At about the same time that I was discovering Toyota, I was also exploring modern science, especially life sciences and astrophysical cosmology, and exploring writers who distilled lessons for business from recent scientific discoveries. From this study, I surmised that Toyota’s way of organizing work succeeded so brilliantly because it

resembled Nature’s way of “organizing” life on Earth. In that context, I began to consider whether Toyota’s practices might show businesses how to achieve robust sustainability analogous to the sustainability that Earth’s living systems have achieved for more than four billion years.

Lost in Financial Crisis

In the wake of the recent global economic crisis, accompanied by Toyota’s first financial losses in nearly 50 years and massive product recalls, people ask me if I still see Toyota’s management approach as a model for other organizations to follow. My answer is that Toyota as it was before the early 2000s will always serve as an exemplary model. The company’s present financial problems developed because top managers after 2000 violated the unique thinking that had shaped Toyota’s stunningly successful practices throughout the previous four decades. Toyota’s current crisis occurred because the company’s top managers turned away from the thinking that had implicitly anchored the company’s operations to the concrete reality of natural systems in the real world.

Instead, these managers concentrated on the virtual reality of financial abstractions, and in so doing they emulated the limited thinking that has guided almost all other large corporations in the world for the past 30 years or so. Typically, large corporations and financial markets give primacy to the virtual reality of financial abstractions and are relatively indifferent to the concrete reality of human and nonhuman life. Adopting this perspective, which helped produce the recent worldwide economic crisis, caused Toyota’s financial performance to turn sharply south in the current recession.

In February 2009, Shoichiro Toyoda, the 84-year-old family patriarch and honorary chairman of Toyota Motors, announced a stunning shakeup of top management. He excoriated top managers for losing sight of the fundamentals that had made the company so outstanding. He pointed out that the company’s financial reversal occurred not primarily because of the recession’s severity, but because after 2000 its top executives, in order to achieve excessive finance-driven growth and pricing, sacrificed the fundamentals that had made Toyota thrive. Mr. Toyoda promised that the company would “return to basics.”

Those fundamentals are not well understood by Western management observers, who understandably, but mistakenly, attribute Toyota’s success to a set of practices they labeled “lean manufacturing.”, “Lean” is not a term Toyota uses to describe the management approach it developed in the last 40 to 50 years. Observers outside Toyota first used the term “lean” in the 1980s to describe unique practices they saw in Toyota plants, such as kanban, jidoka, and on signaling, heijunka, takt time, and kaizen.

Outsiders from the West who saw these practices as the key to Toyota’s distinctiveness did not realize that people working in Toyota viewed them as temporary solutions, countermeasures, devised as remedies for particular problems that kept the company from achieving an ideal operating condition. More basic in Toyota than those specific countermeasures is the company’s distinctive way of thinking that drives it constantly to strive for an ideal state, sometimes referred to as a “True North.” This problem-solving process and the underlying thinking is described fully for the first time in English in Toyota Kata (McGraw-Hill, 2010), a new book by Mike Rother.

In general, that “True North” thinking focuses the company’s workers and managers on generating and continually improving a carefully orchestrated process. This process is capable of producing results sufficient to sustain the organization’s ongoing activities indefinitely. Companies other than Toyota, however, tend to focus attention on forcing everyone in the organization to achieve the highest possible short-run bottom-line targets, targets set for the most part by global financial markets. These companies tend to view results as an additive, linear sum of independent contributions from a mechanistic collection of parts. Each part of the organization is viewed as an isolated entity that can be manipulated with predictable consequences. Toyota sees differently. Toyota always viewed results as emerging from a complex, non-linear process, in which people belong to, and patiently nurture, web of relationships. Just as all components of natural living systems are interrelated, so it is in Toyota.

In short, Toyota’s management culture at its zenith was process-driven, not results-driven. Toyota eschewed the financial markets’ absurdly impossible demand to produce higher results quarter by quarter. Its own pathway to higher results echoed W. Edwards Deming’s advice, given many years ago, to improve the capability of the process, not to demand that people meet higher targets by any means possible. Toyota’s attention to process and the thinking it generated led to the company’s many decades of remarkable financial performance.

The Implications of Global Finance

Although we have recently come to understand better than ever the cause of Toyota’s greatness, and of its present decline, we have achieved this insight in the context of a global financial system that is hostile to the financial health of Toyota or any other large and successful publicly traded company. If nothing stops global financial institutions from their relentless drive for immediate returns, if the financial sector completes the takeover of the global economy that it has worked toward for the past 30 years, then knowing that emulating nature’s systems will improve long-run performance cannot rescue non-financial businesses.

The recent slide toward bankruptcy of the Simmons Bedding Company, until now a successful manufacturing firm for 133 years, illustrates exactly how large financial institutions profit by destroying non-financial companies (Julie Creswell, “Profits for Buyout Firms as Company Debt Soared,” The New York Times, October 5, 2009). Like thousands of American companies, Simmons is the victim of corporate buy-out schemes that began almost 40 years ago with conglomeration, followed by the growth of an increasingly sophisticated takeover market that featured hostile takeovers, then leveraged buyouts, and, most recently, purchase by private equity and hedge funds.

Details change from decade to decade, but the general pattern has been much the same over these years. First, a large investor, generally a financial company with access to big lines of credit, approaches a target non-financial company considered to be undervalued by the market. With the consent of the target company, if possible, or against its wishes if consent is not forthcoming, the investor uses borrowed funds to purchase shares sufficient to gain effective control over the target’s operations. Having achieved control, the investor then arranges either a public equity offering of the target company’s shares or borrows against the target company’s assets. Using that capital, the investor repays the debt it incurred to purchase the target company and, usually, pockets a substantial capital gain. The next step is to boost the target company’s market value by increasing its earnings as quickly as possible, by whatever means possible. This done, the target company is sold to another investor ready to profit through the same ritual, until the target company’s debt is no longer sustainable, and it is driven to bankruptcy.

At Simmons, this process began in the 1970s with its acquisition by two large conglomerates (Gulf +Western being the best known). The process continued in the 1980s when William E. Simon’s leveraged buyout firm, Wesray Capital, purchased and sold Simmons (Simon was U. S. treasury secretary in the Nixon years). Finally, Simmons has been “flipped” seven times in the last two decades by firms such as Merrill Lynch, Thomas H. Lee Partners, and others. The debt piled onto Simmons by all these investors rose from $164 million in 1991 to $1.3 billion today, a burden the company could not sustain and that now drives it toward bankruptcy.

The only winners in this process are members of the investment firms, the large financial institutions that help those investors raise capital, and, on occasion, top executives of the target company who negotiate with the investors. Everyone else loses, including the target company’s creditors and stockholders, its employees, customers, and the communities in which it operates. The terrible costs that investment firms impose on their targets are driven home when we note that Bill Simon’s firm cashed out of its investment in Simmons in 1989 by selling its stock to the company’s employee pension fund for $241 million cash. That cash equaled twice what Simon’s firm had paid for Simmons in 1986. When Simmons shares plunged during a subsequent market slump, the employee pension fund was left penniless.

The harsh reality is that today’s large global financial institutions do not value the performance of any large non-financial company for its own sake. Firms such as Goldman Sachs and J. P. Morgan Chase that now combine investment banking, commercial banking, brokerage, and insurance under one worldwide roof are not interested in the possibility that a client company might improve its financial performance if management replaces mechanistic management-by-results (MBR) thinking with Toyota’s living-system style of management-by-means (MBM) thinking (H. Thomas Johnson and Anders Broms, Profit Beyond Measure, Free Press, 2000). Such global financial institutions today are far more interested in generating revenue from, “trading” activities than from, “investment” activities. Their primary concern is not to make money by helping businesses grow and prosper. Rather, it is to maximize as quickly as possible the returns they can generate for their own benefit through destructive trading activities that strip a business of its entire value and leave it bankrupt, if not worse. Their aim is to capture for themselves all the wealth they can garner, especially by using debt to gain control of a business, and then selling it, or its pieces, for as much as possible. The large financial institutions have learned that destroying a business makes them more money than building one. And they are good at it.

The Rise of the Virtual Economy

An important new article by John Cobb, one of the world’s leading scholars of Alfred North Whitehead’s work, discusses the current power of the global financial community to force corporate managers to subordinate an organization’s concern for concrete, real processes to abstract financial considerations. For Cobb, the power happened in large part because enormous financial firms can grow their assets in a virtual economy at a much faster pace than non-financial business institutions can achieve in the real economy. The term, “virtual economy” refers to an economy in which the chief economic pursuit is to invest in, and trade in, financial instruments. As our economy became more and more focused on finance, monetary wealth was concentrated in the hands of a few, and the industrial capacity of the nation was hollowed out. We see this increasingly in the United States, where productive industries have disappeared at an alarming rate. And yet human beings cannot survive without a real economy where manufacturing and other forms of non-financial business are ubiquitous (John Cobb, “Landing the Plane in the World of Finance,” Process Studies, v. 38, no. 1, pp. 119–138).

The enormous size of global financial institutions now gives them, and the financial markets they control, increasing power to force businesses in the real economy — businesses, in other words, that could provide real jobs for real people — to capitulate to their demands for short-term earnings growth and share-price appreciation. Global financial institutions have almost unlimited power to purchase control of non-financial businesses and drive their managers toward decisions that maximize the financial traders’ short-run returns. This power virtually ensures that efforts to improve long term business performance by improving management practices are doomed. As pawns of the virtual economic system, most non-financial business organizations will no longer be able to survive and thrive by optimizing a system of relationships that contributes to the economic well-being of the larger community. As soon as they show robust performance, such firms will be taken over and dismembered by financial institutions for the benefit of the small handful of traders and executives who orchestrated the takeover.

I once believed that the goal of corporate managers should be to nurture a profitable enterprise that sustains good-paying jobs by providing useful products and services to customers at competitive prices. I saw the fundamental cause of poor business performance since the late 1960s to be the power of accounting and finance to focus managers’ attention on immediate growth in bottom-line financial results. Higher and more stable average financial results are achieved, I thought, when managers concentrate on perfecting the concrete, real, human features of a business rather than merely on achieving abstract financial targets. But my belief did not take into account the nature and impact of today’s global financial institutions.

It troubles me deeply to have been forced to conclude that global financial institutions have themselves become an insidious threat to the well-being of businesses. Today’s financial institutions seek to gain far more than the returns that even the best-performing business can produce. Their object is nothing as mundane and useful as arranging long term financing for profit-oriented businesses. No, as Fritjof Capra presciently observed almost a decade ago, today’s global financial institutions seek to deal with people, resources, and businesses as commodities to be traded in the least regulated and least transparent markets possible in order to make as much money for themselves as possible, whatever the cost to society as a whole (The Hidden Connections, Doubleday, 2002, chs. 5, 7, and Epilogue).

This system works most insidiously through the trading activities of global financial institutions that control their own commercial banking subsidiaries from which they borrow and use enormous sums to acquire non-financial businesses at virtually no cost and with almost all risk transferred to taxpayers. Because of the spectacular market collapse of the 1920s, for 50 years under the Glass-Steagall Act, large financial institutions that engaged in corporate underwriting and securities trading were prohibited from owning and controlling commercial deposit banks. That Act was repealed in 1999, with the result that these institutions can once again own and use deposit banks.

Since the 1970s, the immense market power of these global financial institutions has enabled them to pressure corporate management to focus attention increasingly on results compiled by accountants and financial analysts. This pressure caused companies to become obsessed with achieving only short-term financial targets, and virtually to disregard the relationships that create a healthy and profitable organization for the long term. And so here we stand today.

A Ray of Hope

Although it is a stretch, I would like to offer hope that we can restore some semblance of independence to our economy’s non-financial business sector. I suggest that business might become once again a viable engine for creating well-paying jobs and for meeting the public’s needs for safe, useful products and services. This will not happen if the financial sector is able to continue sating its limitless greed by using the power of the virtual economy to destroy the real economy on which our society’s standard of living depends. How can we bring the financial sector under control and reduce its egregious influence on our lives? Instead of looking to the government for solutions, let’s address the problem by asking the following question: What can Toyota’s example teach us that might lead us out of this vicious cycle?

I ask this question because Toyota, unlike almost every other large publicly traded company in the world today, has relied scarcely at all on financial markets to raise capital for long-term investment. Instead, Toyota has used internally generated funds to finance virtually all its growth for at least the past 50 years. Indeed, a longstanding joke in Japanese financial circles is that Toyota only borrows as a favor to banks, not because it needs outside capital. And its shares are listed on the Nikkei Exchange in Tokyo because in the 1950s the Toyoda family sold a substantial portion of its Toyota holdings for family reasons. Toyota has not sold shares publicly to raise equity capital for the company. Similarly, Toyota became “listed” on the NYSE for the first time in 1999, largely for political reasons, not to raise capital.

A sign of Toyota’s limited need for outside finance is its consolidated cash balance, which in recent decades has run in the $25 to $30 billion range, and often more. Wall Street gurus and financial experts commonly criticize such large cash holdings as a sign of top management inattention to shareholder interests, something that usually makes a company a target for corporate takeover artists. For Toyota, however, such cash balances made it possible to spend billions in the 1990s on hybrid power-train development, leading to the highly successful Prius model, and to spend more billions sustaining its full-time workforce during the current recession.

Were all non-financial companies able to emulate Toyota’s disdain for external finance, it is unlikely that Wall Street and the global financial institutions it has spawned would exist today. However, finance experts usually take for granted that companies will borrow and issue stock. But what creates this perception?

To get to the source of such an issue, a Toyota sensei would say “ask why five times.” So, let us ask of this assertion that companies must borrow and issue stock: Why? The first answer probably will be that the demand for growth makes it necessary. Why? Because growth requires a lot of investment in capacity before it can be financed out of current earnings. Why? Because initial earnings will not be sufficient to cover the cost of initial investment. Why? Because costs will exceed revenue until sales reach a certain level. Why? Because then economies of scale will kick in. Why? Because we build capacity to a larger scale than needed at first, in order to enjoy lower costs per unit as sales rise.

At this point, the Toyota sensei asking these questions might inquire: What if you build capacity as needed, in small increments, so that costs rise more or less in line with revenue, thus leading to profits, and cash, from the first unit sold?

Moving Beyond the Virtual Economy

This vignette is based on the well known fact that, from its pre-World War II beginning to the present, Toyota has always aimed at consuming no more resources (material, labor, supplies, power, capital, etc.) than necessary to produce what is needed to serve customers at the moment. It was scarcely possible for the company to do otherwise in its early years, especially after the war, when scarcity was extreme. But over time, Toyota became adept at finding ways to continually do more with less. For Toyota, the pathway to achieving low costs, at which they have always excelled, was to reduce total costs by continuously reducing consumption of resources. That strategy not only insured low costs, but it also made profitability a way of life, thereby eliminating the need to deal with financial institutions, in financial markets.

By contrast, the American pathway to low costs has usually been to achieve low average costs per unit of output, the metric that follows from the economies of scale mindset. The easiest way to achieve low cost per unit, then, is to produce more units, not to reduce consumption of resources. Inevitably, the need to produce more in order to supposedly “cut costs” led over time to larger and faster machines, more offline work to keep track of material flows, more need for marketing, advertising, and deal-making to sell excess output, and so forth. In other words, producing more output to achieve lower cost per unit led to higher total costs and thus, unfortunately, to the need to seek funds in the external financial community.

Pathway to Sustainability

In addition to emulating Toyota’s highly disciplined approach to limiting growth to what is possible with internally generated resources, what other steps can reduce the global financial system’s grip on our economy? Surely the most fundamental, and most difficult, step is to focus the primary purpose of business activity on the essential concerns of humans and natural systems — on life, that is — rather than on financial concerns. If business is viewed as concerned above all with life, then its primary purpose is to provide people with meaningful and fulfilling livelihoods through which they satisfy the genuine economic needs of fellow humans in ways that harmonize with Nature’s life-sustaining system on Earth.

According to the story financial institutions have disseminated for the past 30 or more years, business exists specifically to maximize shareholder value. Focusing on shareholder value means seeing business through the narrow lens of accounting statements and financial abstractions. That narrow lens blinds us to the true purpose of business in a real economy, a purpose that requires diminishing the power and influence of the global financial system. We need to replace the longstanding story about the purpose of business, from financial gain to sustaining life.

An important consequence of redefining the purpose of business in terms of human and natural systems is that it puts the issue of sustainability front and center. All too often, sustainability is thought of as little more than a collection of desirable features to add to a global corporation while it continues pursuing “business as usual.” In other words, a publicly traded, shareholder value-maximizing corporation can tout such sustainability features while its operations remain firmly planted in the web of the existing financial economy. Such features include, for example, an increase in the efficiency of resource consumption, attention to working conditions of laborers in underdeveloped, low income countries around the world, environmental programs to promote carbon-free energy sources, reduced use of toxic substances in manufacturing process and products, products designed for easy and foolproof recycling, and so on.

While pursuing these features is a valuable and commendable goal, none of them addresses the ultimate concern of true sustainability. True sustainability requires conducting economic activity in a way that makes it possible for all life, human and non-human, to flourish on Earth indefinitely. But we humans make tens of thousands of non-human life forms extinct every year as our economic pursuits cause us to encroach on their habitat to serve our own ends. Certainly an economic system focused on endless growth to achieve share price appreciation does not encourage a sustainability that allows all life to flourish.

Indeed, I firmly believe that true sustainability in an economy dominated by publicly traded firms is an oxymoron. True sustainability might be possible, however, were businesses in our real economy to escape the destructive growth-oriented emphasis imposed on them by the global financial sector. Toyota was free from this pressure throughout virtually all of its modern history, until very recently when finance-motivated growth stretched its management ranks too thin, weakening its unique process improvement kata, and causing quality to slip. Perhaps freedom from pressure to grow will become Toyota’s condition again, and the condition of companies that adopt Toyota’s original habits of thought.

