June 03--Georges Doriot was arguably the first venture capitalist in the world, at least in the sense that we use the term today.
Doriot became head of the American Research and Development Corp. in 1946, a venture capital firm founded by New England businesspeople who wanted to give new firms not only the financing but the managerial guidance they needed to succeed. ARDC funded, then guided, hundreds of technology startups.
Doriot is probably at least as famous among business historians for a very popular course he taught at Harvard Business School. The course was called "Manufacturing," but it was really a survey of Doriot's philosophy of business, management and life.
He would advise his classes of managers-to-be that they had to get in the habit of smiling anytime anyone brought them bad news. It was essential, he said, that everyone in the organization knew that no matter what the problem, the organization's managers always were ready to hear about it. The troops had to know that no messenger would ever be killed for bringing bad news to the bosses.
Any fool can run a company when everything is going well (and, as Warren Buffett once said, sooner or later a fool will run the company). Managers earn their pay when all hell breaks loose.
However, you can't manage what you don't know.
Just ask Eric Shinseki, who resigned last week as Veterans Affairs secretary after disclosures that officials in some VA medical centers, including Albuquerque's, hid the huge waits veterans faced to receive care.
Shinseki said that as a military officer he thought nothing of ordering troop movements based on nothing more than a corporal's report from the battlefield. When the bad news from the VA system finally started reaching his desk, Shinseki found himself wondering at the lack of integrity of his staff.
Just ask Albuquerque Mayor Richard Berry. The Department of Justice report on the Albuquerque Police Department says no one in the first and second tiers of management seemed to gather the bad news about police shootings so that it could be reported up the line.
This isn't just a public sector problem. Far from it.
There is no evidence that top executives at Oracle Corp. were aware in 1990 that its sales reps were booking phantom sales to boost revenue for Oracle and to earn bonuses for themselves, a stunt that cost 400 people their jobs through layoffs and nearly bankrupted the company.
There is no evidence that AIG brass knew its Financial Products unit was making trades that would help push the global financial system to collapse in 2008 and lead to a multibillion-dollar taxpayer-funded bailout of the firm.
All of this raises the question, why didn't Shinseki and the rest know?
Underlings often have every incentive to tell the bosses what they want to hear. Oracle's sales team members could become wealthy in a year if they could book enough revenue, and Oracle's cutthroat culture was not kind to reps who didn't make their numbers.
The VA inspector general's report says local managers' compensation was pegged to their success in getting patients seen quickly. The patients weren't being seen because VA doesn't have enough physicians, but the bad news didn't get up the chain of command, it appears, because some local managers wanted their money.
There is an oft-repeated axiom that you cannot manage what you do not measure. To measure something, a system to capture, evaluate and report the data has to exist.
One of the more depressing findings in the Justice Department report on APD is that there was really no system in our Police Department to capture essential information about police shootings, understand what the information means, and use the information to better train and manage police officers.
There are bosses who intimidate employees into silence. AIG Financial Products was run by Joe Cassano, described by financial journalist Michael Lewis as "a guy with a crude feel for financial risk but a real talent for bullying people who doubted him." Lewis quotes a former Cassano employee as saying, "The fear level was so high that when we had these morning meetings you presented what you did (so as) not to upset him."
Sometimes it seems as if bosses just don't want to know. Veterans and medical staff have complained about poor access to care at VA facilities for years. If the local managers didn't want to tell Shinseki about access problems, he only had to go down to the local DAV hall to get the word.
Anyone with access to the Albuquerque Journal or the local television stations knew the Albuquerque Police Department seemed to shoot an awful lot of people. It's a short walk from City Hall to police headquarters, where an inquisitive manager likely would find any number of patrol officers and sergeants in the know.
The Justice Department report does not say whether Mayor Berry ever took that walk.
UpFront is a daily front-page news and opinion column. Comment directly to Winthrop Quigley at 823-3896 or firstname.lastname@example.org. Go to www.abqjournal.com/letters/new to submit a letter to the editor.
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