Using the Archetype Family Tree

The Systems Archetype Family Tree is based on two principles: that the systems archetypes are related strategically to each other, and that many situations can be described by progressing through several archetypes as they are linked on the tree (see “The Archetype Family Tree”). The tool is intended to help you use the relationships between archetypes to figure out how to begin looking at a new situation, and to gain increasing understanding of a problem as you work through the tree.

For example, suppose you were one of the proprietors of that lawn care company. You would start at the top of the chart, thinking about the nature of your situation. Is the phenomenon you want to understand something that used to be growing, whose growth you would like to reinstate, or something that is growing too quickly and you are worried about where it might lead? Then wind your way through the statements on the reinforcing (left-hand) trunk of the tree to see if they apply to your situation.

In this particular case, growth was not an issue; they had a debt problem to consider. If you, like the lawn care company owners, are trying to fix a chronic problem that persists despite your efforts to fix it, you want to work through the balancing (right-hand) trunk. Again, follow the chain of logical relationships, continuing to identify elements of your story.

For example, the lawn care proprietors’ fix” was to borrow whenever their cash flow was low (BI in “A Diagnostic Journey through the Archetype Family Tree”). As they serviced their mounting debt, however, the fix came back to haunt them in a “Fixes that Fail” structure (R2).

A Diganostic Journey Through The Archetype Family Tree

Working through the family tree reveals that what began as a simple balancing process(borrowing to meet cash needs) becoming a “Shifting the Burden” structure, in which the real leverage is to tighten financial control.

The lawn care proprietors sensed they were trapped in a “Shifting the Burden” process because they were not addressing the more fundamental issue of weak financial controls (B3). The borrowing fix was making matters worse by reinforcing a “loose” spending mentality (R4). Having diagnosed the situation, they could take effective action by focusing more attention on the root causes of their problems — low income and high spending — by tightening their budget and investing in better financial management tools.

Experimenting

Experimentation is key to using the archetypes most effectively. It is probably most useful to look at a particular situation or problem through the lens of several different archetypes, moving through the “tree” as needed. You may find yourself combining archetypes, adding loops and links to adapt them more completely to your story. By the time you have gleaned what you can from them, the loops may be five or six generations removed from the original archetype with which you began.

Michael Goodman is vice president of Innovation Associates (Framingham, MA). Art Kleiner has a long-standing background writing about business, environment, and systemic issues. This material will appear, in a different form, in the Fifth Discipline Fieldbook (Doubleday, forthcoming Spring 1994) .

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—Dr. Alan G. Whitney, president of Pacific Synergies Ltd., Vancouver

Companies are cleaning up.

During the past 20 years, many businesses challenged the environmental movement, minimally met pollution controls, fought stricter standards, and resisted costly cleanups. Today. however, changing consumers and a changing economy are demanding that industries take action.

“Over the last 20 years, as environmental limits have become more apparent, communities, businesses and governments have started to take action.”

“Twenty years ago, corporate leaders had to be dragged into pollution control,” state Emily T. Smith and Vicki Cahan of Business Week.

“Today, a minority are taking up the cause of pollution prevention, for good reasons…. Accidents such as the one that killed 2300 people at Union Carbide Corporation’s plant in Bhopal, India in 1984 drove corporate credibility on the environment to an all-time low.” (“The Greening of Corporate America.” Business Week, April 23, 1990, p. 96).

Questioning Growth

One of the engines of change has been the publication of The Limits to Growth in 1972. This book was based on a two-year study at the Massachusetts Institute of Technology in which a system dynamics model was built to explore the long-term consequences of growth in population, industrial capital, food capacity, resource consumption, and pollution. It warned that if current growth trends continued unchecked, the limits to growth on the planet would be reached sometime within the next 100 years — and it created a furor.

Debated, criticized, and praised, the book went on to sell 9 million copies in 29 languages. Many readers questioned the validity of the model, while others claimed the book was making unjust predictions about growth. Perhaps the most controversial aspect of the book was that it challenged the belief that continual material growth is desirable. The book’s message was an uncomfortable one — it called for fundamental changes in beliefs and actions in order to create a sustainable future.

Over the last 20 years, as environmental limits have become more apparent, communities, businesses, and governments have started to take action. Research to control pollution emission has led to stricter emission standards and the exploration of alternative energy and power sources. Pollution control and cleanup has become an over $100 billion market, and it is still increasing as the demand for cleaner technologies and products grows. Criminal fines for polluters violating federal laws increased over 80% percent in 1989 alone. Companies have found that eliminating toxic wastes and pollution can actually save money in resources and energy as well as waste disposal.

So where do we stand now, 20 years later, in relation to the earth’s limits? How can we work toward creating a sustainable economy that will not overshoot its limits? And what are the future implications for business? These are the questions addressed by a follow-up to The Limits to Growth that was published just last month — a book that is likely to prompt more debate and awareness as well as more action.

Growth: A Tragedy of the Commons

Beyond the Limits: Confronting Global Collapse and Envisioning a Sustainable Future, is an attempt by three of the original authors (Donella Meadows, Dennis Meadows, and Jorgen Randers) to re-evaluate the earth’s sustainability and society’s impact upon it, given the present conditions. What they found is sobering: despite the world’s improved technologies, greater awareness, and stronger environmental policies, many resource and pollution flows have grown beyond their sustainable limits. How did this happen?

According to Beyond the Limits, the limits to growth on our planet are equal to the limits of the planet’s ability to provide materials and energy, as well as the ability of the planet to absorb pollution and waste (see “Environmental Sources and Sinks”). Since 1973, the earth’s population has risen from 3.6 billion to 5.4 billion. As this ever-increasing population demands more resources to support it, the subsequent strain upon the earth’s resources has also grown exponentially. The result is a “Tragedy of the Commons” situation, where actions taken for individual gain are collectively overtaxing the earth’s resources.

