Traps in “Learning from Failure”

The April 2011 issue of the Harvard Business Review was devoted to “learning from failure.” Little was said, though, about the potential traps embedded in studying failures and drawing conclusions about their causes. More than a decade earlier, in 1998, Ian Bradbury and I published a paper titled “Improving Problem Solving” (Report No. 167, Center for Quality and Productivity Improvement, University of Wisconsin). In it, we discuss two examples that illustrate the inferential traps involved in studying only failures or defects. The first example came from the Challenger disaster. In a teleconference the evening before the launch, Thiokol solid rocket booster engineers argued that the launch should not proceed due to the low ambient — and hence joint — temperature. Project leaders however considered the argument made by Thiokol personnel too weak to support a decision to delay the launch.

CHALLENGER O-RING PROBLEM DATA

During a teleconference the evening before the Challenger launch, only two of the points on the plot received much attention: the point at 55° F and the one at 75° F.

The data reviewed in the discussion included the occasions on which problems had previously occurred with O-rings on the solid rocket boosters and the temperatures at which these problems had occurred. See “Challenger O-Ring Problem Data” for a plot of the number of distressed rings per launch versus booster joint temperature. During the teleconference, the data were not displayed graphically, and only two of the points on the plot received much attention: the point at 55º F and the one at 75º F.

The team never discussed instances in which the number of distressed O-rings (called “failures” for purposes of this discussion) was zero. That is, the discussion considered only failures. Subsequent to the disaster, a plot was made that included the launches that had no distressed O-rings (see “Complete Challenger O-Ring Data”).

COMPLETE CHALLENGER O-RING DATA

Subsequent to the disaster, a plot was made that included the launches that had no distressed O-rings.

Adding the information about launches in which there were no distressed O-rings changes one’s view of the relationship between failures and temperature, particularly considering that the projected launch temperature was near freezing. Since the accident, some have argued that had the second graph been discussed in the teleconference, it might have carried the day and led to a postponement of the launch (see, for example, Diane Vaughan, The Challenger Launch Decision, University of Chicago Press, 1996). Edward Tufte makes the case that a clear proximate cause of the accident was “[A]n inability to assess the link between cool temperature and O-ring damage on earlier flights. Such a prelaunch analysis would have revealed that this flight was at considerable risk” (Visual Explanations: Images and Quantities, Evidence and Narrative, Graphics Press, 1996).

Tufte discusses the 13 charts that the team used during the teleconference and concludes, “[T]here is a scandalous discrepancy between the intellectual tasks at hand and the images created to serve those tasks. As analytical graphics, the displays failed to reveal a risk that was in fact present. As presentation graphics, the displays failed to persuade government officials that a cold-weather launch might be dangerous. . . . [T]here are right ways and wrong ways to show data; there are displays that reveal the truth and displays that do not. And, if the matter is an important one, then getting the displays of evidence right or wrong can possibly have momentous consequences.” (It is not my intention here to discuss visual displays, but rather to advocate the use of all the data pertinent to the issue at hand in drawing conclusions. However, I recommend Tufte’s books, including his landmark Visual Display of Quantitative Information, to all of us who analyze and present information.) Tufte actually identifies two problems here: first, the omission from the discussions of the prior launches that did not have distressed O-rings, and second, the inadequacy of the displays of evidence.

The second example of inferential traps that result from studying only failures comes from the automotive industry and was provided by Mike Tveite:

A manufacturer of fuel injectors had been having a problem with mild leakage. In certain cases, when the fuel injector should have been closed, small amounts of fuel were seeping past its sealing surface into the engine’s inlet manifold. This often showed up first as a lack of smoothness of the engine at idle or reduced ease of starting.

FUEL INJECTOR FAILURES

This picture is intended to convey the idea that the vast majority of failed injectors contained contamination. It is not intended to be numerically accurate.

Under the warranty agreement, car dealerships that replaced fuel injectors for being leaky returned them to the manufacturer for problem-solving analysis. Tear down of the fuel injectors and careful examination under a microscope revealed a relationship like that depicted in “Fuel Injector Failures.”

Possible actions that were being considered to reduce the level of contamination included redesign of the injector and fuel line filters; additional washing, flushing, and inspection operations in the manufacturing process; increased air filtration and so on.

The people working on the problem were asked whether they had examined any fuel injectors that were not leaky. They had not, but decided to do so. Doing so produced the result shown in “Leakage Versus Contamination.”

LEAKAGE VERSUS CONTAMINATION

When the people working on the problem also examined fuel injectors that were not leaky, they found that contamination was present independent of the occurrence of leakage.

It thus became apparent that the contamination was present independent of the occurrence of leakage. If the manufacturer had not examined “non-defective” injectors, it could have expended substantial time and capital on reducing the presence of contamination without benefit to the problem at hand.

In our paper, Ian Bradbury and I note that when a potential cause is of a binary nature, that is, it is either present or absent, we must attempt to obtain data in all of the cells of a table such as the following:

Tufte puts it more generally: “In reasoning about causality, variations in the cause must be explicitly and measurably linked to variations in the effect.” He goes on to identify principles for reasoning about statistical evidence and for the design of statistical graphics: “(1) documenting the sources and characteristics of the data, (2) insistently enforcing appropriate comparisons, (3) demonstrating mechanisms of cause and effect, (4) expressing those mechanisms quantitatively, (5) recognizing the inherently multivariate nature of analytic problems, and (6) inspecting and evaluating alternative explanations.”

I do realize that I have put forth two examples of failures in learning and inference to discuss traps in learning from failure. It is likely that there are cases in which these kinds of problems existed and the parties involved reached the correct conclusions, but my goal in providing examples of these traps is to increase awareness of the potential for these failures.

Likewise, the use of “the 5 Whys” to discover “the Root Cause” of a problem, mistake, or failure is fraught with the danger of falling into the same kind of logical trap illustrated by the two preceding examples. In our paper, Ian and I go on to say, “If one only considers the ‘problem’ category of results from a system, one may either miss an important causal relationship (as in the Challenger case) or erroneously infer presence of a causal relationship,” as in the case of leaky injectors. Any analytical tool depends on the mind of the user for the goodness of its outcome.

Learning from Failures (or Successes) on a Large Scale

After the Challenger disaster, a commission chaired by former Secretary of State William Rogers was appointed to investigate. The U. S. House Committee on Science and Technology also conducted hearings and produced a report. Subsequently, sociologist Diane Vaughan did an intensive study of the context of the disaster and the practices and relationships that existed in the NASA system (including contractors), in the engineering profession, and in the government. After her study, Vaughan concluded that the Rogers Commission had failed to include important aspects of the context:

Both for easy public digestion and for NASA’s survival, the myth of production-oriented, successblinded middle managers was the best of all possible worlds. It removed from public scrutiny the contributions to the disaster made by top NASA officials, Congress and the White House, and it minimized awareness of the difficulty of diagnosing the risky technology. Locating blame in the actions of powerful elites was not in NASA’s interest. And focusing attention on the fact that, after all this time, the technology still could defy understanding would destroy the NASA-cultivated image of routine, economical spaceflight and with it the Space Shuttle Program. . . .

Retrospection corrects history, altering the past to make it consistent with the present, implying that errors should have been anticipated. Understanding organizational failure depends on systematic research that avoids the retrospective fallacy.

In hindsight, it is likely that an explanation can be found for any failure, and an inference can be made that the parties involved should have known better.

It is just as dangerous to restrict study to successes. Peters and Waterman’s book, In Search of Excellence, is an example. They identified some companies as “excellent.” Then they studied each company to discover why it was excellent. They picked some practices that they saw as the reasons for excellence and discussed them in the book. My friend Bill Bellows points out that they didn’t go to other companies that were not in the excellent category to see if they were also using those practices. Later, some of the companies identified as excellent were not so excellent.

From this perspective, information from benchmarking exercises should be considered carefully. Simply copying without careful thought about context and whether or not a practice will fit into an organization’s system can be dangerous.

The “Root Who”

The fundamental attribution error occurs when someone attributes a problem or mistake to the behavior of an individual without considering situational factors that may have influenced that behavior. We tend to attribute problems to the people who happened to be there when the issue occurred, rather than considering numerous other factors that may have contributed. (On the other hand, when we make a mistake ourselves, we tend to consider those other factors.)

In its August 2003 report on the shuttle Columbia accident, the Columbia Accident Investigation Board stated:

Many accident investigations make the same mistake in defining causes. They identify the widget that broke or malfunctioned, then locate the person most closely connected with the technical failure: the engineer who miscalculated an analysis, the operator who missed signals or pulled the wrong switches, the supervisor who failed to listen, or the manager who made bad decisions. When causal chains are limited to technical flaws and individual failures, the ensuing responses aimed at preventing a similar event in the future are equally limited: they aim to fix the technical problem and replace or retrain the individual responsible. Such corrections lead to a misguided and potentially disastrous belief that the underlying problem has been solved. The Board did not want to make these errors.

I recall hearing an executive in a large corporation refer to “the ongoing search for the root who.” Others refer to the kind of faulty investigation described by the Board as “the Blame Game.” When this kind of activity goes on in an organization in response to a failure, learning is suppressed. To avoid the Blame Game requires practice of the discipline of thinking about context, i.e., thinking systemically.

Superstitious Learning

People at all levels in organizations watch performance indicators. When the indicators get worse from one period to the next, employees often act to correct the situation. If a given performance indicator then gets better the next period, the actors conclude that their actions produced the improvement. I have attempted to illustrate the connection of the conclusion to the results in “An Action Appears to Produce Improvement.”

However, it is possible that the action had no immediate effect. In Experiences in Statistics, using a mathematical model for stable variation, Dr. Dennis Gilliland demonstrated that the likelihood that the third number pictured would be lower than the second given the second was higher than the first was two thirds. (The same likelihood would exist for the third number in a sequence high-low-high). This finding means that when the action has no effect at all, the person who acted would be more likely to conclude that the action produced an improvement even when it didn’t. Plotting performance indicators over time would reduce the chance of this kind of superstitious learning. In “Performance Indicators Plotted Over Time,” notice that the first three points in the series follow the pattern shown above, as do points four, five, and six, as well as other sequences of three points in the series.

The Dangers of Induction

W. Edwards Deming stated in The New Economics, “No number of examples establishes a theory, yet a single unexplained failure of a theory requires modification or even abandonment of the theory.” Deming’s statement implies that you can pile up empirical examples that appear to support a theory from here to the moon, but that does not constitute proof. Our degree of belief that the theory is correct may increase, but we have not proved that the theory will hold up in the future. Inductive proof can be done in mathematics, but not in the world of experience. Deming used the example of the mythical rooster Chanticleer to explain what he meant by the statement above:

The barnyard rooster Chanticleer had a theory. He crowed every morning, putting forth all his energy, lapped his wings. The sun came up. The connexion was clear: His crowing caused the sun to come up. There was no question about his importance. There came a snag. He forgot one morning to crow. The sun came up anyhow. Crestfallen, he saw his theory in need of revision. Without his theory, he would have had nothing to revise, nothing to learn.

If Chanticleer had been a two-year-old rooster, he would have had nearly 500 observations that appeared to support his theory. However, those 500 observations did not prove the correctness of his theory. As another example, think of the many centuries during which our species collected empirical observations that were consistent with the theory that the sun revolved around the earth. Nevertheless, Milton Silviera, Chief Engineer, NASA, wrote, “The first flight [of the shuttle] represented a proof of the design concept.” I am not sure of the meaning of his statement, but I’m certainly unsure that the word “proof” is appropriate to describe one observation, successful though it might have been.

Before using a theory in a new, possibly untested circumstance, good practice requires carefully examining the test conditions.

In his important book, The Structure of Scientific Revolutions, Thomas Kuhn describes the doing of science as puzzle-solving within the current scientific paradigm until anomalies occur that force scientists to reexamine their basic theory and develop new theories that provide the ability to explain the anomalies. Diane Vaughan observes, “In the Kuhnian sense, a paradigm is a fundamental component of scientific culture. It is a worldview based on accepted scientific achievement, which embodies procedures for inquiring about the world, categories into which these observations are fitted, and a technology that includes beliefs about cause-effect relationships and standards of practice and behavior.”

In the engineering disciplines, when it is extremely costly or virtually impossible to construct tests of ideas, it may be tempting to rely on a series of observations in practical application as “proof.” This appears to have happened in the case of the Challenger. Vaughan writes,

From integrated sets of assumptions, expectations, and experience, individuals construct a worldview, or frame of reference, that shapes their interpretations of objects and experiences. Everything is perceived, chosen, or rejected on the basis of this framework. The framework becomes self-confirming because, whenever they can, people tend to impose it on experiences and events, creating incidents and relationships that conform to it. And they tend to ignore, misperceive, or deny events that do not fit. As a consequence, this frame of reference generally leads people to what they expect to find. Worldview [paradigm] is not easily altered or dismantled because individuals tend ultimately to disavow knowledge that contradicts it. They ward off information in order to preserve the status quo, avoid a difficult choice, or avoid a threatening situation. They may puzzle over contradictory evidence but usually succeed in pushing it aside—until they come across a piece of evidence too fascinating to ignore, too clear to misperceive, too painful to deny, which makes vivid still other signals they do not want to see forcing them to alter and surrender the worldview they have so meticulously constructed.

So we see that a complex set of cognitive, psychological, and logical forces may lead us to unwarranted induction. It is important to be aware of this tendency and try to practice a discipline of being careful about our inferences. It is also useful to keep in mind that, as Clarence Irving Lewis noted in Mind and the World Order, empirical generalizations are “probable only.” The next observation may overturn the generalization. As Deming said in Out of Crisis, “No matter how strong be our degree of belief, we must always bear in mind that empirical evidence is never complete.”

Limits of Applicability of a Theory

In January 2003, the space shuttle Columbia was launched. During the launch, a block of foam insulation struck the leading edge of Columbia’s left wing. This strike damaged Columbia’s thermal protection system and led to disintegration of the shuttle as it re-entered the earth’s atmosphere. In work done to assess the potential damage while the shuttle was still in orbit, analysts used a mathematical modeling tool called Crater. Crater was normally used to predict whether small debris, such as ice on the external fuel tank, would pose a threat during launch. Crater had been calibrated with testing done on small debris on the order of three cubic inches. People at NASA judged Crater to be a conservative tool; that is, it tended to predict more damage than actually occurred.

In the discussion of the Crater model, the Columbia Accident Investigation Board stated:

Although Crater was designed, and certified, for a very limited set of impact events, the results from Crater simulations can be generated quickly. During STS-107 [the Columbia mission], this led to Crater being used to model an event that was well outside the parameters against which it had been empirically validated. . . . [M]any of the STS-107 debris characteristics were orders of magnitude outside the validated envelope. For instance, while Crater had been designed and validated for projectiles up to 3 cubic inches in volume, the initial STS-107 analysis estimated the piece of debris at 1200 cubic inches — 400 times larger.

The Board concluded that “the use of Crater in this new and very different situation compromised NASA’s ability to accurately predict debris damage in ways that Debris Assessment Team engineers did not fully comprehend.”

Usually, it is advisable to avoid use of a theory or model to apply to a set of circumstances that are outside the test boundaries. Therefore, before using a theory in a new, possibly untested circumstance, good practice requires carefully examining the test conditions. In a personal communication, Ian Bradbury pointed out that we face an inferential gap in cases such as validation testing with prototype parts (differing materially from the intended method of production) and test conditions that differ materially from intended use. He states, “Deliberate consideration of the theory behind the Crater model with subject matter knowledge could have assisted in the judgment of likely effectiveness for the intended inference. Efforts previously to empirically test the limits of model applicability against predictions from underlying theory would have been better still.”

