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fear,
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Iconoclasm
investigations against senior management were launched by the Justice Department. Kumar pleaded guilty to fraud and was sentenced to twelve years in prison in 2006 and to pay $800 million in restitution. Wang resigned from CA’s board in 2002, and the board subsequently launched its own investigation against him. Hehas never been indicted. What is interesting about the investigation’s report is the culture of fear prevalent within CA:
Mr. Wang caused additional harm to CA by creating a “culture of fear,” which caused CA employees, at all levels, to refrain from offering dissenting opinions. He did this by making personnel decisions in an arbitrary manner, routinely firing CA personnel on a subjective basis. This had the effect of suppressing corporate dialogue, by both lower and midlevel employees, as well as in the highest ranks of senior management. According to one witness, CA employees felt as if they were constantly “hanging on by their fingernails.” In the SLC’s view, this culture was the breeding ground in which the 35-Day Month practice originated and later flourished. This atmosphere proved particularly toxic at CA, since, under Mr. Wang, missing Wall Street estimates was to be avoided at all costs. 12
Computer Associates provides a good example of how to inhibit both innovation and iconoclastic thinking through fear and intimidation. Even Wang’s and Kumar’s decision making was distorted by their own fears of failing to meet earnings expectations. Although it is possible to run a company this way, it is not possible to foster iconoclastic thinking when fear is pervasive. Such a company can only grow through the acquisition of others’ innovations.
An Alternative to Fear: The Idea Market
Jim Lavoie, age sixty, is the CEO of Rite-Solutions, a software company based in Newport, Rhode Island, that creates novel software solutions for demanding environments. The company makes programs for submarine command and control systems and visualization tools for CoastGuard helicopter pilots on rescue missions. With his business partner and longtime friend, Joe Marino, fifty-eight, who is the president, the two formed a company whose founding principle is the creation of a culture that fosters fun and innovation. Lavoie is the gregarious one. He exudes energy and enthusiasm and possesses a personality well suited for networking and raising capital. Marino is serious. Down-to-earth, practical, he knows how to run a company and has a good sense for the type of employee who benefits from the culture that they have created. He boasts that Rite-Solutions has a 2 percent annual attrition rate, a feat unheard of in the software industry, in which the norm is 10 to 20 percent. Rite-Solutions is not a big company (about 150 employees), but it has attracted a great deal of attention for its approach to innovation. Lavoie and Marino are not iconoclasts, but they are attempting to coax potential iconoclasts out of their shells. They represent the antithesis of the CA management style.
“Most companies have this funnel,” says Lavoie. “Give me all of your ideas and we’ll choke them down to two ideas. In my old company, if you had a great idea, we would tell you, ‘Okay, we’ll make an appointment for you to address the murder board,’ because the murder board’s job was to make sure the company took no risk. Their job was to shoot down ideas.” 13
Marino explains what would happen. “Some technical guy comes in with a good idea. Of course questions are asked of that person that they don’t know. Like, ‘How big’s the market? What’s your marketing approach? What’s your business plan for this? What’s the product going to cost?’ It’s embarrassing. Most people can’t answer those kind of questions. The people who made it through these boards were not the people with the best ideas.
They were the best presenters
.”
Lavoie confesses, “If you know the game, you can get through the funnel. You
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