As Garrett Hardin described this phenomena in a 1968 essay, imagine a pasture (like the Commons in an English village) that is open to all townspeople. Each villager is allowed to graze as many cattle as he or she desires — the more cattle they graze, the better their profits. But if too many cattle are added, the whole commons could become overgrazed, depriving the entire villages’ cattle of food. Despite the threat overgrazing presents to each villager, the “Tragedy of the Commons” structure encourages the villagers to each add to their own herd to increase profits (“Tragedy of the Commons: All for One and None for All,” Vol. 2, No. 6). Eventually, the pastures can become so depleted that even the grass roots disappear, permanently destroying the pasture itself. As a result, each individual pursuing actions in his or her own best interest creates an outcome that is worse for everyone.

Environmental Sources and Sinks

“The human population and economy depend upon constant flows of air, water, food, raw materials, and fossil fuels from the earth. They constantly emit wastes and pollution back to the earth. The limits to growth are limits to the ability of the planetary sources to provide those streams of materials and energy, and limits to the ability of the planetary sinks to absorb the pollution and waste.” (Beyond the Limits)

To compare this scenario with the exponentially growing world population and industrial base, imagine that not only the number of cattle (resource drains and pollutants) are growing, but that the neighboring townspeople have all heard of the beautiful, spacious pastureland and want to use the commons for grazing. So the number of cattle herders (people, companies, industrialized countries) increases as well. Not only will the group reach the pastureland’s limits, but they will reach them more quickly. That, according to Beyond the Limits, is the situation we face as a world population.

Reaching the Limits

What will happen as we reach the earth’s limits? There are four possible outcomes (see “Approaching the Limits: Four Possibilities”):

1. If the limit is very distant or growing faster than the demand, growth can continue without interruption.

2. Growth can approach the limits smoothly and then level off when it reaches those limits.

3. It can gradually come into balance by overshooting the limits, coming back down, and shooting back up again (much like how a thermostat adjusts the temperature in a room).

4. It can overshoot the limits, destroy the resource base, and subsequently collapse.

One of the most common arguments for continued industrial growth is that better technology will find solutions to the problems we are creating. This argument supports the first possible outcome — it says that by continually pushing back the limits, we will allow continued growth.

Structurally, however, the rate at which growth is occurring is too fast for correction. Due to the layering nature of limits, the number of limits we will run into is increasing as well — once we remove one limit, we often encounter another one. Technological advancements that remove one limit can create additional limits: nuclear power plants, for example, have helped replace fossil fuel usage, but their by-products are choking landfills with toxic waste.

The example of emission control for cars illustrates the structural difficulties inherent in trying to use technology to manage the dynamics of exponential growth. Even if we can cut pollution emission by 50, 60, or even 90%, if the number of cars is always increasing exponentially, the amount of pollution will also continue to grow exponentially. After a certain point, reducing the emission levels will prove too costly for any technology.

The Danger of Overshoot

Systemically, the only way for an exponentially growing human economy to prevent reaching a planet’s physical limitations is to balance its inflows and outflows. This requires two actions: (1) reducing usage of nonrenewable resources to the rate at which renewable resources can be substituted for them, and (2) reducing the rate of renewable resource use to equal regeneration rates. Likewise, the emission rates for pollutants need to be brought down to equal the rate at which they can be absorbed, recycled, or rendered harmless.

The difficulty in smoothly balancing the inflows and outflows lies in the time delays involved. Anything that is growing will stop at its limits only if it recognizes that it is reaching those limits and responds quickly. Due to the inherent delays in the global system, it is almost impossible to get accurate and timely feedback on the impact of industrial growth on the environment. For example, in the case of the impact of chlorofluorocarbons on the ozone layer, there is a long delay between the release of a CFC molecule into the air and the subsequent destruction of ozone. Because of the long delays, even if all the CFC releases into the air were stopped today, ozone depletion would continue for at least a century.

The result is that in most “Tragedy of the Commons” structures, the system shoots beyond its limits before it gets the signal that it has gone too far. That, in effect, is what has happened already, according to the World3 model used in Beyond the Limits — we have already overshot many of the earth’s limits. Whether or not we will ease back down below the limits (by bringing the inflows and outflows in line), or destroy the resource base and experience a collapse, depends on the quality and timeliness of our response to the challenges we face as a planet.

Implications for Business

The basic message in Beyond the Limits is that the pressures created by growth are not going to disappear — there are fundamental structural reasons why they must be addressed sooner or later. The situation is analogous to the case of our trade debt and federal debt — we have been borrowing from the future in order to live better today. In the same sense, we have also been accruing an environmental debt without knowing what the true cost of borrowing is nor what the payback schedule is going to be. A systematic plan to begin paying back our environmental debt needs to be put in place before we reach the limits of nature’s reserves.

In presenting World3’s findings, Beyond the Limits challenges companies to examine long-term investment and future limitations rather than gauging success based on short-term profits. Art Kleiner, in a recent article in the Harvard Business Review, stressed that such changes are crucial: “Industry (and nations, for that matter) cannot thrive if they sacrifice future quality of life for present economic gain” (“What does it Mean to be Green?” July-August, 1991, p. 38). Keeping within the earth’s limits and working toward a sustainable society will require fundamental changes in the way our organizations’ goals and incentives are structured. For example, the following will need to be addressed:

• Product Lifecycle Waste Management. Every ton of garbage at the consumer end has already produced 5 tons of waste at the manufacturing stage and 20 tons of waste at the initial site of mining, pumping, logging, or farming. As recycling and conservation efforts increase at the consumer level, pressure for pollution cleanup and prevention upstream in the manufacturing process is likely to increase.
• Total Package and Product Redesign. Current packaging methods produce a large amount of no recyclable waste. Companies that invest in changing the way they manufacture, package, sell, and dispose of their products can be more competitive in the emerging environmentally conscious marketplace. Some car manufacturers, for example, are experimenting with new designs that will allow for easy dismantling so that each part can be recycled.
• Environmental Accounting. Being able to track the costs associated with harmful by-products of manufacturing will become increasingly more important. While any good accounting system can report on the usual financial measures, new systems will be required to estimate environmental liabilities that may be growing beyond industry’s means to deal with the future costs that are being accrued.
• Shades of “Green.” There is now an opportunity to redefine the marketplace into shades of green consumers: from the “pale green” end where consumers will choose products that are environmentally friendly but require little effort or sacrifice on their part, to those who are “deep green” and will go out of their way to patronize companies whose products and services are deemed to be environmentally friendly. Companies who can appeal to the full spectrum of the green consumers are likely to be well positioned to compete in the new marketplace.

