Vision, Values, and Courage

Leadership for Quality Management

Neil Snyder

• Publisher: Free Press
• Year: 2010
• Print ISBN: 9780029297551
• eBook ISBN: 9781451602524
• Topic: Business
• Subtopic: Business General
• Index: Business

Today, quality is the battleground on which global competition takes place, yet without effective leadership no quality program can succeed. This penetrating book exposes the problems that arise when leadership in business fails to do its job, and offers powerful, inspirational examples of firms that have confronted this problem and prevailed through leadership that aims at producing quality results. By highlighting the practices of such noted leaders as Walt Disney and Michael Eisner at Walt Disney, Ray Kroc at McDonald's, Sam Walton at Wal-Mart, David Kearns at Xerox, and Robert Galvin at Motorola, the authors reveal how each of these legendary leaders possessed three crucial leadership characteristics -- vision, strong values and beliefs, and the active courage to make their visions a reality. These characteristics, they show, make the difference between superior performance and "business as usual." With eloquent case studies, the authors demonstrate that unusually successful business leaders show the way for their employees by nurturing cultures that encourage and reward quality performance and by exhibiting personal characteristics that inspire excellence. A leader dedicated to a single vision, the authors show, inspires personal commitment to a common purpose. Walt Disney had a vision of a company that would never stop creating, innovating, and growing. Values and beliefs serve as the basis for direction and action in a business. Superior leaders, the authors argue, are expert in the promotion of values -- such as Ray Kroc's obsession with high-quality, inexpensive food in a clean environment. The courage to make things happen is exhibited most dramatically by Sam Walton's perseverance in mass market retailing. The payoffs for these superior leaders included the loyalty and commitment of their employees, quality, and profits.
The authors' approach to leadership for quality management -- with its focus on vision, values, and courage -- emphatically demonstrates what leaders must do to consistently produce quality results if they want their organizations to prosper and grow.

PART I
LEADERSHIP AND TOTAL QUALITY

CHAPTER 1
WHAT IS LEADERSHIP?

It is becoming increasingly clear that in many industries, American companies are lagging behind their foreign counterparts, struggling to catch up in the areas of product quality and operational efficiency. Although many U.S. firms are making great strides in performance improvements, foreign competitors continue to improve at an even faster pace. Thus the gap between the two is widening, not narrowing. If these current trends continue, the United States runs the risk of becoming a second-rate economic power.

In an effort to regain the market leadership position they have lost, many American firms have recently begun implementing various management methods and philosophies, hoping these new approaches will solve their business problems. Unfortunately, businesses often identify their so-called problems only in terms of the bottom-line results in their income statements and balance sheets. Because they attend only to financial problems, all too often the root cause of their difficulties—ineffective leadership—is overlooked.

Poor leadership is the primary cause of the declining effectiveness of operational methods and strategies of many U.S. industries over the past few decades. At the end of the operational process, poor leadership has resulted in product quality below most customers’ tolerance for imperfection.

Although it has begun to improve dramatically, the U.S. automobile industry provides us with a good example of this trend. General Motors, formerly the model of industrial achievement, has come in the 1990s to represent what U.S. businesses should never be. GM was the world leader in automobiles following World War II, and judging by its income statements and balance sheets, it continued in this leadership position until the early 1980s. Since then, however, GM’s financial statements show a different story—a story of poor performance that was years in the making. Although GM has been working on improving corporate operations and processes for over a decade, it is only now beginning to take steps that suggest a proper diagnosis has been made of the root cause of its poor performance: ineffective leadership.

The leadership problem at GM was never more evident than in the late 1980s when the board of directors offered to buy Ross Perot’s stock in the company for almost $350 million more than it was worth if he would simply resign from the board and keep quiet about the problems at the company. But the stock price premium was just part of the problem, and not the most important part at that. Only a few weeks before the offer was made to silence Perot, the GM board had announced its intention to lay off personnel and close several plants, ostensibly to cut costs. These actions were supposed to save the company about $500 million. As it turned out, $350 million of that $500 million was earmarked for Perot. How do you think GM workers felt about this decision? What do you think it did to their morale, loyalty, commitment, and productivity? How could those workers have reconciled that decision with the company’s push to improve the quality of its products? This action by the board, demonstrating a profound lack of understanding of human nature, speaks clearly about the poor quality of leadership at GM.

