But what of other major organizational failures in Canada? Is it simply the absence of leadership from the top or other facilitators? Is it a mindset that is not conducive to success and which can permeate an organization? What other factors are at play in corporate failures like Nortel, or that have led to the need for leadership changes in the RCMP or in the Royal Canadian Airforce or the City of Montreal.
A surprising measure of productivity, although perhaps not totally accurate, is the comparison that it costs 20 to 30% more to build a road or a sidewalk in Montreal than in Toronto (Toronto Sun, Oct 5, 2012). This is due to the inflated costs associated with corruption. Setting aside whether the number is accurate or whether or not there are similar types of corruption in both cities, it is safe to say based on the astounding testimony heard to date from the Charbonneau Commission into Quebec’s construction industry that corruption has been a huge contributor to excessive costs and poor productivity in Montreal. In thinking about an agenda for competitiveness in Canada, it may have seemed unlikely a year or two ago that ethics and corruption would be important factors to consider. In the World Economic Forum report on Global Competitiveness, corruption is just mentioned by less than one percent as one of the most problematic factors for doing business in Canada. This compares to 19% who mention it as an issue for the Czech Republic or 16% for India. It will be interesting to see if this rating for Canada increases next year and if there is an impact on the country’s competitiveness rating. A key question here of course is leadership.
The testimony at the Charbonneau Commission has resulted in the resignation of three mayors including the Mayor of Laval and the Mayor of Montreal, Gerald Tremblay. While not directly implicated, Tremblay was seen to have turned a blind eye to corruption in the City and in the fund raising practices of his own party. Looking at the testimony of one disgraced City of Montreal engineer, Gilles Surprenant, one sees an employee who says he was in collusion with other staff as well as suppliers and seemed to be operating in an atmosphere of fear. Perhaps this isn’t surprising given that he was being paid kick-backs from suppliers, but what would be interesting is to know is how many other organizations and how many people work in organizations where there is toleration of unethical behaviour, collusion and fear. So the key issues here are leadership, the impact on corporate culture and ethics and on innovation, competitiveness and productivity
Also of interest are industries that have failed. Looking at the financial crisis of 2008, it is generally assumed that the cause was the development of highly leveraged and sketchy financial instruments; primarily mortgaged backed securities and poor regulation. It would also be of interest to understand the role of culture, and how it was that such risky behavior and business practices were allowed to flourish. It is generally assumed that lack of regulation played a key role and it probably did. But what of the individuals, their motives and the cultures that were established. One explanation is somewhat similar to the “prisoners’ dilemma” where prisoners have to decide between whistle blowing and collusion. A culture can be created where collusion is in the best self interest of everyone involved. Any financial institution that did not participate would have had relatively poor performance in their financial results and share price compared to those who were deeply involved in developing products based on unverified sub-prime loans. However, while the prisoner who told the truth may have benefited in the dilemma, when the regulators are complicit there is no benefit in coming clean. It seems regulation, or the lack of it, was critical and this is of course a type of leadership failure. Governments are supposed to provide leadership in the establishment of laws and in promoting a level playing field for businesses to compete