The path to true sustainability cannot be known in advance. It must emerge from a disciplined process that leads our actions through uncharted terrain toward the vision of a truly sustainable economy. However, I think it is reasonable to suggest certain features of business activity that might emerge as we pursue this vision. For one thing, business is likely to focus more and more on place — on the local, not on the global. Going local means operating more to human scale, making connections between actions and consequences visible so that externalities caused by distance in time and space between producers and consumers are reduced and even eliminated.

After all, “globalization” of the economy in recent years means not just the spread of business activities across national borders, a trend that has been evident in the industrial world for over 150 years. It means, more importantly, the globalization of financial markets, markets that permit very few, very large financial institutions to conduct transactions of unprecedented magnitude, with lightning speed. This has shifted all economic activity increasingly outside of national boundaries and made it rootless, even lawless, bounded only by the financial power and greed of a small number of extremely large financial institutions. In the modern world, once economic activity is framed in financial terms, it becomes subject to global transacting and trading. All sense of place and locale, of people and nature, is lost. Humans become mere commodities, the same the world over, valued only for their price as labor and their spending as consumers. Financial wealth and the power it gives to control Earth’s resources becomes concentrated in ever fewer hands, while increasing numbers of humans sink into poverty.

Nevertheless, there is hope. It lies not in efforts to take over and control the financial economy. Rather, it resides in the discovery by businesses of ways to function without financial markets and global financial institutions, a discovery that would make the financial economy largely irrelevant. If companies succeeded at limiting growth to the extent of internally generated funds, they would not need to issue shares, and they would not need public markets in which to trade shares. In the absence of those institutions, it would not be necessary to pressure companies to grow relentlessly. And without relentless growth, there would be much less pressure, or opportunity, to assume massive amounts of debt. This is the pattern always seen in Toyota. Toyota followed these precepts during the decades after World War II — when they were becoming one of the world’s most successful large corporations.

Today, Toyota is paying for a decade when top management foolishly drove the company to grow to become #1 in sales in its industry. Hopefully that obsession has ended, at least for now. The company promises to restore the thinking and habits that generated its original success. The challenge now is for all businesses to adopt the same thinking and disciplined habits. The result could be a real economy in which businesses operate in harmony with Earth’s capacity to sustain all life. That surely is a purpose worthy of our highest dedication.

The post Toyota’s Current Crisis: The Price of Focusing on Growth Not Quality appeared first on The Systems Thinker.

The recognition that a company is a complex social system and a living community has been an underlying theme of leading management thinkers as far back as the early 20th century. Nevertheless, the machine continues to be the dominant metaphor for business leaders, many of whom seek to solve their problems by “pulling levers” or “pushing buttons”: making large-scale changes without a clear feeling for how those changes will affect the collective action of the company.

The speed and complexity of the global business environment calls for a new appreciation of a systems-focused view of the world, one that recognizes the interrelationships of people, processes, and decisions — and designs

organizational actions accordingly. The intellectual roots of systems understanding are very diverse (as we’ll see shortly), but they converge around three interrelated assumptions. First, because many of today’s organizations are complex and ever-changing, static solutions that try to lock in any ongoing management solution are likely to become new sources of destabilization themselves. That is why organizations need to be dynamic — capable of adapting to unexpected developments. Second, organizations must have a capacity for widespread experimentation and trial-and-error learning if they are to be self-correcting. Finally, although a systems view requires an understanding of how all the parts fit together as a whole, it also depends on an intimate understanding of the parts themselves. This is because change in any part of the system or in its outside environment — including the other systems to which it is connected — can produce profound ripple effects.

Significantly, these assumptions all recognize the importance of human participation in decision making. Systems thinking isn’t just for senior executives or engineers. Everyone who works within a system — including suppliers and line workers, designers, and marketers — should learn how the system works, develop their creativity, and apply that creativity to improve the system. This is true not just for startup companies, but also for the most staid and structured organizations, including those in government. As the National Commission on Terrorist Attacks Upon the United States reported, “Imagination is not a gift usually associated with bureaucracies. . . . It is therefore crucial to find a way of routinizing, even bureaucratizing the exercise of imagination.”

Let us therefore take a tour of the key ideas and books that a manager in any corporation or agency could use to improve day-to-day performance, both conceptually and in practice. The books and articles in this survey all provide a fusion of hard science and soft management skills, supporting a vision of an employee-centered and systems-oriented company.

Such a company emphasizes constant learning both for the individual employee and for the organization as a whole. The most valuable expertise is understood to be held by those who are closest to any given part of the system. Management’s chief jobs are, first, to facilitate learning, adaptation, and improvement by creating a culture that is free of fear, and, second, to provide the tools and training that employees need to identify problems and opportunities for improvement. And the leaders throughout these companies also practice “mindfulness.” They establish and revise routines that constantly test current assumptions and seek to anticipate future needs, they pay attention to process, and they see continuous improvement as the best way to achieve not only step change but also innovative leaps.

Whole-Systems Design

Any effort to cultivate a systems orientation could profitably begin with the work of the late Russell Ackoff, one of the field’s pioneers. Not surprisingly for a man who warned against organizational silos and fragmentation, Ackoff rejected narrow specialization in his own career. He studied architecture and philosophy and pioneered operations research before joining the Wharton School at the University of Pennsylvania in the 1960s, where he taught systems sciences and management. After leaving Wharton in 1986, Ackoff worked as an independent consultant until his death in October 2009.

Ackoff drew a clear distinction between the machine age, in which companies could assume relative stability and seek optimum solutions to discrete problems, and the systems age, beginning after world War II, a time of growing global and technological complexity. Organizations would henceforth have to deal with “sets of interacting problems” and give up the quixotic search for simple solutions that could be applied consistently. The key challenge, Ackoff said, would be designing systems that would learn and adapt. In a talk he frequently gave on “the second industrial revolution,” he said, “Experience is not the best teacher; it is not even a good teacher. It is too slow, too imprecise, and too ambiguous.” Organizations would have to learn and adapt through experimentation, which he said “is faster, more precise, and less ambiguous. We have to design systems which are managed experimentally, as opposed to experientially.” To accomplish this, he laid out a method of interactive planning, which involved an “idealized design of the organization” — a technologically feasible future that reflected how key stakeholders would redesign and rebuild a system if it were suddenly destroyed.

Clark Manufacturing Company, a unit of Clark Equipment Company, employed Ackoff ’s idealized design in the early 1980s, when its market for earthmoving equipment came under assault from higher-quality, lower-cost Japanese competitors and the company’s leaders realized that they did not have the organizational capabilities needed to match the competition. But they could get them by combining forces with two other companies: Euclid (a small truck company) and Volvo. Against the prevailing advice of the time (including that of many of the firm’s managers), Clark’s leaders initiated a successful joint venture with these two companies. Among the benefits, as Ackoff told the story in his masterwork, Re-creating the Corporation: A Design of Organizations for the 21st Century, was the development of a single management group that overcame the initial skepticism “about the ability of a cross-cultural management to work effectively.”

The book is full of both conceptual tools for organizational redesign and specific practices for developing adaptive and resilient learning environments. For example, in his discussion of innovative approaches to financial and human resources planning, Ackoff describes the use of elected internal boards to give people more control over their decision making, and shows how to set up an internal market for shared services that reflects their real value (or, as he calls it, an “internal market economy”). The overriding theme is the need to avoid any particular management panacea, and instead institute an adaptive, continually evolving design process that (as Ackoff puts it) manipulates the parts of a company “with a primary focus on the performance of the whole.”

“Experience is not the best teacher; it is not even a good teacher. It is too slow, too imprecise, and too ambiguous.”

Better Thinking and Interacting

Ackoff ’s focus on learning is picked up by Peter Senge, an aircraft engineer by training and the author of The Fifth Discipline: The Art and Practice of the Learning Organization, which focuses on the need for blending the “behavioral” and “technical” elements of organizations. One underlying premise of the book is that a systems orientation requires individual employees to be open to new ideas and points of view and free of conscious and subconscious prejudices.

“Organizations work the way they do because of how we work, how we think and interact,” writes Senge, who is also the founder of the Society for Organizational Learning and a lecturer at MIT. The “best systemic insights don’t get translated into action when people don’t trust one another and cannot build genuinely shared aspirations and mental models.”

Senge identified five disciplines — ongoing bodies of theory and practice — as necessary for organizational learning.

1. Systems thinking,which in this case means learning to recognize the forces of acceleration and equilibrium at work in complex systems, how they interact over time, and how to use them to gain leverage.
2. Personal mastery,which is a variation on what Abraham Maslow called “self-actualization”: tapping immense creative potential by aligning the personal aspirations of individuals with the goals of the organization and a clear view of current reality.
3. Mental models,which are the prevailing attitudes, beliefs, and cognitive habits held within a group that shape its perceptions of the world and how it takes action.
4. Shared vision,which is the collective voiced aspiration that supports the collective pursuit of worthwhile goals.
5. Team learning,which embodies open dialogue with no preconceptions, and other forms of candid, in-depth group activity.

Unlike many management principles, Senge’s disciplines are fundamentally personal, and require a shift in perspective among individual members of an organization, as well as a collective transformation. For newcomers to these ideas, the first chapter of The Fifth Discipline offers an excellent overview of the disciplines and how they fit together. Senge’s subsequent book, the collaboratively written The Fifth Discipline Fieldbook: Strategies and Tools for Building a Learning Organization (Doubleday/Currency, 1994), offers a step-by-step guide to tackling the five disciplines. (Disclosure: Art Kleiner, the editor-in-chief of strategy+business, was a Fieldbook coauthor and its editorial director.)

Everyone’s a Knowledge Worker

Widespread employee participation is essential for creating and maintaining learning and adaptive capabilities, but that goal has long been elusive for many companies. The earliest thinkers on organizations, including Elton Mayo, the father of humanistic management, and Chester Barnard, president of New Jersey Bell Telephone from 1927 to 1948 and author of the leadership classic The Functions of the Executive (Harvard University Press, 1938), generally recognized the challenge of reconciling the interests of employees with those of the organization. Mayo’s famous Hawthorne experiments demonstrated that merely paying attention to workers could boost productivity, albeit briefly. Barnard provided the justification for participative management. Organizational purpose, he said, must be well communicated and widely accepted, and management’s authority rests on its ability to persuade, rather than command. Thus, legitimacy is a function of competence and expertise, not hierarchy.

But it wasn’t until the rise of “knowledge workers,” whom Peter Drucker first described in 1959 and broadly defined in Management Challenges for the 21st Century (Harper Business, 1999) as people who “know more about their job than anybody else in the organization,” that a widespread recognition of the role of ordinary employees in improving systems began to take hold. And even today, there is a stubborn resistance to widespread participation, a residue of machine-age approaches to management that is perpetuated by a disagreement about who exactly qualifies as a knowledge worker.

A narrow definition of knowledge workers, and some might argue this is the dominant view among U. S. companies, is articulated by Thomas Davenport. Davenport is a leading management consultant and professor at Babson College who wrote, in “Why Don’t We Know More about Knowledge?” a 2004 article in the MIT Sloan Management Review (coauthored with Michael Hammer and Dorothy Leonard), that although “every job requires some knowledge, most would agree that knowledge workers are people with high levels of education and expertise whose primary task is the creation, distribution or application of knowledge.” In contrast, a systems view demands the broadest possible definition of knowledge workers because, at the most elemental level, any employee who connects to a process must have the knowledge to recognize when something is wrong and to sound an alarm.

Employee participation plays an integral role in companies seeking a systems orientation. For example, it lies at the core of one type of company that Karl Weick and Kathleen Sutcliffe, professors at the Stephen M. Ross School of Business at the University of Michigan, have studied in depth: high reliability organizations (HROs). These are nuclear power plants, aircraft carriers, and other enterprises that must foster constant mindfulness as a way to avert catastrophic system failures.

In Managing the Unexpected: Resilient Performance in an Age of Uncertainty, an account of the unique management characteristics of HROs, Weick and Sutcliffe describe a culture in which employees engage in the continuous updating and deepening of their understanding of the context of organizational systems, the problems that define them, and what remedies they contain. Mindful organizations, they explain, are characterized by a broadly defined “deference to expertise,” in a setting where “expertise is not necessarily matched with hierarchical position.” (Barnard meets Drucker.) HROs are also capable of seeing weak signals of systemic failure and responding with vigor. To support this capability, such organizations strive for open communication, recognizing that if people refuse to speak up out of fear, this capability will be undermined.

Managing the Unexpected is replete with examples of the importance of mindfulness and imagination at all levels of the hierarchy. The authors show how maintenance personnel made it possible to avoid a potentially catastrophic containment failure at the Davis-Besse nuclear power plant in Oak Harbor, Ohio, in 2002. They note the precision and on-the-ground decision making that are necessary to prevent accidents on aircraft carriers operating on the high seas, explaining that because of the sensitivity of operations, junior officers are expected to disregard a captain’s orders when following those orders could jeopardize the crew’s safety., “Rigid hierarchies have their own special vulnerability to error,” write Weick and Sutcliffe. “Errors at higher levels tend to pick up and combine with errors at lower levels, thereby making the resulting problem bigger, harder to comprehend and more prone to escalation.”

Training and Tools

Systems thinkers embrace Louis Pasteur’s dictum that “fortune favors the prepared mind.” That is why a commitment to training and tools — for individuals and for organizations as a whole — is a key theme in guides to improving social systems.

Notwithstanding the Toyota Motor Corporation’s current problems with product quality and safety, the kaizen philosophy, long associated with the Toyota production system, remains one of the most critically important facets of a systems approach to management. Over a period of decades, it enabled Toyota to achieve its current position as the automaker with the most to lose, in terms of both market share and reputation.

Learning is such an integral part of kaizen — the continuous improvement of every process, every day, at every level of a company — that for many practitioners, training is considered the most important responsibility for any manager. For years, Toyota’s competitive advantage rested on the institutionalization of two interlinked routines, or kata: continuous improvement and coaching. The coaching kata, explains Mike Rother, a consultant and author of Toyota Kata: Managing People for Improvement, Adaptiveness, and Superior Results, “is the repeating routine by which Toyota leaders and managers teach the improvement kata to everyone in the organization.”

Rother offers a detailed look at the intertwined layers of routines, processes, and training that define the kaizen approach. He also provides the historical context for this philosophy and its pursuit of continuous flow production, or “1×1” production, when he vividly describes trekking through Ford Motor Company’s six-story Highland Park plant in Michigan. Now a storage facility, it was the site of the world’s first automobile assembly line, in which parts were built on the upper floors and, with the aid of gravity and chutes that were punched through the holes of each floor, moved to subassemblies below and eventually to final assembly on the ground floor. Henry Ford’s aspiration to create a continuous manufacturing flow from one value-added step to the next, without interruption and entirely free of slack and waste, captured the imagination of Toyota’s founder, Kiichiro Toyoda, who brought it to Japan.

Achieving kaizen depends on the knowledge and skill of every employee. Thus, writes Rother, “the primary task of . . .managers and leaders does not revolve around improvement per se, but around increasing the improvement capability of people.”

For decades, Toyota employees, using the scientific method and iterative problem-solving approach inherent in their system, were engaged in a constant cycle of finding and solving problems, developing and testing new ideas, implementing and codifying new solutions and routines, then starting all over again. Versions of this problem-solving process were used at all levels of the company to improve everything from manufacturing to strategic planning. Every Toyota employee was engaged in a constant quest for what Matthew E. May dubbed “the elegant solution” in his book of the same name (The Elegant Solution: Toyota’s Formula for Mastering Innovation [Free Press, 2007]). May defines this solution as “one in which the optimal or desired effect is achieved with the least amount of effort.”

Of course, many of these techniques and methods have long been known, and long been applied in piecemeal and ineffective ways. To explain how managers can apply them more effectively, John Shook, who worked at Toyota for 10 years, has written Managing to Learn: Using the A3 Management Process to Solve Problems, Gain Agreement, Mentor, and Lead. This slim, illustrated guidebook offers a worm’s-eye view of A3 diagrams. (An A3 diagram is a single-page document, roughly 11 by 17 inches, that aims to capture a snapshot of an individual process problem and its recommended solution.) “Every issue an organization faces can and should be captured on a single sheet of paper,” writes Shook.

“This enables everyone touching the issue to see through the same lens.”

Shook explains the centrality of employee development by following the story of a single employee and his supervisor — with the perspective of each following two parallel columns on every page — as they map out the solution to a single problem, translating production documents from Japanese to English to support the expansion of Acme Manufacturing, a fictional Japanese company’s U. S. operations. By focusing in minute detail on the mapping of a single problem, he shows how a seemingly mundane process can be fraught with errors, delays, and cost overruns that have system-wide implications, and how a deep understanding of the problem and its causes eventually leads to resolution. He also shows how patient coaching by the supervisor not only helps resolve the problem, but teaches his charge to be a better analyst.

Deming recognized that when it comes to the myriad processes that make up a large system, ordinary employees — including line and maintenance workers, salespeople, and technicians — know the system best.

The Deming Connection

The kaizen philosophy, Toyota production system, and similar methods are all closely linked to the work ofW. Edwards Deming, the statistician who came to be known as a leading management guru and paved the way for the ascendancy of quality as a management priority. (Actually, it is difficult to tease out cause and effect in the relationship between Deming and Toyota; they learned from each other over the course of many years.) Deming’s key insight — a deceptively simple yet profound statistical observation about how processes work — offers one of the most practical and important insights into the role that employees play in improving processes and developing a systems approach to organizations.

