Introduction


Introduction

The idea of writing The Accountable Organization came to me soon after I led FaxWatch, Inc. (FWI), the medical information services company I founded, through a rebranding process. The deep introspection I undertook helped me to identify more than just a new name and logo for our company—in the process, I identified the underlying principles that would set us apart from our competition and fuel our continued growth and success.

Many people wait a lifetime to chronicle what they learned in business. As an entrepreneur with a still-young company, I wanted to offer something unique, a different perspective from the rest. But, like countless others, I was infuriated by the corporate chicanery going on in America. It seemed like every day another chief executive was going down in flames. And when Arthur Andersen fell, it was a wake-up call. I had long respected Andersen for what I believed were its ethical standards and quality of work. If it could be taken down, no company was safe.

Amid all the talk of restoring trust in corporate America, it became clear that legislation and litigation would not be enough to get us there. The change had to be initiated by those who had the most at stake: the people at the companies themselves. But what would that change look like? In other words, what kinds of organizations foster trust, both within and without? To answer this question, I drew on the lessons I'd learned from my experiences in corporate America and as an entrepreneur and CEO. I interviewed people across industries and job functions, from CEOs to frontline managers.

I found that to earn trust, a company must be founded on integrity and embrace accountability—it must be what I call an Accountable Organization. Chapters 1-3 in this book explore the foundational elements that are crucial in creating this kind of company.

Trust, however, isn't the only reward. An Accountable Organization also has a competitive advantage over firms without a strong ethical core. Here are some of the reasons why:

  • Members of an Accountable Organization stand by ethical principles and create a meaningful purpose for their company—thus, they make better decisions. Because the ethical framework has been clearly articulated, there is less confusion over which path to take: decisions are made confidently based on what's right. Without this framework, decisions are often based on expediency or "what's-in-it-for-me" thinking—not the best strategy for ensuring the long-term sustainability of the business.

  • Members of an Accountable Organization execute better. They establish systems and processes to reinforce accountability, including effective communication and conflict management. In contrast, organizations that communicate poorly or lack accountability are often riddled with internal conflict, confused priorities, and disconnected employees—translating into lower productivity and higher operational costs.

  • Members of an Accountable Organization are strong, ethical leaders who embrace their greater responsibility to the organization as a whole. They understand the importance of taking risks for fueling creativity and innovation. Companies without accountable leadership will drift—or worse, be led astray—while those that avoid risk taking will stagnate.

  • An Accountable Organization attracts more customers and keeps them longer. Customers know that principle-driven companies stand behind their products. They know what to expect in terms of quality and service. In short, people buy from companies—and people—they trust. Companies that neglect building trust-based relationships find themselves competing for fair-weather customers, resulting in higher customer acquisition costs and increased customer defection.

  • Finally, an Accountable Organization attracts and retains higher-caliber employees who won't stay at a company that doesn't have a strong moral fiber. As with customers, it's less costly to retain good employees than it is to hire new ones. Companies with lower ethical standards will have higher employee turnover, increased training costs, and lower productivity. In contrast, an Accountable Organization will attract and retain the best leaders, managers, and support staff.

Of course, market conditions, competitive forces, business strategy, capitalization, public policy, and many other variables influence whether a business succeeds or fails. Nonetheless, the strength of a company's culture makes an enormous difference when it comes to its balance sheet. For example, as this book's case study shows, Southwest Airlines’ long-term success is not due solely to its being a "low-price" carrier—plenty of bargain-basement airlines have been forced out of markets by larger players. Rather, Southwest's long-term success has much to do with the "Warrior Spirit" of its employees—a culture that has provided Southwest with a lower cost structure and a compelling value proposition compared to its industry counterparts.

Accountable Organizations such as Southwest prosper in our free-market system because of the trust they earn. These companies are built on integrity, that is, adherence to core values, assumed to be moral and beneficial to both the organization and its stakeholders. Yet integrity in and of itself does not magically create trust. The organization must prove that its actions and choices are in alignment with its core values and deliver on this implied contract at every level.

Those who are skeptical about the government's power to improve matters are onto something. This framework—the relationship between integrity, accountability, and trust—cannot be conjured into existence through new laws or yet more lawsuits. Rather, it requires commitment at an individual level on every rung of the ladder within the organization itself. Unquestionably, it's unrealistic to believe that, say, forty thousand employees will simply adopt an accountable perspective on their own. The company's infrastructure plays a crucial role, as does organizational buy-in, often initiated by both formal and informal leaders. Therefore, The Accountable Organization seeks to help inspire individual commitment with concepts that are practical and actionable.

  • Purpose. Members of an Accountable Organization must first define what they stand for and where they are going. Without this understanding, a company allows itself to be steered by expediency rather than taking control of its own course. Chapter 4 addresses the vital importance of identifying an organization's values and purpose.

  • Execution. Once defined, an Accountable Organization's values and purpose are integrated into a robust strategic plan. This focused road map for execution provides clarity and specificity, defining performance standards and providing a common frame of reference for individual and organizational accountability. With the plan in place, what remains is effective implementation, which is addressed in chapter 5.

  • Leadership. Accountability means that a firm's leaders—not unlike elected officials in a democratic society—are responsible to the people they serve and should account for what they do on their behalf. While everyone in a company should be fully accountable, the leadership of the organization has an even greater responsibility, if only because their decisions and actions have greater impact. Chapter 6 discusses the different ways that CEOs are accountable to their organizations, primarily through the many essential roles they play.

  • Communication. When communication is incomplete or misleading, or when it shuts down completely, cynicism can creep into the culture. In contrast, effective and empathetic communication not only ensures organizational efficiency, it also builds trust. Chapter 7 shows how stakeholders in an Accountable Organization seek to establish communication that is clear, consistent, and compassionate, both internally and externally.

  • Conflict. When conflicts arise in the workplace, those involved often seek to assign blame, choosing to ignore their own part in the situation. Our desire to be "right" makes it difficult to see that we're in fact part of the problem. Chapter 8 provides insight on how to manage challenging situations—and how to remain accountable in the process.

  • Risk. Innovation and a competitive edge are necessary for a company to succeed. As such, leaders and other stakeholders must be willing to take educated, responsible risks. Chapter 9 looks at how the creativity and courageous decision making inherent in this kind of risk taking are crucial to the vitality of an Accountable Organization.

At the end of each chapter is a section entitled "Building the Accountable Organization" that includes questions to help you examine these topics on your own. You might even consider introducing these questions to prompt discussion in meetings. To best use this book, apply the lessons you find valuable to your current position, your state of business, and your organizational challenges.

Chapter 10 is a portrait of one Accountable Organization: Southwest Airlines. While the company has been profiled before, Southwest's continued success is even more remarkable now, given the abysmal state of the airline industry. This case study, featuring the insight of Southwest president and COO Colleen Barrett, demonstrates how the airline's stellar performance wouldn't have been possible without its unique culture.

Becoming an Accountable Organization is an ambitious proposition, but one that is realistic—and, in the end, a challenge worth undertaking. In the face of continual tests, members of Accountable Organizations work tenaciously to stay the course. They stand by their principles; lead with humility, compassion, and resolve; are fully accountable for their choices; and build steadfast trust among customers and fellow stakeholders. When individuals make this kind of commitment to reclaiming integrity and embracing accountability, the combined result is restored trust and long-term success.

So, whether you're a CEO, a manager, or a frontline employee, I urge you to take on the challenge of building an Accountable Organization. The rewards and fulfillment will come from the journey itself not the destination.

I wish you success.