Can a System of Organizational Leadership be Measured?

In a well-written article published by Deloitte Insights (June 20, 2019) by the same title, the authors outline the value of measuring the human experience beyond that of the customer to include the workforce and stakeholders.

The authors quote four Deloitte leaders: “It would be wonderful if we could have a common framework that applies across customers, partners, and workforce…this could drive an enterprise’s competitive advantage.”

My research into organizations that achieve long-term excellence suggests precisely this. They do it through a designed framework, and they deploy it with great care and discipline. This framework is what I call a designed system of leadership because it is leadership, above all members of the workforce, that has the greatest impact on the human experience within the workforce, the customer, and the stakeholder.

Case: I had been asked by the CEO of a rural hospital system in Western Washington to help them design a framework, model, or a system of leadership. He wanted a standard way of doing leadership to be developed and implemented across the system. My first meeting was with the executive leadership team. Our objective was to identify the output of the system because every system has a purpose. It produces something. After a lengthy conversation, Eileen, the COO who had been quiet the whole time, finally said, “we cannot deliver exceptional health for our patients unless our staff (workforce) feel empowered to go the extra mile. Our patients (customers) need a sense of empowerment because we want to do healthcare with them, not to them. And we are a community-owned hospital, therefore our community (stakeholders) need a sense of empowerment so we can work together to create a healthy community.

Empowerment became the central purpose of the framework or system of leadership. This system included key behaviors and routines that all leaders would be expected to model, that would support an empowered workforce, patient, and community experience. After several months, we had to determine a way of measuring the human experience with each of these three groups. We finally settled on two that would measure the experience of the workforce. They had other ways of measuring the experience of the patient and the community, both of which were already showing signs of steady improvement.

Employee safety. Working in a hospital is statistically more dangerous than working in construction. So, they began to measure the number of days lost due to workplace injury as a way of measuring their system of leadership and workforce experience. There was a double benefit to this metric. When an accident occurs in a hospital that causes injury to a worker, a patient is often involved as well. Reduce the number of accidents involving staff, and there should also be a corresponding increase in patient safety.

Fear. It should not come as a shock that fear is the number one killer of innovation, creativity, and empowerment. They already had a data system that allowed employees to self-report errors and near errors in processes and procedures without fear of retribution. In my naivety, I thought, “great, the fewer the reports, the better the performance.” “No,” they said, “we want the number of reported incidents to go up, not down. When the workforce is operating without fear, they are more willing to report their own errors and near errors.”

The result? In one year, the number of days lost due to a workplace injury dropped by two-thirds. The number of self-reported incidents continued its steady increase, indicating the workplace was increasingly a place free of fear.

To see more and a complementary chapter of “The Genetics of Leadership: Cracking the Code of Sustainable Excellence” go to DanielEdds.com/book

The Leadership System

What We Believe

Mission is Sacred
· Mission is more than a pretty slogan;

· An organization exists solely to fulfill its mission;

· The primary responsibility of leadership is the execution of mission; and

There are two lenses through which to view leadership. 1) The lens of the individual leader seeking to influence others and attract a following through a personal style; and 2) The lens of the organization where all systems are engineered with a set of standard requirements which will deliver predictable value to the customer. Leadership is one of these systems.

Implications for Leadership
Leadership and System Design
With no intentional system design, leadership defaults to individual leaders seeking to attract followers through personal style and personality. The results are all too frequently revenues at any cost, profits at any price, and production at any risk. Case: In September 2016 OSHA sited a major automotive parts manufacturer and its staffing agency for repeated safety violations. The most notable of which was a robot that malfunctioned. A young woman, struggling to meet demands of leaders who required quota be maintained at any cost, stepped in to clear a sensor fault. It abruptly restarted, crushing her to death.

