Chapter 8 Manana The Procrastination Stall Whenever I feel like exercising, I lie down and the feeling invariably goes away. --The late Robert Hutchins, famed educator who was president of the University of Chicago When the danger of action is greater than the danger of inaction, organizations are wise to take the time to assess the situation before acting. Unfortunately, the reverse is often true. This chapter shows you how to determine where immediate action is wise and how to organize to obtain the benefits of needed rapid action. Warning! Watch Out for Dangerous Delay and Risky Inaction The procrastinator (Exhibit 8-1) believes that if he or she does nothing and waits long enough, any bad situation will resolve itself. Or if it does not resolve itself, it will simply go away. Many even insist that procrastination is a form of work, explaining that they are letting their ideas percolate. With that point of view, they feel no guilt about any delay. The fact is, almost any direct action is better than no action. Usually, nothing much is lost in trying, and when you keep trying, you keep learning, especially from your mistakes. contrary, he'd discovered lots of things that didn't work. The natural tendency in such circumstances is to procrastinate until a better solution magically appears, but Edison didn't know the meaning of procrastination. He kept on experimenting until he succeeded. When fear is an element, that fear can create a procrastination stall that may lead us to disaster. In the 1930s, an American helium-filled airship was swept aloft by a sudden wind. It is told that the rope crew was carried away. Most let go right away and got off with sprains. Others held on until they lost their grip. Each time a man let go, the dirigible leapt higher. Those who hesitated longest fell to their deaths from hundreds of feet in the air. Don't Think Too Long About That Fear always springs from ignorance. --Ralph Waldo Emerson Fear and Trembling in the Executive Washroom Fear rules many business leaders and their fear comes in different guises. One of America's most admired CEOs only made acquisitions of privately held family-owned companies headquartered in small towns. This company had a very good success rate with acquisitions of all sizes and could have grown faster by buying other types of companies as well. But the CEO would procrastinate when presented with the idea of buying a good public concern. Colleagues said the CEO had an excessive fear of negative publicity. He feared that he might look foolish in the type of public scrutiny that follows an offer for a widely held public company. Hold onto that thought for a moment, and see if it could apply to you or your organization. It may be that the potential for embarrassment affects some of your decisions and behavior. Psychologists tell us that fear of public ridicule and of public speaking are among the most common and intense human fears of all. Another CEO operated the executive suite like a merry-go-round. He always had three or four people competing for every position. He fired the top person in each function or subsidiary operation every time a budget was missed for which the person was responsible. Unit heads frequently lost their jobs, especially during recessions. It turned out that the CEO had a great fear of being fired himself. By being tough on his people, he felt the board would be more dependent on him. As you can imagine, there was not much teamwork or sharing of information in this company. No one wanted to rock the boat. Procrastination became a way of life. Each business unit lost market share almost every year, and profit margins were weak and becoming weaker. Whenever the company sold a business, that business quickly became more profitable under either the same management or new management operating with less fear. Similarly, when major layoffs occur, many of the survivors feel worse than those who are laid off. They will do anything to please if they cannot easily find other jobs, including simply maintaining the status quo. A worker in one company watched as seventy-three people were fired from her department. Only she and four others remained. When the ax finally fell on her, she was almost grateful. The terrible strain was finally over. She said that she had done nothing novel or even new and had not improved her skills during the eight years that she survived. Procrastination became her major weapon as she temporized to put off the inevitable. (Incidentally, her former company still performs poorly and has since been acquired, leading to still more layoffs.) A different type of fear dogs those who aspire to be CEOs. Companies often pick two to five contenders and stage a two- to three-year "beauty" contest to see who should be the next leader. During that time, luck plays a role. Put yourself in that position. If your unit does well and no one else's does, you get to be the big boss. As you can imagine, almost no one in that position is going to try anything that might not work perfectly during the beauty contest. Key programs are detoured or put off because of the risks of failure. Imagine the subliminal message each of the workers is getting! Fear stalks the hallways while delay sucks black ink from the bottom line. It is far easier to stand back and let others be innovative. But that's the way to ruin, not to progress. One CEO took avoidance to an extreme. At a strategy session with the CEO's senior management, an executive shared a list of all the issues that the company had