The Challenge Culture is one book that should be read by every CEO. More importantly, it would also be a good idea for the boards to evaluate the performance of a CEO based on this single parameter. Nigel Travis, chairman of Dunkin Brands, the author of this book, has a simple message: companies should have an open mind in inviting challenges from stakeholders in terms of questioning what is being done, so that they are able to move in the right direction. By challenge, it does not mean confrontation, but allowing questioning by others. While being in a comfort zone of status quo or remaining unchallenged, CEOs often develop hubris to the extent that employees dare not question any move. This leads not just to stagnation in the organisation, but also slow decay. Therefore, a challenge culture is required.
Travis is candid in pointing out that challenging is not normally encouraged and often a challenge is interpreted as subversion and employees run the risk of being fired. Therefore, there is the development of a phalanx of ‘yes men’, which reinforces the belief of the CEO that he is doing right. This is what he calls ‘power paradox’.
Travis has worked in companies like Blockbuster and Papa John’s before becoming chairman of the Dunkin brand. This was a culture that he had embedded in these organisations and found it to be useful. Having naysayers is always important because they tell you where you can be going wrong. In fact, Travis has the idea of devoting time to just talk to employees where they can speak on anything, including personal issues. The same was also done with only-women groups for focusing on their issues and getting their opinion on matters. In this way, the CEO gets to know the colleagues, as well as ‘what holds back people’, which can be as rudimentary like daycare for children. This is what he calls the social value of challenge, which gets into specific groups within the organisation.
The crux, he believes, is communication and unless organisations have an open culture, this cannot be achieved. Here, he gives the example of Elon Musk of Tesla who has created a culture of open communication where hierarchies need not be adhered to. Employees are free to talk to him or mail him without going through the hierarchies and seniors who come in the way are fired. Examples where challenges are abhorred, which have led to the decline of the CEOs, are Travis Kalanick of Uber, John Stumps of Wells Fargo and Jeff Immelt of GE.
Communication, he says, is a messy process as people pose questions and engage in discourse. Hence, separating the logical and feasible from the noise is always a challenge. An interesting suggestion that he gives is that a starting point to having a challenge culture is to have an informal organisation. And this starts with people calling each other by first name, because it breaks the barrier that is otherwise erected. Titles not just give an ego boost, but also create barriers where hierarchy is reinforced. And any leader who brings in this culture would automatically be seen as being humble rather than domineering, which is the case in most companies.
Challenges can be posed by the culture of a geography, which we should be willing to accept for the sake of business. Here, he gives an example of how Dunkin moved to Amsterdam for the first time and had to custom-make its coffees and donuts to the local taste and, hence, the standardisation practice had to be made flexible. Europeans have coffee and pastries in a different way from Americans, and this can be worth noting for any company that is going global.
Another unique way of getting people to challenge the firm is talking to a user group. For a product like coffee and donuts, talking to students is a good way of posing a challenge. Here, Travis met students and took their views on how they would run this business. This is quite an innovative way of going about getting ideas on how to grow the company. But such an approach rarely finds too many takers.
Another group that is pertinent is shareholders, especially if the firm is listed, because by right, they can ask questions that have to be answered. Similarly, it is hard to dodge the media. Listing is, hence, good for the company as there are external checks that come in, which the management and board have to address; and in a way are kept alert all the time. Bankers also ask questions, but at times they may not be too keen to actually grill the management as they have their own business interests in the loan being given.
How good was Travis in adhering to the challenge culture? He gives an instance where his communications in-charge Karen Raskopf actually guided him on what he had to do and his response was negative. She told him that she was only doing what he had been propagating all the time. He agreed with her and apologised.
A challenge culture is effective in times of change. People are expected to question the status quo. A pushback is required and this can happen if there is an open culture that encourages new ideas. Employees should feel confident to speak up. Some ingredients of a challenge environment are decentralised authority, open communication, avoidance of bureaucracy, strong result orientation, people development, tolerance of styles, etc. The reader, if working in an organisation, can look around and see if this challenge culture exists within.
-The author is chief economist, CARE Ratings