• Leadership exhibits a strong customer focus
• High visibility
• Leaders set aggressive 'leapfrog' goals
• Leaders drive cycle time performance
• Clear, easily remembered values
• Manager as coaches
• A focus on continuous leadership
• Champion for organisation citizenship
• Patient

1.1	Organisational Leadership (85 points)
	Describe how senior leaders guide your organisation and review organisational performance.

This item addresses how senior leaders set directions and build and sustain an organisation conducive to high performance, individual and organisational learning, empowerment, and innovation.

The item asks how leadership takes into account all key stakeholders – customers, employees, suppliers, partners, stockholders, the public, and the community. It also asks how senior leaders review overall organisational performance and capabilities.

Key words and phrases for this item

• Values and expectations
• Empowerment and innovation
• Set direction
• Performance review
• Findings and improvement

1.1a	Senior Leadership Direction

This area calls for information on the major aspects of leadership – creating values and expectations; setting directions; projecting a strong customer focus; encouraging innovation; developing and maintaining an effective leadership structure; and effectively demonstrating, communicating, and deploying values, directions, expectations, and a strong customer focus.

Setting directions includes creating future opportunities for the organisation and its stakeholders. An effective leader promotes continuous learning, not only to improve overall performance, but also to involve all employees in the ongoing challenge to enhance customer value.

To be successful, leadership must ensure that the organisation captures and shares learning. Communication by leadership is critical to organisational success. Communications need to include performance objectives and measures that help provide focus as well as alignment of work units and work processes.

Senior leadership direction (1.1a 1,2 and 3) is the mission, vision and goals section. The key words are values, performance expectations and balance.

Some thoughts on balance
In the US, and elsewhere, for much of this century, the conventional wisdom has been that businesses have a vaguely defined 'duty' to balance the interests of their stakeholders - their customers, employees, shareholders, and so on - which means, as Drucker (1999) says, they were not accountable to anyone. "The emerging American theorem that businesses should be run exclusively for the short-term interest of the shareholders is not tenable and will certainly have to be revised," he says.

Pension funds and mutual funds - resourced as never before by the disposable income of baby boomers at the peak of their productivity - are rapidly gaining control, through ownership, of the public corporations that are the pillars of western capitalism.

This means that to a unique extent the future economic security of more and more people depends on the performance of their stock ownership.

"The emphasis on measuring performance mostly by how much it benefits the shareholders will therefore not go away. Immediate gains, whether in earnings or in share price, are, however, not what shareholders need. They need economic returns 20 or 30 years hence.

"We will have to learn how to balance short-term results - which is what the present emphasis on shareholder value amounts to - with the long-range prosperity and survival of the enterprise.

"Businesses also will increasingly have to satisfy the interests of their knowledge workers. Performance will have to be defined non-financially in order to be meaningful to knowledge workers and generate commitment from them."

Now, back to the criteria ...

• "How" questions are looking for an answer which contains a process.
• Your organisation’s values and expectations may be established, communicated and deployed in a number of ways - you may have to model and describe a number of separate processes, or you may have a single comprehensive process which accomplishes all of the listed requirements.
• If communicating organisational values and expectations happens informally in your organisation you may have to make tangible what has until now been tacit. See the section on turning tacit into explicit knowledge in Writing an Application.
• Organisational values should be wrapped up in your vision and mission - again, whether you have them written down or not.
• Vision statements should be realistic, verifiable and memorable; short and sweet (Brown, 1998, p 88); unique to your organisation; and most of all, meaningful.
• How senior leaders tradeoff the value expectations of all stakeholders is also a subject that may have to be worked through and committed to paper for the first time. The Worksheet may be a help …
• Scheduled, regular, off-site workshop involving say senior leaders and managers, focussing on vision- and mission-building may be one of the set of processes you describe or illustrate for this requirement.
• In-house publications are often used to deploy and communicate expectations and values.

Examples

3M Dental's vision

Philips Semiconductors mission statement

Solar Turbines - shared leadership, shared goals

'Most organizations haven't done a particularly good job of articulating what they stand for - their ‘mission statements’ notwithstanding. Why is that? First, some don't stand for anything real. Second, many of those that do stand for something don't have a good grasp of what it is.

