I just read a fascinating article in the New York Times about Dell’s flawed decision making regarding computers with leaky electrical components.  (http://www.nytimes.com/2010/06/29/technology/29dell.html?src=me&ref=general)

Internal documents strongly suggest that Dell knew the computers were defective, yet they consciously decided to “not proactively bring problems to the attention of customers”, and to “emphasize uncertainty”.  My favorite part of the article has to be Dell telling the math department at the University of Texas that all of their computers were failing at once because UT had forced them to do difficult math calculations.

Dell’s strategy of controlling their supply chain has been a favorite of business school case studies for years.  Unfortunately, it appears that Dell’s laser like focus on delivering low-cost computers became the singular driving force in the organization, divorced from any embedded sense of ethical behavior, brand management, or visionary leadership.

This lapse in judgement will cost Dell billions in repair costs, brand value, and litigation.   Unfortunately, vacuums that exist with regards to ethics and leadership often represent hidden costs.  As a result, it is all to easy for seemingly successful organizations to operate under the direction of ethically flawed leadership and strategy, as long as current financial returns are positive.    The NFL’s refusal to acknowledge the long-term impact of head injuries, or to a lesser extent, Apple’s current denial of reception issues with it’s newest Iphone are examples of financially successful organizations obscuring the truth to succeed in the marketplace.

Leaders of every organization should take the time to define their company’s Dynamic Essence, and make sure that it can be applied across the entire organization ethically, with long-term market success in mind.  If the unique driving force for your organization does not explicitly preclude ethically questionable behaviors, or worse,  it requires explicitly deceiving your customers, rest assured that the truth will leak,  faster than the components inside Dell’s faulty computers.

When the Limits of Excellence are reached, the Virtues of Excellence are transformed into these corruptions. Please remember, they aren’t crimes or “sins;” they aren’t corruptions in that sense. We call them corruptions because, by definition, they take something good (the Five Virtues of Excellence) and dilute it and transform it into something unhealthy and harmful. So when we cross the Falling Point and the corruptions set in, we are guilty of nothing more than pushing ourselves to be excellent. And that’s something to be proud of. The problem is that this is precisely how excellence traps us and holds us back. Here they are:
Entropy
Entropy occurs when the physical and mental limits of Effort are surpassed. It signals a breakdown of the system. This system can refer to a person, a team, or an entire enterprise. So an excellent person, giving his or her all, eventually hit a wall when there’s no more effort to give. Hello Entropy.

Technocracy
Proficiency is merely a cost-of-entry, and it’s the same for everyone. So, when we rely upon proficiency beyond its limit, asking it to somehow differentiate us or drive truly great achievement, we’ve asked it to do what it can’t do. Excellent proficiency may look amazing to a novice, but masters know it’s never the end all. When we make it our focus, it can lead to a cult of capability, or Technocracy. We see this in the athlete who has no grace, the musician who has no taste, the prose stylist who has no ideas. They are like circus performers, and are soon forgotten.

Fixation
Fixation happens when the limits of healthy Commitment are surpassed. Eventually, our priorities, strategies, and organizations become misaligned. We’ve all seen fixated people who like to think they are committed. They mean well, but they have lost the plot. Perhaps they should be committed?

Rigidity
When Expertise is asked to have a vision, which it lacks by definition, Rigidity sets in. Then what we think we know supplants what we actually see, and progress becomes marginal and incremental. We’ve all known people who are great at project or operations management, but lack “the vision thing.” When something doesn’t go the way they’d like, unless they have other resources, skills, and frameworks to draw upon, they often dig in their heels, becoming rigid. They confuse this with expertise, with an assist from commitment. Wrong. It’s ego, plain and simple. The virtue of excellence got corrupted into rigidity, and the cost to themselves, their team, and the enterprise is following right behind.

Cunning
Cunning occurs when the limits of Acumen are reached and strategy is reduced to self-serving tactics. Acumen has an attitude of openness and considers navigation to part of the strategic adventure of business and life. Cunning sets in when that attitude is lost, when facts, information, and the map grow fuzzy. Because nobody has perfect information at all times, cunning is always a temptation.

Let’s start with a useful tool that supports a big idea: you can download a handy summary chart that outlines and expands the information in this blog postby clicking here. Look for the document entitled Costs of Failure, Mediocrity and Excellence.

We always say that mastery, and specifically Leadership Mastery, is different than excellence in kind, not in degree. So today we’ll talk about how excellence differs from failure and mediocrity in degree, not in kind. In other words, excellence is on the same continuum with failure and mediocrity, it’s quantitatively different from them, but not qualitatively different (like mastery is). And so excellence is always threatened with devolving back to mediocrity or even failure. Being excellent means riding a roller coaster.

If you’re excellent, congratulations. Unfortunately, you are now in the Excellence Trap. Excellence is the largest hidden cost in business. I discuss that in detail elsewhere, but here I’ll just show you what excellence looks like at 30,000 feet compared to failure and mediocrity. Here are a few examples… (more…)