A designed leadership system has all the components of any system beginning with a defined set of requirements that are aligned with mission: 1) a clear purpose, 2) a set of standard behaviors, 3) a defined set of routines and activities designed to deliver predictable value, 4) a plan for deploying the system; and 5) a measure of system performance. Case: When Paul O’Neil stepped down from the Alcoa Company after 13 years of stellar performance, it was safer to work in an Alcoa foundry than work in the back office of an insurance company. O’Neil set up routines and metrics that focused on worker safety. Individual leaders performed to the requirements of a system that said safety was the function and purpose of leadership. The result was the best financial performance Alcoa ever enjoyed.

The Leadership System
Definition
In her classic book, Thinking in Systems, author Donella Meadows defines a system as exhibiting three components: elements, interconnections, and a function or purpose.” We would add to this basic definition that within every system there are rules that govern the interconnections or relationships and routines. These rules are both formal and informal.

Therefore, when systems theory is applied to leadership, a definition immerges that can be understood as:

A leadership system is that which coherently organizes and connects leaders and the elements they control with critical relationships to produce a desired and measurable outcome, (maximum value).

This is opposed to the personality driven view of leadership, which might be best expressed in the subtitle of John Maxwell’s bestselling book – 21 Irrefutable Laws of Leadership – Follow them and People Will Follow You. Under this model, the primary function of a leader is accumulating power and influence through gaining followers – frequently through sheer force of will or personality.

With a designed leadership system, there are a set of defined requirements, which recognizes interconnections to other systems and the leader submits everything she controls (elements), to deliver maximum value (purpose or function). It is not about leaders and followers. It is about leveraging the highest value of each interconnecting system to provide predictable and maximum value to the customer.

Example of Leadership System Design
In his book, The Power of Habits, author Charles Duhigg tells the story of Rhode Island Hospital. At one time, it was a place of feudal fights where nurses were pitted against surgeons. An elderly man was brought in with a Subdural Hematoma. Immediate surgery was required. Ignoring both hospital protocols and repeated caution from the nurses that standard consent forms were not properly completed the surgeon went ahead with the surgery and told the nurses: (Quoting Duhigg): “If that’s what you want, then call the fucking ER and find the family! In the meantime, I’m going to save his life.” Within two weeks the man was dead. The surgeon operated on the wrong side of the man’s head. It would be easy to say that the fault was the surgeon’s and he should be dismissed, (he was). However, over the next four years similar accidents occurred for which the hospital paid $500,000 in fines.

The good news is that changes were made. It might be obvious to say, they implemented check lists and other procedural changes to insure patient safety. However, the stronger reality is that they transformed the entire leadership system. Leaders become subservient to the requirements of a designed system rather than every leader managing according to personal style and personality. The result was a dramatic increase in patient safety and they were honored with a prestigious award for Critical Nursing. Where the old leadership system put the surgeon at the top of the pyramid with virtual unquestionable authority, the new system empowered everyone around the care of the patient – delivering maximum value. Duhigg concludes with an example of a routine surgery performed by an experienced and well trained surgeon. Before he started he went through a check list but missed a minor point. In response, the youngest and least experienced nurse pointed out the error which was welcomed by the surgeon.

A leadership system, therefore, is what connects individual leaders, and organizes the elements they control with the critical relationships to produce the desired outcome – maximum value. Without a designed system, individual leaders function according to personal style and produce results that are highly variable and sometimes catastrophic. With a designed system, all leaders operate according to the requirements of the system which is designed to produce predictable maximum value. In the Rhode Island Hospital example, the surgeons recognized the nurses as part of a total system of patient care. It was not a matter of power and control. It was about more medical value delivered to the patient.

Leadership: It’s A System, Not a Person

We worship at the altar of personally driven leadership. My last Amazon search listed 197,000 books on leadership, virtually everyone approaching leadership as the characteristics of the individual. Annually, we spend approximately $40Billion in leadership development. Yet there is not a shred of evidence there is any measurable organizational impact. Training is disconnected from organizational mission, vision, culture, and systems.

