1 | Leadership
Do You Know Your Externalities?
The drumbeat for corporate social responsibility continues to grow. The Harvard Business Review has initiated a debate about “the lack of coherence in most firms’ attempts to be socially responsible.” Click here to read the article that launches the debate.
According to HBR, leaders need to think in terms of externalities, which is the “effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account.” In other words, take ownership of your impact.
The Baldrige Criteria ask how you do that through questions in the Leadership category:
- How do you consider societal well-being and benefit as part of your strategy and daily operations?
- How do you consider the well-being of environmental, social, and economic systems to which your organization does or may contribute?
These are birth-to-grave questions about the design, production, delivery, service, and destruction/recycling of your products, facilities, and equipment. Or, if you don’t manufacture anything, of your operations. You answer the questions as part of strategic planning and your design processes and you manage and measure your performance as part of process management.
The first step is to identify your externalities. The best time to do that is during the design stage, when you can modify the design to reduce your impact, but even if that window has closed, you still need to determine what your externalities are. Only then can you start to take ownership of your impact.
To read more about corporate social responsibility, click on these…
20Apr2010 | Steve George | 0 comments | ContinuedSustainability: A Business Imperative
If your organization isn’t on the environmental responsibility bandwagon yet, what are you waiting for? Last year Wal-Mart announced plans to investigate more than 100,000 suppliers with a Sustainability Index. Now, according to Fast Company, “IBM is following Wal-Mart’s lead by asking its 28,000 suppliers in 60 countries to establish environmental goals and measure energy conservation, greenhouse gas emissions, and waste management/recycling practices.” (“IBM to Suppliers: Embrace Sustainability…Or Else,” Ariel Schwartz, April 14, 2010)
The Baldrige Criteria ask how you consider societal well-being and benefit as part of your operations, including the environmental systems to which you contribute. As with everything in the Baldrige model, acting on your environmental responsibility requires well-defined and deployed processes that align with your mission and vision and support sustainability and long-term success.
IBM seeks the same systemic approach by its suppliers. According to Wayne Balta, IBM’s VP for corporate environmental affairs and product safety, “We want them all to build long-term sustainability in a way that is integral to their routine operations, not as an add-on fix.”
The Veterans Affairs Cooperative Studies Program (VACSP) Clinical Research Pharmacy Coordinating Center, which won the Baldrige Award in 2009, is a small organization of approximately 112 people that supports and manages drug-related activities in clinical trials. In its application summary, it describes how it considers societal well-being and sustainability:
15Apr2010 | Steve George | 0 comments | Continued“As a small organization, the Center has a culture of improvement, including a strong commitment to conserving natural resources and to environmental stewardship. The Center maintains a constant focus on process improvement and…
Layoffs and the Failure of Leadership
Susan Marvin wrote an insightful column that the StarTribune published in yesterday’s paper. Marvin and her three brothers run Marvin Windows, a privately-held window and door manufacturer in a small town in northern Minnesota. Their grandfather started the company in 1912.
Marvin begins by noting that, last year, her company cut the weekly hours of more than 1,000 workers from 40 to 32. Upon hearing the news, the workers cheered. They had feared layoffs during the housing downturn. The Marvin family decided that was not the best option. (“Do layoffs really help the bottom line?” StarTribune, April 2, 2010)
The Baldrige Criteria ask how your organization prepares for situations like this, although few leaders had expected a recession as deep and long as this has been. Such preparation includes determining the impact of decisions on all stakeholders, on the quality of your products and services, and on your culture.
Too many leaders ignore these factors and focus on just one: Laying people off cuts costs. When you grow, you add people. When revenues fall, you lay people off. From a financial standpoint, the logic makes perfect sense. As an added benefit, you can rid your organization of some of the “dead wood” that often accumulates over time.
The Marvins disagree with this approach. Susan Marvin points to a study by Jeffrey Pfeffer, a professor at Stanford University. According to Pfeffer’s research, layoffs lead to lower worker productivity, lower company profits, damaged employee morale, loss of institutional knowledge, and increased rates of alcoholism, drug abuse, mental-health…
5Apr2010 | Steve George | 0 comments | ContinuedUndercover and Out of Touch
I haven’t watched much of the new TV show, Undercover Boss, because it sounds manipulative and because any boss who has to go undercover to find out how his company really works is not the kind of role model we should learn from.
Visionary leadership is a Baldrige core value. It emphasizes senior leaders’ personal involvement in communicating, coaching the workforce, developing future leaders, and recognizing employees. Visionary leaders do this every day, not just when a TV camera is turned on, and they do it without a disguise. They interact with their people daily, in every imaginable venue, nurturing an environment in which employees feel valued and engaged.