Theories and Assumptions Not Made Explicit

In The Logic of Failure, Dietrich Dörner writes:

If we want to operate within a complex and dynamic system, we have to know not only what its current status is but what its status will be or could be in the future, and we have to know how certain actions we take will influence the situation. For this, we need “structural knowledge,” knowledge of how the variables in the system are related and how they influence one another. . . . The totality of such assumptions in an individual’s mind — assumptions about the simple or complex links and the one-way or reciprocal influences between variables—constitute what we call that individual’s “reality model.” A reality model can be explicit, always available to the individual in a conscious form, or it can be implicit, with the individual himself unaware that he is operating on a certain set of assumptions and unable to articulate what those assumptions are. Implicit knowledge is quite common. . . . An individual’s reality model can be right or wrong, complete or incomplete. . . . The ability to admit ignorance or mistaken assumptions is indeed a sign of wisdom.

In the example of the use of Crater, it appears that the NASA team implicitly assumed that the model performed the same both in the test conditions and when the piece of debris striking the Columbia was 400 times larger. Had this assumption been made explicit, perhaps someone would have asked for an explanation of the rationale behind the assumption. Any conclusions drawn from the analysis should have been qualified by a statement of the conditions under which Crater was tested.

The more we work at trying to identify the traps awaiting us, the more adept we may become at overcoming them.

People also use implicit theories in less technical circumstances. For example, Douglas McGregor articulated Theory X and Theory Y to describe views about the nature of people in the workplace. In the management of organizations, implicit theories about the value and effects of competition, the nature and sources of motivation, the relationships among organizational components, and many other aspects of the organization’s functioning govern management’s actions every day. Individuals and organizations could learn and improve by bringing their assumptions and theories to the surface and questioning them.

Doubtless there are other blind spots that can introduce difficulties into learning and inference. The more we work at trying to identify the traps awaiting us, the more adept we may become at overcoming them.

Gipsie Ranney is an international consultant to organizations on management, quality improvement, and statistical methodology. She was a co-founder of the University of Tennessee’s Institute for Productivity through Quality. Gipsie co-authored Beyond Total Quality Management: Toward the Emerging Paradigm and contributed to Competing Globally Through Customer Value. The American Society for Quality awarded her the Deming Medal in 1996 “for outstanding contribution in advancing the theory and practice of statistical thinking to the management of enterprises worldwide.”

The post Blind Spots in Learning and Inference appeared first on The Systems Thinker.

Any informed student of systems thinking recognizes that such strategies eventually fail because they merely treat symptoms. They do not cure root causes. On the contrary, in time, these actions may actually worsen our underlying social and environmental problems. For instance, the availability of recycling may boost consumerism. Indeed, our problems will not go away until we discover that unlimited growth cannot be the primary goal of economic activity and act on this discovery. Society must learn to run an economy that enhances human well-being while ensuring that all life on Earth, both human and non-human, flourishes indefinitely.

Our problems will not go away until society discovers that unlimited growth cannot be the primary goal of economic activity.

To develop an economy that benefits Earth and its inhabitants, we need

• a good understanding of the state of our current economic system,
• a clear vision of the sustainability that must become the goal of our future economic system, and
• a willingness to take small steps to identify and remove the obstacles we encounter on the path to get us from our current economic system to the future system.

To achieve these goals presupposes that we identify the assumptions about reality that underlie our thinking. It also requires that we understand how we got to where we are today. Understanding how we arrived at this point allows us to make informed decisions about our economic activity and proceed wisely to develop a sustainable future.

Like performers in a jazz group, we have no full-blown score that shows us precisely what comes next. We do, however, have the ability to examine the past, consider the present, and create a viable path to a sustainable future.

The Origin of Belief in Economic Growth

How can we get to the core of the challenges that face us? How do we begin to make a significant difference? One place to start is by understanding and thinking carefully about the underlying assumptions that gave us economic growth as a viable business strategy in the first place. Adam Smith and the first generation of classical economists originally proposed the capitalist economic system as an answer to the question, “What is the best way to conduct economic activity so as to increase ‘the wealth of nations’?” Their concern was how to secure national wealth. Their focus was on providing an alternative to the 17th- and early 18th-century mercantilist nations’ efforts to amass precious metal reserves through conquest and one-sided trade surpluses. Early classical economists advocated gaining national wealth instead by encouraging industrial employment through the manufacture of and trade in products and commodities. In other words, they saw a nation’s economic strength in its productive employment and trade, not in vaults filled with dubiously acquired stores of gold and silver.

These economists put less emphasis on growth per se than on the social and legal conditions they saw as prerequisites to innovation, risk-taking, and investment. Thus, Smith and his peers argued that market exchange was superior to feudal custom as a basis for conducting economic activity. They also believed that manufacturers and traders should privately own the property and equipment they used in their enterprises. In this way, capital that had previously been locked up in the “commons” on the feudal manor would reach entrepreneurs eager to invest it in novel ways.

Only long after Adam Smith did economists shift their attention to, among other things, growth in the human economy. To some extent, this shift was a response to the unprecedented expansion of the human population that began after the onset of the fossil fuel–enabled industrial era in the early 18th century. Along with that growth came cycles of boom, depression, inflation, deflation, unemployment, and financial instability. These events prompted European and American economists by the first half of the 20th century to develop so called macroeconomic models to explain patterns of economic activity in the aggregate, as opposed to the microeconomic models of market and price behavior of individual consumers and firms that had been the chief concern of economists in the previous two centuries.

After the 1930s, government policy makers were using macroeconomic models and tools developed by John Maynard Keynes and other economists to deal with economic cycles, price-level fluctuations, and employment instability. Although the success of these models seemed to be confirmed by the long period of sustained economic growth in the Western democracies from the 1940s to the end of the 20th century — a welcome change after the long depression of the 1930s—it no doubt contributed to the environmental problems we now face, giving rise to the dilemma of today’s policy makers to come up with ways to achieve “prosperity without growth” (Tim Jackson, Prosperity Without Growth? Sustainable Development Commission, U. K., 2009).

By the late 20th century, then, the relatively small-scale and competitive industrial economy had been transformed into the vastly larger-scale, more centralized, and more monopolistic global economy. At the same time, the question of how to increase a nation’s wealth was replaced by an answer: transform resources into an ever-growing stream of goods and services for human consumption, without limit.

The Impact of Newtonian Thinking

The way modern humans have thought about the economy derived mainly from Western religious and scientific cosmology passed on through educational, religious, and social institutions from the 18th century to the present day. Particularly important in shaping economic thought has been the mechanistic view of reality articulated by that most admired of Western 18th-century intellectuals, Isaac Newton.

By the late 20th century, the relatively small-scale and competitive industrial economy had been transformed into the vastly larger-scale, more centralized, and more monopolistic global economy.

Central to Newton’s cosmology is the idea that reality in this universe is material “stuff” consisting of independent objects that connect only through external force. This force is of course known as “gravity.” Economists after Adam Smith’s time adopted the idea that the independent behavior ascribed by Newton to material non-human systems in the universe applied equally to all human, social, and living systems on Earth. Thus, homo economicus is an autonomous being motivated solely by his or her desire to maximize self-interest through winner-take-all competition and accumulation of material wealth. A social setting in which humans work, such as a business, achieves results that presumably can be measured as a linear sum of its parts. Holding the human economy together in a coherent way is an external force resembling gravity. Borrowing on Newton’s ideas, Adam Smith described that force as “an invisible hand” that produces the “greatest good for the greatest number” when all individuals independently pursue their self-interest through economic exchanges based entirely on prices set in free markets.

Growth was not a feature of Newton’s universe, but it became an inevitable part of modern economic thought as people increasingly viewed the goal of market exchange to be the accumulation of material “stuff” measured with abstract financial quantities. Having shifted the goal of economic activity from real, tangible things to abstract financial quantities, the race to grow without limit was on. After the early 19th century, more and more people began to take for granted what they presumed were limitless sources of power delivered by coal furnaces, internal combustion engines, and coal-generated electricity. They rushed to use such power to strip forests, mine minerals, produce steel rails and high-rise girders, travel great distances, and till millions of acres. They believed that inexhaustible resources would give them the necessary means to achieve unending growth. The adverse environmental impact of this growth was, for the most part, out of sight — either not yet readily visible or located far from major population centers.

Eco-philosopher Thomas Berry powerfully described this devastating transition in human history:

In our times . . . human cunning has mastered the deep mysteries of the earth at a level far beyond the capacities of earlier peoples. We can break the mountains apart; we can drain the rivers and flood the valleys. We can turn the most luxuriant forests into throwaway paper products. We can tear apart the great grass cover of the western plains and pour toxic chemicals into the soil and pesticides onto the fields until the soil is dead and blows away in the wind. We can pollute the air with acids, the rivers with sewage, the seas with oil — all this in a kind of intoxication with our power for devastation at an order of magnitude beyond all reckoning. We can invent computers capable of processing ten million calculations per second. And why? To increase the volume and the speed with which we move natural resources through the consumer economy to the junk pile or the waste heap. Our managerial skills are measured by the competence manifested in accelerating this process. If in these activities the topography of the planet is damaged, if the environment is made inhospitable for a multitude of living species, then so be it. We are, supposedly, creating a technological wonderworld (Thomas Berry, The Dream of the Earth, Sierra Club Books, 1988).

A New Cosmology

Ironically, the Newtonian cosmology that legitimated this “wonderworld” in modern economic thought underwent a radical transformation in the late 19th and early 20th centuries, just as the social and environmental costs of sustained economic growth were beginning to appear on the horizon. This new cosmology embodies a view of reality that itself has the potential to help answer the question of how to run a sustainable economy. According to this worldview, sometimes referred to as “the universe story,” our universe originated 13.75 billion years ago in an infinitely dense, small, and hot singularity — the “big bang” — containing the source of all the matter and energy that ever will exist. Since the “big bang,” the universe expanded continuously and thereby became host to an evolving array of increasingly complex forms such as sub-atomic particles, galactic clouds of hydrogen and helium atoms, stars, elements of the periodic table, molecules of water and amino acids, planets circling stars, Earth, and Earth’s life forms — ranging from prokaryotic microbes to human beings.

Consider the view of reality inherent in this cosmology. First, reality is not “stuff” put here all at one time in its present form. Instead, it is a continuously evolving process, or system, that itself produces all the forms we perceive around us. Moreover, that process embodies a small number of patterns that connect all matter and energy in relationships from which everything emerges.

Three features seem to permeate the universe:

1. Everything is connected to everything else. Nothing is independent. “The universe,” Thomas Berry remarked, “is a communion of interconnected subjects, not a collection of independent objects.”
2. Every form that has ever emerged from the evolutionary process is imbued with a unique self-identity, or “inwardness,” that embodies the form and enables it to multiply and expand its influence.
3. The universal system of interconnected, self-defining forms sustains itself and flourishes indefinitely by continuously generating increasing diversity, or differentiation, and thereby preventing any one form’s growth from extinguishing other forms (see Brian Swimme and Thomas Berry, The Universe Story, Harper Collins Publishers, 1992; Joel Primack and Nancy Abrams, The Journey to the Center of the Universe, Riverhead Books, 2006).

For nearly 14 billion years, relying on these three features, the universe has evolved, using an unchanging budget of matter and energy. All the increased complexity and differentiation intrinsic to the evolution of the universe has been accomplished with the same quantity of stuff — or, as an economist might say, “at zero marginal cost.” The universe is sustained by the continuous generation of newness, using a fixed amount of matter and energy to do so.

We humans have posed the first threat to this sustainability by using our unique powers of technology to consume from Earth’s fixed supply of resources and create waste faster than Earth can regenerate the waste, thus depriving resources to other life forms. This consequence of modern economic growth would not occur, however, were the human economy able to achieve prosperity and sustainability simultaneously, by consuming Earth’s resources at a steady rate that does not threaten the ability of other life forms to thrive. How to achieve that goal is the most important question of our time, perhaps the most important question humans have ever faced.

As revealed by modern science, the behavior of the universe suggests the best way to run an economy intended to support human well-being while ensuring that all life on Earth, both human and nonhuman, flourishes. When we acknowledge the interconnectedness of all life on Earth and when we grasp the current state of our life-denying global economic system, we are poised to identify constructive actions that will lead to a viable future state.

Economic Growth and Nature’s Systems

Anthropologist and systems thinker Gregory Bateson once commented, “The major problems in the world are the result of the difference between the way nature works and the way man thinks” (as quoted by Bill Devall and George Sessions in Deep Ecology: Living as if Nature Mattered, Peregrine Smith Books, 1985). A viable future state requires that we see that nature works through a series of interconnected feedback loops that prevent any species from growing without limit, ensuring that life can flourish indefinitely, despite Earth’s fixed supply of resources. Were it not for such checks on growth, population booms would lead to crowding and mass extinctions, thus reducing the number, diversity, and resilience of the planet’s flora and fauna.

By contrast, “the way man thinks” is to assume that Earth can supply all the resources to sustain endless expansion of the human economy. In past centuries, when humans grew steadily in number, we did not seriously threaten the health of the planet. Since the Industrial Revolution, however, and especially today, the human economy has consumed Earth’s resources at a pace that is causing environmental distress and the extinction of other species to a degree unprecedented since the extinction of the dinosaurs some 65 million years ago. When humans use our unique powers of language and technology to circumvent nature’s ways of constraining growth, and when we engage in unlimited consumption of Earth’s fixed, finite resources, our behavior compromises Earth’s capacity to sustain life. If this unchecked growth continues, we may be jeopardizing the sustainability of our own species.

Conditions for Growth

The dedication to growth is rooted in two conditions that profoundly shaped the course of the industrial economy for the past two centuries. One condition is the discovery and ever-increasing use of fossil fuels — coal since the late-eighteenth century; oil since the mid-nineteenth century; and natural gas since the late-nineteenth century. Without these fuels, the massive extraction and transformation of Earth’s resources into products for human consumption that has characterized the modern industrial economy would have been inconceivable. But helping drive that enormous consumption of resources was a second condition: the development and nearly universal use in the past century of abstract financial concepts to describe, explain, and direct economic activity.

When we view economic activity through the lens of financial numbers such as profit, cost, income, and GDP, it becomes a quantitative abstraction, completely separated from the concrete activities that produce such numbers. Indeed, corporations are seldom held accountable for the true social and environmental costs of their actions, including polluted air and rivers, toxic food, scarred landscapes, scarce or tainted water, discarded human lives and communities. Seen in this light, it is hardly an exaggeration to say that the modern industrial economy has been growing itself to death.

The rate of economic growth, especially in Western capitalist economies after the late 19th century, was also greatly accelerated by the use in limited-liability corporations of long-term debt and equity instruments. With access to large amounts of financial capital, companies produced — and consumers consumed — at higher rates than would otherwise have been possible. Since the early 20th century, financial capital has grown faster than physical capital (John B. Cobb, Jr., “Landing the Plane in the World of Finance,” Process Studies, Vol. 38.1, Spring-Summer 2009). This discrepancy gave global financial corporations the monetary wealth with which to acquire and control large industrial corporations.

As a result, a small number of individuals in the financial sector came to own and control an increasingly large share of the economy’s monetary wealth. To a much greater degree than ever before, inequality in the distribution of wealth increased rapidly. The predictable rise of political influence exercised by those at the upper end of the wealth distribution is now enabling political power in Western society to shift from popular democratic majorities to plutocratic minorities.

A Piecemeal Approach

Reinforcing this shift in power is our tendency to accept the growth of enormous corporations and to delegate virtually all of our economic decisions and fulfillment of our physical needs to them. As the writer, agrarian, and land steward Wendell Berry has said, “Most people in the ‘developed’ world have given proxies to the corporations to produce and provide all of their food, clothing, and shelter [and] . . . to corporations or governments to provide entertainment, education, child care, care of the sick and the elderly, and many other kinds of ‘service’ that once were carried on informally and inexpensively by individuals or households or communities” (Wendell Berry, “The Total Economy,” in What Matters?: Economics for a Renewed Commonwealth, Counterpoint, 2010). Large corporations and governments thus capture vast financial wealth and political power while providing, on their terms, almost all the goods, services, and jobs that shape our lives.

