Category Archives: Business Development Ethics

Why Companies Must Care about How They Achieve Revenue

“I don’t care how you make your number, as long as you make it,” my district manager admonished his sales team back in 1993. He chuckled, but he was dead serious. His laissez faire attitude was risky. We could have interpreted his statement as permission for dishonesty – a gremlin that regularly meanders into sales organizations. In an odd way, my manager was lucky. I brought moral boundaries when I joined the company. So did most of my colleagues. But a few did not . . . “If I told you all that went down, it would burn off both of your ears.”

I don’t malign my former manager. He didn’t care how his team made quota because his boss didn’t care. Neither did his boss’s boss, or any of the bosses above him. That’s how things often work in sales. When you have a razor-sharp pink slip dangling over your neck, scruples can interfere with job security. The choices are stark: eat, or get eaten. Making goal and focusing on how much you will earn at plan matter more than ethical interpretations. In fact, over my many years as a sales rep, I remember countless meetings and communications dedicated to how to make quota, but I don’t recall a single instance where ethics, honesty, and integrity were even mentioned.

Since before the advent of double-entry accounting, revenue has been glorified, particularly in marketing and sales. Companies heap recognition on top sales producers. They’re consecrated as “Rock Stars” – a term that grates on me when used in this context. Pundits slather on the puppy love, lavishing praise and attention on entrepreneurs and companies that have achieved “explosive revenue growth.” If you’re on the margins of this frenzy, you can tap into “proven” ways to replicate the selling dynamite. Around the world, revenue is the most revered financial metric. And the word carries additional positive meanings: income, earnings, gain, and profit – not to mention connotations of success and power. “Revenue is king!”

Search online for “crush your quota” and “outstanding revenue growth,” (in quotes) and you’ll get about 5,500 and 7,700 results, respectively. These glimpses reveal society’s unflinching adoration not just for revenue, but for its fast and furious capture. But we pay a price. When sales are ill-gotten, revenue reeks. And when we become immune to the stench, there’s pain and suffering. Some of it lasts forever.

In its 2016 annual report, 21st Century Fox, parent company of Fox News, wrote,

“The Fox News Channel, under new leadership, is stronger than ever, and is on track to have its highest rated year in its 20-year history. There has been some speculation that Fox News’ unique voice and positioning will change. It will not.”

and,

“Selling, general and administrative expenses decreased 3% for fiscal 2016, as compared to fiscal 2015, primarily due to the sale of the DBS businesses and Shine Group partially offset by higher selling, general and administrative expenses at the Cable Network Programming segment.”

VW’s 2014 annual report reported revenue this way:

“The Volkswagen Group continued its successful course in fiscal year 2014, again generating record sales revenue and operating profit in an ongoing difficult market environment . . . The Volkswagen Group generated sales revenue of €202.5 billion in fiscal year 2014, 2.8% higher than in the previous year. The clearly negative exchange rate effects seen in the first half of the year in particular were offset by higher volumes and improvements in the mix. At 80.6% (80.9%), a large majority of sales revenue was recorded outside of Germany.”

Yet, at both companies, sordid activities were fully underway at the very time these bland sentences were crafted. At both companies, the activities had direct connections to revenue. And at both companies, senior executives knew what was happening. In the case of 21st Century Fox, hush money was paid to victims of host Bill O’Reilly, whose show, The O’Reilly Factor, was a cash cow for Fox News. And at VW, a clever engineering tweak made it possible to sell nearly 500,000 vehicles illegally.

Of course, it’s ludicrous to think 21st Century Fox would choose to write,

“Revenue and profits were up this year at Fox News due to lower than expected payouts to silence Bill O’Reilly’s sexual harassment victims. Legal costs decreased as well. As a result, SG&A expenses as a percent of revenue achieved its biggest decrease in five years. We expect that trend to continue, despite the obvious risks from Mr. O’Reilly’s predilections.”

