#128- There’s No Right Way to Do a Wrong Thing
John (Intro): I have been on a quest to learn everything I can about leadership obsessed with what makes the best leaders so good. After running companies small and large for the last 20 years, today I speak on stages all across the world to audiences who are interested in that same question. My name is John Laurito and I’m your host. I invite you to join me on this journey as we explore this topic: What makes the best leaders so good? Welcome to Tomorrow’s Leader.
John: All right, welcome to today’s episode of Tomorrow’s Leader, where we dive deep on all things leader-related, related to leading yourself and leading others. So many stories to go through today. Today is one of my favorite topics, and it’s beyond just one episode. So
this might cover the span of two or three or four. Maybe we’ll come back to this at some point in the future as well. But the topic is the topic of integrity and how important that is as a leader and not just how you handle it, but also how to set the right culture in your organization. And I have seen time and time again organizations, once great organizations that absolutely slide down a slippery slope because they take their eye off the ball. And ultimately it’s a slow degradation of standards. And when it comes to integrity, there is no right way to do the wrong thing. So despite what many people may think, when some leaders may think in particular and I’ll give you some examples again, you know, I love stories. So stories, I think make a point. I think back to a few different things.
John: One, I think back to 2010, I think it was November when in the middle of the night a British Petroleum tanker exploded, killing, I think it was 11 crew people and spilling like five million gallons of crude oil in the middle of the Gulf of Mexico. It took months and months to just cap the spill, literally to plug the spill and the leak and the damage environmentally and all around in the local countries and the supply chains and everything, let alone the oil industry, was disastrous. And it was not millions. It was billions. Well, when they went back and looked ultimately this stemmed from the fact that British Petroleum was negligent in how they treated the maintenance and the safety of this oil rig. So ultimately, it was an oil rig. So what they did was, I think the number escapes me, but it was something like 700 egregious, willful, as they call that violations over the course of like, I don’t know, two years that they had been cited for from OSHA.
John: And compare that to like Exxon and, you know, Sunoco and some of the others where they had one, you know, two, three, maybe five over that same period of time. It was literally that big of a difference. 700 plus egregious willful violations. They had just done a survey, I think it was a couple of weeks before this disaster and they had surveyed. I can’t believe they even took the time and the effort to do this, but they had surveyed the workers around the safety conditions, I guess one of many things. But the safety and the overwhelming feedback was, OK, this is a disaster waiting to happen. There was so much evidence that this was going to happen. It was literally like watching a movie you’ve seen before and, you know, the ending of the movie, it was absolutely predictable.
John: So ultimately, that’s that comes down to integrity where you have a problem that you know is going to be there. The reason was plain and simple. And they ultimately
acknowledged it was to cut costs and to save money. It was purely financial, and wasn’t even laziness. It was purely a financial decision to risk lives. Now it ended up costing them, I’m going to say something like 18 billion dollars, British Petroleum, in terms of fines, penalties, costs, environmental fines, everything, once this was all said and done. So had they taken the time, had they literally taken whatever amount of money and even a year off of their, you know, hit the pause button on their drilling, it would have been a fraction of the overall costs and ended up being. So ultimately, this major major, I’m not going to say it’s a lapse in integrity. It just was a total outright blatant disregard for doing what’s right. Ultimately cost lives. It cost so much environmental damage and it ultimately cost them so much money.
John: You see organizations do this all the time. Now, that’s an extreme example. I’ll give you some not so extreme examples that maybe didn’t cause physical damage, but they damaged reputations significantly. And you can spend 30 years building up a reputation and you can absolutely destroy it in a minute. You see people do this well, you see companies do this, too. And I’ll give you a great example for those of you who remember Blockbuster Video. Now, Blockbuster Video when I was a kid was like the place to go. That was the place where you just look forward to going there on a Friday night or Saturday night. You peruse and look for the movies you wanted to get. And, of course, all the ones you wanted to get were not available that day. But it’s just a fun experience. I kind of equate it to like going to a Starbucks. It just you walked in, you felt good. You know, you’re going to get a movie. It was the thing to do. It’s a Blockbuster, you know, was booming. I mean, it was the thing is, I think this was back in the 90s. It was the place to go. And it was growing like crazy. I mean, making money hand over fist.
