Published in Director Magazine (Australian Institute of Company Directors)April 2005. Copyright 2005 Spandah Pty Ltd.

Asking the right question can save millions of dollars for companies.

If there is one factor that most recent corporate failures in Australia and overseas have in common, it is the failure of Directors and Executives to ask the right questions. Invariably, that failure is a reflection of an entrenched culture (e.g. HIH) that discourages challenging, questioning, probing for facts and seeking better strategies. That culture often starts (implicitly or explicitly) at the top – at Board and Executive levels.

The cost of not asking questions After the NAB’s $360 million currency trading losses in 2003, the NAB’s Chairman, Graham Kraehe, said afterwards :

“I think probably the primary thing [I learned from the recent events] is to not necessarily accept the information that is presented to you, be far more aggressive in questioning it.”

HIH lost its entire business – leaving $5 billion in debt – because questions were not asked. NAB lost around 10% of its profits. All up, over $5 billion between just two companies.

How much value is lost in other companies by not asking some simple questions – questions that

• challenge assertions and assumptions, 
• probe the facts, 
• cut through the ‘spin’, 
• clarify hidden meaning and purpose, 
• identify the weakness in a process, proposal or strategy.

From my experience working in Australia and overseas with small, medium and large businesses I have no doubt that the answer is: a lot – and it’s all unnecessarily lost profit.

The skills of hearing and asking

None of those questions needs to be delivered aggressively. In fact, they are generally far more effective when delivered conversationally, without aggression and with a constructive purpose. The skill of asking the right questions is an essential skill for Directors and Executives and is linked to the skill of hearing/noticing what is said and what is not said.

It is the latter – what is omitted – that creates many, many problems in business. Omissions can take various forms, including assumptions (data not available or not verified), generalisations (global descriptions that fail to define what is meant), partial descriptions and specifics (which avoid an alternative).

The skill of hearing/noticing what is missing is a skill of awareness that can be learned quite easily. Unfortunately it is not taught in business school.

Language and awareness

One of the elements of learning that skill is to recognize the patterns of language and conversation that expand, contract, direct and focus your awareness and thoughts, and then to learn the questions that reverse those functions.

There are some patterns of language that are typically used to influence and persuade – language that will slide your awareness and attention towards what the speaker (or writer) wants you to think, and away from what the speaker wants to avoid. These patterns are the tools of trade of skilled influencers – the honest, the dishonest and the accidental – as well as those who avoid accountability.

If you understand those patterns, and the impact they have on your awareness and thoughts, it is far easier to spot the issues and phrase a question that elicits useful information. However, you must be able to spot the patterns at the speed of normal conversation, because you rarely get a second chance.

There’s hardly a Board or Executive meeting where those patterns are not used, knowingly or unwittingly.

The function of communication and questions

Communication has a simple function – person A generally wants to communicate an idea to person B and influence B to think or respond in a particular way and/or to take a particular action. ‘Action’ here includes ‘to do nothing’.

To achieve that, the speaker/writer must use language that activates one or other of a number of processes within our consciousness that determine how we process information and create reality inside our minds. Even if A has no intention to influence a B to do X, if B understands the language to mean ‘Do X’ then the language will have that effect.

We must choose our language with care. We must also listen to language with care and be aware of its impact on us. Take for instance, the following example:

“At the time of writing, GMD [Global Markets Division] trading operations continue to manage risk responsibly in changing market conditions. Adherence to risk discipline is good.”

If you had read that in a report from the currency trading room during a Board meeting, chances are that you would think “Good job” and go to the next item on the agenda. An expensive decision. The quote is extracted from the APRA report into the irregular currency options trading at the NAB. It was part of a report to the NAB’s Risk Management Executive Committee in November 2003.