Or for VW to share, “While our vehicle portfolio has achieved dramatic improvements in average mileage, VW has not reduced fleet CO2 emissions. However, the company has developed technology to circumvent environmental standards enforcement worldwide, resulting in unhindered sales, and significantly higher profits than could be achieved with compliant vehicles.”

The content in these financial reports, and others, are lies by omission. Providing broader information about legality or ethics would seem the right thing to do, but financial reporting has been a longstanding showcase of corporate self-interest. What emboldens companies to remain opaque about their dirty revenue laundry is the knowledge that the word revenue carries a pleasing blend of excitement, gravitas, and respect. Whether on a financial report, blog, or press release, consumers of financial information want to be awed, impressed, and amazed. And apparently, deceived. That, and accounting standards don’t require CFO’s to distinguish ethical revenue from unethical. Most companies lump everything into a single account, and present the consolidated figure.

Even respectable business publications bow at the revenue altar. On April 3, 2017, Forbes published an editorial stating that O’Reilly’s job was “safe” at Fox News. The reason? One word: “Money.” The article continued with forceful facts: “The O’Reilly Factor generated $446 million in advertising revenue for the network from 2014 through 2016, according to Kantar Media. Last year, the show brought in an estimated $110.8 million in ad revenue, according to iSpot.tv. That compares to the 2016 of $20.7 million in advertising for MSNBC’s biggest star, Rachel Maddow, who is on an hour later. Fox News makes up about 10% of its parent company 21st Century Fox’s revenue and about 25% of its operating income.” No wonder O’Reilly felt his crude behavior was beyond reproach.

“’21st Century Fox certainly has an economic incentive to keep Bill O’Reilly on air,’ says Brett Harriss, an analyst at Gabelli & Company, adding that any backlash the company faces from advertisers would be temporary.” Just 16 days after the Forbes column published, Fox fired O’Reilly. Yes, Mr. Harriss, preventing a valuable brand from winding up in the dumpster is a powerful economic issue, too. To the women who suffered from O’Reilly’s depredations, there’s little solace that the company’s numb executives eventually kicked him to the curb. It should have happened much earlier.

My former boss’s attitude about making quota isn’t unique. In fact, it has spread far and wide. A rogues’ gallery of corporate apathy that recently splashed into the news:

In making goal . . .

We don’t care if employees are grievously harmed. (Wells Fargo)
We don’t care if innocent people are sickened. (Peanut Corporation of America)
We don’t care if the people who use our products die. (Takata, GM, Turing Pharmaceuticals)
We don’t care if our customers are hurt. (United Airlines)
We don’t care if our customers are deliberately deceived. (Wells Fargo, Trump University)

What’s the remedy? The problem defies simple approaches, but here’s a start:

1. Care. “I don’t care how you make your number, as long as you make it,” isn’t inspiration. It’s infection.

2. Stop rewarding executives, marketing professionals, and sales staff exclusively for revenue achievement. Select other measures that include customer value delivered.

3. Stop obsessing over maximizing shareholder value. One reason that many strategic decisions ultimately cause harm. According to Professor Bobby Parmer of the University of Virginia’s Darden Graduate School of Business, “Shareholders don’t own the corporation. Public companies own themselves. Shareholders own a contract called a share. There is no legal reason to put shareholder interests above anyone else. It’s a choice, but not mandated. There is no legal duty to maximize profit. As long as executives aren’t violating the law, the courts won’t interfere with their decision making . . . Across hundreds of studies, there is no evidence that companies that maximize shareholder value are more profitable.”

Would these tactics eliminate all corporate harm? Probably not. But they would reduce the likelihood. We need to redirect our revenue infatuation into pursuing outcomes that bring broader benefits. We need to abandon our consistently polite, reverential rhetoric about revenue. We will always have good revenue and bad revenue. First, we must learn to distinguish between the two, and to appreciate that the difference matters.

Disobedience: A How-to Guide for Managers and Employees

Somewhere, a manager just ordered an employee to take a questionable action. To do something immoral or stupid. Something that causes harm to customers. There – it just happened again! In less than the time it takes to read this paragraph. Relentless wrongdoing. It happens all over the world.

