Business excellence models, core value deployment and lessons from the Bible

by Rick L. Edgeman, Su Mi Park Dahlgaard, Jens J. Dahlgaard and Franz Scherer

Business excellence is a way of working that balances stakeholder concerns and increases the probability of long-term success through operational, customer-related, financial, and marketplace performance excellence. Common to the philosophies of most business and performance luminaries, and to virtually all business excellence models, is an emphasis on the importance of leaders and leadership. While leadership is focal, the function and form of leadership that best sustains and advances organizations intent on business excellence is subject to ongoing revision.

This article proposes a model of leadership composed of competence and core value subsystems. Businesses have long neglected the core value subsystem, and such neglect has erected barriers to systemic leadership. Of necessity such models require a principle-centered definition of leadership. Such definitions tend to include controversial elements, and the one provided here is no exception.

Leadership and business excellence models

A well-known Demingism states that "defects beget defects." Less well-known, perhaps, is the corollary that a bad leader provides poor leadership, which may be worse than no leadership. Since the business excellence models upon which quality awards are based include leadership as either a foundation or an enabler, by implication the antithesis of business excellence results from a bad leader providing poor leadership. In this case, the company will win no quality award and, more important, will most likely struggle for future survival.

Although awards should not motivate organizations to run the quality race, business excellence is to be coveted since its practical translation is almost always prosperity and longevity.

While the criteria of quality awards do not define leadership, they nevertheless suggest activities and roles for leaders, and they formally assess organizational leadership. But is it truly leadership that is assessed by the various quality award criteria? Recalling W. Edwards Deming's exhortation to cease reliance on mass inspection and, instead, to focus on building good quality in rather than inspecting bad quality out, one can derive an analogy for leadership: Make quality systemic by building in good leadership.

The portrayal of leadership as either a foundation or an enabler indicates that leadership is localized rather than systemic; that is, leadership in business excellence models is often overly, although perhaps not overtly, dependent on Leaders (with a capital L) and is not truly a leadership system. In more familiar terms, this is analogous to the contrast between quality being the responsibility of the quality department and quality being everyone's responsibility. This article proposes, therefore, that leadership is everyone's responsibility, although the scope and influence of that responsibility may vary widely.

Leadership must be built in so that, ultimately, Leader becomes leader becomes leadership--becoming systemic rather than "hero" based. In this sense, one views the highest form of organizational leader as the "servant leader,"¹ perhaps more popularly referred to as a coach or team builder.

Leadership in international quality award criteria

Leadership is explicit in the business excellence models underlying all international quality awards. However, since leadership is not rigorously defined by the criteria, what is assessed may be thought of as the fruits of leadership. This is despite the fact that such models tend to assess leadership according to an approach-deployment focus rather than a results focus. Consider the leadership criteria of the Malcolm Baldrige National Quality Award:

"The leadership category examines the company's leadership system and senior leader's personal leadership. It examines how senior leaders and the leadership system address values, company directions, performance expectations, a focus on customers and other stakeholders, learning and innovation. Also examined is how the company addresses its societal responsibilities and provides support to key communities."²

This quote suggests systemic leadership, but the examination items do not support it. There is an incongruity between the ideal of leadership described in the quote and the assessment of leadership as addressed by items 1.1 and 1.2 of the criteria.

In the Baldrige Award criteria, the leadership category is valued at 110 points (out of a possible 1,000) and is assessed via two items:

* 1.1 Leadership System (80 points)

* 1.2 Company Responsibility and Citizenship (30 points)

The first of these two items deals with "how senior leaders guide the company in setting directions and in developing and sustaining effective leadership throughout the organization." While this sounds as though it may promote systemic leadership, a reading of the Areas to Address indicates that it is the exercise rather than expansion of leadership that is examined.

The second of these items addresses both societal responsibilities and community involvement. The issues to be addressed are "how the company addresses its responsibilities to the public and how the company practices good leadership."

These citations from the criteria clearly equate senior leader(s) with leadership. Although this view is common to the business excellence models on which most quality awards are based, it is contrary to the notion of broad-based, systemic leadership.

