Sunday, March 29, 2015

Let's Play Damage Control

Credit: US Navy (CC-by-2.0)
Have you ever tried to put toothpaste back in the tube? Maybe shaving cream back into the can? How about words back into your mouth? The first one is hard; the second one, much harder; the third... impossible.

I was reading a story today about a father of a young girl with #CerebralPalsy. Dad would regularly bring his daughter to a particular indoor play establishment in Guelph, Ontario. Though the establishment had a policy of socks only, an exception has always been made for this little girl because she needed to wear her shoes and braces in order to climb on the play structures. I don't want to mention names (against my instinct as a father of a special needs child), because I am trying to make a general point, not point out a single incident. Having said that, if you are on Facebook and live in or near Guelph, Ontario; you probably know to which incident I am referring. As it turned out, at this particular visit, the owner of the establishment was present, and enforced her rules much more stringently than any of her employees have in the past. The father and daughter were shown the door, and forced to drive to a neighbouring town to complete the play date. As a result of the angry posts of this girl's parents, the establishment in question was so overrun with negative feedback that they decided to shut down their Facebook page. Unfortunately for this company, all that they accomplished with that action is to remove themselves from the conversation. 

So, what went wrong? Well, as with most similar incidents, this is the result of a comedy of errors.
1) Employees should have brought the exception to the attention of management.
I understand that this would have been a tough thing to expect of an employee. "Uhm, boss, yesterday I broke the rules, and I thought you should know about it." But maybe, the first visit would have been the place to cut this off at the pass. If the owner had a reputation as being an ethical entrepreneur, her employees might have been willing to ask the father for his contact information and say "I'm sorry, but right now I have to enforce the rules. I will discuss this situation with my boss and have her call you to discuss what options are possible in the future." While the father and daughter would have still been upset, they would have had the comfort of knowing that it was not impossible, just not possible now.
2) The owner and the father should have looked for alternatives that would address all concerns.
Now I don't know what would have been a possible alternative, I know very little about Cerebral Palsy, but a dialog with two experts (the owner as an expert in play structures, and the father as an expert in Cerebral Palsy), must have been able to come up with alternatives. Would it be safe for the little girl to where dad's socks over top of her shoes and braces? If not dad's socks, perhaps some other rubberized covering.
3) The organization should have stayed in the conversation.
Here is the attempt at damage control that the owner put out on Facebook just before the page went down:
The parents have since argued (adequately in my opinion) the first two points.
It was bad enough that the owner didn't stay in the conversation directly with the parents. Had she done that, and conveyed a sense of empathy and a desire to find a solution, the parents would probably not have launched their campaign to boycott the establishment. The entire thing would have been resolved without threatening the bottom line. 
In fact, the parents would probably have bragged about the care that the establishment had given them and the owner may have been sitting on a nice Ethical Credit. Instead, buy "pleading the fifth" and shutting down the Facebook page, the owner is now burdened with Ethical Debt, from under which she may never escape.
In The Art of the Start 2.0, @Guy Kawasaki points out how lawyers should be used. Rather than asking a layer if you should do something, Kawasaki says that you should say "This is what I want to do. Now, keep me out of jail." In my opinion, if you need a lawyer's advice on how to handle an irate customer, you've let it go too far.

Saturday, March 28, 2015

What's the FUTURE of SHOPping?

Based on photo by Andrew Todd Phillips (CC-BY-SA-2.0)
Here we go again! CBC is reporting that another 1500 retail jobs are lost in Canada as Best Buy shuts down its Future Shop subsidiary. Best Buy bought Future Shop in 2001. I would have expected them to have sorted out the competing stores well before now.

I get it, big fish eat little fish, and there will always be a bigger fish. As I understand it, the employees are being well treated and presented with choices. But this still annoys me. Another Canadian brand dies at the hands of an American company.

The Government of Canada should force any companies that buy Canadian businesses to leave the country if they find that they cannot make it here, and restore the brands they destroyed. In this case, it should be the Best Buy stores that are closing, and the Future Shop stores that remain. It may sound like semantics, but every day, Canada is losing a little of its identity.

Admittedly, the real trouble is that Future Shop shareholders valued the $580M more than the pride of owning a piece of a successful Canadian brand. I suppose in hindsight, they are probably happy to have been rid of it instead of having to do battle with the American giant.

