The Power of Ethical Management

In recent conversations I have been challenged by the notions that many organisation continue to come unstuck because  of unethical behaviours of leaders and managers.  But is it just at the top that we have problems?

Organisations can create an environment conducive to ethical behaviour.  It all comes down to how people - and I include both employees and clients - perceive the way they are being treated by the organisation and its management.  And the extent to which they can influence what happens.

Three factors come into play.

•  Purpose:  use values, hopes, and a clear purpose statement to determine what is acceptable and unacceptable behaviour.
• Professionalism:  by knowing as much as we can about our job and striving to perform effectively we develop an identity with the purpose and pride ourselves and of our organisation.  Knowing what is at risk can help you resist temptations to behave unethically. 
•  Perspective: be reflective in our practice.  Make time to pause and reflect, make yourself aware  of what is going on around you. See the big picture and all the impacts.  Respond and adjust, using purpose as your reference point.

Is it success that corrupts, not power?

Holding organisations together when all is going well is not an easy task.  When all is going well you can inadvertently wander away from core business. Success bring a certain amount of freedom to explore, and can lead to complacency and slowness to respond to circumstances. Success is not often something for which we prepare. 

It is in that context that we can ask:

Why have so many seemingly successful companies failed in recent years?  Why is there widespread anxiety over company/organisational leadership?  Why are so many countries questioning the quality and effectiveness of their political leadership?

Is it a lack of preparedness?  Is it an inability to cope with success?  Have we even thought about what success is?

The following examines some issues relating to responsibility, ethics and power in leadership.  I have drawn on some older material to help my reflection, and suggest that we seldom consider how we should prepare for success as a precursor to good performance.  None of this is new, but has it been forgotten?

Leadership has been described as a serious meddling in the lives of others (De Pree, 1991:7).  This implies that leadership embodies a responsibility of leaders for, or toward, those who are led. 

Yet a common scenario in modern business (since the late 1980s) is:

... good, respected and successful leaders, men and women of intelligence, talent, and vision who suddenly self-destruct as they reach the apex of their careers.  (Ludwig and Longenecker, 1993:266).

An Australian newspaper article from that time (Barker, 1995:14) reported that a concern for ethics in business is:

... a response to what is now called “ the excesses of the eighties” - the economic damage done to the nation and individuals by greedy, irresponsible and often corrupt business people who were feted as national heroes.

Ethics in management is a significant theme in the recent.  But why is it that leaders get caught up in a downward spiral of unethical decisions?

Ludwig and Longenecker (1993:266-267) seek to:

... debunk the notion that ethical failure of our leaders is largely due to lack of principle and/or the tough competitive climate of the 80s and 90s. (Equally, we could say the same for the more recent past)  Rather, we would like to suggest that many of the violations we have witnessed in recent years are the result of success and lack of preparedness in dealing with personal and organisational success.

Other evidence (Barker, 1995; LaBier ,1986) supports this contention that little attention is placed on preparing people to deal with the trials and dilemmas associated with success in modern society.  As success is the goal of every leader (Ludwig and Longenecker, 1993:270) it is surprising that it does not rate more significance in management and leadership literature.

The biblical story of David and Bathsheba is used to outline four potential by-products of success:

·      lose of strategic focus;

·      privileged access;

·      control of resources;

·      inflated belief in personal ability to control outcomes.

Ludwig and Longenecker (1993:267-269) write that “... the good and successful King David of Israel, believing he could cover up his impropriety, took Bathsheba to his bed while her husband was off in battle.” 

David is not where he is supposed to be (loss of strategic focus), he “delegated, then ignored what was happening”.  David had time on his hands, and a viewing position atop the palace roof to view Bathsheba at bath (privileged access).  David then manipulates the situations (controls resources, and tries to control outcomes) sleeps with Bathsheba who falls pregnant, brings her husband in from battle in the hope he will sleep with his wife and cover-up David’s impropriety, and eventually causes the husband to be killed.  The manipulation is exposed.  “David, in short, chose to do something he knew was clearly wrong in the firm belief that through his personal power, and control over power, he could cover up”.