Deming, who also advised Ford, General Motors, and many other Western companies, argued that the predictability and quality of all processes are subject to two distinct causes of variation: special causes, which are generally due to a glitch in the system that can be fairly easily fixed, like a worn part on a machine; and common causes, which are more complex and difficult to isolate because they are systemic. For instance, product defects caused by the use of poor-quality materials in manufacturing might be traced back to a purchasing policy or a cost-cutting mandate from accounting or inadequate storage that causes otherwise good-quality materials to warp or rust. Treating a systemic problem as though it is a one-time glitch not only makes it less likely that the root cause will be found and fixed, but can cause even bigger problems going forward.

Deming recognized that when it comes to the myriad processes that make up a large system, ordinary employees — including line and maintenance workers, salespeople, and technicians — know the system best. They possess the crucial knowledge that is needed to distinguish between mere glitches and systemic failures and to ensure the predictability of any given process. He argued that a predictable, stable system offers unexpectedly valuable opportunities for improvement and innovation. Companies that rely on outside “experts” to monitor their processes, in lieu of employees with day-to-day experience, lose these opportunities for gain.

In his book Out of the Crisis (MIT Press, 1986), Deming codified his management philosophy in 14 points, which emphasized the importance of a change-friendly culture and participative management, including a work environment free of fear in which employees get the training needed to analyze and improve the system.

Deming’s writing tends to be dense and difficult to read, as I discovered in researching my own book, The Man Who Discovered Quality: How W. Edwards Deming Brought the Quality Revolution to America — The Stories of Ford, Xerox, and GM (Times Books, 1990). The most accessible source for Deming in his own words is his last book, The New Economics for Industry, Government, Education. The first chapter touches on the role of management and the customer, as well as the connection between continuous improvement and innovation. The third and fourth chapters illuminate Deming’s view of systems and the context for thinking about systems within a human organization. “If Japan Can . . .Why Can’t We?” the 1980 NBC television documentary produced by Clare Crawford-Mason, which is credited with rediscovering Deming’s work and helping to launch the quality revolution in the United States, is a very accessible video introduction to Deming’s ideas — and surprisingly relevant to today’s businesses.

Quantitative Distractions

Any discussion of systemic visions or ideals confronts one final — and profound — hurdle: what H. Thomas Johnson, an accountant and professor at Portland State University, refers to as the “quantitative abstractions” that control most companies., “When businesses regard economic activity as if it involves only the manipulation of abstract quantitative variables,” writes Johnson, “they miss what is really happening to the people, the communities, and the natural world that surround them.”

In his books Profit beyond Measure: Extraordinary Results through Attention to Work and People (coauthored with Anders Bröms) and Relevance Regained: From Top-down Control to Bottom-up Empowerment, Johnson outlines how perverse financial incentives and the use of top-down accounting information to control operations ushered in a “dark age of American business history” between the 1950s and 1980s. He traces the mischief caused by American cost accounting back to the fall of the once-integrated production system à la River Rouge, and the rise of the multi-product production system à la General Motors which requires ever more expensive equipment to reach scale. In response to the capital investment required for this equipment, management sought to drive down unit costs by pushing output regardless of market demand — a phenomenon that led to bloated inventories and warehousing, and made it increasingly difficult to achieve systemic improvement.

Johnson found that financial systems aimed at achieving short-term, bottom-line results treat the organization mechanistically, as “a collection of independent parts.” They squeeze cost savings and profits from the system without regard to how such squeezing will impact the system in the long run. He argues that ignoring the systemic impact of financial decision making is unsustainable in the long run and will yield progressively worse results. Yet, as Johnson wrote in the March 2009 issue of The Systems Thinker, “the thinking and behavior of almost all business managers in today’s world reflects a world view grounded in the whole-equals- sum-of-the-parts and win-lose competitive principles of 19th-century mechanics, not the systemic, cooperative, win-win symbiotic principles of 21stcentury cosmology and life sciences.”

Interestingly, according to Johnson, the one noteworthy exception to this dysfunctional approach to financial management has been Toyota. He argues that Toyota’s performance, unrivaled for close to 50 years — up until about 2000 — could be attributed in part to accounting and financial practices that were consistent with the company’s systemic approach to management. But that changed, wrote Johnson in the February 2010 issue of The Systems Thinker, when Toyota’s top managers “turned away from the thinking that had implicitly anchored its operations to the concrete reality of natural systems in the real world.”

There’s no question that Johnson’s perspective on many issues is controversial. (See Art Kleiner, “What Are the Measures That Matter?” strategy+business, First Quarter 2002, for the story of Johnson’s feud with “balanced scorecard” developer Robert Kaplan.) But his work shows how financial practices can be profitably redesigned with an eye toward participation, increased day-by- day awareness, and shared information, rather than mechanistic control. All the works mentioned in this guide have been linked to higher performance. Yet their focus on the expertise of ordinary employees remains a hard sell in many companies, because it requires an enormous long-term commitment to training and to local control and knowledge sharing.

Moreover, employee-centered systems organizations need to develop trust — between supervisors and employees and among employees who have to work together to understand and improve the system. Making this work takes skillful management. Indeed, many quality improvement efforts in the U. S. failed because they absorbed rigid process guidelines but failed to build in flexibility.

But it can be done; by now, thousands of managers in dozens of companies have accomplished it. These resources provide a path for others to follow.

The post Seeing Your Company as a System appeared first on The Systems Thinker.

Groups in Context

We exist as members in organizational peer groups: in Top Executive groups, Middle Management and Staff groups, and Bottom groups. We also bring our personal bias to our group relationships, to our affinities and antipathies. When things go wrong in our groups, our tendency is to explain these difficulties in terms of personal issues: there is something wrong with you or me, or maybe we are just an unfortunate mix. And when our diagnoses are personal, so also are our usual remedies: fix, fire, rotate, separate, divorce, or recommend coaching or therapy for one or more parties.

In fact, many of the peer group breakdowns that occur are not personal at all; they become personal, but their roots lie in context blindness.

Principle 3: When We Are Blind to Our Peer Group’s Context

Principle 3: When we are blind to the contexts in which our peer groups are functioning, we are vulnerable to falling into dysfunctional scenarios that cause us personal stress, weaken if not end our relationships with our peers, and detract from the contributions our peer groups could be making to the system:

• Territorial Tops. Members of Top peer groups may see themselves as just people with a job to do, but they are more than that; they are a group existing in a context of complexity and accountability (“Four Persons in a Top Context”).

  FOUR PERSONS IN A TOP CONTEXT

  

  Without awareness and mastery of that context, they are vulnerable to falling into dysfunctional territoriality. The process goes something like this. As members of Top teams, we reflexively adapt to the complexity and accountability of our context by differentiating, with each of us handling our own areas of responsibility. Differentiation is an essential process; without it, we would not be able to cope with the complexity and responsibility of our situation. But then a familiar process unfolds; we harden in our differentiations. Differentiations become territories. Each of us becomes increasingly knowledgeable and responsible for our area and decreasingly knowledgeable and responsible for others’ areas. We develop a ‘‘mine’’ mentality. We become protective and defensive of our territory. And we face uncertainties about the form and future of the system: What kind of culture do we want to create? Do we want to expand in new directions or stick to our knitting? Are we going to take financial risks or play it cautiously?

  These are complex questions with no textbook answers, yet we gradually polarize around fixed positions: the Riskers versus the Cautionaries; the Loose/Democratic System Builders versus the Bureaucratic/Authoritarian System Builders. Relationships fray. There are issues about who are the really important members of this team. Members feel they are not respected for their contributions. There are feelings about who is holding up their piece of the action. There are battles for control. Silos develop, sending mixed, confusing messages down through the system. There is redundant building up of resources in the silos; potential synergies across silos are blocked. Tensions among the Tops are high, and it all feels so personal.

• Fractionated Middles. Middle peer groups, whether first-line supervisors or middle managers or staff groups, may think of one another as just people and attribute their feelings about one another as simply reflections of one another’s personality, temperament, motives, values, and such. But Middle peer groups exist in a tearing context, one that draws them away from one another and out toward those individuals they are to supervise, lead, manage, coach, or service (“Four Persons in a Middle Context”).Dispersing is an adaptive response to that tearing context; that is what Middles are hired to do. But in time, we harden in our separateness. We develop an ‘‘I’’ mentality in which our separateness from one another predominates; our competitiveness with one another intensifies, as does our tendency to evaluate one another on relative surface issues: emotionality, manner of speech, skin color, gender, clothes we wear, and such. This fractionation of Middles isolates them, leaving them unsupported, without a peer group, able to be surprised, and often feeling undercut by actions taken by other Middles. It leaves the system uncoordinated, and it works against potential synergies among Middles or any collective influence by Middles.

FOUR PERSONS IN A BOTTOM CONTEXT

• Conforming Bottoms. Bottom peer groups exist in a context of shared vulnerability (“Four Persons in a Bottom Context”). The reflexive response is to coalesce. In coalescing, we feel (and, in fact, may be) less vulnerable. We develop a ‘‘we’’ mentality in which our differences are submerged and we feel connected to one another, supporting and being supported by one another. But then we harden in our we-ness — our closeness to one another and our separateness from all others, from ‘‘them.’’ In our we-ness we become wary of all others, resistant to them, and at times antagonistic to them. In our we-ness, there is pressure from one another as well as self-inflicted pressure to maintain unity. Difference is experienced as threatening to the we, and those expressing difference are pressured to come back into line. Individual action is experienced as threatening to the we and is discouraged. The pressure toward conformity is intense. The cost to individuals is the suppression of their freedom and the opportunity to develop their individuality; the cost to the system is resistance to even the best-intentioned change initiatives and the suppression of energy that could be focused on system business.Each of these scenarios results in stress for individual group members, causes the quality of their relationships to deteriorate, and diminishes the group’s contribution to the overall system. And each of these scenarios is avoidable. Transformation becomes possible with context awareness and choice:

  Leadership strategy 3: Recognize the context your peer group is in; adapt to that context without allowing adaptation to harden into dysfunctionality. Develop your peer group into a Robust System, one that strengthens individual members, their relations with one another, and their contribution to the system.

In order to develop powerful peer groups, we need to

A SYSTEM DIFFERENTIATING

A SYSTEM HOMOGENIZING

A SYSTEM INDIVIDUATING

(1) understand the fundamental systemic processes underlying Robust Systems, that is, systems with outstanding capacities to survive and develop in their environments;

(2) recognize how these processes are influenced by context in ways that can limit peer group effectiveness, and

(3) master the processes. Any peer group — Top, Middle, or Bottom — can become a Robust System.

A Robust System differentiates, homogenizes, individuates, and integrates (see “A System Differentiating,” “A System Homogenizing, “A System Individuating” and “A System Integrating”). ‘‘Differentiates’’ refers to the fact that the system develops variety in form and function, thus enabling it to interact complexly with its environment.

‘‘Homogenizes’’ means developing processes for sharing information and capacity across the system. ‘‘Individuates’’ means encouraging individuals and groups to function separately and make independent forays into the environment, experimenting, testing, developing their potential. ‘‘Integrates’’ means enabling a process in which parts — individuals and units — come together, share information, feed and support one another, and modulate one another’s actions in the service of the whole.

Whether we see context or are blind to it, our groups will reflexively adapt. But some reflexive patterns of adaptation actually diminish peer group effectiveness by relying on certain processes while ignoring or suppressing others. When we see and understand context, we can strengthen our groups by bringing the ignored or suppressed processes back into the mix.

• The formula for falling into Top Territoriality is differentiation and individuation without homogenization and integration.For Top groups in the context of complexity and accountability, the reflexive response is to differentiate and individuate, that is, to develop a variety of forms and processes for coping with complexity and for the parts to function independently of one another in the pursuit of these separate strategies and approaches. Thus far, this is all to the good. It is when Top groups fail to balance differentiation and individuation with homogenization and integration that they fall into destructive territoriality. In light of this peril, how can leaders develop a robust Top peer group? The leadership challenge for Top groups is not to differentiate less but to homogenize and integrate more, to share high quality information with one another, to spend time walking in one another’s shoes, to work together on projects other than their specialized arenas, to function as mutual coaches to one another in which all Tops are committed to one another’s success. Such forms of homogenizing and integrating activities serve to strengthen the group’s capacity. The new formula for Top peer power becomes: Homogenization and integration strengthen differentiation and integration.
• The formula for falling into Middle Alienation is individuation without integration. For Middle groups in the tearing context, the reflexive response is to individuate: to separate and function independently as they supervise, manage, lead, coach, or otherwise service the groups they are charged with serving. This is an adaptive response to the tearing context. It is when individuation is not strengthened by integration that the fractionated pattern described previously develops. In light of this peril, how can leaders develop a robust Middle peer group? The leadership challenge for Middle peers is not to individuate less but to integrate more: meet together regularly with just Middle peers, share information gleaned from across the system, use their shared intelligence to diagnose system issues, share best practices, solve problems, work collectively to create changes that individually they are unable to achieve. The new formula for Middle peer power becomes: Integration strengthens individuation.
• The formula for falling into Bottom Conformity is homogenization and integration without individuation and differentiation. For Bottom groups in the context of shared vulnerability, the reflexive response is to coalesce. Coalescence is a process in which unity is maintained by homogenizing (emphasizing commonality while suppressing differences that could divide) and integrating, that is, sharing resources and supporting one another in common cause. Coalescence is an adaptive response to shared vulnerability; it is when homogenization and integration are not balanced by individuation and differentiation that the groups fall into stifling and destructive conformity. So how to develop a robust Bottom peer group? The leadership challenge for Bottom peers is to strengthen themselves by encouraging differentiation (Let’s explore multiple approaches to coping with our vulnerability) and individuation (Go out there and see what unique contribution you can make). Differentiation and individuation are not experienced as threats to unity as long as they are pursued with the goal of strengthening the we rather than weakening it. The formula of, In unity there is strength, is changed to, In diversity there is strength. In the language of group processes, the new formula for Bottom peer power becomes: Individuation and differentiation strengthen homogenization and integration.

Principle 4: Overcoming the Illusions of System Blindness

Principle 4: Our consciousness — particularly how we experience others — is shaped by our relationship to them. Change the relationship, and we experience them quite differently.

One reaction to any of the group strategies described could be: Very interesting, but it won’t work with my people. And why won’t it work with your people? Well, it’s because of their temperament, or needs, or motives, or level of maturity, and so forth. We find ourselves back into experiencing others through a personal rather than systemic lens. When Tops are in the ‘‘mine’’ mentality, Middles in the ‘‘I’’ mentality, and Bottoms in the ‘‘we’’ mentality, the feelings they have toward others feel solid, firmly grounded in the characteristics of these others. Simply a matter of who they are. And any notion that you might feel differently toward them feels far-fetched. Yet these solid, firmly grounded experiences are in fact the illusions of systemic blindness. Change the relationship, and the feelings change.

In the Power Lab experience (described in Part I of this article), we demonstrate this illusion quite dramatically. A central feature of the program is a multiple-day intensive societal experience in which participants are randomly assigned to Top, Middle, and Bottom positions. With great regularity, Tops fall into territorial issues, Middles become alienated from one another, and Bottoms become a powerfully connected we. And all relationships seem firmly grounded in the reality of who the people are. Then there is a second experience in which all roles are shifted; the powerfully bonded Bottoms are now in different contexts: some as Tops, others as Middles, and others as Customers. And in short order, love is transformed into impatience, annoyance, competition, aggression. Previously territorial Tops and alienated Middles are now bonded Bottoms. They all experience the power of context. That can and should be a humbling experience.

There may be many roads leading to systemic understanding. As an educator, my favorite is this: I prefer to come to a system intentionally knowing nothing about it: reading no reports, interviewing no one. And then I give a talk on Top Teams and Middle Peer Relationships and Bottom Group think. The presentation is about context and how context shapes our experiences of ourselves and others, and the dysfunctional scenarios that can follow. The power comes when people identify themselves and their system in this pure abstraction. How does he know this about us? Clearly whatever is happening to us is not simply about us or our particular organization. Something else must be going on. And that questioning creates the opening for systemic understanding and intervention: for Tops to pay more attention to homogenizing and integrating activities, for Middles to regularly integrate with one another, and for Bottoms to strengthen themselves by building individuation and differentiation into their survival strategies. The challenge for all is to see, understand, and master systemic context.

Systems in Practice: The Case of the Rigid Manager

The following case illustrates the people-in-context ideas I’ve described in this chapter, and it also supports what could be regarded as a fifth principle toward developing system insight:

Principle 5: Seeing people opens up deep but potentially limited personal interventions; seeing context opens up comprehensive systemic interventions.

A change intervention that has been successful in division A of Ace Manufacturing is being introduced into division B with the help of a team of consultants. One snag is that B’s division head is less than enthusiastic about the project. Our department managers are having enough trouble keeping up with day-to-day demands without dealing with the complexity of a whole new initiative. Still, the initiative has been introduced, and five of the six department managers seem invested in making it work despite its apparent difficulties. Charles, the sixth manager, has been ignoring the initiative. To him, it is as if it doesn’t exist. Charles is clear about his boss’s priorities, and his boss’s priorities are Charles’s priorities.

The consultants have attempted to work with Charles, with little success. They interpret Charles’s apparent resistance from a personal developmental framework: seeing him as being stuck at a developmental level at which he is unable to separate himself from the demands of authority. If Charles and the initiative are to be successful, Charles needs to be helped to move through that stage of development and acquire greater independence.