We understand biological systems. We know digital systems, and we know systems of marketing, finance, and customer engagement. The last remaining frontier of organizational systems is leadership. When applied, a well-designed system of leadership generates sustainable long-term performance.

A leadership system is defined as A systematic model of leadership that comprehensively designs the way key organizational resources interact so that they achieve a desirable and measurable purpose. This definition applies classical system thinking to the practice of organizational leadership. There are three parts to the leadership system:
1) Key resources;
2) That interact in a specific way:
3) That they achieve a desired outcome or purpose.

Of the three parts, the purpose is the most important. Here is why:

Seattle’s Swedish Hospital Neurological Institute evolved from an organization focused on patient safety to one of revenue generation. In doing so, they changed the surgeon’s compensation formula from one where revenues were shared between surgeons, to one that compensated surgeons for production. This resulted in higher surgical production and higher surgical revenues. Competition for surgical production replaced surgical collaboration. Patient safety was compromised. They received exactly what the system was designed to produce.

The result was harm to patients and lapses in ethics. The CEO of Swedish Hospital resigned, and the director of the Institute lost his license to practice in the State of Washington. The CEO of the parent organization was forced to take out a full-page ad in the local newspaper apologizing to patients and staff.
Changing the purpose of a system is significant. Changing the purpose of a system from patient safety to revenue generation is seismic. Were the individual leaders of the Institute stupid or unqualified. Exactly the opposite. Each leader within the system was smart and extremely well qualified. However, as Deming is also often quoted as saying: I should estimate that in my experience most troubles and most possibilities for improvement add up to the proportions something like this: 94% belongs to the system (responsibility of management) 6% special events.

So was it is more important, the individual leader, or the leadership system?

Who is Responsible for Employee Engagement?

I just read an article by By Todd Nordstrom, on questioning the value of the 40 hour work week. One part resonated strongly with my own research. Todd states: Engagement is a choice of the employee. It means they give their discretionary effort. You can’t force it…focus on providing the best employee experience possible that makes them want to choose to engage in their work.

In two personal interviews with CEOs of large healthcare systems both explained to me how they approached employee engagement. They did NOT demand it. Low engagement was never blamed on the employees. They put the responsibility squarely on the shoulders of leaders and managers. In fact, personal performance of leaders and managers was graded in part, by the engagement levels of their subordinates. If engagement scores were habitually low, as in below the 25th percentile nationally, they were either removed or their work units received a thorough assessment to understand why. If engagement scores were in the middle 50%, managers were typically assigned a coach. One CEO required that this group receive two performance reviews each year.

The result, the highest levels of employee engagement consistently. One has achieved this distinction for 13 consecutive years. If it is true, that the number one reason why workers leave their employer is a bad boss, then it is time bosses accept responsibility for NON-engagement or active DIS-engagement of employees.

See Todd’s full article at: https://www.inc.com/todd-nordstrom/research-suggests-companies-are-wrong-about-8-hour-workday-heres-how-to-prepare-for-flexible-schedules.html, published November 14, 2019

Why Lean Does Not Work – It’s the System!

I had been invited to facilitate a lean workshop with a large state agency. The division had been hammered during the recession with massive layoffs, forced retirements, huge loss of institutional knowledge but with little reduction in workload.


So, for four days I met with 18 front line managers and workers to document their processes, create value stream maps and find ways to eliminate non-value added work. At the end of the four days, we had two beautiful value stream maps on a wall, we had a beautiful spaghetti diagram that demonstrated that every invoice they paid had to pass through the financial managers desk seven times before it was processed. The last half day we spent designing 4 initiatives that would have significantly reduced the burden of low value work, allowed staff to go home on time, and improve customer value. There was nothing in these initiatives that required funding, or approval from the governor.