In the end, this is another example of a retailer shooting itself in the foot. They say it's because they are losing to online shopping, but they are hosting online shopping websites. Retailers have to provide value to the consumer that cannot be matched in the online world, and focus their efforts on that. Here's a common scenario. You go into a retailer and stand in the aisle comparing two products. Magically, a sales associate appears and asks if you need help. You say "Yes, I'd like to know what's different between these two brands other than the $50 price difference." And the well meaning sales associate proceeds to read the two boxes. You walk away thinking to yourself: "I should have just read the reviews online and ordered it there."

Monday, March 23, 2015

What Makes a Great Leader?

Credit: Scott Maxwell
I read a discussion today from McKinsey & Company entitled Decoding leadership: What really matters. The authors discuss a study they conducted to try to identify "what sort of leadership behavior organizations should encourage". It seems that the researchers really conducted an exhaustive study. I congratulate them on their work.

A survey 189,000 people in 81 medium to large organizations, identified 4 key leadership behaviours that the strongest leaders possess. While that is interesting, what I find alarming is that the list of "20 possible types of behavior" that they used does not include  any mention of Ethics or Integrity. In fairness, some of the behaviours might be seen as ethical traits, but they aren't traits that would prevent Ethical Debt.
Where is the mention of Honesty, Fairness, Trustworthiness, Beyond Reproach, etc. Sure number 9 is "Foster mutual respect", and while that is important, it doesn't scream out "Always do the right thing".

My grandfather used to be an accountant. I remember a story that I heard about him that went something like this:
Someone approached one of his clients and asked for an introduction to my grandfather as they were looking for someone to fix their books so that they wouldn't have to pay so much tax. Apparently, my grandfather's client told him "Don't bother asking Mr. Rochow, he would never do that kind of book-keeping."
That is the kind of ethics that all leaders should possess and cultivate in their organizations. You want a reputation that is so ethical that nobody would ever even consider asking you to do something that is not above board. That is the way to avoid Ethical Debt.

Friday, March 20, 2015

Do You Feel The Heat Yet?

A Frog in a pot
credit: James Lee
I read this article from CBC Marketplace today. I won't spell out what my initial thought was verbatim, but suffice it to say that it was along the lines of "how dishonest is that?" Basically, what Marketplace is reporting is that food packages have been shrinking in order to keep "prices" constant. They provide several examples such as:
«Last year, Maple Leaf Foods shrunk packages of 500 g of bacon to 375 g, a 25 per cent reduction.»
I'm sure that such tactics do not fool anyone who has taken a Home Economics course in school. But what about the people who haven't? This kind of tactic is preying on the segment of the population that need value the most. The other day as a treat for my son, I took him to McDonald's for lunch. I don't remember the last time I ate anything from that particular fast food chain, so imagine my surprise at how small the "Big" Mac is now. When I mentioned it to my wife she said, "Yeah, they've been getting smaller for a while."

It reminds me of a story I heard many years ago. If you want to cook a frog, you have to do so slowly or it will become rubbery. (I don't know why anyone would want to eat a frog, it's just an illustration.) To maintain the perfect texture, apparently you put the frog into a pot of cold water and then, ever so gradually, turn up the heat. The frog will get cooked without even noticing that it is taking place.

Now I have long since maintained that one has to be vigilant when shopping. But this, in my opinion, is another question of corporate ethics, and #EthicalDebt. I used to hold Maple Leaf Foods in pretty high regard. Now that they are pulling this stunt, I will scrutinize all of their products much more closely. It won't take too many more incidents like this before that brand is forever tarnished in my eyes.

I would be interested in hearing your thoughts. Is this practice dishonest, or is it justified? Which would be more likely to cause you stop buying your favourite brands: 1) a gradual increase in price, 2) a gradual reduction in package size?

Saturday, March 7, 2015

What is Ethical Debt?

As ethics are the moral compass of a society, and society is constantly evolving,
are questions of ethics still valid?

« Plus ça change, plus c'est la même chose. »
("The more things change, the more they stay the same.")
-- Jean-Baptiste Alphonse Karr, Les Guêpes, January 1849.

Each generation thinks that the next generation is wild and reckless. My grandparents were likely taken aback by the introduction of Rock and Roll to modern society. They would certainly have preferred the works of J.S. Bach. However, if I'm not mistaken (and I might be) J.S. Bach was branded a heretic in his day! Now there is obviously a huge difference between socially acceptable music and ethics. I suspect however, that societal ethics don't actually change as much as we might think.

If one considers the Occupy Wall Street movement that started a few years ago, the protesters were against corporate greed at the expense of the less fortunate. Basically, as the theory goes, 1% of the population is living off the backs of the other 99%. Now I don't entirely buy that, however the point of Ethical Debt is that, as far as most people are concerned, this could be true. Ethical Debt must be managed in the same way as financial debt. The impact of financial debt is obvious. We can only continue incurring more financial debt for so long before our creditors pull their purse strings tight, and refuse to offer any more. There may be situations where debt must be incurred, however the longer that debt stays on the books, the more expensive it is to remove it from the books.

