A transformation programme almost never fails at the moment it is declared to have failed. It fails considerably earlier, in a series of small, entirely reasonable decisions by decent people about how much of the truth to put in a status report.
The pattern is so consistent that it deserves a name. The programme reports green, quarter after quarter, with the confidence of people who genuinely believe they can still recover the position. And then, in a single reporting cycle, it goes red — not amber, red — and the executive team asks, with complete sincerity, why nobody told them.
The answer is that everybody told them, repeatedly, in a language the executive team had trained them to use.
Optimism is not a personality trait here. It is a rational strategy.
Put yourself in the position of a programme director eight months into a transformation that is behind. You have a plan to recover. It is not a certain plan, but it is a plan, and you believe in it more days than not.
You now face a choice about what to put in the report.
If you report amber, several things happen immediately. The scrutiny intensifies. A review is commissioned. Your judgement becomes a topic. The recovery plan you were going to execute must now be defended in three separate forums before you are permitted to execute it, which delays it, which makes the recovery less likely, which makes you more likely to have to report red next quarter — at which point the earlier amber will be produced as evidence that you knew and did not act.
If you report green, and you recover, nothing happens and you were right. If you report green and you do not recover, you will have a difficult quarter in six months' time — but that is six months away, and a great many things can change in six months.
The person reporting green is not lying. They are making a defensible calculation under a set of incentives that the executive team constructed. And they are making it, individually, at exactly the same moment as eleven other people in eleven other workstreams, each of whom believes their own optimism is the only optimism in the system.
Nobody is lying. Eleven people are each making a locally defensible calculation, and each believes their own optimism is the only optimism in the system.
Why the standard remedy makes it worse
The executive response to a late-arriving red is almost invariably to tighten the reporting. More granularity. A shorter cycle. An independent assurance function. A second steering committee.
Every one of these raises the cost of reporting amber.
Think about what has actually changed for the programme director. The scrutiny that follows an amber is now greater. The audience is larger. The paper trail is longer. The number of people who will form a view about their competence has roughly trebled. You have not made honesty easier; you have made it more expensive, and you have done so at the exact moment when the system most needs it to be cheap.
This is the central irony of transformation governance. Almost every mechanism organisations install to detect bad news earlier has the effect of delaying it — because the mechanisms operate on the reporting, and the problem is not in the reporting. It is in the arithmetic the reporter is doing before they write it.
What the executive team is really being told
There is a second layer to this, and it is the uncomfortable one.
The reason honesty is expensive is not that the executive team punishes it. Very few executive teams do, and most would be genuinely offended by the suggestion. It is expensive because of what people have watched happen to the last person who tried.
They watched a director raise a serious concern eighteen months ago and observed, with great precision, what followed: the slight cooling, the exclusion from the next round of pre-meetings, the way the concern was handled as a management problem rather than engaged as an argument. Nobody was punished. Something subtler occurred, and everybody in the room understood it, and it has governed their behaviour ever since.
An executive team that wants earlier bad news must therefore do something considerably harder than redesigning its dashboard. It must make the reporting of bad news visibly survivable — which means the next person who brings it must leave the room in better standing than they entered it, and this must happen where everybody can see.
Two things to look for this quarter
Two observations will tell you where you stand, and neither requires an instrument.
Look at the faces, not the slides. A status report that is green in every dimension, presented by people who look exhausted, is not a status report. It is a symptom. Green is easy to write and hard to live.
Count the reversals. Name a decision in the past six months that the executive team reversed because someone argued it down. If you cannot — and most teams cannot — the question is not whether your people are bringing you the truth. It is what they have concluded about what happens when they do.
Laszlo Cser is the founder of Vantaris Consulting, an executive leadership advisory practice working with organisations whose executive decisions carry significant commercial, operational or reputational consequence. More essays.