Erhard Integrity

Negotiation, Organizations and Markets Research Paper Series
Harvard Business School NOM Research Paper No. 07-03 Barbados Group Research Paper No. 07-03
Integrity: Where Leadership Begins

(PDF file of Keynote and PowerPoint Slides)
by Werner Erhard werhard@ssrn.com Independent Michael C. Jensen mjensen@hbs.edu Jessie Isidor Strauss Professor of Business Administration, Emeritus Harvard Business School; Senior Advisor, The Monitor Group
May 10, 2007
Copyright Werner Erhard, Michael C. Jensen and Landmark Education LLC 2007. All rights reserved Drawn from the work by Werner Erhard, Michael Jensen and Steve Zaffron in creating a new model of integrity: Integrity: A Positive Model that Incorporates the Normative Phenomena of Morality, Ethics and Legality, available at SSRN. See: http://ssrn.com/abstract=920625 Some of the material presented in this course/paper is based on or derived from the consulting and program material of the Vanto Group, and from material presented in the Landmark Forum and other programs offered by Landmark Education LLC. The ideas and the methodology created by Werner Erhard underlie much of the material. FAIR USE: You may redistribute this document freely, but please do not post the electronic file on the web. We welcome web links to this document at: http://ssrn.com/abstract=983401 We revise our papers regularly, and providing a link to the original ensures that readers will receive the most recent version. Thank you, Michael C. Jensen, Kari Granger, Werner Erhard
Electronic copy available at: http://ssrn.com/abstract=983401
ABSTRACT
We present a positive model of integrity that provides powerful access to increased performance for individuals, groups, organizations, and societies. Our model reveals the causal link between integrity as we distinguish and define it, and increased performance and value-creation for all entities. And our model provides access to that causal link. The philosophical discourse, and common usage as reflected in dictionary definitions, leave an overlap and confusion among the four phenomena of integrity, morality, ethics, and legality. This confounds the terms so that the efficacy and potential power of each of them is seriously diminished. In this new model, we distinguish all four phenomena integrity, morality, ethics, and legality as existing within two separate realms, and within those realms as belonging to distinct and separate domains. Integrity exists in a positive realm devoid of normative content. Morality, ethics and legality exist in a normative realm of virtues, but in separate and distinct domains. This new model: 1) encompasses all four terms in one consistent theory, 2) makes the moral compass potentially available in each of the three virtue phenomena clear and unambiguous, and 3) does this in a way that raises the likelihood of those now clear moral compasses actually shaping human behavior. This all falls out primarily from the unique treatment of integrity in our model as a purely positive phenomenon, independent of normative value judgments. Integrity is thus not about good or bad, or right or wrong, or what should or should not be. We distinguish integrity as a phenomenon of the objective state or condition of an object, system, person, group, or organizational entity, and define integrity as: a state or condition of being whole, complete, unbroken, unimpaired, sound, perfect condition. We assert that integrity (the condition of being whole and complete) is a necessary condition for workability, and that the resultant level of workability determines the available opportunity for performance. Hence, the way we treat integrity in our model provides an unambiguous and actionable access to superior performance (however one wishes to define performance). For an individual we distinguish integrity as a matter of that persons word being whole and complete, and for a group or organizational entity as what is said by or on behalf of the group or organization being whole and complete. In that context, we define integrity for an individual, group, or organization as: Honoring ones word. Oversimplifying somewhat, honoring your word as we define it means you either keep your word (do what you said you would do and by the time you said you would do it), or as soon as you know that you will not, you say that you will not to those who were counting on your word and clean up any mess caused by not keeping your word. Honoring your word is also the route to creating whole and complete social and working relationships. In addition, it provides an actionable pathway to earning the trust of others. We demonstrate that the application of cost-benefit analysis to ones integrity guarantees you will not be a trustworthy person (thereby reducing the workability of relationships), and with the exception of some minor qualifications ensures also that you will not be a person of integrity (thereby reducing the workability of your life). Therefore your performance will suffer. The virtually automatic application of cost-benefit analysis to honoring ones word (an inherent tendency in most of us) lies at the heart of much out-of-integrity and untrustworthy behavior in modern life. In conclusion, we show that defining integrity as honoring ones word provides 1) an unambiguous and actionable access to superior performance and competitive advantage at both the individual and organizational level, and 2) empowers the three virtue phenomena.
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Center for Public Leadership John F. Kennedy School of Government Harvard University, Cambridge, Massachusetts
10 May 2007
Integrity
Where Leadership Begins
A new model of Integrity
Werner Erhard
Independent
Michael C. Jensen
Jesse Isidor Straus Professor of Business, Emeritus, Harvard Business School Senior Advisor, The Monitor Group
Drawn from: Werner Erhard, Michael C. Jensen and Steve Zaffron Integrity: A Positive Model that Incorporates the Normative Phenomena of Morality, Ethics and Legality unpublished working paper in process, May 2007, available at: http://ssrn.com/abstract=920625
Some of the material presented in this course/paper is based on or derived from the consulting and program material of the Vanto Group, and from material presented in the Landmark Forum and other programs offered by Landmark Education LLCThe ideas and the methodology created by Werner Erhard underlie much of the material.
2007 Werner Erhard, Michael C. Jensen, Landmark Education LLC. All Rights Reserved
An Invitation
We will present a new model of Integrity, that incorporates Morality, Ethics, and Legality After engaging with the model over the next hour and a half, you are invited to determine for yourself whether this model has the power to deliver on the following promises:
2 2007 Werner Erhard, Michael C. Jensen, Landmark Education LLC. All Rights Reserved
Promises To Be Delivered
Access to dramatic increases in workability and performance in the lives of individuals, relationships, and organizations
However you wish to define performance, ranging from the ability to produce intended results, through competitive advantage, value creation, empowering and enabling others, to enhanced quality of life
By dramatic we mean increases on the order of 100% to 500%
Access to dramatic increases in workability and performance in the lives of individuals, relationships, and organizations With performance (including the agenda and the actions taken to realize the agenda) that is inspired by, and that brings out the best in us
That is, constrained and empowered by Integrity, and moral, ethical, and legal principles
We will demonstrate that Integrity, as it is distinguished and defined in this new model, reveals and provides actionable access to:
The platform for superior leadership A guaranteed opportunity for maximum performance an important Factor Of Production Realizing the power potentially available in Morality, Ethics, and Legality the character and authenticity required for good leadership
Outline Of Topics
The confusion, unclarity, and ambiguity amongst Integrity, Morality, Ethics, and Legality: The Gordian knot Integrity distinguished and defined Integrity for a person, group, or organizational entity The impact of Integrity on relationships and trust Cost/benefit analysis applied to your Integrity guarantees you will be untrustworthy and out of Integrity
Outline Of Topics Continued

