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A senior vice president at Okta approved a gratuity that was $18 over the company\u2019s threshold on a $2,000 dinner. The auditing system flagged it, a person wrote it up, an email was sent, his assistant processed it. It landed on the COO\u2019s desk \u2014 routed there from the board.<\/p>\n
\u201cI\u2019m paying somebody to audit that expense report,\u201d Okta President and COO Eric Kelleher said at a BCG-hosted breakfast roundtable at the Fortune COO Summit in Scottsdale, Arizona. \u201cI\u2019m paying somebody to flag that, and I\u2019m paying somebody to write up an email and send to me, and I\u2019m paying my assistant to receive the email and process it.\u201d<\/p>\n
He let that hang in the air. \u201cThat\u2019s waste.\u201d<\/p>\n
Of course, we all know exactly why that process exists: someone built it and kept it that way. That person is almost certainly still in the building, certain it\u2019s the right way to do things, defending the inefficient structure that everyone else has to slog through.<\/p>\n
That\u2019s a lot harder problem to fix than an expense report.<\/p>\n
The disease: confirmation bias with a salary attached<\/p>\n
Fortune Senior Writer Phil Wahba moderated a conversation between Kelleher, FedEx Freight VP Patrick Maier, BCG Partner and Managing Director Geraldine Rhodes and IBM SVP Joanne Wright, digging into what every COO needs to master: the line items that clog up executives\u2019 profits and losses. \u00a0<\/p>\n
All of the guests described what happens when the people who design systems are also the ones evaluating them.<\/p>\n
\u201cPeople who build a function over time.\u00a0It\u2019s hard for them to see where they can be optimized in what they\u2019ve built,\u201d Kelleher said. \u201cThey\u2019ve built something the best way they know how, and they have a confirmation bias that things run the right way.\u201d<\/p>\n
BCG\u2019s Rose put a number on the cost of that bias: roughly 60% of executives surveyed by her firm have seen minimal or no return on AI investment\u2014not because the tools don\u2019t work, but because companies are deploying them on top of broken processes without fixing the processes first. Sure, you can automate the expense audit, but if no one ever questions why the audit exists in that form in the first place, you\u2019ve just made your dysfunction more efficient.<\/p>\n
The same instinct to accumulate without interrogating shows up everywhere. FedEx Freight\u2019s Maier, VP of Operations, Custom Critical, found it hiding in his own company\u2019s books: a sponsorship of a local minor league team that wasn\u2019t generating sales meetings, and a membership at a prestigious country club that nobody was using for customer-facing events. \u201cWhen we asked what we were doing with it,\u201d Maier said, \u201cwe found that none of it was being used for sales-facing events.\u201d The spending had simply accumulated, invisible because everyone around it had stopped asking why.<\/p>\n
IBM\u2019s Wright, SVP of Transformation and Operations, ran the same drill across a much larger organization. \u201cWe\u2019re 115 years old,\u201d she said. \u201cWe are really good at doing more with less.\u201d But it\u2019s a rare thing for any company, she added, to take a deep breath and ask: \u201cwhat can we stop?\u201d<\/p>\n
IBM\u2019s answer to that question\u2014a two-year end-to-end transformation that started not with a technology deployment but with a blank-page question\u2014has so far yielded a 30% improvement in its operating model, or roughly $4.5 billion. That is a lot of $18 expenses.<\/p>\n
The status problem nobody wants to name<\/p>\n
What makes this harder, the panelists agreed, is that the people most resistant to change are often the ones most essential to the business right now. Their value and the processes they oversee are, in their own accounting, the same thing. Leaning into disruption can undermine their own standing at the company.<\/p>\n
Rose framed this as a sponsorship problem: transformation efforts stall, she argued, when there\u2019s no executive with enough cross-functional authority to force people out of their silos and confront the assumptions underneath them. \u201cYou have to have that sponsorship at the top,\u201d she said, \u201cwith somebody that\u2019s kind of bumped through the silos and really takes a fresh look at what do we want to achieve strategically.\u201d<\/p>\n
Without that air cover, the status-holders win. Not through sabotage, but through inertia. They keep their heads down, run their function the way they\u2019ve always run it, and wait for the transformation initiative to fade like every other one before it.<\/p>\n
Kelleher said he watches for the early warning signs. \u201cIt\u2019s a red flag for me when I have teams defunding their intern program,\u201d he said, adding that he goes and talks to people who are cutting back. He\u2019s concerned that it\u2019s \u201cbecause they\u2019re not open to new ideas.\u201d<\/p>\n
\u201cJust, everyone should be hiring interns,\u201d Kelleher continued. \u201cMassive volume. The more you can afford, the better,\u201d he said. \u201cThe thing that\u2019s daunting to your team because they\u2019ve been doing it for 10 years and it\u2019s draining is exciting to them. The infusion of energy is just awesome.\u201d<\/p>\n
The point isn\u2019t that interns are better workers. It\u2019s that they haven\u2019t been trained to accept the absurdities yet. They walk in and ask why as genuine curiosity. They\u2019re the only people in the building with no stake in the answer.<\/p>\n
The interns coming through the door in 2026 have grown up treating AI as a default, not a feature. Wright watched IBM\u2019s latest cohort arrive and described them as \u201chungry, hungry, hungry\u2014using AI to drive everything they do from the minute they wake up to the minute they finish at night. And there\u2019s no fear. In fact, it\u2019s the innovation and the creativity is outstanding.\u201d<\/p>\n
Kelleher\u2019s longer-term prescription goes further than interns. \u201cI very firmly believe we need to be giving [managers] budget for work, not headcount,\u201d he said. \u201cThey\u2019re going to spend some of that on headcount and they\u2019re going to spend some of that on technology. And that is a leap for everyone in industry right now.\u201d<\/p>\n
The people who\u2019ve spent a decade building the audit process may not be the ones to redesign it. But the person who just walked in the door, with no stake in the answer and no memory of how it was built, might be exactly right for the job. As Kelleher said, \u201cwe just don\u2019t think that way.\u201d<\/p>\n
#expense #report #defunded #intern #programs #symbols #corporate #Americas #dysfunction<\/p>\n","protected":false},"excerpt":{"rendered":"
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