If you want honesty, break some rules

We've all heard, or perhaps even told, the "organizational lie"; We're customer centric; everyone's performance is above average; we're the darling of our industry, coming up with one innovation after another. That last one was true of Advanced Cardiovascular Systems (ACS) in the past, but not when Ginger Graham took over as CEO. From that first moment in 1993, Graham chose to tell the truth about ACS's situation--that R&D was practically at war with product development, yields were down, and customers were disgruntled. And ever since, she's seen the benefits of exploding organizational lies. Truth telling is something that's hard to argue with but difficult to do. And, indeed, ACS instituted some radical practices to create its culture of honesty. Every senior manager was assigned a coach from the ranks who regularly solicited feedback from everyone, high and low, about the executive's performance. To get the truth, though, ACS executives learned that they had to offer it up themselves--the whole truth about the company's financial state, its problems, and its triumphs. When they did, they found that, in return, they could ask their employees for help in solving the problems, and passive complainers became active partners in the company's fortunes. ACS management spreads the word about the virtues of honesty through vivid stories of corporate history and quirky rituals. Every quarter, it holds companywide meetings in which the faults of top managers are examined--to keep them honest and tough enough to go on telling the truth. In fact, in the process of openly owning up to problems and jointly fixing them with employees, the entire company grew more powerful, nimble, and tough-minded, able to respond quickly to change, both internal and external.