Business was poor and Charlie was upset. He tried different means of improving the business picture, but nothing worked. He made optimistic speeches and even spent significant sums from the company's treasury to reward loyal friends of the company. That didn't work either. So he decided to reward friends even more. But customers and employees were beginning to express concern. The treasury was being depleted; the company went deeply into debt; and people didn't feel that a failed procedure should be repeated on the grounds that it might work if tried again.
The general discontent made Charlie very nervous. He just had to do something.
He was mainly concerned with one particular competitor, Danger Corp., whose products and activities could have a profound impact on his business. So he assigned two key managers, Joe and Fred, to monitor Danger's activities.
Joe and Fred had other responsibilities as well, but it was obvious to everybody that an attack by Danger (that's not the company's real name) could be more devastating than efforts by other competitors about which the two managers worried.
Charlie was more than a bit bothered by the fact that Joe and Fred didn't talk to each other (except for public displays) and didn't share information. Nevertheless, the Danger threat was sufficiently grave that Charlie felt confident Joe and Fred would be especially vigilant.
Their heightened awareness paid off. One day, Sally, one of Fred's engineers, reported her discovery that Danger was preparing a major offensive and that it was possible to block it. But Sally was not in management, an important deficiency. Though she had been with the company a long time and had an excellent reputation, her report could not be accorded the respect and attention that would have been due somebody in management.
Further, while Sally provided significant information and offered an avenue for immediate investigation, confirmation and action, she lacked details. She didn't know the exact date, location and implementation of Danger's offensive. So Fred ignored her warning.
When Danger attacked, almost exactly as Sally had warned, many people wanted to know why Fred had ignored her. He defended his inaction with many plausible excuses. Charlie, always loyal to his managers, defended Fred's inaction, too, and pointed out that Sally's warnings lacked specifics. He added, though, that there would be no retaliation against her-as if that would have been a normal consequence of her behavior.
Yet, something had to be done. Charlie didn't feel that a manager should be punished for egregious failure, but he knew he had to do something.
So he created another level of management.
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