In a video to employees on March 17, 2014, GM CEO Mary Barra said, “Something went wrong with the process and terrible things happened.”  She acknowledged mistakes that led GM to wait nearly a decade before fixing a defective ignition switch linked to 12 deaths.  She has hired a high-profile lawyer to lead an internal investigation to learn what went wrong in the company.  Two congressional investigations are underway and the company disclosed that as early as 2004 employees knew of the defects.  More than 3 million cars have been recalled dating as far back as 2008 and up to 2014 models.   A $300 million charge to earnings was taken to cover repairs for the faulty ignition switches, air-bag wiring harnesses, and brake parts.

It’s not the first time that something went wrong with the process.  In the 1970s we saw it when a known design flaw in the Ford Pinto caused 180 deaths, and again in 2010 when Toyota recalled over 5 million cars because of a defect that caused unintended acceleration.  The Toyota CEO said, “We sacrificed quality in our push to capture market share.”  More recently, an investigation into the nuclear fuel melt down at the Fukushima power station revealed that engineers knew there was a design flaw 24 years earlier and it had never been corrected.

In all of these cases something went wrong in the performance management system—and we wait to hear about the causal factor with GM.  That something is called unintended consequences and in Applied Leadership we have created a law that states, “People will do whatever you incentivize them to do…they won’t do anything else even when it’s the right thing to do.”  It’s not that people are bad; it’s that they encounter conflicting messages in an organization.  And goals can become such a fixation that when evidence emerges that a goal is unwise, people will either not observe it or ignore it because their identity is tied up in the goal.

In Applied Leadership there are four foundation learnings for leaders to avoid unintended consequences:

• Message = Content + Context, and left in a vacuum without context people will infer one based on their life experiences and self-stories that shape their identity.
• The message is far more important than any other aspect of the performance management system—because it determines behavior.
• Leaders manage content and context to ensure that congruent messages about performance exist from the top to the bottom of the organization.
• The selection of metrics in performance management is absolutely critical because the metrics will shape the identity, purpose, and long-term viability of the organization.
• When a single metric dominates the collective identity of an organization, it will take a crisis or crises to refocus the organization.

It will be interesting to hear the lessons from the GM investigation.
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