John: Well, interestingly enough, if you know the story of how Netflix was started, Reed Hastings started Netflix out of his frustration from returning the movie Apollo 11 or Apollo 13, one of those and got a late fee, I think the late fee was 40 bucks. And he got so pissed that he ultimately started Netflix. That’s truly the start and how it was born. Now, what was interesting, and there’s a lot more to this story that won’t go into but actually Blockbuster had the ability to purchase Netflix at one point for 50 million, which would have been an unbelievable decision and certainly a great investment. And they declined and they did not, you know, the end of the story. And ultimately, Blockbuster has gone bankrupt. There’s one Blockbuster that is still open and it is not open as a Blockbuster. It’s opened as an Airbnb. Believe it or not, you can actually stay overnight. And the one remaining Blockbuster that exists leaving to where it is. But my daughter Skye showed me that because we’re looking at places to go, go to Blockbuster, go overnight. I’m like when I looked at him, like, that’s kind of interesting. Kind of cool, I guess.
John: But so anyway, what Blockbuster did now, Blockbuster made its money, and I’m going to pause and give you a chance to think about it. Where do they make a large portion of their revenue? Well, I kind of just told you, because Reed Hastings felt the pain of that and that was late fees, right? It’s just you’d always return these things late. You get late fees. I forget the percentage, exactly. But Blockbuster earned in one year, I think it was 20% of its revenue, but it earned its max year. 800 million dollars in late fees. Not 8 million, not 80 million. 800 million dollars in late fees. 800 million dollars in penalties. So basically one of its largest revenue streams was penalties was punishing its customers. That’s how they made money. Ridiculous. Well, understandably, there was so much backlash. Everybody, you
know, just soured on Blockbuster wouldn’t want to do this. Netflix was coming along the scene and they were coming up with a different solution and a different model. So what did Blockbuster do? Blockbuster came up with an idea. They got all their executives together and they brainstormed and came up with a brilliant idea. Hey, if our customers are complaining about late fees, they don’t like them. Let’s listen to our customers. Let’s get rid of late fees altogether. Gone. OK, so they began a massive ad campaign.
John: I’m going to show this to you. This is one of the signs all of you can see it. If you’re watching YouTube, you can see it. It says, Welcome to Life After Late Fees. And if you’re not watching YouTube, my YouTube channel here, you should subscribe to it because you see all this cool stuff. But if not, just Google Blockbuster late fees and look at the images. Welcome to Life After Late Fees. Now, there’s tons of different ads they put out. None of them have, some of them had some small print. None of the small prints said anything other than, yeah, no more late fees. We heard you. We took action. That’s it. They had posters plastered all over the place. Well, here’s what happened. You go get a movie, which was fantastic. No late fees at all. You return it whenever you want.
John: Now, the little tiny print, the small print that wasn’t actually printed anywhere was that if you kept it for longer than seven days, they assumed that you wanted to buy it. So as a convenience to you, they build you $30 on day eight. Legitimately. That’s their campaign now. They said they were not going to charge late fees, and they blatantly charged not only late fees, but exorbitant late fees and absolutely were so deceptive and misleading and doing it well. Needless to say, class action lawsuits, fastforward Blockbuster is bankrupt and the Brainiacs of that idea should be put in jail if they’re not already, ridiculous. But that all comes down to integrity. How can you sit in an office, think through an idea and think that’s actually OK to do? To deceive the public? I mean, what does that actually say about the values of that type of organization?
John: Again, I give you an extreme example, but this small stuff, too. You know, the Navy treats our I’m sorry, the Marines treats integrity and all branches of the military. So it’s not just Marines because I’ve read enough about them, treats integrity as just the utmost core
value. A great example of this is there was a mission, one of the training missions, one of the Marines fell asleep during one of the training missions. Now, in the grand scheme of things, it’s certainly punishable. It’s not an incredible big deal. But they ended up discharging him from the Marines. And the reason was not because he fell asleep, but when they confronted him about it, he said he denied it and said, no, I did not fall asleep. They confront him again. He said, no, I absolutely did not. And then they gave him the overwhelming evidence, which I don’t know if it was a video or footage or whatever. And then he finally said, yes, OK, I did it. He only acknowledged that once he was caught, integrity is owning up to your mistakes. And in that case, they would have given a little slap on the hand. That’s fine.
John: But integrity is really owning up to your mistakes, not when you’re caught, but ultimately when you make the mistake. Right. That’s what true integrity is. So the Marines rationalize this and how can we have somebody commanding a battalion? And ultimately in the heat of battle, we’re where the troops don’t have to think through. Am I getting the true story from my leader, from my commanding officer? Is there a hidden agenda? Are they telling me everything I need to know? Are they being fully transparent? Are they giving me
some kind of spin job? They can’t afford that because if that happens, people die. Right? So they need the utmost of trust and integrity.