Meanwhile, the other department managers, each operating independently of the others, are grappling with both the requirements of the new change initiative and the continuing demands of the division head, who is increasingly unhappy with them. They have been lax on their paperwork, reports not being timely or thorough, and there have been too many complaints from people in their operations. None of this is a problem for Charles. His paperwork is fine, his reports are timely and thorough, and as far as the division head is concerned, Charles’s operation is running smoothly.

Charles may in fact be stuck at this level of development, and it could be useful to help him move through that stage. But a richer understanding of this situation with more powerful intervention possibilities emerges when observed through a systems lens.

A Systemic Picture. Charles, with his apparent inability to separate himself from authority, is but one piece of a total system scenario involving the relations between and among the division head (Top) and the department managers (Middles). A deeper understanding of this situation and a more global intervention strategy emerges when we take into account the contexts in which people are functioning:

• Top Context: Complexity and Accountability. To the division head, this new initiative is being experienced as another complication in an already complex world. This feeling is reinforced by the lax reports from department managers and the complaints coming from their groups. Progress on the change initiative seems incoherent. The division head receives very different reports.
• Middle Context: Tearing. Charles is not the only Middle torn between the requirements of the new initiative and the day-to-day demands of the job. Department managers are coping with the tearing in different ways. Charles reduces the tearing by aligning up; the division head’s priorities are his priorities. The division head has no problem with Charles, but the consultants do because Charles’s priorities are not their priorities. Meanwhile, the other department managers are coping with the tearing differently. Some are aligning with the consultants’ priorities; the consultants are pleased with their efforts, but the division head is not. Others are attempting to please everyone with limited success.
• Middle Peer Group Context: Tearing. Each department manager faces this tearing alone. There is no Middle peer group with a coherent strategy for handling their tearing and implementing (or agreeing not to implement) the change initiative.

A Systemic Intervention. The key leverage point is the Middle peer group. Currently there is no Middle group with an independent perspective on the current situation or a coherent strategy for dealing with it. Middles, being in their independent, separate ‘‘I’’mentalities, do not experience the need or potential for collective power in their group. In fact, their competitiveness with and evaluations of one another, all consequences of the ‘‘I’’ mentality, support their not working collectively.

A first step in a systemic intervention is to develop system knowledge: education regarding context. Rather than approaching the situation head-on, a conceptual presentation or simulation would be aimed at illuminating context, primarily the Middle context and the challenges that context raises for individual Middles and the Middle peer group. The goal is for the abstract to illuminate the concrete current situation: why people are feeling the way they do and how the development of a powerful, independent Middle peer group can fundamentally transform the situation. Then it is up to department managers to work on developing such a group—one that meets regularly, in which members share information about what’s working for them and what’s not. They support one another, coach one another, and, most important, develop an agreed-on strategy for handling the change initiative.

If Middles are successful in that effort, a number of problems are resolved. The complexity of the Top (division head) is reduced; he is receiving more consistent information from his Middles, and the change initiative appears to be managed more uniformly. Individual Middles are less torn, alone, weak, unsupported; all Middles feel part of a powerful and effective peer group; the change initiative is pursued more consistently. And, one would hope, this change initiative, when implemented effectively, will have a positive effect on the lives of all system members. From this persons-in-context framework, the focus is less on ‘‘fixing’’ any one person than on helping all parties see, understand, and master the systemic contexts they are in.

Implications for Leadership Development

Seeing context is an unnatural act. We do not see others’ contexts; all we see directly are their actions or in actions. Nor do we see our own contexts; what we see and feel are specific events, actions, and conditions. So the challenge is how to educate leaders regarding context.

Conceptual Presentations. This article is one example of education in context. Leaders, like everyone else, welcome the opportunity to organize what appear to be random, chaotic phenomena into actionable abstractions — finding the simplicity in complexity. This framework of Top, Middle, Bottom, Customer does that. It resonates with leaders’ day to-day experiences; they can readily see themselves as moving in and out of these contexts; and those with at least minimal self-awareness can recognize the lure of the disempowering reflex responses. Along with awareness, the framework offers clear choice: alternative strategies for empowering self, others, relationships, and systems. In this sense, this is a teachable framework, whether through chapters and articles such as this, presentations, case studies, animations, theatrical dramatizations, or other media.

Executive Coaching. One-on-one coaching can be an important tool of education in context. This, of course, requires that coaches have a deep grasp of context first in their own lives and then in their ability to see it operating in others. The coach can help the leader take into account the context of others. What is their world like? What are they wrestling with? How are they likely to experience this initiative of yours? And what can you do to ease their condition in a way that makes it possible for them to do what you and the system need them to do? A coach can help leaders be aware of their own context and the choices available to them. Are you unnecessarily sucking responsibility for this up to yourself and away from others? What are the consequences of doing or not doing that? Are you sliding in between others’ issues? What are the consequences of your doing or not doing that? The coach’s job is not only to help create awareness and choice in the moment, but also to educate leaders such that context consciousness becomes a regular component of their analytical framework.

Experiential Education. Well-designed organization simulations enable leaders to experience directly the consequences of context blindness and the possibilities that come with seeing, understanding, and mastering context. There is a difference between knowing these concepts intellectually and experiencing them directly in the heat of action. In a stroke of synchronicity, as I was writing this article, I received an email from an Organization Workshop trainer who had just completed a workshop with the executives of his organization. He wrote:‘‘The best part of it was [that] the group has had a lot of prior exposure to [the concepts of] choice and responsibility. So this was for them a fantastic example of how the theory of choice/responsibility isn’t as easy as it sounds.’’ Experiential education can provide this kind of humbling experience that sets the stage for real knowing.

Conclusion

A missing leadership ingredient is the ability to see, understand, and master the systemic contexts in which we and others exist. In our person-centered orientation, we tend to be blind to context, and that blindness is costly.

When we are blind to others’ contexts, we misunderstand them, have little empathy for the challenges they are facing, misinterpret their actions, react inappropriately to them, and fall out of the potential for partnership with them. When we are blind to the contexts we are in, we are vulnerable to falling into patterns that are dysfunctional for ourselves and our systems as burdened Tops, torn Middles, oppressed Bottoms, and screwed Customers. And when we are blind to our groups’ contexts, we are vulnerable to falling into the dysfunctional patterns ofTop territoriality, Middle alienation, and Bottom group think.

With system sight, all of these dysfunctions can be avoided; we are able to interact more sensitively and strategically with others who are Tops, Middles, Bottoms, and Customers; we are able to create more thoughtful, creative, and productive responses when we are Top, Middle, Bottom, and Customer; and we are able to create peer groups whose members value and support one another and who collectively make powerful contributions to their systems. All of this can be taught — just as we know that the earth revolves around the sun even though our direct experience is the other way around. The other day, I heard my young grandson describing how the other kids in class were grousing about something their teacher had done. He said,‘‘Don’t they get it? She’s just a Middle.’’ So maybe early education would be a productive path to develop.

The post People in Context, Part II appeared first on The Systems Thinker.

This discovery that thought alone changes the brain’s physical structure validates strategies that practitioners of systems thinking and organizational learning have long appreciated. These strategies — effective with everyone from primary school children in the Netherlands to employees in global corporations — include listening without judging, speaking honestly, looking for interrelatedness, nurturing relationships, and asking fresh questions. Brain research suggests that such mental awareness, attentiveness, and creative questioning can actually transform our brains from rigid, automated responders to thoughtful, alert, searching, and open creators of Self and the world.

This article explains why mindfulness — being fully aware of the present moment and regarding it with openness and curiosity — is the compelling responsibility of all human beings. It explains why all of us are by definition obligated to examine and develop our inner context — the Self that thinks well, sees clearly, and decides intelligently. Our survival as individuals, organizations, and a species depends upon it.

Our Inner and Physical Contexts

For the purposes of this discussion, I use “context” in two ways. Strictly speaking, the word “context” means “the situation that surrounds us, with its conditions.” I use it to designate inner context, the mental state inside our heads that envelops us — such as our ideas, tastes, attitudes, moral principles, social rules, and worries. Used this way, “context” is synonymous with “Self or “Mind.”

I also use physical context to refer to the world surrounding us now. The Self is always moving from past to future in a physical space with its own conditions. We live among family, friends, teams, clubs, and neighbors. We occupy a workplace consisting of office furniture, equipment, tasks, deadlines, and colleagues who interact, apply knowledge, make choices, interpret events, and sometimes bring us coffee.

In the workplace — or in any physical context — people, objects, and events are woven together. Indeed, the word “context” comes from the Latin “contexere,” meaning “to weave together.” Woven together in our inner context, our Self, are all those attributes we refer to with the pronoun “I.” The Self, the Mind, emerges as brain cells (specifically, neurons) weave together and connect. Brain cells connect as a result of our experiences. Daily life builds the brain, continuously, moment by moment. We make our Selves.

For example, humans are born with the capacity to distinguish every one of the sounds contained in the 6,000 languages spoken on earth. Particular neurons are genetically assigned to receive particular sounds. The more an infant hears a single sound, such as “gr,” the more that “gr” is wired into a tiny cluster of neurons in the brain’s auditory cortex. The cluster of neurons holding “gr” comes alive with electrical activity when — and only when — that distinctive “gr” sound enters the child’s ear and passes to the brain. Clusters of neurons — circuits — in your brain hold all the sounds of the language you speak. In this way, experience decides if Italian will make sense to you or sound like gibberish.

Experience also wires the brain for music. During the first few years of life, a child’s brain can wire for any kind of music. Because in the United States children hear Western music, by the age of five, their brains have formed circuits that hold Western musical sounds. Five-year-old children know the customary chord progressions in Western music. These examples from music and speech demonstrate that use sculpts the brain.

Because personal experience generates the Self, therefore, one might well ask, “What experiences, what influences, made me the Self that I call ‘I’?” and “Will I, my Self, choose to rewire my brain by paying attention to new contexts that offer new experiences, or will I refuse?”

Perhaps the most obvious influence that shapes the human mind is culture, the context that envelops us from birth. Culture is, of course, a social invention. This invention is communicated to us by our grandparents, parents, friends, teachers, colleagues, and others. These people form a social network that hands down rules of behavior. They give us opinions about education, political parties, right and wrong, the war in Afghanistan, and offshore drilling. They tell us what knowledge is worth learning. Culture wires circuits in our brains, and, miraculously, a Self emerges.

Culture encompasses more, of course, than the social inventions of people inhabiting a broad geographical region. The term also alludes to narrow contexts, such as universities, reading groups, and NASCAR races. Economics, for example, is an academic discipline with its own culture. This academic discipline’s culture does not train economists to be ethicists who ask, “How can the economy be made to serve society?” Nor does the culture of economics departments train economists to be historians disposed to ask, for instance, “Should the Federal Reserve System, created in 1913 as an entity privately owned by the nation’s leading banks, continue to exist in its present form and continue to issue all U. S. currency, so that the federal government must borrow money from the Federal Reserve Bank to meet its financial obligations?”

Rather than consult history, economics departments focus on designing theories, abstract models divorced from ethical and historical contexts. Their models deal with describing, analyzing, and preserving the current economy, which, for better or worse, depends on market activity leading to continuous growth. The product of a narrow culture, the economist sees through a special lens. So do we all.

User’s Guide to Life

Each of us perceives reality through the unique lens of our personal values and ideas. These values and beliefs are part of us, just as surely as an arm is part of us. And just as we are unwilling to part with an arm and will fight to protect it, so we are unwilling to part with the ideas, customs, and practices that constitute the Self, our “User’s Guide to Life.”

Protective of their “User’s Guide to Life,” people who hear of a discovery that challenges their way of thinking typically say immediately, automatically, “It is not true. It is impossible.” Eventually they may admit, “Well, perhaps it is possible.” Faced with irrefutable evidence, they concede, “Ah, it is true.” In time, they incorporate that new information into their own “User’s Guide to Life,” saying, “I thought so all along.” If it is a popular discovery, invention, idea, or procedure, some might even claim, “I thought of it first.”

When culture produces results no one wants, people automatically distance themselves from those outcomes. We treat unwanted results as if they had an independent existence of their own. For example, human beings have degraded 21 percent of the topsoil in the world’s arable land and have reduced 80 percent of humankind to poverty, and yet we automatically disavow responsibility for these conditions. We claim to be prisoners of systems and powerless to alter them. We say we can do nothing.

Not just when our “User’s Guide to Life” faces a daunting or unwanted context, but in any context — familiar or novel — we humans tend to run on automatic pilot. In a meeting with colleagues, the Self automatically downloads a reaction: “Seen it before, know it well.” Relying on customary thoughts, we make customary judgments. As Ellen Langer, a Harvard psychologist, points out, instantly we interpret events, hastily we decide what they mean, immediately we judge and reach conclusions about what is going on around us. We defer to authority, continue the same old practices, and fiercely, sometimes violently, protect a long-held idea.

Protecting What We “Know”

It is understandable, profoundly regrettable, but by no means inevitable that human beings regularly function on automatic pilot and fight to preserve familiar ideas. Brain research suggests three reasons for this determination to protect what we know, freeze thought, and close the Self.

Need to Belong. One reason we seek to retain the lessons of culture and personal experience is that the brain is a social organ. It loves the company of other brains. Indeed, it demands the company of other brains. To survive and flourish, it must belong. Belonging is so important to the brain that it spends its downtime—when it is thinking of nothing in particular — rehashing relationships, asking, “Did I belong? Was I accepted? Did they like me?”

“Social to the core,” as Michael S. Gazzaniga put it in Human: The Science Behind What Makes Us Unique, the brain also delights in gossip because gossip makes it feel included. Men and women alike spend hours gossiping. Cell-phone conversations are rarely about Tolstoy or astrophysics. They’re about personal matters. Women spend one-third of their conversation talking about themselves. “My friend gave me roses.” “I really do want that facelift.” “We meet every winter to ski.” Keenly interested in others, women spend two-thirds of their conversation talking about other people. “The last time I saw her, she looked upset.” Men also love to gossip. They call it “exchanging information” or “networking,” but it’s still just gossip. Furthermore, men spend two-thirds of their time talking about themselves: “I beat my own personal best in that marathon.” “I convinced the boss to use my design.” “I think she likes me.”

Belonging is so important that not belonging generates actual pain. When we do not belong — when we feel rejected, ignored, mocked, or reprimanded—we experience the same hurt that physical pain causes. Two brain regions respond to physical pain. The same two regions also respond to social pain. These two regions — the anterior cingulate cortex and the right ventral prefrontal cortex — react to the pain of a broken arm, and they react to the pain of social distress. When you break your arm, or when you are ignored, your anterior cingulate cortex immediately sends out an alarm: “Pain . . . something is terribly wrong.” This alarm serves to alert the right ventral prefrontal cortex to dampen the pain as much as possible.

The pain of not belonging is so intense that we try hard to avoid it. To avoid the pain of not belonging, we conform. We repeat the same ideas our friends and colleagues voice. We accept culture’s dictates. Willingly, we become prisoners of context, physical and mental.

Search for Meaning. A second major reason that humans automatically struggle to protect their values and convictions is that in order to survive, the brain requires meaning. In its perpetual quest for meaning, the brain looks for patterns and order in everything. Troubled by randomness, for example, it tries to make sense of life, asking, “Is my job worth doing?” “Why did those teenagers have to die in a car crash?” In its quest for meaning — for order, significance, and purpose — the brain protects, apparently, the beliefs and practices it has long known and resists anything that does not fit its patterns. Ironically, protecting meanings causes us to miss the new meaning that an immediate physical context offers us now, as we inhabit the moment.

Habit. A third major reason that human beings struggle to protect customary thoughts and practices is that habit grips the human brain. Gipsie Ranney provided a fine instance of the power of habit when she said that many CEOs insist that “increases in external incentives will enhance performance.” They make this claim despite compelling evidence showing that external incentives actually squelch creativity, discourage risk taking, and increase conformity. These CEOs cling to their belief in external incentives because, often reinforced, it has become habitual. Once a thought becomes habitual, it occupies physical space in the brain.

The Brain’s Habit Center

The habit center of the brain consists of interconnected clusters of neurons located near the core of the brain and called the basal ganglia. Scientists have long known that parts of the basal ganglia affect movement. They now realize that the basal ganglia is also implicated in storing habits. For example, when an activity is practiced so long that it becomes habitual, like leaving the house at six every morning to go jogging, the habit is stored in the basal ganglia. Habits of thought seem also to be held in parts of the basal ganglia. If throughout childhood you were treated kindly, and if you were always encouraged to practice kindness, then neurons in your basal ganglia became wired to form circuits holding the habit of kindness. Embedded in your brain and emerging in your personal Self is the habit of always doing the kind act.

Habits — good and bad alike — are hard to break. One reason habits are hard to break is that they occupy physical space in the brain. The more a habit is practiced, the more real estate it usurps.

Habits are also hard to break because when we try to get rid of a habit, one part of the brain, the orbital frontal cortex, sends out an error message. The orbital frontal cortex, located just above and behind the eyes, is the brain’s error detector, constantly appraising situations to see how things are going. When expectations are thwarted, the orbital frontal cortex sends out an error alert — like a flashing orange hand at a crosswalk that warns pedestrians to rush to the safety of the curb. This error message says, “Something is not right.”

When a healthy person tries to break a habit, the orbital frontal cortex resists doing so, in effect declaring, “Breaking this habit is wrong.” The error message at the same time triggers overwhelming emotions strong enough to vanquish rational thought. Overpowered by these emotions, the brain does not want to listen to reason. The brain wants victory, not truth. It wants to defend its interests, even if what it defends is illogical and unsubstantiated.

