Consulting Cases

The Boss Fires His Buddy And Faces Market Realities

Background
Winter, 1984
I first worked with the Earthdata Corporation when it was 18 months old, the head count was 40, and the engineers had fallen behind schedule building their first computer. I worked with the engineers for six months and helped them get back on schedule. Eighteen months later, the CEO called and said they needed leadership training. We agreed I would first survey the company.

What The Survey Uncovered
Earthdata had projected $40M in revenues the first four quarters after their product launch. But after two quarters, revenues were trifling, spending had doubled, and there was wide disagreement even on the amounts received, with one camp predicting the company would run out of cash in three months.

The survey revealed that the revenue projection process had been blighted from the start. Four of the five members of the Executive Team had projected first year revenues around $20M. But the fifth executive, the SVP of Marketing, projected $40M. Despite the 4-1 margin, the executive team approved his $40M projection.

Why? Because the SVP was loved and protected by everyone. He was the CEO’s best drinking buddy, though the CEO had been on the wagon for three years. Many observed that the SVP walked unsteadily and slurred his words after lunch, and the prevailing wisdom was, “If you wanted him to think, you had to talk to him first thing in the morning, when he was still hung over.” He was known as the “Black Hole of Calcutta,” because “once you put something on his desk, it was never to be seen again.” If his flaws were brought to the surface, the marketing team worried, he might lose his job, and never work again. That would destroy him. Their choice was to protect him or save the corporation.

The CEO was unaware of their assessment of the SVP. He always stressed teamwork, and emphasized that team players didn’t meddle in others’ areas of authority; to raise serious doubts when it was someone else’s decision meant you were a poor team player.

Thus, two quarters after the product launch, everyone was waiting for the marketing strategy, and the sales force was complaining that marketing gave them no support. The was company split over revenues, with one camp claiming they were $7.85M, rather than the projected $16.5M for the first two quarters, and the other claiming they were only $4.47M.

Privately four of the five executives thought the SVP’s original projection was horribly wrong but said nothing, believing that was the right thing to do.

What We Did
1. After surveying the company, I put these issues on the table. I helped them explore their concerns about addressing their issues. We decided how to manage these concerns.

2. The executives, beginning with the meeting in which I put the issues on the table, practiced new skills, supported by my coaching. They practiced while visiting prospects, designing and implementing a headcount reduction, and recruiting a new senior marketing executive.

3. I raised a reasonable doubt about their way of trying to be good team players. They assumed that being a good team player meant not meddling in other executive’s bailiwicks.

• Their definition of teamwork made it unlikely that they would learn from each other. It prohibited them from raising reasonable doubts about key assumptions on strategic issues.
• Teamwork, I said, meant actively supporting, questioning, reminding and observing each other. Doing this requires leadership, common language, common purpose and mutual trust. It is done best when it is done with humor. They met all the requirements, including the humor. What they needed was focus.
• A good team player, I suggested (1) Avoids placing his own interests, or the interests of any individual, above the common interest. (2) Raises the tough issues productively — gives feedback both regularly and as needed. (3) Strives to do so with compassion. (4) Accepts responsibility before his own conscience, and before his mates, for the consequences of his actions, both intended and unintended. (5) Separates facts from opinions. (6) Accounts for all relevant facts and opinions. The CEO led the way in applying these “teaming” rules. The others followed.

4. The discrepancy in revenue estimates raised a doubt about SVP’s assessment of prospects. I recommended that they visit their prospects and assess for themselves where each prospect was. I pushed them to do it as soon as possible.

5. At the same time, I offered support, comfort, and inquiry to the CEO as he faced, and thought through, his worries and fears about his friend the SVP, his performance, his drinking — and about the welfare of the company.

• I said that it was possible that retaining the SVP both harmed the common interest and harmed the SVP, by enabling him. I reminded him that every complex decision caused some suffering and injustice. The only solution, once he had accepted executive responsibility, was to act with compassion. I defined compassion as taking appropriate action with sufficient resources, while responding to suffering and injustice with empathy. I pointed out that he was already in a deeply empathic place with the SVP. To act compassionately could mean coupling his empathy to the actions that placed the common good first.
• I designed a process that allowed him to collect his own data — through customer visits. Halfway through the visits, he was clear and resolute on the need to replace his friend as soon as he could.
• One way, I suggested, that he might express his love for the SVP was to build him a safety-net. d. He put his whole heart into constructing it.

6. The executive team, facilitated by me, prioritized the issues: (1) SVP Marketing says we have five prospects inside the ten yard line. We must verify this. (2) Even our best case scenario requires that we reduce our overhead. Let’s start thinking and talking about it now, and continue the conversation during our travels to our prospective customer.

7. Based on my summary of the executives’ questions and concerns, I developed questionnaires and templates for them to use with their prospects. They practiced interviewing each other, asking the questions while I coached. We taped these practice sessions and they listened to the tapes. Listening to the tapes, all reported, was extremely uncomfortable, but well worth it.

8. Together, the other four executives visited their top prospects. These were the prospects that the SVP had characterized as, “inside the ten yard line”.

• They discovered that not one prospect could be characterized as having crossed midlfield. After the second visit, the executive team was able to predict accurately what they would learn in the final three visits.
• By the last visit, there was agreement amongst the four of them to reduce their headcount by 30% and to do it in two weeks. During their trip, I facilitated some conversations by phone, helping them articulate their observations and opinions and formulate new questions.