By contrast, consider Sam Walton and his company, Wal-Mart (the subject of Chapter 3). They stand as a shining example of what can happen when a leader understands and meets the requirements of an effective leadership role. Walton founded Wal-Mart in 1962 and turned the company into the most profitable retail firm in the country (surpassing even Sears and K-mart) in less than thirty years. He did that by believing in his people and by personally taking the initiative to make things happen. As Walton once said, “When it comes to Wal-Mart, there’s no two ways about it, I’m cheap. A lot of what goes on these days with these overpaid CEOs who’re really just looking from the top and aren’t watching out for anybody but themselves really upsets me. It’s one of the main things wrong with American business.”1

Walton was right on target. Ineffective leadership is the most critical problem confronting American businesses today. Corporate executives have become “money men” interested more in finance and accounting than in manufacturing and delivering top quality products and services. If this trend continues, many U.S. firms will lose their ability to compete in global markets.

This book addresses the importance of effective leadership in reversing that trend. It explores the crucial role of leadership in producing long-term improvement in business operations and product and service quality, and it provides a timely message aimed at helping U.S. firms identify and deal with their leadership deficiency. To set the stage for our leadership discussion, we will first discuss the evolution of our current problem.

COMPLACENCY GETS A FOOTHOLD IN U.S. BUSINESSES

Between the end of World War II and the Arab oil embargo of 1973, the United States was virtually alone at the top of the world’s economic ladder. Leaders in U.S. business could do just about anything they wanted and still succeed. Unfortunately, lulled by this stability and security, many chose to ignore important issues like modernization, quality improvement, and the development of the people who worked for them. These leaders forgot the important fact that businesses must move forward with as much vigor during periods of great security as they do during periods of strife.

With the luxury of an overwhelming competitive advantage, American executives failed to explore innovative management styles; instead they settled for the status quo, and management systems and organization structures grew excessively bureaucratic. But in the postwar period they continued to dominate the international business arena, largely because their weakened competitors remained so far behind. In their view from the top, it seemed they could do no wrong.

Sadly, it took twenty years to show us the true costs of that arrogance and complacency. In the 1980s, deficit spending by the federal government brought the illusion of economic prosperity to the United States, but the reality of the situation was the further erosion of our economic strength. The U.S. national debt ballooned from $894 billion to $2.837 trillion during this time, and it increased almost another trillion dollars in 1990 and 1991.2 By 1990 it was also undeniably clear that businesses in many U.S. industries were far behind their foreign counterparts, and that many others were dangerously close to becoming followers in the global marketplace.

POST-WORLD WAR II DEVELOPMENTS IN JAPAN, EUROPE, RUSSIA, AND CHINA

For the reverse of this story we can look back to 1945 Japan. Decimated by the war, the Japanese were forced to rebuild their economy from the ground up. With active cooperation from the government, businesses in Japan launched an unprecedented rise from the ashes of wartime defeat to their current position of economic strength rivaling that of the United States. But the people of Japan deserve most of the credit for transforming their economy. While Japan is poor in natural resources, it is rich in tradition and culture. Its people were willing to sacrifice, save, invest, and work hard, and they laid the foundation for Japan’s ascent to economic power. Business and government leaders in Japan harnessed the people’s energy and determination and were thereby able to create one of the world’s most powerful economies. Less than fifty years after World War II, with a population of 124 million people (about 50 percent of the U.S. population) and a land area the size of Montana, Japan is positioned for world leadership.

Japan has begun to exercise that economic power in its relations with the Association of Southeast Asian Nations (ASEAN). This economic union, comparable to the European Community in many ways, comprises some of the most successful economic powerhouses in the world. Although Japan is not a member of the group, its tremendous wealth and economic success give it great influence over member nations. History leads many in the region to be continually suspicious of Japan’s motives, and the fear of Japanese domination of these smaller states will tend to limit Japan’s sway in this developing region. Nonetheless, it appears that Japanese business leaders are quickly learning how to form and sustain mutually beneficial economic alliances. We should expect movement in this direction to continue, and as a result that Japan will be even more competitive in the future.

With some qualifications, we would predict the same for Europe. In the devastated aftermath of World War II, the nations of Europe were fragmented, suspicious of one another, and fiercely independent. They still are. Yet with the advent of the 1992 Single Europe Act, we are supposed to be witnessing the dawn of a new era of unity in the European Community (EC). With a combined population of 325 million people and a $4.6 trillion gross national product (GNP), the EC is, and will continue to be, a force to be reckoned with.

