Up here in the North East the community is still reeling from the collapse of Northern Rock and is now watching with horror the ongoing farcical spectacle that is Newcastle United Football Club.
If either of these institutions were part of the NHS they would, in future, be likely to be subject to the new failure regime set out in a recent consultation document published by the Department of Health. It describes the mechanism for dealing with “unsustainable providers” and proposes a new bureaucracy for regime change - bussing in “special administrators” when all else is lost.
I must confess that I railed against some phrases used in the narrative. For example “the very presence of this underpinning regime increases the consequences of failure to trust management and therefore should make failure less likely”.
Fear of failure
In other words fear is the key. I fundamentally disagree with such a one-dimensional approach to poor performance. The most likely outcome of this sort of pressure is a sharp flurry of improvement that has as much staying power as a prawn cracker.
For my money the formula for sustained success is sculpted from the sheer hard graft of creating a powerful cadre of leaders, particularly clinical leaders, who share values, have a common purpose and display positive behaviours that inspire staff and enhance the organisation’s reputation and in so doing change its culture.
I don’t doubt that we need a last ditch failure regime to ensure those in authority above the organisation know what they should do when failure occurs. I also support the need for clarity and direction in relation to the long-standing question of what to do about failing trusts - but let’s not kid ourselves that putting this in place does anything to prevent failure.
Most research on organisational development will tell you that sustained business success or success in turning around organisations is generally achieved by changing behaviours, particularly leadership behaviours.
In my last job I inherited a failing trust and had the opportunity to lead a great team in securing long-term stability and international recognition for turning it around. Sharing stories with leaders from other industries, it is apparent that there are some common themes.
The right way
In his lively and arresting book Why smart leaders fail, management expert Sydney Finkelstein describes how hubris and an unassailable sense of the right way to do things, based on past success, bring previously high flying leaders to their knees when facing a new challenge in a new environment.
Careful diagnosis of the context and detailed analysis of the causes of decline are therefore an essential first step. Lessons from my experience are that as a chief executive you must be able to articulate a clear strategy that gives a sense of direction through turbulent waters. There is no better pressure to exert than to demand of your leaders that they promote this vision, are clear about priorities, engage staff, listen and act on what they hear, constructively challenge poor performance and shape their part of the organisation through personal impact and determination.
Most importantly, leaders must pay attention to where the future talent lies and provide support systems and coaching activities that foster tomorrow’s leaders.
Combine this with a performance management framework that makes accountability clear but also recognises that too much downward pressure stifles change and innovation and you have the ingredients for success. I know this isn’t rocket science but it works.
I can hear some voices out there questioning how hard-edged this touchy-feely people-centred recipe is. Well, research shows 80 per cent of culture change in organisations is determined by how leaders behave with their teams.
Of course these strategies are not a universal remedy. As business consultant Jim Collins suggests in Good to Great, his classic book on building great organisations, you also have to make sure “the right people are on the bus, the wrong people off the bus and that the right people are in the key seats” in order to make progress. I agree wholeheartedly, but I also believe that a policy of tough love not tough luck is more likely to earn you trust and credibility when dealing with the inevitable human cost of ruthlessly driving for success.
So coming back to my earlier theme, organisational failure is rarely, if ever, attributable to a single cause. It is usually the accumulation of poor decision-making, ineffective actions, a chronic lack of dialogue internally and externally and systems failure of one form or another. I would bet my bottom dollar that the next trust to hit the wall will display all of these characteristics.
Anyone brought in to lead in these circumstances would do well to understand the often messy and ambiguous root causes of decline and focus hard on recovery plans to address them.
They should of course be highly focused on changing strategies, systems and processes while giving equal if not more emphasis to shifting behaviours and changing attitudes, otherwise the prospects of long term and sustained improvement will be slim.
They would also be wise to avoid the well-trodden path of importing external “expertise” to solve problems and guide the organisation to salvation.
I am not promoting some Luddite notion that external learning and insight have no place, nor that cross-pollinating ideas and best practice have no impact. However, I passionately believe that the sort of deep-seated change required to achieve a major turnaround in organisational fortunes has to start from within.