(2) Cultural - Iran, 1978: misjudgment and mismanagement
2.1) Compelling event: As a country manager in Iran I was responsible for 30 engineers, all men. I was enthusiastic about a new hire, a small, shy, modest, demure woman from India. I was particularly impressed by her having no engineering degree at all. No, she had not been like me during my immature undergraduate days, nothing like that. As a woman, she had not been allowed by her family (her caste) in India to study the "masculine" subject of engineering.
However her husband had, and she had read all his textbooks and helped him prepare for his examinations. At the end of the day, she was indubitably more qualified than he was. Regardless, at our office none of the other 30 engineers could hold a candle to her, including a brilliant Kurd who had earned a Masters in nuclear engineering in the U.S.
The error: As this woman from India was doing the work of three, I responded with raises, more responsibility, heading up projects -- and then I made my fatal error. I proudly made a public announcement promoting her to a significant management slot. I was looking for her to take over my position as country manager as the next step.
The next thing I knew, I was faced with a palace revolt. Not only were the Iranian engineers livid, but to my amazement, also the English and American ones. Now this woman could do the work of three, or maybe even 10. But she could not accomplish the work of 30. Frankly, I would have much preferred keeping her and firing the all the rest. However that was not a viable option.
Reluctantly, I found her another position at a larger company. Once she had a signed offer, the two of us then put on a bit of theater for the male engineers. She brought me a bid with a "mistake.” I "discovered" it, threw a tantrum that this gross error would cost us millions, and terminated her employment, effective immediately. "Sobbing" (in between choking with laughter) she leaves the office. The men are just thrilled. Peace reigns, all is well, and they actually start getting some work done again. What a farce.
Lessons learned: (1) Do not underestimate cultural differences! (2) You can not reward the high potentials, the over-achievers, in a way that sows envy and hostility in the group as a whole.
1st Aftermath: Later in my career while working for a Fortune 500 company, I was able to hire an outstanding executive secretary. Bored, she had decided to come out of retirement. She was 30 years older than I was. She had been her high school valedictorian and gone to the University of Chicago on a full academic scholarship. Unfortunately, she dropped out her first year there -- "married out" would be the more accurate term. She was not only smarter than I am but also far more astute about corporate politics. If she had had the paper credentials, she would have made it to the C-suites.
Recalling my Iranian error, I went to considerable trouble to reward her quietly. I could have made waves about the low salary limit her job description imposed as being my secretary (versus one for a CXO). I might even have won that battle, but I certainly would have lost the ensuing war. Instead I gave her a substantial pay raise (far beyond the proscribed limit) by transferring funds every month to her bank account from my own salary.
Relevance: Acknowledgment, recognition, praise and a corner office are terrific motivators, but money still counts. Make the effort to be creative in finding the right combination for your people on an individual basis.
2nd Aftermath: My boss left to join a start-up. I was the hardest worker, with the best education, the best language skills, the most years abroad, and the best secretary of anyone in the international division. I was certain I would get the promotion to head the division. It was a no-brainer. My secretary was not so sure. She offered to help. Bemused, I declined her (obviously unneeded) assistance.
My new boss arrived. He had a BA, not an MBA. He was excited about taking over the international department. His first request to me was for assistance in obtaining a passport. He had never had one before, and wondered how to apply. From there on, matters deteriorated rapidly.
Lesson learned: Yes, I really was the most this, the best that in the international department. I was also the most arrogant and the least liked. I had been so busy working and chalking up business wins that I had totally ignored relationships with my peers. Promoting me over them would have been a mistake.
Furthermore I had never made a personal connection with any of the senior managers either. None of them had particularly impressed me, so why bother? Therefore I had no mentor to take me aside to help me lower the intensity, try to be a little more friendly, to learn not to look down on people who, because of their families (spouse, children) had no inclination to work straight through the weekends, every weekend.
Relevance: Intensity and business wins are not alone enough to climb the corporate ladder, anymore than an outgoing, cheerful and pleasant personality without much to show in the way of accomplishment is. Pay attention to the balance, above all for your high potentials.
2.2) Compelling Event: Country risk analysis was a topic I had enjoyed in graduate school. However that was an exercise that was always externally directed -- away from headquarters. I actually did include such analysis, albeit briefly, for potential bids in Iraq, Kuwait and Saudi Arabia. However directing this analysis inward to Iran, my "home base" the years I had worked in the Middle East, had never occurred to me. C.I.A. rationalizations notwithstanding, there were indeed warning signs that the Shah’s government was on increasingly shaky ground.
Caught up in the micro-world of corporate and marketing strategy, I completely overlooked macroeconomics and the developing political situation. When the Shah precipitously left, our firm was blindsided. All kinds of major projects were in the pipeline and our firm was completely exposed, totally vulnerable. Nothing could be rescued. Multi-million dollar losses were directly due to my cultural and political blindness.
Lesson learned: You need to pay attention to the political environment both at home and abroad. Political risk has many facets. It includes financial (the development of the Euro/U.S. exchange rate) -- and local risks. If your interest in politics is limited, as mine is, get someone on the board who has good political antenna -- and heed his admonitions.
Aftermath: Later in my career a major contract was won in Nigeria. The customer did not want to open an irrevocable letter of credit (LC) with a U.S. bank, fearing our "influence" as a Fortune 500 company in the U.S. The suggestion was made to open the LC with the central bank of Nigeria, the government bank backed by oil funds. While the legal department reviewed the documents (eventually approving them) I proceeded with other research.
At that time there had not yet been press coverage of the central bank shenanigans in Nigeria. However there were warning signs, which correspondent banks were picking up on. I rejected the central bank LC and suggested as a compromise one drawn on a major Swiss, German or Japanese bank. This proposal was accepted.
Relevance: You have a Joint Venture, are capability sourcing offshore. What early warning systems do you have in place to avoid being caught, for instance in the U.S., by the fall-out from the General Motors collapse or that of another key customer/supplier of yours? Are you just relying on the global credit analysis firm Dunn & Bradstreet www.dnb.com, or are you also using upstart competitors such as, in the U.S., Cortera, www.cortera.com?