A CFO's Strategy for the Human Side of Change

Journal for Quality and Participation, The, Fall 2005 by Lebow, Rob

This is the story of Tom Hastings, a recently promoted executive with new ideas on how to improve his organization. Read along, and learn how Tom led his staff on "A Journey Into the Heroic Environment."

A Sense of Foreboding

Tom Hastings was an important fellow these days, having recently received a promotion to chief financial officer (CFO) of one of the fastest rising biotech companies, Applied Industries. His financial training was pretty traditional; after his short Navy pilot stint, his early career path was through one of the "Big Eight" firms - that were now down to the "Big Three." Even with all his experience, his new job was making him uneasy. He was concerned that the company's focus was more on its stock price than on its business and customers.

In the back of his mind, he kept thinking about a passage from the book, Lasting Change: The Shared Values Process That Makes Companies Great, which he kept on his desk. He would glance at it from time to time. Having read it a dozen times, he nearly could recite it by heart. The authors had written, "In 1985, a 747 jumbo jet crashed in the mountains outside Tokyo's Narita Airport, the worst crash in the history of aviation. After an extensive probe, the investigators found the pilots had been highly skilled, and apparently no flight errors had been made. The weather had been clear, no 747 had ever had a similar accident, and no errors had been made by air traffic control. To add to the mystery, aircraft maintenance had been performed as required. Yet, a recently repaired section of the rear fuselage had ruptured, knocking out the elevators and vertical tail section, taking with it the ability for the pilots to control the aircraft."

"After the crash, an investigation ultimately placed blame on the 'system.' Put another way, the investigators concluded that the fault lay in the lack of accountability. The report said, 'In the end it seemed clear that each individual with a maintenance role had done his or her job, but that no one had been assigned maintenance responsibility for the entire plane. In their system the plane was just a number without any ownership.'

"To each staff member, this plane had been just a job, a checklist between breaks and lunch. The report went on to say that no one had taken any short cuts, but no one had owned the final outcome either!"

Tom learned that Japan Airlines (JAL) had changed dramatically since then. Each aircraft now had a specific maintenance group assigned to it. Each person who worked on an aircraft now understood that he/she shared a personal responsibility for the plane's safety. At the end of every overhaul, the JAL team assigned to that plane showed its confidence in and commitment to the work by sending one of the staff members on the plane's next flight.

Tom also knew that this team accountability concept had kept JAL free of any repetition of the Narita tragedy. Not only that, but the new approach even benefited the company's bottom line: the airline reduced maintenance costs by more than 15% annually.

Tom's recent disquiet centered on a feeling that Applied Industries might be the next 747 slated for tragedy. He worried that the reports after its crash would say: "...and everyone was doing his/her job, but the people in every department didn't own anything except their stock and stock options."

Getting Started

So, Tom decided that this day he would take the first step to putting in place a strategy to engage his staff in the ownership of their own results.

"Connie," Tom said to the departmental secretary, "I want to do something very unconventional today."

Connie had worked with Tom throughout his career at Applied, as he served as senior auditor, finance administrator, investor relations manager, and, now, CFO.

"Connie, I've been working on a new plan. Remember the story of the JAL 747 incident I've spoken to you about over the years. Well, I think I have a solution."

"To the plane crash?" asked Connie.

"No, of course not!" Tom laughed. "No, I'm talking about our plane crash, the one at Applied."

Connie was breathless, almost whispering, "Boss, is our stock tanking?"

"Absolutely not! We're fine, so relax. No, I'm only speaking metaphorically. But, like JAL, it seems we have not connected our staff to our business.

"I'm at the top of this food chain and I'm not even in control. Literally every one of us, regardless of rank, is like a puppet on a string. My string is Wall Street, and the other folks are on budgets, incentives, top-down measurement systems, and good old supervision. The only joy most of us really get is the dream to get rich on the stock and retire. Frankly, that scares the heck out of me."

"OK, Mr. CFO, what are you going to do about all of us being puppets?" Connie challenged, not sure she agreed with him.

"I'm going to start by calling a meeting."

"With your department heads?" asked Connie picking up on Tom's serious gaze.

"No, I want to talk to our people," said Tom. "I want their perspective about my fears. I want to hear what they think. I want to get them in the discussion earlier than later. I think I know what I'm going to say, and it's going to open the proverbial can of worms.