Ethical Debt is not Karma

Many readers may at this point think I am referring to the mystical concept of Karma. This would be a misunderstanding. Karma implies that when you do good, at some time in the future, in some unrelated fashion, good will be done to you. The opposite side of Karma holds that when you do evil, evil will be done to you. Ethical debt on the other hand, says that when you stretch the boundaries of socially acceptable behaviour, society is less and less likely to trust you. To illustrate this, let's take a look at Bill Gates. With respect, Bill Gates is renown as an aggressive businessman. He has caught the ire of many around the world for what outwardly appeared to be a profit at all costs approach to his leadership at Microsoft. Since stepping down from an active role at Microsoft, Mr. Gates and his wife have started the Bill and Melinda Gates Foundation.

We work with partner organizations worldwide to tackle critical problems in four program areas. Our Global Development Division works to help the world’s poorest people lift themselves out of hunger and poverty. Our Global Health Division aims to harness advances in science and technology to save lives in developing countries. Our United States Division works to improve U.S. high school and postsecondary education and support vulnerable children and families in Washington State. And our Global Policy & Advocacy Division seeks to build strategic relationships and promote policies that will help advance our work. Our approach to grantmaking in all four areas emphasizes collaboration, innovation, risk-taking, and, most importantly, results. [source]
Since its inception, the Gates Foundation has given away nearly $33 Billion, yet Mr. Gates continues to be portrayed in social media as some sort of evil mastermind. How many more billions of dollars will the Gates family have to give away before the Ethical Debt is off the books?

Another illustration is the assassination of Boris Nemtsov on February 27, 2015. Is there anything that Russian President Vladimir Putin could say or do to make the world believe that he was not involved? The fact is that what Mr. Putin does speaks so loudly that nobody can hear what he says.

The opposite side of Ethical Debt (ie: Ethical Credit) is also true. George Washington is attributed with the quote: "It's better to be alone than to be in bad company." Of course, there is no way to validate that this was ever uttered by Washington, or that he is its original source, but his reputation is such that we believe it to be true.

What Does This Mean For You?

Canadian citizens are, for the most part, highly respected around the world. In fact, it is a matter of national pride that a Canadian can travel just about anywhere in the world, and as long as he or she displays a Canadian flag, open doors and smiles will be plentiful. However, an article in The Huffinton Post from the 9th of February 2015 entitled Canadian Businesses 2nd-Most Trusted In The World: Survey drew attention to the Ethical Debt balance sheet among Canadian companies. (Though they didn't call it that.)

The story points out that "Canada saw the largest drop in trust in business of any of the 27 countries surveyed." What this tells me is that Canadian companies are trading internationally on the reputation of our citizens. The rest of the world trusts Canadian businesses almost implicitly, but the people who know us best (those within our borders) don't trust us like they used to.

This is a wake-up call to all businesses. Correct your Ethical Debt before you have no reputation left upon which to trade.


Friday, March 6, 2015

The Art of the Start 2.0 - a Review

If you're looking for a book to show you the easy way to start a business, keep looking. But if you're looking for a book that will tell you how it really is, this is your book. In The Art of the Start 2.0, Guy Kawasaki breaks down the process of starting a business into clear steps. What he doesn't do is sugar coat it. This book should be required reading as part of every MBA program.

If you are not familiar with Kawasaki's writing style, you may be caught off guard... in a good way. It is decidedly refreshing to read an entrepreneurial book that cuts the crap, and tells it like it is. The world is full of Nike-preneur Evangelists telling you to "Just Do It", but very few telling you "How". Don't expect this book to take away the fear of starting a new venture, but you can expect this book to help you avoid certain key mistakes.

I have read the first Art of the Start ten years ago, this is much more than just a rehash of version 1.0. This book is filled with many new concepts that didn't even exist 10 years ago. To say that this is just a better Art of the Start is like saying the Ferrari is just a better Model T. In version 2.0, Kawasaki revisits several areas that were covered in 1.0, but where changes in society and technology require a new approach. Since my copy of The Art of the Start 1.0 grew legs and walked out of my library, I can't tell you how much of my impression that this version is better is attributed to the revision, and how much is attributed to me being ten years older and more mature. But either way, whether or not you read The Art of the Start, you owe it to yourself to read this revision. You won't be sorry.