'There are five important characteristics of a good expression of a company's core purpose:

1. it absolutely has to be inspiring to those inside the company
2. it has to be something that could be as valid 100 years from now as it is today
3. it should help you think expansively about what you could do but aren't doing
4. it should help you decide what not to do.
5. it has to be truly authentic to the organisation involved. Companies that fail on this count are often the ones that really don't stand for anything and never will.

• Empowerment, innovation and learning are the key words
• Moving decision-making to where the work is done - to self-managing teams, for example - empowers the people involved. It also changes senior executive teams from managers to leaders (see the Boeing A&TP case study)
• Innovation is Baldrige’s ‘missing category 8’ according to some commentators. If it’s important to your organisation, this is the place to show how your leadership team establishes and reinforces an environment that encourages innovation. See 3M Dental in the case study collection.
• Effective leaders promote continuous learning. Matching skills to a rapidly changing marketplace is a core strategy for survival in many industries today, not just those in the e-economy!
• How is learning - by the organisation, it’s leadership and individual workers - established and reinforced in your organisation?
• See the exhibit Graniterock IPDP for an example of interactive learning fostered and championed by senior leaders.

• Strategy is dealt with in detail in category 2.
• My interpretation of this question is that in the context of senior leadership direction, it’s seeking a high-level process, a description of how your senior leaders scope mid to long-term directions and opportunities.
• An important part of the senior leaders' organisational review is the translation of review findings into an action agenda – sufficiently specific so that deployment throughout the organisation and to suppliers/partners and key customers is possible. The action agenda could include opportunities for innovation to gain a performance leadership position relative to competitors and/or other organisations with similar processes, products, or services.

1.1b	Organisational Performance Review

Area 1.1b addresses the senior leaders' role in reviewing overall organisational performance, including using employee feedback to improve leadership effectiveness. This aspect of leadership is crucial, because reviews help to build consistency behind goals and allocation of resources. A major aim is to create organisations that are flexible and responsive – changing easily to adapt to new needs and opportunities. Through their roles in developing strategy and reviewing overall performance, senior leaders develop leadership and create an organisation capable of adapting to changing opportunities and requirements.

Briefly, organisational performance review (1.1b 1,2,3 and 4) asks how your leaders use performance information to drive improvement, what the data look like, and how they’re used to improve what your leaders do. Key words are empowerment and innovation, direction, performance review and findings and improvement.

• This requirement is looking for review processes, and for data-sets, but the key word is assess. How do senior leaders use the information they gather and review to take the temperature of the organisation?
• Operational, customer-related, competitive, financial and marketplace data-sets will be your raw material.
• For an example of the sort of data-set that might apply in this case, look at the dashboard data in the Dashboard measures at IBM Rochester exhibit

• This is a closing-the-loop question. Establishing a set of performance measures is the fist step. Reviewing them to track and evaluate performance is the second step. The third step is to translate review findings into new activities which improve performance.
• Specifically, this requirement asks how this happens. How do you use the results of the activities outlined in 1.1b(1) to prioritise your continuous improvement activities, and to clarify your opportunities for innovation?
• Look at the Performance Management material in the 3M Dental case study, and the Boeing A&TP case study, for examples of the use of performance management information (aggregate data) to make explicit, reliable, robust prioritisation decisions.

• And now we close the loop. Set and deploy measurements, track, review, decide on the actions needed, and then act. This requirement is looking for evidence of action.
• Make a list, or set up a matrix based on the worksheet information
• This area is asking for real examples from (1) and (2); how do you deploy this information; throughout your organisation; upstream to your suppliers and partners; and downstream to your distributors and customers?
• Alignment is the key word. A comprehensive response to this requirement would describe or illustrate a high-level process for using the information explained in (1) and (2) to achieve alignment. Review the definition and explanation of alignment in the Alignment Explained exhibit.
• An example might be IBM and AT&T’s discoveries that improvements in customer satisfaction drive improvements in revenue. In very large organisations like these, even tiny (1%) improvements in net satisfaction translate into million dollar revenue gains.
• See the IBM customer satisfaction exhibit.

• And finally, how are your performance data used to improve management and leadership effectiveness; how is employee feedback used to improve management and leadership?
• Some of the measures - after Brown (1998 p91) - might be:
  - complaints made to a ‘leadership’ hotline
  - employee survey data
  - numbers of layers of management
  - data on employee understanding of mission and vision stuff
  - evidence that leaders walk the talk, that they model leadership.
  