At the conclusion one of the participants grabbed the manager by the lapels of his sport coat, and while shaking him said this, if you don’t follow through with this don’t ever ask me to participate in something like this ever again!!! As a curtesy to the Department’s executive leadership, it was decided to run these initiatives by them, so they could then tell the Governor that they were implementing lean. This is where the projects died. Not one initiative was ever implemented. They killed them through simple neglect. Why?


Where executive leaders stupid? Nope, they included smart people with advanced degrees. Where they unkind and did not care about their staff. Nope, I believe they truly cared for their people. Unfortunately, in 25 years of consulting, I have seen this same thing happen dozens of times. I have also seen the opposite happen dozens of times. I am not alone. By some estimates 90% of all lean initiatives fail to produce any value at all, which means the other 10% must generate spectacular results. What is the problem? Was it the people or the system?

I’ve come to the conclusion it was/is the system. In this case it was a system that rewarded executive leadership for the proximity to the Governor. the Governor was the source of funding, professional positioning, and therefore there was no reward or process for taking ideas from those lower down the organizational ladder.

Having an idea or a story to share. Let’s talk about it.

 

Why the US Military is the Best at Leadership Development

No institution in the world puts more emphasis on leadership than the US Military. Few would argue that they produce better leaders, of higher caliber, and character. How do they do it?

I put this question to General Barry McCaffrey, a retired 4-Star General, and Director of the Office of National Drug Control Policy under President Bill Clinton. General McCaffrey is among the highest decorated Generals to have ever worn the uniform. He is the recipient of three Purple Hearts for wounds received in combat, two Silver Stars, and two Distinguished Service Crosses. When most are well into retirement status, the General is still a sought-after public speaker and a paid analyst for NBC news on issues of national security. During my interview, he recounted to me the following story.

During the first Gulf War (1990-1991), General McCaffrey commanded the 24th Infantry Mechanized Division. In a bold and surprising maneuver he lead over 25,000 troops, 1600 armored vehicles, plus wheeled vehicles and war planes in the famed “left hook” which moved his entire force 240 miles across trackless desert to surround and destroy the entire Iraqi army; all within 48 hours with minimal loss of life to American forces. In explaining to me the fundamental role of training and leadership development, General McCaffrey related the following story.

Three weeks before the start of this major operation and one of the riskiest in recent military history, General McCaffrey loses his Chief of Staff to promotion, arguably one of his most senior and important leaders. As he explained to me, “I thought oh my God, I’ve got weeks until a major operation starts”. However, the US Army Chief of staff personally selected the replacement and he reported to General McCaffrey a week later. He went on, “I had no idea who he was. If I had asked for three or four people, (to interview) the Army would have said, no here’s the guy you need. I had to trust them”.

This brand-new Chief of Staff had to show up and immediately take over from his predecessor. Errors and mistakes at this level means soldiers die. It is that black and white. There was no time for on the job training, or the traditional on-boarding and assimilation. He had to perform, perform well, and perform immediately. As General McCaffrey explained to me, “he performed flawlessly with no drop in performance”. How does this happen?

This happens because the US Army does not rely on personality driven leadership. It has a clearly defined system of leadership and every officer, both enlisted and commissioned, is trained to its exact requirements. Leadership rules, routines, and core behaviors are drilled into every soldier from the first days of basic training. Do they do it perfectly? Of course not. One of the structural elements of the system is that every rank has a school so that when General McCaffrey receives a new Chief of Staff, that officer has been trained in exactly how to be a Chief of Staff the way the US Army wants the job to be done.

There is no equivalent in either the commercial, nonprofit, or the public sector world for what happened to General McCaffrey. But because the Army has a specific way they want leaders to lead, they can train emerging leaders to the exact specifications and skill sets required to be successful. Within this system, the US Army assures itself of successfully accomplishing its mission and they put their soldiers in the best possible position to be personally successful.

I would love to hear your story or even just your thoughts on this idea. Or maybe you want to explore this further within the context of your organization.