Failing to Fail Can Be the Worst Scenario

The worst companies are the ones that fail to fail: they never do especially well, and they never do badly enough to close or be bought out. Instead they muddle along, fortunes rising and falling, hiring and laying off in waves, providing lackluster returns to their owners/shareholders and poor quality products and services to their customers. They never get their act together, and generate far more human misery than an organization that fails or succeeds outright.

The worst business ideas follow a similar pattern. Six Sigma, a business fad that attempted to repackage and repopularize successful quality methods previously developed by people like W. Edwards Deming and Joseph Juran, had a number of negative effects on companies who bought into it, even as it showed positive results on paper. It inspired companies to take their top engineers and other talent away from the work of creating and producing product, declare them “black belts”, and set them to finding and fixing individual problems. The presentations I have seen were impressive, with beautiful charts and graphs, and illustrations of the millions saved, but the unquantifiable costs were palpable to those of us in the trenches. The best of our engineers were taken away overnight, and those who remained, while competent, were, by management selection, of lesser skill and experience – a fact that could not help but flow through to and affect the product and customer. In addition, a certain amount of management’s attention had to be directed towards the reports, presentations, and general management of the special Six Sigma organization. Much ballyhoo was made of it all, and some probably saw their careers uplifted, but the net effect on the company was debatable.

Beware business fads. With the help of marketing savvy university professors (who I am sure profited significantly) Six Sigma was sold to the business community accompanied by a lot of book sales, and the lack of real business knowledge among some American businessmen allowed them to fall right into the fad. In some large corporations the Six Sigma fad continues to muddle along, keeping the best engineers dedicated to finding bad fasteners and similar problems while their ingenuity is otherwise lost to the product development effort. As long as they can show they are saving money the company will keep the system going. Six Sigma continues to muddle along.

“Muddling” occurs in many arenas. Similarly, poorly-conceived business systems – processes, databases, organizational structures – tend to take on a life of their own and resist replacement. Once in place, they develop a human constituency bolstered by the egos of the designers, sponsors, and participants. While more wasteful than alternatives, the cost to replace them combines with their cultural inertia to keep them around far past their period of even relative usefulness, in large part because the costs they impose on the organization are difficult to identify. The workers “in the trenches” can tell, though, as they struggle with clumsy procedures, redundant databases, bureaucratic systems of signoffs and approvals, and other wasteful business functions. Unfortunately, companies who look only at the most easily measured costs will fail to detect the waste, and lousy business systems can go on for decades, giving customers less than the best products, and degrading the profitability of the company in subtle and undetected ways.

There’s no accounting for management styles, skill levels, or personalities. There is no question that such factors are a powerful force behind the muddling phenomenon. My observations have been that, as W. Edwards Deming said, “The quality can be no better than the intent at the top”, by which I believe he meant that an organization is unlikely to perform better than is permitted by the savvy and skill of its top manager. Some people don’t have the personality to be a good manager, a fact which is unlikely to be acknowledged by business schools who make money from having lots of students. Some people never learn the right things to be a good manager, and some company cultures don’t support management learning and skill development. These all contribute to companies that muddle, never failing but never succeeding either, generating the maximum human misery along the way.

The solution, as almost always is the case in the corporate world, is at the top, and most people are not in a position to make a difference, or don’t recognize their potential. In such positions I tend to take the risk, speaking up constructively and with the knowledge that, if I wind up on the street looking for a new job, the new job will probably be better than where I was, and I’ve escaped the ongoing pain of “muddling”. I hope you are not working in a “muddling” organization.

As always, I welcome your comments and commiserations.

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