1. Shareholder Value as a Strategy. And not a good one. Even the guy who popularized it concurs. “Shareholder value is a result, not a strategy,” said Jack Welch. “Your main constituencies are your employees, your customers, and your products.”

2. IT as a Utility. Cloud computing is the latest step toward buying computing capabilities as services.

3. The Customer Chorus. Technical and social developments have given customers a stronger and more pervasive voice—and companies are finding ways to listen.

4. Enterprise Risk Management. Chief risk officers hold the new umbrella over pockets of risk that had been scattered, and addressed separately, throughout the organization.

5. The Creative Organization. The ability to produce creative output was seen as a competitive advantage to encourage through collaboration and diverse perspectives.

6. Open Source. Wikipedia, which represents the power of open source, was born in 2001.

7. Going Private. According to the article, “As the decade wore on, private equity’s playbook for turning around businesses was increasingly held up as best-practice management,” especially in the areas of strategic focus and governance.

8. Behavioral Economics. Rational thought alone does not explain human decision-making. Yup, that’s the 2000’s in a nutshell.

9. High Potentials. Some managers are more equal than others and you would be smart to develop them.

10. Competing on Analytics. The data you collect can be turned into intelligence.

11. Reverse Innovation. I don’t know where the clever name came from, but what HBR is focusing on is the emergence of huge markets in India and China.

12. Sustainability. By which, HBR means going green, and it declares that 2010-2020 will be the decade of sustainability.

From a Baldrige perspective, listening to customers, managing risk, promoting innovation (creativity), focusing on strategies and governance, developing managers, converting data into knowledge and knowledge management, and pursuing sustainability would rank as influential management ideas because they key components of a systematic approach to performance excellence.

As for improving HBR’s list, I would suggest the past decade also saw the proliferation of Lean and Six Sigma as process improvement methodologies, the emphasis on agility to respond more quickly to a rapidly changing environment, and widespread acceptance of the balanced scorecard as a way to measure performance.

Here’s hoping the list ten years from now touts the Baldrige model as one of the decade’s most influential management ideas.

To find out more about these topics, read:

• 9 Ways to Get Closer to Customers
• Anticipating Disruptive Change
• Making Innovation Part of Your Culture
• Transforming Measurement
• Get the Information You Need
• Knowledge Management 2.0
• 10 Steps to World-Class

If every financial institution in the U.S. had been forced to answer these Baldrige questions honestly and accurately in the past few years, and if regulators had been verifying their responses, the financial crisis and the bailout it triggered could have been averted. Either they would have had processes in place to deliver ethical and effective leadership or their irresponsible practices would have been exposed.

“I think the last two years have revealed the single largest failure of senior management in the financial sector, and of the board system in American history,” wrote Bo Cutter in new deal 2.0 (November 24, 2009). Cutter has been a managing director of Warburg Pincus, a global private equity firm, and led President Obama’s Office of Management and Budget transition team. Considering the savings and loan crisis in the 1980s and 1990s and the scandals involving Enron and Worldcomm earlier this decade, one could argue that senior management and boards of directors in the financial sector have been failing miserably for thirty years. One could also make the case that the government agencies responsible for overseeing these financial institutions failed miserably, too.

This systemic failure cannot be fixed by feeding the system, as the bailout does, or by chastising the senior leaders no matter how good that feels. The system has to change. It didn’t change significantly after the savings and loan debacle. It didn’t change much after Enron and Worldcomm. If it doesn’t change in response to today’s financial crisis, the failures will continue.

The Baldrige model provides guidance on how to address these fundamental, systemic issues: Ask and answer the questions. Verify the responses. Embed the Baldrige core value of visionary leadership, which states that “senior leaders should serve as role models through their ethical behavior” and “should be responsible to your organization’s governance body for their actions and performance.”