The veil of invisibility Morality, Ethics, Legality, and Sincerity distinguished and defined Proposal for development of a positive theory of normative values Operational Definitions
The Gordian Knot

Anything about which there are too many books, articles and papers probably means that there is a tangled knot, with something hidden that keeps the knot from unraveling The knot makes the potential power of the phenomenon inaccessible even to those with the wisdom to exercise it with power rather than force 1
The Gordian Knot

Integrity, Morality, and Ethics obviously qualify as such phenomena Maybe not coincidently, so does Leadership 2, 3 The Gordian knot is held together by the unclarity and ambiguity of the phenomena of Integrity, Morality, and Ethics
Cutting Through The Gordian Knot

A positive model of Integrity that incorporates the normative phenomena of Morality, Ethics, and Legality
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Integrity Distinguished And Defined

We distinguish Integrity as a purely positive phenomenon We identify the domain of Integrity as the objective state or condition of an object, system, person, group, or organizational entity We define Integrity as the state or condition of being whole, complete, unbroken, sound, perfect condition
Integrity Of An Object
The Integrity, Workability, Performance Cascade For a bicycle wheel to have Integrity, it must be whole, complete, unbroken, sound, in perfect condition If a bicycle wheel has Integrity it is fully Workable If a bicycle wheel is fully workable, it provides the maximum opportunity for Performance
Integrity Of An Object
The Integrity, Workability, Performance Cascade
When Integrity declines, workability declines. When workability declines the available opportunity for performance declines
While Integrity does not cause performance, there are other factors that determine the level of performance, Integrity does determine workability, and workability determines the available opportunity for performance. No matter about the other factors, one cannot perform beyond the available opportunity for performance, and that is determined by Integrity
Thus, Integrity is an important Factor Of Production

Integrity Of A System
What we have said about the Integrity of an object is true for the Integrity of a system, i.e., the components of the system and the relationship between the components but with a system Integrity clearly extends to the Integrity of the design, implementation of the design, and the use of the system
Integrity For A Person A Suggestion

We all take ourselves to be persons of Integrity.
when interviewed in prison.) (Even Al Capone
However, for the balance of this conversation, we suggest that you be willing to take a look at your integrity from the perspective of this new model of integrity Taking into account Chris Argyris insight from 40 years of studying human behavior: Put simply, people consistently act inconsistently, unaware of the contradiction between their espoused theory and their theory-in-use, between the way they think they are acting and the way they really act. 5
Integrity For A Person (Includes Group & Organization Entity)

The definition of Integrity for a person remains the condition of being whole, complete, unbroken, sound, However, for a person Integrity is a matter of that persons word, nothing more and nothing less Includes what is said by your actions and behavior
Integrity For A Person (Includes Group & Organization Entity)

For a person to have Integrity their word must be whole, complete, sound, unbroken, perfect condition
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What Constitutes A Persons Word

What you say you will do (or not do), and by when you said you would do it What you know to do (or not do) What you are expected to do (or not do), unless you have declined it When you assert, you have evidence that the other would find valid for themselves The moral, ethical, and legal standards respectively of your society, group and organization, and state, unless you have declined them
Integrity For A Person Is Honoring Your Word

What It Means To Honor Your Word You keep your word (as we have defined your word), and on time or If you will not, just as soon as you know, you say you will not, and Say by when you will, or that you will not at all, and Clean up any mess for those who were counting on you to keep your word
Relationships Constituted By Ones Word

The usefulness of taking ones self to be constituted by ones word (at least for the purposes of Integrity) becomes even clearer when examined in light of the fact that giving ones word creates a relationship (or a new aspect of an existing relationship) When I give my word, I have a new relationship not only to the other, but with myself as well. Honoring your word creates workable relationships
The Power Of Honoring Your Word When You Will Not Keep Your Word
When the literature on trust talks about walking the talk, it says that to be trusted you must keep your word However, unless you give your word to virtually nothing, you will not always keep your word When it is impossible or inappropriate to keep your word, or even just choosing not to keep your word, honoring your word allows you to maintain your word as whole and complete Surprising to most people is the fact that you will engender a greater degree of trust (and admiration) when you do not keep your word, but You do honor your word
The Power Of Honoring Your Word When You Will Not Keep Your Word
23.3% of the . . . memorable satisfactory encounters involve difficulties attributable to failures in core service delivery. . . From a management perspective, this finding is striking. It suggests that even service delivery system failures can be remembered as highly satisfactory encounters if they are handled properly. . . One might expect that dissatisfaction could be mitigated in failure situations if employees are trained to respond, but the fact that such incidents can be remembered as very satisfactory is somewhat surprising. (Italics in original.) (Bitner, Booms and Tetreault 1990, pp. 80-81)
Cost Benefit Analysis