9. The CEO immediately took action on multiple fronts.

• He talked to his lead investor, describing what he had learned, and what they were planning to do. Then he offered to resign, holding himself responsible for the present situation. The lead investor thanked him for his resignation and asked for time to think about it. He asked the CEO to continue functioning as CEO in the man time. Then they agreed on the next steps he would take in the meantime. 
• He began talks with his other investors.
• He talked to the SVP. First, he discussed his own performance. He took responsibility for the revenue estimate and headcount build up. He confided that he had offered his resignation, hoping the SVP would do the same. Then he said that the SVP’s performance jeopardized Earthdata. He accepted responsibility for having done a poor job of supervising SVP. With tears running down his cheeks, he apologized for letting down the SVP.
• The same day, he began his search for a new senior marketing executive.
• The next day, the SVP resigned and the CEO implemented his safety net.

10. At the same time the CEO was taking these actions, the executive team began designing the cost reductions.

• I gave them a sequence of questions, which they modified. Then I facilitated their discussion.
• They addressed the following: What must they keep doing? Is there anything they need to do more of? What could they stop doing? What are they losing? What will they stop doing? Who do they want to keep? Who are they were willing to lose? How to implement the reductions without losing anyone they wanted to keep
• They succeeded in retaining everyone they wanted to keep.

11. A week later, the lead investor asked the CEO to stay on. Within a month, they identified a senior marketing candidate all were excited about. However, for him, it was a lateral move, sliding from a famous midcap to a mature startup. He was looking to move up to CEO. To make room for this, the CEO resigned his executive position, while remaining Chairman.

12. The new CEO immediately addressed the marketing strategy. The corporation had been trying to sell to the Fortune 300, he said, and they never had a chance. “No SVP of Data Processing will ever be fired for buying Big Blue (IBM). We must sell into the Fortune 300 to 500, where SVP’s are paid to take risks.”

Outcome
They met their revised first year projection. The second year, they doubled revenues. The third year, their first public offering raised $550M (real money in the mid-eighties).

Wresting Control From the Bad Guys

Background
Loomis, a small cap public company, had been public ten years and had yet to produce a profitable quarter. The new CEO had just left a large cap corporation, where he had been my client. When he left, the CEO was unaware that a nontitular board member controlled the company with an iron hand.

The CEO’s efforts to introduce meaningful reform were stymied by the board. He asked my help in transforming the board and the operating entity. We started by surveying the whole company.

Survey
The company was dysfunctional from top to bottom. The performance of the board and executive team harmed the company and barred the possibility of success.

The Board
Nicolas. Nicolas, who never held a titular position, had controlled the board, since the IPO. Daily, by phone, he communicated with senior and middle managers, instructing and monitoring. Rumors said that he day traded the company’s securities.

The second thing Nicolas said to me, during our first talk, “Jonah wasn’t even my second choice for CEO.” I asked who was second. He said, “Another outsider,” I asked who was first. “Kelly, our COO,” he said.

“How did you lose control of that decision?” I asked.

“I got to choose the first 6 CEOs. The board felt it was time they got to choose.”

Adam. Adam was Chairman. He did as Nicolas told him. He was a lawyer and billed much of his work as chairman to the company as legal fees, with Nicolas’ approval. Near the end of the survey, I told Adam, “I have never seen such a dysfunctional corporation or one so harmed by factions.”

He said, “Tell me about it. Most of the time I feel like I am in Bosnia [the world’s hot spot at the time.]” I said that the problem started at the top. Nicolas and Charles had to stop interfering. Jonah needed authority to fire Charles. And, if the rumors were true, Nicolas had to stop trading the company’s security. He said in a loud voice, “Jesus Christ, you are going to say that? You must have very big balls.” I asked why I needed big balls. “I have never seen anyone challenge Nicolas.” I asked for clarification. Did he mean that people confronted Nicolas, but not successfully. He cut me off, “No one dares to challenge him.” I asked him why. He said that he would not talk about it.

At board meetings, Adam voted with Nicolas and a majority voted with them. A majority of that majority seldom did their pre-reading. Those who did little pre-reading said that they were on the board only as a favor to Nicolas, who assured them that they need not do the preparation.

The Executives
Jonah was CEO. He was outraged at what he found in the company and on the board, once he was on board. He was not hopeful about what he could do. He lacked adequate board support to challenge Nicolas.

Jonah began his career as a manufacturing and engineering manager. He had solved many tough manufacturing and engineering problems, of which there were many here.

From above, Jonah was opposed by Nicolas. From below, Jonah, and his team, were sabotaged by Charles.

Kelly was COO, and had been a candidate for CEO. Many thought Kelly was afraid of Nicolas and this undermined his credibility and leadership within the company.

Charles was ‘the son Nicolas never had.” He was Senior Vice President (SVP) of Military Relations. He had been the company’s first CEO. He was still on the board. All five CEO’s, since, had wanted to fire him. As Nicolas told me, “I wouldn’t let one of them fire him.” Charles consistently countermanded orders that came from the management team.

Executives, managers and employees felt caught in the middle. Many believed that Nicolas and Charles would pull another coup, putting Charles back in power. Many feared that once in power, Charles would fire all who had disobeyed him. Charles was famous for firing people on the factory floor and sometimes hiring them back in the parking lot.

Jerome was SVP of Marketing. He lacked most required knowledge of marketing. He did not know what he did not know, although almost everyone else knew. Jonah was still on the fence. Nicolas had hired Jerome over the strong objections of Charles, who was CEO at the tiime.

