The title of chapter 5 of the New Economics is Leadership. From that chapter, page 116
As I use the term here, the job of a leader is to accomplish transformation of his organization. He possesses knowledge, personality, and persuasive power (chapter 6 [Management of People]).
How may he accomplish transformation? First, he has theory. He understands why the transformation would bring gains to his organization and to all the people that his organization deals with. Second, he feels compelled to accomplish transformation as an obligation to himself and to his organization. Third, he is a practical man. He has a plan, step by step, and can explain it in simple terms.
But what is in his own head is not enough. He must convince and change enough people in power to make it happen. He possesses persuasive power. He understands people.
Dr. Deming touches and some of the common themes most often discussed when discussing leadership. But his vision is much different than many. His vision of leaders is more focused on obligations to others rather than seeking extrinsic motivation. Most of those leading organization today are obviously very focused on extrinsic motivation. All you have to do is look at the pay packages for senior executives and you see where the focus of those senior executives (and the board approving those excessive pay packages) are focused. They seek to attract to leadership positions those that focus on the extrinsic motivation of an enormous paycheck rather than leaders most interested in an opportunity to lead an organization for the benefit of the employees, shareholders, suppliers, customers and society.
The aim of leadership should be to improve the performance of man and machine, to improve quality, to increase output, and simultaneously to bring pride of workmanship to people. Put in a negative way, the aim of leadership is not merely to find and record failures of men, but to remove the causes of failure: to help people to do a better job with less effort.
W. Edwards Deming, page 248, Out of the Crisis
This is a wonderful quote. Far too many leaders think their role is to hold people accountable. Such thinking shows much that is wrong with those that seek simple answers instead of improvement.
Dr. Deming continues with the following quote (in Out of the Crisis):
Actually, most of this book is involved with leadership. Nearly every page heretofore and hereafter states a principles of good leadership of man and machine or shows an example of good or bad leadership.
One of the difficulties people often have with understanding Deming’s ideas is understanding how interconnected everything is. You can’t lead an organization by deciding much of the management system is good but I am going to ignore psychology. I like using extrinsic motivation. I want to treat employees as variable costs that I will take on or drop as the market fluctuates. Leaders in a Deming management system must consider the entire inter-related system.
The same principles could be used to lead an organization based on somewhat different underlying theories (to create another management system). So if one modified the entire system to accomodate the belief that intrinsic motivation was unimportant and extrinsic motivation was preferable that system could be lead based on the alternative principle. The problem, I believe, is that it is based on the wrong theory and would not be effective. And care would have to be taken to modify all the areas of Deming’s management system that need to be modified based on that alternative belief (which is quite difficult).
It would be a bit easier if the modification was to a more peripheral part of the system. So for example there are numerous problems with numerical goals. I believe it would be possible to design a system to mitigate the problems. Modifying the system to allow for numerical goals while it isn’t advisable would possible, I believe. Essentially you would need to setup processes and a build a culture that mitigated the problems that exist in using numerical goals (with an understanding of variation, systems thinking, psychology and the theory of knowledge). For most organizations it is much wiser just to not use numerical goals; rather than invest all sorts of time and energy in modifying a management system to avoid the dangers using those goals cause.
Please share your thoughts on leading an organization.
Related: Eliminate Sales Commissions: Reject Theory X Management and Embrace Systems Thinking – Dr. W. Edwards Deming on Innovation – Russel Ackoff: Corporations Are Not Led By Those Seeking to Maximize Shareholder Value – Akio Toyoda’s Message Shows Real Leadership