Do a careful cost benefit analysis on that to which you consider giving your word Do not do a cost benefit analysis on honoring your word
Any cost benefit analysis on honoring your word guarantees that you will be an untrustworthy person, and (with one trivial exception) that you will not be a person of Integrity
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Veil Of Invisibility
The Integrity-Performance Paradox
If operating with Integrity makes so much difference to performance, why are people and organizations so willing to sacrifice their integrity? why do people and organizations sacrifice Integrity and thereby reduce their opportunity for performance in the pursuit of increasing performance?
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Six Components Of The Veil Of Invisibility

1. Integrity exists as a virtue 2. Integrity is not understood to be a factor of production leading to false causes/excuses masquerading as the cause of failures 3. Self deception (lying to ones self) about being out of Integrity confusing talking for walking 4. The belief that Integrity requires keeping ones word. Leaves no way to maintain integrity when it is not possible or is inappropriate to keep ones word
Six Components Of The Veil Of Invisibility

5. Forfeiting the power and respect that accrues from acknowledging that one will not keep ones word out of the fear of looking bad and losing respect and power 6. The failure to apply cost/benefit analysis to the decision to apply cost/benefit analysis to honoring ones word
The Virtue Phenomena Of Morality, Ethics, Legality

MORALITY: In a given society, the generally acceptable standards of what is desirable and undesirable, of right (good) and wrong (bad) conduct or behavior of a person, group, or entity
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ETHICS: In a given group (the benefits of inclusion in which group a person, subgroup, or entity enjoys), the agreed on standards of what is desirable and undesirable, of right (good) and wrong (bad) conduct or behavior of a person, sub-group, or entity that is a member of the group, and may include defined bases for discipline, including exclusion

LEGALITY: In a given governmental domain, the system of laws and regulations of right and wrong behavior of a person, group, or entity that are enforceable by the state through the exercise of its policing powers and judicial process, with the threat and use of penalties, including its monopoly on the right to use physical violence
The Virtue Phenomenon Of Sincerity

SINCERITY: A human internal state phenomenon regarding what an individual says, or in the case of a group or entity, what is said for or in the name of the group or entity, and defined as the degree to which a person, group, or entity is wellmeaning regarding that to which they are giving their word
The Beginnings Of A Positive Theory Of Normative Values

This title is not a non sequitur Standing in Integrity as a positive phenomenon, the encounter with the virtue phenomena of Morality, Ethics, and Legality is transformed from virtue to ones word, and is thus revealed as a determinant of the workability of ones life The correlated behavior as a result of that difference is more likely to conform to moral, ethical, and legal standards
The Beginnings Of A Positive Theory Of Normative Values

We all know people we would characterize as fundamentally virtuous; people who are adamant about being consistent with the moral and ethical codes to which they subscribe However, there is overwhelming evidence in every sector of life of those who violate moral and ethical codes to the detriment of others (not to mention themselves) Surprisingly, almost none of these people consider themselves evil, bad, or even wrong How come? Rationalized tradeoffs of virtue for another good (like our institutions reputation, or the viability of our enterprise)
Values As A Source Of Conflict

Values are not the only source of conflict. But consider the multitudes of religious and civil conflicts:
Crusades of the Middle Ages Holocaust Two World Wars Ethnic Cleansing in Bosnia Mass Killings of the Tutsis in Rwanda
Values As A Source Of Conflict (continued)

Genocide in Darfur Brutal bombings, torture, and televised beheadings associated with the worldwide conflicts involving radical Islam 75 years of conflict between communist and capitalist philosophy over ownership of the means of production and distribution of output.
Reducing Conflicts Requires Knowledge Of

The role of values in shaping and guiding human action and interaction How values arise and change How values interact across cultures How to deal with conflicts between values How values can be changed
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Reducing Conflicts Requires Knowledge Of (continued)