Harlan headed Product Development and R&D. He hated Jerome, called him a liar. Said that Jerome had no idea what he was doing. Harlan was admired and respected by those who reported to him. Fellow executives mistrusted him. He said bad things about marketing, Jerome, and Jonah to his team. In the stories he told his team, he was the hero and other executives, including Jonah, were the bad guys.

Operations
The company’s primary product line suffered from the highest wastage in their industry. If they had normal wastage they would be profitable. Wastage was proving immune to fixes. Annual turnover on the manufacturing floor was 50%, and had been from the beginning.

Although technical performance of the second product line was competitive, the sales and marketing lacked a coherent strategy, adequate collaterals, and sales support. No systematic prospecting occurred.

The absence of cooperation between product development and marketing was a strategic liability, as was the absence of necessary competence in marketing.

The two product lines mistrusted, disrespected, and discounted each other. The absence of cooperation harmed improvement efforts.

Engineering worked to no known engineering standards. The design and drawings of the company’s capital equipment failed all known standards. This machinery never produced acceptable performance.

What I Did
Meeting with the Executive Team
I presented the findings to Jonah and the executive team.

Everyone agreed about the harm caused by the board, with Nicolas the main culprit and Adam a close second. Everyone but Charles agreed that Charles was a menace who had a lot to contribute.

During the meeting, Charles tried his best. He summarized. He allowed himself to be interrupted by colleagues and consultant. I interrupted his denials and explanations. I asked him to ask for examples. He followed my lead. He would start to explain or deny, then allow himself to be interrupted.

Everyone but Charles, thought Jonah needed explicit board authority to fire Charles if need be.

Kelly and Harlan objected loudly to my notion that acceptable engineering standards were absent. Jonah sided with them, told me, “That is not possible. You are being alarmist.”

Jerome objected angrily when I observed his lack of competence. Jonah aided Jerome. Harlan enthusiastically supported me. Jerome attacked Harlan. I interrupted by pounding a book on the table while shouting, “Stop!”

I imposed round table rules. Everyone must speak in turn. Before one spoke one had to summarize what the last person said, to the last person’s satisfaction.

All agreed that the fight between Jerome and Harlan had to stop. Improvements were not possible with those two positions not cooperating. All agreed that the two product lines needed to cooperate.

The Next Two Days: Meeting with All Executives and Managers
All executives and managers met for two days. Jonah asked if we could use the round table rules, and we did.

Many spoke about Nicolas countermanding management decisions while demanding production and sales data that had nothing to do with his position as director. All who spoke said they felt caught in the middle between Nicolas and Charles on one side and Jonah and the management team on the other. Many felt nothing could improve until this did. Jonah summarized and inquire for over an hour.

Charles was described as yelling and degrading people in public, firing them on the spot, even when he lacked authority. Examples of his countermanding management policy were described. He summarized. Jonah then summarized and inquired for an hour.

Many said they felt discouraged by the fight between Jerome and Harlan. Many felt nothing could improve until that did. The fight between the two product lines erupted during the meeting, giving Jonah his first first-hand experience. Gallows humor prevailed, with a strong link made between speaking up and getting fired. And people spoke up. Jonah summarized and inquired.

I said that under these conditions speaking up took real courage. It showed how much people cared and wanted the company to succeed. “Your morale,” I said, “is essential to a turnaround like this.”

Many described the differences and disagreements between the two product lines. Someone from the other product line summarized each person who spoke. As we summarized and inquired, disagreements morphed into misunderstandings. Some misunderstandings were traced back to differences in technical nomenclature. We started building a common language.

We began a discussion of engineering process which quickly uncovered the absence of acceptable process and standards. Unfortunately, time ran out before we had the same conversation with marketing. Marketing was not addressed again for six months.

Jonah said that yesterday [the meeting with Jonah and his executive team] he had doubted much of what I had said. Today had surfaced information that appeared to confirm much of what I said. Jonah asked me what we should do next. I suggested we take what we had learned to the board. I said that I thought the whole executive team should be at the meeting ready to bear witness to what had been said and learned. Everyone agreed that should be done. Then the gallows humor rose, with me as the butt and victim.

This is where the two-day meeting with executives and managers ended.

Meeting with Nicolas
Nicolas and I dined the night before the board meeting. I describe the way his daily interference harmed the company. I gave examples of Charles disruptions. I said that everyone feared him. Smiling, his elbows aggressively on the table, his face in mine, he shouted, “Good!”

I pounded my fist on the table. The restaurant went quiet. I pointed my finger between his eyes and shouted mutely, “No. That is what is wrong with this company.”

I quoted some of the rumors about his day trading. Leaning close, looking me in the eye, he whispered, “They mean nothing.”

“Nevertheless, I am putting them on the table tomorrow.”

On the way out, I told him that Jonah needed authority to hire and fire all executives. He stopped and faced me, “Ha! Every president of this little company has tried to fire Charles. I didn’t let them and I won’t let the new guy, either.”

The Board Meeting
We sat at a rectangular table. Nicolas sat at an end. I sat next to him, catty-corner. Adam was calling the meeting to order, when Nicolas interrupted, turned to me, and said in a voice heard by the secretaries next door, “You know, I have hired a lot of consultants in my time and I never listened to one of them.” I looked at him, said nothing, and turned back to Adam.

