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The story at Wells Fargo was similar. For years, it had successfully billed itself as the friendly, community bank. It ran warm and fuzzy ads around themes of working together and caring about people. The ads did not mention that in 2010 a federal judge ruled that the bank had cheated customers by deliberately manipulating customer transactions to increase overdraft fees (Randall, 2010), nor that in August, 2016, the bank agreed to pay a $4.1 million penalty for cheating student borrowers. But no amount of advertising would have helped in September, 2016, when the news broke that employees in Wells Fargo branches, under pressure from their bosses to sell more “solutions,” had opened some two million accounts that customers didn’t want and usually didn’t know about, at least not until they received an unexpected credit card in the mail or got hit with fees on an account they didn’t know they had.

None of it should have been news to Wells Fargo’s leadership. Back in 2005, employees began to call the !rm’s human resources department and ethics hotline to report that some of their coworkers were cheating (Cowley, 2016). The bank sometimes solved that problem by !ring the whistleblowers. Take the case of a branch manager in Arizona. While covering for a colleague at another branch, he found that employees were

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Reframing Organizations4

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opening accounts for fake businesses. He called HR, which told him to call the ethics hotline. Ethics asked him for speci!c data to support the allegations. He pulled data from the system and reported it. A month later, he was !red for improperly looking up account information.

In 2013, the Los Angeles Times ran a story about phony accounts in some local branches. Wells Fargo’s solution was not to lower the “ame under the pot but to try and screw down the lid even tighter. They kept up the intense push for cross-selling but sent employees to ethics seminars where they were instructed not to open accounts customers didn’t want. CEO John Stumpf achieved plausible deniability by proclaiming that he didn’t want “want anyone ever offering a product to someone when they don’t know what the bene!t is, or the customer doesn’t understand it, or doesn’t want it, or doesn’t need it” (Sorkin, 2016, p. B1). But despite his public assurances, the incentives up and down the line still rewarded sales rather than ethical squeamishness. Many employees felt they were in a bind: they’d been told not to cheat, but that was the best way to keep their jobs (Corkery and Cowley, 2016). Like the VW engineers, many decided to cheat now and hope that later never came.

Maybe leaders at Volkswagen and Wells Fargo knew about the cheating and hoped it would never come to light. Maybe they were just out of touch. Either way, they were clueless—failing to see that their companies were headed for costly public-relations nightmares. But they are far from alone. Cluelessness is a pervasive af”iction for leaders, even the best and brightest. Often it leads to personal and institutional disaster. But, sometimes there are second chances.

Consider Steve Jobs. He had to fail before he could succeed. Fail he did. He was !red from Apple Computer, the company he founded, and then spent 11 years “in the wilderness” (Schlender, 2004). During this time of re”ection he discovered capacities as a leader—and human being—that set the stage for his triumphant second act at Apple.

He failed initially for the same reason that countless managers stumble: like the executives at VW and Wells Fargo, Jobs was operating on a limited understanding of leadership and organizations. He was always a brilliant and charismatic product visionary. That enabled him to take Apple from startup to major computer vendor, but didn’t equip him to lead Apple to its next phase. Being !red was painful, but Jobs later concluded that it was the best thing that ever happened to him. “It freed me to enter one of the most creative periods of my life. I’m pretty sure none of this would have happened if I hadn’t been !red from Apple. It was awful-tasting medicine, but I guess the patient needed it.”

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During his period of self-re”ection, Jobs kept busy. He focused on Pixar, a computer graphics company he bought for $10 million, and on NeXT, a new computer company that he founded. One succeeded and the other didn’t, but he learned from both. Pixar became so successful it made Jobs a billionaire. NeXT never made money, but it developed technology that proved vital when Jobs was recalled from the wilderness to save Apple from a death spiral.

His experiences at NeXT and Pixar provided two vital lessons. One was the importance of aligning an organization with its strategy and mission. He understood more clearly that he needed a great company to build great products. Lesson two was about people. Jobs had always understood the importance of talent, but now he had a better appreciation for the importance of relationships and teamwork.

Jobs’s basic character did not change during his wilderness years. The Steve Jobs who returned to Apple in 1997 was much like the human paradox !red 12 years earlier— demanding and charismatic, charming and infuriating, erratic and focused, opinionated and curious. The difference was in how he interpreted what was going on around him and how he led. To his long-time gifts as a magician and warrior, he had added newfound capacities as an organizational architect and team builder.

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