MY BLOG - "MINDING YOUR BUSINESS"

Staying in the Loop

Posted on 26th Jun 2019

 

STAYING IN THE LOOP

 

“A man hears what he wants to hear and disregards the rest . . .”

                                                                                   From The Boxer by Paul Simon

 

I’ve always been fascinated by the concept of a feedback loop. It’s a simple idea with profound implications. In its basic form, a feedback loop is outcome information that’s cycled back to become input information, which allows us to make adaptive changes. For example, we don’t just turn on the shower and step in. We put our hand in the water first to gauge the temperature. If it’s too cold, we turn the temperature up. If it’s too hot, we turn it down. When it’s just right, we step into the shower. That’s a feedback loop.

We use feedback loops in business all the time: earnings reports, expense reports, marketing surveys, customer comments, quality inspections, and employee satisfaction surveys to name a few. This regular flow of outcome information is vital for making decisions about what needs to change and how we need to change it so that we can achieve better results. Importantly, feedback loops come in all sizes from the individual to the team to the department to the entire organization.

Sounds easy and straightforward, right?

Yeah, I thought you knew better. Establishing and maintaining timely, accurate feedback loops is one of the most difficult aspects of running a business. So what gets in the way? There are three major constraints:

Time and Expense – Most of us operate in a blur of activity from the time we arrive at work until the moment we leave. There’s more to do than could ever be done – and then work just keeps on coming. It takes time to collect outcome data, distribute it, read it, discuss it, make decisions about it, plan actions to address it, implement the actions, then do it all again, over and over. Unless company leadership prioritizes feedback and allocates resources to ensure that it’s carried out in a timely, accurate, and continuing manner, it will become spotty and may wash out altogether. We typically prioritize financial data, but may leave operational and behavioral data to subjective opinions.   

Fear of Hearing the Truth – This is a big factor. In my experience, it distinguishes healthy organizations from unhealthy ones. I recently read Bad Blood by John Carreyrou about Elizabeth Holmes and her company, Theranos. If you’re not familiar with the Theranos saga, Holmes was a Silicon Valley wunderkind who built a $9 billion blood-testing company based on lies, hype, and misinformation until federal prosecutors finally caught up with her. She perpetrated her fraud by wowing investors with promises of wealth, so they closed their eyes to the truth lest they miss out on a ground floor investment in the next Amazon or Google. The investors muzzled their own experts who questioned Theranos’ management practices, outcomes, and reliability. Inside the company, Holmes and her COO set up silos to block the flow of information between departments and fired any employee who questioned the company’s very questionable product quality and reliability. Lack of feedback was the company’s first casualty.

Theranos is obviously an extreme example, but the same corporate behaviors occur even when we lop a few zeros off a company’s net worth. Leaders in companies big and small oversell products and services without certainty of delivery, hurry products to market before quality is assured, withhold information from executives and investors so only a few people know the big picture, refuse to believe accurate feedback data and make decisions based on hopes and hunches rather than solid information, and let go of concerned employees who offer feedback that they don’t want to hear.

In contrast, leaders in healthy organizations actively seek feedback at all levels of the company – including information about themselves – so they can operate with the most timely, accurate data available. As Jim Collins noted in his business classic Good to Great, the best business leaders confront the brutal facts.

Fear of Telling the Truth – My favorite teaching story for businesses is The Emperor’s New Clothes because it reveals so much about human nature. Not only is the Emperor blinded by his own ego to believe that he’s wearing a beautiful new garment instead of his underwear, but some people take advantage of the situation while others fear to say anything because the Emperor might get angry. This happens all the time at work. We tell our boss what he or she wants to hear, especially if bad news upsets our boss or reflects badly on us. And it’s not just one boss; it’s bosses all up and down the company ladder, which creates multiple blocks in the feedback loops throughout the organization. We tend to see ourselves and our efforts in a positive light. We also tend to fear reprisals for telling the truth whether or not there would actually be a reprisal. The bottom line is that we want to be liked, we don’t want to upset others, and we really don’t want to get fired. As a result, accurate feedback gets stuffed or sidelined.

The best of companies foster a culture of honesty and openness from top to bottom. And keep in mind that “foster” is a verb. It takes consistent attention and action to create a culture where feedback is both shared and received in a constructive manner. The Center for Creative Leadership defines feedback as information shared for the sake of positive change. This makes a lot of sense to me. It’s worth the effort to advocate for effective feedback loops in the companies where we work. After all, who wants to step into a shower that’s too hot or too cold?

 

                                                                                                                                                                                                                                                                             Gregory Powell, Ph.D., 2019