The floor was turned over to me. I described what had happened, so far. I said that the executive team was next door waiting to be called.

While Nicolas fumed, I described his daily interference. I read the rumors about his day trading. I described Charles interference and reported the fear people felt, caught between Nicolas and Charles on the one hand and Jonah and his management team on the other.

The feuds between Jerome and Harlan, Product Development and Manufacturing, and the two product lines were put on the table.

We took a break and the executives joined us. For the first time, the other directors stirred, asking question after question about each issue. After the executives left, directors were heard saying, “I had no idea.” “This is quite a surprise.” “It makes sense, once you think about it.”

They asked what I recommended. “All board communication goes through the CEO’s office. There should be no direct communication between the board and anyone in the company except the CEO, the CFO and General Counsel. All other communication between the board and executives and managers is at the discretion of the CEO. This includes, of course, Nicolas and Adam, as well as the rest of you.” Several directors summarized and inquired. Nicolas interrupted, yelling that ‘it will only happen over my dead body.’

Only Adam and Nicolas voted against the motion supporting my recommendation.

Nicolas interrupted as I voiced my next recommendation, “Fuck all consultants,” he said. I said nothing, turned back to the group and recommended that the CEO be given unilateral authority to hire, fire, promote and re-assign all executives, managers, and employees of the company. At his discretion, and only at his discretion, the CEO may delegate this authority to others. Charles was asked to leave the room.

This time Adam voted with the majority leaving Nicolas as the lone dissenter.

After The Meeting
Jonah
A week later Jonah and I laid out his plan. He needed to communicate internally the two board decisions.

He needed to build his own relationships with individual directors. The company needed to develop its presence on Wall Street and with the banks. Then they would seek new lines of credit while upgrading their investor community.

We disagreed on manufacturing and engineering. He resisted my dire assessment. I told him that I had raised a reasonable doubt. It was his job to do something about it. I encouraged him to go out and see for himself, which he did.

Adam
After the board meeting, Jonah balked at paying the next invoice from Adam, for work he had done as Chairman. By phone, Jonah told Adam that outside counsel had advised against paying the invoice. Because of this opinion, Jonah could not approve payment. Nicolas then called Jonah, insisting that he pay Adam’s invoice. Jonah refused and told Nicolas that the place to pursue the issue further was at the next board meeting. Four more times Adam submitted invoices and Jonah refused approval. Each time Nicolas called and deferred to the Board. Neither Nicolas nor Adam raised the issue with the board. Adam stopped submitting invoices.

Charles
I asked Jonah, “What does Charles need to do different to keep his job, his seat on the board, his place on the executive team?” We role-played Jonah’s answers and anticipated Charles responses. Then we met with Charles.

Jonah said, “You have a tremendous contribution to make, but I cannot afford to keep you if you continue to countermanding legitimate instructions.” Charles summarized. Jonah continued, “For the time being you are to speak to no one below the level of senior vice president without the appropriate senior vice president present.” Charles summarized and asked how he could keep track of what was happening. Jonah said, “That is not your job. Your job is military relations. You should summarize that.” He did.

Jonah said, “We will review how you are doing every Monday morning at my staff meeting. I want to keep you, but you must change. I expect you to make mistakes. But I expect to see serious improvement week after week.”

Jonah, Kelly, and Manufacturing
A month after I encouraged Jonah to see for himself about manufacturing, he called, shaken, and said, “Things are not be as bad as you say they are. But they are much worse than I thought they were.”

I told him how Montgomery, fighting Rommel in North Africa, would move his headquarters to whatever part of the battlefield required attention. This was a key to his success. Assuming a new command, Monty began by teaching his staff how to move his mobile headquarters. I suggested that engineering and manufacturing required his attention. He agreed and he came up with the idea of changing jobs with Kelly. He would oversee engineering and manufacturing while Kelly handled his duties until the problem was fixed.

The next day we raised the issue with Kelly, who surprised me by objecting. He wanted the night to sleep on it. He would give us his answer the next day.

Jonah called the next morning sounding distraught. He said Kelly had something to tell me. Kelly said, “I really fucked up. Last night, on my way out, I saw Heather working late. I went into her office. I thought she liked me. She has given me lots of signals so I asked her if she would sleep with me. She broke into tears and ran out of the room. I had no idea she would get upset. I don’t know what got into me. I thought she had kind of asked me. I am sorry for how I have hurt her and Jonah.”

I said, “Kelly, I am so sorry. But you have it wrong. The person you hurt most here is not Heather or Jonah. It is you. I am so sorry. What happens now?”

Jonah said, “He resigns from the company tomorrow morning. He is to have the letter on Ryan’s desk by close of business today. He leaves our meeting and goes to his lawyer.”

Replacing Kelly with Ben
Jonah was excited about recruiting Ben, “Five years ago, when the region was booming, someone of Ben’s caliber would never consider Loomis. Now, we may be the only job qualified for him in the whole region.” This, Ben said, was why he took the job.

Ben had a sweet disposition and expected rigorous disciplined process. Morale began to rise as soon as he walked in the door. Order seemed to follow in his wake.

He pooh poohed my notion that neither manufacturing nor engineering operated to any known standards. I told him he could save a lot of time starting from scratch. “Begin by documenting what is going on and then figure out what you want to change,” I said.