Given the hardships and inequities that this growth has created, it is surprising that popular public opinion about national and global economic policies supports the relentless economic growth that financially benefits a select few. Presumably, this paradox derives in part from the influence that large business and government institutions wield over education and the public media. Also, the public’s dependence on products, services and jobs created by those institutions—and our seemingly unending appetite for consumer items — helps make us complicit in the global growth strategy.

Thus, in response to our deepening environmental crisis, rather than reining in large growth-oriented institutions, most of our strategies have focused on piecemeal approaches such as recycling waste, buying plug-in electric and hybrid automobiles, installing solar panels on rooftops, creating vegetable gardens in abandoned urban spaces, and grinding worn-out running shoes into material for making playgrounds. While environmentally friendly practices are commendable in their own right, they address symptoms, not the fundamental problem of inexorable economic growth.

If we should continue to pursue unlimited economic growth, the unanticipated consequences may exceed our most fearful imaginings.

A Positive Future Economy

The following steps suggest ways we might solve our economic problems and repair the current destructive global economy that is based on “the way man thinks.” These steps propose a positive future economy based on “the way nature works.”

1. Take back what Wendell Berry calls the “proxies” we have given over the years to corporations and governments to fulfill all our physical and economic needs. This implies consuming less of everything and having each community become more self-sufficient and less dependent on outside institutions for necessities such as food, clothing, shelter, recreation, education, and healthcare. In short, take back global by going local.
2. Produce and trade more of what we consume locally and import less from the outside world by carefully planned programs to promote import substitution. This creates more local jobs and more local opportunities to invest local savings.
3. Delegate to outside corporations and to regional and national governments only those economic activities that cannot be provided effectively in the local community. Then initiate programs to steadily improve the local community’s ability to provide those activities.
4. Markets do well at defining prices for reproducible, homogeneous, fungible commodities but not for defining values of heterogeneous, nonrenewable, unique species. Most economists after Adam Smith and David Ricardo ignored this fact. Thus, modern economists take for granted that markets will set prices for land and labor as though they were fungible commodities. They increasingly regard Earth’s natural resources, human labor, and life itself as commodities to trade. This idea must end.
5. Modern science tells us that reality is relationships and process, not “stuff” to mechanically collect, assemble, and accumulate. But humans have yet to learn that their well-being requires them to emulate in their social, business, and economic organizations the patterns of relationships found in nature, not the mechanistic patterns so pervasive in present-day financial management. To that end, people managing economic processes in the workplace must recognize that “cost” is a function of how they design human relationships in those processes, not a financial quantity that they control by changing the scale of those processes and the speed at which the processes transform inputs into output.
6. Endless growth in the human economy makes it impossible for Earth’s remarkable life system to flourish over the long run. However, almost all present-day programs to promote “sustainability” or “sustainable development” fail to question the assumption that growth is a necessary condition of human economic activity. Thus, they do no more than treat symptoms of the underlying disease; they do nothing to prevent the disease itself. And by simply alleviating, temporarily, some of the adverse consequences of growth, they avoid tackling the fundamental problem, which is to produce a condition of long-term sustainability in a context of no growth.
7. Do not look to universities or academic researchers for answers to the social and environmental problems that we now face. Academic institutions are firmly entrenched in the status quo.

Undoubtedly no one seriously believes that the defining feature of the human economy should be the destruction of life. And yet today our economic activity is destroying Earth’s capacity to support life. To alter this condition, we must thoughtfully scrutinize our reasons for advocating continuous growth in production and consumption. If we should continue to pursue unlimited economic growth, the unanticipated consequences may exceed our most fearful imaginings.

H. Thomas Johnson is professor of business at Portland State University and Distinguished Consulting Professor of Sustainable Business at Bainbridge Graduate Institute. In 1997, Harvard Business Review named his book Relevance Lost one of the most influential management books of the 20th century, and in 2003, Harvard Business School Press listed Tom among today’s 200 leading management thinkers. In 2001, Tom’s book Profit Beyond Measure received the Shingo Prize for Excellence in Manufacturing Research, and in 2007, the American Society for Quality awarded him its prestigious Deming Award. You can contact him at johnsoht@pdx.edu.

The post A Global System Growing Itself to Death—and What We Can Do About It appeared first on The Systems Thinker.

Because of its widespread impact, creation of the Web has been compared to the invention of the printing press. From this perspective, Web-based tools are the latest phase of an old pattern: technological change precedes and drives social change. In this article — based on our recent book Leadership and Web 2.0: Leadership Implications of the Evolving Web, Bertelsmann Verlag, 2011 — we explore the basic features of Web 2.0 as a first step toward understanding the implications these revolutionary new technologies have for leadership (see “What Is Web 2.0?”).

The evolving Web is the source of new technologies that are perhaps the most tangible of many changes that are transforming society — and organizations within all sectors — in ways unforeseen and without precedent. The world is becoming more complex, more interdependent, and less predictable. The new technologies, though, are only the surface manifestation of a deeper cultural shift. Traditional norms have been challenged to absorb practices of transparency, collaboration, and openness that emerged in the “geek world” of open software and have become second nature to the Millennials who grew up digitally literate.

This shift requires organizations, and those who exercise leadership within them, to understand the new conditions and make appropriate accommodations. The same technologies that threaten to make traditional ways of leading obsolete offer powerful new vehicles for innovation and change, erode boundaries around and between organizations, and foster networks that mitigate risk and facilitate creative adaptation. At the same time, new modes of leading and new tools for the exercise of leadership come hand-in-hand with new constraints.

Seven Indicators of the Need for a New Leadership Paradigm

In surveying the vast literature on leadership in recent decades, we see seven trends that — taken together — suggest that we need new mental models for this key organizational and societal role. We’ve observed

• A focus on leadership as an activity rather than a role
• A focus on leadership as a collective phenomenon
• A need for individual leaders with high levels of personal development
• Movement away from organization-centric toward network-centric leadership
• Movement away from viewing organizations as “machines” toward viewing organizations as “organisms”
• Movement away from planning and controlling toward learning and adapting
• A shift from Generation X to Generation Y

The paradigm that was dominant until at least the early 1990s assumed that organizations were driven by designated “leaders” and “followers” pursuing shared goals. At its best, this model allowed for participatory and shared leadership, but it inevitably singled out the lone leader as a key player, tacitly reinforcing deeply rooted myths about the importance of “heroic” individual leaders and the effectiveness of command-and-control styles of leading. While situations will continue to exist that are well suited to this approach, it has become obvious that in the world that is emerging, the leadership resulting from this paradigm is increasingly limited in effectiveness.

Criteria for a New Paradigm

Taken together, we believe that these signs constitute a compelling case for a new leadership paradigm, or perhaps more than one. Indeed, the era of single-paradigm leadership may be past. Attractive as it is to identify the next new model, we think it is more realistic to view the current situation as one of intense fermentation. We seem to be living in a period of continuous disequilibrium, at the boundary between order and chaos, which complexity theory teaches us is the most fertile ground for creativity.

What is clear is that the most effective approaches to leadership going forward will meet the following criteria:

• Adaptive — capable of learning and responding to ongoing change
• Supportive of emergence — appreciative of the capacity of systems to spontaneously self-organize and create novel solutions
• Cognizant of complexity — recognize the need to bring a complexity of thought and feeling to challenges that is commensurate with the complexity of those challenges
• Integral — take into account a full range of perspectives on people, organizations, and society
• Outcome-oriented — focused more on what results from leadership than the particular ways in which those results are attained

Below we describe five illustrative models that we find attractive, each of which meets some or all of these criteria:

• Developmental Action Inquiry (Joiner & Josephs, 2006; Torbert, 2004, 1976), which is a way of simultaneously conducting action and inquiry as a disciplined practice, integrating developmental theory with the skills of individual and organizational learning.
• Adaptive Leadership (Heifetz, Linsky, & Grashow, 2009), which recognizes that leadership is an activity rather than a role, is suited to challenges without known solutions and emphasizes the need for living with disequilibrium.
• The DAC Model (Velsor, McCauley, & Ruderman, 2010; McGuire & Rhodes, 2009), which shifts attention away from designated leaders influencing their followers, focusing instead on the outcomes of leadership (such as direction, alignment, and commitment, as captured in the acronym), without specifying how those outcomes are created.
• Integral Leadership, which is grounded in Ken Wilber’s bold aspiration to create a “theory of everything” (Wilber, 2001) and aspires to take into account both objective and subjective perspectives on individuals and systems.
• Theory U (Scharmer, 2009; Senge, Scharmer, Jaworski, & Flowers, 2008), which builds on, deepens, and systematizes the best features of organizational learning to integrate rigorous data gathering and analysis, deep reflection, and practical prototyping of innovations.

No doubt this list is incomplete. Whatever the limitation of any particular choice, we believe the set as a whole ably illustrates the emerging landscape of possibilities.

Implications of a Paradigm Shift

The Web technologies that have coevolved with societal trends will increasingly serve as nails in the coffin of the old paradigm, while accelerating and consolidating the emergence of a new one. Thus, we can expect more open and participative forms of leadership to play an increasingly important role. Web 2.0 expands both the capacity and the disposition of people throughout an organization to communicate with one another and to link with people outside the organization, be they customers, suppliers, or peers.

More traditional styles will become riskier in light of the need to understand and adapt to a rapidly evolving environment. Businesses must cope with a world that is increasingly interdependent, hypercompetitive, and characterized by accelerating rapidity of change. A reliance on traditional organizational practice and leadership limits learning from the environment and the ability to respond flexibly to it. This approach will not only be unattractive to the Millennials who constitute the next wave of membership but also threaten an organization’s very survival.

New Leadership Mindsets

Whatever the particular realities of any given organization, it is safe to predict that most people in roles of formal authority in all sectors will need to develop new mindsets and skills in order to master the kinds of leadership most effective under the conditions that are evolving. For example, practitioners on the cutting edge of leadership learned some time ago that it is both more realistic and more effective to focus on influence rather than control, and to frame influence as being mutual rather than unilateral.

A related shift of mindset is from ROI to ROR — from return on investment to return on relationships. Things get done through people, and this process requires building relationships with peers and others over whom one has no authority. These and many other mindset shifts are necessary to fully capitalize on the potential of the Web.

Such shifts in mindset are increasingly necessary rather than merely optional. In their book The 2020 Workplace, Meister and Willyerd predict that in 2020, employees will communicate, connect, and collaborate with one another around the globe using the latest forms of social media. As they work in virtual teams with colleagues and collaborate with their peers to solve problems and propose new ideas for business, they will need to be able to

• Participate socially
• Think globally
• Learn ubiquitously
• Think big, act fast, and constantly improve
• Exercise cross-cultural power

Of course, we have also learned that mindsets are hard to change. As a first step, leaders need to have a deep understanding of how the paradigm is changing and “unlearn” old assumptions about leadership.

Skills

New mindsets are the foundation for new skills. Here are examples of the kinds of skills that have proven useful in supporting the current cultural shift, of which the Web is only one wave.

Self-Leadership. Leadership, like charity, begins at home. Just as it has become critical to understand systemic patterns in relationships, organizations, and society, so too is it important to be aware of one’s own internal system. Long gone are the days when a person could “check her personality at the door” and act as if professional behavior is independent of personal character. A key element of self-leadership is emotional intelligence.

Interpersonal Skills. High-performing teamwork depends on high-quality communication. But habitual modes of talking — be they polite or blunt — often obscure rather than enhance communication. Being able to understand the reality that others experience, as well as enabling them to understand your own, requires the two core skills of reflective conversation: advocacy and inquiry.

Collaborative Leadership. A large set of forces have combined to give momentum to the inexorable shift away from one-way, hierarchical, organization centric communication toward two-way, network centric, participatory, and collaborative leadership styles. According to Meister and Willyerd, by 2020, a “collaborative mind-set” enabling “inclusive decision-making” and “genuine solicitation of feedback” will be not just advantageous but required. In many contexts, the primacy of individual intelligence will give way to that of collective intelligence, as leaders learn to take advantage of crowdsourcing.

Network Leadership. In an increasingly networked world, network leadership skills will become as important as team-building skills. Like teams, networks have predictable stages of development and other characteristics with which leaders need to be familiar. But of course leading networks is quite different from leading teams of subordinates. As Boje (2001) observed:

Network leaders provide mediating energy. . . . They set up exchanges between other partners, point out collective advantages in collaboration, and identify dangers and opportunities. Leaders must be able to see and respond to trends, and redirect energies as appropriate. They must be able to identify and bring together network resources to tie the network together and reconnect fractures.

Those who try to exercise such leadership with the rules of a more traditional approach risk turning networks into bureaucratic federations.

Small- and Large-Group Facilitation. Group facilitation offers an old but underutilized set of skills. These are increasingly essential as leaders strive to elicit — and allow — leadership to emerge from teams and other groups. Having the skills to manage virtual meetings, or even virtual teams, is increasingly important.

Systemic Hosting Skills. Newer on the horizon are a variety of tools for convening at the systems level. Managers would do well to learn how to bring together stakeholder groups and even a “strategic microcosm” of the whole system that includes representatives from constituent groups.

Systems Thinking. Through the systems archetypes, simulations, and experiential activities, leaders can gain powerful insights into the role they play in the systems in which they operate.

Ability to Lead Millennials. Organization-based leaders face a challenge in leading employees of the Millennial generation (born roughly in the last two decades of the 20th century). The experience of this generation in “growing up online” will likely lead them to expect the social environment of work to reflect the social context of the Web. According to Gary Hamel, “Companies hoping to attract the most creative and energetic members of this generation will need to understand these expectations and reinvent management practices accordingly.” He offers a list of 12 “work-relevant characteristics of online life”:

• All ideas are on an equal footing.
• Contribution counts more than credentials.
• Hierarchies are natural, not prescribed.
• Leaders serve rather than preside.
• Tasks are chosen, not assigned.
• Groups are self-defining and self-organizing.
• Resources get attracted, not allocated.
• Power comes from sharing information, not hoarding it.
• Opinions compound and decisions are peer reviewed.
• Users can veto most policy decisions.
• Intrinsic rewards matter most.
• Hackers are heroes.

The same skills for leading Millennials can also help organizations adjust to the external environment in the face of accelerating change and unprecedented uncertainty.

Coaching. Coaching has been identified as one of the top tools for developing leaders. On-the-job learning is the core of leadership development, and coaching helps ensure maximum value from such experience. By developing the skills and underlying mindsets of coaching, managers make the transition from seeing themselves as a critic to the more supportive perspective of a coach. Instead of asking “How could this person have performed better?” the coach asks, “How can I help this person learn from the experience?”

The belief that leaders are mostly made, not born, not only expands the notion of who can be leaders, it also expands the responsibilities of a leader. An important dimension of leading becomes the ability to cultivate leadership in subordinates.

Knowledge

New areas of knowledge are also important to undergird shifting mindsets and new skills. Two of the most salient are Web 2.0 literary and cultural literacy.

Web 2.0 Literacy. To optimize their effectiveness, leaders need to command at least minimal literacy in how to use these tools. They also need to know how to leverage these technologies to grow other leaders. Leaders today need even more skill in “listening” to other views, constructively asserting their own, and being willing to challenge their own assumptions. The inability to do so may result in a marked decrease in the volume and quality of information others willingly make available to them. And without a disposition to inquiry, leaders could use the new media to seek information that merely confirms their biases.

Cultural Literacy. The Web increases the need for leaders to be sensitive to and able to manage differences in national as well as organizational culture. Increasingly, teams and networks will be virtual via the Web, comprising individuals from different countries, races, and religions. Effective leadership will need to take into account those differences.

Impact by Sector

While this profound cultural shift poses challenges that are common to organizations in all sectors, we see distinctive patterns within each sector.

