How the mighty fall
April 7, 2014 Leave a comment
Regardless of what your mission and vision statements says, if you focus only on making money, you will fail.
There have been instance after instance of organizations, especially the leadership, that focused on making money over doing what they were organized to do and then failed.
A lot of it boils down to corporate greed, but that isn’t always the reason.
I was just meeting with my country club’s manager and he experienced the result of the club focusing on the bottom line versus delivering great service and building relationships–their mission. For several years, club amenities were in serious neglect because everyone was focused on keeping their costs low instead of making the club a great place to be a member and thus making more money because people flock to the club. Two years ago, he came in and got rid of the bonuses to everyone for saving money and reinvested that money back into the club itself. This past year, they have made more money then they ever did.
Booz | Allen | Hamilton is one of the most recent mighty that have fallen to this focus on money over mission.
Several years ago, Booz Allen split their commercial and government lines. Commercial associates in Booz Allen made considerably more money because commercial accounts paid much higher rates. Government contracts required Booz Allen to hire lower paid employees doing the same work as commercial to remain competitive. The problem was that the government work was expanding at an alarming rate. This was the start of their demise actually…they just had no idea back then.
Booz and Company split off and became the commercial consulting firm and Booz | Allen | Hamilton continued as the government consulting firm. Their mission and vision was to “Solve their client’s toughest problems and deliver results that endured.” In a nut shell, Booz was a very high paid and effective solution provider and trusted advisor that put solutions in place that did not require the consultant to come back constantly, to have people in place implementing the solution, or require significant software warranties to keep the system running. You went in, fixed the problem, and left with it running without you.
You might imagine that, given how most contractors operate, many clients loved this model and would continue to call you back to help them solve your problems. In 2008, when I joined them, this was a great way to work.
However, the model was already changing. Even then I remember them telling us at Intro how they were different and that we were not a “butts in seats” contractor. The reason they were saying that then was because that is what we were becoming very quickly.
Over the next three years, their model evolved to building new work, building a team to support that work, maintaining the team, and then building more work. Basically, Booz wanted more and more steady income. This could have come from continuing to deliver the best work–what they were known for, but it was easier to hire people and put them in place as lasting solutions. This created quicker growth.
The problem with this model is it is just like everyone else’s out there. Unfortunately, when you compete with that type of model, the next time the contract is up for renewal, someone will always come in cheaper to win that work. Competing in this environment with this model is a downward spiral for the contracting companies, the employees, and the government…no one wins.
As you can imagine, people start fighting over work, cheaper employees are brought in with limited skills, they stop investing in employee talent development, and talented employees are pushed out the door.
You can only solve the toughest problems with really smart people and when you stop hiring, developing, and paying them, you fail to be able to deliver on your mission.
Regardless, the executives want to continue to make the same amount of money they always have, so they start cutting people from the bottom of the tier…the ones costing them money. Fancy layoffs, what they called furlough letters, started going out. The company stopped training. People got rid of others so they could rape and pillage their existing clients.
Out of the 60+ people I worked with on the Strategy and Organization team, about four still exist. Just this week, they made another drastic manpower cut and forced many people to take pay cuts and work longer hours. The mass exodus continuos.
Now there are those that will blame the economy, or government spending. I don’t buy that. When all other contractors were suffering in 2008/2009, Booz was growing at a double digit rate. They were growing because many people still focused on the mission and vision then. However, as the new model really took hold because it was how everyone was rated and promoted, their growth quickly came to a halt. This drove poor decisions and even some illegal activities, which they were caught doing. If they stuck to their mission and vision and their original model, they would still be very strong today.
This is the same old story played out over and over. What will actually happen is one of two things…
1. They will continue to thrash about like and tree trying to save the dying heart, cutting off limbs in spite of itself, until they simply go bankrupt and this 100 years old company dies.
2. Or, the CEO is replaced with an outsider who gets rid of all the crap executives, cuts everyone’s pay, and reduces the organization to a manageable amount so it can refocus on the original mission and vision.
Either way, people on all sides will lose because several years ago greed overcame mission and vision and the poison slowly took hold.
And this boys and girls is how the mighty fall.