  Walking the talk?
  - Rufus White of Boeing A&TP: leadership is a contact sport in this plant
  - Fred Palensky of 3M Dental: leadership is deeply immersed in 3M Dental.
  
  - turnover of key leaders
  - succession planning data
  

1.2	Public Responsibility and Citizenship (40 points)
	Describe how your organisation addresses its responsibilities to the public and how your organisation practices good citizenship.

Key words and phrases for this item

• Regulatory, legal, ethical responsibilities
• Support of key communities

"An organisation's leadership needs to stress its responsibilities to the public and needs to practice good citizenship. These responsibilities refer to basic expectations of the organisation – business ethics and protection of public health, safety, and the environment. Health, safety, and the environment include the organisation's operations as well as the life cycles of its products and services.

"Organisations also need to emphasize resource conservation and waste reduction at the source. Planning should anticipate adverse impacts from production, distribution, transportation, use, and disposal of products. Plans should seek to prevent problems, to provide a forthright response if problems occur, and to make available information and support needed to maintain public awareness, safety, and confidence.

"Organisations should not only meet all local, state, and federal laws and regulatory requirements, they should treat these and related requirements as opportunities for continuous improvement "beyond mere compliance." This requires the use of appropriate measures in managing performance.

"Practicing good citizenship refers to leadership and support – within the limits of an organisation's resources – of publicly important purposes. Such purposes might include improving education, health care in the community, environmental excellence, resource conservation, community service, industry and business practices, and sharing non-proprietary information. Leadership as a corporate citizen also entails influencing other organisations, private and public, to partner for these purposes. For example, individual companies could lead efforts to help define the obligations of their industry to its communities."

1.2a	Responsibilities to the Public

Public responsibilities in areas critical to your business also should be addressed in Strategy Development (2.1) and in Process Management (6). Key results, such as results of regulatory or legal compliance or environmental improvements through use of "green" technology or other means, for example, should be reported as Organisational Effectiveness Results (7.5).

• Remember that how questions are seeking process answers
• Impacts on society is the key phrase. What are they? How do you know? Now, what do you do about them?
• Start with an overview of your regulatory and legal environment
• Finish with an example of how your organisation goes ‘beyond mere compliance’ According to Brown (1998) this is not optional "examiners want to see evidence of going beyond … basic … requirements"
• Matrix responses (see Writing an Application for examples) may be appropriate here. List products, services and operations down the left side, key practices, measures and targets across the top, for example.
• Use information from your completed Worksheet. The narrative with each matrix will explain the processes involved (like, how you meet a target of less than 4 hours for cleaning up an uncontrolled spill of a class x substance …)

Examples

Company responsibility and citizenship at Boeing A&TP

Environmental awareness at Texas Nameplate Company

• Anticipate and proactiveare the key words
• Evidence that you understand and attempt to forecast your various publics’ concerns about your organisation’s current and future activities is required, as well as some evidence of process.
• A good recent example will be compelling - explaining the processes used for anticipating public concerns before the introduction of a new service or product, and how your anticipation reduced or eliminated any concerns, for example.

Example

Assessing community impact at Boeing A&TP

• What happens in your place, how has it improved?
• Brown (1998) says forget the generalities, be specific: Northrop for example has an anonymous hotline that employees call to report unethical behavior, and employee training on what constitutes unethical behavior.

Examples

Ethical business practice at Solectron

Legal and ethical conduct at Boeing A&TP

1.2b	Support of Key Communities

How do your organisation, your senior leaders, and your employees actively support and strengthen your key communities? Include how you identify key communities and determine areas of emphasis for organisational involvement and support.

• Areas of community support appropriate for inclusion in 1.2b might include efforts to strengthen local community services, education, the environment, and practices of trade, business, or professional associations.
• Don’t miss the how word - this area is also looking for processes; how does your organisation, its leaders, all of its employees, identify key communities, decide how to get involved, and decide how to provide support?

Examples

Granite Rock wins community involvement award

Solectron Community and Environmental Awards

Texas Nameplate Company gives back to the community

Boeing AT&P employee community fund