In the business sector, in particular, the boundaries around enterprises are eroding, enabling deeper two-way communication and interaction with and among customers, competitors, suppliers, and other stakeholders. Such new constellations constitute “ecosystems” of mutual benefit that are better able to help companies sense and respond to rapidly changing realities. New relationships of this kind, arising from the technologies of “Enterprise 2.0,” allow companies to better meet customer needs while simultaneously drawing customers into the very design of products and services as “prosumers,” who produce as well as consume. Companies are better able to look for ideas coming from the outside, become more transparent about their aspirations, and draw upon the best brainpower around the globe.

Established businesses also face stiff competition from lean “new industrial era” global players that use the Web to create virtual companies at radically reduced cost and with minimal infrastructure. The new, agile competitors are also able to easily avail themselves of the economies of “the Cloud” (the Internet equivalent of a common, shared resource, comparable to an electrical utility), without having to manage legacy IT systems.

In the social sector, individual organizations are increasingly networked, using the Web to enhance their effectiveness in attracting support, collaborating with organizations with similar missions, and soliciting stakeholder feedback to assess impact. The social media enable groups to self-organize and mobilize in response to crises and opportunities, requiring established organizations to collaborate with individual “free agents.” At the same time, such free agents — acting alone or in networks — are increasingly able to act on behalf of the public good without organizations as intermediaries.

While beneficial for the health of the sector, this trend threatens existing social-sector institutions with obsolescence, unless they can demonstrate distinctive value. Nonprofit organizations are also collaborating more with one another in response to pressure from funders to produce results and in response to the greater ease of collaboration made possible by the Web.

In the government sector, the Web has breathed new life into “open government” movements in a number of countries across the globe. At all levels of government, agencies in those countries are beginning to make information about their mission and spending more available, while seeking information from citizens to better meet public needs. Public bureaucracies are becoming more transparent about their operations and decisions, not only to the public but to their employees and to other agencies as well.

Government is acting more like business, treating the public as customers to be served and taking greater accountability for meeting the needs that those customers are now better able to articulate. To this end, government institutions are increasingly forming “policy webs,” in which a wide range of stakeholders participate in the decision-making process.

Emerging “Global Commons.” Across sectoral boundaries, individuals and organizations are increasingly called to come together to finding common cause in the effort to address “wicked” problems that defy solution from within any single sector. This trend reflects the emergence of what we are inclined to call a “Global Commons.” This new Commons has a number of discrete ingredients, all of which serve to enhance the well-being of the collective. It is a critically important source of new leadership for addressing “stuck” problems at all levels. We see this sector as continuing to become more and more significant, eventually subsuming to a large extent the discrete sectors, as people within, across, or outside organizations rise to the challenge of collaborating to construct sustainable lifestyles, cultures, and societies in a world of increasing complexity, accelerating change, and daunting problems.

The New Status Quo

These are not be easy times to be in formal positions of management and leadership. Guardians of organizations at all levels face tough choices about how much to insulate and protect their institutions from the threats to privacy and security posed by the Web, while at the same time striving to benefit from the Web’s power to open access to new ideas and modes of organizing. More basically, organizations of all kinds face challenges to their viability as they strive to keep pace with the agility and cost advantages of Web-enabled networks and free agents. Creative disruption may become the new status quo.

Whether one focuses more on the disruption or the creativity may depend as much on personal disposition as it does on one’s particular organization, country, or culture. In either case, thanks to the Web, we have the opportunity to learn how to hone and extend our individual intelligence, deepen our collective intelligence, and use this new capacity to address the threats to our well-being and survival that have resulted from accumulated, unintended systemic consequences of our behavior. Thus the ultimate implication of the Web for leadership is that it provides hope for a sustainable future combined with the tools to help create it.

Grady McGonagill has 30 years of experience helping a wide range of clients around the world build capacity for leadership, learning, and change.

Tina Dörffer spearheaded the Bertelsmann Stiftung Leadership Series, and is now working as a strategy and leadership consultant.

Grady and Tina are the authors of Leadership and Web 2.0: The Leadership Implications of the Evolving Web (now available for the Kindle on German Amazon.com and available on U. S. Amazon.com in August 2012).

The post New Leadership in a Web 2.0 World appeared first on The Systems Thinker.

Our first reaction is to blame others for these problems, be they greedy Wall Street bankers, rapacious corporations, or dishonest politicians of either the conservative or liberal persuasion.

But here’s some news for you. Playing the blame game is merely an ingenious avoidance technique. It allows us to place the focus outside of ourselves and steer clear of having to look at our own contribution to today’s troubling situations. Don’t get me wrong. I know some people and organizations do bad things. But we often project onto others the very things we need to examine in ourselves.

The economic, social, and environmental ills we face today are of our own making. They are the outcomes of how we see and respond to the world. Unethical corporations and disreputable politicians might seem to cause the most egregious harm, but they are merely taking today’s dominant cultural perspectives to the extreme. The challenges our society faces today illuminate the changes we each need to make in ourselves.

To resolve a problem, you first need to understand its cause. The roots of our troubles are simple, yet for most of us completely hidden from view. We have been living in a dream world, controlled by false perceptions and beliefs. Our personal lives, as well as the activities of the organizations with which we are involved and society at large, have been guided by fundamental misjudgments about how our planet functions and what it means to live a good and decent life.

The most harmful illusion is that each of us exists on Earth as an independent, separate entity. This belief, now dominant in Western culture, has produced an extreme form of individualism. Most of us today believe in the “sacredness” of the individual. Anything that threatens our ability to do whatever we want, whenever we want, is seen as a danger to our economy, personal freedom, and way of life.

The belief in separation leads us to accept the notion that self-interest is the dominant driver of human behavior. This is false. A selfless concern for the welfare of others is also encoded in our genes. It is a powerful form of feedback that keeps the self-interested aspects of our personalities in check. By emphasizing only our selfish traits and denying our selfless qualities, we have denied our capacity for self-restraint and promoted behaviors that undermine the health of the planet and put billions of people in peril, including you and me.

The economic, social, and environmental ills we face today are of our own making.

Our belief in separation and the extreme individualism it has spawned is a fantasy – with startling consequences. It prevents us from seeing that we humans exist only due to the complex web of interlocking ecological and social systems that exist on Earth. Because we have failed to restrain our activities to conserve those systems, the Earth’s surface temperatures are on a trajectory to rise by around 2°C, and possibly much more this century. If this occurs, the consequences will be disastrous. Temperatures might climb gradually, in fits and starts, for a while. But then sudden shocking changes that no computer model could ever predict are likely to occur. Rapid and chaotic climatic shifts will trigger destructive heat waves or long-term drought, followed by food shortages, resources wars, and maybe the destruction of a major city or two by rising sea levels or horrific storms. Without a swift, dramatic change in direction, the coming decades will be a wild and turbulent ride.

To navigate the troubled waters that lie ahead and eventually emerge in a healthier condition, we must overcome the erroneous perspectives that have led to this predicament. At the most fundamental level, this involves a shift from responding to the world exclusively through the perspective of extreme individualism – the lens of “Me,” which includes our personal, family, and organizational goals and desires – to meeting our needs by renewing and caring for an expansive “We” – the many people, organisms, and interconnections we are part of that make life possible and worthwhile.

As opposed to “first-order change,” which slightly improves the efficiency of a system without fundamentally changing its goals, structures, or ultimate outcomes – which is what most so-called sustainability initiatives focus on – the shift from “Me” to “We” constitutes a “second-order change,” which establishes altogether new and truly sustainable objectives, designs, and results. As we make this transformational shift, our personal awareness will increase and the fear and emptiness that pervade us will diminish. We can once again find promise, meaning, and inspiration in our lives.

Five powerful commitments can help you make the conversion from focusing exclusively on “Me” to consistently accounting for the many people, organisms, and interdependencies involved with an emphasis on “We.” None of the commitments is actually new. On the contrary, throughout human history, sages have proclaimed them to be universal truths. They are often discussed today in a disjointed way, and at times you might practice one or more of them.

Although not particularly complicated, these five commitments are profoundly important because they are based on “natural laws” of sustainability. These are universal truths about how humans must interact with the Earth’s ecological systems and with each other if we are to successfully transition through the rocky times ahead and emerge in a better condition.

Each of the commitments can be applied immediately. You don’t need to wait for other people or institutions to change. You and your organization only need to change your own thinking and behavior.

Each time you put the commitments into practice, the myths that have such a powerful hold on you will be weakened. You and the groups you engage with will then be better equipped to do your part to resolve the systemic breakdowns that threaten us all.

As you make the shift from “Me” to “We” that is at the heart of sustainable thinking and action, an extraordinary inner journey will begin that will radically change your life. Your optimism about the future and your self-confidence will grow. Hope and inspiration will be your hallmarks. You will become a beacon of light for others to follow.

The First Commitment: See the Systems You Are Part Of

How do you see the world? Does your image include all of the things that actually exist on the planet, or is your vision narrowly focused on your personal, family, or organizational needs and wants?

Most of us are not so self-centered as to say that we completely ignore the natural environment or other people. Nor will most people or organizations say they are always selfless and think only of others. But if your focus is mostly limited to your personal or organizational desires, then time and again you will think about little else and fail to see how your activities affect other people, the natural environment, or even yourself.

The difference between an expansive view of the world and a restricted perspective can be understood by looking up for a moment and taking several deep breaths. Feel the air as it fills your lungs. Can you explain what just happened?

Oxygen entered your body and sustained your life. Oxygen supports a process called cell respiration that turns food into energy. Oxygen also detoxifies your blood, strengthens your immune system, and rebuilds your body. Do you know how this oxygen came to be? About three-quarters of it was produced during photosynthesis in single-celled green algae and bacteria in marine environments. The remainder came from the same process in forests and other vegetation. Complex interactions occurring all around you created the oxygen that makes your life possible.

How conscious are you of these elaborate relationships? If you fail to consider the intricate web of interactions unfolding all around the planet, you will often act in ways that impair those life-giving forces. You will also create significant distress for other people – and, ultimately, for yourself.

We humans live in systems. You are a complex system yourself. Think of your heart, lungs, and the many other organs that work together seamlessly to keep your body running. You are also a member of numerous social systems, such as your family, place of work, community, professional societies, and fellow humans around the globe. Additionally, as the oxygen you just inhaled demonstrates, you are a part of the larger complex living system that is planet Earth.

The reality is that everything on the planet is created and sustained by something else. There is nothing that actually exists by itself. This is the Law of Interdependence. It is the most fundamental of all the natural laws of sustainability. It says that each of us exists in this world only as part of a complex web of interlocking systems. There is no truly separate “Me.” Each person is created and sustained by interconnected networks of ecological and social systems – a collective “We.”

Understanding the context in which you exist is essential for progress toward true sustainability. The first and most important commitment you and the organizations you are involved with must make to realize the shift from “Me” to “We” is to see the systems you are part of.

What you see in the world is in large part shaped by your assumptions and beliefs. Your thinking, in turn, influences how you interact with everything around you. If you, and the organizations you participate in, desire to begin the journey from “Me” to “We” and thrive in the difficult times ahead, you must abandon your fictional belief in separateness and make a commitment to see the integrated nature of the systems you are embedded within. You must become aware of the context in which you exist.

Systems can be difficult to quantify. But you can map them. Drawing maps of the social, economic, and ecological systems you are part of can be a fun and helpful way to expand your awareness of systems.

Seeing the systems you are part of is only a first step in the transition from “Me” to “We.” You must now look deeper and understand how to think about the consequences of your outdated thinking and behavior on those systems.

The Second Commitment: Be Accountable for All the Consequences of Your Actions

“We reap what we sow.” This timeless proverb means we determine our future by what we do in the present. There is no way to avoid this natural law. We cannot plant seeds of one kind and expect to reap fruits of a different type. Wise people throughout the ages have told us that this is so.

Science has described this principle as well. Newton’s Third Law of Motion says that, “For every action there is an opposite and equal reaction.” If we toss a stone into the air, it will fall to Earth every time. When we push over the first of a row of dominoes, it will fall on the next, which will tumble onto the next and, eventually, cause the entire chain to collapse. Our planet is composed of interlocking webs of systems, so almost everything we do today has a consequence of some type, somewhere, at some point in time. This is the Law of Cause and Effect.

The natural Law of Cause and Effect is closely connected to the Law of Interdependence. In fact, it is the flip side of that first law of sustainability because it describes the consequences that naturally occur when we fail to see and care for the Earth’s social and ecological systems.

Most people know that cause and effect exists. Yet those of us who grew up in Western nations were raised in societies that promote the notion of separation and extreme individualism. Personally and organizationally, we tend to focus almost exclusively on our own needs and wants – on “Me” – and deny, discount, or ignore the many ways in which our actions might affect the many systems we are part of – the broader “We” that makes life possible and worthwhile.

The second commitment you and the organizations you are involved with must make to realize the shift from “Me” to “We” is to be accountable for all of the consequences of your actions.

As with systems, cause and effect relationships can be difficult to quantify. But they can be mapped. Tools such as “Fishbone” diagrams can help you understand the possible consequences of your actions.

Awareness is everything. The more mindful you become of the potential effects of your actions, the greater your awareness will become. Like the other commitments involved with the shift from “Me” to “We,” as other people and organizations make a similar commitment, our society will increase its understanding of the implications of our past and current practices, and take another step toward true sustainability.

The Third Commitment: Abide by Society’s Most Deeply Held Universal Principles of Morality and Justice

Imagine, for a moment, that a genie suddenly whisks you away from your everyday life and makes you the world’s most powerful decision maker. At your fingertips is the most up-to-date information about the planet’s economic, social, and environmental conditions. You can use that data to make any type of decision you want about how resources and wealth should be allocated and how things should function.

But, there is a catch. The genie has also given you amnesia. You cannot remember your social status, nationality, gender, ethnicity, religious affiliation, how much money you have, or even who your parents or family are. Consequently, you don’t know what the effects of your decisions will be on you or your loved ones because you don’t know who you are or where you live. (This exercise is a slight variation of the “veil of ignorance” described by John Rawls in A Theory of Justice, Belknap Press, 1971.)

Under these conditions, would you make decisions? Would you use as much energy, consume as many resources, or generate as much solid waste and greenhouse gas emissions as you do today? Would you seek to accumulate as much personal wealth or power?

Not likely. Instead, you would undoubtedly adopt a decision-making process similar to the universal moral principle known as the “Golden Rule” that says: “Treat others as you would like them to treat you.” In other words, you would no longer focus only on your own wants and needs but instead consciously choose to see things through the eyes of people all over the world because those “others” might include you! You would shift your perspective from “Me” to “We.”

As far-fetched as this scenario seems, it describes the reality of the world we live in today. Although you might never have omnipotent power, no matter who you are or where you live, you can be negatively affected by the actions of anyone on the planet at any time. Similarly, your activities, and those of the organizations you are a member of, can affect people around the globe as well as all future generations in surprising ways. To ensure your own well-being, you must therefore make decisions that enhance the well-being of everyone else.

Committing to seeing the social and ecological systems you are part of, and accounting for all of the ways your activities are likely to affect those systems, are necessary conditions for the shift from “Me” to “We.” But this is only a start. You must now decide on the moral principles that will guide your response to those consequences. What moral standards will you hold yourself to as you respond to the breakdown of the climate and biosphere and the social and economic distress they trigger? What principles of morality and justice will your organization base its activities on?

The natural laws of sustainability and associated commitments are the fundamentals of the shift from “Me” to “We” embodied in sustainable thinking and action.

In today’s over-crowded, over-consumed, over-polluted, and over-heating world, morally just behavior is more essential than ever before. That’s because moral action is not based on philosophy or good intentions. It is based on real-world consequences. This is the Law of Moral Justice. This natural law of sustainability says that morally just behavior is imperative now because at this moment in history, our survival requires exemplary levels of human self-control, cooperation, and principled action. Without it, everyone will suffer, including you and me.

Although instinctual drives and the capacity to reason shape human behavior, the moral precepts we hold ourselves to determine how those processes play out. The third commitment you and the organizations you are involved with must make to realize the shift from “Me” to “We” is to abide by society’s most deeply held universal principles of morality and justice. The most widely held moral precept is to always strive to “do no harm” to the social and ecological systems we are part of.

