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“Integrity as we define it (or the lack thereof) on the part of individuals or organizations has enormous economic implications for value, productivity, and quality of life. Indeed, integrity is a factor of production as important as labor, capital, and technology. Without a clear, concise, and most importantly, an actionable definition of integrity, economics, finance and management are far less powerful than they can be.”

“Putting Integrity Into Finance: A Purely Positive Approach” by Werner Erhard and Michael C. Jensen Ph.D. Published by Columbia University’s Center On Capitalism and Society in their Journal: Capitalism and Society, Volume 12, Issue 1.

http://capitalism.columbia.edu/journal/12/1

By Werner Erhard and Michael C. Jensen
NBER Working Paper No. 19986
Issued in March 2014
NBER Program: Corporate Finance

Abstract: The seemingly never ending scandals in the world of finance with their damaging effects on value and human welfare (that continue unabated in spite of all the various efforts to curtail the behavior that results in those scandals) argues strongly for an addition to the current paradigm of financial economics. We summarize here our new theory of integrity that reveals integrity as a purely positive phenomenon with no normative aspects whatsoever. Adding integrity as a positive phenomenon to the paradigm of financial economics provides actionable access (rather than mere explanation with no access) to the source of the behavior that has resulted in those damaging effects on value and human welfare, thereby significantly reducing that behavior. More generally we argue that this addition to the paradigm of financial economics can create significant increases in economic efficiency and productivity. http://www.nber.org/papers/w19986

Sands Leadership Lecture Series

“Professor Michael Jensen and Werner Erhard, two extraordinary thinkers, engage in a conversation that explores groundbreaking access to being a leader and to the effective exercise of leadership as one’s natural self-expression.” -Simon Business School, University of Rochester

For an individual we distinguish integrity as a matter of that person’s word being whole and complete. For a group or organizational entity we define integrity as that group’s or organization’s word being whole and complete. A group’s or organization’s word consists of what is said between the people in that group or organization, and what is said by or on behalf of the group or organization. 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, or as soon as you know that you will not, you say that you will not be keeping your word to those who were counting on your word and clean up any mess you caused by not keeping your word. By keeping your word we mean doing what you said you would do and by the time you said you would do it.

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.

Integrity: A Positive Model that Incorporates the Normative Phenomena of Morality, Ethics and Legality Werner Erhard, Michael C. Jensen, Steve Zaffron, published March 23, 2009 at SSRN

Werner Erhard Integrity

Knowing, Doing, and Being

Teaching Leadership: Approaches That Emphasize Being

“How does one teach leadership in a way that not only informs [students] about leadership but also transforms them into actually being leaders? In this section, several authors share courageous and often unconventional approaches to teaching that target the very essence of who we are, the BE component of leadership education.

“Erhard, Jensen and Granger anchor this collection by taking dead aim at the BE component.  In a highly provocative chapter titled “Creating Leaders”, this eclectic group of scholars argues for adopting a decidedly ontological approach to leadership education that promises to leave students actually being leaders. Contrasting their ontological approach−described as being and action as experienced ‘on the court’−with more traditional perspectives where leadership is observed and commented on ‘from the stands,’ this chapter presents a rigorous theory of leadership education that begins and ends with the following bold promises to students:

• You will leave this course being who you need to be to be a leader.
• You will leave this course with what it takes to exercise leadership effectively.

“For these authors, integrity, authenticity, and being committed to something bigger than oneself form the base of ‘the context for leadership,’ a context that once mastered, leaves one actually being a leader. It is not enough to know about or simply understand these foundational factors, but rather by following a rigorous, phenomenologically based methodology, students have the opportunity to create for themselves a context that leaves them actually being a leader and exercising leadership effectively as their natural self-expression.” –  editors comments from The Handbook for Teaching Leadership: Knowing, Doing, and Being, Edited by Snook, Scott A., Nohria, Nitin N., and Khurana, Rakesh, Sage Publications, Inc., 2011.

“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.”  – abstract for Integrity: Where Leadership Begins – A New Model of Integrity

Werner Erhard, Michael C. Jensen, & Steve Zaffron