The following two versions of the “Trolley Game” illustrate the tendency of emotion to vanquish reason. While the first version favors reason, the second defers to emotion.

Version 1. You are on a bridge watching as an out-of-control train hurtles toward five unsuspecting workers on a track. There is a switch near you that you can use to divert the train onto a different track, where only one worker is standing. Would you divert the train to hit one person in order to save five? Most people answer, “Yes.” It’s a question of logic. The part of your brain that reasons does the math. It tells you to sacrifice one to save five.

Version 2. You are standing on a bridge watching the train aim at five people. There is no way to divert the train. However, standing next to you on the bridge is a massively overweight stranger. If you push him off the bridge and onto the track, he will stop the train. You will kill him and save five. Will you push the stranger off the bridge?

Most people will not push the stranger. Simple logic says, “Kill one; save five.” But now emotion is involved. It feels bad to push a stranger to his death. Emotion defeats reason.

Emotion also trumps reason in a well-known experiment called the “Ultimate Bargaining Game,” involving sharing. Two players are given a chance to split money. One player receives $100.00 and is invited to propose a split. The other player is allowed to accept or reject the offer. If he rejects it, neither player gets anything. Pure logic says, “Having money is desirable.” Therefore one expects the first player to offer the worst possible split. Logic also says, “A little money is better than none.” Therefore one expects the second player to take whatever is offered. However, typically players in the experiment defy logic. The person proposing the split frequently offers almost a fifty-fifty sharing, which is illogical. Such a split is normally accepted. However, when the first player offers significantly less than a fifty-fifty split, the second player rejects the offer. The second player’s feelings of insult, anger, and unfairness trump logical self-interest. Emotions sometimes help us make good decisions, sometimes not.

Mirror Neurons for a Change

Fortunately, we are not trapped in an overwhelmingly emotional, habit-ridden, culture-molded Self. We are capable of opening our minds, hearts, and wills, as systems thinkers and management theorists Otto Scharmer and Peter Senge so emphatically encourage us to do. We are capable of learning from one another, paying attention, thinking well, and seeing clearly.

Mirror neurons are the cells in the brain that make it possible for us to know what it is like to be another person. Giacomo Rizzolatti and his colleagues at the University of Parma discovered mirror neurons in 1996. They were studying how the brains of monkeys buzzed with activity when the animals picked up different objects. Astonishingly, when a trainer picked up some nuts and the monkeys just sat watching, the monkeys’ neurons began to buzz — as if they were picking up the nuts. Watching the scientists grasp food had activated in the monkeys’ brains the identical neurons that had buzzed earlier when the monkeys picked up food. Just watching caused neurons to fire and create circuits.

Human brains behave the same way. We, too, have mirror neurons. Mirror neurons look like any other neuron, but they have a surprising and unique double function. These neurons fire both when you do something — that is, when you perform an action or feel an emotion — and when you watch someone else do something — when you watch someone else perform an action or feel an emotion. Mirror neurons cause you to imitate that action or feeling in your brain.

For example, when someone else kicks a ball, your brain kicks the ball. When you see someone else feel an emotion, then your mirror neurons cause you to feel that same emotion. Your brain makes circuits that hold that feeling. When you observe a woman smile in happiness, then your mirror neurons cause you to feel that same happiness. Because of mirror neurons, you do not have to reason to yourself, “That woman looks happy; therefore she must be happy.” Mirror neurons let you just know the person is happy.

Furthermore, suppose that you are with a friend who is anxious. As you watch your friend feeling anxious, your mirror neurons wire to imitate your friend’s emotion. You “catch” his anxiety. Now you feel anxious, too. Furthermore, your anxiety causes your own body to react. In effect, secondhand emotion affects us physically. When we see an emotion on another’s face, that sight affects both brain and body.

Mirror neurons are sometimes called “empathy neurons” because they let us empathize. They let us unite with another, understanding another’s experience completely and compassionately.

The fact that human beings are equipped with these powerful mirror neurons changes our view of human nature. By nature, human beings seek intimacy and form close ties with others. By nature, humans are highly social, cooperative, and collaborative. By nature, humans are an “empathic species,” born equipped with neurons that unite us. It is possible that, given this capacity for empathy, human beings have survived not primarily by being aggressive, self-sufficient, independent competitors fighting tooth and claw to gain every advantage. On the contrary, it seems that we have survived by seeing with another’s eyes and feeling with another’s heart. Neuroscientist Richard Restak says, “If we try to think in a compassionate manner about the other person — no matter how difficult that may be — we then become capable of empathizing — of thinking and feeling as that person does.” We become one with the person, united.

A New Responsibility

Understanding the power of mirror neurons as well as the fact that daily life shapes the brain brings with it great responsibility. We now realize that those watching our actions and displays of emotion will “catch” our behavior, performing it in their own brains. Surely we must take care, then, that our behavior is worthy of emulation. We must also be careful of what we are willing to observe. When we observe the actions and feelings of others, especially for a sustained period, our brains perform those same actions and feelings. What behavior do we want our brains to replicate?

And what truth does knowledge of mirror neurons and the brain’s plasticity permit us to confidently promulgate? How do we know that our own peculiar daily life and interactions have led us to truths?

Culture gives us, of course, its version of truth. For example, virtually all cultures teach a few universal moral principles.

1. Do no harm. Be compassionate, empathize, oppose cruelty, alleviate suffering.
2. Be fair. Give everyone an equal chance. Punish cheaters; repay kindnesses. Do unto others as you would have them do unto you.
3. Support the community. Share, be generous, collaborate, volunteer.
4. Respect authority. Show respect for those in authority. Fulfill duties and obligations.
5. Be pure. Reject things that contaminate, such as incest and polygamy.

The trouble is that interpretations of these universal principles are local. In some countries and in some religions, do no harm permits stoning a woman to death for having sex out of wedlock. Surely we must be wary of judging right and wrong based upon universal moral codes that yield widely divergent interpretations.

But if we can’t trust local interpretations of universal moral codes, what foundation does allow us to make moral judgments? Science might help. For example, as Professor Will Keepin explains, “In field after field, in biology, physics, nonlinear dynamics, artificial life, complexity theory . . . [is] a new idea . . . that beyond the physical realm, there exist invisible patterns and principles that somehow organize what we observe and experience.” Apparently there exists “a realm beyond the observed, material, empirical world . . . Something transpires behind that which appears.” Might an ethic be drawn from that observation? What might a new moral code be? Perhaps a new moral code will emerge from our capacity to empathize.

The point is that definitive concepts of right and wrong are elusive. Achieving the fullest understanding possible about ethical and other matters is exceedingly difficult. Because it is so difficult, each of us has a responsibility to open our minds and hearts to every single context we inhabit, always searching for truth. To open our minds intelligently demands, among other things, thinking well and paying attention.

Thinking Well. Thought alone — just thinking — can actually connect neurons in emotional regions of the brain so that they hold a positive outlook. If we begin each morning writing down three reasons to be grateful, we will in time weave brain circuits that hold a grateful attitude. Buddhists meditate on compassion and as a result generate brain circuits in which compassion is embedded.

Paying Attention. Thinking well requires paying attention. Paying attention in a disciplined way intensifies the brain’s response to any thought or sensation. To understand the force of paying attention, consider that all objects possess shape and color. Take a chair, for example. The shape of the chair is processed by distinctive circuits of neurons. The color of the chair is processed by an entirely different circuit of neurons. Neurons that process the shape of the chair have nothing to do with those that process the chair’s color. Therefore, if you choose to pay attention only to an object’s shape, then you strengthen only the neurons that specialize in shape. If you then focus on the object’s color, you will bolster the neurons that specialize in color.

Targeting an object, taking aim, is the first step in paying attention. Having chosen the target, concentrate on it. Ignore distractions and irrelevancies. Return wandering attention to the target, re-aim. This process wires the target into the brain’s circuitry, thus changing the brain’s physical structure.

Paying attention is of huge importance to anyone interested in context because it makes the brain alert and vigilant. Otherwise, we might end up in this situation:

• “What big eyes you have Grandma,” Red Riding Hood said, oblivious of the countless past visits when her Grandma’s eyes did not seem big.
• “What big ears you have, Grandma,” she said matter-of-factly. Had she concentrated, Red Riding Hood would have recalled that her grandma’s ears had never looked big, furry, and pointed.
• “What a deep voice you have, Grandma,” she said blandly, as if her Grandmother’s voice had always sounded deep and low.
• “What big teeth . . .” At last paying attention — too late — Red Riding Hood realized that she had been talking to a wolf.

Poor Red Riding Hood. No one taught her to concentrate, so she wasn’t vigilant. Clearly William James was right when he said, “An education that would improve attention would be the education par excellence.”

A Work in Progress

We human beings are capable of exercising mindfulness — of paying attention and thinking well. We are able to suspend disbelief, listen, learn, and deepen understanding.

• Shall we, then, in any context strive intentionally to cultivate compassion, patience, and love?
• Shall we perhaps apply the term “social” not only to relationships among human beings, but to relationships among every living thing?
• Shall our values serve not only our own ends, but those of all life?

The Self, a work in progress until the day we die, has the power to grow and learn in all the contexts it inhabits. What’s more, it has the power to transform these contexts and, in so doing, perhaps even save the world. Let’s use our knowledge of the brain to cultivate reason, curiosity, mindfulness, and empathy now, in today’s context, so that our wise decisions enable human beings and Earth to flourish always.

Elaine B. Johnson, Ph. D., a Woodrow Wilson Fellow and Honorary Fellow of Huron University College, Canada, is an internationally recognized authority on contextual teaching and learning and a popular interpreter of brain research. Author of the definitive study on teaching in context, Contextual Teaching and Learning: What it Is and Why It’s Here to Stay (2002), Johnson is in demand as a consultant to businesses and schools. She is currently writing a book about the brain tentatively called Love Your Brain, Improve Your Life.

AUTHOR’S NOTE: The material in this article is based on numerous studies that, in an academic journal, would be scrupulously documented. For this publication, space permits mentioning only a few major sources: Sharon Begley, Train Your Mind, Change Your Brain (NewYork: Ballantine Books, 2007), pp. 156-160; John B. Cobb, Jr., “Capital,” a paper written for a conference in Suzhou, China, January 2009, pp. 4-13; David Dobbs, “A Revealing Reflection,” Scientific American Mind, April/May 2006, pp. 22-27; Michael Gazzaniga, Human (New York: HarperCollins, 2008); Marco Iacoboni, Mirroring People: The New Science of How We Connect with Others (New York: Farrar, Straus and Giroux, 2008), pp. 1-46; Will Keepin, “Science and the Spirit: Integrating the Sacred and the Secular,” Timeline, September/October 1998, p. 15; Ellen J. Langer, The Power of Mindful Learning (Cambridge: Perseus Books, 1997), pp. 1, 4, 16- 18,100, 103-105; Daniel J. Levitin, This Is Your Brain on Music (New York: Plume/Penguin, 2007), pp. 26-27, 40-43; Gipsie B. Ranney, “The Trouble with Incentives: They Work,” Ongoing Discussion Thought Piece for Pratt and Whitney Rocketdyne’s Enterprise Thinking Network, pp. 5-7; Richard Restak, The Secret Life of the Brain (New York: Dana Press & The Joseph Henry Press), 2001, pp. 44-45; C. Otto Scharmer, Theory U (San Francisco: Berrett-Koehler, 2009), 119-121; Theory U’s Foreword by management theorist Peter Senge, p.xiii; Jeffrey M. Schwartz, M. D., and Sharon Begley, The Mind and the Brain (New York: Harper Collins, 2002), pp. 59-73; Daniel Siegel, The Mindful Brain (New York: W. W. Norton & Company, 2007), pp. 110-118. For the relationship of emotion to reason, see Antonio Damasio, Descartes’ Error (New York: Avon Books, 1994), pp. 70-71, 159-160. Matthew Lieberman and Naomi Eisenberger, working at UCLA, discovered that emotional pain is comparable to physical pain.

The post Changing Our Systems by Changing Our Brains: The Leverage in Mindfulness appeared first on The Systems Thinker.

In the world of big data and high-stakes, disruptive change, learning becomes essential for leadership. Reason may have been concerned with high-risk leadership situations, but he could have easily been referring to any leader. In fact, contemporary leaders in business organizations share many of the same challenges faced by well-known high-stress and high-consequence positions such as pilots, surgery teams, and military quick reaction forces.

The Shift from Traditional to Learning-Directed Leadership

Traditional approaches to leadership focus on power, influence, and position as the sources of leadership. No doubt, these are important factors. However, they prove less important in a complex and dynamic world where disruptive change is considered normal. Leaders working in the world of “big data” engage learning rather than power, knowledge rather than influence, expertise rather than position. Learning-directed leaders see continual learning, not the hoarding of power and resources, as their primary advantage. At their core, learning-directed leaders work to be open to new information and ready to revise past assessments of a situation, cultivating knowledge, learning, and expertise along the way as described by psychologist Theodore Mills (1967).

Leadership requires a shift in understanding about the nature of problems and how these problems are solved. The study of knowledge distinguishes between ill-structured and well-structured problems. Well-structured problems require time, patience, and persistence. Given enough time and resources, leaders can always solve well-structured problems. An example of a well-structured problem is reducing a budget by 15 percent. On the other hand, determining a new strategic direction in a fast-changing marketplace is an ill-structured problem.

Well-structured problems are the work of traditional leaders. Learning-directed leaders, on the other hand, work to solve ill-structured problems. No matter how much time, persistence, and patience a leader puts into solving an ill-structured problem, it can never be fully understood, and people will never fully agree on one right decision. In fact, there is no single best solution for an ill-structured problem. “Moving from Traditional to Learning-Directed Leadership” represents the shift in thinking required for a leader to be successful in this context. The shift, although difficult, is essential for leading, as an example from the medical profession illustrates.

CHARACTERISTICS OF A COMPLEX LEADERSHIP ENVIRONMENT

Eliminating Infections in Critical Care Medicine

Medical personnel insert or replace thousands of central line catheters each day. These catheters, which are inserted into veins in the neck, groin, or chest, dispense medications or fluids and can be used to measure blood volume. In the most trying cases, a central line catheter can save a life or limit pain. Inserting one of these devices is a common procedure. Unfortunately every year, an estimated 80,000 patients contract an infection that could have been avoided. Between 30,000 and 50,000 of these patients die as a result (Landro, 2010).

The procedures involved in changing a central line catheter may seem simple and routine, but learning to do something other than the existing procedures is much more difficult. In reality, improving the process of inserting or changing central line catheters has proven particularly challenging. Changing a well-established procedure involves monitoring hundreds of pieces of information, coordinating complex processes, and overcoming deeply ingrained cultural barriers.

MOVING FROM TRADITIONAL TO LEARNING-DIRECTED LEADERSHIP

Several factors contribute to the problem. A medical professional may care for hundreds of patients a month. The human mind is only capable of remembering a limited amount of data at any one time and so keeping track of each procedure becomes difficult. Further, many professionals don’t have direct access to the correct supplies. Changing a catheter may prove a challenge because resources come from different locations and quality is difficult to assess. Adding to the problem, changing and inserting a catheter requires coordination among various professionals.

A group of physicians sought to change the way medical professionals go about inserting and changing catheters in patients to decrease the high rate of infection and death. Led by Dr. Peter Pronovost of the Department of Anesthesiology and Critical Care Medicine at the Johns Hopkins Hospital, they tackled the problem by turning learning into action (Pronovost & Vohr, 2010). They began by reviewing prior research on catheter-related infections and related topics. From this research, they identified five practices that showed promise in limiting infection.

First, they introduced an educational program to teach physicians, residents, nurses, and other medical professionals about the existing procedures and how small changes might reduce infections. Second, they created a central cart that included all the materials needed to conduct the procedure with a greater degree of safety. In the past, medical personnel might have to search for the proper equipment, losing valuable time and focus in the process. Third, they instituted a daily care plan meeting that addressed whether patients needed a new catheter. Fourth, and most important, they implemented a checklist procedure, adopted from preflight checklists used by airline flight crews. The process, led by the bedside nurse, ensured that personnel followed proper and safe procedures. The checklist was to be used each time a new catheter was inserted or rewired. Fifth, they called on nurses to stop the process if any care provider failed to follow the guidelines as stated on the checklist. The steps on the checklist were clear and concise. When inserting a catheter, the professionals were to wash their hands; clean the patient’s skin with a disinfectant; wear a cap and gown and use a surgical drape; insert the catheter through parts of the body other than the groin; and remove any unnecessary catheters.

The physicians achieved a successful result by almost any measure. Researchers estimated that, when adopted in 50 intensive care units in Michigan, the procedure might have prevented 2,000 infections, reaching an infection rate of near zero (Landro, 2010). The procedures demonstrate the power of learning-directed leadership. Learning-directed leadership impacts organizational effectiveness through five processes: increasing awareness of a problem or system, learning from (rather than simply repeating) experience, facilitating behavioral change through coordination, improving judgment of individual employees, and breaking down hierarchy to transfer knowledge across levels of the organization. We present each of these in turn.

Increasing Awareness. Like most successful organization-wide learning initiatives, the catheter safety effort began by focusing attention on the general problem. The hospitals that adopted the catheter safety process implemented a training course for the general population and garnered the support of management. Frontline employees, those who were responsible for insertion and replacement of catheters, received additional training that focused on the specific elements of the problem. Increasing awareness stands as the first step in learning by focusing the attention of the entire organization on an otherwise misunderstood or overlooked problem.

