Erhard Integrity

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

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

Negotiation, Organizations and MarketsResearch 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 Erhardwerhard@ssrn.com

Independent

Michael C. Jensenmjensen@hbs.edu

Jessie Isidor Strauss Professor of Business Administration, EmeritusHarvard 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 ofintegrity: “Integrity: A Positive Model that Incorporates the Normative Phenomena of Morality, Ethics andLegality”, 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 programmaterial of the Vanto Group, and from material presented in the Landmark Forum and other programsoffered by Landmark Education LLC. The ideas and the methodology created by Werner Erhard underliemuch of the material.

FAIR USE: You may redistribute this document freely, but please do not post the electronic file on theweb. 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 themost recent version. Thank you, Michael C. Jensen, Kari Granger, Werner Erhard

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mailto:werhard@ssrn.com

mailto:mjensen@hbs.edu



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

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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 person’s 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 one’s 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 one’s 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 one’s 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 one’s 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.

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

IntegrityWhere Leadership Begins

A new model of Integrity

Center for Public LeadershipJohn F. Kennedy School of GovernmentHarvard University, Cambridge, Massachusetts10 May 2007

Werner ErhardIndependent

Michael C. JensenJesse Isidor Straus Professor of Business, Emeritus,

Harvard Business SchoolSenior Advisor, The Monitor Group

1 © 2007 Werner Erhard, Michael C. Jensen, Landmark Education LLC. All Rights Reserved

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,

by Werner Erhard underlie much of the material.and from material presented in the Landmark Forum and other programs offered by Landmark Education LLCThe ideas and the methodology created

An Invitation• We will present a new model of Integrity,

that incorporates Morality, Ethics, andLegality

• After engaging with the model over thenext hour and a half, you are invited todetermine for yourself whether this modelhas the power to deliver on the followingpromises:


Promises To Be Delivered• Access to dramatic increases in

workability and performancein the lives of individuals, relationships,and organizations

– However you wish to define performance,ranging from the ability to produce intendedresults, through competitive advantage, valuecreation, empowering and enabling others, toenhanced quality of life

– By “dramatic” we mean increases on the order of100% to 500%


Promises To Be Delivered• Access to dramatic increases in

workability and performancein the lives of individuals, relationships,and organizations

• With performance (including the agendaand the actions taken to realize theagenda) that is inspired by, and that bringsout the best in us– That is, constrained and empowered by

Integrity, and moral, ethical, and legal principles


Promises To Be DeliveredWe will demonstrate that Integrity, as it isdistinguished 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 authenticityrequired 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 ofIntegrity


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 probablymeans that there is a tangled knot, withsomething hidden that keeps the knot fromunraveling

• The knot makes the potential power of thephenomenon inaccessible even to thosewith the wisdom to exercise it with powerrather 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 theunclarity and ambiguity of the phenomena ofIntegrity, Morality, and Ethics


Cutting Through The Gordian Knot

A positive model of Integrity

that incorporates the normative phenomena of

Morality, Ethics, and Legality


Integrity Distinguished And Defined• We distinguish Integrity as a purely positive

phenomenon

• We identify the domain of Integrity as theobjective state or condition of an object,system, person, group, or organizational entity

• We define Integrity as the state or condition ofbeing whole, complete, unbroken, sound,perfect condition


Integrity Of An Object

• For a bicycle wheel to have Integrity, itmust be whole, complete, unbroken,sound, in perfect condition

• If a bicycle wheel has Integrity it is fullyWorkable

• If a bicycle wheel is fully workable, itprovides the maximum opportunity forPerformance

The Integrity, Workability, Performance Cascade


Integrity Of An Object

• When Integrity declines, workability declines.

• When workability declines the available opportunityfor performance declines– While Integrity does not cause performance, there are other factors

that determine the level of performance, Integrity does determineworkability, and workability determines the available opportunity forperformance. No matter about the other factors, one cannot performbeyond the available opportunity for performance, and that isdetermined by Integrity

• Thus, Integrity is an important Factor Of Production

The Integrity, Workability, Performance Cascade


Integrity Of A System• What we have said about the Integrity of

an object is true for the Integrity of asystem, i.e., the components of the systemand the relationship between thecomponents

• but with a system Integrity clearly extendsto the Integrity of the design,implementation of the design, and the useof the system


Integrity For A PersonA Suggestion

• We all take ourselves to be persons of Integrity. (Even Al Caponewhen interviewed in prison.)

