“Why are you picking on Ford?”

Several readers wanted to know what I have against the struggling car maker.

I have nothing against Ford. It simply provides some useful lessons in how not to lead an organization, and in how empty so much conventional wisdom is about how business leaders should run a large enterprise.

Let’s let Ford off the hook for awhile. Instead, let’s talk about Walter Reed.

Here are some quotes from General Kevin Kiley, who as Surgeon General presided over the fiasco at the nation’s premier military hospital, taken from his testimony to the House Oversight Committee where he explained how he could have been uninformed about the conditions there:

“I don’t do barracks inspections at Walter Reed.” “In my role as the MedCom commander, Walter Reed was not my only command.” “My staff informed me that the Walter Reed staff was working it,” (it being a 2006 report describing numerous problems in Building 18).

If the point isn’t clear, there’s this statement: “I command by commanding through my commanders and trusting them to execute the mission.”

Two points about the Walter Reed story. First, if anyone doubts the value of an independent press, this story should clinch the point. Had it not been for the Washington Post, soldiers would still be recuperating among mouse droppings.

And second, the Washington DC press corps is infected by the same disease that pervades leadership discussions in the United States: When something goes wrong, what’s most important is making sure someone gets fired. It doesn’t much matter who gets fired, so long as we hold someone accountable.

So we held General George Weightman accountable, because he’d been the commander in charge of Walter Reed for six whole months. And then, awhile later, General Kiley resigned as well — not, one presumes, because he received a wonderful opportunity in private industry.

Almost lost in the noise were the two likely root causes of Walter Reed’s problems. These matter to you because both have immediate parallels to circumstances you face, are likely to face, or have already faced as an IT leader.

The first was a bungled facilities-management outsource to IAP Worldwide Services. I say bungled, not to impugn IAP, nor to question whether the outsource was a wise decision (the point is, to put it mildly, contentious), but to describe how everyone involved managed the transition.

The core problem is easily stated: The Army announced the outsource to IAP in January of 2006, but IAP didn’t take over until 13 months later. The results were predictable: Knowing their jobs were going away, facilities staff left in large numbers — 60 of the original 160.

It’s hard to keep the joint running when there aren’t enough people left to run it. Lesson for IT, and for anyone else engaged in an outsource: Once you announce the decision, finish the hand-off before the mass exodus. If you can’t, promise — in writing — large bonuses for staying on until the transition is complete.

That’s the easy root cause to avoid, because the solution is purely a matter of technique. Here’s the hard one: Walter Reed represented a pervasive failure of organizational listening.

Read the press reports describing General Kiley’s testimony (for example, “Two Generals Provide A Contrast in Accountability,” by Dana Milbank in the 3/6/2007 Washington Post). What should jump off the page at you is not merely that he didn’t know What’s Going On Out There, but that he was blind to the importance of the subject.

He was not merely ignorant. He was willfully ignorant — not a good condition for anyone in a leadership role.

General Kiley didn’t see that barracks inspections would be useful. He didn’t, it appears, recognize that he should spend time talking with those who do the actual work of the organization. He didn’t personally observe his organization in action (or at least, that’s how he described himself in his testimony).

The result: He didn’t know he had problems — with facilities, with administration, with professionalism, with patient care.

How many CIOs, I wonder, approach their work the same way, hearing the organization solely through their chains of command. How many have never looked at a single data-entry screen produced by their developers. How many have never listened in on a single call to the Service Desk; watched while a systems administrator builds a server or troubleshoots a defective one; or sat in on a project status meeting.

Many leaders mistake organizational listening for micromanagement. In case you’re one of them, here’s the secret: Leaders listen to everyone while giving direction through their chains of command.

Micromanagers do the opposite.

The usually estimable Economist has adopted an editorial stance toward corporate governance best described as peculiar. It goes like this:

The compensation paid to CEOs — in many cases more than Samoa’s gross domestic product — isn’t, as it might appear, bloated. Instead it correlates well with company performance. And anyway, it’s justified by the risk CEOs take when they accept the position. (The Economist has apparently redefined “risk” to mean “being able to retire in luxury no matter what you deliver.”)

Meanwhile, the corporate raiders who buy corporations, drain them of cash and take on a load of debt are actually improving the balance sheet. By doing so, you see, they take away from managers the temptation to misuse the cash.

As a public service, I’d like to offer an alternative model of governance to the Economist’s editorial crew: Hire good management teams.

No, this isn’t unrealistic ideological bunk. As evidence of its possibility, look no further than Toyota. It’s a strong candidate for best-managed company in the world. Its CEO, Hiroshi Okuda, receives less than a million a year in compensation, it is sitting on a mountain of cash, and it just continues to gain marketshare, market capitalization, and profits.

Oh … and, it manufactures its cars in the United States, treating its employees well enough that they have no interest in unionizing.

Meanwhile, Ford pays its CEO, Alan Mulally, $35 million per year, it isn’t sitting on a mountain of cash, and continues to lose marketshare and market capitalization. Profits? Maybe some day Ford will figure out a way to “monetize its business model” as folks used to say during the quaint days of the dot-com boom.

Many readers took me to task for last week’s column criticizing Ford and its non sequitur reply to reader Geoff Hazel’s suggestion that it stop running a dumb series of advertisements. It wasn’t Ford’s fault, they explained. It’s Ford’s lawyers and the litigiousness of American society.

Some recognized the absurdity of Ford trying to prevent Mr. Hazel from suing it if it stopped running an ad without compensating him for the idea, but still figured fear of litigation was the genesis of the boilerplate. But even this doesn’t hold up to close scrutiny, for two reasons.

First, nobody has yet sued me for publishing ManagementSpeak, even though I routinely use reader submissions. Why is that? Two reasons: First, the whole litigiousness issue has been overblown, and second I make sure everyone submitting an entry knows the rules — that I get unlimited use without providing compensation. It just isn’t that hard.

To reinforce the point, the New York Times Magazine recently ran a feature describing how Toyota chief engineer Yuichiro Obu and project manager Mark Schrage designed the new Tundra: They talked to large numbers of truck owners and watched them at work. Notably absent was any suggestion that Obu or Schrage worried about lawsuits. They focused on designing a great truck.

Among the lessons for in-house IT: (1) Hire people who want to build great products. (2) Don’t waste their time “gathering requirements” — have them gain, not just insights but empathy regarding how people work. And (3) Keep compliance requirements in perspective. They are important, but they are the tail, not the dog.

That Ford richly deserves its failure is evidenced by another anecdote, this one provided by Joe Pascudniak:

We enjoyed a fortnight in Tuscany in 2004, driving all around the place in a rented Diesel Ford Fiesta. Not like any Diesel I’ve ever driven.

Started right up, just like a gas car. Quiet, no Diesel smell, brisk acceleration. Small wonder that in Europe, Diesel cars dominate the market.

Unleaded gas was about $US 1.25 a quart at the time and Diesel cost us about $US 1 a quart. My Age 20 (Celsius) brain is not as agile as it once was but mentally doing a litres to gallons and KMs to miles conversion yielded an estimate for our Fiesta of somewhere between 50 to 60 mpg.

When we got home, I emailed Ford to ask if they would consider importing Diesel Fiestas to the US. If so, my check would be in the mail.

A week or so later, I got a snotty reply to the effect that Ford’s product plans had no room for a Diesel Fiesta.

I once pointed out that the solution to Ford’s problems is to start building cars people want to buy (see “Time for architecture planning,” KJR 10/9/2006).

It appears that Ford does build them. It just won’t sell them to us.