If there is anything to be learned from the last 20 years, it is that the environmental movement is not a passing fad but a permanent reality. There are genuine structural reasons why the issues will continue to grow in importance. The choice that companies must make is whether to be a leader in becoming more environmentally responsible, to be in the middle of the pack, or to be a laggard that kicks and fights inevitable changes at every step.

Building a Sustainable Future

“A sustainable society,” according to the authors, “is one that can persist over generations, one that is far-seeing enough, flexible enough, and wise enough not to undermine either its physical or its social systems of support…. From a systems point of view a sustainable society is one that has in place informational, social, and institutional mechanisms to keep in check the positive feedback loops that cause exponential population and capital growth.”

Sustainability does not mean stagnation. A sustainable society is interested in qualitative development, not sheer physical growth. It requires that we begin to ask questions such as what the growth is for, who would benefit, what would it cost, how long would it last, and whether or not the planet’s sources and sinks could accommodate it.

To achieve a sustainable economy, according to the authors, the most important change of all needs to take place individually, as we re-evaluate our mental models about consumption and waste. We must let go of the “sacred cow” that growth at all costs is desirable. People might have to change from a “have it all now” philosophy, valuing a high standard of living, to an attitude that values an improved quality of life for the present and the future. Asking ourselves about the actions we take and what their future effects will be — not just in terms of market share and profits, but in terms of future resource availability and environmental impact — will challenge us to make the right decisions for a shared world.

Businesses have the opportunity to make the greatest impact toward building a sustainable future. Activists can educate, consumers can work on an individual level, and government can legislate — but businesses can act. Industry has the opportunity to innovate and create the changes that will push the environmental movement past the “hype” and into a world of genuine action.

As the economy tightens, some businesses and consumers may think they can’t afford environmental improvements. But failing to protect the environment might end up costing far more than preserving it. Eastern Europe’s current “ecotastrophe” is a case in point: Hungary’s Deputy State Secretary estimated that health problems and loss of production due to pollution reduced their nation’s gross domestic product more than 6%. (“Is the Planet on the Back Burner?”, Time, Dcc. 24, 1990, p. 48-50).

Making educated choices around such issues is the challenge of operating a business in today’s world—the largest industrial group on the smallest overpopulated pastureland that has ever existed. But if businesses do not stop to challenge the choices they are making, they might discover they have travelled down the wrong path in the long run—the path of real economic loss and the destruction of vital resources.

Meadows, Donella, Dennis Meadows. and .10rgen Randers. Beyond the Limits. (Chelsea Green Publishing Company. 1992); Further Reading: Milbraih, Lester. Envisioning a Sustainable Society: Learning Our Way Out. (SONY Press, Albany, 1989)

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Having worked with a number of new enterprises and groups within large organizations that have achieved success and rapid organizational growth, we have come to believe there is a dark side of success. In years of exposure to these kinds of situations, we have seen patterns that appear independent of the individuals involved, in which accomplishment leads to dysfunction, and accolades give way to frustration and dissatisfaction. If ignored by senior executives and management teams, these patterns can lead to the spiraling decline of the organization. If, on the other hand, leaders anticipate and deal with these dynamics in a timely and disciplined way, they can lead their organizations to sustained success on both a business and a human level.

In his recently published book DEC Is Dead, Long Live DEC: The Lasting Legacy of Digital Equipment Corporation (Berrett-Koehler, 2003), MIT management professor emeritus Ed Schein identifies a number of “invisible” consequences of the rapid growth of DEC in the 1960s–1980s. These insights emerged from his 26 years of consulting with the CEO and senior management team. In cases we have studied, we also recognized some of these same consequences in their early stages.

As organizations grow and disperse geographically, four things tend to happen.

What happens in organizations as part of the growth process that almost inevitably leads to dissatisfaction?

• First, employees lose familiarity with one another, and work relationships become less predictable and more difficult to manage.
• Second, open communication both upward and laterally in the organization becomes more challenging and time-consuming.
• Third, the organization as a whole finds it difficult to achieve strategic focus.
• Finally, anxiety grows among executives and employees alike.

These problems can escalate over time and, left unaddressed, bring even the most vibrant organization to its knees.

So how do you identify and constructively deal with these issues before it’s too late? A recent case study illustrates some of what we believe are generic systemic patterns in rapidly growing organizations that are variations of the “Limits to Growth” systems archetype, as well as potential interventions for managing the challenges of success.

Growing Challenges

A highly successful nonprofit organization had just opened a second office and hired new employees to serve the dramatically increasing customer base. Shortly after, a new president/COO came on board to help the CEO deal with the growing organizational size and complexity.

As the new COO worked toward creating a strategic plan, she became increasingly uneasy. She saw problems regarding:

• The capacity of managers to deal with the challenges of a larger and more complex organization;
• Negative and sometimes hostile attitudes of some senior staff members;
• Executives who used the excuse of not understanding the organization’s goals as a license to do their own thing; and
• The unwillingness of some of the veterans to deal with the process and human implications of growth.

In interviews we conducted with the COO, she told us of her frustration and anger at several members of her management team. She had spent many unproductive hours trying to work with them, to no avail. She had reluctantly reached the conclusion that they were having a negative impact on the rest of the staff as well and would have to go.

