A Crisis of Core Values

Bob Lapin

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The second core value is “prevention of problems.”  Randy had several choices in his approach to my business.  He could have negotiated the best price and promised the moon without taking the time to understand my needs.  However, as each week rolled by with the grass being cut to the wrong height, the clippings not being collected and grass overgrowing the sidewalks, Randy would have made his money but our relationship would have been destroyed and his future employment in doubt. The first step in “prevention of problems” is to take the time to clearly understand the “requirements” of the customer.  The next step is to assure that the work process is capable of consistently meeting the requirements.  Randy must assure that: he has room on his production schedule to cut my lawn every Wednesday; the lawn mowers are maintained and the blades are sharp; other crews, who may cut my lawn have a clear understanding of my requirements; and, all new employees are trained before being put to work.  Randy did these things and, therefore, had a happy customer who would pay his bills on time and refer new business to him.  Andersen’s flaw was elevating revenue generation above problem prevention.  It’s as if the healthcare profession had changed their core value from the Hippocratic “Above all, do no harm” to “Above all, hit your revenue target.”

The third “core value” is the attitude that error is unacceptable.  This does not mean that people will never make a mistake.  It means that when error does occur it is unacceptable to all involved and efforts will be made to assure that that error never occurs again.  Philip Crosby called this attitude “zero defects.”  W. Edwards Deming called it “continuous improvement.”  Motorola calls it “6 sigma.”  The Japanese call it “kaizen.”   Whatever the guru, the concept is simple, “Do It Right the First Time.”

The last of the core values is “management by fact.”  I remember a Christmas party my first year out of college and the opportunity to speak to a company president. I was intrigued because I had never had the opportunity to speak to a company president before.  I asked him what a president did.  He said, “I make decisions.  Right or wrong, I make decisions.”  Philip Crosby, the author of “Quality is Free” and founder of the Quality Management consulting practice, Philip Crosby Associates, did much to ignite the world’s interest in Quality Management in the early 1980’s.  Phil explained the role of executives in decision making as follows:  “Sometime, you will not have all the information you need to make a decision.  When that happens, think hard and make the best decision that you can.  By the way, Phil would say, that should happen to you once or twice in your career, not once or twice a day.”  Andersen made a decision to break from the past with a daring new strategy that for twenty years generated increases in revenue, profits and income for the partners.  Unfortunately, the decision led to its down-fall.  I wonder how that momentous decision was made.

As we face the rigors of the 21^st century, I believe that the concepts and techniques of Quality Management have a new place.  Management has struggled with a unifying theory of management.  MBA programs present classes in marketing, finance, accounting, operations, human resources, etc., but what holds these functions together?   One of my old business professors once maintained that managing a company was like driving a stagecoach in the old west.  The president of the company is the driver and each set of reins in his hands goes to a bit in the mouth of one of the horses.  Each horse represents a different functional department and by shear force the president drives the coach onward towards its goal.  I think we can do better than that.  The discipline of Quality Management presents us with a concise and actionable set of core principles: Commitment to customer satisfaction, prevention of problems, intolerance of error, and management by fact. 

Andersen is just one example of so many of today’s firms which have lost their bearings.  I propose that a new unifying theory of management, using the principles I’ve just described, provides a vehicle to get business “back on track.” It’s up to us to make sure that the current crop of systemic business failures becomes the last.