If you commit to practicing moral justice by striving to do no harm, you can make the tough choices required to help society transition to true sustainability.

The Fourth Commitment: Acknowledge Your Trustee Obligations and Take Responsibility for the Continuation of All Life

In 1972, the Apollo 17 astronauts took the first and most complete picture humanity had ever seen of our planet – our home – as a whole. Referred to as “the Blue Marble,” the picture shows that there are no discharge pipes allowing us to dump our toxic substances, solid waste, and greenhouse gases into space. Everything we humans make – toxic and otherwise – accumulates somewhere in the land, waters, or atmosphere of our planet. There are no intake pipelines that allow us to import additional resources from other planets. When we deplete non-renewable resources, they will vanish forever. When we push the Earth’s climate and ecological systems beyond their limits, they are likely to flip into permanently degraded and, from a human perspective, unwanted conditions.

The cumulative effects of human activities on the Earth – especially those of the past 50–100 years – have led a number of scientists to proclaim that we have entered a new geological era called the “Anthropocene.” This term refers to the fact that, for the first time, humankind’s influence on the environment is so overwhelming that our activities, rather than natural processes, will now determine the fate of the Earth.

It is a universal moral principle that the more power one has over another, the greater is the duty to use that power benevolently. If human behaviors now determine the fate of the planet, individually and collectively, we have a responsibility to do what is necessary to sustain it. This is the Law of Trusteeship. This natural law of sustainability says that no one living today actually owns anything. We are merely trustees with a responsibility to administer the planet’s assets to ensure that they are sustained in a healthy condition into perpetuity.

Acknowledging that we are now trustees of all there is in the world is a difficult task for most people and most organizations. Our belief in extreme individualism, derived from the mistaken idea that we exist independently from all other organisms and processes on Earth, leads us to think that we have no responsibilities for anything beyond our organizations, our families, and ourselves. This belief is erroneous. The fourth commitment you and the organizations you are involved with must make to realize the shift from “Me” to “We” is to acknowledge your trustee obligations and take responsibility for the continuation of all life.

The commitment to acknowledge our trustee obligations and take responsibility for the continuation of all life emphasizes our selfless, cooperative, and caring instincts. It thus operationalizes the second of humanity’s most deeply held universal moral principles, which is to “do good.” The Golden Rule succinctly describes this commitment: “Treat others as you would like them to treat you.”

The Fifth Commitment: Choose Your Own Destiny

The natural laws of sustainability and associated commitments are the fundamentals of the shift from “Me” to “We” embodied in sustainable thinking and action. In summary, these laws state that our survival and the survival of all other life forms on Earth is possible only because we are enmeshed within a complex web of interdependent climatic, ecological, and social systems. Given the deteriorating conditions of the planet today, almost every action we take affects those systems somewhere, at some point in time. Our response to these consequences will be shaped by the moral principles we adopt to guide our thinking, behavior, and policies. Because human actions now determine the fate of the Earth, like it or not, each of us is a trustee with the responsibility to care for all life on Earth.

But there is one additional natural law that you must follow to make a successful shift from “Me” to “We.” This law is the key to your ability to abide by all of the others. It is the Law of Free Will. This law states that even though your perceptions and behaviors are strongly influenced by your upbringing, today’s dominant cultural worldview, and the physical, political, and economic infrastructure they produced, you have the capacity to change your thinking and practices at any time.

Humans are capable of self-awareness and independent thought. You have a natural ability to reveal, examine, and alter the core assumptions and beliefs that shape your life. This means that at any time, you can choose to abandon views that do not serve you well, keep those that do, and adopt new ways of seeing and responding to the world that produce substantially better outcomes. The fifth and final commitment you and the organizations you are involved with must make to realize the shift from “Me” to “We” is to choose your own destiny.

If you choose to make the shift from “Me” to “We,” you can start by acknowledging the natural laws of sustainability and decide to abide by the commitments here. Likewise, the organizations you are involved with can choose to create a culture of accountability for sustainability organized around the five commitments (see “The Five Commitments”).

All social change happens one person at a time. This means there is only one way to alter the trajectory of the troubling conditions the world faces today, and that is for you to make the shift from “Me” to “We.” You must see for yourself the truths inherent in the natural laws of sustainability and the power of the five commitments. As more people see the world in new ways, social contagion will occur. If you focus on the broader “We” that makes all life possible, and think and act sustainably, great peace and happiness will be yours. You will also become a role model that others will follow.

Bob Doppelt is executive director of The Resource Innovation Group (TRIG), a non-partisan social science-based sustainability and global climate change education, research, and technical assistance organization affiliated with the Center for Sustainable Communities at Willamette University, where he is also a senior fellow. In addition, Bob is an adjunct faculty member in the Department of Planning, Public Policy, and Management at the University of Oregon. He is the author of Me to We: Five Commitments That Can Save The Planet and Change Your Life (Greenleaf Publishing, 2012).

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The Infinite Game

What rules prove to be constant in your day-to-day experience at work and at home? If you are anything like our clients or like us, you live and work in an environment where new rules are written and old ones are broken every day. James Carse saw the emerging complexity of the world back in the 1970s. He wrote a lovely book called Finite and Infinite Games to distinguish predictable, closed-system games from the ones that were open and unpredictable (James P. Carse, Finite and Infinite Games, Free Press, 1986). Traditionally, finite games have shaped our experience and our success.

In a finite game, it is easy to make sense. Everyone agrees on the goal; the rules are known; and the field of play has clear boundaries. Baseball, football, and bridge are examples of finite games. At one time in the not-so-distant past we expected careers, marriages, parenthood, education, and citizenship to be finite games. When everyone agrees on the rules, and the consequences of our actions are undeniable, responsible people plan for what they want, take steps to achieve it, and enjoy the fruits of their labor. We know what it takes to make sense in a finite game.

Most of us realize that we play a very different game. We play an infinite game in which the boundaries are unclear or nonexistent, the scorecard is hidden, and the goal is not to win but to keep the game in play. There are still rules, but the rules can change without notice. There are still plans and playbooks, but many games are going at the same time, and the winning plans can seem contradictory. There are still partners and opponents, but it is hard to know who is who, and besides that, the “who is who” changes unexpectedly.

Every day, the newspaper is full of examples of unexpected and sometimes unknowable developments. The mortgage market tanks, an interstate bridge across the Mississippi River collapses, youth in London turn into lawless mobs, earthquakes hit Washington, DC, and a tsunami devastates Japan.

In such complex and unpredictable environments, important factors that shape the future are unknowable. Social, economic, climactic, and political changes erupt without warning. We can plan, but we expect our plans to go awry. We can work toward our goals, but we understand that our work may be in vain. We experience unintended consequences that too often punish what should be rewarded and reward what should be punished. We need new ways to make sense in complex organizations. As individuals and organizations, we need the capacity to adapt to the unexpected. We need adaptive action.

Every day, forces we do not control reshape the landscapes of life in the 21st century. Not only are the rules of the game of life changing, but the game itself is being transformed. Not only are we playing a different game, but we are called upon to play many different games at the same time. Not only are we playing many games, no one knows who will get prizes in the end and for what. It is your move. Life is uncertain. What do you do?

Economic foundations sit on quicksand of derived values and float on bubbles of speculation. Would it be possible to see, understand, and respond to economic turmoil in ways that reduce risk and increase value for us and our organizations?

Cultural and national loyalties shift too quickly or lock in too tightly for civil stability to be sustained. Might we see early signals of dissatisfaction so we could understand and influence the public discourse toward peaceful and productive dialogue?

Technology moves from imagination to reality to obsolescence at breathtaking speeds. Can we consumers, producers, suppliers, and service providers develop the capacity to keep up with the pace of technical change?

Massive, ubiquitous, and direct communications contribute to both intractable stability and incomprehensible disruption. Can we read the landscape and establish media and messages that support the patterns we choose to reinforce?

Local climactic conditions change more quickly and more unpredictably than farmers, multinational corporations, or emergency services can respond. Can we collect data from around the world, consider it in rational and open ways, and take collective action for the good of people and the planet?

These are the kinds of questions that shape our ability to thrive — perhaps even to survive — in the uncertain world of the future. As individuals, we face similar challenges in personal development, home, and health. As community members, such challenges appear in threats of violence and opportunities for collaborative action. At work, our abilities to manage planning, marketing, human resources, and supply chains all depend on the ability to see, understand, and influence emerging change in complex environments.

We don’t think these problems are beyond human intervention. We believe that humans can make sense of patterns in a fast-changing environment and build the adaptive capacity they need to thrive in such volatile uncertainty.

We are living and working in a world — indeed in multiple worlds — that are changing before our very eyes. This massive disruption is no secret. Every scholarly and practical discipline has tried to describe how these fundamental changes affect decision making and action. In our work, we engage with people from many different sectors: educators, public health professionals, politicians, bureaucrats, military strategists, leaders, healthcare professionals, technology gurus, industry giants, mechanical engineers, entrepreneurs, product developers, middle managers, academic researchers, funders, and grantees. The particular challenges faced by each of these people are unique. They work with different resources, different conceptual and practical tools, different places and times and shares of the power picture. Still, they have one thing in common. They and their organizations all get stuck trying to deal with the uncertainty. They struggle to understand and to adapt to the ever-changing rules of the game.

Our research and practice, our personal and professional lives point to Adaptive Action as a path through these uncharted territories.

Adaptive Action Defined

Adaptive Action is an elegant and powerful method for engaging with dynamical change in an ever-emerging, always self-organizing world. The Adaptive Action model consists of three questions:

What? So What? Now What?

What? What do you see? What changes have occurred? What is the same as before? What is different? What containers are most relevant? What differences are emerging or disappearing? What are the current exchanges and how strong are they? What is the pattern of the past? What desires are there for patterns in the future? What?

So What? So what surprises you? So what do your observations mean to you? So what do they mean to others? So what might you expect in future? So what assumptions or expectations were confirmed or denied? So what containers are open to change, and what might those changes mean? So what differences are open to change, and how might new or more effective differences be infused into the system? So what options are there for building new exchanges, changing existing ones, or breaking ones that are not helpful? So what?

Now What? Now what will I do? Now what will you do? Now what will we do together? Now what messages should we send to others? Now what outcomes might we expect? Now what will we do to collect data for our next and emerging cycle? Now what?

That is it! After framing such an enormous set of overwhelming challenges we face in the world of today and tomorrow, it is a bit surprising that we would offer a solution as simple as the CDE Model coupled with Adaptive Action. How can such a simple method prepare individuals and groups to thrive in response to such complex challenges? How can such a simple method help us leverage the uncertainty that plagues complex adaptive systems? The answer is not so simple.

First, Adaptive Action is a variation of a very old idea. Similar processes show up as the scientific method of building and testing hypotheses, PDSA (Plan, Do, Study, Act), learning cycles, action research, and diagnostic procedures. From records of ancient warfare to the latest scientific treatises, we see the steps of data collection, analysis, and action repeated in an infinite number of ways. The reason it keeps showing up is that it works. When adaptation is called for, seeing, thinking, and acting in iterative cycles is exactly the right response. Adaptive Action is a slightly adapted version of the age-old process. We have altered the process to account for the openness, high dimensionality, and non-linearity of dynamical change in complex adaptive human systems by stating it as a series of inquiries and by embedding into the process the conditions for self-organizing.

Second, Adaptive Action is a cycle. Every ending action makes the next beginning question necessary. Complex systems of all kinds — from fractal mathematics to genetic biological systems — are driven by iteration. A short, simple process is repeated over and over, at different times, in different speeds, with different raw materials. The result is a highly diverse, but fundamentally coherent, pattern. You find examples of iteration leading to coherence in every facet of human activity. Practice makes perfect for the musician and the athlete. Reliable processes produce consistently high-quality goods. Behavior that is modeled and practiced is embedded in habit. Rituals build community. Good manners encourage respect. Saturation advertising seduces consumers. When you begin to see them, the examples of simple iteration and complex results are endless.

Third, Adaptive Action is framed as a series of questions. An adaptive actor is always standing in inquiry. In times of uncontrolled and dynamical change, inquiry is absolutely necessary. The greatest risk is allowing assumptions of the past to dominate expectations for the future. The only way to avoid this dangerous path is to ask questions—clearly and perpetually.

Fourth, Adaptive Action is simple enough to be flexible. It can be repeated by anyone or any group, in any place, at any time. It may be explicit or implicit, solo or shared, public or private. It may deal with patterns in physical, conceptual, emotional, social, or political reality. Formal groups and informal ones can engage in Adaptive Action. Cycles can be short as a second and long as a lifetime. In any variation, it supports effective and efficient engagement between people and their environments.

Fifth, it is the only way to reduce the risk of uncertainty in dynamical change. Under conditions of extreme unpredictability, it is impossible to know ahead of time what will happen. It is impossible to know what is a good choice or a bad choice before you make it and see the results. All you can do — the only way to mitigate risk — is to try something, quickly and carefully assess how the system responds to your action, and take another action in mutual response. Adaptive Action leads you to adjust and correct when it is impossible to predict and control.

Sixth, there are millions of tools, models, and methods to support each step. You can even use the ones you already know to fill in the blanks of What? So what? and Now what? Ultimately, we hope you find ways to create an Adaptive Action toolkit that fits you and your complex environment.

Seventh, Adaptive Action cycles can be embedded inside each other to build a network of inquiry and action. While you explore any large adaptive challenge, you will also encounter smaller ones. Sometimes these smaller challenges are closely connected together and sometimes they may be loosely connected. Planning a presidential campaign is a long cycle of Adaptive Action, but within it there are other adaptations like selecting staff, setting and testing strategy, reviewing poll data, deciding where to spend your time and where to dispense your message. As any political operative can attest, there is no end to the numbers and levels of Adaptive Action cycles that inform a political campaign. Each one can stand alone, and all of them are intimately connected to each other, so you can choose to deal with one at a time or any combination of a group of them. The trick is to choose a sufficient number to do the work well and few enough to do the work efficiently.

Excerpted from the forthcoming book Adaptive Action: Leveraging Uncertainty in Your Organization, by Glenda Eoyang and Royce Holladay, to be published in April 2013 by Stanford University Press. Glenda Eoyang and Wendy Morris will present Adaptive Action: Leveraging Uncertainty and Thriving in Chaos at the 2013 ALIA Summer Institute.

Glenda Eoyang is offering a series of free online conversations about Adaptive Action and Human Systems Dynamics (HSD). Participate each month in this opportunity to explore new answers to the most persistent questions in your continuing leadership challenges. There is no charge for these events, but registration is required. Once registered, you are signed up for all sessions and will have access to the archived conversations. For more information, go to the HSD website.

Glenda H. Eoyang is the founding executive director of the Human Systems Dynamics Institute, a network of professionals working at the intersection of complexity and social sciences. A master teacher and facilitator, Glenda supports change for individuals, organizations, and communities around the world.

Royce J. Holladay is the director of the Network of the Human Systems Dynamics Institute. She is a prolific writer and engaging presenter, seeking to explain complex ideas in simple and understandable terms. In addition to formal essays, articles, and papers, Royce often uses stories, poetry and haiku, and graphics to express complex ideas.

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— Peter Block

Engagement is the latest hot thing. Everybody is talking about employee engagement, customer engagement, and stakeholder engagement. But, too often, the term feels meaningless – most people do not know where to start to make it happen. To facilitate significant, transformative changes in organizations, we need to make a profound change in how people interact, not just at offsites and other special occasion meetings, but in the weekly team meetings, ad hoc design sessions, and problem-solving get-togethers that make up daily life in organizations.

The designs that seem to best support the kind of engagement we need and want share a number of key qualities. They are messy and they are complex. The conversations they produce cross boundaries between departments, between roles, and between parts of the organization that don’t ordinarily talk to each other. Many are self-organized, in which order arises out of local interaction. The dialogue feels generative. Yet, at the same time, the designs that work have just enough structure to channel the energy and keep things moving and productive. These structures are liberating rather than confining.

