Management

The American View: Double Indignity

People, business, and governments all manifest the same style of self-destructive rationalization. When forced to confront their mistakes, they spitefully lash out at others rather than accept the consequences. This irrational thinking can have grave consequences for everyone impacted by the organisation.

Ian Dunt’s 23rd August week in review column has been echoing in the back of my head for the past three weeks. Bear with me a moment and consider this opening paragraph:

‘Our behaviour has degraded badly. Over the last three years there's been plenty of time to mourn the loss of Britain's international standing and domestic stability. But there's something else worth mentioning: our newfound lack of grace, of basic respectability in the manner we conduct ourselves.

For my American readers, Mr. Dunt is the editor of politics.co.uk. Here, he was writing less about the Brexit mess and more about how said mess had damaged the UK’s long-term international credibility. To be clear, I don’t intend to weigh in on Brexit here; as a Texan, I don’t feel like I have any right to. As curious as I am about British culture and politics, I realize that I don’t understand the issue well enough to be sure that I’m not projecting American perspectives onto it. Moreover, I don’t want to offend. That said, I’m keenly interested in Mr. Dunt’s larger point on self-inflicted reputational damage. Here’s how he ended this column:

‘When [Brexit] fails, as it will, [PM] Johnson will revert back to his standard approach of blaming the dastardly Europeans, as he has always done before. ... Britain therefore becomes two things: desperate and disrespectful. We are at once obsequious and uncivil, like Basil Fawlty elevated to the level of international diplomacy. … There is no grace in that manner of behaviour, no respectability and no gravitas. Once this thing is over, with whatever economic and political damage it entails, that reputational damage will also last. We've made a fool out of ourselves and called it patriotism.

It doesn’t matter if you’re discussing international diplomacy, public relations, management, or child rearing; a angry emotional outburst is likely to do your cause far more harm than good. 

This thought lodged deep and has been nagging me ever since. This is individual behaviour that I’ve seen many times in the corporate and military worlds. When a senior leader makes an awful decision, they tend to lash out at others (e.g., competitors, suppliers, or their own subordinates) rather than accept responsibility. With individuals, I’ve always seen this as an ego-preservation tactic; if one can rationalize some sinister conspiracy as being responsible for an error, then they can avoid uncomfortable introspection … and need not make any meaningful changes.

That said, Mr. Dunt’s analysis made me consider how I’ve seen this same clumsy, disreputable, and often aggressively-confrontational approach manifest at the cultural level. Companies make bad decisions just like individuals do: sometimes due to a flawed outlook, other times due to poor decision-making. Sometimes out of ambition, other times out of fear. You can argue that organisations are simply collections of individuals and therefore should be considered such; I disagree. For a self-destructive decision to stand in a group of people who know better, some sort of cultural malfunction needs to overwhelm most or all of the group’s crucial decision-makers.

As an example of this, consider the wonder that was the end of Yahoo! Broadcast. I’ve written quite a bit covering my time there. Long-time readers are invited to skip the next two paragraphs that set the context for this story.

In a nutshell, famous American business mogul Mark Cuban created a small streaming media company called AudioNet back in 1995. He changed his company’s name to Broadcast.com in 1998 following tremendous growth, and sold his company to Yahoo! in April 1999 for a whopping $5.7 billion. I joined the company – then known as Yahoo! Broadcast – in September 1999 to build their in-house consulting practice.

The company had already tried to implement consulting with unqualified staff and had botched the job so badly that they had to dissolve the experiment and hire qualified outsiders to start over.

Long story short, we launched our new consulting product line in January 2000 and quickly achieved spectacular success. We booked $3.5 million in consulting engagements and successfully delivered on $350,000 of business within our first 70 days of operation. Considering our margins, and given that our ‘service’ line was focused on reducing costly friction for customers’ future streaming events, we paid for our entire practice in less than one fiscal quarter. Naturally, we were laid off (along with most of the Dallas staff) in April 2000, ending the experiment.

That’s what always fascinated me about my time at Yahoo! We had developed a winning product line with unmatched, proven profitability at a time when the mother company was desperate to find ways to claim any scrap of profit. Yahoo’s stock price had plunged 90% during the time I was there. Rumours of bankruptcy ran wild. The decision to kill the Dallas operation – and, effectively, to destroy the entire streaming business – made no operational, financial, or logistical sense. Our consulting team still had over $3 million in jobs contracted … Work that had to be delivered. Moreover, work with guaranteed profits that would help keep the survivors afloat for another year. Work that no one left in the company could deliver.