In “Management Lessons from Undercover Boss” (HBR, March 23, 2010), Michelle Buck, director of leadership initiatives at the Kellogg School of Management, points out that “leadership is a relationship, a partnership, and employee engagement isn’t just a soft and fuzzy topic but has bottom-line implications.” Senior leaders who spend their days holed up in their offices or surrounded by other executives cannot build the relationships or strengthen the partnerships that sustain great companies.
I spent much of last week traveling to sales offices in Europe with the president of a company with a half-billion dollars in annual revenue. He spends most of his time meeting with these small teams and with key customers scattered across nearly 120 countries around the world. Unless they are very new to the company, the employees have met the president on their turf and at orientation held at the company’s…
30Mar2010 | Steve George | 0 comments | ContinuedLessons from India’s Business Leaders
Peter Cappelli writes for Harvard Business Review today about the commitment of Indian leaders “to social goals that extend beyond the interests of their firms.” (“Indian Companies: Doing Well Because They Do Good”) Cappelli and his colleagues interviewed the leaders of the 100 largest companies in India. “Every executive we interviewed described the main objective of their company in terms of a social mission,” writes Cappelli, who contrasts the dark path American companies have taken (corporate lobbyists subverting the public good, excess executive compensation, second worst shareholder performance among developed countries over the last decade) with the bright future of Indian companies (second best overall growth rate in the world, competing and winning in high-skilled service industries, acquiring foreign companies that then perform better).
For Indian companies, “business strategy rests on the social mission.” Bharti Airtel’s business strategy focuses on getting cell phones into the hands of people who have no means to communicate. ICICI Bank’s business strategy focuses on providing financial help to those with no access to banking. Dr. Reddy’s business strategy focuses on addressing the healthcare needs of the poor worldwide.
Dr. Reddy’s, a pharmaceutical company, provides for the healthcare needs of 40,000 children. Such charitable support is another characteristic of Indian leaders and their companies. Infosys has built and staffed entire hospitals in different parts of the country. Tata Group gives 65% of its profits to charities.
Cappelli points to two reasons why Indian companies are doing well by doing good. First, by raising the quality of life for…
12Mar2010 | Steve George | 0 comments | ContinuedShrink the Change
I’m guilty of being negative. When I evaluate a company’s Baldrige assessment, I dutifully note its strengths but I really zero in on its opportunities for improvement. And that’s a mistake.
In their thought-provoking book, Switch: How to Change Things When Change Is Hard (Broadway Business, 2010), brothers Chip and Dan Heath explain why you need to learn how to recognize and understand your strengths, the best practices, the small victories—the bright spots:
“To pursue bright spots is to ask the question ‘What’s working, and how can we do more of it?’ Sounds simple, doesn’t it? Yet, in the real world, this obvious question is almost never asked. Instead, the question we ask is more problem focused, ‘What’s broken, and how do we fix it?’”
I highly recommend Switch for its eclectic mix of research from a wide variety of fields that challenges the accepted wisdom about change. Change is hard? It doesn’t have to be that hard. We need a burning platform? Not really. Use SMART goals to change? Won’t work.
Instead, how about: Shrink the change. “Make the change small enough that they can’t help but score a victory,” write the Heaths. Arrange for early successes and you build momentum for the bigger changes ahead.
Or: Just look for a strong beginning and a strong ending and get moving. As they note, “the middle is going to look different once you get there.” Know where you are. Imagine where you want to be. Ready-Fire-Aim!
Or: Clarity dissolves resistance. The Heaths tell a lot of great stories in…
2Mar2010 | Steve George | 0 comments | ContinuedManagement’s Five Deadly Diseases
W. Edwards Deming was one of the world’s great management experts, and his thinking helped shape the Baldrige Criteria. Like his friend and peer, Joseph Juran, Deming believed that nearly every problem an organization faces is a problem of management. And he didn’t have a very high opinion of management.
Art Petty reminds us that Deming remains very relevant on his blog, Management Excellence (click here). He links to a 15-minute video in which Deming describes management’s five deadly diseases (click here for video). Despite Deming’s strange speaking style, the video is interesting because he forcefully makes his case against management problems he had identified during decades of work with all types of organizations.
The five deadly diseases are:
- Lack of constancy of purpose. People haven’t decided what business they are in and as a result, they are unable to plan for the future.
- Emphasis on short-term problems—also known as worshiping the quarterly dividend. Leaders have no plan to stay in business by improving the quality of their products and services. Such short-term thinking produces unemployment, which is a sign of bad management, which means there’s a whole lot of bad management still going on in this country today.
- Annual rating of performance. It’s an arbitrary and unjust system that annihilates long-term planning and teamwork. People work in fear. As Deming said, rewarding performance sounds great but it can’t be done.
- Mobility of management. It takes a long time to understand how a company works. Annual performance ratings encourage management mobility, which leaves too few people who really understand…