Restricting Versus Liberating Structures

Jazz is a great example of a liberating structure. Using its underlying rules, musicians are able to play together. In fact, people who have never seen each other play or met before can sit down and jam. They can create something wonderful. Without the rules, though, it would be harder if not impossible for them to collaborate. The principles of jazz give enough structure so that people can create together, and these same principles allow infinite degrees of freedom. Different saxophone players playing the same piece can come up with totally unique expressions each time they play it, yet you recognize it as this piece rather than another. Something about the rules of jazz give each song a persistent identity while leaving plenty of room for individual creativity.

To facilitate significant, transformative changes in organizations, we need to make a profound change in how people interact.

This interdependence between different players and the liberating structure of jazz is a powerful metaphor for the kind of engagement we need in our organizations. The idea of liberating structures was first introduced by William Torbert in The Power of Balance: Transforming Self, Society, and Scientific Inquiry (Sage, 1991). Bill’s interest in an integral approach to leadership and action inquiry led him to explore the notion of a form of organizational structure that gives guidance to people but in such a way that they develop skills to guide themselves. He developed a theory of power that generates productivity, justice, and inquiry and a theory of liberating structure through which organizations can create continual quality improvement.

Edward de Bono, who is best known for his work in creativity, contributed the following perspective in Teaching Thinking (Penguin, 1991):

We can distinguish between restricting structures and liberating structures. Tools are liberating structures. With the proper tools students will surprise themselves with ideas that they have not had before.

The connection between liberating structures and process design emerged as facilitators and organizational development specialists over the past 20 years developed new large-group methods to engage whole systems (see “Methods That Shift Interactions”). In reviewing these practices, we began to recognize the loose-tight quality of some of the dynamics that made them work (Lisa Kimball in a 1996 interview). In his book, Terms of Engagement: New Ways of Leading and Changing Organizations (2nd ed., Berrett-Koehler, 2010), Dick Axelrod describes essential principles that characterize popular large-group methods such as Open Space, Appreciative Inquiry, the Conference Model, and others: these include widening the circle of involvement, connecting people to each other and other ideas, creating communities for action, and practicing democratic principles.

Beyond these principles, each of these approaches is made up of multiple components that collectively fuel interactions of a certain quality. For example, Open Space Technology is guided by four principles, one law, and a set of common practices within which any group can self-organize around any topic. These kinds of comprehensive change strategies typically play out over several days; some include multiple sessions that take place weeks or months apart and are often led by teams of consultants.

A Methods Mash-up

Liberating structure designs come from theories and principles drawn from complexity science about self-organization and the diffusion of innovation and change (see “Introduction to Complexity”). They help group members tap into collective intelligence, be creatively adaptable, and build on each other’s ideas to get results. They have a bias toward action.

Liberating structures are fractals – they can work at multiple levels, from small groups to large groups to the whole system. For example, what we like to call “Impromptu Speed Networking” can work with a dozen people or with several hundred (see “Impromptu Speed Networking”). The processes are simple. They are fast to learn. In a somewhat heretical fashion, some small pieces are “cherry picked” from many of the best group methodologies, such as the Appreciative Interview from Appreciative Inquiry and Discovery and Action Dialogues from Positive Deviance. The goal is to find small processes that anyone can pick up and use. They do not require explanation or theory in order to use them. Likewise, they do not require extensive training or certification.

However, they generally do need to be experienced in person. Keith McCandless and Henri Lipmanowicz, who have introduced these methods in diverse organizations suggest:

The generative qualities of liberating structures cannot be adequately described in writing. Many are counterintuitive; who, for instance, would believe that the most productive meeting can be one that starts without any agenda? Other practices may seem too simple – can one minute of silent reflection change the outcome of a meeting?

Practitioners find that many innovative ideas and creative approaches to new opportunities emerge from meetings designed around high engagement processes. In addition, processes that bring diverse participants from different parts of the whole system together tend to produce many surprising, serendipitous outcomes unrelated to the primary theme of the meeting. For example, at a meeting of a large healthcare organization, the person who made appointments for patients described a vexing problem regarding her access to information. She happened to sit in a small group with someone from the Information Technology group; through their chance conversation, they were able to collaborate on a new approach.

But in addition to this kind of traditional problem-solving outcome, the strategy that McCandless describes as a methods “mash-up” delivered something new. After the event, people who had participated in the meeting demonstrated a significant degree of uptake of the liberating structures methods. In subsequent meetings with their own groups, they used one or more of the methods they had experienced.

An Invitation to Play

As noted above, the liberating structures framework is an attempt to define key elements of that pattern language to make them more explicit to people who both design and participate in large-scale change initiatives. The next step is to invite people to play with the elements that make up this proposed framework and create their own repertoire of possibilities for engaging everyone in new ways of solving problems and creating potential solutions, whether in meetings that are large or small, formal or informal, routine or special.

One way to teach liberating structures is to have participants apply multiple methods in rapid cycle in the course of working on something important to their organization. After each exercise, the facilitator debriefs the process as well as the content to help people notice things about the structure and patterns across different methodologies. For example, after participants take part in Impromptu Speed Networking, they are invited to notice different aspects of the process: how starting a meeting standing up builds rather than drains energy, how having several iterations of the same conversation with different partners changes understanding, and how questions open up more space for creative thinking than presentations. The goal is to introduce participants to the pattern language of these generative processes.

None of the methods is presented as the right answer for any particular situation. Most participants find several methods that appeal to them, and many find a place to try one out quickly. Something about the deconstruction – the demystification – of the processes makes the techniques feel easy and forgiving.

For instance, a U. S. Army leadership program incorporated liberating structures by positioning them as tools for gathering information from the edge to enhance decision making. One officer explained:

These simple exercises give everyone a voice. I found liberating structures to be very powerful in breaking the paradigms of traditional meetings and an effective method to achieve solutions to complex problems within a hierarchical organization.

Many participants tried out one or more of the processes within days or weeks of their introduction. An Army division chief shared that after several conference sessions in which one or two individuals dominated the talk and focused on their issues only, by applying liberating structures, “We were able to accomplish much more in a day than the previous two days.”

In another organization, a manager at the DC office of a state department of education said,

I didn’t think we were going to be able to pull together so many different departments that had not been at the same meeting without spending hours making presentations to explain what we were all doing. I was amazed that we just got right to work. By the end of the day we were on the same page and had a way forward on things that would have taken weeks of meetings to accomplish.

Liberating structures have been introduced in global corporations, hospitals, educational institutions, multi-stakeholder coalitions, and local community groups for purposes that range from developing new product marketing strategies, reducing infection transmissions, creating innovative curriculum, and designing solutions for intractable economic problems. Many of these applications have delivered significant bottom-line results. But the potential of liberating structures goes beyond any one initiative or the convening of a successful meeting. The big payoff will come when facility with processes that truly engage everyone is widely distributed and becomes the norm rather than the exception wherever people gather for important conversations.

Lisa Kimball, PhD, is president of the Plexus Institute, a nonprofit social enterprise focused on applying ideas from complexity science to solve social and organizational problems. Lisa previously founded Group Jazz, a company supporting facilitators and leaders to change the conversation about problems and potential solutions. She has worked for more than 30 years for clients including government agencies, corporations, nonprofit organizations, and educational institutions. Lisa serves on the board of the Organization Development Network. She can be reached at lisa@plexusinstitute.org

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We learned that Frank and his colleague Mark Swanson had built their semester science curriculum around a real project: the design of a new state park to be developed north of Tucson. After studying the sorts of conflicts that inevitably arise in park and wilderness area management, they were working with a STELLA-based simulation model that showed the impacts of different decisions. They had an overall budget and a prescribed mission based on environmental quality, economics, and recreation and education targets they had set out for the park. At the time, the students were working on designing the park’s trail system. Once they laid out a proposed trail, the simulation model calculated the environmental and economic consequences, prompting energetic debates over trade-offs among different options.

We had only been standing in the back of the room for a few minutes when a couple of young boys came over and grabbed us. “We need your opinion,” Joe said. “Billy and I have different trails. He thinks his is great because it makes a lot of money (routing hikers past the best views), but it also does a lot of environmental damage. Mine does less environmental damage, but he thinks it’s too close to the Indian burial grounds and will stir up protests.”

We listened for a while as the two boys explained their different trails and showed us some of the simulated consequences. There were no black and white answers, and it was clear that they understood this. This was about design and making choices. The bell rang, signaling the end of the period, and they said goodbye, agreeing as they left to come back after school to see if they could agree on a proposal to share with the rest of the class at the end of the week. (The students’ proposals and analyses were presented to the actual park planning commission at the end of the term.)

The students also learned a variety of conceptual tools for mapping systems and for expressing and communicating with others about their understanding of the interdependence in developing a park plan. Today, tools like behavior-over-time graphs, connection circles, causal loop diagrams, stock-and-flow mapping, and system archetypes are introduced in this school system as early as kindergarten. These young children are invited to look at daily experiences like how trust builds or deteriorates in a friendship, or what happens during the process of breaking a bad habit. As students get older, they can naturally extend these tools to more complex subjects, and start to develop their own simulation models. This process develops not only deep content knowledge but thinking skills to see how common system dynamics can underlie very different situations.

“Our approach was to invite kids to consider a world view of complex interdependent systems. Instead of abstract learning, we use simulations to begin to confront and to penetrate this world of interdependence as it is embodied in particular real-life situations and how these systems relate to other systems,” says Frank Draper.

Roots of Engagement

What was evident from the outset in the state park exercise at Orange Grove was the engagement of the students. What made them so involved?

First, the students were wrestling with real-world problems rather than artificial schoolroom exercises. They could identify not only with the challenges of developing a new state park but also with the benefits of designing the park well.

Second, the students were thinking for themselves. They knew there was no single right answer to the challenges they were facing. Ultimately, they had to understand more clearly what would happen if different decisions were made, and they had to frame the resulting trade-offs appropriately. No single formula was presented by the instructor to point to the right answer. Rather, the students had to sort out their own thinking about a real issue and explore different proposals, ultimately coming to their own conclusions.

Third, the teachers operated as mentors, not instructors. The teachers’ role was not to give a prescribed method or guide the students to a predetermined right answer. Indeed, the teachers did not know the best outcome and were co-learners with the students. But the teachers’ roles were no less crucial: they had to help the students make sense of the outcomes of different scenarios. Having been involved in building the computer simulation gave the teachers important knowledge for this task, but no simple answers. A complex dynamic simulation model will often respond to changes in ways that its developers do not anticipate, as different feedback interactions play out over time.

The entire process engaged both teachers and students in mutual learning around a complex domain. They had to recognize that they were working with a model and thus, by definition, their view was incomplete. One of the teachers’ roles was to help the students describe the assumptions upon which the model was based and to invite the students to critique those assumptions and consider the implications of alternative assumptions, a critical aspect of scientific thinking.

Educators understand the importance of reflection (i.e., learning how to examine our own assumptions and reasoning) in developing higher-order skills, but it remains an elusive educational goal.

Fourth, working with partners drew the students into a joint inquiry. This not only enabled them to get to know one another but forced them to continually confront alternative views and assumptions. This drew students into a natural process of seeing how each reasoned, employing past experiences and assumptions to draw conclusions that guided actions. Appreciating this in the other made them more open to testing their own reasoning.

Of course, human beings follow such processes of inferential reasoning all the time, but it is often easier to see how this works in another person, since our own reasoning is often “transparent” or invisible to us. Educators understand the importance of reflection (i.e., learning how to examine our own assumptions and reasoning) in developing higher order skills, but it remains an elusive educational goal, all but completely ignored by traditional schooling. Didactic instruction bypasses it entirely. Teachers’ efforts to try to get students to reflect are easily undermined by teachers’ authority and formal power, which intimidates students programmed to seek correct answers. As Scheetz said, reflection requires safety, which benefits from an environment of mutual inquiry. In this sense, students helping one another reflect is a powerful approach that goes well beyond teacher-centered strategies.

For example, consider the following (slightly stylized) interaction between Joe and Billy, working on their park trail system.

Billy: “Your trails are a bad idea because they are too close to the Indian burial grounds. You shouldn’t do that.”

Joe: “Who says? There are no rules that say we can’t do that. They do a lot less environmental damage than yours.”

Billy: “Yeah, mine are a problem. But which is worse?”

Joe: “I didn’t really think about the burial grounds. Maybe there is a way to avoid the burial grounds and also do less environmental damage?”

Billy: “Yeah, maybe, but I wonder how much less money we’ll make; the park has to generate enough money to stay open. Let’s try some other routes.”

Today, many educators advocate for a “systems view” in education, but this simple interaction shows a critical but often missing element. The two boys are debating about the way specific features of a system interact over time in response to alternative actions — for example, how trail location affects the hiking patterns of visitors, the environmental effects, and park revenues. They step back to see how specific choices can have many different effects. They see different parts of the system interacting as a result of the choices they have made, and they adjust their choices accordingly. This is what the late pioneering educator Barry Richmond called “operational thinking.” It was one of eight interdependent systems thinking skills that he saw as critically important (see “Eight Systems Thinking Skills”). Other skills were also evident: The students were learning to see change — the consequences of how the park’s trail system was laid out — as differing patterns of behavior over time, exhibiting dynamic thinking. And they learned how to formulate a hypothesis — what consequences they expected from different changes — and to test their expectations against a formal model of the system. They thus engaged in scientific thinking.

In concert with scientific thinking — where the model’s assumptions are made explicit and challenged— even young learners can engage in sophisticated processes of building rigor and relevance.

Operational thinking really comes alive when students can use interactive models to simulate and analyze the effects of different actions on overall system behavior. In concert with scientific thinking — where the model’s assumptions are made explicit and challenged — even young learners can engage in sophisticated processes of building rigor and relevance.

The exchange also illustrates the dance of collaborative inquiry — thinking together about a complex matter. The boys are probing each other’s ways of thinking through the design problem they face and making their own thinking more explicit in the process. In this way, collaboration and reflection become inseparable elements of mutual learning. They are helping one another; neither is right nor wrong; both are learning. Joe hadn’t really thought about the Indian burial grounds as a constraint; this was outside the assumptions upon which he was operating. Likewise, Billy had not paid a lot of attention to the environmental damage of his trails because he was focused on maximizing hiker traffic and park revenues. Both conclude that there may be still better overall designs if they expand their assumption sets. In short, the boys are becoming more aware of their own taken-for-granted assumptions as they think through ideas together.

Of course, such interactions both build and depend upon mutual respect. It is easy to imagine two young boys simply arguing about who is right and never challenging their own reasoning. This is why educators like Scheetz understand that realizing the benefit of systems thinking tools is inseparable from deep and broad engagement of students, and that how, in turn, this depends on the overall school environment. As Scheetz says, “an environment where learning is likely to occur is one that is safe and secure and where taking risks is okay” (see “The Global Achievement Gap”).

Peter Senge is the author of The Fifth Discipline, coauthor of The Necessary Revolution, and founding chair of the Society for Organizational Learning. This essay is reprinted with permission from the second edition of Schools That Learn: A Fifth Discipline Fieldbook for Educators, Parents, and Everyone Who Cares About Education (Crown Business, 2012). It was adapted from part of “Education for an Interdependent World” in Joy Richmond, Lees Stuntz, Kathy Richmond, and Joanne Egner (editors), Tracing Connections: Voices of Systems Thinkers (isee Systems and Creative Learning Exchange, 2010). Tracing Connections was a commemorative volume in honor of Barry Richmond, a pioneer in systems thinking, managing director and founder of High Performance Systems, and designer/developer of the STELLA modeling software, who passed away suddenly in 2002.

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Yet all too often, we find ourselves working in systems stuck in downward spirals of self-defeating dynamics. Intuitively, we all know the story of the downward spiral. A sports team makes a few mistakes and then cannot manage even the most basic play. A company cuts maintenance budgets due to financial pressure, which results in more breakdowns and lower quality, rising costs and lost customers, and eventually even greater financial pressure.