At the invitation of the CEO and COO, we began to investigate the situation. We conducted a series of interviews with the senior management team and identified five key issues:

• Lack of clarity and agreement about the meaning of their shared vision;
• Employees’ feelings of being excluded from the team and lack of understanding regarding the needs of the larger organization;
• Competition and turf battles resulting in part from the opening of the second office;
• Lack of clarity and enforcement regarding recent delegation, empowerment, and accountability decisions; and
• Inadequate management training in the skills required to lead a more complex and stratified organization.

What was it that caused all of these issues to surface at about the same time in an apparently well-run and successful organization? A systemic view of the situation, developed by participants in three two-day “Learning Labs” over a six-month timeframe, provided some provocative insights. Participants in the Learning Labs included the CEO, COO, and all senior managers. By working with causal loop diagrams of the dynamics they described, the group was able to identify some leverage points for change and ultimately reverse the negative dynamics that had begun to dominate the organization.

SUCCESS ENGINE PART I

The Engine of Success

Our initial task was to try to understand what had enabled the organizazation’s growth and success in the recent past. Once we clarified the core process the management group viewed as responsible for their earlier accomplishments, we could explore ways for them to redirect their efforts and sustain that success into the future.
In this case, the group identified clarity of goals as having played an essential role in the past. Because of its relatively small size in earlier years, all employees participated in clarifying the organization’s objectives. With clear goals, the organization was able to effectively target its resources toward high-leverage activities. Identifying such focused activities also allowed employees to align all their efforts — from mission through strategy to final results — for consistent outcomes. This alignment ultimately led to high levels of performance. And once people saw the tangible benefits that resulted from having clear goals, they were even more willing to invest time and energy in the process (see “Success Engine Part I”).

With the organization’s rapid growth, communication among business functions became more difficult, and senior managers and employees had come to hold widely varying interpretations of what the goals of the organization actually meant. The management team realized that clarifying goals and getting organizational alignment once again would have a positive impact on employee morale and teamwork.

SUCCESS ENGINE PART II

In addition, with clear goals and a compelling mission, stakeholders, including board members, healthcare providers, and members of third-world governmental agencies, would feel more committed to the effort. Increased support from stakeholders would help to boost employee morale. The team believed that when people feel optimistic about their organization’s prospects, they can more productively engage in teamwork and feel more comfortable engaging in open, honest communication. Candid communication and improved teamwork then permit the deeper dialogue that leads to even greater clarity about shared vision and goals (see “Success Engine Part II”).

The management team came to the conclusion that, by making the mission and goals absolutely clear, consistent, and compelling, they could ensure that each employee knows how their everyday actions contribute to overall organizational success. Workers could also plan their activities with total focus, avoid any projects or activities that do not contribute value, and prioritize the rest based on their level of contribution to organizationwide objectives. Through the causal loop diagrams, the team was able to see how they had created an engine for growth and success in the past, and gained confidence that they could do so again in the future.

THE DARKER SIDE OF GROWTH PART I

The Dark Side of Growth

Having come to an understanding of how their organization could operate effectively, the management team then focused their energies on how the system was currently operating and what was impeding or could impede their progress. They recognized that there is in fact a dark side to growth that comes with success.

As the team discovered, as growth continues, functions and departments become larger in size and more specialized in their activities. Consequently, they tend to become differentiated from each other, and communication between and among them becomes more difficult than when the organization was smaller (see “The Darker Side of Growth Part I”).

THE DARKER SIDE OF GROWTH PART II

As communication and understanding decreases, workers find it more challenging to understand how, why, and by whom decisions are made. Morale begins to decrease; many employees become less engaged than previously; and the organization’s success is imperiled.

In addition, as the decision-making process becomes murkier, the lack of clear shared goals and priorities reduces the level of alignment in the organization and erodes trust. For when we can no longer be sure that we want the same things as our managers or coworkers, how can we have confidence in our ability to work together? Reduced trust further reduces morale, engagement, productivity, and, in the long run, organizational success. As defensiveness and suspicion grow:

• Negativism and provincialism rise, which undermines interdepartmental communication even further and makes organizationwide support for decisions less likely.
• Actions taken to mitigate the negativism and provincialism cause people to focus on why decisions don’t work — the problem — instead of on what we can do together to meet our goals — the solution. Leaders’ efforts to respond to the defensiveness lead to inconsistencies in priorities, and drain time and energy.
• The perceived inconsistencies in priorities reduce alignment among employees, thereby increasing competition for resources and further boosting defensiveness and suspicion (see “The Darker Side of Growth Part II”).

The Emotional Side of the Structure

From our interviews with the management team and conversations during the Learning Labs, we could see some significant emotional reactions that were resulting from the organization’s rapid growth. Levels of anger and defensiveness had begun to rise over time, while some workers’ self-esteem and feelings of belonging had plummeted. This pattern was consistent with our experiences in other organizations.
These problems again seem to stem from the fact that, as growth increases, groups can no longer include everyone in every decision. When people feel excluded, they become defensive and suspect others’ motives. They also begin to doubt their own abilities to contribute, which leads to anger in some and reduced self-esteem in others.

THE DARKER SIDE OF GROWTH PART III

The Outcomes

The development and analysis of the causal loop diagrams through interviews and the Learning Labs resulted in two important conclusions:

• The problems the organization was facing were not unique, but were the result of their very success and rapid growth.
• There were no villains in the story, only people trying to do their best in a systemic structure that generated some unfortunate and at times dysfunctional behavior.

The systems map indicated two key leverage points for immediate action: creating more clarity around the vision and goals, and improving the transparency and understanding of the decision-making process. The management team also identified a longer-term action: to hold “dialogues” on a regular basis to provide a safe mechanism for dealing with the emotional issues that surfaced.

In a rapidly growing organization where there is significant momentum and stress around accomplishing all the tasks associated with that growth, the decision itself to take time for reflection requires courage on the part of leaders.

