1. The art of cross-company cooperation
The Good: Cisco Systems. To help ensure cross-organizational cooperation, the company changed its compensation system so leaders are paid not only for hitting their targets, but also on how effectively they collaborated with their peers. Plus, Cisco installed 120 “telepresence centers” (high-end video conferencing) and used Internet social networking sites to facilitate worldwide.
The Bad: The Federal Aviation Administration (FAA). Travelers last year saw a spike in missed connections, lost luggage and hours spent waiting on the tarmac. The problem wasn’t money (the FAA didn’t spend all the money it was allocated last year) or lack of know-how (current technology exists to solve many of these problems).
Instead, it appears the FAA is unable to break the gridlock among the key players. Big airlines, small aircraft owners, labor unions, politicians, airplane manufacturers and other parties fight to protect their interests and blame each other for the problems.
The Lesson: Shared goals and clearly defined roles provide the foundation on which cooperation and coordination can be built. Also, employees must be held accountable. That requires a combination of good behavior patterns set by company leaders, and systems that encourage appropriate behavior among employees.
2. Reach out to others for know-how
The Good: New York City schools. The city has been phasing out large failing neighborhood schools and replacing them with smaller schools that offer caps on enrollment and greater autonomy for principals. More parent involvement has been encouraged, too. Results: higher test scores.
The Bad: Merrill Lynch. Although top dog Stanley O’Neal is credited with boosting Merrill Lynch’s profitability, former employees point to a flaw in his style. He is said to be uncomfortable around people with views different from his own, and some report that he didn’t engage in debate with individuals who could have helped him steer clear of the subprime mortgage troubles.
The Lesson: Some business leaders view involving others in decision-making as a sign of weakness. Others fear giving up control. But even in a small business, it’s wise to seek out the perspectives of employees and outsiders.
Plus, involving others in decisions increases their ownership of the issues and helps focus them on generating solutions rather than waiting to be told what to do.
3. Control costs and continue to grow
The Good: Costco. The warehouse retailer is obsessive about keeping costs low. It doesn’t use pricey ad agencies. Signage looks like it came off a laser printer. And yes, there are no shopping bags. Yet the company hasn’t had a negative monthly same-store sales result in its 23 years. One key: Store managers are treated as entrepreneurs and allowed to make decisions that meet the needs of shoppers in their geographies.
The Bad: 3M Worldwide. After 3M introduced the Six Sigma method to get costs back in line, profits grew but critics say it stifled creativity. And as innovation slowed, 3M had two quarterly earnings misses. In response, a new CEO removed the obligation of 3M scientists to adhere to the Six Sigma objectives. Now it appears the tension between cost and growth through innovation is being treated as an “either/or” choice and not as an “and” option.
The Lesson: Cost containment and growth shouldn’t be treated as trade-offs. Finding ways for these paradoxes to coexist is essential for the achievement of consistent business results.
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