That doesn’t mean they get bonuses during a bailout. Governance has to be better than that. As Cutter writes, “I think I am correct in saying that there was not a single independent director in America who stood up on this issue. I do not understand why every board of every institution that failed was not asked to resign immediately.”

They weren’t asked to resign because the system hasn’t changed. It’s business as usual even in the most unusual and trying times. As long as that system remains intact, the misery it produces will continue.

To find out more about effective leadership, read:

• The Priorities of Leadership
• Excessive Executive Compensation Derails Excellence
• Why Organizations Fail
• 10 Critical Questions: Senior Leadership
• 4 Parts of True Sustainability

An article online at the Wall Street Journal today stated that “pensions for top executives rose an average of 19% in 2008, with more than 200 executives seeing pensions increase more than 50%.”  Yet, as Ellen E. Schultz and Tom McGinty write in “Pensions for Executives on Rise,” “Executive pensions rose even as the share prices at the companies declined an average of 37% in 2008 and many firms froze employee pensions and suspended retirement-plan contributions.” And cut employee benefits. And laid people off.

That’s an ethical issue. It’s a moral issue. The Economic Policy Institute stated that the average CEO of a company with at least $1 billion in annual revenue makes 262 times what the average worker makes. I’ve heard all the rationalizations for this but they miss the point: Companies pay their CEOs these outrageous amounts because they have passive investors and servile directors who rarely question the conventional wisdom of paying a leader 262 times more than other employees. Very few have the courage to break this paradigm.

In “Ripping up the rules of management” (CNNMoney), Susanna Hamner and Tom McNichol compare the conventional “wisdom” to the best practices of companies such as Whole Foods, which limits executive pay to 19 times the average full-time worker’s salary. The article quotes Whole Foods CEO John Mackey, who said, “Fewer things harm an organization’s morale more than great disparities in compensation. When a workplace is perceived as unfair and greedy, it begins to destroy the social fabric of the organization.”

That makes it both unethical and bad for business—especially if you are trying to create a culture of employee empowerment and engagement, which is one of the reasons to integrate the Baldrige model.

James L. Lamrecht and Renato Ricci wrote a book called Dare to Be Different, published by ASQ Quality Press in 2009. They draw on their extensive experience to identify problems that have held companies back for decades. The first is employee motivation, and the top de-motivating factors are:

• “The executive manager, sitting across from you in a meeting, has a base salary at least five to seven times yours and may well have forgotten the everyday realities of the shop floor.
• Your manager’s incentive and/or bonus package, which will be triggered thanks to your cost savings proposal and initiative, is worth at least 10 times your bonus package.
• If cost savings or process improvements are not on schedule, resulting in layoffs, you and others will be the first to be let go; members of management, however, usually get to keep their jobs. And even if some managers are eventually laid off, their severance pay will easily be 5–10 times your severance pay.”

Most overpaid executives, and the boards that enable them, either don’t recognize the systemic damage to the social fabric of their company caused by excessive compensation or they don’t care. As a result, employees rightly resent the hypocrisy of leaders who like to say that their employees are the company’s biggest asset or its greatest strength or its competitive advantage.

If that was true, the leader saying it wouldn’t be “worth” 262 of the people he was talking about.

All three of these factors are addressed in the second half of the Leadership Category in the Baldrige Criteria. Companies that want to improve in these areas can ask and answer the questions in Item 1.2 (here) and read how Baldrige Award winners respond (award application summaries here).

The study shows that more companies are doing more than just talking about corporate citizenship. Forty percent of the respondents assign a team or individual to work on corporate citizenship issues, up from 26% in 2007. More companies are setting policies for corporate citizenship and integrating it with their business planning processes.

The study also found that more large companies are “establishing corporate citizenship management policies and practices to ensure citizenship is integrated into the core business.”

As the study concludes: “Increasingly, customers, employees, business partners, and government demand that corporations take an active role in social, environmental, and community concerns. That’s why strategic corporate citizenship is more than good business—it’s a business essential.”

You can read a summary of the survey here.

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