To see this, one need only review the corresponding criteria items for the European Quality Award, the Australian Quality Award, the Japan Quality Award and Japan's Deming Prize. In each of these, leadership is the first category. In the case of the European Quality Award, which is based on the EFQM Model for Business Excellence, leadership is considered an enabler and is valued at 100 points out of a possible 1,000. It defines leadership as, "How the behavior and actions of the executive team and all other leaders inspire, support and promote a culture of total quality management (TQM)."³

The award's self-assessment criteria indicate that four key areas must be addressed:

* How leaders visibly demonstrate their commitment to a culture of TQM.

* How leaders support improvement and involvement by providing appropriate resources and assistance.

* How leaders are involved with customers, suppliers, and other external organizations.

* How leaders recognize and appreciate people's efforts and achievements.

It is clear in these criteria that leadership is considered to be how internal visibility, provision of resources, external visibility and employee recognition are achieved by the upper echelon of the organization.

The 1997 Australian Quality Award leadership criteria allocate 140 points out of a possible 1,000 to:⁴

* Senior executive leadership (60 points).

* Leadership throughout the organization (40 points).

* Leadership in the community (40 points).

The intent of these criteria approaches systemic leadership in that they cover the values of the organization, including behaviors that it wishes to establish in its relationships. Moreover, the leadership category of this award examines the role of management in creating values and developing an appropriate management system to make those values a reality. The category further examines how the management system creates an environment for learning and continual improvement as well as the involvement of employees at all levels in achieving the organization's goals.

The criteria of the Japan Quality Award allocate 150 of 1,000 total points to leadership with those points distributed as:⁵

* Leadership system and organization (100 points).

* Public responsibility and corporate citizenship (50 points).

According to the award's criteria, this category "examines how senior executives determine the company's future direction to become a 21st century company from the viewpoint of public responsibility and customer focus." This category also examines how senior executives convey the company direction to all company units. Again, an emphasis on key leaders rather than systemic leadership is evident.

Japan's Deming Prize evaluates leadership somewhat differently. According to Yoshio Kondo, a former member of the Deming Application Prize Subcommittee, leadership is assessed through an executive session where examiners listen to senior executives talk through their thoughts on, and enthusiasm for, companywide quality control.^6,7

The executive session is evaluated independently by each on-site examiner, of which there must be at least two, and the minimally acceptable score is 70 out of 100 possible points. The assigned score is the median result of the independent evaluations. The Deming Prize emphasizes senior executive leadership more so than any other quality award, with no evident indication of systemic leadership.

Leadership in 1,000 words or less

While the idea that "all men are created equal," as set forth in the U.S. Declaration of Independence, applies ideologically to the sanctity of human life, all leaders are not equal and thus neither will be their organizational impact.

This follows the statistical truism that differential input leads to differential output. If this is true in the transformation of physical raw materials into finished end products, it is perhaps even more true in the case of leadership: Leaders are the raw material of business excellence as well as organizational failure.

As pointed out by Michael C. Harris, "one cannot learn leadership and teamwork from a single chapter, 20 chapters, or even 20 books."⁸ If this is true of "one"--that is, of the individual--then how much more difficult must it be to make leadership systemic? Yet Harris claims--and the authors' experience is consistent with his claim--that leadership and teamwork are the basis for the information age in which we live. Given the importance of leadership, it is essential that it not be ethereal, but concrete--not just art, but an integration of art and science.

What is leadership? Consider the following definition.

Leadership is:

* Vision that stimulates hope and mission that transforms hope into reality.

* Radical servanthood that saturates the organization.

* Stewardship that shepherds its resources.

* Integration that drives its economy.

* The courage to sacrifice personal or team goals for the greater community good.

* Communication that coordinates its efforts.

* Consensus that drives unity of purpose.

* Empowerment that grants permission to make mistakes, encourages the honesty to admit them and gives the opportunity to learn from them.

* Conviction that provides the stamina to continually strive toward business excellence.

In a few words, leadership is we, not me; mission, not my show; vision, not division; and community, not domicile.

This definition of leadership demands a transformation of organizational core values and culture. For it is through core values that the greatest potential for inculcating systemic leadership exists. More easily said than done, it is an organizational equivalent to "from small acorns mighty oaks grow." Profound leadership--systemic leadership--results from the integration of core values and competencies.

