Scandals and Company Culture

Shhh; Scandal and culture

Years ago a court judge in New Zealand was convicted of expenses fraud, the judge’s defense was that he hadn’t understood what the forms required. The public reaction was disbelief; either he just thought he could get away with it or he was too stupid to be a judge.

Since that early example I’ve looked at company scandals and the explanations given with a suspicious eye. In every case there are signs of how the company culture has effectively colluded around the scandal – it’s never just one person, it’s people turning a blind eye, it’s fear of whistleblowing, it’s the company culture, it’s the CEO.

Following the Enron scandal I heard a story, possibly apocryphal, of a manager who joined the company. Shortly after joining he heard that the ambitious revenue targets had been sent out across the company, requiring a jump of 25% in sales from one quarter to the next. At the end of the next quarter, to his amazement, those sales targets had been met across the company. He smelt something rotten and decided to update his CV and move on, he was not surprised when the Enron scandal broke. At the time it was the biggest corporate bankruptcy the world had seen. The Sarbanes-Oxley Act was passed to prevent scandals of this scale ever happening again (it didn’t).

In the Bernie Madoff Ponzi scheme his family members were involved in the company, including his brother who was appointed as Chief Compliance Officer. There are rules in many companies about potential conflict of interest when partners or family members work together.

More recently Wells Fargo came under fire for the cross-selling scandal where staff opened credit card accounts for non-exisiting clients in order to meet targets. In companies employees focus on what gets rewarded; and when enough pressure is applied from their bosses and their colleagues some will break rules to meet those targets. The company directors’ failure to halt the scheme was called “gutless” by Elizabeth Warren – the company maintains that the employees – all 5,600 of them (so far) acted alone. Either the bosses knew or they should have know, but so far none have taken responsibility.

John Oliver’s piece on the US police system exposes the myth of the “one bad apple” and looks at some of the systemic issues behind the fatal police shootings in the US. The failures of process and policy erode the public trust in the police, reducing their ability to their job.

The points John Oliver makes could equally apply to businesses.

  1.  Leadership
    Your leader must lead, her actions must demonstrate her high ethical standards and she should speak clearly and frequently about the company’s ethics.
  2. Monitor/Collect data
    We can now analyse data and patterns of performance, look at patterns and changing patterns. At a financial institute I worked at we were required to take a break of at least two weeks. HR sold it as being good for employees but my security colleagues gave another explanation, the two week break was long enough to highlight any odd activities.
  3. Avoid conflict of interests
    Keep review processes independent, external if possible. Don’t hire siblings or partners into the same field. Declare any outside interests that might raise a red flag – I wrote some columns for a (former) supplier. I had to declare this and I donated the income to charity to remove any potential conflict. Independent reviews make a difference
  4. Transparent Processes
    The more open you are, the more public you can be about your processes, the less opportunity there is for fraud or scandal. A very simple example; some universities are using blockchain to certify their qualifications, as that becomes a public record there is no chance to create a fake degree.
  5. Rewards
    Be careful what you reward, that will direct the employee’s focus and in extreme cases leads to unethical behaviour to reach stretch targets.
  6. Whistleblower procedure
    Even with all the best practices in place something could go wrong. Create a robust, independent whistleblower procedure.  Whistleblowers are generally punished for coming forward, be the exception.

Building a scandal resistant company culture is not easy; not doing so is expensive, even fatal.

Image: Shhh  |  Grey World  |   CC BY 2.0

Web Summit Highlights: Day Three

Final day at the Web Summit, it’s been a blast. So much knowledge and inspiration in one place, and I only got to experience a small part of it. Great organisation, all sorts of complex logistics thought through, some fantastic speakers. And Dublin, you were a charming host. Here are some of my highlights for the day.

What Millennials Want

millennialsAccording to the panel Millennials require marketing to be authentic “you can’t bullshit them”. Which raises the question – which audience could  you bullshit?

A large percentage of millennials feel they’re not represented in the media, which begs the question who is the media representing?

I admit I get a bit irritated with the discussion of Millennials, it tends to position them as special, but when I read an analysis of what Millennials need it seems to be what workplaces should be offering everyone.

Future of Mobile

Rather than talking about mobile, we should be thinking about mobility.

Advertising remains a challenge, looking to solve it with formats with a higher impact; specifically fullscreen video or large images making messages legible, (hmmm, what happens to my data roaming allowance if I do this?).

Still see tracking across platforms/devices as difficulty, but we know mobile has leapfrogged other media and is now ahead of radio, magazines and outdoor video.

