Ralph Waldo Emerson famously said, “What you do speaks so loudly I cannot hear what you say.”  In The Leadership Challenge, Jim Kouzes and Barry Posner identified five practices through their research that ordinary people who produce extraordinary results do habitually.  The first of these is model the way.  The successful leaders they studied had great clarity about their personal values, their credo. In their leadership role in organizations they took great care to set the example for others, consciously aligning their behaviors to their values. When word and deed do not match, leaders are branded as hypocrites.  And hypocrites find that they lose the power of influencing others to make a personal commitment. We simply will not voluntarily follow those we cannot trust. A manager that has lost credibility rules by compliance, using the power of carrot and stick to enforce standards of performance. Compliance is only as good as the manager’s ability to deal out the carrot and sticks. Commitment trumps compliance every time. Think about those house chores we all need to do…some we do because we want to, others we do because we have to.  I have to clean my garage, I want to work in my garden. Guess which one looks better!

As leaders we need to understand these tough times have increased the scrutiny on our behaviors.  When we are asking others to cut back on expenses, do they see us doing the same? Even if you can afford it, maybe it isn’t the time to buy the Porsche.  Complaining about your torturous travel schedule to Italy and Spain won’t gain much sympathy from your employees who had to forgo a customer visit in Chicago because of travel restrictions.  And drop the corporate jet!  Bill Gates flies coach, so can you. Anytime you invoke the “do as I say, not as I do” approach, you have harmed your credibility, and depleted the currency of leadership.  Oh, and by the way, you have harmed organizational performance!

A friend, and one of the best CEO’s I have ever encountered, said to me once. “My values are aspirational.  I don’t always live up to them.”  I suggest there is a fundamental misunderstanding here.  Goals may be aspirational.  But you either have a value or you do not.  I aspire to weigh 170 lbs. I am not there yet. It is an aspirational goal. But I value being healthy. You will know that by what I eat, how often I exercise, and countless other behaviors I exhibit.  If I say someday I will start exercising, then someday I will value health.  When it comes to values, I judge you by current behaviors, not your intent.

Of course we are human. Leaders screw up and sometimes make choices that could send a message counter to an espoused value.  Most of us want to be led by human beings, and humans are fallible. Great leaders acknowledge the bumps along the way, apologize, and correct them. Hoping others didn’t notice is a flawed strategy. They did.

It is another rainy day here in Michigan. Looking at my to do list, I was thinking I would stay in the dry office and get busy taking care of it. I can exercise tomorrow.  Oops, no.  I am going to head to the gym for an hour.  Hypocrisy is just a bad thing.

Reading the business news this morning left me feeling a bit overwhelmed. I make no claim to be any smarter than the next person when it comes to economics, but I have spent my life working in and studying management. A lot of very good and very smart people are working feverishly on trying to turn the fortunes around in their companies. Numbers are being scrutinized looking for any operational savings or signs of hope on the revenue side.  As I leaned back in my chair, I glanced up at my bookshelf and saw my old copy of Out of the Crisis, by W. Edwards Deming. I was fortunate to be part of a group at General Motors that worked with Dr. Deming. I remember studying this huge book, chapter by chapter. I opened it back up and started reading the sections I had highlighted and found its relevancy hadn’t faded in the 20 plus years since I first read it. Indeed it seemed written for today.  A few thoughts of the good doctor ought to be thought through by every manager in every enterprise.

First, Dr. Deming states that the most important things cannot be measured.  I spent my early years in operations management, so I love metrics. Business is an exciting challenge for me and I love to know the score. However, Dr. Deming would argue that using the metrics we have in place is akin to managing looking in the rearview mirror. They may tell us how we did, but they have little value in predicting how we will do.  For that we must rely on what Dr. Deming called Profound Knowledge.  The numbers should help us understand the statistical nature of work and variability, but more importantly we need to appreciate the underlying systems in our businesses and how they impact the outcome. He also postulated that profound knowledge required managers to understand the theory of knowledge and its limits. Lastly, profound knowledge requires management to have knowledge of psychology and the concepts of human nature.

I have a sense that many, if not most, executives these days are dismissing the forces at work that they cannot measure. Micromanagement has come back into vogue. Many are even seeing this micromanagement as being heroic; they are saving the company!  I fear this extreme management of the now is missing the opportunity to use profound knowledge to lead their companies to the future. They may survive, but I have my doubts they will flourish.

Second, Dr. Deming raises it a level when he stated the most important things are unknown and unknowable. A simple example he used with us at GM is that we cannot know, therefore we cannot count, the number of customers who chose not to come into our showrooms. I see this most often these days with companies trying to implement the Toyota Production System. The efforts tend to morph into a new department of folks that move from location to location doing the parts of the Toyota Production System we can see and count. Methods like visual control (andon), just in time and kanban, continuous improvement projects (kaizen), and development of standardized work seem to be the primary tactics. They are all good and important. However, it is a system, and unless the methods in TPS that cannot be measured are implemented, they are doomed to failure. The concept I see most overlooked and therefore, least implemented, is nemawashi, or the foundational work that needs to be done so that those that do the work on a daily basis integrate the knowledge into their everyday mindset. Simply stated, its the people thing. Without it, TPS efforts end up being run by a small group of experts who descend on a work area, run some kaizen projects, organized the workplace, write some standardized work plans, and produce projected savings reports that are roundly applauded by management.  Meanwhile, the workers adopt a “this too shall pass” tolerance mentality, and things return mostly back to the old way not too many months out.

