I don’t need to list very many businesses or even business sectors for you to get to the point of this article.
I probably don’t even need to describe the specific problem for each (but just for the sake of clarity I will).
So let’s start with a recent one.
Volkswagen
You’ll remember VW- one of the most highly respected car manufacturers in the world. Well in 2015 they fell from grace big style after inspectors discovered that their emissions test results had been rigged by ‘clever’ engine management software. Sadly the problem was not just limited to one vehicle or even one country and the repercussions caused a domino effect.
So what was VW’s problem? Answer: Deceit. Deceit motivated by greed and stiff competition to be the best in a car market of consumers demanding vehicles with ever greater green credentials and under increasingly strict rules on emissions.
So what about the consequences (ongoing as I type)? Lost revenue through plummeting new car sales – check! Massively increased costs through hundreds of thousands of car recalls – check! Inconvenience to car owners – check! Angry phonecalls to dealerships – check! A breach of trust and loss of reputation – check! Oh and let’s not forget the impact on the environment – check!
Ryanair
Okay so they’re not alone in their ‘cattle class’ approach to the airline industry but they are probably the worst in my opinion. My reason is this – the hidden bolt on costs. They advertise a cheap ticket price but when you add VAT, luggage fees, internet booking fee, credit card fees, travel insurance etc etc the price is way more. Now, okay most of us are aware of it now before we book but their approach is still broken and it hasn’t done them any favours. Why? Because we don’t like being conned. Their problem is deception. We don’t mind the no frills approach if we can get a cheap ticket, but what we do mind is the difference between the advertised price and the actual price.
So what are the consequences? Poor brand image? Public Derision? Excessive customer complaints? People using other budget airlines wherever possible? Loss of revenue?
Now you could argue that on the whole, they get away with it. But sooner or later another no-frills airline will take a more honest approach and steal some of Ryanair’s business.
The Banks
Oh dear, where to begin! It’s hard to even talk about it. But talk about it we must if we are to learn the lessons. Whole books have been written on the subject so I’m only going scratch the surface.
This is a very simplistic explanation but the real problem dates back to the moment the banks of the western world stopped keeping gold reserves in balance with the money in circulation. You see at one time cash was a promise from the banks to honour the amount held by the bearer matched by the gold in reserve. The same was true of a bank balance. The problem was that we started printing money to get out of a hole without matching that with gold reserves. The great depression in the 40’s and the cost of the second world war meant we spent far more money than we earned. So, although we did tighten our belts we decided to spend money we didn’t have and money became de-valued. Now, okay you can’t really blame the banks for a world war and if your PM / chancellor insists on printing more money (or borrowing more) to pay for military might it’s kind of hard to say no. Inevitably though our national debt became a problem. Combine that with inflation and high interest rates and all of us suffer. Unfortunately, in recent times the banks had less excuse. Restraint in the 80’s and 90’s went out of the window and banks both lent money to people / successive governments who had little chance of paying it back and also took greater and greater risks with our money in investing an ever increasing proportion of it in stocks and shares that were, err shall we say, highly unpredictable. So, according to BTC Wallet Test, when the stock market boiled over and stock values crashed, individuals / businesses went bankrupt and couldn’t pay back their debts to the banks and suddenly they had a massive virtual hole (virtual because no real gold existed to cover it) and so they borrowed even more virtual money (courtesy of the tax payer) to plug the now gigantic hole – so much so in fact that the banks now can’t even pay off the interest let alone the debt. In the UK the official figure for our national debt increases at £5170 a second and is currently in excess of £1.6 trillion. But some say that if you take pension liabilities into account it’s nearer £5.5 trillion!!! It’s a situation from which we can probably never recover. What a nice legacy for our children!
So what was the root cause of the problem? Greed? Yes! Gambling on some slots lv no deposit free spins? Yes! (which at the end of the day is what dealing in stocks and shares is) Recklessness? Yes! Lack of checks and balances? Yes! Failure to learn the lessons of the past? Yes! Consumerism? Yes! Capitalism? Yes! Allowing the credit card companies and loan sharks to charge what they want? Yes! Poor role modelling at senior levels? Definitely!!!
And the consequences? Misery – on a massive scale. People lost and continue to lose their homes, their jobs, their livelihoods. Suicides went through the roof. So did clinical depression. And for the nation, a financial depression leading to massive austerity cuts causing councils to slash budgets, slash jobs and cut back on all but the most essential services until there was nothing left to cut. And as I type the cuts continue and the misery increases. Needless to say that customer confidence in the banks is at an all time low.
