Paying Attention to Bad News

Bad news can be really disheartening. When you get news of a product failure, there’s a real temptation to think, oh, that’s as much as I want to know about that! I think I’ll go home now. I think I’ll work on something else. Meetings in which colleagues try to explain away a product failure or a lost customer are the worst. But they are preferable to the meeting that isn’t called, to the silence and inactivity when nobody tells you something negative is going on.

Only the Paranoid Survive is Intel chairman Andrew Grove’s book about the need for a business to stay alert to change at what he calls “major inflection points” in the market. In the book Andy talks about how important it is for a company’s middle managers, “often the first to realize that what worked before doesn’t quite work anymore,” to confront senior management with bad news. Otherwise, he says, “senior management in a company is sometimes late to realize that the world is changing on them-and the leader is often the last of all to know f95zone .”

In one example of a major inflection point, Andy describes Intel’s slow response to a crisis over early versions of its Pentium chip in late 1994. Certain chips contained a minor engineering flaw. Intel reacted to the problem on the basis of it being a relatively insignificant bug that would affect only a very small number of users. Customers, however, felt differently. Intel endured “unrelenting bombardment,” as Andy described it-much the result of customers rallying together on the Internet-before offering a free replacement part to anyone who wanted it. Few customers took the company up on its offer, but the public.

An engineer himself, Andy confessed that he was one of the last to understand that his company now had to respond to a customer crisis as a consumer products company would-not in a month, as it had taken Intel this time, but in a matter of days. It took a barrage of relentless criticism and that to make me realize that something had changed t we needed to adapt to the new environment. The lesson is we all need to expose ourselves to the winds of change.

We need to expose ourselves to our customers, both the ones who are staying with us as well as those that we may lose by sticking to the past. We need to expose ourselves to lower-level employees, who, when encouraged, will tell us a lot that we need to know. Some experts say that companies struggle with the need for change because they haven’t been designed for change.

Lower-level staff may hesitate to bring bad news forward, and many managers don’t want to hear it. A change in corporate attitude, encouraging and listening to bad news, has to come from the top. The CEO and the other senior executives have to insist on getting bad news, and they have to create an appetite for bad news throughout their organizations. The bearer of bad tidings should be rewarded not punished. Business leaders have to want to listen to alerts from salespeople, product developers and customers.

In commercial aviation Douglas Aircraft, with its DC series, had a major lead over Boeing immediately after World War IL Douglas was so focused on filling all of its orders for the propeller-powered that it failed to move quickly enough to jet engines. Boeing built the jet powered 707 on speculation, without a single customer order in hand and never looked back. Communication of the bad news of potential war was flawed, too. Cable after cable warned US. Yet cryptic cables made for confusing orders to the forces in Hawaii. In the last twenty-four hours lower-level officers with tantalizing clues to the time and place of the attack scurried around, hand-carrying paper folders up through the chain of command. Today’s digital technology can ensure that you get the news and that you can put your organization into action fast.

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