Learning from Past Experience. One reason that the intervention proved so successful was that it relied on a comprehensive review of existing knowledge. The researchers didn’t start from scratch; they sifted through years of studies, in fields from medicine to flight crew operations. They identified ways to put these research findings into action. But they went further by culling best practices. They identified what practices were cursory and which were central to success. Much of the success could be attributed to the fact that these techniques had been used before, and only the most successful processes were adopted.

The researchers went beyond use of existing experience; they made gains in applying the model to a new situation. No one could logically accept that a flight crew checklist would be appropriate for a hospital. The researchers knew they had to adapt the checklist for their own unique purposes. The process of adaptation cannot be underestimated, for it seems that many best practices go unused because organizations fail to adapt them to the specific circumstances they face.

Facilitating Behavior Change. The central line catheter awareness program also involved behavioral change by encouraging medical professionals to consider small changes in how they work. Behavioral components included adoption of a common cart, institution of a checklist to detail critical procedures, and establishment of standardized review procedures for each patient.

These changes help medical professionals focus on the processes most important to achieving the goal, in this case infection-free catheter insertion. At the same time, the professionals develop a clearer picture of the larger task, seeing how their individual actions fit into the larger treatment plan for the patient. Learning occurs through the constant monitoring of patient treatment as given by other caregivers. Thus, this approach engages the best element of goal setting. It helps to simplify a complex process by focusing attention on key aspects of a task while simultaneously allowing for learning about the implications for the larger task. The most important behavioral change may not be the actual medical procedures itself, but the improved coordination that results.

We know that learning involves collective rather than just individual processes. Yet, the role of coordination in learning is often characterized as mysterious and therefore often overlooked. Perhaps this is because coordination can be difficult to observe and capture. Psychologist Daniel Wegner (Wegner and Wegner, 1985) has taken some of the mystery out of coordinated learning with something he calls “transactive memory.” His early research was largely confined to laboratory studies. In one study, pairs of individuals who had been in a relationship more than three months were better able to recall words than those who were not in these relationships. Over the last few years, the notion of transactive memory has been confirmed in dozens of studies in real-world settings. These studies largely confirm Wegner’s findings – teamwork matters. The catheter safety program demonstrates the role of transactive memory in learning. Teams that demonstrate transactive memory share three characteristics.

First, team members believe in the credibility of the information shared by other members. The catheter safety program appears to increase credibility because it provides a shared template, common repository, and agreed-upon procedure for documenting knowledge. Essentially, the shared checklist replaces individual memory with a team memory. Credibility increases because the checklist serves as a shared and likely more credible source of memory, so that memory is no longer assigned to the more fallible process of individual cognition.

Second, transactive memory involves effectively coordinating actions. Coordination means that information moves across and between individuals in a way that contributes to the team’s overall performance. The catheter safety program encourages coordination by helping teams establish a common set of procedures that guide action. The development, implementation, and integration of a checklist fosters learning because coordination becomes an everyday practice, not an abstraction. Coordination leads to learning because it necessitates an agreed-upon procedure, standardizes routine processes, and creates a template for improving processes.

Third, the common checklist improves coordination among a group of specialized professionals. Organizations manage complexity by distributing labor. Nurses, physicians, and residents each perform a specific duty. This division of labor helps the organization but creates challenges for coordination. Learning occurs when team members understand, respect, and utilize the unique expertise of these diverse roles. The catheter safety program provides evidence that when learning becomes a daily practice, it improves performance.

Improving Judgment. In addition to creating awareness and making incremental changes to behavior, lessons from catheter safety checklists point to the importance of improving professional judgment. The checklist implementation process marks an important shift from institutionalizing organization-wide policies to allowing experienced professionals to exercise judgment. For example, the development and implementation of a checklist is not abstract but part of the daily routine of professionals. For sure, implementation requires a coordinated effort at all levels of the organization, including strong support from management, but ultimately, the change occurs at the most direct levels of patient care, not policy. The program success results from the learning that occurs as professionals exercise autonomy and judgment unencumbered by overly burdensome institutional rules.

Improving professional judgment is an important part of learning. In a 1986 study, Vimla Patel and colleagues found that experienced physicians saw medical situations in a more holistic and complete way than did residents. In other words, physicians relied on a greater source of data, including patient histories and lifestyle data, to make a diagnosis. In non-routine cases, experts rely on “flexible reasoning” to generate alternatives, revise hypotheses, and develop meaningful courses of action. Judgment and its cousin learning require adapting, looking at a broad range of information, challenging, and understanding context.

Breaking Down Hierarchy. The cornerstone of the catheter safety program can be found in the introduction and use of a common checklist. However, from a learning standpoint, the checklist itself serves simply to facilitate a larger psychological purpose. It facilitates the breakdown of traditional organizational and professional hierarchies.

Medicine’s adoption of checklists builds on a legacy established by commercial pilots. Studies of numerous air tragedies and near misses have revealed that all too often, dysfunctional power dynamics among the flight crews contributed to the disaster. Overly authoritarian cockpit captains ignored the insights and warnings of copilots, leading to a crash or near miss. The checklist serves to neutralize traditional forms of power such as rank or profession because authority no longer rests in the rank of individuals but in their knowledge, and this paves the way for learning. Nurses and residents gain the authority to stop a procedure if it doesn’t conform to guidelines.

Each of these five processes underscores the importance of learning in improving organizational effectiveness. The initial experiment for catheter safety has been adopted by other hospitals around the US. It stands as a remarkable example of learning in organizations. We can’t emphasize enough that the learning from such an effort occurs on two levels. The first level is the learning that occurs from engaging in the process of building the procedure. The second level of learning occurs as an outcome of the continued engagement in the process itself.

A successful program can tell us something important, but an overt collapse of learning can tell us something else. Next we turn to the case of Lehman Brothers and the failure to learn.

Failure to Learn at Lehman Brothers

As one way to understand just how the catheter safety program invokes learning, we can contrast it with an organization that failed to learn. Lehman Brothers can be described as a collapse of learning because it had, at the time of this writing, the largest bankruptcy in the world’s history, topping an estimated $639 billion in assets.

Over years, Lehman grew into a rigid culture, where it enforced strict informal rules for behavior. The culture served the company well at times, but the same rigidity also restricted its ability to learn and adapt. During the mortgage crisis of 2007, the managers at Lehman needed to assess and change their behavior and respond to the need for new direction. Rather, as former chief talent officer Hope Greenfield indicated in Leader to Leader, managers “stood in the sidelines waiting to see who was going to take the reins next” and occupied themselves with “finger pointing and blame.” The culture did not change behaviors even when the company needed that change to survive.

Lehman found itself plagued by widespread turnover, which resulted in continual loss of talent. These trends meant that professional judgment was constantly under threat. As Greenfield pointed out, managers who tried to exercise their professionalism found themselves sidelined and ostracized, and many eventually left the organization. As a result, the culture at Lehman restricted independent professional judgment in favor of rigid thinking. Learning ultimately became stifled.

Team coordination, another hallmark of learning, is built on a foundation of credibility that allows individual team members the freedom to act. However, in cultures that breed a strong sense of competitiveness among managers, it is difficult to build credible, trustworthy teams in which members place the team’s interests and welfare above their personal interests. In this “underdog eat underdog world,” managers prided themselves on their work ethic and fierce competitive spirit rather than good leadership.

This competitive spirit often overshadowed level-headed thinking. The head of Lehmann was bound for retirement, and his number two in command was not a likely successor. This dynamic enhanced the spirit of competition, since according to Greenfield, “any newcomer was regarded as a potential rival and there was smug satisfaction in seeing peers falter.” Although some competition can be a good thing, too much competition can lead to wasted resources, knowledge hoarding, and lack of cooperation. Eventually, problems go unaddressed because leaders lack the information and perspective necessary to overcome them.

Lehmann Brothers had a strong belief in the firm as a family. While this is generally a positive attribute – with, for example, the firm rushing to help when an employee had an ill family member – too much of a family culture means that the hierarchy is rigid and unyielding in decision making. When the firm had 8,000 employees, having only a handful of people at the top making the key decisions may have worked, as these were the handful that Lehmann believed really understood the business. By the end of 2008, the firm had grown large and complex, but the hierarchical family decision-making structure had not changed. The executive committee briefly tried to expand its membership, involving more in the decision-making process, but this effort was short-lived and threatened those in power. The case of Lehman shows that when organizations fail to break down rigid hierarchies, learning and adaptation are the primary victims.

Lehman Brothers’ ultimate bankruptcy stands in sharp contrast to the organizational learning demonstrated by hospitals that adopted the catheter safety procedures. The contrast cannot be overstated: Leaders who foster learning in organizations perform better, provide better work environments for employees, and stand a stronger chance of survival in the face of threats or challenges, as the next example confirms.

Learning-Directed Leadership in Consulting Firms

Whether the organization is involved in healthcare, professional services, or other fields, learning provides an advantage. A recent study by Richard Boyatzis (2006) of Case Western Reserve University illustrates how learning connects to revenue. The study involved a professional service firm with more than 3,000 partners worldwide. Professional service firms serve as a good proving ground for the advantage of learning because they typify the kinds of problems commonly faced by knowledge workers. Only partners and those who ranked at the top of the firm based on quality of client relationships, performance in growing the business, and strength in managing the practice were included. Thirty-two of the top-ranked performers met the benchmark as the best of the best. On average, the partners billed $2.4 million annually and produced a gross margin of 57 percent.

The study first gauged the behaviors and attitudes of the senior partners using a 360-degree feedback process, with five of the partners’ peers, five of their subordinates, and their boss completing a survey. Each partner also completed the survey. The survey sought feedback on 20 different competencies considered important by the organization. One cluster of competencies involved leadership, initiative, and planning. The second included knowledge-based competencies such as pattern recognition, systems thinking, and general knowledge of the job. A third cluster measured the degree to which senior partners valued learning and facilitated learning in others.

Just over a year and half later, the researchers looked at the relationship between the competencies and the partners’ performance. Performance was measured using two clear, agreed-upon measures: revenue, or how much money the partners brought into the firm, and gross margin, or how well the partner utilized the organization’s resources. Once the researchers collected this data, they then conducted various analyses on the relationship between these two performance measures and the 20 competencies.

The results resonate with learning-directed leadership. While several competencies showed value for performance, only two correlated significantly with both revenue and gross margin: valuing learning and facilitating learning in others. We estimate that the competency of valuing learning accounted for almost $800,000 in additional revenue. Facilitating learning accounted for an additional $1.6 million! Performance on gross margin was more than 10 percent higher for those senior partners who valued and facilitated learning.

As with any study, this one had limitations; however, it provides evidence of a clear relationship between desired performance outcomes and the value of learning-directed behaviors. The study not only shows the importance of learning in knowledge work, but also provides solid evidence of how important it is for leaders to facilitate learning in others.

Identifying new problems faced by clients, forging new relationships, and building new business lie at the heart of consulting work. Recall the distinction between ill-structured and well-structured problems. A second consideration for learning involves learning in the face of both complexity and novelty. “Learning Situations Based on Complexity and Novelty” plots these considerations along two dimensions.

Leaders in the medical profession and consultants share something in common: learning in the face of complexity. For the medical professionals, the situation involved routine. The physicians involved in the effort to decrease catheter-related infections learned by focusing on the most important issues and standardizing procedures. The consultants, on the other hand, learned to identify novel situations and new business opportunities. The physicians and consultants both employed learning to improve organizational performance, but learned different things. Of course, the nature of learning is constantly shifting. The consultants will at some point need to learn under routine, just as the medical professionals will also face novel problems.

Conclusion

Through the examples above, we can begin to see how the demands of novelty and complexity shape leadership. The stories of learning in this article highlight the remarkable link between leadership, learning, and organizational performance. We provided examples of how expertise, knowledge, and creativity hold a clear advantage over position, influence, and authority. Ultimately, leadership is embedded in learning-directed actions.

LEARNING SITUATIONS BASED ON COMPLEXITY AND NOVELTY

© 2011 Anna B. Kayes and D. Christopher Kayes

Anna B. Kayes (EdD, the George Washington University) is Associate Professor of Business in the School of Business and Leadership at Stevenson University. She is author of articles on learning and leadership in outlets such as the Journal of Managerial Psychology and the Journal of Management Education, and is co-author of the forthcoming book, The Learning Advantage: The Six Practices of Learning Directed Leadership.

D. Christopher Kayes (PhD, Case Western Reserve University) is Dean’s Research Scholar and Associate Professor of Management at the George Washington University. His article, “The Destructive Pursuit of Idealized Goals,” was recognized as the most significant contribution to the practice of management by the Organizational Behavior Division of the Academy of Management. He is the author of “Destructive Goal Pursuit: The Mt. Everest Disaster” and co-author of the forthcoming The Learning Advantage: The Six Practices of Learning Directed Leadership.

References

American Management Association. How to build a high performance organization, 2007. [link]

Boyatzis, R. E., “Using tipping points of emotional intelligence and cognitive competencies to predict financial performance of leaders,” Psicothema, 18, 2006.

The Economist, “Data, data everywhere. A special report on managing information,” February 27, 2010).

Greenfield, H., “The decline of the best: An insider’s lessons from Lehman Brothers,” Leader to Leader, 55, 2010.

Landro, L., “Building team spirit: Nurses hesitate to challenge doctors even when doctors are ordering the wrong drug or operating on the wrong limb,” Wall Street Journal Online, February 16, 2010.

Mills, T. M. The Sociology of Small Groups. Prentice-Hall, 1967.

Patel, V. L., Groen, G. J., & Frederiksen, C. H., “Differences between students and physicians in memory for clinical cases,” Medical Education, 20, 1986.

Pronovost, P., &Vohr, E. Safe Patients, Smart Hospitals: How One Doctor’s Checklist Can Help Us Change Health Care from the Inside Out. Hudson Street Press, 2010.

Reason, J., “Safety in the operating theatre — Part 2: Human error and organizational failure,” Current Anesthesia and Critical Care, 6, 1995.

Wegner, T. G., & Wegner, D. M., “Transactive memory,” in A. S. R. Manstead & M. Hewstone (Eds.), The Blackwell Encyclopedia of Social Psychology, Blackwell, 1995.

The post Learning-Directed Leadership in a Changing World appeared first on The Systems Thinker.

The plant manager said they had discovered that this particular inspector knew which production workers consistently produced shoes with fewer defects, and the inspector had been getting shoes made by only those workers to inspect. This was the reason the inspector was being punished with a week without pay. Dr. Deming told the plant manager that he — the plant manager — should have been the one sent home. He said the plant manager was the one who had created the system that led to the bad behavior and so was responsible for it. In this case, an incentive was put into place that had an unintended effect, and the plant manager did not see that he had created the circumstances that led to that effect. The title of this article might be expanded to say incentives work, but often they work in unintended ways — hence, the trouble with them.

When managers talk about motivating people, they are probably not referring to creating conditions in which intrinsic motivation can flourish, but rather they are talking about ways to manipulate behavior.

The use of incentives, particularly in the arena of executive pay, is of particular interest given the current economic situation. A December 30, 2009 article in the Wall Street Journal described the Christmas letter to investors by Guy Hands, founder of Terra Firma Capital Partners, a buyout firm (James Mawson, “Terra’s Guy Hands Sees Power Shift to East”). Hands’s letter said, “It cannot be right to continue with a system which allows risk to be taken in the knowledge that, if things go right, bankers will take on average 60% to 80% of the profits generated through compensation and, if they go wrong, shareholders and ultimately the Government will pick up the costs.” This is just one example of the kind of outrage currently being expressed about executive compensation.

Motivation or Manipulation?

In his landmark paper, “One More Time: How Do You Motivate Employees,” Frederick Herzberg made a distinction between motivation and movement (Harvard Business Review, 65(5), September-October 1987). In a retrospective commentary, Herzberg wrote:

“The first part of the article distinguishes between motivation and movement, a distinction that most writing on motivation misses. Movement is a function of fear of punishment or failure to get extrinsic rewards. It is the typical procedure used in animal training and its counterpart, behavioral modification techniques for humans. Motivation is a function of growth from getting intrinsic rewards out of interesting and challenging work.”

It appears to me that when managers talk about motivating people, they are probably not referring to creating conditions in which intrinsic motivation can flourish, but rather they are talking about ways to manipulate behavior. Of course, this is obvious when one considers the subject and the object of the verb “motivate” in Herzberg’s title. One commonly used type of behavior manipulation is incentives.

An important source of arguments in favor of incentives for executives is Principal–Agent Theory in economics. Ray Rees describes the type of problems the theory is intended to address as follows:

“A large and interesting class of problems in economics involves delegated choice: one individual has the responsibility for taking decisions supposedly in the interests of one or more others, in return for some kind of payment. Examples are a manager running a firm on behalf of its shareholders, an employee working for an employer, an accountant handling the tax affairs of a client, an estate agent selling someone’s house, an investment advisor administering a trust fund or share portfolio, a public policy maker, and so on” (“The Theory of Principal and Agent Part I,” Bulletin of Economic Research, 37(1), 1985).

Rees goes on to describe examples of principal–agent problems and their solutions (part II of his summary of Principal–Agent Theory appears in volume 37, issue 2 of the Bulletin of Economic Research). The theory and the solutions are mathematical. Several of the examples involve the use of incentives to obtain the “optimal” solution (optimal mathematically). A basic assumption in the examples is that the agent is “economic man” — he acts in his own best interests. (I note that this refers to “best interests” as he sees them economically; I wonder whether economic man appreciates the structure and dynamics of systems or the importance of long-term as well as short-term considerations.)

Two things about this theory cause me to question its direct application. First, I know that the papers that get published in the mathematical sciences deal with problems that can be solved, not necessarily problems that actually exist. Generally, it may be that the actual problems in context are simply too complex to solve or include numerous non-quantifiable factors. In some situations, we can still use the solved problems for guidance in the real world, provided we are aware of the potential differences between the real situation and the solved problem as described, and we understand clearly the assumptions made to address the problem.