With some initial reluctance, senior managers agreed to revisit the shared vision and goals to clarify any ambiguities and ensure that they were consistent with each other. They evaluated the outcomes expected from each goal, the metrics by which they could define success, and the method to be used to resolve conflicting priorities that might arise. During this process, inconsistencies and lack of clarity in the meaning of some of the objectives were revealed. The team also came to understand why some staff members responsible for specific goals were not aligned on priorities or action plans. In fact, in one dramatic example, at one point, the CEO confessed, “I guess I fudged that one to make it acceptable to all the board members.”

Once the group agreed on the goals, they worked to create a transparent decision-making process and establish a means for quickly disseminating decisions and their rationale to all employees. The team agreed to delegate decision-making authority to the level as close as possible to the actual work. In fact, instead of specifying what authority they would delegate, members created a “reservation of authorities” document, with a rationale for each decision-making authority that was reserved for senior management only.

The group communicated the results of this effort to all employees. As a whole, the organization launched an initiative to tie department and individual work assignments and performance reviews directly to the organization’s goals. Six months after completion of the project, the CEO and COO reported:

• They had a more cohesive management team.
• The decision-making process is working, and people are no longer complaining about not understanding what decisions were made or why.
• The organization is using performance reviews for each employee and an overall scorecard for senior management that tie directly to the organization’s goals.
• Employees are more aware of and skilled in surfacing mental models and understanding and dealing with different perspectives.</li.
• Teams occasionally slip back into a silo mentality and have not yet fully internalized the systems view, but they are continuing to work on doing so together.

The Issue of Inclusiveness

As we have shared this work with colleagues, we have been struck by the degree to which they report having encountered similar business and emotional dynamics in other organizations. It appears that many of these issues are, in fact, quite generic in situations where there is rapid organizational growth. Usually, senior managers fail to recognize and constructively deal with these patterns. Instead, the “blame game” often seems to prevail, thus precluding people from seeing and addressing situations from a systemic perspective to the detriment, and sometimes the demise, of the organization.

The issue of inclusiveness seems to be at the core of the emotional dynamics that arise in rapid organizational growth situations. People want to be a part of and contribute to their organization. When they feel thwarted, intense feelings and sometimes dysfunctional behaviors arise.

Executives and managers who subscribe to the myth that you can simply grow out of your problems do so at their own peril. As illustrated in the diagram, if organizations do not address these issues, a cycle of dysfunctional thinking, feeling, and acting can escalate and, over time, undermine success.

To avoid this drastic outcome, as happened in this case, senior managers first need to take the time to reflect on and understand the systemic structure in which they are operating. In a rapidly growing organization where there is significant momentum and stress around accomplishing all the tasks associated with that growth, the decision itself to take time for reflection requires courage on the part of leaders. Managing success then involves proactively clarifying and creating alignment around strategic goals, understanding the complexities of their systemic structure, and implementing a clear and transparent decision-making process along with an ongoing infrastructure to allow employees to voice and discuss their concerns. As shown in this case study, such steps can constructively transform an organization and enable continued growth and success.

Jeff Clanon is a founding consultant member and the director of partnership development for the Society for Organizational Learning. The Society (SoL) is a nonprofit, member-governed organization dedicated to building knowledge about fundamental institutional change through integrating research, capacity building, and the practical application of organizational learning theory and methods. SoL evolved from the Center for Organizational Learning at MIT, where Jeff was the executive director for five years. Fred Simon is an independent consultant, a founding member and member of the governing council of SoL, and an adjunct faculty member of the University of Michigan. He worked for Ford Motor Company for 30 years, where he pioneered new approaches to creating leadership at all levels. For more information about SoL, visit www.solonline.org.

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Nevertheless, despite the progress illustrated by these and other cases, the forces of unsustainable growth and resource exploitation have continued to compound. So the release of Limits to Growth: The 30-Year Update (Chelsea Green, 2004) by Donella Meadows, Jorgen Randers, and Dennis Meadows comes at an important time. For newcomers to the systems approach, the 30-Year Update presents the logic of overshoot and collapse and emphasizes the urgent need for sustainability without dwelling too much on the mechanics of the methodology (see “Key Terms”). At the same time, those already inclined to see things from a systems perspective not only have their mental models reinforced and refined, but also have a series of cogent examples to draw upon when spreading the gospel of sustainable development.

Systems and Growth

Three themes emerge in the book: background on systems and the mechanics of growth; the introduction of a formal computer model, known as World3, and some of the scenarios that it produces; and implications and recommendations (see “The World3 Model” on p. 9). Throughout the volume, but particularly in the first three chapters, the authors explain the basic laws of system structure and behavior with a lucidity that comes from decades devoted to the dissemination of these concepts.

Though usually considered “best practice,” it is not common to come across computer modelers who clearly communicate the purpose of their model and its associated boundaries; that is, the question the model was intended to address and those for which it loses its ability to provide meaningful insight. So it is a treat (for modeling geeks, anyway) to have the authors devote several pages to just these concerns in the course of their introduction to the World3 model. The central question they mean to address is: Faced with the possibility of global collapse, what actions can we take that will make a difference and lead to a sustainable future? It is clear that this is a model whose primary purpose is to help us think, not to provide the answer. In the course of laying out their model’s purpose, the authors make one of the best cases for “modeling for learning” that I have come across.

The authors introduce a variety of potential actions into the World3 model, at first, one-by-one, then in logically consistent groups. Each run, or scenario, provides insight into how that potential action or group of actions might affect the course of future events. In this way, Meadows, Randers, and Meadows are able to prioritize potential actions in order to come up with the set that offers the greatest opportunity for avoiding the worst consequences of collapse.

Recommendations for Action

In the end, World3 does provide an answer. Of the various assumptions tested and given the boundary conditions of the model, we can still make a transition to a sustainable global society if people around the world immediately take the following actions:

1. Stabilize the population
2. Stabilize industrial output per person
3. Add technologies to:
   • Abate pollution
   • Conserve resources
   • Increase land yield
   • Protect agricultural land

The bad news is that we have already begun to experience symptoms of overshoot—water tables are dropping rapidly in some areas and incidents of coral bleaching have risen but two of the most urgent signals. The good news is that, as the authors’ account of the ozone story demonstrates, once the global community sees the clear need for change, change can come about quickly.