known about for five years but that had never been resolved. The CEO complimented the executive on his work and then picked up all copies of the document listing the problems and destroyed them. He said, "This information is too important to get out." But we know that the first step to solving a problem is to get it out in the open where it can no longer be ignored. But What If . . . ? Anxious business executives often connect their fear to everything that happens, not just those things that they should fear. For example, a company that had a lot of failures with advanced-technology products began delaying debuts and finally decided to pursue only low-technology products. Ironically, many of these advanced-technology areas in which the company had tried products later proved very successful--for other companies. The company had simply developed its products a little ahead of the customer demand. But they had exited the field before they could reap the rewards of their advanced technology. They had programmed themselves to fail. The product technology stepdown made things worse. The company's low-technology products were also unsuccessful. Talk It to Death I will never put off until tomorrow that which I can forget about forever. --Anonymous Some corporations create monuments to procrastination. They bury their problems in committees or hire outside consultants. These actions give the appearance of doing something worthwhile to resolve the problems. All too often, there is no actual plan, just a vague commitment to consider a plan. People within the organization know that something is wrong, but they get the impression that the identified problem need not be fixed right away. Employees relax, figuring it will not be disastrous if the problem is not actually addressed for six months or a year. Consultants frequently abet the corporate delays by setting up a game of musical chairs. They convince corporate leadership that the problems need new approaches. So they rework the organization chart. Everyone gets a new job. This is action, but it is not useful action. It is the "who's on first?" version of a procrastination stall, which is only good for delaying the time needed to solve a problem that threatens serious consequences. The board is happy because the CEO is doing something. And the CEO, just a few years this side of retirement, manages to avoid making difficult decisions that may cause him corporate pain. A Diversionary Tactic For a time, AT&T institutionalized procrastination. Instead of more seriously addressing important problems in the long-distance market, AT&T's Bob Allen diverted investor attention from the core problem when he made a spectacular acquisition. In doing so, he bought a company AT&T could not run, NCR (National Cash Register). Chairman Allen also hired a potential successor to placate the board of directors who nervously worried about Allen's procrastination. In retrospect, it seems possible that Allen had no intention of stepping aside. Allen fired his chosen successor peremptorily. But don't waste tears on the would-be Allen successor. The man won a corporate lottery. After just nine months in the wings, he was awarded $26 million in severance compensation. But that's peanuts. Allen's apparent procrastination-stall attempt to diversify when he should have focused more on the core business cost the company a king's ransom. The NCR debacle, its purchase at high cost and later sale at a lower price, cost AT&T more than $5 billion, not to mention that the takeover cost thousands of dedicated NCR workers their jobs. Stall Erasers Behold the turtle. He makes progress only when he sticks his neck out. --James Bryant Conant, American educator Practice, Practice, Practice: Success Through Simulation Some businesses try to determine why employees fear certain activities in hopes of discovering a method for overcoming the fear. Computer-based simulations help decision makers understand how to manage their businesses in turbulent times, deal with business and moral conflicts of interest, and make acquisitions at a reasonable price when the pressure is on. Those with irrational fears and those who work in situations where fear can be paralyzing are asked to do simulation planning exercises. When nothing is actually at stake, they learn to perform the feared activities without incident. For example, utility employees are put in a simulated nuclear plant and faced with a potential meltdown if they don't act rationally. They've already been trained to deal with crisis without fear. They become better performers in fact, like the pilot in a flight simulator who can practice difficult maneuvers on the ground. These days, even pilots of oceangoing oil tankers attend simulation schools, much as airline pilots have for decades. Every possible emergency is thrown at the oceangoing pilots. Later, when at sea and a real problem occurs, it is second nature for the pilot to do the right thing. The Titanic's crew could have used this training. Companies of every sort can do the same thing for their people by thrusting them into real-life situations in which errors are tolerated as learning experiences for workers and for the company. When simulations are based on issues your business actually faces, comfort and effectiveness grow. It is also helpful to talk to people at other companies who are good at overcoming feared activities. These outsiders can dispel concerns that are founded in dread but not in actual experience. Listen, the Answers Doth Bark! Wise