John: Here’s my point today. The leader has a job, the leader has a job, is setting the tone for the organization. And the leader’s job is to not only set the tone and set the standard and not just talk about it, but their actions say everything. OK? You will have opportunities as a leader to really reinforce the culture of the organization when you see lapses in decision making, lapses in judgment, and also lapses in integrity or integrity issues. When you see that it’s how the leader handles it that ultimately dictates the direction of that organization. Now, I will say this. I’ve done this well at times and I think for most of my career. But there’s one time in my career now I’m going to be fully transparent here. This one time in my career that really sticks out, that bothers me and always has.
John: This was something that happened 20 years ago when I was leading an office and we were having great success. Everything was going well. In fact, we were working hard to become the number one office in the country. And we had had great success over the prior year and had a lot of momentum. Things were going well. We had a program where advisors were successful. I invited them to become what I called coaches, and these coaches would go on appointments with younger advisors, newer advisors and kind of be the lead advisor, train them, help implement business and everything like that. Well, as for that, they would get a percentage, 10% of the revenue that was generated in that sale. All they had to do was be in that appointment and then they had to do some work behind the scenes. Well, it was an honor system. There was really, it was not easy for me or anybody else to go back and check as to whether or not this was happening. They’d fill out a form. The advisor would sign it saying, hey, here’s what I covered. The advisor that was a trainee would sign it saying, yes, you know, this person covered it.
John: Well, one of the coaches, his name is Lyle, made a decision that he was going to make up appointments. He would actually go to advisors and kind of bully them or coerce them into signing a form saying that he had covered appointments that he did not. In essence, this was stealing money. Now it came to my attention. Now, at that time, I made what I felt was a bad decision at the time. I shouldn’t say that. At the time, I felt like I made a decision that was the right decision. As I look back now, years later, a lot smarter, a lot wiser. I realize it was a bad decision. I did end up punishing him. I confronted him. I removed him from the role. He was no longer a coach that day moving forward. But I had an opportunity to really make a loud statement. And I did not. I did not take advantage of that. I allowed it to be handled behind closed doors in a really quiet way and really a way that he kept his dignity. I allowed him to step out of the role and in reality, I allowed him to keep his job as an adviser.
John: Now, here’s a situation. He was doing something unethical with money, not clients, but with the company’s money. And in this day and age and even back then, that is a clear indication. This is not somebody who you want doing anything with client money. My decision wasn’t my action and it wasn’t strong enough. It was quick, but it was not strong enough. I had an opportunity to let my organization know that that is absolutely how egregious that is. You not only lose your coaching job, you are out of this organization because that type of person has no business being in this organization. And we had a great culture. We had a phenomenal culture. We ultimately did get on to get up to number one.
But this was a person that was not the right fit in that organization, and it has stuck with me for 20 years. I wish I could hit the rewind button and handle that situation differently.
John: My message to leaders, you are going to have situations like that where you are faced with a dilemma. You have an opportunity to make a point and really loud statement when you see people cut corners or do things that are unethical or don’t apply with a line with the company’s values or principles or vision or mission, you have an opportunity and not even an opportunity. An obligation. To send the right message with your actions, not just what you say, but what you do, everybody is watching everybody. I guarantee when I go back to that situation 20 years ago, there were people that looked and they knew the situation and they’re like, wow, boy, he got off easy. Biggest regret I have. I think it’s one of the single biggest regrets I have in my leadership career, that situation. So I made a a a wrong decision because of other factors. And bottom line, you get one chance to make that type of decision. You can’t rewind time. You can only control the decisions you make moving forward. Painful lesson, lesson learned now passing it on to you so you don’t make that same decision.
John: So in any event, integrity, it doesn’t matter. Everything else doesn’t matter unless you have integrity to the utmost as a leader, you have the responsibility to control that environment, that culture and organization set the tone, reinforce it, because in reality, nothing matters if you don’t have integrity.
John: So I hope this was helpful. Please let me know. Give me feedback, comments, suggestions, thoughts on future topics, challenges you’re having hit the like button. Subscribe, go down below, hit the five star review and I will look forward to seeing you soon. Thanks, everybody. Take care.
John (Closing): Thanks for joining us on today’s episode of Tomorrow’s Leader. For suggestions, or inquiries, about having me at your next event, or personal coaching, reach me at john@lauritogroup.com Once again, that’s john@lauritogroup.com. Thanks! Lead on!