According to the authors, people respond to signals that a system has overshot its limit in one of three ways:

1. Deny, disguise, or confuse the signal that the system is sending
2. Relax the limits through technological or economic action
3. Change the system structure Certain elements of society are

stuck in response 1, regardless of the growing mountain of evidence calling for action. We see this mindset in the refusal by some politicians to acknowledge the science behind global warming. Others place their faith solely in the market and/or technology, even though the price would be extremely high if the market system and new technologies fail to save the day. The only truly effective response is to change the system structure, the sooner the better.

This was the core message of the original Limits to Growth. And while that message became a part of society’s broad environmental consciousness, the warning went largely unheeded. The result is that the party’s nearly over, and we need to figure out how to minimize the hangover.

Restructuring Society

Because structure determines behavior, the highest-leverage approach to these problems is to change the underlying structures that have created them, such as farming techniques, forest management policy, end-user attitudes toward consumption, recycling, and reuse, and legislation regulating pollution. So how do we go about restructuring the global system? The authors share the tools they have found to be useful: rational analysis, data gathering, systems thinking, computer modeling, and clear communication.

Notice that these tools really have more to do with making the case for change than they do with enacting change that has been agreed upon. That is, they are exceptionally useful for helping lawmakers understand the need for change and explaining to corporate decision makers the logic behind a shift. These tools can even guide the overall implementation of a change effort. But once the case has been made, the day-to-day activities can look somewhat like business as usual: rewriting laws, redesigning products and processes, reorganizing departments, and so forth. The difference is that the guidance offered by these tools means the change is less like rearranging deck chairs on the Titanic and more like fixing the hole in the ship.

The 30-Year Update is compelling: We have already overshot the planet’s carrying capacity on numerous vital resources. Whether humanity is successful in avoiding the most disastrous effects of collapse will be determined in part by the actions taken by people across our society and planet. Unfortunately, politicians and other leaders often seem to be linear and “black-and-white” thinkers. Navigating the turbulence ahead will require decision making that appreciates non-linearities and shades of grey. The 30-Year Update will bring some to the sustainability camp. But more important, it will inspire others—those with the necessary perspective—to take action. There’s no time to waste.

Gregory Hennessy is honored to have worked with Dennis Meadows on several occasions and to have met the late Dana Meadows once.

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But no exponential growth process can continue forever. A system that is dominated by reinforcing loops will quickly encounter one or more limits. These limits will eventually cause some balancing loop to become dominant, a process known as shifting dominance. By better understanding reinforcing processes and shifting dominance, practitioners can more easily detect them in their early stages and intervene appropriately before they spiral out of control.

Purpose

Participants engage in this exercise to:

• experience some important physical features of a process that exhibits doubling and exponential growth
• confront the phenomenon of shifting dominance
• practice drawing and interpreting behavior over time graphs and causal loop diagrams.

Context

“Paper Fold” provides a wonderful illustration of the power of reinforcing processes. When we are struggling to help our clients or audience understand the behavior of some reinforcing loop that resides at the heart of a relevant issue, we often find it useful to take five minutes to do this activity. We like this exercise in part because of its simplicity and portability. If presented in the spirit of inquiry, exploration, and playfulness, “Paper Fold” can help participants confront their own misperceptions about causality and exponential growth in a nonthreatening way.

Equipment and Set-up

You need one small cocktail napkin or paper-towel square for each participant. A sheet of regular typing paper is too thin to work well.

If you don’t have enough napkins for everyone, you can hold one up and demonstrate folding it as outlined below. However, having people watch the exercise rather than experience it for themselves may reduce its impact.

Instructions

Instruct the group to do the following: “Take the napkin (or paper-towel square). Fold it in half, fold it in half again, and fold it in half again. Now fold it in half a fourth time. After four folds, it is about 1 cm or a 0.4 inch thick.” Continue, “Of course, you could not fold the napkin in half 29 more times. But if you could, how thick would it be?”

Because the answer to this question is highly counterintuitive, most people will not know it. To stimulate discussion, we suggest a number of different thicknesses and ask participants to raise their hand for the answer that seems most reasonable. For example, we say, “Who thinks it would be less than a foot thick? How about from the floor to the ceiling? How about from here to the top of the building?” Then we share the correct answer: “Folded 29 more times, this napkin would be 3,400 miles thick, the distance from Boston, MA to Frankfurt, Germany.”

Debrief

Most participants consider the correct answer totally preposterous and assume there is a trick to it. In debriefing the exercise, we suggest first demonstrating the math behind the answer. Use slides or a white board to show the dramatic outcome of doubling anything 33 times: 1, 2, 4, 8,16, etc. Doubling something 29 times increases it by a factor of about 540 million. After four folds, the napkin is about 0.4 inches thick. Doubling it 29 more times would produce a thickness of 216 million inches. A mile is about 63,400 inches, so the folded napkin would be a little over 3,400 miles thick.

At this point it is useful to ask people to draw the behavior over time graph for the thickness of the napkin, assuming that they could accomplish one fold every second for 33 seconds.

Depending on the time available, you may want to prepare other examples to further explore this dynamic. Population growth is a dramatic illustration that piques people’s interest. You can say, “We chose to illustrate 33 doublings in this activity for a reason. Today’s global population is almost 33 doublings from the first person on Earth. More than 6 billion people currently live on the planet. In other words, an individual relates to the planet’s population as the thickness of a single sheet of paper relates to the distance from Boston to Frankfurt.”

A traditional French riddle also illustrates the surprising nature of exponential growth: Suppose a water lily is growing on a pond in your backyard. The lily plant doubles in size each day. If the lily were allowed to grow unchecked, it would completely cover the pond in 30 days, choking out all other forms of life in the water. For a long time, the plant seems small, so you decide not to worry about cutting it back until it covers half the pond. How much time will you have to avert disaster, once the lily crosses your threshold for action? The answer is, “One day.” The water lily will cover half the pond on the 29th day, leaving you only 24 hours before it chokes out the life in your pond.