corporate leaders keep track of issues as they arise to be sure that something is being done about them beyond simply creating a plan to do the plan. Effective cost-cutting programs have found that tracking suggestions from the date they are offered until they are dealt with--and with progress reviews along the way--is very helpful. A few intrepid companies go so far as to allow all their suggestions to be implemented automatically after a few weeks, if no one objects in the meantime. What is needed is a bias for action, with follow-up to understand how the measures are working. Do It Yourself Bringing in outside consultants can aggravate the procrastination stall in several ways. Not only does it give leaders an excuse to stall, it focuses the responsibility for action on outsiders. The CEO can blame the consultants for risky or unpopular decisions. This tactic is an unsatisfactory example to set for the company. It is better to be forthright and decisive: Handle the decision in-house and take the heat if any develops. A Foolish Consistency Can Risk All It's true, I'm a monogamist, but the first time I married, I was monoging with the wrong person. --Anonymous Avon was once one of Wall Street's Nifty Fifty stocks because it had churned out 15 percent earnings gains year after year and similar stock market gains for its shareholders. Its thousands of door-to-door salespeople could work for the company as long as they liked. No threat of downsizing here. But, as more and more housewives joined the nation's full-time outside-the-home workforce, the growth of this business that once made prosperous entrepreneurs of thousands of women faded like lipstick applied before morning coffee. When Hicks Waldron was named CEO at Avon, the Avon Lady was ringing the doorbell way more than the cash register. Avon was becoming a loser, not even earning its dividend. Still, Waldron promised publicly, "I'll never cut the dividend!" Whoops. It was soon clear that Waldron was out on a limb, a tiny one at the top of the tree at that. He could have dug in his heels and used a procrastination stall, thus wasting assets, or he could change his mind about the dividends and deal with reality. Waldron decided to play it smart. He looked for and found an innovative way to solve the problem. He and his investment advisers offered the widows and orphans (Wall Street shorthand for investors who live on dividend and interest income) a share-for-share tax-free swap for a new class of stock. The new shares paid dividends at the old rate and were set up to do so for three years. Shareholders seeking appreciation held the old common shares on which Avon cut the dividend. The income shares sacrificed some of the common stock's appreciation potential, but during a three-year hiatus, income holders had time to sell the special shares in an orderly fashion and reinvest elsewhere for income. The income shares then became the reduced-dividend common after the three years ended. By not letting himself be paralyzed by the fear of looking foolish, Waldron avoided a procrastination stall and found a 2,000 percent solution. Stallbusters In this chapter, you have learned a lot about how inaction can be worse than action in many situations. The next section will help you identify such circumstances in your own organization and create an appropriate bias for action. Action First Unfortunately, there is often little incentive for procrastinators to change. Contrast this with the circumstances of the oil rig worker on the burning platform towering over the North Sea. He's been warned that to jump is to die. Neither can he procrastinate without dying. He jumps. Incredibly, he survives the plunge. Creating a bias toward action, where inaction is more dangerous than any decision, is something that most organizations fail to do. Most organizations operate on the assumption that all action needs to be considered first. An interesting example in the late 1990s of a company that went from being biased toward inaction to being biased toward action is IBM. During the years when it appeared that IBM could do no wrong, the company fragmented authority and required dozens of people to coordinate with each other. Decisions were always delayed, and so were the results of the decisions. IBM found itself a weak follower in more and more circumstances. The new CEO, Lou Gerstner, changed things by personal example and by sharing values that emphasized taking personal, timely, appropriate actions. Those who persisted in the old ways soon found themselves looking for work elsewhere. If you think about how your organization works, you should be able to identify areas where action can precede in-depth analysis. Answering the following questions will help you identify those areas: When should the customer be considered right and receive immediate recognition and resolution? Let us consider a high-technology product with a high degree of technical content, such as a high-speed communications switch for sending data over telephone networks. You are now the customer, and you cannot send your data from point A to point B. As a result, your operations are all shut down until the problem is fixed. Clearly, you as the customer cannot solve the problem without the manufacturer, even if the problem is at your end. The manufacturer's knowledge is essential to your success. Advanced suppliers of such switches have responded to this circumstance by providing service people located at the customer's equipment site. When a potential problem is seen, the