol build up leads to a heart attack and risk of death; too many knowledge traps lead to managerial failure and risk of corporate death.

Several types of knowledge traps exist.  The manager who lacks humility to seek and consider the ideas and opinions of others is a knowledge trap.   The employee who withholds information from a colleague is a knowledge trap.  This goes for managers and departments that are rivals and withhold information from one another too.  A company with an isolationist culture that is out of touch with customer and competitive developments is a knowledge trap.

Below are three ways to increase knowledge flow and reduce the risk of knowledge traps that lead to managerial failure.

1.      Put Your Cards on the Table

On a regular basis, get in front of the people you lead and share the issues you are working on and thinking about.  First, tell them what you are thinking.  I call this “putting your cards on the table.”  Next, ask people what they think is right, wrong and/or missing from your thinking.  Let them speak.  Just listen.  Don’t criticize.  Resist the temptation to be defensive if your view is challenged.  I also recommend having someone else take notes so you can give your full attention to each speaker.  Thank people when they share their opinions and ideas.  You will be surprised what you learn from a knowledge flow session and how it will improve the quality of your decisions.  It will also improve the way people execute your decisions because you’ve given them a voice.  Follow up in writing to tell people what you heard and what you’re going to do about it.

2. Encourage Creative Friction

In a culture that values knowledge flow people will disagree and they need to be able to work through their disagreements.  Let people know that this creative friction is part of every great company and that it should be encouraged, not suppressed or avoided.  It is wise to set ground rules.  Everyone’s attitude should be to focus on getting to the right solution and not on being right for reasons of personal pride.  General George Washington, for example, had terrible judgment when it came to military decisions.  He made it safe for his war council to say what they believed.  He took their advice and it contributed to his success as a military leader.  Another ground rule is that communication should be constructive and respectful, and that uncivil communication is not acceptable.

3. Let the Sunshine In

Many companies are stingy when it comes to sharing information with employees-at-large.  It’s better to let the sun shine on information so that decision-makers are more likely to be aware of it and factor it into the decisions they make.  Industry research reports, and articles on customers and on competitors should be shared broadly.  There are several ways to do this.  Post as much information as possible on your company’s intranet and write about it on internal blogs.  Encourage people in your organization to comment on these posts.  The more knowledge flow the better.

When you put your cards on the table, encourage creative friction and let the sunshine in, you will be creating knowledge flow and an internal marketplace of ideas that will improve the quality of decision-making and reduce the risk of managerial failure.

Adapted from Connection Culture: The Competitive Advantage of Shared Identity, Empathy and Understanding at Work.

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