The behavior in all of these instances seems counter-intuitive. We generally expect things to follow linear patterns of growth. Linear growth occurs whenever a factor expands by a constant amount each time period. But positive feedback causes a factor to expand by a constant percentage each time period. In this second case, the change process starts slowly; in folding the napkin, no significant change is noticeable for many doublings. Then, although the underlying growth process hasn’t changed at all, an explosion seems to occur. The 34th doubling would actually add another 3,400 miles to the napkin’s thickness, as much as has accumulated throughout all past history.

To understand this behavior, it is useful to show a causal loop diagram of the underlying loop structure. If you have time, ask participants to work together in small groups to draw the simplest possible diagram that explains the growth in the napkin’s thickness.

Here, R1 is the dominant loop. For a constant folding rate, the greater the thickness of the napkin, the greater the amount added by folding. As the amount added by folding goes up, the thickness of the napkin increases as well.

Variation

If you have time, create two-person teams. One person folds and the other plots the thickness on a simple behavior over time chart, with the number of seconds (assuming one fold per second) on the horizontal axis and the thickness of the napkin on the vertical axis.

Did the groups’ behavior over time graphs look like the figure on p. 5? Obviously not. The teams find that it is impossible to fold the napkin more than seven or eight times. At that point, the thickness stops growing. The exponential growth plateaus once you can no longer fold the napkin What causes this behavior? The answer is: shifting dominance.

Initially, change in the napkin’s thickness is influenced only by the reinforcing loop (R1). At that point, growth in the napkin’s thickness does not produce any palpable increase in its stiffness. But as the thickness increases, the stiffness starts to increase. The resistance to folding grows until no amount of human effort can produce another fold. The balancing loop (B2) has become dominant.

Shifting dominance is an important phenomenon for all managers to comprehend. When it occurs, successful policies that have been learned and refined over time no longer work; they may even become counterproductive. Management lore is full of stories about leaders who mastered one way of attaining success by identifying and pushing on the dominant reinforcing loop governing progress in their firm. But then some limit emerges, perhaps in the market or among competitors. Because the company’s data system probably focuses only on the variables in the loop that used to be dominant, management’s control systems do not even register the change. Performance eventually falters, and management’s response is to push even harder on the policy levers that used to work—to no avail. By the time there is indisputable evidence that new loops are dominant, it may be too late to avoid permanent damage. Understanding the dynamics of shifting dominance can help managers react to changing conditions before it’s too late.

Linda Booth Sweeney is a doctoral student at Harvard’s Graduate School of Education. Her research focuses on systemic innovation practices and the development of systemic thinking skills. Dennis Meadows is director of the Laboratory for Interactive Learning at the University of New Hampshire. He has co-authored eight books that illustrate the use of systems thinking to understand complex social and environmental issues.

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The Rebuilding Process

In 1996, Schena was assigned to run Caterpillar’s Brazilian operation, located in the troubled city of Piracicaba. Up until that time, the division’s performance had been less than stellar, and Schena determined to breathe life into the organization by motivating employees to rebuild the business themselves (see R1 in “Limits on Skilled Workers”). This approach and the resulting employee engagement not only helped turn the company around, but in 1999 earned the facility a notable operational excellence certification and the country’s most prestigious quality award. Today, Caterpillar Brazil continues to be number one in the company in terms of financial returns and employee satisfaction.

However, at a certain point, Chris and his management team began to recognize that the state of the larger community could threaten the organization’s ongoing success. The urban area surrounding the factory suffered from high crime and a failing educational system. It soon became clear that the lack of skilled workers could halt the division’s upward trajectory (see B2).

LIMITS ON SKILLED WORKERS

As employees became engaged in rebuilding the division, they created high levels of success (R1). With the rise in success came the need to hire more workers. Because of problems in the surrounding community, management anticipated that, at a certain point, the availability of skilled workers would begin to decline (B2). To overcome this limit, Cat Brazil invested in programs to boost the skills of the local population and make the city appealing to workers from elsewhere.

Overcoming the Limit

To overcome this potential limit, Cat Brazil embarked on worker education and health programs, among other initiatives. In addition, the organization launched a project known as Piracicaba 2010. This effort brought together local officials, entrepreneurs, CEOs, and other community and media leaders to develop a vision and strategy to attract talented people to the city. The goal was to make Piracicaba a model of sustainable development and an excellent place to live.

Caterpillar Brazil offered its resources and strategic planning capability to jump-start the effort, and many employees enthusiastically volunteered their own time toward the effort. Within six months, the initiative was mature enough for the team to hold a town meeting to expand community participation., “By getting citizens to talk to each other regularly in the pursuit of a common goal rather than their own smaller agenda,” says Chris, “the community was able to work together to make the environment more attractive and safer. In fact, now the city not only attracts more professionals but more businesses as well.” A couple of years ago, the Brazilian government selected Piracicaba 2010 as a pilot program for the country to exemplify what needs to be done to regenerate its cities. Since 2002, Brazil’s government has granted funding to run the program, and similar projects have sprung up throughout the country.

Removing Barriers

Sustaining success means more than pushing on an organization’s growth engine; it also involves removing barriers that might impede that growth. As the Caterpillar Brazil story illustrates, the process of removing those hurdles can open up new possibilities both within and beyond the organization’s boundaries, creating an ongoing cycle of growth.

Janice Molloy is managing editor of The Systems Thinker. Kali Saposnick is publications editor at Pegasus Communications.

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The “Limits to Success” archetype shows that being successful can be just as dangerous to longterm health as being unsuccessful (see “When the ‘Best of Times’ Becomes the ‘Worst of Times,’” Dec. 1990/Jan. 1991). Even success can sow the seeds of failure by stressing and overburdening the current system. Success can also trap us in a mentality of “what worked in the past will continue to work in the future.”

