Fudging the line and leaping over it may seem different, but every little “innocent” move can create cracks in the company you are trying to build. In this Tough Things First podcast, Ray Zinn says, bringing it all down may start with just a few bricks in a box.
Rob Artigo: Ray, today, we’re looking at something that happens in almost every organization, usually without anyone really noticing until the damage is done: the quiet erosion of just once. The idea that repeated small exceptions, each one justified by the circumstances of the moment, gradually rewrite the rules of the place. In the military, I saw this all the time is that “Let’s just do this this one time.”
Somebody’s going to see that and they’re going to repeat that later on. And what happens is it’s like a family tree or roots, it starts to spread all over the place. Most people don’t really set out to lower standards, they just make one reasonable exception, and it seems fine at the time. What’s the difference in your experience between a genuine one-time exception and the start of a pattern? And how do you tell the difference in real time? You’ve got to make these decisions in real time, so how do you tell the difference?
Ray Zinn: Well, there was a company that I knew in the Bay Area, Silicon Valley, that was having some inventory problems and the revenues weren’t matching. What they did is they said, “Just once, what we’ll do is we’ll put bricks in these boxes so they look like they’ve got product in them, but we’ll just do it once so we can show that we have the inventory and it’ll help our gross margin, our bottom line.” They did fill up their racks, their shipping area, with these boxes with bricks in them. So they looked official and if you picked them up, you could feel the weight and you could feel there was something there. They had a label over it so that they could detect if somebody had opened up the box and looked at what was inside. But what they failed to realize is that the auditor, when they came in, rather than just do a sample count, that’s what they do, they do a sample count, they actually opened up some of the boxes and then they found bricks inside, okay?
That was a one-off thing that this company had never done that before, but they said, “Well, we need to protect our bottom line and our audit results.” So they said, “That’s one time we’re going to just do this.” And, of course, that just killed them. That one-off situation just did them in. They ultimately filed for bankruptcy over that one instance, that one time. We know that that happened at Enron, this happened at Arthur Anderson, it’s happened at a number of companies that I know that were back in the Y2K period where people did things one time because of an unusual circumstance, like that Y2K thing. It was a one-off thing that people thought, “Well, it’s only happening once so we might as well get prepared for it.” But it was against their value system. In other words, they knew they were doing wrong, but they said, “It’s okay if I just do it once.” And there’s no justification for doing something wrong once. There’s no justification. Zero.
Rob Artigo: I think of Sam Bankman-Fried with his electric truck and doing a demo of the truck and he had it plugged in. He had it plugged in with their demo thing. It was like the only thing running it was it’s plugged into the wall. And he’s doing 25 years in jail for fraud, so it can lead to some really bad stuff if you make those kinds of exceptions. So the extreme examples are Enron and Bankman-Fried situation, and then other people who’ve put stuff up there. But it comes to compromise.
And I’ve watched teams where every exception came with a good explanation, a tight deadline, and like you said, putting the bricks in there, “Well, we have to have some weight in the boxes. We want them to see that there’s product and we just don’t have product to put in the boxes, so we’re going to use bricks.” At what point do those explanations stop protecting the standard and start replacing it? When does it become the culture in the company? And again, we go back to Enron because it was a culture in the company of Enron where they pulled off those scams. Everybody accepted it. I guess the culture said, “Hey, this is fine. This is the way we’re going to do it.”
Ray Zinn: As I said, there’s no justification of doing the wrong thing once. It’s going to come back to bite you. You can’t get away with it just once. When you do it once, you’re going to do it again. Then if you do it again, it becomes a habit. Habits form very quickly. Bad habits, so not good habits. Bad habits form very quickly. So if you want to start a bad habit, just do it once.
Rob Artigo: If a leader realizes their organization has already drifted because just once has become common, what’s the first thing they need to do to start pulling in the real rules and getting them back online?
Ray Zinn: So you’re saying if you choose to do something wrong once, how do you fix it? Is that what you’re saying?
Rob Artigo: Yeah. How do you backtrack from that and restore maybe what your original intent for the company was?
Ray Zinn: Okay. It’s called repentance. You have to acknowledge you did something wrong, you have to confess it. You don’t let somebody else find it. You find it, you acknowledge it, and then you make amends. You correct the mistake and then you don’t do it again.
Rob Artigo: Yeah. Making it right.
Ray Zinn: Right.
Rob Artigo: I think it comes down to making it right.
Ray Zinn: Yeah. If you do something knowledgeably wrong, then the first thing you do is make it clear that you recognize it, not let somebody else find it. I know of a situation where this particular hospital, as they were going back over their records, doing the reconciliation of their charges, they found some errors in the charges they were making that was being paid for by Medicare. So rather than having it caught by an audit firm, the company found it themselves and then they confessed it.
Now, they were somewhat reluctant to do that because the news media picked it up. The local paper picked up that they had found this bad deed that they had done, and where it was done incorrectly, the charges to Medicare. And they really went after them. But the company accepted that. They apologized to the community. They made it right. They paid back the damages that they found. It took them a while to get their reputation back, but rather than hide it, rather than wait for it to come out, they found it and they confessed it and they solved the problem.
Rob Artigo: There’s so many really great examples of this. It’s just a fundamental truth about how to behave. It’s operate honestly and you’re on the right path and don’t make any exceptions and you won’t have any problems. Join the conversation at toughthingsfirst.com. Your questions and comments are always welcome. Follow Ray on X, Facebook, and LinkedIn. And of course, pick up Ray’s books, Tough Things First, The Essential Leader, and the Zen of Zinn series one, two, and three, now including Zen of Zinn Daily. Until next time, do the tough things first, right, Ray?
Ray Zinn: Absolutely. That’s where we’re coming from.