Mobile is already the primary method of communication with clients; eg in banking, where people visiting branches one or two times a year, online twice a month, but may use their banking app

Digital Marketing is Dead

This was more of an argument against creating silos in digital, something I find easier to agree with, and it contained the quote of the day

User experience is like fairy dust – sprinkle it on everything

You can see the whole presentation on slideshare.

Data of Media

A discussion with Sarah Wood (Unruly) and Rachel Schutt (data geek at Newscorp) about the need to create a culture of using data, not just bring in data for the decision moment.

Ongoing analysis by unruly shows that the key metric for sharing is the emotional intensity of a piece of content. It beats out do good, look good, funny, kudos, or status. Next challenge is connecting that emotional intensity to the ROI of a piece of content.

Not Impossible Foundation

How do you solve the world’s impossible healthcare problems? One by one.

The Not Impossible Foundation crowd sources ideas and builds sustainable solutions – like a 3D printed prosethetic arm for Daniel, a young man in Sudan. They didn’t just solve the problem for one man, they trained local technicians and left the equipment at a local clinic so more people can be helped.

I love it when technology changes lives in such incredible – but not impossible – ways.

Dharmesh Shah, Hubspot

As Hubspot grew there was a need to define how they worked, what the company values were and what that meant to the company. He began by thinking this was easy, but it became one of the hardest things he’s worked on.

Along the way he realised that culture  grows organically and it’s hard to define as he put it “the first rule of culture – you don’t talk about culture”.

Eventually the Hubspot culture code was developed, which has become one of the most read documents on organisational culture on the internet. It’s defined as “part manifesto, part employee handbook, part manifesto of dreams”, take a look – it describes a place we’d all like to work.

Why spend time on culture?

  • Culture is to recruiting as product is to marketing – an amazing culture is what you need to attract stars.
  • Peers beats perks – having great colleagues is more important than any sort of perks.
  • Product is easy to copy; culture is hard to copy and it’s therefore is a barrier to entry for competitors.

It was a great presentation, but my favourite part of the presentation and of the culture guide is the principle that you should have as few rules as possible – expect employees to use good judgement. My presentations on building social into a company includes the line “people are nice; you can trust them”.

Real Time Marketing at Coca-Cola

Coca-Cola use social media to do “real time marketing”, monitoring social media for insights and turning those insights into content to respond. They can also ramp up for campaigns around events. For example they had a team at the World Cup in Brazil made up of Coca-Cola employees and agency staff who could read social media data, create content, buy media. The team turned out 10 TV commercials, 12 infographics and 16,000 responses over the 32 days.

They see that the “always-on” marketing should ideally be done by the brand, not outsourced to an agency. It’s a big commitment from the company involving 130 people world-wide working on real time marketing. Having the right people in the team and in the room together means they can respond quickly. In fact the vast majority of content around Coca-Cola is created by fans, around 85%.

Is it “kids playing on social media”? was a question posed. The answer was a clear “no, these are graduates with expertise and the tools to do their job”. Good to hear someone busting that myth.

Ryan Smith, Qualtrics

The Qualtrics company is behind collecting all sorts of research and marketing data, including feedback on the conference. Their team was wearing T-shirts with geek slogans such as “I’ve got 99 problems but getting data ain’t one of them”.

The company started in Ryan’s Smith’s family basement, and it was a long time before they needed – or took – any capital. It’s a great “start-up to success story”, and my favourite comment from it was “Qualtrics aim to do hard things; and want their employees to emulate the competent – not the confident”.

Closing the Conference

The final session on the mainstage is a discussion about the future of music, entertainment and what technology is doing to that. It features Dana Brunetti (producer of House of Cards), Eric Wahlforss (co-founder of SoundCloud) and some guy called Bono.

The moderator cracks a joke about the new line up of U2, and the panel claim the instrument they’d play – I don’t think anyone volunteers to be the drummer.

The questions are serious and so are the answers, this is an industry mid-change, there’s room for new models. But as Bono repeats; the artist must be paid, they don’t believe in the freemium model. Turns out as rich as U2 are they didn’t give away Songs of Innocence. Apple bought it, and then gave it away.

It’s a good discussion, but a tiny part of me wishes the line up were a little different… and the band were playing.

closingAnd that’s it for another year. You can watch the day’s live streams by signing up for next year’s conference.

Massive thanks to the hundreds of people involved in the conference, you did a great job (but next year fix the wifi).