I predicted that documents produced before he arrived would mislead him. He accused me of being alarmist. I suggested that he see for himself. He did see, but he was sticking to the plan. He predicted it would take two quarters to lower wastage to acceptable levels and raise quality. It took six quarters. No matter how resilient to solution problems proved to be, morale remained high, humor always present. At the end, he agreed that neither had operated by known standards. He wished he had listened to me, but he had been unable to. It was beyond his comprehension how anyone could let such a thing happen.

The Executive Team
For 12 months, I met monthly for two and a half days with Jonah and the executive team. We addressed Harlan and Jerome and the cooperation between Product Development and Marketing, the cooperation between the two product lines, and improvements in manufacturing and engineering.

Ben was constantly frustrated, dumbfounded at his inability to solve his primary problems. “I used to think that me and my guys were pretty smart. I am beginning to doubt that.” His team mates assured him that if he couldn’t do it, then no one could.

We addressed Charles, who, everyone agreed, was trying very hard and producing fewer “incidences.” We reviewed each incident. We looked at alternative ways of relating to Charles during an incident. We looked at alternative ways Charles might act during an incident. We role played the alternatives.

Once it was clear that Ben could do an excellent job with manufacturing and engineering, I suggested that Jonah turn his attention to marketing which was in equally bad shape. He resisted.

As the year moved on, it became more urgent for him to build his presence on Wall Street and develop new banking relationships. These things took time. And, besides, he did not know anything about marketing. “You know more than anyone in marketing. You could start by beginning your search for a new SVP.” Jonah said he did not want to take on Nicolas about Jerome, just yet. He agreed to start a quiet search, not using a firm, but his personal contacts.

Jerome and Harlan kept fighting. Nothing improved. I suggested that Jonah think about how long he would suffer this and what he might do about it. “You may have to choose, one over the other,” I said. He winced, then turned angry. I breathed deeply, let out a sigh and said, “This is hard work. And there is so much of it here. You can do it. You are up to it.”

Jerome self-destructed several months later. A secret condition of employment for his secretary was daily fellatio. Then, to hide money during a divorce, Jerome put lots of it in her account. She began incurring large charges on Jerome’s company credit card. Jerome turned her in and unraveled his own sordid corruption unintentionally.

Just then, Mary Ann, Jonah’s first choice to replace Jerome signed on. Within a quarter, Harlan was fighting with Mary Ann. Jonah, then, fired Harlan.

Two quarters later, Charles brought in a series of government contracts that grew the company from $20M in revenue and 155 people to $100M in revenues and 900 heads in less than eight quarters.

Defusing A Bully And Rationalizing An Ad Hoc Management Style

Background
Spring, 2001
The partnership invested in real property. The partners included Will and Jack, and Will’s son Sean. Will and Sean lived in northern California. Jack lived in Chicago.

Property site management and maintenance personnel numbered 123. Management, including support staff, numbered 39, spread over three geographies. Capital Transactions and Finance were in Chicago. The search for new acquisitions, property management, marketing, sales, and maintenance were in the Southern Region, in northern California. A growing property management operation was in the Northwest Region.

I knew Will socially. He asked me to take a look at their operation and see if I could come up with anything. He had not specific problems he was concerned about, and he had no idea of what needed to work better.

What I Found
Partners and Their Issues
1. Sean ran the division that managed the properties.

2. When Will and Jack were in a transaction, they were hard to reach when needed. When they were not in a transaction, they micro-managed, all the operations, causing problems and upset. Will and Jack were unaware of the problems they caused. No one told them.

3. Will was concerned about worsening economic conditions and their ability to cover possible operating losses. In that regard, he was worried about Jack’s liquidity, but he had said nothing to Jack, afraid it might cause a rift.

4. Will also got angry and verbally abusive. Sean was a frequent target, but no one was immune. Sean avoided eye contact with Will, rarely talked to him, and was seldom alone in a room with him. Father and son never talked about it.

5. Privately, everyone voiced love and sorrow for Sean, the stoic.

6. Sean was even harder on himself than his father was.

Issues in the Three Regions
1. No region satisfied Accounting’s month end requirements, despite the loud and frequent complaints of Lee, the head of Accounting. Too many month end forms were turned in incomplete, improperly filled out, and late.

2. All three administrative functions — Accounting, Operations, and Transactions — complained about the Northern Region, run by Sam. All who complained said northwest managers thought themselves superior to everyone else in the company. According to Accounting, they were the worst at satisfying month-end requirements.

3. The head of accounting, Lee, and head of transactions, Alice, though highly dependent on each other, never cooperated, and criticized each other often. This was a nuisance for all. Many complained privately. No one spoke up.

What We Did
1. Will, Jack, Sean, and I spent a day discussing the above findings.

2. Before we met, I told Will that he set the tone. If he tried hard, everyone else would. If he tried hard, they could change anything they wanted. If he did not try, no one else would, and nothing would change.

3. Regarding process, they agreed to summarize what the last person said before the next person talked. They also agreed to let me interrupt. They were free to interrupt my interruptions.

4. I put micro-management on the table.

a. Will said that could do business no other way. Sean grunted. I suggested that Sean summarize Will, then ask questions about Will’s statement. He did, then asked Will, “How could you not know the trouble that would cause us?”

b. Jack stepped in, took my suggestion, and asked Sean for examples. During Sean’s examples, Jack and I interrupted Will’s interruptions.

c. Each time Sean offered an example, Jack, with my encouragement, asked Will to summarize. Each time, Will needed four and five iterations before Sean found his summary acceptable. To his credit, Will kept summarizing until Sean said yes.