When kept within reason, privileged access and control of resources are positive and justified requisites for success.  Privileged access is “essential for comprehensive strategic vision” and control of resources is “necessary for the execution of strategy” (Ludwig and Longenecker, 1993:269).  Loss of strategic focus and inflated belief in personal ability are essentially negative (see Table 3)

Table 3:  Possible outcome experienced by successful leaders

	Positive/Benefit	Negative/Disadvantage
Personal Level	Privileged Access Position Influence Status Rewards/Perks Recognition Latitude Associations Access	Inflated Belief in Personal Ability Emotionally Expansive Unbalanced Personal Life Inflated Ego Isolation Stress Transference Emptiness Fear of Failure
Organisational Level	Control of Resources No Direct Supervision Ability to Influence Ability to set Agenda Control over Decision Making	Loss of Strategic Focus Organisation on Autopilot Delegation without Supervision Strategic Complacency Neglect of Strategy

                                                                                (Source: Ludwig and Longenecker, 1993: 270)

The benefits of success to the leader and the organisation are obvious.  Less readily apparent is the personal “dark side” of success which revolves largely around three psychological issues outlined by Ludwig and Longenecker (1993:270-271).  These are:

·      Climbing the success ladder exposes leaders to negative attitudes and behaviours.  There may not be apparent, but nonetheless come with the territory of successful leadership.  Negatives that could be reinforced include unbalanced personal lives, a loss of touch with reality and an inflated sense of personal ability.

·      Leaders may become emotionally expansive - “their appetite for success, thrills, gratification, and control becomes insatiable”.  They can lose the ability to be satisfied.  They can become personally isolated and lack intimacy with family and friends, losing a valuable source of personal balance.  They “literally lose touch with reality”.

·      Other factors include stress, fear of failure and the “emptiness syndrome” (“Is this all there is to success?”)  An inflated sense of ego can lead to abrasiveness, close-mindedness and disrespect.

Success does not necessarily lead to undesired behaviour as Ludwig and Longenecker (1991:271) are careful to record:

We are not suggesting that all successful leaders fall prey to these negatives that are frequently associated with success, but rather want to make the case that success can bring with it some very negative emotional baggage.

However, it is useful to recognise the seven lessons from David’s experience (Ludwig and Longenecker, 1991:271) provide a useful framework for reflection:

•  Leaders are in their positions to focus on doing what is right for their organisation’s short-term and long-term success.  This can't happen if they aren't where they are supposed to be, doing what they are supposed to be doing.

• There will always be temptations that come in a variety of shapes and forms that will tempt leaders to make decisions they know they shouldn't make.  With success will come additional ethical trials.  

• Perpetrating an unethical act is a personal, conscious choice on the part of the leader that frequently places a greater emphasis on personal gratification rather than on the organisation’s needs.

• It is difficult if not impossible to partake in unethical behaviour without implicating and/or involving others in the organisation

• Attempts to cover-up unethical practices can have dire organisational consequences including innocent people getting hurt, power being abused, trust being violated, other individuals being corrupted, and the diversion of needed resources.

• Not getting caught initially can produce self-delusion and increase the likelihood of future unethical behaviour.

• Getting caught can destroy the leader, the organisation, innocent people, and everything the leader has spent his/her life working for.”

The important lessons for Ludwig and Longenecker (1992:272) is for leaders to recognise it could happen to them, and to be aware that:

Ethical leadership is simply part of good leadership and requires focus, the appropriate use of resources, trust, effective decision making, and provision of model behaviour that is worth following.  Once it is lost it is difficult if not impossible to regain.

Further Reading

Barker G (1995)  The glove that tempers the iron fist.  The Australian Financial Review Magazine. July. pp.14-21

Burdett  J O (1991)  What is empowerment anyway?  Journal of European Industrial Training. 15(6):23-30

De Pree M O (1989)  Leadership is an Art.   Melbourne: Australian Business Library, Information Australia.

De Pree M O (1991)  Leadership Jazz.  Melbourne: Australian Business Library, Information Australia.

Eisler R (1995)  From domination to partnership: The hidden subtext for organisation change.  Training & Development 49(2):32-39

LaBier D (1986)  Modern Madness: The Emotional Fallout of Success.  Reading, MA: Addison-Wesley

Ludwig D C and Longenecker C O (1993)  The Bathsheba syndrome: the ethical failure of successful leaders. Journal of Business Ethics 12(4):265-273

Peace W H (1991)  The hard work of being a soft manager.  Harvard Business Review. 69(6):40-42,46-47

Six Enemies of Strategic Planning...and six ways to face them

Strategy development can be a baffling process, and poor strategy is almost impossible to execute. Kaufman gives some useful hints about what to avoid and how to avoid them.  Six ideas that can be used as tools to check how you are doing!

1. A focus on means rather than ends.  Overcome this enemy by turning it on its head.  Look at the WHAT and not the HOW.

2. The failure to recognise the three levels of results:  micro (individual), macro (organisational) and mega (societal).  Overcome this by understanding the distinctions among the three levels and linking them together.