The heart of a good planning process is really in understanding the implications of achieving one’s strategies for success. When used in a planning process, the “Limits to Success” archetype can help show how actions, whether intentional or unintentional, may end up reinforcing themselves and taking on a life of their own. It can also assist in the search for organizational barriers that growth may begin to engage.

Below is a seven-step process for using “Limits to Success” to help identify your engines of success and how they may trigger a process that can potentially lead to failure. By mapping out these structures in advance, you can anticipate future problems and eliminate them before they become a threat.

1. Identify the Growth Engines

GROWTH ENGINE

Identifying the “engines” we commonly use to drive growth—such as marketing—can reveal our implicit assumptions about what we believe increases sales (R1).

The first step in using the “Limits to Success” archetype is to identify the growth engines. Although the growth in “Limits to Success” is usually described with a single reinforcing loop, this loop can represent any number of reinforcing processes that fuel the initial success. Start by drawing one loop and then identify additional reinforcing loops that are relevant.

In this process, it is important to focus on dynamic behavior; that is, identify growth loops, not just growth factors. This will help emphasize the process that is feeding back and regenerating itself. Oftentimes this reinforcing process is linked to our own mental models, leading us to continue taking actions in a particular direction. For example, a laser printer manufacturer may have found that marketing efforts have a strong effect on sales, so they always resort to marketing to boost revenues (see “Growth Engine”). Implicit in that loop is a strong bias toward using marketing to address revenue problems.

2. Determine Doubling Time

The next question to ask is: what is the projected time for our results to double in magnitude? That is, if marketing efforts continue (at a certain percentage of sales, for example), how long will it take for laser printer sales to double? Asking questions about doubling time will help make time horizons associated with the rapid growth explicit, especially where new products or markets are involved. If it is a more established product, finding the time it takes to increase sales by 25% or 50% (or to produce another result) would be more appropriate. The key is to pick an outcome which, if achieved, would outstrip your current capacity.

3. Identify Potential Limits and Balancing Loop(s)

At this point, it may help to categorize the limits in order to explore the many possible side-effects of success (see “Planning for Limits”). If sales double (or increase by 25% or 50%), for example, what sort of limits would we encounter? Some possible categories:

• Physical Capacity—If we double sales, will we need to build a new plant or make capital equipment investments?
• Information Systems—Are current information systems capable of handling twice the current activity?
• Personnel—Will we have enough people to handle double the workload? If not, do we have a plan for hiring and training new people?
• Management Expertise—Will we outstrip our capabilities as an organization to manage the demands such growth will pose?
• Attitudes/Mental Models—Will our actions meet a limit that is imposed more from a worldview than from any physical capacity (i.e., will we run up against sacred cows)?

These categories extend from the most tangible to the least tangible. While capital equipment needs are relatively easy to assess, necessary management expertise and the required shift in mental models may be more difficult to identify.

PLANNING FOR LIMITS

Drawing possible balancing loops helps to begin identifying potential limits in advance. Categorizing the limit can help determine the appropriate course of action for removing it. The categories can also serve as guideposts for what to look for as you begin to grow, while helping you anticipate how quickly you can respond to the potential limits.

In the case of the laser printer manufacturer, doubling the sales of a high-end laser printer with advanced features may mean greater demand for technical assistance. If the company is not prepared for this increase in volume, it could limit future sales growth as customers receive poor technical assistance and look for a supplier with better service (see “Capacity Limits” on p. 8).

CAPACITY LIMITS

A large increase in sales of a product may require more technical assistance for customers. If we are not prepared to make the required investments of time and money to remove that limit, it could hurt future sales (B2).

4. Determine Required Change

The next step is to assess what changes are required to deal effectively with the limit(s) identified. In terms of personnel, for example, technical assistance needs could be assessed by exploring questions such as: If sales double, will we get more sophisticated users, or less? How reliable is the product compared to previous ones? We can then begin to estimate how many people will be needed and what training is required in order to maintain (or improve) the current level of service.

5. Assess Time Needed to Change

If sales can double in six months, and you’ve determined that you need to add 20 to 30 new technical support people, what is the actual time frame in which you can accomplish that while still maintaining the desired level of quality? You may find it will take a full year to hire and train the necessary people. If there is a discrepancy between the doubling time (six months) and personnel expansions (one year), you may run into a “Limits to Success.” If you are able to identify the time needed in advance, however, you can plan for those needs and avoid a “Limits to Success” trap.

6. Balance the Growth

Once we have determined both the engines of growth and the potential limits, we need to consider how to balance the two processes. One way is to ask questions such as: Are we capable of investing enough in the capacity that is required to sustain the growth? If not, will we choose to somehow balance the growth ourselves, or are we going to let the forces of growth choose for us? Look for links between the reinforcing and balancing loops that will enable you to manage the balance between the two, rather than just react to changes. If the laser printer company discovers they cannot hire technical assistance fast enough to meet the demand, they can choose to balance sales growth with the capacity to service that growth. A link between quality of technical support and marketing budget may be appropriate.

7. Reevaluate the Growth Strategy

Even if a strategy is highly successful, we should always be open to questioning whether or not we should continue pursuing it. Reinforcing processes have their own momentum that can propel us toward continually pushing on the engines of growth. Reevaluating the growth engines and viewing the plan in a broader context of overall company strategy can curb our propensity to pursue undifferentiated growth.

There’s an old saying that goes, “Be careful what you wish for; you just might get it.” Unfortunately, getting what you wish may not give you exactly what you want over the long term. Companies can become so focused on preventing failure that they neglect planning adequately for dealing with success. The “Limits to Success” archetype can, however, help us ask the right questions to sustain our hard-earned success rather than be limited by it.

Daniel H. Kim is co-founder of Pegasus Communications, founding publisher of The Systems Thinker newsletter, and a consultant, facilitator, teacher, and public speaker committed to helping problem-solving organizations transform into learning organizations.

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