• However, for the balance of this conversation, we suggestthat you be willing to take a look at your integrity from theperspective of this new model of integrity

• Taking into account Chris Argyris’ insight from 40 years ofstudying human behavior:

“Put simply, people consistently act inconsistently,unaware of the contradiction between their espousedtheory and their theory-in-use, between the way theythink they are acting and the way they really act.” 5


Integrity For A Person(Includes Group & Organization Entity)

• The definition of Integrity for a personremains the condition of being whole,complete, unbroken, sound, …

• However, for a person Integrity is a matterof that person’s word, nothing more andnothing less

• Includes what is said by your actions andbehavior


• For a person to have Integrity their wordmust be whole, complete, sound,unbroken, perfect condition

Integrity For A Person(Includes Group & Organization Entity)


What Constitutes A Person’s 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 andorganization, and state, unless you havedeclined them


Integrity For A Person Is HonoringYour Word

What It Means To Honor Your Word

• You keep your word (as we have defined yourword), 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 word19 © 2007 Werner Erhard, Michael C. Jensen, Landmark Education LLC. All Rights Reserved

Relationships Constituted By One’sWord

• The usefulness of taking one’s self to beconstituted by one’s word (at least for the purposesof Integrity) becomes even clearer when examinedin light of the fact that giving one’s word creates arelationship (or a new aspect of an existingrelationship)

• When I give my word, I have a new relationship notonly to the other, but with myself as well.

• Honoring your word creates workable relationships20 © 2007 Werner Erhard, Michael C. Jensen, Landmark Education LLC. All Rights Reserved

The Power Of Honoring Your WordWhen You Will Not Keep Your Word

• When the literature on trust talks about “walking the talk”, itsays that to be trusted you must keep your word

• However, unless you give your word to virtually nothing, youwill not always keep your word

• When it is impossible or inappropriate to keep your word, oreven just choosing not to keep your word, honoring your wordallows you to maintain your word as whole and complete

• Surprising to most people is the fact that you will engender agreater degree of trust (and admiration) when you do notkeep your word, but

• You do honor your word21 © 2007 Werner Erhard, Michael C. Jensen, Landmark Education LLC. All Rights Reserved

The Power Of Honoring Your WordWhen You Will Not Keep Your Word• 23.3% of the “ . . . ‘memorable satisfactory

encounters’ involve difficulties attributable tofailures in core service delivery. . . From amanagement perspective, this finding is striking.It suggests that even service delivery systemfailures can be remembered as highlysatisfactory encounters if they are handledproperly. . . One might expect that dissatisfactioncould be mitigated in failure situations ifemployees are trained to respond, but the factthat such incidents can be remembered as verysatisfactory is somewhat surprising.” (Italics inoriginal.) (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 anuntrustworthy person, and (with one trivialexception) that you will not be a person ofIntegrity


Veil Of Invisibility• The Integrity-Performance Paradox

– If operating with Integrity makes so muchdifference to performance, why are peopleand organizations so willing to sacrifice theirintegrity?

– why do people and organizations sacrificeIntegrity and thereby reduce their opportunityfor performance in the pursuit of increasingperformance?


Six Components Of The Veil OfInvisibility

1. Integrity exists as a virtue2. Integrity is not understood to be a factor of

production leading to false causes/excusesmasquerading as the cause of failures

3. Self deception (lying to one’s self) about beingout of Integrity – confusing talking for walking

4. The belief that Integrity requires keeping one’sword. Leaves no way to maintain integrity whenit is not possible or is inappropriate to keep one’sword


Six Components Of The Veil OfInvisibility

5. Forfeiting the power and respect thataccrues from acknowledging that one willnot keep one’s word out of the fear oflooking bad and losing respect and power

6. The failure to apply cost/benefit analysis tothe decision to apply cost/benefit analysisto honoring one’s word


The Virtue Phenomena OfMorality, Ethics, Legality

• MORALITY: In a given society, thegenerally acceptable standards of what isdesirable and undesirable, of right (good)and wrong (bad) conduct or behavior of aperson, group, or entity