3. Written objectives that give destination without supplying precise criteria for knowing when you have arrived.  Overcome this enemy by preparing objectives that include measures of success.

4. Needs that are defines as gaps in resources or methods (means).  Overcome this enemy by defining needs as gaps in results (ends), rather than rushing into premature solutions to ill-defined problems.

5. A mission that is practical, real world, do-able, and achievable, without being focused on a vision.  Overcome this enemy by defining an ideal vision.

6. Reliance on plans that are comfortable and acceptable.  Overcome this enemy by pushing out of comfort zones and looking at where you should be, not just where you feel comfortable.

From Kaufman R (1992)  6 steps to strategic success.  Training & Development  46(5):107-112

Encouraging individual achievement as the basis of collective performance

Most, if not all, managers worry about how to bring the best out in their people. There are a number of ways you, as a manager, can encourage achievement.  Here is a list I was given many years ago.  Unfortunately the source is unknown so I cannot make the normal acknowledgements.  And I do not claim the ideas as my own!  They, however, have proved to be helpful (especially the tips on what to avoid!)

The Do’s for fostering high achievement in organisations.

1.     be prepared to develop, and recruit, followers who will exceed you in performance and achievement.
2.     remember to provide a role model of how to function in your business.  Assign a mentor or provide opportunities for mentoring.
3.     delegate tasks but don't delegate people contact.
4.     set quality standards, but don't be afraid of mistakes.
5.     acknowledge personal achievement and/or meaningful group achievement.
6.     give as much responsibility as possible.
7.     remove as many controls as possible, but maintain accountability.  Encourage self-assessment.
8.     provide opportunities for creativity and growth in personal ability.
9.     practice participative management.
10.  encourage an active break during the day - the ability to concentrate declines dramatically after four hours.  Aerobic exercise will reverse this trend.  Food alone will not.
11.  set difficult goals but maintain high expectations - expectations influence performance.
12.  allow space for calculated risks for innovative action. 
13.  set clear goals.
14.  provide a short  purpose statement.
15.  remember, managing yourself is a pre-requisite to managing others.
16.  respect staff as individuals who have commitments outside the workplace.

The Don’ts for fostering high achievement in the organisation setting.

1.     don't push too hard when people are under stress.
2.     don't use manipulations, threats or coercion, implied or actual.
3.     don't mistake quantity of working time for quality of working time.
4.     don't be constrained by rules or conventions.
5.     don't communicate only to delegate or criticise.  Positive appraisal is a powerful motivator.  Criticism without appraisal is a demotivator.
6.     avoid role conflict and ambiguity.

If you’re a little bit down it may help you make better decisions: depression and leadership

Winston Churchill struggled with depression, and that may have made him a better leader.

Referring to Churchill, Nassir Ghaemi, professor of psychiatry in Tufts University School of Medicine, states: “The depressive leader saw the event of his day with a clarity and realism lacking in saner, more stable men.”  (Johansen, 2012, p.50)

The dynamics of discovery: use-inspired research and the non-linearity of innovation

From Archimedes to Edison, attempts to improve quality of life have dictated a need for advances in science and technology. These advances are now widely understood as the key enablers of increasingly prosperous societies.

Despite this long history, the process of managing the expanding frontiers of new knowledge in a way that will benefit society is a work in progress. This is largely due to the unpredictable nature of scientific discovery most famously illustrated by Archimedes, when, upon stepping into the bath, he suddenly realised that the volume of water displaced was equal to the volume of the submerged portion of his body.

His discovery provided the solution to the previously intractable problem of measuring the volume of irregular objects and led to further advances in assessing the density and purity of precious metals among other things. In the modern world little has changed in how new knowledge is acquired. 

However, in an attempt to get the best value for their limited investments, governments have devised processes to manage its discovery.

Interestingly there has been a propensity to divide scientific research into a one-dimensional continuum starting with pure (sometimes known as blue-skies) research progressing through to applied research and on to technology transfer; the defining characteristic of pure research being that it seeks new knowledge with no view as to its application, while applied research seeks solutions to industrial problems.

Such a continuum has been the basis of R&D funding prioritisation in advanced economies around the world since it was promulgated by Vannevar Bush following World War II. In the past few years this mindset has been challenged as it does not accurately reflect the process of science and technology development.

The dynamic nature of the discovery of new knowledge and its commercial application can be observed in the remarkable career of French chemist and microbiologist Louis Pasteur, whose breakthroughs ranged from the first rabies and anthrax vaccines to paving the way for germ theory and pasteurisation. Pasteur was not driven by a quest for new knowledge for its own sake but was motivated by a desire to better understand and solve the problems of industry.

