Business disasters usually come with clear prior warnings
[Download PDF version]: Li #199 Don't Ignore the Hot Light
SIGNS OF IMPENDING danger for a business, department, or team are typically not subtle. They are known, even discussed, yet leaders do nothing about it. Any of us can fall into this pattern.
A high percentage of new businesses fail, but failure is not limited to new ventures. Many long-established companies have found themselves in a nose-dive to oblivion.
Well-known examples would include Kodak, which disappeared after a full century of dominance after the emergence of digital photography ─ despite owning more patents in digital photography than any other company. Its leaders knew all about it, saw it coming, and did nothing in response. How can this happen?
What I learned in Gila Bend
I’ll illustrate by sharing one of the dumbest things I ever did.
In 1972 I was driving from Los Angeles to Dallas to start my sophomore year at SMU. What would you expect a 19-year-old to be doing when he is driving an orange 1970 Olds Cutlass across the Arizona desert? Naturally, I was going about 85 mph, air conditioning at full blast, and enjoying the deafening music from my cool new 8-track tape player.
I was on I-8 about 100 miles east of Yuma, when I noticed the hot light on my dashboard glowing. That’s weird, I thought. I don’t remember seeing that before. I decided to wait a bit to see if it would turn off.
Nope. Five minutes more, and that light was still on.
I looked around. I was truly in the middle of nowhere. Nothing to be seen but flat desert and saguaro cactus. I knew it was about a million degrees outside, and there was no civilization in sight. I decided to keep going.
That red light really started to bug me, and I grew increasingly anxious. I thought about pulling over but didn’t know what I would do if I did. A sign indicated a town ahead. Just a few miles more, and I could get some help. I kept driving.
Finally, I could see signs of life and a gas station a mile or so in the distance. Right about this time, my car seemed to lose power. I was slowing down, even though pushing the gas pedal to the floor. Almost there!
About 50 yards from the gas station my engine starting to make a strange sound, kind of like someone banging tin cans together. Almost there!
My car was now completely unresponsive to the gas pedal, but I was still moving. With the last ounce of momentum, I coasted into the gas station and braked at a pump. That was one good bit of driving! I thought.
I approached a mechanic and told him, “There’s something wrong with my car,” and he came to look. At first, he couldn’t touch it, because the engine was so hot. After a while he tried to add some liquid to the radiator, only to have it shoot skyward like a geyser.
“Whoa!” he exclaimed. “You know what you’ve got here? You’ve got a blown head gasket!” I had no idea what that meant. “Can you fix it? How long will it take? I’m trying to get to Dallas for school.”
“Son,” he said, “the head gasket is what connects the engine to the engine block. I’ll have to pull out the whole thing to replace it. And besides that, we don’t have head gaskets here. I’ll have to have to order one from Phoenix to come by Greyhound bus.”
I got myself a motel room to settle in. The repairs cost $400 (remember, these were 1972 dollars!). And I got to spend four days in beautiful downtown Gila Bend, Arizona.
I still had some sense of humor left. I sent Gila Bend postcards to friends and family, and freely admitted that I was a total idiot. I’m sure you agree.
The problem of willful denial
Laugh as you will at my foolishness, people do this kind of thing all the time, both in business and in private life. It’s called “willful ignorance,” “turning a blind eye,” or simply “denial.” It is the human tendency to refuse to acknowledge information that is uncomfortable, inconvenient, or unpleasant.
I’ve sat in many a meeting and watched a group resist facing negative facts. It crosses my mind: I think we’re about to visit Gila Bend. This is a common problem. “Ignoring the hot light” has caused the downfall of uncounted business executives, and of entire companies.
Sydney Finkelstein of Dartmouth College led a study on great business disasters and published his findings in Why Smart Executives Fail: And What You Can Learn from Their Mistakes. One of the myths he explodes is that those companies were simply caught up in circumstances and events beyond their control; that “the executives couldn’t have known what was coming.” He writes (emphasis mine):
"The only problem with this explanation is that none of the business disasters we investigated turned out to be due to executives being caught by unforeseeable events. . . . In most cases, the executives possessed all the necessary facts. In many cases, people tried to tell them what those facts meant. . . . In each of these cases and many others, the relevant change in business conditions was foreseen and discussed — and then disregarded."
Did you catch that? “DISREGARDED”! They ignored the hot light!
We can do it, too
If some of the smartest executives in the world have made this mistake, so can we. What would constitute a glowing hot light? Here are a few suggestions.
For leaders and managers:
Bad reviews or complaints from customers, either internal or external
An employee who is obviously not pulling his or her weight on a team
An important policy or procedure is routinely not being followed
An employee whose behavior or performance has quickly and mysteriously dropped
Cash flow or budget projections turning in the wrong direction
Personal warning signs:
You’ve had a negative attitude toward work that isn’t getting better by itself
Your relationship with another manager in the company is deteriorating, but you’ve done nothing about it
You can’t remember the last time you did something just for yourself, something that “fills you up”: read a book for fun, played a sport, went out with friends
These are just a few examples. A hot light can be a little nagging thing on the edge of your consciousness or a screaming siren with flashing strobes. In either case, we can choose to ignore it or attend to it. We ignore it at our peril; often, at our company’s peril.
Fix small problems while they’re small
Do you know the most irksome thing about my Gila Bend adventure? The whole mess was caused by a leak in a $4 hose. I could have stopped and hitched a ride to town. For probably $25 or less, I could have had my car towed and repaired. Instead, I got hit for $400 and lost four days of my life. Ignoring a little problem created a huge one.
This is one thing I learned from my friend and mentor, Dr. Henry Brandt, who was one of the world’s great managers. He always said, “Deal with the squeak.” That means deal with those little nagging things while they’re small, and you can avoid massive amounts of trouble in the future. Very wise!
Resolve to pay attention to the warning signs we see, and not to ignore them. You will benefit. Your company will benefit. Solve small problems while they are still small, before they become big issues that hinder or harm the work to which you are dedicated.
So, what nagging hot light should you be addressing right now? Li