Stories From the Book

The Merchant of Fear
From Phil Nolan and Steve Featherstone

We have a horrible track record of investment planning. It has been going on long enough that it's become totally ingrained in our actions. Despite all the other changes we had made, this was something that we ignored, even though it was clear that we needed to deal with it to make the change effort really successful. We made excuses simply because the planning process cut across organizational units and the politics had become a huge barrier. So investments were not always made sensibly. 'I can't do my job unless I have this budget and these projects'. Well no, that's not true, but who wants to confront the problem if it's a powerful person and he's not the only person doing this. Push a little, and people dig in their heals. In an organization with a silo mentality, people often have little incentive to find a better way or to cooperate with each other.

This is where our 'Action Labs' come into play. Action Labs are cross-company project teams that are given an unusual amount of leeway and power. Members of an Action Lab work full time for a few months. So it's very intense. They have the right to talk to anybody they want, do anything they want. We say, 'no boundaries'. They work together all day long. They typically bond and listen more carefully to each other. So the person from one part of the organization starts to understand another part for the first time. They also become very candid with one another. As a group, they become more daring than any individual. With our encouragement, they start pursuing problems, start looking for solutions, in a way that just wouldn't normally happen on the job. We give them permission to be very creative and bold. Not all do so, but in some cases it's marvelous.

Our last Lab was set up to focus squarely on the investment planning problem. Eight people were taken off their jobs and put on this full time for six weeks. They talked to the CEO and the executive group, the heads of some of our business divisions, the people who reported to them, the people who planned the budgets and did all the analysis, even the people who type up the numbers and who have to keep adjusting the figures.

One thing the 'investment planning' team did was to make a video that made fun of how people behaved when they put a budget together. It was a lighthearted way of getting a very serious message across. The video was a skit with characters like The Merchant of Fear, The Glory Hunter and The People Protector. All were over-the-top spoofs of the types of behaviors that existed. Like all good spoofs, they hit the issues dead-on.

The Merchant of Fear would increase his own budget by drawing out and working off of people's fears. He would say things like 'we had better keep a bit of reserve in my budget - just in case'. If you ever tried to tackle a Merchant of Fear he would have at least 10 good reasons why he needed that amount of money to avoid having the company's network explode and kill one billion people, maybe more. 'We need to budget for these 5 things because we could have an incident that might blow part of the network up. Actually, now I think about it, we'd also better add these 2 extra things to the budget because what would happen if it were a building that went up? In fact, while we're at it, we might as well add these other 30 eventualities just in case we blow up an entire town'. And it wouldn't matter that 2 of the budgeted items would have been enough. He would always have an answer. 'If you don't want to put this amount in, then fine. But with a liability of £20,million a day, if something goes wrong we'll end up going out of business pretty damn fast'. He always had answers that were persuasive to many people.

The Glory Hunter was chased the high profile management initiatives that could bring him fame and fortune. He focused on whatever was sexy at the time. He'd go after an 'important' consulting project that had just been started or a 'key' task force led by the CEO. He'd love a major engineering project where he could introduce new technology that would guarantee him a place in the company's historical archives or his picture on the wall. He would not share credit nor do what was necessarily in the best interests of the company. He would just demand budgets for what made him look good.

The People Protector didn't want glory and wouldn't necessarily pander to fears. His sole objective was to make sure that there were enough projects for his staff. If these could match their skill sets and happen near their home base, then all the better. Regardless of what work was actually needed, the People Protector would just be calculating how many projects would be required for his 200 people over eight months and then set his budget accordingly.

The Action Lab team showed the video of these characters to the top 20 or 30 executives, the very people who were being spoofed in the film. You can imagine the reaction!! There was total shock horror. Immediately everyone was trying to guess who the characters had been based on in real life! Somebody even asked 'is that meant to be me?'! Something like this would never have been done in the past, never been remotely considered. Yet with the Labs and the support from the CEO, it happened.
I think top management burned the film. But it worked. They still occasionally refer back to the characters. 'Watch out, this is beginning to look like Merchant-of-fear talk.' It helped stop the old investment planning game in its tracks by exposing the types of behavior that went against the new more shareholder-oriented vision.

We have found that not everyone works well in an Action Lab environment. You need people who are willing. You can't coerce people into doing something like this. They also have to have the technical knowledge or base of experience to work on the problem. They need to be willing to challenge the status quo for good reasons, willing to ask 'why', to challenge the rules instead of just accepting that something is set in stone because it's always been done that way. And they have to be releasable. They need to be able to leave their desk with the agreement that they won't be back until the Lab is over. This last point is a real challenge. The types of people we need in Action Labs are not those who are easy to free up.

We have done ten of these labs. Not all have been great. The ones that have not worked so well did not have a clear focus or objective at the start. We've found if the groups do not work well because of the people dynamics, you have to make a decision there and then if it's salvageable or not and go with it. But most Labs have been very useful, and their actions have made a difference.

One of our biggest regrets with the last lab is that we didn't find a way to make a copy of that video before it was burned!!!