• ETHICS: In a given group (the benefits ofinclusion in which group a person, sub-group, or entity enjoys), the agreed onstandards of what is desirable andundesirable, of right (good) and wrong(bad) conduct or behavior of a person,sub-group, or entity that is a member ofthe group, and may include defined basesfor discipline, including exclusion



• LEGALITY: In a given governmentaldomain, the system of laws andregulations of right and wrong behavior ofa person, group, or entity that areenforceable by the state through theexercise of its policing powers and judicialprocess, with the threat and use ofpenalties, including its monopoly on theright to use physical violence


The Virtue Phenomenon OfSincerity

• SINCERITY: A human internal statephenomenon regarding what an individualsays, or in the case of a group or entity,what is said for or in the name of the groupor entity, and defined as the degree towhich a person, group, or entity is well-meaning regarding that to which they aregiving their word


The Beginnings Of A PositiveTheory Of Normative Values

• This title is not a non sequitur• Standing in Integrity as a positive phenomenon,

the encounter with the virtue phenomena ofMorality, Ethics, and Legality is transformed fromvirtue to one’s word, and is thus revealed as adeterminant of the workability of one’s life

• The correlated behavior as a result of thatdifference is more likely to conform to moral,ethical, and legal standards


The Beginnings Of A PositiveTheory Of Normative Values

• We all know people we would characterize asfundamentally virtuous; people who are adamant aboutbeing consistent with the moral and ethical codes towhich they subscribe

• However, there is overwhelming evidence in everysector of life of those who violate moral and ethicalcodes to the detriment of others (not to mentionthemselves)

• Surprisingly, almost none of these people considerthemselves evil, bad, or even wrong

• How come? Rationalized tradeoffs of virtue for anothergood (like our institution’s reputation, or the viability ofour enterprise)


Values As A Source Of Conflict

• Values are not the only source of conflict.But consider the multitudes of religiousand 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 worldwideconflicts involving radical Islam

– 75 years of conflict between communist andcapitalist philosophy over ownership of themeans of production and distribution ofoutput.


Reducing Conflicts RequiresKnowledge Of

• The role of values in shaping and guidinghuman 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


Reducing Conflicts RequiresKnowledge Of (continued)

• How values are reflected in markets• How markets either increase or reduce the

positive or negative effects of values on humanwelfare

• How the values reflected in Moral, Ethical, andLegal codes for standards of good vs badbehavior effect human interactions in families,groups, organizations, social cultures, andnations


You are unlikely to have Integrity when you giveyour word, unless you are awake to the fact that

• You have actually given your word – your word isa 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 tokeep my word?”

• You must live by, “Without Integrity nothing works,this includes your life, and your organization!”Integrity first, anything else second.


• Reasons, and even sincerity, are nosubstitute for not keeping your word, andtherefore no matter what the reason orhow sincere you were about your wordwhen you gave it, you will be out ofIntegrity if when you don’t keep your word,you don’t honor your word



• Integrity is not a virtue. SacrificingIntegrity, will sacrifice your opportunity forperformance

• Ultimately, all it takes to have Integrity isthe courage to say what of your word youare not going to keep, and to say it just assoon as you become aware of it, and dealwith the resulting mess for those who werecounting on your word



The Strange Phenomenon Of APowerful Yet Easy Read

• Deadline Busting: How To Be A StarPerformer In Your Organization by JeffreyFord and Laurie Ford (2005)– Gives 85 one page tips will coach you on what

to do to (in our language) be in Integrity, andincrease your leadership


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 ofpower.” Reich, Charles “Power And The Law”

• 2 Bennis, Warren (2007) “The Challenges of Leadership in the ModernWorld”, in “American Pshychologist”, Vol. 62, No. 1.

• 3 Joseph Rost has it close to correct when in his book Leadership for theTwenty-First Century he writes: “… the concept of leadership does not addup because leadership scholars and practitioners have no definition ofleadership to hold on to. The scholars do not know what it is that they arestudying, 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 BusinessReview, May-June: pp. 99-109


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