It was a demand to ignore a customer’s legitimate complaint. An instruction to deny a refund when it was owed. An assignment to use big data to exploit vulnerable customers. A request to physically remove a passenger from an airplane because his seat was needed for someone else. “Follow the rules. Your job depends on it.”

The rule-following edict is a painful artifact of an abiding corporate culture that champions profits uber alle. Millennials, listen up: free thinkers are an impediment to efficiency. They don’t mesh with our manic, bottom-line obsessed business environment. “Objections are a luxury. We have a quota to meet, and there are only so many hours in the day.”

Tell that to the management of United Airlines, who are suddenly scratching their heads, wondering how to foster employees with less malleable backbones. Employees who don’t tremble when saying, “maybe we should consider another approach . . .” Good luck with that. The company just spent decades beating their employees into supplication.

When videos such as Dr. Dao’s violent removal from United Flight 3411 go viral, pundits echo the same three conclusions:

1. The corporate culture of the offending company is toxic,
2. There’s too much insistence on sticking to policy,
3. Employees need to be allowed to use their own judgement

If you’re looking for epiphanies, I suggest not reading any blog titled, What United Did Wrong. By now, we know. And among the “fixes,” you’re guaranteed to find employee empowerment, or some derivative of the idea. Hooray! Embedded in an Official Corporate Apology, we can expect a well-crafted sentence that contains the phrase, “our employees are now empowered to . . .” [Interesting note: that phrase – in quotes – received 175,000 search results].

When all else fails, try empowerment. We’re about it hear it like never before: Employee empowerment – or rather, employee empowerment! – get on the bandwagon now if you need a panacea for misguided corporate goals, bad policies, and ambiguous instructions! If only correcting scandals, scams, and commercial transgressions were that easy. Au contraire! Righting wrongs is not like flipping a switch. Or perfunctorily telling employees, “you are now empowered to . . .  Now, let’s get on with business as usual . . .” Alas, empowerment is never one-and-done.

In the context of an enterprise, empowerment, defined as authority or power given to someone to do something, is more a process than a word. For employees, empowerment assumes the ability to disobey immoral orders. I’ll go further: it imparts an obligation to do so.

To understand the complexities of this idea, I’ll revive a 1961 experiment by Yale professor Stanley Milgram, who wanted to learn whether men of various backgrounds would administer an electric shock to a stranger when asked by an authority figure to do so. The experiment resulted in 64% of the participants obeying the order, and 36% refusing. At the time, Milgram’s experiment concluded that there was no factor – demographic, age, occupation, marital status – that predicted whether a given person would be an order follower or resister. Not a comforting insight.

Fast forward to 2017. University of Virginia professor Bidhan L. Parmar conducted a new analysis on Milgram’s data, and he discovered heretofore unknown commonalities within the two groups. According to a February, 2017 article, Remove the Blinders: How to Disobey Immoral Orders, “After reviewing more than 1,000 pages of audio transcripts from the experiment, Parmar noticed subjects who ultimately disobeyed demonstrated distinctive speech patterns. They tested their assumptions, exercised “moral imagination” and speculated out loud about the consequences of their actions. (“Suppose he gets all these wrong, and I get up to a level where it’s going to be extremely painful?” asked one resistor.) The resistors were also quicker to personalize the issue and made more “I” statements. Said one resistor, “I can’t keep doing this to him” while another noted, “I don’t think I want to be part of this any longer.

“On the flip side, subjects who obeyed showed different verbal patterns. They dug into the procedural details of the task, which was to read word pairs and administer a shock if the unseen person could not correctly associate them (typical comments included ‘Do you want me to read these  fast or slow?’ or ‘Do you want me to write down the ones he gets wrong?’) The obeyers kept moral blinders on and read out word pairs, even as the ‘shocked’ person cried out.” (Note: nobody was physically harmed in the experiment. Milgram used actors as subjects, and the cries were recordings that were not created under duress.)