equipment automatically contacts the equipment supplier's on-site service person. In an ideal situation, the solution is found and the problem corrected before the customer even experiences a problem. In some critical applications, such systems have built-in redundancy so that the operation is routed around whatever is malfunctioning. If that sounds far out to you, long-distance telephone companies have had the capability for years to automatically route your calls around busy switches and circuits to reach the number you dialed. Beyond this example, the customer should also get assistance immediately whenever delay will be harmful to the customer or to the valuable relationship that you want to maintain with the customer. Recently, a financial planner told a story about how his clients call him to bail their children out of jail, to help them rent summer homes, and a thousand other tasks apparently unrelated to financial planning. The planner does these things willingly because each additional service helps cement the relationship and deepens the bonds of trust and mutual support. He is confident that he will get the business when more financial planning is needed by this or the next generation in that family. Of course, common sense should dictate the reasonable limits of taking such actions. On the other hand, there are times when the customer is obligated to pay for what is needed, for example, when the customer needs something beyond the bounds of the relationship or the business obligations. If a customer wants you to repair his or her car, and you are selling small amounts of pads and paper, you should certainly assist the customer to get help but expect the customer to pay the mechanic. In some rare circumstances, even that repair may be something you want to pay for. Some retail stores are so helped by having a reputation of taking goods back without question that there are stories circulating about women's clothing stores providing credit for tires that were returned--even though the stores did not sell tires. Don't let eventual payment solely determine the timeliness of your response. What threats to safety require immediate action? Certainly, safety always requires prompt attention. Sorting out who pays can be dealt with later. A national electric supply distributor has an interesting strategy. A task force at corporate headquarters monitors reports of possible killer storms. At some point before the storm hits, the company dispatches to the area an appropriately large army of trucks filled with portable generators and other electrical goods normally in short supply during emergencies. The concept is that the company's distribution centers are likely to be put out of business by the storm. Each truck is designed to set up business in a parking lot. Products are sold at normal prices, and on-site credit is granted without question. As a result, thousands of businesses and organizations have been able to get back on their feet faster, providing services essential to the community's health and safety, due to this company's remarkable service. The company reports that a large number of these customers become committed to it for life. "A friend in need is a friend indeed" is one of the values that this company practices to its own credit and benefit. If your organization has procrastinated about having essential supplies, remember that like emergency generators for hospitals, they can be lifesaving. What similar opportunities does your organization have to be of service in dangerous circumstances? What competitive actions require immediate responses through use of best judgment? The answer to this question varies a lot from business to business, but when a customer is being wooed by a competitor, the customer will normally expect that you will be able to provide a rapid response in light of their importance to you and relationship with you. Nothing can be more harmful than to get caught up in delays relating to your people not wanting to address the issue of a possible customer defection. On the other hand, if the competitor or the customer is merely faking interest in customer switching, then you are being taken advantage of. Policies can help a lot in a situation like this. The person hearing about the problem can have the authority to make certain concessions without further checking with headquarters as long as the proof of the competitor's action meets certain requirements (such as seeing a copy of a proposal on the competitor's stationery). When two people in different parts of the organization do not agree, when should one of them automatically prevail, when should an automatic rule prevail, and when would a coin flip suffice for the decision? Of course, ultimately you will have to decide for yourself which is which, but some examples may help. In the first part of the example, the two areas might be sales and manufacturing. Since neither area is in charge of the other, there is a turf issue here that can result in a procrastination stall if people avoid dealing with the issue. Who should automatically prevail when . . . That is a question worth a meeting by the two heads of the functions. To ensure the quality of the results, you might want to have someone participate in that meeting who understands the financial consequences of the decision so that an informed choice can be made. Perhaps sales should prevail when a large, profitable customer is involved. Perhaps manufacturing should prevail when manufacturing capacity is strained and quality