How values are reflected in markets How markets either increase or reduce the positive or negative effects of values on human welfare How the values reflected in Moral, Ethical, and Legal codes for standards of good vs bad behavior effect human interactions in families, groups, organizations, social cultures, and nations
You are unlikely to have Integrity when you give your word, unless you are awake to the fact that
You have actually given your word your word is a promise, not a statement of fact (an assertion) You have put your self at risk, and act accordingly You must have a powerful answer to the question, Where is my word when it comes time for me to keep my word? You must live by, Without Integrity nothing works, this includes your life, and your organization! Integrity first, anything else second.
You are unlikely to have Integrity when you give your word, unless you are awake to the fact that Reasons, and even sincerity, are no substitute for not keeping your word, and therefore no matter what the reason or how sincere you were about your word when you gave it, you will be out of Integrity if when you dont keep your word, you dont honor your word
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You are unlikely to have Integrity when you give your word, unless you are awake to the fact that Integrity is not a virtue. Sacrificing Integrity, will sacrifice your opportunity for performance Ultimately, all it takes to have Integrity is the courage to say what of your word you are not going to keep, and to say it just as soon as you become aware of it, and deal with the resulting mess for those who were counting on your word
The Strange Phenomenon Of A Powerful Yet Easy Read

Deadline Busting: How To Be A Star Performer In Your Organization by Jeffrey Ford and Laurie Ford (2005)
Gives 85 one page tips will coach you on what to do to (in our language) be in Integrity, and increase your leadership
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Credits and References

1 When
you make somebody else do something against their will, to me that is not power at all, that is force, and force to me is the negation of power. Reich, Charles Power And The Law 2 Bennis, Warren (2007) The Challenges of Leadership in the Modern World, in American Pshychologist, Vol. 62, No. 1. 3 Joseph Rost has it close to correct when in his book Leadership for the Twenty-First Century he writes: the concept of leadership does not add up because leadership scholars and practitioners have no definition of leadership to hold on to. The scholars do not know what it is that they are studying, and the practitioners do not know what it is that they are doing. Rost, Joseph C. 1993. Leadership for the Twenty-First Century. Westport, CT: Praeger. 4 Cox, La Caze, and Levine (2005) Stanford Encyclopedia Of Philosophy http://plato.stanford.edu/archives/fall2005/entries/integrity/ 5 Argyris, 1991, "Teaching Smart People How to Learn", Harvard Business Review, May-June: pp. 99-109
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Negotiation, Organizations and Markets Research Paper Series

Integrity: Where Leadership Begins

May 10, 2007

Electronic copy available at: http://ssrn.com/abstract=983401

Electronic copy available at: http://ssrn.com/abstract=983401

Electronic copy available at: http://ssrn.com/abstract=983401

Outline Of Topics Continued

The Gordian Knot

The Gordian Knot

Cutting Through The Gordian Knot

Integrity Distinguished And Defined

Thus, Integrity is an important Factor Of Production

Integrity For A Person A Suggestion

Integrity For A Person (Includes Group & Organization Entity)

Integrity For A Person (Includes Group & Organization Entity)

What Constitutes A Persons Word

Integrity For A Person Is Honoring Your Word

Relationships Constituted By Ones Word

Cost Benefit Analysis

Six Components Of The Veil Of Invisibility

Six Components Of The Veil Of Invisibility

The Virtue Phenomena Of Morality, Ethics, Legality

The Virtue Phenomena Of Morality, Ethics, Legality

The Virtue Phenomena Of Morality, Ethics, Legality

The Virtue Phenomenon Of Sincerity

The Beginnings Of A Positive Theory Of Normative Values

The Beginnings Of A Positive Theory Of Normative Values

Values As A Source Of Conflict

Values As A Source Of Conflict (continued)

Reducing Conflicts Requires Knowledge Of

Reducing Conflicts Requires Knowledge Of (continued)

The Strange Phenomenon Of A Powerful Yet Easy Read

Credits and References

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