I feel great empathy for the managers of today’s businesses.  Numbers are everything in their world.  Stock analysts who learned the world of business in an MBA program and never stepped on the factory floor sit in judgment of these managers. Incentive and compensation programs are dependent upon today’s numbers. There is a lot of pressure to only deal with the known.  Being well informed on business metrics is taking precedence over acquiring profound knowledge.  Those that want to talk about human nature and engagement are being dismissed as too soft.  Soft? Maybe.  Right? Probably.

I am going to end this post with Dr. Deming’s own words.  They seem so very right to me at this moment:

“The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding of the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people. Once the individual understands the system of profound knowledge, he will apply its principles in every kind of relationship with other people. He will have a basis for judgment of his own decisions and for transformation of the organizations that he belongs to. The individual, once transformed, will:

• Set an example;
• Be a good listener, but will not compromise;
• Continually teach other people; and
• Help people to pull away from their current practices and beliefs and move into the new philosophy without a feeling of guilt about the past.”

Amen.

I was reviewing my marketing plan this morning and I realized that everything I looked at I was evaluating with a risk reward mindset. The economic conditions have pushed frugality and a cautiousness about spending up the criteria ranking in my decision making. By and large, I think this is a good thing.  I was raised in a culture at United Parcel Service where we routinely turned off the lights when we left our office, even for a moment. Being a good steward of resources is a base level requirement for excellence. The irony is that my marketing is focused on convincing organizations that they should spend some scarce resources now for a future payback. I was afraid to commit my resources now for a future payback!

So after that slap in the face moment, it occurred to me it is always a question of balance. Yes, we must be lean to survive these turbulent economic times. However, if we do not make take bold measures toward the hope of a bright future, we will be caught in a continuos frenzy of trying to plug holes just to stay afloat. Leaders need to be able to separate caution from fear. We need to send a message to those that would follow us that caution in committing our resources is responsible management. We must also show that we have faith in the resiliency of our organization, our team by making the necessary investments in research and development, talent development, and yes, even marketing. It is an easy line to cross over.  Many of the people I deal with are afraid to spend anything right now…they have heard the message from above that costs must be contained! Several levels of management approval are being required even for the smallest expenditures. Oftentimes the cost of the managerial time lost in this scrutiny exceeded the cost of the expenditure!   This quite frankly is…nuts!  I am reminded that Dr. Deming said that fear in the workplace was one of the greatest barriers to organizational success.  As a leader, we need to teach sound measures for evaluating investment.  And we need to gamble a bit.  Cost cutting never lead a company to sustained excellence.  Only bold innovation and moving at a faster pace than your competitors will get you to the top.

I am going to revisit that plan this afternoon.  I am going to trust my instinct and training to make conservative decisions about spending.  But I am also going to be bold…saving a dime today could end up costing dollars in the near term future.  I am going to find that balance!

When Jim Kouzes and Barry Posner, authors of the Leadership Challenge, researched what traits followers look for in a leader, competence was number three on the list. (the others; honest, forward looking, and inspiring) Common sense says we should be reluctant to invest our full energy and talent behind someone that doesn’t have a proven track record of results. Tom Peters reminds us that we are only as good as our last gig. Why risk following someone that hasn’t proved they are capable of a successful gig?

In actual practice, I too often see being clever or sheer longevity on the job taking precedence over competence at the executive level.  Take a look at Fortune’s list of the highest compensated CEO’s and look at the performance of the organizations they lead.  Pay for performance?  Or pay for cleverly loading up the board with those that will look favorably at executive compensation issues?  Perhaps I am too cynical, but it seems like our economy has gotten away from rewarding true value creation.

We consultants are not immune from the same scrutiny.  Does the knowledge and counsel we offer result in true value creation?  How do we know?  There is one thing we have that is often missed internally.  True market forces.  My product is worth what the market deems it to be worth.  Project by project.  Today, I am going to recommit to the concept of competence.  My gut tells me it is the area we all would do well to re-examine.  I want to do well…I am as competitive as the next guy…but I want that next contract win to be based first on being competent.  It’s a good thing.

When I first heard that Richard Beatty, a Rutgers Professor, had spoken to a conference for CFO’s and implied that there was no connection between employee engagement and organizational performance, I sort of smirked.  Another academic with no real experience in the world of work pandering to a crowd that would pay him a speaker’s fee.  But, once again, I was dead wrong.  If you read his article you will see that he doesn’t doubt the importance of engagement, just the HR communities approach to it that equates employee satisfaction with engagement.  I agree with his point that you may be satisfying the wrong people.  Maybe those that aren’t contributing should be dissatisfied! I believe that HR needs a place at the table at least equal with the finance folks right now.  We absolutely need each and every member to be focused on performance at this time, if not always. It seems to me that HR has to sharpen their expertise when it comes to understanding operations.  And then add their voice to make the argument that the best people working in the best environment will produce the best results.  I wonder sometimes if we,HR, haven’t put a little too much emphasis on the life part of work life balance. That may be an unpopular thing to say, but this may be the time to reexamine how much benefit we are getting from flex time, working at home, etc.  They are important tactics, but they must be measured in terms of value back to the organization, not just value back to the employee.