5. I put liquidity on the table.

a. Bashfully, making oblique eye contact, Will said to Jack that he was concerned about the economy and Jack’s liquidity. Jack acknowledged that he was optimistic to a fault. He asked Will what he wanted. Will turned to me. I suggested that they get an accounting of their reserves, review each property, assign each a cash reserve, and then compare the total requirements to current reserves. (They discovered that their requirements exceeded their cash, and spent half a day deciding which properties to sell.)

b. We arranged to hold monthly liquidity meetings, estimating trends and reviewing cash on hand for all flagged properties.

6. I put Will’s abuse on the table.

a. Several weeks before we met, I told Will that others had described him abusing Sean. He said, “They did? I do? This is important. We must do something about this.” He asked what he should do. I suggested that he do and say nothing until we met as a group. Until then he might be on the lookout for things he does that others might consider abuse. I told him I was glad to talk if he noticed anything. I did not hear from him before we met.

b. When we met, I suggested that he listen, summarize, and ask questions. If and when appropriate, he might apologize. Will summarized.

c. Jack described several fits of rage by Will, who summarized each.

d. Will asked Sean if this was his experience. Looking at the floor, Sean said yes. I asked Sean to describe his experience. Silent for a long time, Sean said, “Yes.” I asked Sean what his own experience was of Will’s anger. Horrible, he said. Wagging hand and foot furiously, Will sounded defensive as he started to speak. Jack interrupted Will. I suggested that Will summarize Sean, and not explain. He did.

e. Sean described a time Will abused Alice.

f. Will looked stunned, wagging foot and hand furiously. He apologized. Who are you apologizing to, Sean demanded. You, said Will. But, said John, what about these other people? Will said that he would apologize to them, too.

g. Sean expressed disbelief that Will was unaware of what he did when he was angry. I asked Sean if I might speak, and he agreed.

h. I told them that witnessing anger was as harmful as being attacked by anger. I reminded Sean that he had witnessed a lot of anger.

i. I reminded them that I struggled with anger. Being angry is like being drunk. I fall into a hypnotic trance. Once back, I remember nothing of what I did. I was startled to discover my father was unaware of what he did. It was normal that Will is unaware. Engaging with Jack and Sean was a big step for Will.

j. To help him become aware, we must continue what we have started here — let him know when he is raging, interrupt him, describe what he is doing, have him summarize, and encourage him to ask questions.

k. That ended our first day.

Reflecting On The Day
1. No other client, in a first meeting, used the tools of summarizing and inquiring as well as Jack. His contribution to the day’s success was essential.

2. Will’s effort set a productive tone that carried. Will granted Jack an authority he did not grant me. When Will balked at my instructions, Jack backed me up and Will went along. Not once did Will balk at Jack’s instructions.

3. The meeting and format — long, intense discussion, sitting around a table, was hell for Will, who has difficulty sitting, or remaining in one room for long. Heroically, he stuck with it.

4. Sean took up summarizing immediately and began doing it consistently, though inquiry stumped him that day. An accomplishment of the day: Sean repeatedly stood up to his father. Afterward, he didn’t regret this, though he doubted anything good would come of it.

The Next Day: The Partners and Senior Staff
1. Will, Jack, Sean, and I spent the next day with senior managers from each administrative function and region. I structured and facilitated the discussions.

2. Each partner summarized the previous day’s discussions, including the discussion of Will’s rage. Then, one by one, around the table, each executive spoke on each issue, and then each executive was summarized by a partner.

3. Interruptions by Will and Jack were discussed first. Both expressed surprise at the plethora of examples. Jack took the lead summarizing, inquiring, and then apologizing. Will followed. All agreed this was a priority fix.

4. Will discovered that everyone had stories of his anger.

a. Jack repeated incidents he had related the day before. Alice described Will’s abuse of Sean. Lee described his abuse of Sean and Alice. Sean described abuse of Ann, Lee, and Alice. Sweating through his shirt, wagging hand and foot furiously, Will listened and summarized.

b. Alice said she did not believe Will would change, and she was worried what Will would do when Don [the consultant] was not around. Lee, Ann, and Sean agreed with Alice.

c. All agreed that if it happened when Don was not around, they would discuss it when he was around.

d. Alice said that Will’s effort during the day led her to risk saying what she did [in c., above]. Lee, Ann, and Sean agreed. Jack was impressed with Will’s commitment.

5. Month-end reporting was discussed at length. Lee described the various errors made on the month end forms. Regional heads summarized each complaint Lee described. Improving the timeliness and quality of month end reporting was assigned a top priority.

6. Finally, we discussed Lee and Alice.

a. Partners and executives described how they worked together. Consequences were assessed. Both Lee and Alice summarized.

b. Lee and Alice each shared what she valued about the other and what she wished was different. Each summarized. The team agreed to discuss Lee and Alice at every staff meeting until things improved.

The Next Six Months
1. Partners, senior executives, and I met for a day and a half, every other week, for three months. Then we met monthly for three months.

2. Prior to the first staff meeting, the partners and I held an all-day liquidity meeting, at which the cash requirements for every property were established.

3. Once a month, before the staff meeting, the partners reviewed all flagged properties and cash requirements.

4. At every staff meeting, we addressed Will and Jack’s micro-management interruptions, Accounting’s reporting requirements, Lee and Alice, and Will’s anger.