The downward spiral is a metaphor for decline, a self-reinforcing process that depletes something of value (or, in systems thinking terms, a “stock”). It can be described as a cycle of disinvestment or deterioration, as players withdraw resources from a system, an action that reduces its performance and prompts further withdrawals down the line. Unfortunately, when we are part of a downward spiral, we almost always find it difficult to see a way out because the incentives in the situation often reward narrow, short-term thinking.

Mobilizing change in a downward spiral means starting without the usual conditions for success. Because of the financial and emotional stress of the situation, we are unlikely to have accurate data, sufficient resources or time, committed participation from other stakeholders, or executive sponsorship. We lack the inclination to collaborate with others because our trust has eroded. And, frankly, why should we invest more effort before “they” fix their part of the problem?

For example, a colleague told me about a company where two department leaders who reported to the same boss were competing to avoid the boss’s disapproval. As a result, the leaders distanced themselves from each other. They were cordial in group settings, but otherwise they hardly spoke. They would only return each other’s emails or phone calls when absolutely necessary. This dynamic left the staff in the leaders’ departments unclear how to manage interactions, as their policies conflicted with each other. As a result, the company paid more contract penalties, and service quality suffered. Of course, overall results worsened, and staff confusion increased. But when my colleague asked the two leaders about addressing the issue, they said they wanted to send their teams to a workshop on collaboration.

Systems thinkers believe that if people have a shared picture of how a system works, they can shift things for the better. Our “meta-model” for change is that systems thinking will lead to shared vision, common mental models, and coordinated action on the leverage points that will turn the situation around. Unfortunately, in a downward spiral, where we most need systemic change, we typically cannot negotiate the time or attention to fully understand key dynamics and coordinate action. What we need instead is a meta-model that lets us “bootstrap” our way out of the downward spiral.

“Bootstrapping” is short for “pulling up by one’s bootstraps” or self-generated change. For example, we refer to a computer as “booting up” because it is hardwired to execute a small amount of code that instructs it to execute the next batch of code and so on, repeating until the computer is ready for use. In similar ways in other systems, the dynamics of organic growth — including feedback, accumulation, and amplification — can over time turn small changes into the miraculous forms of a baby, a town, a business, an economy, or a complex ecosystem.

Rediscovering Organic Growth

Given the choice, most leaders want to grow something real. Much as they welcome change, they lose all motivation when asked to “go through the motions” of improvement. “I just can’t do fake stuff,” said a senior vice president. Though they may compromise to reach short-term targets, most would prefer to focus on long-term, ongoing results and real value.

Of course, we do not “grow” results directly. The only way to improve long-term financial results and other outcomes is to grow the systems and capabilities that generate them. This is why nearly every systemic change is ultimately about fostering organic growth.

Whereas inorganic growth occurs through accretion — as when a business grows through mergers – to grow organically means to increase (or restore) through natural development, measured in size, complexity, or maturity. Any system that is growing organically is functioning well enough to create a surplus that can be reinvested in new capabilities or provide resources to the larger system. One of the most inspiring aspects of these turbulent times is that there are signs that those who really know how to grow or regenerate an organization can differentiate themselves for the future. Witness the performance of what Jim Collins and Morten Hansen refer to as “10x companies” in a recent study (Great by Choice: Uncertainty, Chaos and Luck – Why Some Thrive Despite Them All, HarperCollins, 2011).

Yet for most leaders, the dynamics of organic growth are invisible day to day. They cannot see whether their core capabilities are growing, deteriorating, or getting close to a tipping point. Managers see financial results and other outcome metrics, but the system that generates those results is a black box, and everyone in the organization has to discover for themselves how it works. Ironically, this sometimes leads busy leaders to think more simplistically, just when they need to be thinking more systemically.

Still, in most cases, asking leaders to learn the language of systems thinking so they can discuss growth is too high a hurdle. They need a simpler lens to prompt them to ask the right questions and make good decisions. Is there a way to help leaders see and manage the dynamics of organic growth more intuitively — without requiring them to learn a new language before they can start?

The Upward Spiral

In almost every culture, the shape associated with growth is the spiral (as shown by Angeles Arrien in Signs of Life: The Five Universal Shapes and How to Use Them, Jeremy P. Tarcher/Putnam, 1998). Many things in nature grow in spirals, from ferns to seashells to whirlpools. They can be as small as the double helix of a protein molecule and as large as the spiral arms of the Milky Way. Over 80 percent of plant life exhibits spiral growth patterns (see SpiralZoom).

The spiral is simply the shape created by a self-reinforcing growth process. By definition, a spiral winds around a center, in a progressive expansion or contraction, a rise or fall. What we see is the accumulation of changes as the system iterates over time. We tend to associate an upward spiral with growth, development, and evolution, as reflected in the architecture of spires and towers. Thus, I have begun using the metaphor of the upward spiral as a meta-model for systemic change. I define the upward spiral in this context as a metaphor for growth or “mutually reinforcing change that creates or regenerates something we value.”

To understand why the upward spiral metaphor simplifies and empowers how we think about systemic change, let’s take a look at two other prototypical models, Heroic Change and Grassroots Change.

With Heroic Change, change is likened to a journey or “trip to the moon.” In practice, it generally involves a strategic injection of resources and energy to orchestrate a “trip” from the old way to the new way. The drawback is that it is resource intensive, so we may find we do not have enough fuel to get to our destination. If we have not reached our goal and have bulldozed past opposition, the system may swing back toward the other pole, stuck in oscillation rather than advancing (see The Structure of Things by Robert Fritz).

By contrast, with Grassroots Change, we think of change occurring through “ripple effects.” It relies on many small-scale efforts, gradually winning converts until the new way replaces the old. This approach allows for creative emergence, yet can fail to take off if it does not engage structural barriers that limit progress or if local efforts do not build on each other. If our experiments run out of energy, or if we have excluded important opposition, the system can swing back again toward the other pole.

As an alternative, the upward spiral metaphor prompts us to engage limits and opposition, but at a manageable angle. It is not straight up, nor is it entirely sideways. Like a spiral staircase, it grows an asset stepwise, in increments that fit with our resources at any given time. This does not mean we lower our sights; it simply means we only go as fast as we can go and keep it real. The upward spiral approach enables us to bootstrap change out of many small efforts, but it challenges us to go beyond “preaching to the choir.” In practice, many intractable situations in business, cross-sector collaborations, personal relationships, and public life are improved through small, reciprocal actions among peers, leaders and followers, and opposing parties. The upward spiral metaphor looks for ways to use this dynamic intentionally, consciously activating higher levels of aspiration, commitment, and action — even among those who disagree.

The upward spiral metaphor prompts us to engage limits and opposition, but at a manageable angle.

For example, in a tense union-management conversation leading up to a negotiation, a mediator recognized that trust was so low that the parties involved even misinterpreted sincere collaborative behavior. Rather than continue, with the risk of a destructive strike looming, he advised both parties to stop the negotiating activity. He then asked each side to draft a list of things the other could do to demonstrate that it had turned over a new leaf and was committed to collaborating. Management’s list included “reduce work-to-rule days during critical busy periods.” Labor listed items such as “do not require physician’s notes for sick leave of less than a day.” Once complete, the two sides exchanged lists.

Over the following month or two, they watched each other’s actions. Eventually, someone tried an item on the other side’s list. Then the second side decided to reciprocate. The process built until the two sides had carried out a good portion of the items on the lists. When representatives met a second time to negotiate, though they still differed markedly in their interests, they were able to communicate critical data and forecasts more credibly and arrived at an innovative solution to avoid both a strike and difficulties for the workers. This same method has contributed to reversing destructive conflict in a variety of settings, such as helping end the violence in Northern Ireland.

Why the Upward Spiral Model Helps with Bootstrapping Change

In my experience, the upward spiral has four advantages as a model when thinking about systemic change.

1. It activates positive potential. In a downward spiral, we see the worst in people. Yet social psychology shows that human beings are not fixed entities. We can prime ourselves to act on higher values. The upward spiral image itself seems to evoke some of this energy. “I feel different just thinking about the situation as an upward spiral,” explained a teacher. “The image itself activates hope.” With renewed hope, we gain the imagination to reengage difficult situations with new perspective.

2. It works with the way systems grow. Because it is derived from the growth of living things, the upward spiral naturally invites systems thinking without requiring specialized terminology. We can use it to prompt questions such as: What do we want to grow? Are we currently growing or deteriorating? Are we near a tipping point? The spiral shape also guides us in pacing change, tackling challenges at a manageable “angle of approach.”

3. It views opposition as part of the process. The spiral metaphor reminds us that real progress requires engaging those with whom we disagree, so our efforts yield more than just a swing of the pendulum from one pole to the other (see “Progress Through Engaging Disagreement”). For example, as Barry Johnson describes in Polarity Management (HRD Press, 1996), by managing tensions through constructive engagement that integrates the best of two opposing view, we can create both/and solutions and an upward spiral based on shared purpose. At the same time, the metaphor recognizes that change often requires saying “no.” The Systems Archetypes, as defined in The Fifth Discipline and other resources, all involve rejecting some easy but ineffective solution — from quick fixes, to drifting goals, to monopolizing resources.

4. It enables us to take action whatever the circumstances. In systems thinking terms, the upward spiral metaphor works as a fractal; we can use it to spark our thinking relative to any critical resource, asset, or stock — zooming in and out as needed to any scale. We do not need to wait for others to collaborate; in fact, we can act unilaterally to help the right thing happen, addressing whatever is limiting our progress. For example, we can use it to think about growing a company’s strategic capabilities. And if we do not have enough support to act on those ideas, we can use it to think about building that support. If we do not have alignment with our boss on getting that support, we can use it to work on the relationship with our boss. The general principle is to use the resources for change that you do have, to create the resources that you need — starting with the most immediate barrier. For example, a marketing communications manager called her boss to discuss a problem with their marketing strategy, but he treated her concerns with some skepticism. Ah, she told herself. We can’t get to a shared mental model on our marketing strategy until we build some trust and rapport between us. I’ll focus on that. “So,” she said to her boss, “What do you see as the biggest barriers to achieving our goals this quarter?” By the end of the call, he began asking her similar questions.

The CPIRAL Model: Six Principles for Mobilizing an Upward Spiral

After studying examples of downward spirals, reversals, and upward spirals, I began discovering six principles that can help leaders take small, effective steps to build trust, collaboration, and excellence, even in difficult circumstances. To make these principles memorable, I captured them in what I call the CPIRAL Model:

• Center on the Asset
• Prime for Potential
• Invest in Increments
• Approach at the Right Angle
• Signal Through Action
• Listen and Amplify

Let’s examine each of these in the context of a real company in the throes of a downward spiral.

NTB was a client of mine that developed highly specialized software for government programs and was required to submit its software to citizen review committees for approval of the final product. Unfortunately, the company routinely delivered its programs months late. Code often had errors, and many of these were caught by clients, who rejected the faulty software. Programmers were often shifted from one project to another to catch up on deadlines. Stress led many of the programmers to work from home, which reduced the sense of teamwork. Angry customers changed specifications or added to project scope mid-stream. And if a project was delayed too long, the citizen review committee would complete its term, and the programmers would have to start over with a completely new set of approvers. As customers went to competitors, financial pressure mounted, so the company set hiring limits and raised targets for sales staff. Unfortunately, for the sales team to close deals, it often had to promise unrealistic delivery dates, which started the cycle all over again.

One day, sales promised five-month delivery on an 18-month project. The goal was so ridiculous that programming team members knew they had to try something different. They decided to hire a contract project manager (I’ll call him Jake). Jake said he would take the assignment but only with certain non-negotiable parameters. Skeptical but desperate, company leaders agreed.

If we do not diverge from the default pressures on the system, nothing will change.

To everyone’s amazement, Jake’s approach worked. The team completed 18 months of work in just five months, with no changes to the client’s specification (down from 10-25 percent on previous projects) and only 5 percent defects (down from 15 percent). Together with their clients, team members reversed a downward spiral of frustration and delays, and created an upward spiral of credible commitments, delivery, trust, and results.

How did they do it? And why did it work?

Center on the Asset

The first step in building an upward spiral is to ask, What do we want to grow? The answer is usually some kind of asset that enables us to generate the results we want. (An asset refers to any enabling resource, infrastructure, or stock – physical or intangible.) For example, Jake decided that he needed to drastically expand the team’s capability to deliver – the know how, systems, resources, and practices that enabled them to deliver high quality at a fast pace – if they were going to meet the deadline.

Prime for Potential

The second step is to activate hidden potential in ourselves and others by asking, What might help us see ourselves and each other anew? What are we truly capable of? A fresh look provides the inspiration to invest new energy in a situation with negative history. For example, Jake brought in benchmarks from his prior assignments showing how a few changes to work practices can multiply productivity. “Do you think we could apply those ideas here?” he asked the team. They wanted to try.

Invest in Increments

The third step is to decide: How big a step should we take next? The ideal next step contributes to the core asset, yet is within the scope of what you can manage. For example, Jake used the team’s willingness to try something different to get agreement on three small but radical changes. First, he insisted that all team members be assigned to the project full time (rather than several people part time). Second, he insisted the whole team travel to attend a kickoff so they got on the same page. And third, all developers and managers would review issues on joint weekly calls. Developers would fix their own bugs instead of handing them off to junior programmers to fix. These few changes ensured that 100 percent of team members only wrote code that fully met the client’s specifications, drastically reducing rework and waste. Despite the surface inefficiency, these practices virtually multiplied the team’s capability without adding staff hours.

Approach at the Right Angle

The fourth step invites us to set our “angle of approach”: Where do we need to differ from expectations or reach out across lines? Where do we need to say “no”? For example, Jake included downstream departments in team meetings. He vigorously resisted staff reassignments. And he disciplined his team not to write any code before the specifications were finalized. In this way, he ensured that the team only wrote code that fully met the client’s specifications and was consistent with the deadline. If we do not diverge from the default pressures on the system, nothing will actually change.

Signal Through Action

The fifth step advises us not to start with talk, but to ask ourselves, How can we signal our commitment through action? For example, Jake simply showed up at the client meeting with a list of draft specifications, then said, “Rather than give you a blank sheet of paper, we thought we’d give you something to react to. Could you review these and tell us where we’re wrong?” This helped focus the client’s input, demonstrated that the team was on top of things, and showed a commitment to customer satisfaction. If they had waited to talk through the best approach, they might not have gotten started.

Listen and Amplify

If bootstrapping change requires many small, reciprocal actions, then we can drastically accelerate that process by paying closer attention to what is already underway. We can simply ask, What can we build on? How will we know when to take the next step? For example, after a while, Jake noticed that the joint team reviews were not producing new insights. Instead, he switched to a monthly check-in, which won him kudos with the team and sparked even more productivity. Many leaders dramatically accelerate progress by watching closely as their team’s capability grows and adapting in response.

Conclusion

Many people ask at what point a downward spiral tips to an upward one. The answer depends on the balance between growing and depleting flows. Results improve as the asset grows, which then enables reinvestment. (See “Basic Dynamics of Asset Growth.” The structure is similar to the inflows/outflows in a bathtub.) We can tip the spiral by increasing the growing function or reducing the depleting function. In this way, a small action can transform the functioning of the system as a whole.

As you have seen above, the upward spiral model is a sort of scalable invest-for-success strategy. By taking small steps to grow a core asset or stock and working on whatever is the most immediate barrier, we can reverse destructive downward cycles and mobilize growth, health, and regeneration. What may begin as unilateral efforts to spark collaboration can enable more coordinated action and more ambitious visions.

As Robert Pirsig says in Zen and the Art of Motorcycle Maintenance, even the tiny screw on the cover of the gas tank deserves your respect if, by stripping it, you cannot get to the engine. When a new barrier shows up, we need to zoom in and focus on it. As we make progress, we can zoom out and take bigger steps.