Second, I am reminded of Deming’s masterful discussion of different “worlds” of purchasing (see the Appendix to the Second Edition of The New Economics, MIT Press, 1994). In that discussion, Deming said, “Any theorem is true in its own world. But which world are we in? Which of the several worlds makes contact with ours? That is the question.” The mathematical treatment of agency relationships is correct, given the assumptions and the mathematical formulation, but the question is whether the assumptions apply to the world we’re in. I seriously question the applicability of the “economic man” model in the real world if often involve consideration of the effects of the decision on affected parties now and in the future. I believe this concern has led to the frequent publication of papers on the “stakeholder” view of the firm in contrast to the purely economic/financial view.

My friend, Ian Bradbury, quoted to me the following paragraph from a microeconomics textbook:

“If monitoring the productivity of workers were costless, the owners of a business could ensure that their managers and workers were working effectively. In most firms, however, owners can’t monitor everything that employees do —  employees are better informed than owners. This information asymmetry creates a principal–agent problem” (Pindyck, R. S. and Rubinfeld, D. L., Microeconomics, 5th Ed., Prentice Hall, 2001).

Ian commented as follows: “As I think about this introductory paragraph, it certainly has imbedded the assumption of (Skinnerian) Rational Economic man. It also makes you wonder how they think it might be if you could, in fact, monitor employee effectiveness for free. Are they thinking there’s some one-dimensional measure of effectiveness and that it would be known whether an employee was operating at their peak? If (as would really be the case) effectiveness were to be viewed across many interdependent dimensions, what would peak effectiveness mean then? Supposing one could actually measure the deviation of effectiveness from the optimum, then what? It seems as though the belief may also be that the cause of the deviation could be nothing other than (lack of) employee motivation/effort and that knowledge of the lack of optimal performance would be sufficient for knowing how to ‘fix’ the problem” (personal communication, January, 2010).

Anyone who has studied organizations as systems would agree with what Ian has said. I tend to believe that what the economists have done is to solve a solvable problem rather than one that actually exists in our world. In our world, meaningful and reliable measurement of performance, definition of optimal performance, and diagnosis of causes for lack of “optimal” performance are typically difficult, if not impossible or nonsensical.

A telling sentence from the same book says, “When it is impossible to measure effort directly, an incentive structure that rewards the outcome of high levels of effort can induce agents to aim for the goals that the owners set.” How do we know the relationship between this “outcome” and the level of effort, independent of the system in which the organization operates? How do we know the relationship between the “outcome” and the complexities of the organization itself? I believe this is a task for deities, rather than all too human designers of incentive plans.

Extrinsic Incentives Bias

An interesting paper published by Chip Heath deals with what he calls “lay theories of motivation” (“On the Social Psychology of Agency Relationships: Lay Theories of Motivation Overemphasize Extrinsic Incentives,” Organizational Behavior and Human Decision Processes, 78(1), 1999). He contends that these theories, rather than the work of theorists of individual motivation, are used to develop the content of the “deal” between the individual (the agent) and the organization (the principal). He proposes that lay theories of motivation are biased toward believing others are more extrinsically motivated. He calls this the “extrinsic incentives bias.” With this bias, systems of reward would likely be weighted toward incentives.

Heath conducted several studies that supported his view. However, they were all done with MBA students, so the question of whether his position applies to the rest of our society is still open. It appears to me that some of the writings about the principal–agent problem in the finance discipline contain the extrinsic incentives bias, particularly with regard to the CEO as agent for the stockholders. I have wondered whether the escalation of pay, perks, and parachutes for CEOs actually tends to attract individuals who are primarily extrinsically motivated, rather than individuals who are seriously interested in creating value.

Several recent examples appear to be consistent with this view. A paper done by behavioral economist Dan Ariely and his colleagues describes a set of experiments with some very interesting results (Ariely, Gneezy, Loewenstein, and Mazar, “Large Stakes and Big Mistakes,” Working Paper No. 05-11, Federal Reserve Bank of Boston Research Center for Behavioral Economics and Decision-Making, July 23, 2005). The experiments were done with villagers in India and American students, so the same question of how far the results can be extended arises. Nevertheless, the experiments provide counter-examples to prevailing thought about incentives or, more generally, pay for “performance.” (I put the word “performance” in quotation marks to note that Deming contended that performance of an individual cannot be measured independent of the system in which they work. In the rest of the article, I will use the word without quotation marks.)

To introduce the experiments, Ariely states, “Workers in a wide variety of jobs are rewarded for their effort based on observed measures of performance.” He goes on to say, “The expectation that people will improve their performance when given high performance-contingent incentives rests on two subsidiary assumptions: (1) that increasing performance contingent incentives will increase motivation and effort, and (2) that this increase in motivation and effort will result in improved performance. The first assumption, that transitory performance-based increase in pay is increasing motivation and effort, is generally accepted … although there are some notable exceptions. … Although there appear to be reasons to question the generality of the first assumption regarding the positive relationship between effort and pay, our focus in this paper is on the second assumption.” (At the risk of being annoying, I note again that the “motivation” here is extrinsic.)

Creating performance-based incentive programs to improve performance may produce effects that were never intended.

Ariely notes, “Unlike the relationship between motivation/effort and pay, the relationship between motivation/ effort and performance has not attracted much attention from economists, perhaps because the belief that motivation improves performance is so deeply held.” To support the notion that this belief may not always be correct, Ariely cites some findings from the research literature. One finding has been, “When performance on a task relies on highly practiced, automatic skills, increasing awareness, competition, introducing a cash incentive or audience or egorelevant threats (the belief that a task is diagnostic of something one cares about, such as intelligence) can cause people, involuntarily, to consciously think about the task, shifting control from ‘automatic’ to ‘controlled’ processes that are less effective.” He cites examples from sports where this “choking under pressure” phenomenon occurs. He also reports that “increased motivation tends to narrow individuals’ focus of attention, and creativity and insight require drawing unusual connections …In addition to the narrowing of attention, large incentives can simply occupy the mind and attention of the laborer, distracting the individual from the task at hand.” Is it possible that large incentives can occupy the minds of executives, leading to a focus on making the numbers that govern their incentives and consequently reduce their creativity and insight?

In their first experiments, Ariely and his colleagues included tasks, some of which “drew primarily on motor skills, some that drew primarily on concentration, and some that drew primarily on creativity.” However, all required “at least some strategy and cognitive effort.” In their first experiment, the experimenters compared performance for three payment conditions: low, medium, and high (three levels of incentive pay). They observed that “performance of participants was always lowest in the high-payment condition when compared with the low- and mid-payment conditions …” In their second experiment, the researchers compared two types of tasks — one that required “cognitive resources and effort” and another that required “only pure physical effort, without any need for cognitive resources.” They concluded that “Tasks that involve only effort are likely to benefit from increased incentives, while for tasks that include a cognitive component, there seems to be a level of incentive beyond which further increases can have detrimental effects on performance.” Think about the implications of these conclusions. How many purely physical tasks do workers (and managers) perform? It appears that as we raise the stakes higher, the effects on knowledge workers could be just the opposite of what economists and armchair psychologists might think.

The authors conclude that their results “challenge the assumption that increases in motivation [extrinsic] necessarily lead to improvement in performance.” They go on to say, “Do administrators who are in charge of setting compensation have greater insight into such effects? The prevalence of very high incentives contingent on performance in many economic settings raises questions about whether administrators base their decisions on empirically derived knowledge of the impact of incentives or whether they are assuming that incentives enhance performance.”

Unintended Consequences

These conclusions cause one to question even further whether the mathematical formulations of Principal-Agent Theory can be applied without reservation to the world we’re actually in. Creating performance-based incentive programs to improve performance may produce effects that were never intended.

In his paper “On the folly of rewarding A, while hoping for B,” Steven Kerr writes, “Numerous examples exist of reward systems that are fouled up in that the types of behavior rewarded are those which the rewarder is trying to discourage, while the behavior desired is not being rewarded at all” (, “On the folly of rewarding A, while hoping for B,” Academy of Management Executive, 9(1), 1995, originally published in Academy of Management Journal, 18, 1975). He cites examples of “fouled-up” reward systems in politics, war, medicine, universities, consulting, sports, government, and business. Two of the reasons for these fouled-up systems are “fascination with an ‘objective’ criterion” and “overemphasis on highly visible behaviors.” In discussing the first of these, Kerr says, “Many managers seek to establish simple, quantifiable standards against which to measure and reward performance. Such efforts may be successful in highly predictable areas within an organization, but are likely to cause goal displacement when applied anywhere else.” Given the work of Ariely and his colleagues, I would be inclined to extend the statement to all parts of the organization.

A destructive myth that is alive and well today in organizations is the notion that if you can’t measure it, you can’t manage it. I have even seen that statement attributed to Deming in spite of this statement in The New Economics, Second Edition: “It is wrong to suppose that if you can’t measure it, you can’t manage it — a costly myth.” In discussing overemphasis on highly visible behaviors, Kerr observes that “Difficulties often stem from the fact that some parts of the task are highly visible while other parts are not. … Team-building and creativity are … examples of behaviors which may not be rewarded simply because they are hard to observe.” To address the problems of reward systems, Kerr recommends that managers “explore what types of behavior are currently being rewarded . . . undesirable behavior by organizational members . . . may be explained largely by the reward systems in use.”

In connection with the republication of Kerr’s paper, the editorial staff of Academy of Management Executive conducted a poll of executives to find out whether Kerr’s folly was still at work. They reported, “Ninety percent of our respondents told us that Kerr’s folly is still prevalent in corporate America today” (, “More on the folly,” Academy of Management Executive, 9(1), 1995). (Although the poll was conducted in 1995, I can think of no reason why things would have changed in the interim.) The editors identified three themes in the responses given about formidable obstacles to dealing with the folly:

1. The inability to break out of the old ways of thinking about reward and recognition practices. In particular, there appears to be a need for new goal and target behavior definition, including non-quantifiable behavior and that which is system focused rather than job or functionally dependent. [I note that the executives appear to have gotten some of the message about inappropriate goals and targets, but not all of it. Goals and targets can go awry as well.]
2. Lack of a holistic or overall system view of performance factors and results. To a great extent, this is still caused by organizational structures that promote optimization of subunit results at the expense of the total organization.
3. Continuing focus on short-term results by management and shareholders. [I note here that the managers and shareholders should probably be joined by market analysts and mutual fund managers.]

An important issue with regard to incentives is possible effects on teamwork and cooperation. If the incentive system is set up as a zero-sum game, then for me to win, you have to lose. This is a very effective way to ensure that there is little or no teamwork or cooperation. Interactions between individuals and groups are likely to become negative, to the detriment of the organization as a whole. When incentives are based on narrow functional objectives, achieving those objectives may guarantee that the system as a whole will be suboptimized.

One of my favorite examples is the food company that had numerous products that had been on the market a long time and were generally successful, but the existing market was fairly well saturated. To meet sales objectives, the sales group would stage promotions in grocery stores. Since the products had a fairly long shelf life, customers quickly learned to wait for a promotion and then stock up. The result was to introduce more variation into sales volumes. The manufacturing group had to cope with this increased variation, as did purchasing, human resources, the financial function, and others. Manufacturing’s reaction to increased variation was to build warehouses to buffer the manufacturing activity from the variation. Management and storage of the additional inventory increased costs. The net outcome for the whole organization was increased costs, while selling the products for less, a sure way to reduce profits. It seemed to me that the use of narrow functional objectives and a reward system that enforced them was an important source of the problem.

Other potential effects of incentives are lowered risk-taking, increased conformance, and less exploration and creativity. At a time in the life of our world when we are in serious need of creativity and innovation, can we afford to have incentive systems that will get in the way?

Some Examples

We probably all know that stacking up examples is not a way to prove the correctness of a theory, but I hope you will bear with a few as illustrations. Robert Rodin described the effects of reward systems in his company, Marshall Industries, an electronics distributor, in his book, Free, Perfect, and Now (Simon & Schuster, 1999). His list of behaviors inside his company with the existing systems of rewards included the following:

• Our salespeople would ship ahead of the schedule to make a number or win a prize.
• We held customer returns. We had to make sure that the returns coming in did not get counted against sales in the period for which we were trying to hit the numbers. So, if a customer returned items, sometimes our salespeople would put them in the trunks of their cars and keep them there for a few weeks until they could be counted as returns for next period. In the meantime, if we needed that inventory for another customer, we’d have to buy unnecessary stock.
• We opened bad credit accounts. Any order was a good order as far as a sales person paid on gross profit was concerned. Just book it.
• We found extraordinarily creative ways to charge expenses to one another’s profit and loss statements.
• Our divisions hid inventory from one another …our managers devised creative ways to hide the inventory they wanted to hold on to for their own customers, sometimes even sending it out of state in UPS trucks so that they could honestly tell other divisions they were out of stock. When their own customers needed the inventory, though, it would magically reappear.

It is clear that the reward systems in Marshall — commissions, incentives, prizes, contests — were driving those kinds of behaviors. The important statement, “People act rational to the systems we create,” is often attributed to Rodin. The shoe inspector at the beginning of this discussion was acting rational to the system. At Marshall, Rodin took action as CEO to change the reward systems, including putting the sales force on salary. I am reminded of an interchange I had with a young salesman at an electronics retailer. I asked him a question that indicated I doubted what he had just said. He drew himself up to his full height and said, “I’m on salary here, not on commission. What possible reason would I have to lie to you?”

In an article published in The New Yorker last June, Atul Gawande describes his search to discover why McAllen, Texas is “one of the most expensive health-care markets in the country” (, “The Cost Conundrum,” June 1, 2009). Medicare spends nearly double the national average per enrollee in McAllen and also double what is spent in El Paso County, Texas, even though the two Texas communities have nearly the same demographics. Gawande reports that the difference in costs between McAllen and El Paso was the “across-the-board overuse of medicine” in McAllen. For example, Medicare data revealed that in 2005 and 2006, when compared with El Paso, patients in McAllen received “twenty percent more abdominal ultrasounds, thirty percent more bone-density studies, sixty percent more stress tests with echocardiography, two hundred percent more nerve-conduction studies to diagnose carpal-tunnel syndrome, and five hundred and fifty percent more urine flow studies to diagnose prostate troubles … one-fifth to two-thirds more gallbladder operations, knee replacements, breast biopsies, and bladder scopes …two to three times as many pacemakers, implantable defibrillators, cardiac-bypass operations, carotid endarterectomies, and coronary-artery stents …five times as many home-nurse visits.

, “People act rational to the systems we create.”

There is troubling information in the paper, indicating that more care is generally not better quality care, and patients in high-cost areas tend to get more costly tests and procedures and fewer preventive services. The healthcare outcomes were no better in McAllen than in El Paso. One of the possible explanations that Gawande pursued was that doctors were simply practicing defensive medicine — ordering more tests and procedures to avoid the risks and costs of malpractice suits. However, Texas has a law that caps the awards for pain and suffering in malpractice at $250,000. A physician in McAllen confirmed that the number of malpractice suits had dropped significantly since the law went into effect.

Gawande identifies three types of physicians. First, there are those who are “remarkably oblivious to the financial implications of their decisions.” Second, there are those who “think of the money as a means of improving what they do.” Then there are those “who see their practice primarily as a revenue stream. They instruct their secretary to have patients who call with follow-up questions schedule an appointment, because insurers don’t pay for phone calls, only office visits. …They figure out ways to increase their high-margin work and decrease their low-margin work. This is a business, after all.” Gawande even learned of some physicians in McAllen who asked for six-figure payments from hospitals to admit patients. Finally, Gawande focuses on the fee-for-service system of payment. He observes that as long as that system is in place, no amount of tinkering with the insurance system will be effective in lowering the cost of care.

Gawande gives some compelling examples of healthcare systems in communities that have managed to raise the quality of care while lowering its costs. One example is the Mayo Clinic, “which is among the highest-quality, lowest-cost healthcare systems in the country.” He reports that “decades ago Mayo recognized that the first thing it needed to do was eliminate the financial barriers. It pooled all the money the doctors and the hospital system received and began paying everyone a salary, so that the doctors’ goal in patient care couldn’t be increasing their income. Mayo promoted leaders who focused first on what was best for patients, and then on how to make this financially possible.” He goes on to say, “The core tenet of the Mayo Clinic is ‘The needs of the patient come first’ — not the convenience of the doctors, not their revenues. The doctors and nurses, and even the janitors, sat in meetings almost weekly, working on ideas to make the service and the care better, not to get more money out of patients.”

Could it be that physicians, insurers, drug companies, and patients are simply acting rational to the system? The players are incentivized to behave as they do. The system delivers what it is designed to deliver.

A particularly sad story came to me from a friend who was an executive in a large company. He told me about a conversation he had with a higher-level executive. That executive had come from an equally high position in another company. My friend asked him why he had joined my friend’s company when he already had such a good job. The fellow responded that the CEO of my friend’s company, an old pal of his, had called him and said “This company is rolling in money — you should join us and get some of it.” The CEO later escaped with millions in parachute money and was later indicted for accounting fraud, but the company is bankrupt and apparently will cease to exist. The company’s investors, suppliers, retirees, and employees will suffer. I wonder if the CEO is now sailing near Somalia, looking for his next engagement.

There may be cases in which incentives work only as intended, but I suspect they are relatively rare. The trouble is that we are usually dealing with complex systems (people and organizations) that may behave not at all like our myths would predict. The best policy may be to avoid incentives altogether and focus instead on creating systems in which intrinsic motivation, cooperation, ethical behavior, trust, creativity, and joy in work can flourish.