My boss James [3] and I both stressed during our exist interviews that this desperately-needed money was still on the table. There were no hard feelings over the layoffs. We’d be happy to finish the work as independent contractors. The HR people were grateful, as were the remaining business development people. We incorporated a business, bought some liability insurance, and filed the paperwork to become an approved Yahoo! subcontractor. Yahoo! had the ability to seize victory from the jaws of defeat … and, in typical Yahoo! fashion, botched it.

Mere days after we completed registering as subcontractors, the higher-ups at the Dallas operation stopped responding to e-mails and phone calls. Curious, we bought a few pints for our mates who had escaped the layoffs and learned that James and I were getting the silent treatment out of pure spite. The people left in charge had (so we were told) attempted to deliver on one of our consulting jobs and bungled it. They were furious that they couldn’t do what we did. Meanwhile, furious customers were being denied services that they’d already paid for. If ever there was a time to lean on your subcontractors to bail you out of a jam, this was it. Instead, they let their spite get the best of them and chose to write off $3 million rather than admit a mistake.

Owning one’s mistakes – let alone learning from them – was never the Yahoo! way.  

The rest of the operation was destroyed by 2002, making Yahoo!’s $5.7 billion dollar acquisition a catastrophically poor investment (and a running joke in the tech industry). You can see that same joke echo across the years in Verizon’s recent sale of Tumblr.com to WordPress; Yahoo! bought Tumblr for over a billion dollars in 2013, and now Yahoo!’s new owners had to discard it for a paltry three million dollars in August. Different people, surely. Same behaviour.

That’s where Mr. Dunt’s line ‘… our newfound lack of grace, of basic respectability in the manner we conduct ourselves’ resonates for me. James and I left Yahoo! with courtesy and dignity. We didn’t cause a fuss. We strove to remain on good terms with all of our former co-workers. We volunteered to help at a time when no one else could deliver the revenue that we knew – and they knew – they needed. There was no rational reason why the survivors would turn down free money. Yet they did. They became both desperate and disrespectful; a strategy that clearly undermined their best interests and poisoned what little was left of their organisation’s reputation in the industry. It was assisted corporate suicide.

That, in turn, got me thinking again about the circumstances that led to Yahoo!’s infantile refusal to accept help when offered. There were too many people left in the organisation who knew what needed to be done and were motivated to reach out for any life-line thrown to them. Yes, we’d certainly upset a few big-wigs back when we were on the inside; those malcontents were few and far between. They weren’t running the place. The people most responsible for servicing our consulting contracts were mature, emotionally stable, and pragmatic. There was no reason for them to listen to a few disgruntled nay-sayers. So … why did they?

Was it some sort of transmissible, memetic madness sweeping the halls? The sort of irrational exuberance that makes freezing people throw off their coats and race off into the teeth of a winter storm? Some sort of institutional death-urge?

Maybe. I’ve always suspected that it was more an act of cognitive dissonance; many of the survivors of the April culling had been forced to rationalize that the cuts were – despite abundant evidence to the contrary – necessary for the company to rebound. By rejecting everything that had come before the cull, they could divorce their self-image from the failures that had required the layoffs to ‘save’ the company. This rejection of everything – good and bad alike – allowed them to double-down on the company’s claims that cuts were healthy, short-term, and not at all an indicator of a failed strategy. The longer the survivors stayed on, the more they came to resent and reject any suggestion from the outside that they were following a doomed path. They were racing towards a cliff’s edge, and rather than listen to the voices telling them to brake or turn, they stubbornly mashed the gas pedal out of spiteful pride. Look where it got them.


POC is Keil Hubert, keil.hubert@gmail.com

Follow him on Twitter at @keilhubert.

You can buy his books on IT leadershipIT interviewinghorrible bosses and understanding workplace culture at the Amazon Kindle Store.

Keil Hubert is the head of Security Training and Awareness for OCC, the world’s largest equity derivatives clearing organization, headquartered in Chicago, Illinois. Prior to joining OCC, Keil has been a U.S. Army medical IT officer, a U.S.A.F. Cyberspace Operations officer, a small businessman, an author, and several different variations of commercial sector IT consultant.

Keil deconstructed a cybersecurity breach in his presentation at TEISS 2014, and has served as Business Reporter’s resident U.S. ‘blogger since 2012. His books on applied leadership, business culture, and talent management are available on Amazon.com. Keil is based out of Dallas, Texas.

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