There is no faster way. If we are working effectively on the true constraint, we are making maximum progress. The good news is that, in some cases, barriers can shift in an instant. At its root, the upward spiral metaphor is about choosing what to do with whatever degrees of freedom we have. And its central, driving question is always the same: How do we move up from here?

Elizabeth Doty is the founder of WorkLore, a leadership consulting firm that uses systems thinking and story to help organizations such as Cisco, Archstone-Smith, and Stanford University build cultures of commitment and action. She is the author of The Compromise Trap: How to Thrive at Work without Selling your Soul. Elizabeth has given talks and workshops at The Commonwealth Club of San Francisco, Pegasus’s Systems Thinking in Action Conference, and the Society for Organizational Learning. She is a Steward of the Bay Area Society for Organizational Learning and earned her MBA from the Harvard Business School.

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One of the most important things I learned from my past life as a therapist is that if you want behavior change in an individual, you work with them as a whole being and you work with their whole system (family, friends, peers, environment). You don’t focus on their “problem behaviors.” Similarly, if you want behavior change in an organization, you work on it as a whole. You don’t focus on the dysfunctional parts or the underperforming individuals. In my present life, I apply my understanding of systems to organizations and organizational change, not merely the individuals within them.

As systems thinkers know, we can’t blame individuals for doing what the system expects them to do. And as disturbing as Milgram’s experiments were, I have observed that people behave in ways that surprise themselves and that sometimes go against what they know to be right and true. We do this when our environment, our system, sets up conditions that compel us to behave in particular ways. The system also punishes us for not doing what it wants us to do, just to keep us in line.

If we want organizational transformation, if we want more effective organizations, if we want people to find the work they do meaningful, we need to work with the whole system. A buddy of mine recently observed that most people seem uninterested in effectiveness. Sad but true, I fear. Still desperately clinging on to “scientific” management mythologies, many folks just want the numbers to add up and people to do what they’re told. A scary prospect if your business has just appointed a new global CEO who is a bean-counter by background and disposition, and whose single-minded purpose is to show the shareholders that they are getting richer every quarter. Calling a performance issue a “behavioral problem” comes out of this kind of mechanistic worldview. Yuck.

Phase One: Eliminate Systems Blindness

There is hope, however. Some managers are on the threshold of doing something quite different . . . if we would just hang in with them. They know in their gut that doing the same old, same old is not going to make a real difference. For instance, I’ve been working with three business leaders. I’ve been coaching them to see the bigger picture and assisting them to open their thinking about why things don’t go the way they’d like. This, to me, is phase one of the organizational transformation they are seeking to effect: eliminating systems blindness.

Our sessions usually begin with each of them discussing what so-and-so still hasn’t done yet or what what’s-his-name is doing again, despite that one-to-one chat urging him to stop it. I let them get some things off their chests and jot down a few salient observations that I pick up. As I listen, I make connections in my head and find the patterns they are describing. These patterns are descriptors of the system. After a while, I might say something like, “Haven’t we heard all this before?” They smile. Then they frown. What they are slowly learning to do, however, is to see the behaviors as indicators of the wider patterns at play.

The patterns I’m observing in how they describe the staff illustrate a workplace culture characterized by:

• Things done at the last minute without much forethought
• Poor self-discipline with regard to working practices
• Low self-responsibility
• Poor follow-up on commitments and promises
• Distractedness; getting easily side-tracked
• A reactive rather than proactive mindset
• A “she’ll be right” mentality (a common expression in New Zealand meaning, it’ll all be fine in the end, don’t worry about it)
• Inconsistency in work practices
• An overly laid-back attitude toward work
• A “can’t do” attitude

Behaviors at work are tempered by the systemic norms at play; you could also say it’s the “culture.” You can read this in many places: the system is responsible for performance. Don’t blame people for doing what the system asks, and similarly, stop rewarding individuals for good performance. According to Deming, “Reward for good performance may be the same as rewarding the weather forecaster for a pleasant day.”

I’m convinced that the organizational changes these managers want will come about when they focus their attention and energies on the system and not on the individual behaviors of individual people. When I share my observations with them about the patterns I see, they nod and smile and say, “That absolutely describes the culture.”

I then inquire as to what they’ve tried to put a stop to the things they don’t like. Again, I listen for patterns. With all good intentions, they tell me things like:

• “Well, I was going to schedule another one-to-one meeting and go through their KPIs again, but something urgent came up.”
• “I had it written in my diary but I couldn’t remember which page I’d written it on.”
• “I’ve confronted him about it before but it didn’t make a difference, so I couldn’t see the point of following up again.”
• “He knows what he’s supposed to do, he’s been here for 10 years, I don’t see why I should have to tell him again and again.”
• “They’re like a bunch of children; you have to keep on at them, otherwise nothing gets done.”
• “He was fine for a week after I talked to him, but he’s slipped back, and I don’t know how I can get it across.”

After they report what they’ve tried, I ask them to reflect on how similar their patterns are to the patterns they bemoan in the staff: inconsistent, sidetracked, etc. Again, they smile. Again they frown. They find it mildly amusing that they are doing much the same as the staff. Here is when I reinforce the idea of systems. They are part of the same system, and that very same system is exerting itself on them. In our conversations, they are becoming more adept at seeing. I mean really seeing.

Remember, Deming said that a system cannot understand itself. It’s not true just because Deming said it. It’s true because it’s true. The systems to which we belong exert their influence on us. We struggle to know this. We struggle to know how much. We find ourselves at times frustrated with ourselves and with others. It takes an outside eye, a disinterested party, an objective mirror to help us to see what we can’t. They’re called blind spots for a reason. Obvious to me, previously hidden to these three leaders, their system is screwy, not the people within it.

Phase Two: Create the Vision

These three lovely, well-intentioned leaders have warmed up to the second phase of their work together: creating the vision of what you want. Now that they are aware of this thing called “culture” and that it impacts them and that no one person is to blame for doing what the system urges them to do, they are excited to create a vision for the culture they want. They are beginning to identify the elements within the system that maintain its status quo. They are excited. I ask them naive questions like, “What is your purpose?” “What does your business exist for?” How would you like it to be here?” and they eagerly discuss things that they feel should be so obvious but when asked directly, they need to stop and really think about them.

Lately, rather than see themselves as victims of all those awful things the staff do, they are excited to recast their roles as stewards of the system. They get the paradox of systems thinking: they are in it and subject to it, and at the same time, if they can begin to manage their systems blindness with the help of an outside eye, they have the power to do something about it. They are seeing themselves less as managers-who-need-to-be-in-control and more as leaders-who-guide-the-culture. They are more infused with hope for the future. They can use the things over which they do have control (policy and procedure manuals, resourcing, their own attitudes, their individual relationships with staff members) to generate the culture they believe will be more effective and, in the long run, more efficient.

Rather than trying to find new ways to get people to do what they want them to do, rather than focusing on the multitude of things they don’t want, they are thrilled to devote more time to the things they do want. They are thinking bigger: about themselves, the staff, and the business.

Phase Three: Grapple with the “How-to”

Systems thinking, for me, is not merely an academic exercise. It is real world. It changes lives and workplaces.

Next steps for these three? Well, it’s emergent, a work in progress. We’ve had some ups and downs. We’ve had times when they felt like they were banging their heads against a brick wall. At this stage, however, they are hopeful, they are positive, and they are now talking more about modeling and leading the change they want to see. (Didn’t some famous peace-loving figure from history say something about that?) They are truly interested in being different themselves. They are considering how to steward a culture of self-responsibility, flexibility, a “can do” attitude, learning from mistakes, and “just enough” structure. They are approaching phase three: grappling with the “how-to.”

In truth, it is an absolute pleasure.

John Wegner is the co-owner of Quantum Shift. He integrates 20 years experience and knowledge from the fields of education and counseling to create learning environments that are focused, purposeful, and engaging for all. The piece is adapted from John’s blog and is reprinted with permission.

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When I first studied lean in the mid-nineties, I assumed, like many others, that performance improvement stemmed from process improvement. The idea at the time was that repeated “kaizen” (“change for the better”) workshops would lead to the elimination of waste and better-performing processes at lower costs. To someone with my systems thinking background, it made perfect sense to fix broken processes. It took me a while to accept the evidence that although most workshops were successful in the moment, the results rarely showed at the P&L level, and improvements were almost never sustained.

By studying how Toyota taught its suppliers to do kaizen and working with Toyota veterans, I came to accept that the lean challenge was not to apply lean tools to every process, but to develop the kaizen spirit in every person (for more details, see “The Thinking Production System,” by Michael Ballé, Godefroy Beauvallet, Art Smalley, and Durward Sobek, Reflections, Volume 7 Number 2). It turned out that kaizen was a methodology to teach employees on-the-job problem solving. Somehow, systematically developing each person’s problem-spotting and problem-solving capability led to significant overall results. This was consistent with what I’d been told by Toyota veterans about their golden rule of “making people before making parts.”

A Leap of Faith

I was taught repeatedly that lean is a practice, not a theory, or in the words of Taiichi Ohno, one of the founders of lean thinking, “practice over theory.” The general idea is to practice and practice and not worry about theory — and results will come. As a systems thinker, I was uneasy with this leap of faith, but I was forced to admit that managers who adopted this posture had better and more sustainable results than those with staff-driven process improvement programs.

As I continued to puzzle over this conundrum, I was shown a second part of the answer by Orest Fiume, of Wiremold fame. Wiremold’s value grew from $30 million in 1990 to a staggering $770 million in 2000 in a mature industry without any major technological disruption. As its CFO, Orry Fiume had been a key architect of the company’s growth, along with CEO Art Byrne. As Orry expressed in a personal communication, their leitmotiv was that “lean is a business strategy, not a manufacturing tactic.” From many discussions with Orry, it dawned on me that the leader’s role in kaizen step-by-step improvement was the key to overall results. In effect, leaders who use lean as a business strategy learn to

1. 1. visualize processes,
   2. so that employees can practice “problems first” and formulate their problems, and
   3. learn to solve them one by one,
   4. so that senior executives can study proposed solutions and progressively improve the company’s overall policies.

With this framework in mind, I could see a few typical learning areas that are central to lean success:

1. • Products: Toyota did not come to dominate its industry by reducing costs, but by designing and building cars that people bought — mainly through “built-in” superior quality.
   • People: Toyota has a fundamental commitment to developing mutual trust by involving employees in improving their own workplaces, and teaching problem solving at every opportunity by stopping and solving problems rather than working around issues.
   • Lead Time: Systematically accelerating workflows leads to better customer service and surfaces all wasteful operations in processes. Thus, along with product quality, it serves as a natural compass for identifying waste.
   • True Cost: Costs can be separated into the unavoidable cost of doing anything (price of materials, labor, equipment, and so on) and the added cost resulting from the chosen method of operation.

Furthermore, Toyota veterans kept insisting on “teamwork,” by which they meant individual responsibility to solve problems with colleagues across hierarchical and functional barriers. Indeed, according to Toyota’s own history, “just-in-time” was born from its founder’s belief that “the ideal conditions for making things are created when machines, facilities, and people work together to add value without generating any waste.” Kiichiro Toyoda then conceived methodologies and techniques for eliminating waste between operations, both lines and processes, which led to his just-in-time concept.

Three Loops

Discussing these elements with Jacques Chaize, with whom I coauthored “The Lean Leap” (Reflections, Volume 10 Number 3), I finally grasped the system-level explanation for why a relentless focus on individual development leads to overall performance improvement. Firms that do well in lean are those where the CEO gets engineers to do their utmost to really understand customer preferences (“seeking the customer’s smile,” in Toyota parlance), where engineering and manufacturing are taught to work together and come up with workable solutions to technical problems, and where win-win relationships are developed with suppliers. These firms see suppliers as a source of innovation and ideas for higher productivity, not just a resource to be squeezed.

In this sense, the firm can be described as three fundamental feedback loops (see “Three-Loop View”).

The feedback loop between customers and products is essential so that organizations design products that people like and want. The sales growth engine is based on market share and reputation (e.g., what existing customers say about the product). As long as the product is kept in constant sync with customers’ tastes, the top line grows. The second loop is about creating value streams that will consistently deliver good products at an acceptable cost to satisfy both market price and profitability objectives. The key to this second loop is getting engineering and manufacturing to work together to create easy-to-build designs that still fit customers’ preferences. The final loop, the manufacturing/supply chain loop, consists of involving suppliers as partners in order to improve the product’s quality and costs.

In systems thinking terms, we’re filling four stocks:

• Customer Satisfaction: This is the stock of goodwill from customers that will ensure sales, as customers replace their existing products with the newer version and encourage their friends and family to do the same. Customer satisfaction can be increased through better product fit or decreased through poor design, quality defects, slow service, cost of ownership, and so on.
• Engineering Expertise: This stock represents the capability of engineers to understand customer preferences and translate them in design parameters. Again, we can either “get” the customers or miss what they want, and we can either come up with designs that deliver this value or not.
• Shop-Floor Craftsmanship: This stock represents the hands-on know how to build the product safely with minimal waste. This skill grows out of a mixture of engineering astuteness and operator practice through kaizen in order to define working standards.
• Supplier Relationships: This is the stock of relationships that leads to cost-efficient supply chains. This stock is increased when the relationship is strengthened and decreased when it is broken.

Three Implications

There are three broad implications of such a model on our understanding of business management. First, this way of looking at firms goes beyond Toyota’s “lean” model; it also applies to the “German” product culture/family-owned business model, as exemplified by the equally successful Volkswagen, where strong product leadership is the main growth engine. The model also applies to technology-driven companies such as Apple and Google that capitalize on a transformative technology to create “killer apps.” Conversely, the model explains why cost-focused companies constantly lose ground by squandering customer confidence, which leads to lower sales, further cost reductions, lower margins, less investment capacity, lower customer satisfaction, and so on.

Second, this model makes it clear that continuous improvement is a “one mind at a time” problem. All four critical stocks in this framework have to be increased at the individual level: every customer matters, every engineer counts, every operator has to be involved, and every supplier needs to be developed. On the management front, this fact argues against sweeping motions and across-the-board policies, and for a deeper case-by-case management style where the leader’s role is to point toward ideal conditions and support every person on his or her way there.

Finally, the overall conclusion of this three-loop view of the firm is that a leader’s role is not to manage performance directly, but to create the right conditions for performance. Although the “I say-you do” style is more reassuring, a teaching approach turns out to be both quicker and more effective. By distinguishing conditions from day-to-day events, one can determine the broader challenges and then get the full benefit of small-step kaizen. Rather than set task-level objectives, business leaders can thus determine overall dimensions and support their personnel in progressing by repeated practice — putting learning at the heart of day-to-day work.

The overall conclusion of this three-loop view of the firm is that a leader’s role is not to manage performance directly, but to create the right conditions for performance.

The Three Knowledge Wheels

One of the enduring mysteries of lean is that when companies practice it effectively, their costs go down — although they never directly address expenses. The lean CEO safeguards her people and protects her customer, controls and reduces lead time, and relentlessly teaches problem solving — and costs go down! Actually, sales go up, costs go down, and profitability increases. Yet, despite this inevitable truth, it’s difficult to articulate a system level story to argue against the standard cost logic of financiers and accountants.

This problem is as true now as it was in Taiichi Ohno’s times, as he railed about the real-world costs of narrow-sighted cost-based logic. The Three Loop view proposes a framework to help business leaders base their long-term perspective on the experience of, each and every day, turning the three knowledge wheels of following customers, building teamwork between engineering and manufacturing, and developing win-win relationships across the supply chain.

Michael Ballé, PhD, is cofounder of the Institut Lean France and associate researcher at Télécom Paristech. He is the author of Managing with Systems Thinking and coauthor of The Lean Manager and The Gold Mine, for which he received the Shingo Prize in 2006 and 2011. Michael writes the weekly Gemba Coach column for the Lean Enterprise Institute. m.balle@orange.fr

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