Strategic Thought

Bad news must travel fast

I have a natural ability to find bad news. If it's out there, I want to know about it. The people who work for me have realized this and keep me informed.

A lot goes wrong in any organization, even a good one. A product fails. You're surprised by a customer who suddenly switches to another company. A competitor brings out a product that appeals to a broad new market. Losing market share is the kind of bad news that every organization can understand. Other bad news may be about what's going on inside the company. Maybe a product is going to be late, or it's not going to do what you expected it to do, or you haven't been able to hire enough of the right kinds of people to carry out your plans. An essential quality of a good manager is the desire to seek bad news rather than deny it. An effective manager wants to hear about what's going wrong before he or she hears about what's going right. You can't react appropriately to disappointing news if it doesn't reach you soon enough.

You concentrate on bad news in order to get started on the solution quickly. As soon as you're aware of a problem, everybody in your organization must go into action. You can judge a company by how quickly it organizes all of its brain-power to deal with a serious problem. An important measure of a company's digital nervous system is how quickly people in the company find out about bad news and respond to it. Digital technology speeds business response time in any emergency.

In the old days, every company's response to bad news was slow. Business leaders often learned about problems only after they became serious, since the only quick way to pass information was to interrupt them with a phone call. Before handling a problem, people had to find information in paper files or go down the hall to find somebody who knew something about the situation. When people had some information, they spoke on the phone or sent papers to one another. Every step in the process took a lot of time. Today the dawn of the Information Age means we can send information fast, but even now most companies don't gather the key information about customer issues in one place. By contrast, a well-designed digital nervous system operates as an early-warning system.