Biblical lessons on leadership

Prior to the Noahic Flood, "the Lord observed the extent of people's wickedness...all their thoughts were consistently and totally evil"⁹--so consistently evil that extreme corporate downsizing (the flood) was necessary. It is not the downsizing but its root that must be examined: The people's core values were corrupt beyond redemption, and systemic implementation of these core values led to unacceptable results--extensive wickedness and, ultimately, punishment.

Contemporary expressions of these values and their ramifications are more clearly understood when related to such workplace issues as sexual harassment, gender and ethnic bias, intolerance, injustice, dishonesty, disloyalty, arrogance, selfishness and so on. Although these might be called the faces of evil, they can equally be referred to as corporate killers, for such they are.

A culture devastated by corrupt core values may also be seen in the Biblical account of the Tower of Babel.¹⁰ A common language was spoken, clarity of communication prevailed, and the people had a common aim--to build a monument to their own greatness.

Pride in their own competence led the tower builders to choose self-glorification rather than forge a society founded on solid core values. As a result, "God confused their language." The competence subsystem of common aim, communication and construction capability was outstanding--but the core value subsystem was corrupt. When leadership motivations were found to be corrupt, communication became severely impaired, organizational cohesion eroded, and unity of purpose degenerated into multiple and often conflicting aims.

Unity of purpose is key to systemic leadership; it relies on consistent interpretation and application of core values that are understood and accepted throughout the organization. Its primary benefit is the creation of a profoundly conscious organization, where, although each person operates separately, there arises one mind, where all people are one unit, yet each is fully self-aware.¹¹

Moses was following a recipe for burnout with his energy disproportionately devoted to settling disputes among the estimated 2 to 6 million people that he led through the wilderness of Sinai.¹² Fortunately, he listened to the sage advice of a counselor who provided a strategy for distributing this massive task to a large number of future leaders.

Lightening the burden of leadership by distributing abilities, responsibilities and privileges requires a profound level of trust and investment in people. This results in the acceptance of the opportunity to exercise the will and the wisdom to choose to do what is right. These are necessary steps toward empowering the work force and, thus, to systemic leadership.

To accomplish this throughout an organization, the core value subsystem must be deployed and augmented by supporting competencies. Recalling the adage that what gets measured is what gets done suggests that core values can be deployed through the reward and recognition system and through the use of relevant performance measures. Likewise, competencies can be attained through personnel recruitment or deployed through education and training.

A thoroughly developed and practiced leadership system will also communicate the message of forgiveness for honest mistakes. But forgiveness requires listening, which must be embedded as both a competency and core value. It must be accompanied by the clear understanding that we all see the world not as it is, but as we are.¹³ Mutual respect is central to listening.

Systemic leadership is powered by the core value subsystem, and organizations face the twin challenges of understanding this subsystem and practicing its disciplines: servanthood, stewardship, sacrifice, empowerment, listening and conviction. Infusion of such core values into an organization is not an easy task, but one that can be facilitated by the organization's reward and recognition system.

Core values and competencies of leadership for business excellence

Previous sections of this article identified principle-centered core values of leadership for business excellence. This section focuses on more well-known and tangible elements of leadership for business excellence.

TQM. As supported by the criteria of various quality awards, TQM is regarded as the main criterion for business excellence and can be operationally defined as "a well-planned companywide process, integrated into the company's business plan, that achieves the goal of never-ending continuous improvement of all business processes in order to satisfy customer requirements, both internal and external."¹⁴

To build a TQM culture it is important that every staff member understand and apply such basic principles or values as leadership, customer focus, teamwork, employee empowerment, broad-based participation, continuous improvement and focus on facts.

Creativity. Creativity is a differentiating factor in competitive environments where quality and cost are essentially identical. It is important to business excellence because it stimulates improvement and innovation. Creative organizations aim to establish an effective basis for innovation and continuous improvement by adopting a systematic approach to the various aspects of creativity and innovation.

Core values and competencies of the creative organization have been identified as the ability to develop a climate conducive to creation, use of formal creative planning processes, innovation management, idea development, barrier removal, communication, evaluation procedures and motivational stimuli.¹⁵

Learning. Creativity is fueled by learning, and successful organizations of the future will be fast learning organizations (FLOs)--those that have the ability to take on new ideas and adapt faster than their competitors. This requires that organizations discover how to tap their people's commitment and capacity to learn at all levels in the organization.¹⁶ Core values and competencies of FLOs include team learning, systems thinking, shared values and personal mastery.

