Sprint, Poster Child for Dysfunctional Culture

Sprint became an early and dominant player in telecommunications.  They seemed to have it all going for them, as they built a headquarters campus roughly the size of Paris.  It turns out that they should have spent that money on fixing their culture and its strategy (culture’s natural outflow).

Since 2007, when the current CEO took over to “fix” the company, the S&P has lost roughly 18% of its value.  Sprint has lost 80%.  Their current “strategy” involves paying $600 for IPhones (over $30 billion worth) and selling them for $200, which should give them a breakeven point around the mid-point of the century.  The board, we’re told, wrestled with this.  The real question is, “Why weren’t they laughing?”  They do have a parallel strategy – suing AT&T over its potential merger with T-Mobile.  You know when your approach to competition is to use the federal government as a hammer on your peers that you are at the ugly end of your life.  As a bonus, they’ve managed to get the approach to lawsuits changed, so the government can now allow, invite or encourage competitors to join in anti-trust suits.

What went wrong?  The same thing that continues to go wrong.  James Carville told Bill Clinton that “It’s the economy, stupid.”  In organizational life, “It’s the culture, ….”  Sprint is notorious for paying people a lot of money to do nothing, creating a non-competitive, entitled culture.  At the same time, it managed to change course and lay off so many people so many different times that it created a personally competitive, fearful culture.  A lot of people with no real voice, fighting to be the last one standing.

Culture is king.  If it is designed well, it can lead to great things as you go about Building Passionate, Thinking, Pure-Performance Organizations.  Smart, experienced people – of which Sprint has had very many – can commit, trust, challenge, innovate, and talk about the truth, all on the way to building something that doesn’t make incomprehensible decisions and take wildly unproductive actions.  I have met many current and former Sprint employees, and I almost always think 2 things: 1) What a potential powerhouse, and 2) What a waste.  Good people get locked into the pay and benefits, even as they get locked into a cultural death spiral.

What’s the solution?  It’s all about what we call Cultural Design.  We have spent nearly 30 years looking at hundreds of organizations and thousands of leaders up close and personal.  We’ve seen what works and doesn’t work to produce a culture that not only yields pure-performance but does it in a sustainable and continuously renewable way.  The Sprint board made the mistake of thinking it was all about marketplace strategy and having a strong CEO who likes to be on television.  But it isn’t.  It’s all about a culture that is so strong, so dynamic, so honest, so intelligent, so focused on results that if there’s a way to win it will find it.

Sprint is a current extreme example of dysfunctional culture, but great leaders realize that the default position on culture is dysfunctional.  Without design, without building in the 40 attributes that define a truly winning culture, as a leader you get whatever human nature can serve up – seldom at its best, often at its worst.   With good design, as long as you have a real market to serve, good results are as sure as the turning of the earth.

Note: Italicized terms are trademarked property of Luman International.  All rights reserved.

First Things Only

You know, there’s a lot of truth and value in the old expression, “First Things First.”  It reminds us that there are first things, things that are more important than the mountains of activities and detail that continually demand our attention.  It reminds us that we should put those first things at the head of the line.  And it reminds us that we have to make a point of it or this just won’t happen.  It also tells us something else that’s very important – that it takes mindfulness and effort to keep those first things at the top of the list of where we spend our time and energy.

In the actual world we live in, however, first things are often not put first.  Sometimes, they’re not in the middle of the list, or even on the list.  At times, first things are the last things that get people’s attention.  Why is this?  Well, partly because first things are often hard things.  They’re big and tough and difficult to get your arms around.  They take attention that we don’t seem to have, collaboration that we can’t seem to develop, passion that we just can’t muster.  Partly first things need a lot of focus and concentration to make something out of them, and the 21st century doesn’t leave much room for those.  Partly, we haven’t even defined first things as first things.  And partly, we often don’t even know where to begin.

But first things are where the game is won or lost.  That’s where the 80/20 rule really works – 80% of the results from drilling down on 20% of the decisions and actions.  It can even be the 90/10 or 95/5 rule, where very, very few things really make all the difference, where almost all of the results come from just one or two things done exceedingly well.

This is why, at Luman International, we say First Things Only.  If it isn’t a first thing, why are we working on it?  Or to say it differently, why are we working on anything else when there’s a first thing floating around that hasn’t been fully addressed?

But what really happens in organizations?  I was talking with the Senior VP of HR in a Fortune 500 company, who told me that his “first thing” was to create a sense of passion and commitment, and in the process to elininate their pervasive sense of entitlement and “doing only what I have to do.”  I gave him a lot of ideas about how to go about Building a Passionate Organization, something we’ve been helping leaders do for almost 29 years, something that should be on every leader’s list of First Things.  When I met with this executive some weeks later, I asked him what he had been working on.  His answer?  “I’ve spent every waking minute since then trying to get our new physical education/fitness center completed.”

