Could a Devil's Advocate process prevent a Carillion situation in your business?

Updated: Jan 19, 2018

It's easy to throw rocks at Carillion. As some of the reasons for its collapse are emerging, so are the grim implications for those immediately affected. These problems will have been complex and only those involved know the truth.

But all of us, in business, are affected and implicated, are we not? Do we all not stand in the same corporate governance glasshouse that we have jointly constructed, rocks at the ready? Could this, or a similar catastrophe, not easily happen in your business, your department, or to your board? None of us should feel entitled to schadenfreude.

The situation reminds me of the film Sliding Doors, in which we are presented with two alternative outcomes: one in which the main character just makes it through the closing doors of a train and the other, they don't. The movie proceeds to document the implications of these two alternate realities, popularising the expression: ‘a sliding doors moment’. It's a powerful image.

I wonder how many sliding door moments occurred at the main and operating boards at Carillion and in the meeting rooms of the contracting government departments? What decisions were taken when and by whom? Decisions that, in aggregate, led to this nightmare.

Or, what decisions were not taken, or conversations not had, or horizons not scanned and by whom? But crucially, was it safe to speak up?

Many will say that's the role of the non-executive directors: to ask the hard questions. But the power of NXDs is limited by the culture of the board, how much they're told and their own courage.

Or you might say that this is market forces properly, if brutally, at work. Cash is king. You can lose money forever but run out of cash only once. And, dress it up any way you like, Carillion ran out of cash. This is capitalism working. The strong survive. The weak go to the wall. Another gladiator bites the dust in the coliseum that is the City of London.

And technically you would be right, except that this analysis ignores one factor: society gave Carillion a mandate to trade and without that mandate, it could not have traded, or run out of cash.

So I say again: are we all not responsible for this? For the creditors, who will be lucky if they get a penny in the pound? For the families whose lives will be wrecked? For the further erosion of trust in business?