In his early career, he concentrated largely on uncovering new knowledge, but as he did so, came across other, previously unforeseen questions. While working as a chemist at the age of 22 he sought a theoretical understanding of why tartaric acid crystals derived from bio-mass rotated the plane of polarised light while the chemically synthesised form did not.

His experiments revealed that the naturally occurring compound is chiral, meaning its molecules exist in one of two possible crystal structures, each the mirror image of the other. In the process of uncovering this new knowledge, he laid the building blocks for the modern experimental science of crystallography, which is today used in one form or another in everything from gemstone cutting to DNA analysis.

Pasteur’s remarkable career uncovered whole new branches of science – such as microbiology – and, as he developed as a scientist, he began to seek to satisfy both theoretical and practical goals.

Of particular note is the fact that as the problems Pasteur chose to solve became increasingly applied in nature, the nature of his research became more fundamental. Pasteur’s research agenda was use-inspired. Understanding and exploiting the dichotomy between applied and theoretical goals is perhaps the reason behind the breadth of his contribution.

This philosophy is instructive for modern policymakers seeking to get the most from limited investment funds and move away from the outmoded, linear model. The effective management of applied research operations is much more complicated than simplistic models suggest.

A good example of the dynamic nature of new knowledge acquisition and the interaction between applied and fundamental goals is the former IRL’s (now Callaghan Innovation)  high-temperature superconductivity (HTS) research programme, which has its roots in fundamental research but has developed into an emerging New Zealand industry.

IRL’s world-leading capabilities in both fundamental and applied HTS research have positioned New Zealand as a key international player in an industry predicted to be worth billions of dollars globally in the coming decades and transform the way the world generates, uses and distributes electricity.

Ambitious Dunedin-based firm Scott Technology, which purchased a controlling stake in IRL spin-out HTS-110 , clearly understands the value of investing in technology. Its approach is already paying dividends, judging by its inclusion in the fast-mover list of the Technology Investment Network’s top 100 technology firms by revenue.

Putting science to work: increase, don't cut R&D investment when times are tough

The Institute of Public Affairs (IPA) in Australia has proposed cuts to a range of different Australian Government departments and programs, including completely cutting government funding for agricultural research and development.  Here is the paper by IPA .

The Australia Farm Institute  has been quick to respond and contends that  the recommendation are based on a quick and dirty attempt to generate Australian Government budget savings rather than on any proper analysis.  

Of course, the question of how to utilise science for the benefit of industry and business is not new and increased funding is not the whole answer. The “right” answers have morphed continually across countries and for decades.

What gets obscured in the discussion at times, and yet has remained relatively constant, is the fundamental value of science. Furthermore, using science as a driver of economic growth without regard to its underlying core is dangerous. So what are the core components that remain at the heart of science’s value proposition?

First, science is a body of knowledge, a vast one that has accumulated and built upon itself over hundreds of years. Trying to define its origins highlights the extent of human endeavour that it encapsulates. For example, Hippocrates’ work some 2300 years ago is still visible in the practice of medicine today. 

Secondly, science offers a consistent and structured approach to observation and problem solving. Again this isn’t a modern construct, rather something Isaac Newton is credited with formalising.

Thirdly, science’s role as a generator of new ideas and opportunities, whether through design or serendipity, has been well traversed. From the discovery of penicillin to the invention of the microwave oven and Teflon, there is a seemingly endless list of stories of how science has delivered significant advances from the unexpected.

While by its very nature science changes, these core components have remained constant. As discussions on R&D, innovation, and knowledge economies (or however the contemporary analysis is described) evolve, it is important to keep in mind these foundations, which have seen science assume such significance in the drive for wealth and wellbeing.

Another important aspect that should also be kept front of mind is that at its heart, science succeeds through talented, creative, and motivated people. Creating and maintaining a diverse environment where people can flourish is a necessity. 

It is important to recognise  therefore, that an increased support in the Budget for R&D will have the greatest long-term impact in the drive for productivity and prosperity increases.

Deconstructing Innovation: a complex concept made simple

One of the myths of business is that only new companies innovate.  Another myth is that only established companies do research and development.

In reality, new firms need to invest in R&D to gain market share. And, established firms need to invest in innovation to lead the market or to protect their slice of the pie.

But what type of R&D? How do we classify what will work and what won’t? There is no straight answer to the innovation mystery.

Innovation is a complex process that has become a confused concept in recent times. The challenge with complex concepts is converting them into the simple.