Sometimes it is not that much fun…
A couple of years ago I was invited to join LG Electronics Inc (066570:Korea SE, www.lg.com, http://en.wikipedia.org/wiki/LG_Electronics) and manage their IT sales business unit, reporting to the sales director, who was an old friend. I had serious doubts based on my experience working with Korean companies but a long discussion with the newly appointed Korean managing director convinced me that LG Hungary is going to be a 21st century organisation with his leadership.
And it was, until about 14-15 months. Back then, something happened which made the MD revert to traditional Korean style management. The first experience with his new style is a good example of faulty decisions in many ways, I think.
About one month after he employed a personal assistant and obviously advisor, although this person had admittedly zero industry experience, he called a meeting involving all the managers of business units and functions.
He announced that he had wanted LG to partner with the only retailer, called ElektroPont, we are missing out of our market coverage and he had needed very close and intense collaboration from all present. A little backgrounder: for some reason lost in the past, the owner of ElektroPont has held a grudge against LG, investing time and energy to harm the company, trcik it into mistakes if he could. Also, they have been a very small player (2-4% market share in most categories of the electronics and IT business).
Most of the managers didn’t comment or decided to ask technical questions.
My boss, the sales director had serious objections – he had been struggling with ElektroPont for over 10 years and he expressed his concerns: getting tricked into a price war that would hurt our relationship with our other partners, jeopardising our ongoing efforts and commitments and risking money and reputation.
I was the only other person with an objection: I didn’t have experience with this particular company, but having a background with channel strategy I thought it was not a good move.
The MD’s reaction was very hostile, which never happened before and was the first sign of change in his managerial behaviour. I felt threatened and also baffled by this strange turn of effents – I had joined the company because I had felt assured that this kind of behaviour would never occur.
And, of course, we went ahead with the MD’s plan, got our bashing from ElektroPont, suffered huge blows to our reputation and ended up selling less overall because of that decision. Really, the worst case scenario had happened.
Through this story, a lot of decision making biases and problems can be detected.
First and foremost is the power asymetry: it is normal for the boss to have the final call, but when he or she is adamant on a professional decision that is actually outside of his or her expertise coupled with not listening to anyone or the right people, the chances are it will be a faulty one. In this case the MD of LG has made the decision before the meeting, supported by his assistant and opposition was futile.
Although one cannot be certain, but based on my experience with Korean management or rather chain of command, commitment escalation has probably played a significant part. Traditional Korean culture would not allow for questioning or even commenting on a decision made by a superior and once a commitment is required it will be provided with extra vigour – even when the individual knows that the basic requirement is impossible or flawed. Especially in these cases, the individual with the commitment must stay zealous and must show his commitment or over-commitment. Failing while following orders and doing your best is appreciated whereas acknowledging that the original request or order was flawed for whatever reason or challenging your superior is unthinkable. Probably the MD knew he was on to failing and that made him exceptionally stressed and aggressive.
Read more about ‘loss of face’ in Asian cultures:
http://www.trinity.edu/org/ics/ICS%20Issues/03%20ICS%20III%201/Microsoft%20Word%20-%20p%2039%20Kim.pdf
http://goasia.about.com/od/Customs-and-Traditions/a/Saving-Face.htm
Although, usually and especially before this meeting, the MD has not been an aggressive person, most long term employees at LG attended meetings and daily work with a sense of fear. Organising a full-team meeting primed many of the participants with anxiety and determined the way they behaved – silent, acquiescent and resigned.
Another element of biased group behaviour could be identified in a more general behavioural pattern, where people wouldn’t challenge the leader for various reasons. This phenomenon can be caused by personal and professional reasons: fear of conflict, high levels of stress, believe in the leader’s capabilities and decisions, disinterest, low self-esteem, boredom, lazyness, career progress considerations or internal politics. When discussing internal politics it is important to point out that the truth or in a decision making environment, working towards the right decision might not be in everyone’s interest. Some people will be more keen to see their colleagues fail and themselves benefitting from the failure of a decision.
Hi Laszlo,
ReplyDeleteThis is a very interesting story based on typical management challenges and practice. Thank you for the detailed information you shared.
Sometimes managers tend to hide the details or don't share the information with others. I am assuming that the MD has not shared everything with the rest of the managers.
In reference to what you mentioned, it is true that the right decision is not always everybody's interest. In many cases, managers tend to support their own motive before the company wellbeing; this is just the nature of human being. You missed to list corruption as a motive to take and support the wrong decision.
Management style is influenced by culture and from experience I don't expect it to change or be different, that's why I always consider the manager or client background to know what to expect and how to deal with such management style.
Thanks,
Bassam