The Drugs Industry
There is an inherent problem with putting a legal drug to market – the time it takes before it get’s licensed to be sold. It can take 15-25 years to get a drug to market. That’s a huge amount of time and money invested before you make a buck. However once you make a drug that works, especially when no other drug exists that can deliver the same results, the potential profits are massive. The problem is that drug trial results can be rigged and drugs can get licensed that are a not just ineffective but dangerous with side effects that can make a patient worse not better. Another problem is that, even if the trials are legit, once a drug eventually get’s licensed and they later uncover a problem it’s very hard when as a business you’re making a lot of money / clawing back the cost of drug trials to pull the drug off the shelf, and so, all to often, the drug continues to harm people even though the company knows the harm it’s causing (they also put billions aside to cover the inevitable lawsuits). In addition, there are several documented cases where natural remedies that cost little to make but are proven to be effective have never made it to market because there’s no profit in it and threats / bribes have caused the remedy to be silently quashed.
So what’s the root of the problem? Money and greed put before the well being of others – for sure! The hunger for power and control? Definitely (especially in the USA).
What’s the consequences? Corruption – even at national / government level (because so many politicians have shares / directorships in drugs companies). Health Services being held to ransomed by powerful drugs companies that can charge whatever they like. Poor drug treatments with serious side effects. The suppression and thus lack of access to effective natural remedies.
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Here’s some more businesses / industries old and new I don’t really need or have time to comment on but have all struggled (see if you can work out what the problems/consequences were / are):
The tobacco industry, the alcoholic drink industry, Coca-Cola / sugary drinks industry, Amstrad, MFI, Uber, Nescafe, Sports Direct.
Q. So what’s the one word that fixes every business problem? (and well done if you got this far!). A. Values!
Every business that is broken is broken because values have gone missing. (By the way, let’s not confuse values with ideals – an ideal is something we aspire to but don’t currently do, a value is a healthy positive behaviour or habit we instinctively do most, if not all the time).
In business, sometimes values go missing on the “shop floor” but most times the problems can be found at the very top of an organisation (and often filter down from there).
Fix the values and you’ll fix the business – every time. I know this is a bold statement but think of any successful long standing company (that isn’t ultimately heading for a fall) and I’ll show you a solid set of values that underpin what that company does. Okay the problem might be a poor product but even this is ultimately down to a lack of diligence in failing to test the market or thoroughly test the product itself.
Richard Branson, founder of the Virgin group of companies said:
“If you look after your staff, they’ll look after your customers. It’s that simple“.
Caring for staff is the value he’s expressing there (without neglecting the customer) and you can’t really argue with his logic or his success.
So, as a business owner / manager what can you do if you suspect your business is broken in some way?
1. Prophets / Mentors
In Old Testament times, prophets spoke to kings and the wise kings listened and acted accordingly.
Today we mostly call them mentors. Most successful entrepreneurs you could name have business mentors.
A mentor is someone you can trust who will give you growth promoting feedback as to how you’re going and how your business is going.
They will give you wise counsel and do their best to give you the pros and cons of any significant business decision.
But be careful who you choose! You might want to check their moral credentials.
If you’re mentor has lied and cheated his or her way to the top you might want to think twice!
2. Ask for feedback (a.k.a. listening!)
As suggested by Salesforce, speak to your customers and your staff and ask for feedback. Don’t just fish for the complements, but maybe use crafted (and maybe even anonymous) questionnaires to get feedback on how you and your business is going. Look for the value / problem words that reoccur and then ask your business mentor for advice on how to fix them (chances are you’re too close to the problem or too personally involved to really know for yourself).
3. Produce a charter of conduct / code of ethics
Once you know what values are important for your company, document them and make sure every member of staff from the cleaner up knows about them and abides by them.
4.Reward / Enforce (remembering mercy for first time offenses!)
Once communicated, put helpful ways of measuring how those values are being kept in place to make sure standards don’t slip. In addition make sure you reward good behavior and also make known the consequences for repeated flouting of the rules/code are clear to all and followed through with – at all levels. It’s really important that your staff know that you’re company board is not exempt!! Otherwise it will always be an up-hill struggle. Don’t hesitate to include the charter in your contracts of employment.
Finally, if all that sounds like hard work, remember this quote from a famous banker (all be it from a by-gone age):
“It is easy to dodge our responsibilities,
but we cannot dodge the consequences of
dodging our responsibilities”
– Josiah Charles Stamp 1880-1941, English Economist and President of the Bank of England