Leader profiles. Excellent leader profiles are also important to the attainment of business excellence. An empirical study of more than 200 European CEOs and 1,150 of their key subordinates identified eight leadership styles, with five of these mapping to TQM, creativity and learning.^17,18 The key core values and competencies of these five styles are shown in Table 1 in decreasing order of impact on the success factors and, by implication, the attainment of business excellence.

The leadership profile of any individual is a composite of varying degrees of multiple styles, and it is the relative predominance of some styles over others that will influence the success of that individual. Given the importance of leadership, a reasonable first step on the journey to business excellence is assessment and improvement of the different leadership styles of an organization's managers, which will in turn facilitate effective leadership.

Learning from the human experience

Systemic leadership must be championed by those who are in the most advantageous position to do so: those who are already seen as leaders and who believe that giving is gaining. But some leadership styles are better suited to inciting such revolution than others, as supported by the results of the European leadership study. While leadership core values identified by the study are worthy of development and deployment, they aren't exhaustive and should be augmented by such elements as trust, mutual respect, empowerment, listening, stewardship and servanthood.

The core values identified here are embedded in the human experience, waiting for infusion. If we search deeply enough, beyond the literature, beyond learned attitudes and behaviors, we will rediscover that the core principles and values for successful lives and successful corporations are to be found in the human experience--often our own experience.

REFERENCES

1. R.L. Edgeman and J.A. Williams, "Select Leaders Using a Quality Management Process," Quality Progress, February 1998, pp. 78-82.

2. Malcolm Baldrige National Quality Award 1998 Criteria for Performance Excellence (Gaithersburg, MD: National Institute of Standards and Technology, 1997).

3. The 1998 European Quality Award Information Brochure (Brussels, Belgium: European Foundation for Quality Management, 1997).

4. Australian Quality Award 1997 Assessment Criteria (St. Leonards, Australia: Australian Quality Council, 1997).

5. 1996 Japan Quality Award Criteria, www1a.meshnet.or.jp/
jqa/jqa/CRITERIA96E.htm.

6. Yoshio Kondo, personal communication, Nov. 2, 1997.

7. The Deming Prize Guide for Overseas Companies (Tokyo: Union of Japanese Scientists and Engineers, 1996).

8. Michael C. Harris, "Leadership Will Prevail," Quality Progress, September 1997, pp. 83-86.

9. Genesis 6-8.

10. Genesis 11.

11. C. Crawford-Mason, "Profound Knowledge: A New Synthesis from a Transcending Perspective to Personal Improvement" (Silver Spring, MD: CC-M Productions, 1997).

12. Exodus 18.

13. S. Covey, The 7 Habits of Highly Effective People (New York: Doubleday, 1992).

14. R.M. Kirchner, "What's Beyond ISO 9000?" Quality Digest, November 1996, pp. 41-45.

15. S. Majaro, Managing Ideas for Profit: The Creative Gap (London: McGraw-Hill, 1992).

16. Peter M. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (New York: Doubleday Currency, 1990).

17. J.J. Dahlgaard, A. N�rgaard and S. Jakobsen, "Styles of Success," European Quality, November-December 1997, pp. 36-39.

18. J.J. Dahlgaard, A. N�rgaard and S. Jakobsen, "Profile of Success," European Quality, January-February 1998, pp. 30-33.

BIBLIOGRAPHY

Edgeman, R.L., and S. Conlan, "Global Perspectives on Leadership for Business Excellence," forthcoming in International Journal of Applied Quality Management, 1999.

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RICK L. EDGEMAN is a professor and director of the Self-Assessment & Business Excellence Research Centre at Colorado State University in Fort Collins. He has a doctorate in statistics from the University of Wyoming in Laramie. Edgeman is a member of ASQ.

SU MI PARK DAHLGAARD is an external assistant professor at the Aarhus School of Business in Denmark. She has a master's degree in Japanese studies from Yonsei University in Seoul, Korea.

JENS J. DAHLGAARD is a professor at the Aarhus School of Business in Denmark. He has a doctorate in business from the Aarhus School of Business. Dahlgaard is a member of ASQ.

FRANZ SCHERER is president and CEO of the Sirona Group in Bensheim, Germany. He has a doctorate in economics from the University of California in Berkeley.