Now, health is important, and organizations that try to help their employees be healthy have a commendable concept.  But could this really be a First Thing?  Aren’t employees ultimately responsible for their own health?  How will this contribute to building passion and commitment (it won’t, because they come from 10 Keys that have nothing to do with benefits)?  In fact, isn’t this likely in an entitlement culture to build an even greater sense of entitlement? 

In a way, this is more than just a performance question.  First Things Only is a question of everyday ethics.  Someone is paying for the time spent on second and third things, someone is paying for the first things that are going unattended.  Working on second and third (and often ninth and tenth) things when first things are crying out for attention is a waste of lives and resources.  It’s guaranteed to produce sub-optimal results, along with a lot of damage to a lot of human beings.

First Things Only.  Anything else is…well, not that important.

Terms in italics are trademarked property of Luman Interntational.  All rights reserved.

How 10 Smart Can Equal 1 Dumb

It’s a scene I’ve witnessed countless times: Smart people coming together to discuss and debate…and make a dumb decision.

How can 10 smart people do that?  How can 10 smart = 1 dumb?  Well, the default is “dumb.”  It takes drive and energy and commitment and wrestling and fighting to get to “smart.”  Having 10 geniuses in the room won’t help much if they’re not connected in a meaningful way to vision, mission and strategy.  Or if they don’t know how to avoid “lowest common denominator” thinking, a risky endgame that dresses up to look safe.  Or if they’re protecting themselves, their team, their function, or their boss (from disagreement).   

But there’s worse.  If they’re moving in different or even conflicting directions, the fact that they’re geniuses is a huge minus.  They will use their smarts to create advantage for themselves, or to demolish those who disagree, or to lay plans to reduce the decision to an even dumber level.  Smart unconnected to good has a lot more potential for organizational harm than dumb unconnected to good.

There are ways to turn a team full of even average people into a collective wonder.  Building a team full of smart people into what we call A Thinking Organization can blow the lid off any box your organization may be inhabiting.  You can create a culture rich in Thinking DNA.  But first, you’ve got to get past the notion that smart people = smart decisions.  It’s true now, and has always been true, that only smart culture = smart decisions.

Please note: Terms in italics are the trademarked property of Luman International.  All rights reserved.

The Truth Is Out There

When you look at a company like Netflix, so brilliant for so long, making a series of moves that shatter their image, revenues, earnings and stock price, a fundamental question comes to mind:  Didn’t anybody know?

Didn’t anyone inside that organization have any doubts or qualms about raising prices 60%?  Or splitting the business into two parts, one for streaming video and the other for DVD delivery, causing customers to have to deal with two ordering systems and invoices?  And if someone did know, did question, did have doubts, why weren’t they heard or listened to?

Organizations are all plagued by what we call Fatal Illusions.  We can’t help it – it goes with being human.  It doesn’t mean we’re stupid, incompetent, or uncaring.  It’s just really hard to face reality, for a whole host of reasons – ego, misplaced optimism, path dependency, lack of trust, fear of speaking up, just to name a few.  So decisions get made that don’t make sense, because we didn’t take enough time and talk to enough people to ensure that what we’re about to do is actually aligned with internal and external business realities.  Because of this, we end up looking stupid or incompetent or uncaring.

When we’ve done post-audits (or at times, post-mortems), we’ve found without fail that there were voices, usually inside but sometimes outside of the organization, that knew this was a sub-optimal or even disastrous direction.  This isn’t second-guessing or “armchair quarterbacking” – they actually have the documents and data to prove what they knew before the disaster occurred.  They just didn’t get what they knew into the discussion – or to say it differently, the people who were leading the charge didn’t find a way to access all of this priceless information and wisdom.

So what do we need to do?  We can’t go along as an organization that doesn’t bother to align with reality on a consistent basis, and then all of a sudden become hard-core realists when we’re facing a big or game-changing decision.  We have to become a Reality-Based Organization in our cultural DNA – we have to understand and define and face and confront reality as a matter of course.  That means we have forums where all of the truth can be heard, at every step of the process.  We don’t over-value consensus, but rather put a high value on the lone voice that is willing to ask the questions that no one really wants to hear.

The truth is out there.  You’re paying people to learn it and know it.  With some attention to the design of the culture and the decision-making process, you don’t have to miss hearing any of it.  It won’t guarantee that you’ll always make brilliant decisions.  But it will guarantee that you won’t make dumb decisions that didn’t have to be dumb.

Please note:  Terms in italics are trademarked property of Luman International.  All rights reserved.