Parmar’s conclusion: “Resistors developed a moral understanding by asking questions, speculating and empathizing with “I” statements. Ultimately, they were able to override the authority’s instructions and make their own judgments.” Creating that outcome requires more – way more – than simply telling employees, “you’re empowered to . . .” Putting Parmar’s discovery into operation takes fortitude, planning, coaching, and – most important – giving employees room to question management’s requests, and to discuss their concerns. When executives cop an attitude that their policies are sacrosanct, when they lose ability to see wisdom from anyone other than peers, you get Dr. Dao bloodied while being dragged from his seat. That, and many, many lesser-known incidents resulting from the same hubris.

“In daily life, most people face choices in which there is a lot of ambiguity and the ‘problem’ isn’t always apparent,” Parmar says. “All of us are embedded in environments where we get conflicting orders, and often it’s not obvious what the right thing to do is.”

To boost the chances for employees to voice conscientious objection, Parmar recommends that managers should:

• Seek out dissenting views on key issues.
• Question routine actions: Ask why something needs to be done (or not) and what purpose it serves.
• Speak up when business imperatives conflict with personal morals.
• Protect those on your team who ask questions.
• Consider data from multiple angles.
• Make ethical reflection and discussion a regular part of team work sessions: How does our strategy affect customers, community, employees, the environment? Who might gain under this plan? Who might suffer?

Disobedience. Today, calling it moral imagination makes it sound more productive. That will keep the C-Suite happy. But it also might be the best liability protection a company can have.

Personalization: Gateway to Dystopia

Back in the ‘90’s, Robert, a project manager at a systems integrator, asked me for some technical guidance about automated identification. “I want to track people,” he said. “Basically, I want to know when a person enters a room, when he exits, when he’s out in the hallway. Wherever a person is, I need to track it, and to know.”

“That sounds like a prison!” one of his colleagues quipped. The colleague was right. Robert’s client was a correctional facility, and the need was not trivial. Robert shared many reasons for keeping tabs on an inmate’s whereabouts, 24/7. To achieve his goal, I helped him cobble a network of barcode printers, scanners and other devices. In the 20 years since, technological advances and the IoT (Internet of Things) has immensely simplified this task, making it both inexpensive and quick to deploy. I predicted this. At the time, uses for RFID and related technologies were rapidly expanding. I also anticipated that consumers would similarly become coveted targets for surveillance. But in my wildest imagination, I never expected how compliant they would be in allowing others to monitor them.

Surveillance carries a sinister ring, unless, I suppose, you’re a professional spy. Understandably, marketers skate around the term whenever they create ads, web pages, press releases, and other content. Fortunately, they can substitute a related word, one that’s friendlier, with proven sales mojo: personalization. In a digital economy, that helps clear the path to the crown jewels of marketing: detailed personal records.

The sales speil for Ocean Medallion, a new wearable offering from Princess Cruise Lines, gets an A-plus for cleverness. “You don’t need to introduce yourself to your Ocean Medallion Class ship; it knows you already. Your crew? They answer your requests before you even ask them. We’re giving you more than elevated personalized service; we’re creating personal moments.”

Providing personal moments for passengers doesn’t happen without surveillance and amassing a trove of valuable personal data, and other information. Princess has invested accordingly. To track its Medallion-wearing guests, Princess equips its vessels with around 7,000 sensors. What do these sensors sense? Well, remember the prison example I mentioned. Then, let your imagination soar!

Thanks to Sting, a darker, more poetic way to express the same idea:

Every breath you take/
Every move you make/
Every bond you break/
Every step you take/
I’ll be watching you

Personalization involves feeding a ravenous data engine, and sensors provide much of the input. The output cascades through colorful displays. Throughout every Medallion-equipped ship, Carnival has strategically positioned 4,000 15” plasma screens to push personal messages to passengers. “Hi Candace! Karabela dresses are now 25% off in the women’s boutique on D-Deck.” Candace receives this information because Princess knows about her buying habits, including when she’s likely to purchase what. It also helps that Princess owns an archive of her activity since the start of her voyage, and an algorithm knows that every day around 4 pm, Candace wanders to the bar on D-Deck, ambling right past the boutique. Ka-ching! “Imagine how many more margaritas, massages and shore excursions [the company] will sell by making it so simple to book by using a Medallion on your wrist that unlocks personalization for you everywhere,” Chris Peterson wrote in a blog, 5 Things Retailers Can Learn from Booking a Smart Cruise.