It will not be easy for the member nations of the EC to overcome their differences and learn to work together. For example, in June 1992 the people of Denmark rejected the Maastricht Treaty, which would have moved the EC closer to monetary union and common security. Later, the French approved the treaty by only the slimmest of margins. These actions cast doubts on the union itself. As in the Southwest Pacific region of the world, the nations of Europe are reluctant to give up their sovereignty and independence. The final outcome of the movement to unite Europe is uncertain as of early 1993, but political and economic realities suggest they will eventually see the advantages of working together.

Recent declarations of independence in Poland, Hungary, and other nations formerly in the Soviet bloc signal not only the end of the political threat from communist totalitarianism, but also the beginning of an expansion in the European market as these nations develop market economies. With a combined population of almost eight hundred million people, the economic potential of a union between the European Community and the nations of central and eastern Europe is breathtaking.

To take advantage of the opportunities before them, these countries must learn how to utilize their natural and their human resources. And in that effort, they face the daunting challenge of managing nationalistic tendencies. The peaceful division of Czechoslovakia in 1992 into two separate republics proves that these feelings run strong and deep, and the bloody battles in 1992 and 1993 to define the states of Bosnia, Serbia, and Croatia from the former Yugoslavia are painful reminders of what Europe risks as it moves toward unity. Here again, though, the political and economic advantages of cooperation should eventually persuade the people of Europe to settle their differences.

And what of the former Soviet Union? In August 1991, a stunned world watched as the USSR unraveled almost overnight and the Commonwealth of Independent States (CIS) emerged. One day we learned of a coup and the return of hard-line communist leadership; the next thing we knew, the Russian people stood up against the coup conspirators and said no. One by one, the Soviet republics declared independence, following the lead of the Baltic states a few months earlier.

And so after more than seventy years of communist rule, the Soviet threat ceased to exist. For decades the Soviet people struggled to survive without modern conveniences taken for granted in the West; indeed, many lacked adequate food and decent living conditions while their leaders poured money into the huge military apparatus required to suppress and sustain a far-flung empire. Following the collapse of the USSR, we learned that the nation was spending almost a third of its GNP on the military while the citizens of the country went without basic necessities. In that light, it was not surprising that the USSR fell apart; the surprise was that it took so long to happen (and that it happened so quickly once it started).

Fledgling democracies are now emerging throughout the republics of the CIS. It is not at all certain what form of government will exist in these nations as the twenty-first century begins, but the potential exists for the creation of a wealthy and powerful commonwealth founded on basic beliefs in freedom, human dignity, and democracy. Given the vast resources of Russia alone—its vast land area and its population—the introduction of a market economy could develop that republic into an economic power that could substantially alter the course of human events. The literacy rate in the old Soviet Union was about 98 percent, compared to about 80 percent in the United States.3 Ironically, in future global competition with the United States, the CIS could find itself in the driver’s seat by effectively utilizing its well-educated work force and its natural resource base.

And with a population of about one billion people and one of the most advanced military forces in the world, China should not be overlooked as a potential world economic power. The abundance of low-cost labor in China has already enabled that country to establish itself firmly as a leader in the textile industry. With the capacity to do the same thing in any labor-intensive industry, China can be expected to put significant pressure on firms that fail to modernize and keep pace with changes in technology and management practices. As the 1989 protests (and massacre) in Tiananmen Square showed the world, however, the change to a market economy has ignited the Chinese people’s desire for political freedom and has posed a serious challenge to the leaders of this last major totalitarian communist state. With pressures from within and from the free nations of the world, China faces an uncertain future. If it can manage the coming political transition (transferring power from the old communists to the next generation), China may well develop its nascent economic power to rival the United States.

THE TASK FOR THE UNITED STATES

The United States must respond to these profound changes in the world around it.4 Global competitive pressure and potential future economic threats are forcing U.S. business leaders and government officials to think seriously about the significant changes required to restore the nation’s competitiveness in the global economy. The United States has formed a free-trade zone with Canada and will likely form a similar zone with Mexico to capitalize on the human, physical, and fiscal resources of each nation in global competition. Despite inevitable political resistance to such agreements in all three countries, economic realities again suggest that we will continue to move in the direction of increased cooperation with Canada and Mexico.

Our economic prosperity and the prosperity of our children and our grandchildren depend on the decisions our country will make in the 1990s. Never in our nation’s history has leadership been more important than it is toda...

Table of contents

• Cover Page
• Title Page
• Contents
• Foreword
• Preface
• Acknowledgments
• Part I: Leadership and Total Quality
• Part II: Vision: Conceiving Reality
• Part III: Values: The Foundation for Action
• Part IV: Courage: Realizing Your Vision
• Appendix
• Notes
• Index
• About The Author