Bernie Ebbers (of WorldCom) and Jeff Skilling (of Enron) went to prison. Less well-known is Conrad Black the CEO of the Sun Times Group who also went to the pokey. What do they have in common with Rupert Murdoch, besides CEO titles? The famous claim, "I am not responsible," closely allied with "I've done nothing wrong." While Murdoch has not been charged with crimes, or come close to jail (yet), there is no doubt that people at News Corp have been charged, and some will go to jail. And there is public outcry that Murdoch be fired.
Investors should take note. Three bankruptcies killed two of the organisations the ex-cons led and investors were wiped out at Sun Times, which barely remains in business. What will happen at News Corp? Given the commonalities between the four leaders, I don't think I'd want to be a News Corp. stockholder, employee or supplier right now.
But how in the world could something like this happen?
Like the infamous trio, Rupert Murdoch was, and is, a leader who defined the success formula of his company. As time passed, the growing organisation became adroit at implementing the success formula, operating better, faster and cheaper. Loyal managers, who identified with, and implemented intensely, the success formula, were rewarded. Those who asked questions were let go. Acquisitions were forced to conform to the success formula (such as MySpace) even if such conformance created a gap between the business and market needs. Business failure was not nearly as bad as operating outside the success formula. Failure could be forgiven, but better yet was finding a creative way to make things look successful.
Supporting the company's success formula its identity, cultural norms and operating methods and using all forms of ingenuity became the definition of success in these companies. This ingenuity was unbridled, even rewarded! Even when it came to skirting the edge of or even breaking the law. Cleverly using outsiders to do the 'dirty work' was an ingenious way to create plausible deniability. Financial machinations were not considered a problem if there was any way to explain changes. Violating accounting conventions is not really an issue if it is done in the pursuit of shoring up reported results. Moving money wherever necessary to avoid taxes or fines, and pay off executives or their friends, couldn't really a big deal if it helped the company implement its success formula. Any behaviour that reinforced the success formula, as the leader expressed it, made employees and contractors successful.
Do the ends justify the means? Of course! As long as the results appear good and the leader is taking home a whopping amount of cash, everything appears "A-OK."
Is this because these are crooks? Far from it. Rather, they are dedicated, hard-working, industrious, smart, inventive managers who have been given a clear mission. To make the success formula work. Each small step down the ethical gangplank was a very small increment and everyone believed they operated far from the end. If they got away with something yesterday, why not expect to get away with a little more today? What are ethics anyway? Relative, changeable, difficult to define. Whereas fulfilling the success formula creates clear, measurable outcomes!
What is the position of News Corp's board of directors? The New York Times headlined: Murdoch's Board Stands By as Scandal Widens. Murdoch, like any good leader implementing a success formula, had made sure that the board, as well as the executives and managers, were as dedicated to the success formula as he was. Through that lens, there are no difficult questions facing the board. Everything was done to defend and extend the success formula. Murdoch and his team have done nothing wrong except, perhaps, opting for a zealous pursuit of implementation. What's wrong with that? Why should the board object?
Could this happen to you, and your organisation? It may already be happening.
Answer this option, what's more important to you and your company:
1. Focusing on and identifying market trends, and adapting your strategy, tactics, products, services and processes to align with emerging future trends, or
2. Focusing on execution. Setting goals, holding people to metrics and making sure that implementation remains true to the company's history, strengths and core capabilities, customers and markets? Rewarding those who meet metrics and firing those who don't?
If it's the latter, it's an easy slide into Murdoch's very uncomfortable public seat. Very few will end up with an 'Enron Sized Disaster', as BNET.com headlined. But failure is likely. Any time execution is more important than questioning, implementation is more important than listening and conforming to historical norms is more important than actual business results, you are chasing the select group of leaders exemplified today by Murdoch.
Here are 10 questions to ask if you want to know how at risk you just might be. If even a couple of these ring 'yes,' you could be confidently, but errantly, thinking everything is OK:
1. Is loyalty more important than business results? Do you have people working for you who don't do that good a job, but do exactly what you want, so you keep them?
2. Do you hold certain aspects of your business as being beyond challenge such as technology base, meeting key metrics, supporting historical distributors (or customers) or operating according to specified rules?
3. Do you ask employees to operate according to norms before asking if they have a better idea?
4. Does HR tell employees how to do things, rather than asking employees what they need to succeed?
5. Do employee and manager reviews have a section for asking how well they 'fit' into the organisation? Are people pushed out if they don't fit?
6. Are 'trusted lieutenants' moved into powerful positions over talented managers just because leaders aren't comfortable with the newer people?
7. Are certain functions (finance, HR, IT) expected (perhaps enforces?) to make sure everyone operates according to the historical status quo?
8. Is management meeting time spent predominantly on internal-versus-external issues? Talking about 'how to do it' rather than 'what should we do?'
9. Is your advisory board or board of directors filled with your friends and co-workers who agree with your success formula and don't seek change?
10. Do your customers, employees or suppliers learn that demonstrating dissatisfaction leads to a bad (or ended) relationship?