Indeed. For Princess, research about individual customers starts before they embark. Thanks to social media, Princess has a ready-made repository of fungible insight. “The goal of pre-planning is learning more about our guests,” said Michael G. Jungen, Carnival’s Senior Vice President of Experience, Design and Technology  (Carnival is a Princess brand). According to a New York Times article, Coming to Carnival Cruises: a Wearable Medallion That Records Your Every Whim, (January 4, 2017), Jungen “noted that passengers would have the option of linking their medallions with social media accounts, allowing Carnival to delve even deeper . . . As Carnival designed the Ocean Medallion system inside an unmarked building here in suburban Miami, it built a replica set of staterooms, corridors and other ship facilities to test concepts. Scribbles on a monumental white board in one area contained algorithms and personalization ideas.” Examples: when you eat dinner and what you watch on TV. More? . . . Oh yeah!

Jungen and colleague John Padgett, Carnival’s Chief Experience and Innovation Officer, brought their CX and data collection skills from Disney, where they developed a wristband system called MyMagic+. Disney invested over $1 billion in the project. “The ultimate goal here,” Padgett said, referencing a Disney aphorism, “is to delight and surprise our guests.” He makes a good point. Cruise vacationers like to feel pampered. They want special seats in restaurants. They want food brought to them whenever and wherever they are. They don’t want to stress about knowing where their kids are on a massive ship. Wearable guest-tracking devices make these perks possible.

Carnival, and other companies that collect and store large amounts of customer information, explain that their motivations are benign, and that their intent is to provide consumers unprecedented conveniences and outstanding experiences, or CX. That may be true, but it’s not the full story. The same detailed digital customer profile that enables the bartender to custom-pour Candace’s Negroni also feeds finely-tuned algorithms that are superb at separating her from her money. That includes long after the cruise ship returns to the dock. For Carnival, Candace’s digital profile is a cash cow that keeps on giving. Little wonder that Carnival would like every passenger to wear an Ocean Medallion. They just don’t divulge ongoing cash flow and data monetization among the reasons.

Customers should consider what they sacrifice to experience those personal moments. With wearable devices, it’s no longer theoretical to ask which intimate details can be captured and recorded. The correct question to ask is not, “why would a company want that kind of information?” but rather, “what’s stopping them from getting it?” With over 7,000 sensors aboard a ship, I suspect very few people know where all of them are placed, or what activities they monitor. I’d start with the stateroom.

In 2012, President Obama said that “companies should present choices about data sharing, collection, use, and disclosure that are appropriate for the scale, scope, and sensitivity of personal data in question at the time of collection.” In other words, businesses should tailor privacy rules to the data itself. But when I visited the Princess website, I did not see any disclosures or policies specific to Ocean Medallion. And their latest privacy statement was updated in December, 2014, before Ocean Medallion was introduced. “Some data collected from wearables may be relatively trivial, but other data can be highly sensitive,” said Kelsey Finch, Policy Counsel for the Future of Privacy Forum (FPF), which has published a paper providing recommendations for wearable privacy practices.

Before donning an Ocean Medallion, or other wearable device, what should consumers want to know? The US Federal Trade Commission offers sensible guidelines for companies to include in privacy statements:

• identification of the entity collecting the data

• identification of the uses to which the data will be put

• identification of any potential recipients of the data

• the nature of the data collected and the means by which it is collected if not obvious (passively, by means of electronic monitoring, or actively, by asking the consumer to provide the information)

• whether the provision of the requested data is voluntary or required, and the consequences of a refusal to provide the requested information

• the steps taken by the data collector to ensure the confidentiality, integrity and quality of the data

And I’ll add a couple of my own:

• How long will the data be retained?

