In 1989, consultant Sidney Yoshida presented a study known as the "Iceberg of Ignorance," showing just how blind executives are to their own organizations. Yoshida's work revealed that at Japanese automaker Calsonic, frontline workers knew about 100% of the problems facing the company--but company leadership was aware of hardly any of those problems.
As Yoshida talked to employees, he found that knowledge of problems dropped off steeply the higher he went up the management chain. One level above the frontline, Calsonic supervisors knew about 74% of the issues facing the business, but that number dropped to 9% when he talked to middle managers. Worst of all, senior managers only knew about 4% of the problems in their own organization.
This should terrify any CEO worth his or her salt. Granted, this research was done over 25 years ago. Is it still relevant? I would argue yes, and that the problem is probably worse today.
In an increasingly service-based economy, surfacing problems from employees presents a greater challenge than ever before. Why? A few reasons:
- We're not on the assembly line anymore. Problems facing a manufacturing-based operation are much easier to identify and solve than those facing an organization where complex knowledge work is being done that touches the customer directly.
- We're drowning in data. Data and communication channels have proliferated to an overwhelming point. There's data, data everywhere, but hardly a drop of real insight to act on.
- Our organizations are more complex. Now that teams are increasingly distributed and organizations increasingly matrixed, passing problems up a simple hierarchy is no longer a possibility.
Keeping this in mind, here are five ways top leaders can close the gulf between what they know and what their employees know.
1. Be seen and heard.
Like a general on a battlefield, leaders must be seen and heard if they want employees to trust them enough to share problems. If you practice management by walking around consistently, people will begin to feel comfortable telling you things about the business you otherwise wouldn't have known.
2. Ask (and then listen).
People aren't going to answer questions you don't ask. Make a habit of talking to employees about how they feel about their work, how things are going, and any issues confronting them. Just as important--actually listen to what they say. Try to talk less and listen more. Be quick to assume that maybe it's you who has something to learn.
3. Reward your truth tellers.
Seeing the full iceberg requires that you build a culture of transparency, accountability, and psychological safety, one where people understand their role in company strategy and feel comfortable bringing up problems as they arise (rather than sweeping them under the rug to make themselves look better). It takes guts to speak up when you encounter a problem, especially if you are, for example, an entry-level employee who knows his comment may reach executive leadership. When someone brings up a valuable problem, thank him or her and, if appropriate, talk to the whole company about what happened. If you send the message that people should "only bring you solutions," you'll never see more than the tiny tip of the iceberg.
4. Put data into context.
Some executives might be tempted to dive into data-analysis mode to uncover all the problems they are blind to. This is a mistake, especially for CEOs. If you're not a specialist in the type of data you're looking at, you're more likely to simply waste your time. Instead, train your executive staff to make predictions based on their functional data and inform you at regular intervals about how well they are tracking toward their goals.
5. Leverage technology.
If your business is past a certain size, it's simply not feasible to talk to everyone in person and get their insight and perspective. Fortunately, a variety of software solutions exist today that can help you gather input from your workforce, whether through surveys, updates in goal-setting systems, or other forms of feedback.