5. Each incident of micro-management by Will and Jack was described, summarized, and discussed. The unintended negative consequences were assessed. Acceptable alternatives were agreed to. Incidences of micro-management declined steadily over the next twelve months.

6. Property reports that did not satisfy Accounting’s needs were distributed and discussed. Misunderstandings, competing demands, and conflicting requirements were uncovered. Solutions were designed and implemented. Accounting reported dramatic, continuous improvements, from the start. As the Northwest region’s reporting improved, so did its relations with Accounting and Transactions. Six months later, Accounting announced that all regions satisfied their month-end requirements.

7. Each unsatisfactory communication between Lee and Alice was discussed, with each summarizing the other. Both reported exhaustion after these discussions, which neither liked. But both said they were necessary and valuable. The frequency and severity of their private complaints and public feuds declined steadily over the next year. Each expressed appreciation for the other’s effort.

8. We examined Will’s fits. Witnesses and victims shared their observations and emotional responses. Will summarized. Often, he would start to object, and say that was not how he remembered it. I reminded him that when we are hypnotized by our anger, we remember little of what we do. All said Will was having fewer fits and expressed appreciation for his effort.

9. Five months into the project, during a meeting with some of their bankers, Will humiliated Sean. All who witnessed it were horrified, including the bankers. Lee, Alice, and Ann witnessed the incident and were angry with Will. Days later, at the next staff meeting, when we tried to discuss the incident, Will refused to acknowledge his anger or his actions. He discounted what others reported. He refused to summarize. Everyone left upset.

10. I was a guest in Will’s house. That night, before bed, we met, by chance, in the kitchen. We were both still upset. We should have said nothing. Instead, said something, he discounted what I said, and I pushed on, summarizing what others had said. We ended still upset. The next day Will failed to show up for the staff meeting. Everyone felt demoralized. That was how the first six months ended.

We took the next three months off.

The Second Six Months
Will refused to work with me any longer. I continued to work with Jack and Sean. Despite not working with me further, Will continued to reduce the frequency of his angry tantrums. Two years later, a close associate of Will and Jack said that the change in Will, and the improvement in his relationship with Seam, was a miracle.

We turned to property marketing. Sean, Ann, and Tony formed the Property Marketing Team. Ann supervised Southern Region property managers. Tony, a recent college grad and old family friend, was new to Sean’s staff. We began weekly phone meetings. We looked at each property in the region, going into detail on those flagged by Tony.

We invented as we went. When we started, the data used to make marketing decisions was incomplete and unreliable. We refined the data we wanted to see and how we used it. Tony was assigned responsibility for collecting the weekly marketing data. He was given a bonus pool to distribute at his discretion. He learned to give useful feedback. Within two months, all properties were reporting on time with acceptable formatting and accuracy.

Better data produced better decisions — reflected by improved net to rent. We uncovered gaps in the procedures and training of rental agents. At first, we corrected these one at a time. Once we saw the larger picture, we instituted formal training. I took the lead in writing scripts for the phone, visits, tours, and closings. Agents role-played the scripts and then received feedback from the staff and other agents. The training, designed and run by me at first, produced improvements in net to rent, as well. I trained Tony and Kris to take over the training from me.

Transforming Competing Organizations Into A Cooperative Entity While Increasing Internal Customer Support

Background
The Corporation was large cap, well-known, and high tech. They were making the transition from selling boxes filled with electronics to supplying enterprise systems integrating a myriad of boxes.

Two next critical milestones belonged to R&D, and were assigned to Chip. He had to build an operating system that integrated the product lines of the three biggest business units. Then he had to get the units to adopt his system.

Each business unit had its own systems lab. The labs were in New England, northern California, and southern California. They had always competed, sometimes bitterly. Each did the same thing using a different technology. All three were assigned to Chip, forming a new center within R&D.

The lab managers for New England and southern California had a history of personal animosity and professional competition. New England was led by Gail, who was charismatic, very smart, fast on her feet, politically savvy, and always gave as good as she got and defended her people to the end. Clint led southern California. He was Old South, with stately manners, an attractive drawl, and high nervous energy. He was very smart and a male chauvinist. Gail and Clint were not yet talking to each other.

What Our Survey Uncovered
Inside Chip’s Center
Six months after Chip inaugurated his new center, we did our first survey.

Morale was high in two labs, New England and Southern California. Northern California’s morale was a liability, harmed by their anger and frustration at the lack of interest in their expertise and technology.

Across all three labs, support for Chip’s leadership and strategy was strong. Chip was loved by many, admired by all.

Across all three labs, frustration with the business units’ lack of cooperation was rising.

Between labs, competition and hostility had ended. But the absence of useful communication and cooperation remained.

The Business Units
Six months after Chip inaugurated the center, most thought it was excellent technically. But most said that Chip and his people did not listen to the business units. “They talk at us. They tell us we are stupid.” Most said that Chip’s putdowns and insults were way out of line. Many wished that he would go away. Some said they hated Chip.

The performance of all three systems labs, on deliveries, was unacceptable. There was too much schedule slippage, too often.

Too often, Chip’s labs failed altogether to deliver the functions that were asked for.

Many said that Chip and his people did not understand the mission or markets of the business units.

What We Did
Chip and his staff met face to face every other week for a day and a half, for four months, and then monthly for eight months. The meeting site was rotated among the three locations. Chip and his senior team — Gail, Clint, and Bo, who was temporarily heading northern California as a favor to Chip — committed themselves to summarizing and asking clarifying questions before communicating their own points of view.