• How will it be protected?

For now, these guidelines unevenly used – if they are used at all. And I’m not bullish that consumers will demand that companies adhere to them. There are two reasons: first, I don’t think consumers care. Many are digital natives who are jaded about digital surveillance. And thanks to clever marketers, the “wow!” of personalization – like having a waiter just hand you your favorite drink whenever and wherever you want – supersedes consumer concerns over data governance. Please – the next type someone spouts hype about customers having all the information power, remember Ocean Medallion.

Second, Congress just emasculated the already-weak consumer protections regarding data privacy. If Trump signs the joint resolution of congressional disapproval, Internet providers are free from any obligation to get a consumer’s approval to “share or sell things such as your geolocation, your children’s information, your financial information, your Social Security Number, your browsing history, your app usage history, or the content of your message data plan . . . Internet providers will also be free to use customer data in other ways, such as selling the information directly to data brokers that target lucrative or vulnerable demographics”, according to a March 29th Washington Post article, Congress Pulls Plug on Internet Protections.

You’ve probably gathered from my polemic that I’m not a good prospect for Princess or Ocean Medallion. You are right. But if I became their customer, I suspect Princess could quickly learn more about me than maybe I even know about myself. Thanks to Congress, all it now takes is transferring personal data from my Internet Service Provider, blending it with Ocean Medallion’s personalization data, and voila! – digital gold! The worst part (or best part, depending on your perspective): no consumer disclosures are required. A chilling thought that signifies how many more miles we’ve traveled on the road to dystopia.

Surveillance enables personalization, and personalization brings customers personal moments. But those wonderful times won’t be free, and they won’t give people freedom. Being watched never does. There will always be more personal details revealed, and an accompanying monetary transaction.  Personalization delivers marketers an unprecedented ability to know customers intimately, and to hone how they sell to them.  That should give every consumer momentary pause.  Meanwhile, expect vendors to continue hawking the wonderful CX that personalization enables. For them, the value of what customers so willingly sacrifice is incalculably high.

How to Implement a Price Increase

This month, I had a remarkably cruddy customer experience. “So what?” you say. “That’s not unusual.” Agreed. But this foul was so grievous, I worried whether another company might repeat the gaffe.

As a professional marketer – as a compassionate human being – I feel duty bound to intercede. If your company is about to wander into the same bad spot, please . . . don’t! Take a deep breath. Get some fresh air. Walk around the block. Pause by reciting the alphabet backwards.

What was the gaffe? A price increase! Well, not the price increase itself, but how it was done. If you want to learn how one company raised prices, and committed a pile of customer missteps along the way, read on . . .

Just after Thanksgiving, I went to Lifetime Fitness for a session with my trainer. I will call him Jim. “Bad news,” Jim said the moment he greeted me. “We have a price increase effective immediately. Personal training now costs another $9.00 for the hour.” “Why?” I asked. “Member education,” he replied, adding that the new rate applied to all Lifetime members, not just at my local facility.

My quarrel is not with Jim. And I’m not even fussing about the price increase, though I could. My beef is with how Lifetime handled it.

Here are tips for a gentler, more effective way to request more coin from your customers:

1. Communicate the price increase in writing. Lifetime put the entire communication onus on its trainers, who mostly informed customers face-to-face, using inconsistent messages. A written explanation from Lifetime’s corporate office should have been available to members. And as of the time I wrote this, Lifetime revealed no information about the price increase on its website.

2. Provide adequate lead time for staff and customers. Lifetime’s trainers told me the corporate office announced the price increase barely one week before it was to take effect. Even worse, that was on November 22d, the Tuesday before Thanksgiving, when many people travel.

3. Give solid, unambiguous reasons for the increase. “Member education”? Clear as mud!

4. Offer a management point-of-contact – including phone number and email – to address questions and concerns. Lifetime provided none, though when I requested it, Jim gave me the email address for his immediate supervisor, who reached out to me within 48 hours.

5. Make sure the frontline staff understands and supports the price change. Based on my conversations with employees, Lifetime bellyflopped by not providing adequate communication or soliciting staff feedback.

