Bad news travels fast in a successful organization.
An essential quality of a good manager is that he or she deals with bad news head-on, seeking it out rather than denying it. An effective manager wants to hear about what's going wrong before what's going right.A lot goes wrong in any organization: A strategy fails, a competitor does very well, you lose a customer. Maybe a product's going to be late, or it's not going to do what you expect it to, or you're not able to hire enough of the right kinds of people.
Losing market share is the kind of bad news that every organization can relate to. Maybe the competition is doing something very appealing or is gaining a certain type of customer.
You can't react appropriately if you aren't keenly and quickly aware of disappointing news. Everybody in your organization has to focus on it. Companies can be compared by how quickly they engage all the available intellect in dealing with a serious problem.
With bad news, there's a real temptation to say, "Oh, that's as much as I want to know about that! I think I'll go home now. I think I'll work on something else."
If a competitor introduces a super product or you lose a customer, you can't just put it out of mind. Ignoring it is the formula for decline.
When you lose a customer, it can be tempting to say, "That customer's not very sharp. They just made the wrong decision."
Meetings where colleagues try to explain away problems like that are the worst you can attend. But they are preferable to the meeting that isn't called because nobody ever told you something bad was happening.
I have a natural instinct to hunt grim news. If it's out there, I want to hear it.
People who work for me have figured this out. Sometimes I get e-mail that begins: "In keeping with the dictum that bad news should travel faster than good news, here's a gem."
I'm skeptical of good news. When somebody sends me e-mail about an account we've won, I always wonder: "There are a lot of accounts nobody has sent mail about. Does it mean we lost all of those?"
Unfortunately, bad news and doubts aren't always shared among the people in an organization.
Several years ago my company was one of several investing heavily in interactive television in the expectation that the market would develop quickly. Eventually there was a broad realization that the costs were higher and the customer benefits lower than assumed, and that interactive television wasn't going to come together as soon as or in the way we expected. But why did it take so long for us and others to figure this out?
There's a simple answer. We were blind to bad news. That can happen when competitors in an industry pay too much attention to each other and not enough to the overall market - or lack of market.
To a certain extent, a little blindness is necessary when you undertake a risk. You have to have a little suspension of disbelief where you say, "Hey, we're going to do this unproven product. Let's do our best."
But every once in a while, some part of your organization needs to evaluate whether or not there is really a market for what's been undertaken. It's hard to do. Would you want to be the one to call the meeting to say that the whole thing's a dead end?
In retrospect, I'm sure there were many serious doubts among members of our interactive TV group about what we were doing at the time. If we go back and look at the number of people who transferred out of the group, among other indicators, it becomes clear there was some knowledge somewhere that we were on the wrong track.
Unfortunately, the doubts weren't shared - or they weren't shared forcefully enough to register with me.
Once a manager grasps the reality of bad news, he or she must get it out quickly. The goal is to get it all out.
People in the organization will feel lousy and threatened by bad news, but that's OK as long as they feel it as a group. The group needs to react collectively. The people who are affected need to ask, "What really happened? What are the facts?" They need to study the situation intently.
Whether the bad news comes in the form of a realization or in the form of inroads by a competitor, the appropriate response is usually to change your product or service.
Communication and collective action are essential because the people who are out in the field where they can see evidence of bad news are not the people who will orchestrate the product response. It takes time and more than just a few data points to make sure it's the right response.
Once you've changed the product or service, you can spread the word about it and how it's going to solve the problem - how it's going to help make the bad news go away. That's good news, and it travels quickly in any organization, without any special effort on anybody's part.