Learning to act right (11) … One dimension too few
Torrey Orton
May 24, 2010
One dimension too few….
'you can't fix problems using the same level of thinking
you used to create them' (paraphrasing Einstein)
by Charles Brass
In 1995 a group of people of which I was a significant part created a not-for-profit organisation whose mission was 'to engage all Australians in creating a better future for work'.
One of the ways in which this was to be achieved was to create 'demonstration projects' through which better ways of working might be practically explored. In our fantasies at the time, many of these demonstration projects were envisaged to grow to become viable businesses in their own right, at which point they would be used to seed further projects.
Early in 2002 one of those involved from the beginning approached me with the tantalising prospect that one of our 'demonstrations' was now a viable (ie profitable) business and was beginning to explore how to use this 'profit' to benefit the community. On that basis I eagerly joined the Board of the entity, where I found myself alongside my colleague, the CEO and two other members of the local community.
Within four months the community board members had resigned, citing doubt that the organisation was as profitable as the accounts suggested. That should have been enough of a warning, but it wasn't.
Officially, the accounts confirmed a significant surplus and through my efforts we began a sponsorship program designed to significantly benefit the local community.
In August 2002 the CEO went on a month's leave and I acted in the role. For the first time I gained direct experience of the day-to-day practical financial practices of my company (and had personal contact with the staff involved).
My concerns escalated, and ultimately everyone's fears, were proven correct when the organisation was placed into administration and ultimately liquidated early in 2003.
My personal liability for debts incurred exceeded my superannuation and other savings and now, seven years later, I am still in debt.
Arguably, no-one involved was corrupt. Certainly no money was embezzled. However, there was a greater than one million dollar deficit when the company was eventually wound up.
How did three people, all of whom were unarguably focussed on the greater good and not on any personal glory, preside over such a disaster?
Sober reflection from this distance suggests that neither one of us alone would have allowed this situation to develop.
The CEO, who had founded the enterprise, was passionately committed to providing positive outcomes for its clients (funding for which was overwhelmingly provided by the State Government). My colleague had built his business on assisting small business owners to more effectively manage their enterprises, and I had previously been on the Board of a number of companies, including a multi-million dollar global enterprise.
Collectively, however, our blind spots were exquisitely aligned. The CEO had little practical financial expertise (and the accurate valuation of work in progress was a key component in the accounts), my colleague wanted to believe that his approach and his methods would lead to success and interpreted the accounts to support this belief, and I wanted the company to be making a surplus to prove we were doing good work and was very happy to believe his (and the auditor's) interpretation of the accounts.
All of us should have known better, and, truth be told, probably did. But the issue was undiscussable, even when the two Board members resigned. I, in fact, personally worked hard to convince them they were wrong about the company's profitability and that they should stay on Board.
Once the blinkers fell from my eyes, I took action which minimised the loss and (to a small extent at least) protected staff, creditors and clients. However, for a period of nearly 12 months I chose to ignore information which was available to me and to passionately believe in something which was patently not working properly. And yes, I am reminded of story of the person falling from a 100 storey building who, as they are passing the 90th floor is heard to say: "so far so good".
What is right action in these circumstances?
Firstly, I stood up, admitted my culpability and accepted my punishment. Not only did I lose a considerable amount of money, but I endured the wrath of angry staff and creditors at meetings held by the liquidators (I was the only Director who attended, and I haven't missed a meeting in seven years – no, the company is not yet formally wound up, these things do take time).
More importantly, I have thought deeply about blind spots and their implications. By definition, you can't see something that is in your blind spot and if you can't see something it is difficult to know how to properly act on it.
Also by definition, since no-one can know everything, blind spots are inevitable and unavoidable.
Perhaps one way to individually overcome blind spots (as is done when motor vehicles come equipped with multiple rear vision mirrors) is to actively seek different perspectives or lenses through which one sees the world (after all, it was only when I actually sat in the CEOs chair that the situation described here became real to me).
Five years too late, a colleague gave me a question which might trigger alternative perspectives – and I habitually ask it of myself today – 'what is it that I am pretending not to know?'
I find this question helps me consider dimensions and perspectives to which I otherwise might not pay appropriate attention. For example, three years after the incidents described here I was invited to help the Board of a not-for-profit provider of specialist health services resolve an issue with their founder who had transferred the ownership of all their properties to a company he controlled, and now wanted to charge them rent to continue to use them. This seemed like such an egregious breach of trust that I was astounded that the agency which funded the service provider seemed willing to simply increase their funding to cover the rent rather than tackle the issue.
By asking what I was seeing, but not paying attention to, it became clear that officers of the funding body were complicit (probably by omission rather than commission) in the ownership change and hence did not want it investigated. Eventually it became clear that the underlying problem would never be addressed, and the most practical solution was to make the best of the situation.
Considerable pain, and expense, was saved by prompt recognition of a potential blind spot.
However, as I have already implied, in main situation described here there was, in addition, something quite exquisite about the interconnections between our three blind spots, which suggests that there might be a collective perspective to overcoming blind spots.
One of my favourite philosophical theorists (Ken Wilber) suggests there is inevitably a collective perspective, as well as an individual perspective, to any situation; and this experience seems to bear him out.
The simplest way to acknowledge the collective might be to always ensure that multiple people are involved in thinking through key decisions, but the above experience suggests that this might not always be enough.
Insisting on a systematic and structured approach to canvassing the issues involved in making every key decision is another valuable technique, and one which can often be overlooked in the easy familiarity of comradeship.
I am reminded of the story of a business executive who once lost his company a lot of money and was promptly summoned to Head Office. As he walked in to the Chairman's office he forestalled any conversation by proferring his letter of resignation. To which the Chair responded: 'sack you, why would we sack you, we have just spent millions educating you'.
My own education came at the cost of some hundreds of thousands of dollars, and also lost me my job, not to mention two friendships. All because our perspectives were unable to embrace the full scope of the situation.