6. Expect reactions, and plan for the risks. Concern, complaint, and churn – all of it will come. And Lifetime was unprepared.

Right now, across the USA and around the world, you can find the words price increase scrawled in Magic Marker on thousands conference room whiteboards. Unwelcome change, waiting in the wings. How will customers perceive the news?

When announcing higher prices, management has a choice: they can project clarity, consideration and care, or, in the case of Lifetime, they can demonstrate callousness, opacity, and arrogance.

Above all, a price increase presents an opening for a company to engage with its customers in ways that aren’t predestined to be negative or confrontational. “Here’s why we value your business. Here’s what you can expect from us in return. And if you’re concerned, tell us! We’re listening, and we want to hear what you think.”

That healthy opportunity blew right past the senior management at Lifetime.

Is the Voice of Risk Being Heard?

“If only HP knew how much HP knows, we would be three times more productive,” Hewlett-Packard CEO Lew Platt said.

Had Mr. Platt been talking about his sales organization, he would have pumped up the multiple. Sales teams possess a trove of valuable commercial knowledge. It’s not unusual to find reps who are fluent in finance, marketing, strategy, product engineering and customer support. Some have lived or studied abroad. Some are multi-lingual. Add street smarts about customer behavior, and you’ve got formidable brainpower.

Good for customers, but a mixed bag for employers. Knowledge and risk awareness go hand-in-hand. That can threaten mangers, especially when assigning individual quotas and sales targets. A bit less knowledge makes team members more compliant. Naivete makes management’s fuzzy planning numerology and “stretch goals” easier to swallow. “Team! Get out there and nail your quota!” Woe to the salesperson who tells her boss, “I have a 70% chance of making my number.” In sales culture, determinism is revered while probabilistic thinking gets ravaged.

More! Faster! Better! In this make-your-number-no-matter-what environment, the voices of risk get stifled. Problems don’t surface. Issues remain under wraps. Objections aren’t discussed. “We need to keep meetings short and use our time efficiently,” senior sales executives tell me. “Besides, we aren’t interested in dealing with stuff we can’t change.” Yes . . . But . . . There are significant hard costs when management cannot assess vulnerabilities, let alone, even know what they are.

More than ever, organizations need to be intelligent about uncertainty and risk. Something that former Wells Fargo CEO John Stumpf didn’t appreciate before he landed in a hot seat in front of Senator Elizabeth Warren, who eviscerated him with questions about his company’s widespread abuses. Stumpf got so flummoxed, he could hardly speak. Senator Warren provided most of the answers, too.

In fact, Stumpf’s management team brutally crushed the voices of risk as a way to insulate themselves from what was happening in the field. Using a cudgel called U5, management silenced internal dissent, enabling Wells to implement practices that exploited its customers and employees. U5, a federal form, was intended to prevent financial services employees who commit fraud and other violations from hopping from firm to firm and repeating their transgressions. But Wells Fargo’s management warped U5’s beneficial purpose to intimidate sales employees into submitting to their heinous demands.

When slapped onto an employment record, U5 carries serious consequences. To hiring managers, it means “don’t hire this candidate.” To employees, it means “Move to a Caribbean island and open a sunglasses stand because you’re not working in financial services. Not now. Not later. Not ever.” U5 made it possible for Wells Fargo’s Management to deliver an ominous message to its staff: if you have the temerity to speak out, blow the whistle, complain, resist, or express unhappiness or unwillingness, we will ruin you. And they meant every word.

We will never know with certainty which statements got silenced, but here are a few possibilities:

“These goals are impossible.”

“My customers don’t like our policies.”

“I’m uncomfortable doing this. It’s unethical.”

“The stress here is burning me out and making me sick.”

“No. This is wrong.”

The voice of risk, U5’d. A well-known verb in the bank’s HR Department, I am sure. With U5 and the repressive sales culture at Wells Fargo, untold millions of similar comments never reached the vocal chords – and keyboards – of its employees. A tiny few seeped out. Just not enough to awaken regulators and Wells Fargo’s board of directors from their slumber. It took an outsider’s report – an investigative article in the LA Times – to goad anyone into action. If you want to crush the voice of risk, here’s your model!