may suffer. An automatic rule could be that whoever shows the most economic benefit to the company from their proposal should prevail. A financial person could be an arbiter. A coin flip is probably fine in situations where the issue is not very important either for the short term or for its precedent-making value, such as whether to paint a blue or a yellow stripe on the product. But such a dispute can have real costs in product delays if it is not resolved promptly. What problems should receive immediate attention because they almost always get worse if ignored? An excellent example of this sort of problem would be a new pharmaceutical product with unwanted side effects. Sometimes these side effects only show up after a new pharmaceutical has been approved for a certain use by the Food and Drug Administration. Let us say the product is supposed to help glaucoma, but more people using the product are having strokes than should occur among the patient population. The reasons for quick action should be obvious. If the pharmaceutical is contributing to strokes, it is easier to change who gets the product or how it is used than to rehabilitate people who have had strokes. In some cases, the people die and the loss is both permanent and unable to be offset completely to the patient's family. Second, the problem is likely to get worse as patients take the product for a longer period of time. Third, there may be other side effects that the company has missed. The stroke problem is a wake-up call to go back and review all of the data to see what else is going on. It's OK to Take a Chance on Action Many delays occur because employees are afraid that the consequences of mistakes will fall heavily on them or their careers. Downsizing and other cost-cutting phenomena have made this problem worse. To overcome the bias to play it safe, everyone needs to be clear about when they can and should act. Some hotel chains give a desk clerk authority to spend up to a few hundred dollars to resolve an issue that a guest brings to the clerk's attention. If the guest then compliments the employee to management, the clerk can receive an award for the action. How can people be encouraged to overcome procrastination? For the circumstances where you have decided that immediate action is appropriate and desirable, spell out who has authority to do what and be sure that punishment and negative feedback are banished for those who follow the spirit of the policy. Also provide an opportunity for positive recognition. Work with those who will have the authority in order to address their issues. Make them feel comfortable with the authority, and be sure they have the tools to get the job done. A good example of where this situation is important can relate to the use of complicated financial products that hedge against certain kinds of risk: economic (such as commodity prices rising too far) or financial (causing interest rates to be fixed at a certain level, rather than rising when general rates increase). Often these financial products work well in a narrow range of circumstances but can be a disaster for the company outside of that narrow band. The celebrated lawsuit of Procter & Gamble against Bankers Trust is believed to have involved some financial instruments of this type. As soon as someone in the company realizes that the financial instrument is dangerous, quick action is needed. Delay can expand a loss of millions into tens of millions. Since no one can forecast the future, you have no way of knowing if conditions will get better or worse, but you are probably better off not taking the risk. On the one hand, you take a sure loss, some of which may be recouped by continuing. On the other hand, you face a real risk of an enormous loss disproportionate to the potential loss reduction. Reward your people for quick action in these situations. A Deadline for Action Simply because inaction is not instantly harmful does not mean that you can dillydally. You can estimate how much your decision can be expected to improve by various types and degrees of further analysis and compare that possible benefit to the cost of delay. Then set a deadline for a decision and action that is shorter than the time a delay for analysis and decision making will use up. After all, we want to get some gain from our thinking. A good rule of thumb is to get the most improvement compared to the cost of delay. This viewpoint will bias you toward action, even when delaying. You may also find that you have made a mistake and an immediate decision will be more valuable. Imagine that you suddenly find yourself being sued by the federal government for all kinds of issues. The relevant attorneys offer a settlement that avoids large litigation costs and distraction. Your instinct may be to grab the deal. However, that can be risky if you do not understand the future costs of the settlement. Also, you may be able to negotiate a better settlement. Although you will probably settle the case, you would be wise to spend a little time first to understand your choices before taking the settlement. You may be able to propose something to the attorneys that is viewed as more favorable to them and that actually costs you less in future flexibility. Consider questions such as the following to help you frame how long you should delay: Worst case, what can a delay cost because of the amount of time needed to analyze the subject to different degrees and thoroughness to reach a decision? 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