The retail business is struggling. The pharma industry is struggling. The food industry is struggling. The automotive industry is struggling. Banks. Insurance companies, … The world in which businesses have to develop revenue streams is changing at lightspeed and many owners and C-level leaders have no clue how to react and if they do, most of their efforts come too late or are based on an old context and using old world methods. They are not in tune with the actual situation and do not contribute at all to defining a strategy for The Day After Tomorrow.
Customer behaviour has changed dramatically because of the availability of new digital tools and channels and the way companies like Amazon, Uber, Facebook, Spotify, Netflix, Google, Alibaba… are constantly satisfying the basic emotions of the customer by creating a better interface and turn it into an even better FEAST time and time again: Fast, Easy, Accessible, Simple and Tempting. The way many traditional companies are trying to tackle these devastating effects, is what killed Nokia and Kodak and what will kill many companies in the next decade.
I call it the Chernobyl Syndrome.
How can you detect the Chernobyl Syndrome? It’s actually pretty easy.
In my previous blog I told you to go and sit on the beach of Nazare, Portugal and observe the surfers. A friend sent me a PM saying “nice story Rik, but do you have something closer to home that can be inspiring? I don’t have the time for Portugal.”
Yes and no. I do have something you can do at home. And no, it is not inspiring. On the contrary, I may be extremely frightening and it can even become a life changing experience. So beware. If you are not willing to change, stop reading here, but remember, “We do not have to fix what is still working” is not the best business idea, believe me.
Are you still there? Good.
I have a simple test for you that you can do from home. All the tools you need are a comfortable couch, an hour or so of your time, a drink (if you don’t mind alcohol, I would recommend a beer or a wine, to ease the nerves a bit) and some snacks like nuts or chips to keep your stomach busy. And you need a streaming service. Yes. We are going to binge-watch.
Now sit back, take a very deep breath and watch the first episode of that terrifying series called “Chernobyl”.
Pauze. (you should be watching, not reading, see you in an hour).
Ok. Here you are again. I know, you are probably still trying to recover.
It is pretty breath-taking isn’t it, that horrible story about the explosion of reactor 4 of the Chernobyl powerplant on the 26 April 1986 and how the whole management was completely incapable of doing what maybe could have been done. It is dark. It is devastating. You need some time to digest it. How the hell could this happen? Could it happen again?
I will not give you the time to digest it, though, because I have something I want you to do straight away, while the emotions are still fresh and lively
I want you to think about this:
“Does the way that the Chernobyl disaster was being ‘managed’ remind you in some way of how your company is dealing with these fast changing and devastating times?”
If the answer is “yes” or even a “maybe” or “in some aspects”, then scream like a character in ‘The nightmare on Elmstreet’ horror franchise and run away from that company as soon and as hard as you can. Run and don’t look back. Write your letter of resignation today. Your company is doomed, but you do not need to die like those poor sods at the Chernobyl plant, doing useless stuff that leads to nothing at all, until you die a terrible death. Chernobyl can happen again. As a matter of fact, it is happening in thousands of companies as we speak. Maybe also in yours. Run baby, run.
What can we learn from the Chernobyl Syndrome Culture?(I already coined it, sorry).
What happened in Chernobyl?
A (most probably) very capable and knowledgeable management of well-educated engineers was completely incapable of dealing with the devastating situation. The one and only reason – for their complete blindness for reality and facts and for their flabbergasting lack of targeted actions – was the culture of that nuclear plant. Culture eats strategy for breakfast, but in this case, The Chernobyl Syndrome Culture kills companies like the most horrifying serial killer (or a burning nuclear plant) kills people.
These are the devastating characteristics of the Chernobyl Syndrome Culture (the things you better not recognize in your direct environment):
One directional and top down
The top decided and those decisions cascaded downstream. One directional. Senior managers received instructions from the authorities and middle managers received instructions from the senior management and the operational managers received instructions from the middle management and the only thing they all needed to do was to simply obey and follow the instructions, even if that literally lead to a useless and certain death.
Strictly driven by rigid processes and procedures
Nobody actually decided. The processes and procedures were leading. Nobody was supposed to actually think. The management model was carefully recorded in a complex set of processes and procedures: these scripts were the only guidelines to be followed. There was absolutely no room for any alternative script or improvisation. The explosion of reactor 4 was ‘an impossible’ happening and as such it did not fit any script. So management kept using processes and procedures that by definition had no relation to the reality out there.
Management by fear
Operational people were afraid to tell the truth to the middle management that was afraid to tell the truth to the senior managers that were afraid to tell the truth to the authorities and those that dared to open their mouths were being told to shut up in the most threatening way.
Inside-out thinking based on assumptions
Because an explosion ‘was completely impossible’ in combination with the fact that outside-in info had no way to travel upstream due to the one directional top down communication and the fear of breaking rules and telling the inconvenient truth, the management never even considered the real cause of what was happening and all outside-in facts were simply ignored or overruled.
It is right to “not fix what has not been broken”, but first of all you need to make sure that what you think is not broken actually is.
In the end, at Chernobyl, it was not a matter of not knowing what you do not know, it was a matter of not wanting to know what you know.
How Nokia lost the smartphone battle
Why am I so convinced that the Chernobyl Syndrome is a clear indication that the company may already be in the middle of a Chernobyl doomsday scenario, or is heading for one? Because the parallels between Chernobyl and Nokia being disrupted by the smartphone, are way too obvious to be ignored.
In order to understand the rapid downfall of Nokia, from its position as a world-dominant and innovative technology organisation, Tim O. Vuori, assistant professor in strategic management at Aalto University and Qui Huy, Professor of Strategy at INSEAD Singapore conducted a qualitative study. The results were published in the 2015 paper Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle.
The study is pretty clear about the why: a culture that was inside out and top down, driven by rigid processes, assumptions and fear.
The researchers refer to it as:
“Organisational fear grounded in a culture of temperamental leaders and frightened middle managers, in which the middle management was scared of telling the truth because they feared being fired, the top managers were afraid of the external environment and not meeting their targets and executives were afraid to publicly acknowledge the failure of the system. Top managers intimidated middle managers, so top management was lied to by middle management who felt telling the truth was useless.”
There are many examples of Chernobyl scenario’s in the very making out there, but I will not mention one by name. Companies and their leaders know. They just don’t want to know. That is very Chernobyl-like. Know what you know, but pretend you don’t know what you don’t know.
Digital and digital players have changed consumers, and society. The old culture that helped leaders to manage companies the old way, will not help them to face the aggressive changes of the future. They need to develop new strategies and a new company culture in order to survive.
I will write two more blogs on this subject.
In “The Chernobyl Culture and how to change it” I will elaborate on the lessons learned and how companies like Microsoft have successfully changed their culture and in “Curiosity did not kill the cat” I will zoom into a new KPI for new normal companies: the Net Curiosity Score and why that is a life-saving metric.