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Fred Bigjim – Reflection

by on November 7, 2007

I believe that the case titled “The CEO’s Private Investigation” featured in this month’s edition of the Harvard Business Review relates to some of the topics raised in class on Monday as well as some other issues covered in previous classes. The case set up is that of a successful American international Aerospace company that just lost its CEO. This CEO had been in charge for over eighteen years and is considered to be one of the backbones for the company’s success and growth. Basically, he dies and the board has to find a replacement. Enter the new CEO and this is her first day on the new job. She is aware of the rumors that the company may have practiced bribery with foreign governments in order to win contracts. Specifically, she is suspicious of the previous CEO and some of his right hand men – one of whom is an executive that most inside the company thought would be appointed the CEO. Therefore, the new CEO is now faced with the problem of ignoring any possible wrong doing or moving forward and investigating the matter and exposing a possible corporate scandal. Structurally speaking, this set up reminds me of some of the class exercises where Kevin presents a scenario and then gives each team a certain amount of time to go over the matter and attempt to decide what route to take based on what factors are provided. Clearly in class the time factor is significant. We literally have a ticking clock to come up with our answers and try to defend them.

In this case study the new CEO is under a similar decision making time constraint because as soon as she informally brought up her concerns to the company attorney she realized that her questioning such activity will become known because of whatever internal politics that she as the new person may not be privy to. She must now work with what she has which is not much, mostly her instinct and experience to figure out what her course of action will be and she must do so in the course of an afternoon. She does not have the luxury of going over charts and figures to make a rational choice. She is more or less now in the good luck and the low predictability random territory. Similar to what was discussed in class on Monday, a traditional approach will most likely not work in this situation. This will be more of a focusing on behaviors and evaluating the type of organization in order to determine if she should move forward and initiate a change in management. For her it would be either to move forward or not with an investigation. If she does not move forward and allows the executives that possibly place the company at risk by practicing the act of bribery she will not only implement herself if it ever blows up, but also her inaction will condone the current corporate culture of this as acceptable behavior.

If she moves forward and in doing so begins to change the corporate culture to that of one with better ethics it will involve many of the current executives of the company to go on the defensive. Clearly this will create loyalty and division issues within the company. This could lead to an “us” against “them” mentality considering not only are peoples jobs on the line, but their professional reputation as well as their possible freedom if they are found to be guilty of a federal crime. Attempting to determine how people will behave under such an investigation I would guess would be very random. Sure you could look over their records and determine they are sane people and professionals and as such believe they will behave accordingly and continue with work as normal and productive executives. However, under stressful circumstances they could just as easily snap and come in shooting people (a very extreme scenario) or do things to undermine or sabotage the company during the investigation such as give internal information to competitors or leak false or damaging information about the company to the press which could have a negative outcome on stock sales or result in loss of clients.

What if, once new change begins (even if it is for the better) if new company needs arise. If they do, is she able to focus on them while keeping her possible Pandora’s Box from disrupting the daily operations of the organization? Even though the examples in Monday’s class were more products related as far as prototyping, I believe one of the main issues that were a factor in the video case study was the issue of the company having trust in the CEO. The situations are different, one deals with attempting to gain approval of the FDA while this one deals with attempting to avoid any government involvement (in this case any possible federal violations of the Foreign Corrupt Practices Act and the Sarbanes-Oxley Act – a great similar fictional example is meticulously portrayed in the movie Syriana).

In the video case study the company had a 20% percent chance of success. In this case study, as it is depicted, the company has a 25% chance of coming out of the investigation without any violations. Knowing that the odds are against you raises the randomness only more. Any found violations will create a messy and long legal affair between the parties and in the process could possibly bring down the company. In the video if they are not approved it is implied that half the staff will be laid off. Basically the odds are in favor of the negative in both scenarios. However, as with the video case study it is also implied that of having trust in your leaders to figure out a way to overcome such odds is sometimes more important than just following a rational route. As with all featured case studies in the Harvard Business Review, the study is followed by reactions by respected professionals. Even though all four of the reactions had different suggestions and methodology to what should be done they all still appear to agree upon the fact that something needs to be done and that the bribery investigation needs to move forward. One great example brought up is that the board would not have brought in a new CEO from outside over the successful internal candidate (as far as his sales records are concerned) if they did not have faith in her. Again, like the video case the odds are against her, but her people will back her choice even if it is based on low predictability.

Even though this case study is fiction I believe that it creates a good scenario of how an individual could possibly change the culture of an organization by leading by example. In this case that cultural change would be for the better (even if it results in short term possible profit loss, scandal, and division and dissent within the company) and she would be doing it by putting her own neck on the line. After all once she moves forward she has to stick it out because if she caves in half way through the investigation and the corrupt executives are able to undermine or oust her than she will not only lose her job, but her professional credibility as a strong leader will most likely be in question when she looks for any future CEO positions. The reactions to this case study seemed to focus more on the issues of right and wrong (they did have strategic suggestions as well, but not much). If I were able to add to their reactions I think the CEO should also consider how to factor in some of the skills that alums that responded to Kevin’s survey deemed important to have as well. Like, time management strategies – such as is this the right time to move forward with an investigation and how long could it last and how much of my time will it consume. Communication and Networking strategies – such as who do I talk to for what information I need, who can I trust, how to contain the bad press, how to communicate to the board and others that things are still under control even when they are being told otherwise by the undermining executives. Decision-making and Planning strategies (long-term to short-term) – such as how do I see the organization surviving the negative long term effects that an investigation could result in and how do I keep things going day to day and month to month during such an investigation? What meetings can I miss today in order to stay on top of what is going on with the investigation? What issues of the investigation can I not worry about and instead use the time to meet with clients in order to keep generating business?

Finder, Joseph (2007, October). The CEO’s Private Investigation. Harvard Business Review, 85 (10) 47-60.

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