Voicing risk, pushing back, calling out red flags, blowing the whistle – use any terms you want. Wells Fargo used the threat of severe punishment to systematically turn off every communication management didn’t want to hear. An extreme case, for sure, but far from isolated. Where there’s disdain for knowing the truth, a company’s sales culture will reveal it:

“Sell what we’ve got!”

“I don’t want to hear how you aren’t going to make your number, I want to hear how you are!”

“Don’t give me problems. Give me solutions!”

“Stop making excuses!”

“Quit whining!”

One of the most effective ways to shut down the voice of risk is to brand an employee “not a team player,” or “doesn’t believe in the company’s potential.” It’s not U5, but punitively, it might be the next best thing. Try getting promoted or landing a better sales territory with those tidbits embellishing your personnel record. Management’s message: “if you want to stay here, do as we say, and don’t rock the boat.”

“But . . . nobody wants a department full of Chicken Littles, either!” Fair point. There are clear strategic advantages to being picky about the information one accepts before making a decision. Managers must be granted the flexibility to determine what’s useful and valuable, and what to eschew. After all, in sales and selling, there are no universally recognized standards for framing the truth. Look at any B2B sales organization, and you’ll see different managers using different dashboards, and no two turning the same dials and knobs. Vive la difference!

Yet, there’s a distinction between healthy selectivity and willful ignorance. Sales culture should never be an accomplice to the latter, yet the problem is epidemic. The annals of corporate failures are littered with companies that subdued the voices of risk, and created horribly skewed versions of reality. “Employees are our greatest asset! Amazing that none of them are doubters or naysayers!”

Make sure the voices of risk are not silenced at your company. That begins with the board. In an article, Culture: The One Element Most Critical for the Board’s Management of Risk , Jay Taylor, CEO of EagleNext Advisors, recommends six questions to ask:

• Is the CEO active in creating the culture for the organization? Is he or she modeling the right behaviors?

• Is there appropriate tone at the top, both during and outside of board meetings?

• During strategy, product, and investment discussions, is there transparency around business assumptions, openness to respectful but challenging views, and identification of emerging risks to the business model beyond the immediate planning horizon?

• Is there a willingness to bring forward bad news? Is there an understanding that failure may occur, but the business cannot grow and prosper without taking smart risks?

• Has the board established clear expectations for timely identification and handling of risk, particularly those around business goals and objectives? Is there clear risk ownership?

• Not everything should be filtered through the CEO. Are other executives and risk owners present at board meetings and allowed to take questions directly?

The answers to these questions directly influence the culture within the sales force. They influence the strategy, tactics, compensation, and measurements under which business development teams operate. When salespeople believe that the board views risk management, governance and compliance as a crucial responsibility, an ethical environment can be established within the sales organization. The converse is also true: when it’s evident the board doesn’t want to be bothered with protecting the company’s stakeholders, [stuff] will happen. We saw how that works at Wells Fargo.

In addition,

1. It’s understandable that not every anecdote from the sales force constitutes an “action item,” but make sure it’s clear that salespeople will not be penalized for voicing issues to management.

2. Don’t limit account reviews to “wins.” In meetings and internal communication, allow frank discussion about what impedes selling, and make sure no person or department is held sacrosanct in the conversation.

3. Don’t condemn people for probabilistic thinking. Instead, embrace the approach! That won’t make anyone less determined, resolute, or rabidly goal-focused. In fact, the sales team and its managers will become more risk-aware.

4. Appoint at least one board member to serve as a direct point-of-contact for salespeople who want to elevate concerns about illegal or unethical practices, or any other activity that endangers the company, its employees or its customers.

Uncork the knowledge that exists in your sales organization. Giving risk a voice, and a safe way to express it, provides a measurable financial return. And in the case of Wells Fargo, it could have saved the company from itself.