The
Single Problem Wells Fargo, Samsung, and Chipotle Have in Common
There's a major issue here. One that countless companies fall victim
to every day.
The recent
scandal at Wells Fargo finally led to a result that many considered
inevitable: the
resignation of CEO John Stumpf.
The Wells
situation is certainly complex. On the surface, it's just the latest in what's
become commonplace today: evidence of systemic dishonesty and corruption in the
finance industry (and arguably, big business as a whole). What made this case especially intriguing, though, was just how
widespread openly deceitful practices had become, with thousands of employees
committing open fraud.
But there's another issue at stake here, one
that countless companies fall victim to every day.
Charles Elson,
director of the John L. Weinberg Center for Corporate Governance at the
University of Delaware, summed it up well in a recent
interview with The New York Times.
"Wells Fargo emerged unsullied by the
financial crisis and with a reputation for integrity," Mr. Elson said.
"That reputation was so hard to gain, so easy to lose."
Or, as you've probably heard before: Trust
takes years to build, seconds to break, and forever to repair.
We've seen some very successful companies
experience this recently.
For example,
Samsung has been fiercely battling to keep the catastrophe surrounding one
of its flagship smartphones, the Galaxy Note 7. After a number of phones
spontaneously exploded in August, the Korean technology company scrambled to
determine the cause.
But after
replacement devices the company shipped started blowing up too, Samsung decided
to pull a drastic (and unexpected) move: It
killed the Galaxy Note 7 entirely.
Then there's Chipotle. The fast-food chain
seemed to shoot up out of nowhere, quickly becoming America's new darling. Then, much
more suddenly, a series of outbreaks of food-borne illness stopped the company
dead in its tracks. Hysteria ensued, customers fled, and stock prices dropped.
Now, several months after the last serious outbreak, the company is still
struggling to win back consumers.
The Root Cause
On the surface, each of these companies are
suffering different problems. But we can identify a single root cause they all
share:
Leadership
ignored clear evidence of systemic problems for an extended period of time.
In Wells
Fargo's case, evidence indicates that management
became aware of serious problems years ago. Some employees reportedly wrote
directly to Stumpf, attempting to warn him that aggressive
sales goals were encouraging unethical behavior.
Regarding Samsung, shock and fire risks are
nothing new--although previous safety situations have involved products other
than phones.For example, in 2003 the company recalled
184,000 microwave ovens due to a defective part that caused them to "begin operation unassisted," resulting in
smoke or fire. Smaller recalls included 43,000
microwaves in 2009 and 20,000
washing machines in 2007, both for shock or fire risks.
And you might
be surprised to learn that Chipotle's first major setback with food-borne
illness wasn't in 2015. No, for that you'd have to go back to 2008, when the
chain fell victim to not one but two separate incidents, one
dealing with hepatitis and the other with norovirus.
Additionally,
internal problems with employees--including the nearly 10,000 workers who accused
the company of forcing them into unpaid overtime--may have contributed to a culture where leadership wasn't taken
seriously.
The Lesson
It may take only a few moments to do
long-lasting, possibly irreversible, damage to your company. But the problems
always start behind the scenes, and are often years in the making.
The key is for company leaders to continue to
identify weaknesses, and cultivate a culture of continuous improvement. Don't
just seek feedback; make sure you're listening to it as well.
This is especially important when you've
achieved a measure of success. Yes, continue to focus on what you're doing
right. But don't ignore the warning signs.
Because Rome may have fallen in a day, but it
started falling apart years earlier.
BY JUSTIN BARISO
http://www.inc.com/justin-bariso/the-remarkable-leadership-mistake-of-wells-fargo-samsung-and-chipotle.html?cid=nl029week41day13B
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