At every meeting, Chip addressed his bullying. He met with all key business unit executives and managers, in small groups. He prepared for these meetings by articulating, with his team, what he wanted to say, and ask, each group of customers. He role-played this with his team and me.

He shared with each group the findings that said he was insulting, dismissive, abusive, and a bully. He apologized. He said he was committed to change this. Then he described what he thought he did when he was being a bully and asked his customers about their experience of him. They described specific instances. Chip listened, summarized, asked questions. He reported experiencing waves of surprise, recognition, guilt, shame, sadness, and deepening inner commitment to face and master his bully.

During discussions with his team and me, Chip uncovered his belief that success went to the winner of the argument. This had worked well in graduate school and the research labs. He assumed it would succeed here. It never occurred to him that he might have to do something different. He saw that what had worked up to now in his career was not working now. At every staff meeting, Chip asked his team if they had heard anything from customers about his behavior.

After twelve months, I re-interviewed Chip’s internal customers. All gave him kudos for changing his behavior, for listening well, for understanding their business, and for giving sound advice. All said that they trusted Chip and his people to not put their own interests first.

We built Chip’s executive team. Issues at the interface between Gail and Clint were addressed at every staff meeting.

Each executive did her or his best to summarize and inquire before sharing her or his own point of view. At first, I coached and intervened in every exchange, helping them form these new habits. Over time, I intervened less, as the team habituated itself to the new skills. After nine months of practice, I intervened rarely.

At first, Clint and Gail needed four or five summaries before the sender of a communication would say, “That is what I intended you to hear.” By the end of the third month, Gail and Clint needed one and sometimes two summaries to hear the other correctly

During working discussions, everyone on Chip’s team maintained a disciplined focus on using the new skills. No insults, even cloaked in humor or double entendre, were exchanged. They appeared more relaxed and less defensive. All reported high satisfaction with the work they were doing and the progress they were making. All were surprised that applying the new skills took less energy than they were used to spending in their encounters. They began discovering shared values and common concerns. Their mutual respect grew.

When we were not working, insults returned. Improvements in non-working exchanges lagged behind improvements in work exchanges.

All was leavened by Chip’s unsinkable, hilarious humor. With only one exception, during the most stressful times, we laughed out loud together. This executive team was exceptional in it its ability to use humor as release and not distraction.

After five months of this work, we began observing improved communication and cooperation across lab boundaries, one and two levels below Chip’s direct reports.

I recommended that Chip and his team build a formal customer outreach program. This was a foreign concept to them. Customers they needed to understand and influence were identified, assigned to an executive or manager, and put on a regular outreach schedule. I encouraged them to practice their outreach conversations with each other, before talking to customers. At first, I coached and critiqued their practice, and encouraged them to do the same for each other.

The business units were now cooperating with Chip’s labs, who hey experienced as much more in touch with their markets and needs. At the next annual budget cycle, the business units gave Chip’s center 25% more money than he asked for. Three years later, all three business units had adopted Chip’s common standards, while using Chip’s operating system in all products.At the beginning, there had been lack of cooperation and understanding of each others’ roles among the labs and the units, and between Chip and the units.

Project management emerged as a problem during the process of working on the schedule slippage on deliveries. We surveyed each project with deliverables in the next 18 months. I generated survey questions and protocols, which they modified, role-played, and then used to collect data about the projects. During analysis, I offered templates and models to organize the data, and facilitated discussion.

I also offered templates and protocols when the team turned to the problem of supervising each project, and I facilitated their supervision. Over the next 18 months, they made every delivery and left their customers satisfied.

Don’s Interventions During Discussions
When anyone inquired, summarized, or responded to disagreement with humor, inquiry or summary, I acknowledged it. When Chip appeared to use humor in a hurtful way, I stopped the conversation and led a discussion on what had just happened.

When someone did not summarize before offering her or his own point of view, I interrupted and reminded them to summarize. When someone was interrupted, I interrupted the interruption, and encouraged others to do the same. Sometimes I had participants share what they were thinking about the interruption, and what would have happened if they had interrupted it.

When it appeared that a misunderstanding or disagreement was in play and unrecognized, I interrupted, articulated conflicting points of view, and encouraged others to respond.

I encouraged all to speak. I cheered, congratulated, celebrated, shared observations and sometimes gave advice. I encouraged them to take responsibility for their processes by making the same process interventions I was. Chip took the lead in this and the others followed.

My process interventions were applied, first, in the bi-weekly staff meetings, then in all center meetings I attended, and, finally, at Chip’s request, in meetings with business units. At the end of a year, my role as facilitator had become obsolete.

The Emotional Challenge
During the first two months, by the end of each meeting, Chip, Gail, Clint, and Bo all reported leaving these meetings exhausted and going to bed early. By the end of month two, all reported no longer needing extra sleep. By the end of month four, all reported leaving meetings exhilarated, and not tired. After twelve months, all agreed that this had been hard work and all were glad they had done it.

Anecdote
At our very first meeting, Clint was offended that I told Chip, in front of his team, that some in the business units hated him.

For the rest of the year, Clint followed my instructions while we worked and gave me the cold shoulder when we weren’t working. Relating to Clint was painful, challenging, and very hard.

At the last staff meeting of the year, Clint looked me in the eye and said, “I hate to admit this. But this was well worth the effort and I want you to come work with me and my staff next year. I am sorry I gave you the cold shoulder. I was really angry.”