Have a look at that quote again, and consider which questions you might ask to prevent problems arising when faced with similar language. Two things stand out that signal potential problems:

1] The language is largely global. Global language expands awareness to encompass many possibilities without being specific. Sounds great, means little. Everyone believes that they understand what is meant, but when asked they all give different meanings. Like flying over a territory and not being able to see the details. For the NAB, the problems were in the details of how things were being done. You don’t need technical expertise to tackle this type of language. If the language generates global awareness, simply direct and contract awareness by asking for specifics: “What do you mean by ‘trading operations’?” “What do you mean by ‘manage risk responsibly’?” “What risk, specifically?” “What do you mean by ‘changing market conditions’?” “To which risk disciplines are you referring?” With the verbs (process/action words) you could ask: “How are you managing the risk?” “How are market conditions changing?” Then, from all the (global) possibilities, the mind is focused on what the language means in practical terms.

2] The word ‘good’. When you are dealing with hundreds of millions of dollars of exposure, ‘good’ raises potential deficiencies in the adherence to risk disciplines. The word ‘good’ is more contracted or limited than ‘excellent’. There is a gap that is unexplained between ‘full adherence’ and partial, ‘good adherence’ – ‘good’ is a comparative word: “If adherence is ‘good’, compared to what? Prior adherence or the required standards?” “Where is it falling short of required standards if it is only ‘good’?”

Those questions alone would probably have led to a review of the NAB’s procedures, and they only take a few minutes to ask. But if that is not enough, there is more. The next phrase that deserves attention is “At the time of writing..”. That phrase contracts or limits timeframe and directs and focuses the reader in some narrow band of time at which the words were written.

You can quite simply re-direct the mind and step outside of the limiting time frame by asking the questions: “What about in the months prior to the report?” “What is the position since the report was written?”

Apart from being full of global language, the two sentences have another element that directs and focuses awareness towards managing risk and adherence to risk discipline. Sounds like the trading room has everything under control. But in directing awareness to the ‘management’ of risk in positive terms, they can cause the mind to by-pass the essential issue of what exposure the bank had. To re-direct the mind back to that issue, ask: “What is our exposure.”

These are some simple questions that can save companies many dollars and generate better results by getting to the facts and identifying processes and strategies that may require attention.

Having done that, what do you do next?

The other side of the coin is that questions are an excellent, fast and very effective way to facilitate solutions, commitment and accountability. There are around 22 questions that will turn virtually any business problem into a solution and strategy with full commitment and ownership. But that is another story for another time.

Christo was invited by the Australian Institute of Management to write a chapter in the book DNA @ Work, one of a trilogy of books on leading edge management models. The other two books in the trilogy are Love @ Work and Speed @ Work. All three books were published in June 2006 and are now available from bookstores, including AIM bookstores.

DNA @ Work deals with various topics, including the ‘DNA’ of innovation, money, leadership, organisational development and knowledge management. Christo’s chapter is The DNA of the DNA: Consciousness in Business, and deals with the processes that underlie all other processes in business.

Christo will be taking part in a panel discussion at the official launch of DNA @ Work in Brisbane in the first week of August 2006 (date to be confirmed).

The following is an executive summary of the chapter.

………………

Every element of business arises from, and takes shape in, human consciousness. Yet this is one of the least understood processes in business, but holds the most potential for significant development in the individual and the organization.

The highest individual and corporate performances are directly related to our state of awareness and to the processes by which we shape personal and corporate consciousness.

The level of self-awareness of an organisation’s leaders and the extent to which an organisation’s culture supports and encourages its people to draw on the deep, untapped resources within them will determine the organisation’s success in the next decade.

We are all capable of extraordinary performance. High performance is effortless, but in order to tap into that effortless performance, a slightly different way of thinking is required – and a slightly different way of doing things.

A small number of core processes of consciousness are the DNA of the DNA – the means by which we form knowledge, innovate, lead, create organisational culture, relate, communicate and act in business. By mastering these processes of consciousness we open many possibilities that were previously unseen and untapped.

Organisations that genuinely master the play of consciousness will lead the way to business success in the next 10 years.