Gipsie Ranney is an international consultant to organizations on management, quality improvement, and statistical methodology. She was a member of the faculty of the Department of Statistics at the University of Tennessee, Knoxville, for 15 years. Gipsie was a co-founder of the University of Tennessee’s Institute for Productivity through Quality and served as director of Statistical Methodology for General Motors’ Powertrain Group from 1988 to 1992. She co-authored Beyond Total Quality Management: Toward the Emerging Paradigm (McGraw-Hill, 1994) and contributed to Competing Globally Through Customer Value (Quorum, 1991). The American Society for Quality awarded her the Deming Medal for 1996, “for outstanding contribution in advancing the theory and practice of statistical thinking to the management of enterprises worldwide.” Gipsie originally wrote this article as an Ongoing Discussion Thought Piece for Pratt & Whitney Rocketdyne’s Enterprise Thinking Network.

The post The Trouble with Incentives: They Work appeared first on The Systems Thinker.

Many of our current cultural stories seem to reinforce a belief that challenge and conflict lead to collapsing systems. Stories of breakdown are everywhere — a struggling economy, political polarization, declining high school graduation rates. Yet even as these systems falter, new beginnings are all around us. The more we look for stories of innovations launched and challenges overcome, the more visible they become.

When we allow ourselves to look through this lens, we see that a renewal is under way, a modern renaissance fueled by the passion and commitment of many who have dared to pursue a dream. In communities, organizations, industries, and other social systems, new ways of living and working are flourishing. For example, many consider journalism to be an industry in decline. But even as traditional forms of journalism are dying — because they aren’t serving us well — I see signs of rebirth every day. Bold experiments are underway. Spot.us uses “crowdfunding,” in which community members pool money to support investigative reporting. News Trust, which rates the news for accuracy, fairness, and other criteria, is drawing increasing readership and participation to its site. Similar innovations are arising in other areas, ranging from healthcare to politics.

Given these parallel dynamics of collapse and rebirth, what can we do to help the systems of which we are part move toward productivity and resilience?

For more than 50 years, experiments in organizations and communities and across social systems have shaped practices for “whole systems change” — methods for engaging the diverse people of a system in ways that lead to unexpected breakthroughs. In 1992, Margaret Wheatley’s groundbreaking Leadership and the New Science contributed to theory by connecting our changing understanding of science to human systems. As the current generation of whole systems change practitioners mix and match methods such as Open Space Technology, The World Café, Future Search, and Appreciative Inquiry, many of us have been seeking a deeper understanding of the patterns that make these practices work.

My quest to unlock the mystery of what is involved in changing whole systems began in the late 1980s. I thought that understanding how change works was key to creating a world that works for all. I still do. I started noticing shifts in how change occurs when using whole systems change practices. See “Traditional and Emerging Ideas About Change” for examples.

Born from my own practice, my interactions with friends and colleagues, and my immersion in what science has taught us about chaos, complexity, and networks, I noticed a pattern of change through the lens of emergence — increasingly complex order self-organizing out of disorder. What follows describes that pattern, along with questions, principles, and practices for successfully engaging with upheaval.

The Nature of Emergence

Emergence is nature’s way of changing. We see it all the time in its cousin, emergencies. What happens?

A disturbance interrupts ordinary life. In addition to natural responses, like grief or fear or anger, people differentiate — take on different tasks. For example, in an earthquake, while many are immobilized, some care for the injured, others look for food and water, a few care for the animals. Someone creates a “find your loved ones” site on the Internet. A few blaze the trails and others follow. They see what’s needed and bring their unique gifts to the situation. A new order begins to arise.

This pattern of change flows as follows:

• Disruption breaks apart the status quo.
• The system differentiates, surfacing innovations and distinctions among its parts.
• As different parts interact, a new, more complex coherence arises.

(See “A Pattern of Change.”)

In journalism, cracks began to appear in the 1990s as newspaper readership declined. This disruption was generally correlated with the rise of the Internet. Worse, advertisers, who provide a principle source of revenue for journalism, started to leave. When the economy came to the precipice in 2008, the decline became an avalanche (Johnny Ryan, Newspaper circulation decline).

With the ability for anyone to publish made possible through increasingly sophisticated online tools, the assumptions about what journalism is and how it is done are in flux. A myriad of experiments are testing those assumptions — the relationship between journalist and audience, the economic model, even the purpose of journalism itself. These experiments shed light on what to conserve from traditional journalism that still serves us well and what to embrace that wasn’t possible before. Journalism is differentiating into its elemental nature, helping us understand new ways in which news and information is created, distributed, and digested.

While a new coherence has not yet arisen and likely won’t for a while, we do have clues. We know it is more of a conversation than a lecture. It still is about making sense of our complex world so that we can make wise individual and collective decisions. And it calls for a broad-based digital literacy movement, similar to the literacy movement sparked by the coming of age of newspapers that served the formation of democracy in the U. S.

People often speak of a magical quality to emergence, in part, because we can’t predetermine specific outcomes. Emergence can’t be manufactured. It often arises by drawing from individual and collective intuition — instinctive and unconscious knowing or sensing without deduction, reasoning, or using rational processes. It can be fueled by strong emotions — excitement, longing, anger, fear, grief. And it rarely follows a logical, orderly path. It feels much more like a leap of faith.

Emergence is always happening. If we don’t work with it, it will work us over. In human systems, it often shows itself when strong emotions are ignored or suppressed for too long. While emergence is natural, we don’t always experience it as positive. Erupting volcanoes, crashing meteorites, and wars have brought emergent change. Yet even wars can leave exciting offspring of novel, higher-order systems. The League of Nations and United Nations were unprecedented social innovations from their respective world wars. New species or cultures fill the void left by those made extinct.

Emergence seems disorderly because we can’t discern meaningful patterns, just unpredictable interactions that make no sense. But order is accessible when diverse people facing intractable challenges uncover and implement ideas that none could have predicted or accomplished on their own. Emergence can’t be forced. It can, however, be fostered.

Why Does Engaging Emergence Matter?

Emergence isn’t just a metaphor for what we are experiencing. Complexity increases as more diversity, connectivity, interdependence, or interactions become part of a system. The disruptive shifts occurring in our current systems are signs that these characteristics are on the rise.

Today’s unprecedented conditions could lead to chaos and collapse, but they also contain the seeds of renewal. We can choose to face our seemingly intractable challenges by coalescing into a vibrant, inclusive society characterized by creative interactions among diverse people. In many ways, this path is counterintuitive. It breaks with traditional thinking about change, including the ideas that it occurs top-down and that it follows an orderly plan, one step at a time.

We don’t control emergence. Nor can we fully predict how it arises. It can be violent, overwhelming. Yet we can engage it, confident that unexpected and valuable breakthroughs can occur.

Benefits of Engaging Emergence

Although specific outcomes from emergence are unpredictable, by engaging with it some benefits are foreseeable. To illustrate these benefits, I draw from Journalism That Matters, an initiative that convenes conversations among the diverse people who are shaping the emerging news and information ecosystem.

Individually, we are stretched and refreshed. We feel more courageous and inspired to pursue what matters to us. With a myriad of new ideas and confident of the support of mentors, collaborators, and fans, we act. At an early Journalism That Matters gathering, a recent college graduate arrived with the seed of an idea: putting a human face on international reporting for U. S. audiences. At the meeting, she found support for the idea. Deeply experienced people coached her and gave her entrée to their contacts. Today, the Common Language Project is thriving, having received multiple awards.

New and unlikely partnerships form. When we connect with people whom we don’t normally meet, sparks may fly. Creative conditions make room for our differences, fostering lively and productive interactions.

A reluctant veteran investigative reporter was teamed with a young digital journalist. They created a multimedia website for a story based on a two-year investigation. Not only did the community embrace the story, but the veteran is pursuing additional interactive projects. And the digital journalist is learning how to do investigative reporting.

Breakthrough projects surface. Experiments are inspired by interactions among diverse people.

The Poynter Institute, an educational institution serving the mainstream media, was seeking new directions because its traditional constituency was shrinking. Because Poynter served as a cohost for a JTM gathering, a number of staff members participated in the event. They listened broadly and deeply to the diverse people present. An idea emerged that builds on who they are and takes them into new territory: supporting the training needs of entrepreneurial journalists.

Community is strengthened. We discover kindred spirits among a diverse mix of strangers. Lasting connections form, and a sense of relationship grows. We realize that we share an intention—a purpose or calling guided by some deeper source of wisdom. Knowing that our work serves not just ourselves but a larger whole increases our confidence to act.

As a community blogger who attended a JTM conference put it, “I’m no longer alone. I’ve discovered people asking similar questions, aspiring to a similar future for journalism. Now I have friends I can bounce ideas off of, knowing we share a common cause.”

The culture begins to change. With time and continued interaction, a new narrative of who we are takes shape.

When Journalism That Matters began, we hoped to discover new possibilities for a struggling field so that it could better serve democracy. As mainstream media, particularly newspapers, began failing, the work became more vital. We see an old story of journalism dying and provide a place for it to be mourned. We also see the glimmers of a new and vital story being born. In it, journalism is a conversation rather than a lecture. Stories inspire rather than discourage their audience. Journalism That Matters has become a vibrant and open conversational space where innovations emerge. New language, such as news ecosystem — the information exchange among the public, government, and institutions that can inform, inspire, engage, and activate — makes it easier to understand what’s changing. People say, “I didn’t know I could be effective without a big organization behind me. Now I do.”

These experiences show that working with emergence can create great initiatives, the energy to act, a sense of community, and a greater view of the whole — a collectively intelligent system at work.

As more people engage emergence, something fundamental changes about who we are, what we are doing, how we are with each other, and perhaps what it all means. In the process, we tear apart familiar and comfortable notions about how change works. We bring together unlikely bedfellows and re-imagine and re-create the organizations, communities, and social systems that serve us well.

Three Questions for Engaging Emergence

Three questions can help us think about how to work with change:

• How do we disrupt coherence compassionately?
• How do we engage disruption creatively?
• How do we renew coherence wisely?

Like all appreciative questions, these direct our attention toward possibilities and open us to exploration. They are posed as questions rather than statements to remind us that when the terrain is uncertain, focus and fluidity both support us to be nimble in our response.

You can use them as you might an affirmation. Just as affirmations help us attend to what we wish to create, these questions help us adapt to the specifics of our situation. We can connect our circumstances with the flow of change by prefacing each question with, “In this situation…”

These questions create temporary shelter for us to consider the challenges of a changing system. They help us experience and offer compassion in disruption, engage creatively with difference, and support both personal and collective renewal while potentially wise responses coalesce.

If you are familiar with Zen Buddhism, think of the questions as koans — paradoxical riddles or anecdotes that have no solution. They may — if you seek to understand them in an intuitive way and work with them in your life — provide flashes of insight into what’s going on and how to engage it.

Principles for Engaging Emergence

A principle is a fundamental assumption that guides further understanding or action. Principles help us make order out of chaos. They describe the landscape, enabling us to discern useful characteristics so that we can make useful choices. Principles support us in designing our initiatives, organizing our work and ourselves, determining what to do and how best to do it. For example, a commonly cited medical principle is “first, do no harm.” This fundamental understanding guides life-and-death decisions without prescribing a specific approach.

I derived the principles for engaging emergence listed below by connecting my understanding of whole systems change processes with what science tells us about the dynamics of emergence (see “Principles for Engaging Emergence”). In short, scientists frequently cite four dynamics of emergence:

• No one is in charge. No conductor is orchestrating orderly activity (ecosystems, economic systems, activity in a city).
• Simple rules engender complex behavior. Randomness becomes coherent as individuals, each following a few basic principles or assumptions, interact with their neighbors (birds flock; traffic flows).
• Feedback. Systems grow and self-regulate as the output from one interaction influences the next interaction. (We talk to a neighbor, who talks to a neighbor, and suddenly everyone in town knows a story.)
• Clustering. As we interact, feeding back to each other, like attracts like, bonding around a shared characteristic. (Small groups of women meeting in living rooms grow into the women’s movement.)So if emergence occurs through these dynamics, what are the implications for how we engage with it?

These five principles are my answer to this question:

• Welcome disturbance. Disruption indicates that the normal behavior of a system has been interrupted. If we ignore the disturbance, chances are conditions will get worse. If we get curious about it, the disruption could lead to breakthroughs.
• Pioneer! Break habits by doing something different. Prepare and jump into the mystery, working with the feedback that comes.
• Encourage random encounters. Remember, no one is in charge. More accurately, we never know which interactions will catalyze innovation. Maximize interactions among diverse agents, knowing unexpected encounters will likely trigger a shift.
• Seek meaning. Meaning energizes us. As we discover mutuality in what is personally meaningful, we come together. Like clusters with like. Shared meaning draws us to common awareness and action. When shared meaning is central, we organize resilient, synergistic networks that serve our individual and collective needs.
• Simplify. Principles — simple rules — equip us to work with complexity. When principles break down and the situation grows chaotic, what is essential? What serves now? As answers coalesce, we become a more diverse, complex system around re-formed principles at the heart of the matter.

These principles help us work with the flow of emergence. Welcoming disturbance encourages us to begin, knowing all change starts with disruption. To support differentiation, pioneering guides us in thinking about what to do. Encouraging random encounters reminds us to consider who to involve. Seeking meaning provides a thread of coherence by helping us clarify why. And simplifying helps coherence emerge by guiding us to the how.

Practices for Engaging Emergence

If principles help us sort through what to do, practices guide us in how to do something. A practice is a skill honed through study and experimentation. The practices for engaging emergence are rooted in the skills of everyday conversation (see “Practices for Engaging Emergence”). As such, we all know something about them. They are our birthright. When issues are complex, stakes are high, and emotions are right below the surface, these practices help us engage with each other.

Because working with emergence has nothing A-to-B-to-C about it, no one right way exists to use these practices. They help us identify what to notice, what to explore, what to try. They are helpful hints for flying by the seat of our pants.

Just as scales prepare a musician and drills train an athlete, these practices equip us for the challenging conversations, the ones that involve disruption, difference, and the unknown. They are the conversational backbone for improvisation, enabling us to stay in the flow even if we don’t know the specific path we’re taking. Honing these conversational skills is a great way to engage emergence.

I organize the practices into four groups:

Prepare to Engage Emergence

• Embrace mystery, choose possibility, and follow life-energy to cultivate a composed state of mind, alert to aliveness and potential. This enables us to face whatever shows up with equanimity or even delight.

Host Emergence

• Clarify intentions and welcome people. These are skills of being a good host. In exercising them, you create a “container” — a hospitable space for working with whatever arises. These practices are the yin and yang of hosting. One provides focus — clear direction and purpose. The other ensures fertile ground for relationships and connection.
• Invite diversity to encourage people to look beyond our habitual definitions of who and what makes up a system. Doing so prepares us for innovation by increasing the likelihood of productive connections among people with different beliefs and operating assumptions. Inviting diversity is one of the most time consuming, challenging, and critical activities of engaging emergence.

Engage

• Take responsibility for what you love as an act of service. This practice is a game-changing skill. It liberates our hearts, minds, and spirits. It calls us to notice what deeply matters to us and to put our unique gifts to use for ourselves, others, and the systems in which we live and work. The more this practice becomes our operating norm, the more innovation, joy, solidarity, generosity, and other qualities of well-being appear. The capacities for listening and connecting grow through this practice.
• Stepping in to inquire appreciatively is a second game-changing skill. The questions we ask determine the answers we uncover, shaping our experience, actions, and outcomes. Typically, the more positive the inquiry, the more life-affirming the outcome.
• Open yourself to the unknown. This practice is an act of faith. Once open, we can’t go back. It may be the most counter-cultural practice of them all, requiring the courage to be vulnerable.
• Reflect, name, and harvest — these can be sacred acts. They call forth that which previously didn’t exist. The arts — music, movement, visual arts, poetry, film — often enhance the effectiveness and reach of these practices.

Iterate: Do It Again . . . and Again

This practice reminds us of the never-ending nature of change. It takes time and perseverance to make its mark. Because our attention tends to get caught in our routines, iteration is the most elusive of the practices. Together, these practices form a system for acting, providing insight into what our role is, how we support others, and what we can do together.

What’s Possible Now?

Whenever we work with this pattern of emergent change, a turning point occurs as coherence arises. We experience ourselves as part of something larger. Perhaps our voice rises in harmony, a sweet blend of each and all. Or we overcome an obstacle because we used our different skills and abilities to accomplish something together that none of us could have done alone. We change through such experiences. The principles and practices I’ve described help us break through habits of separation that keep us fragmented. Our personal stories become a doorway into the universal.

Joel de Rosnay, author of The Symbiotic Man: A New Understanding of the Organization of Life and a Vision of the Future (McGraw-Hill, 2000), introduced a notion I find promising called the macroscope. Just as microscopes help us to see the infinitely small and telescopes help us to see the infinitely far, macroscopes help us to see the infinitely complex. Rather than a single instrument, they are a class of tools for sensing complex interconnections among information, ideas, people, and experiences. Maps, stories, art, media, or some combination could be used as macroscopic tools that would help us to see ourselves in a larger context. For example, consider the brilliant use of technology in a sports stadium. We are able to experience the game from many angles. At a glance, the scoreboard tells us the state of play. Cameras zoom in so that we can see the action not just on the field but also in the audience. Television dramatically extends the reach of the event. And a history of statistics available online lets both professional commentators and ordinary people put the activities in perspective. We can immerse ourselves in the experience and understand it from many perspectives. Imagine applying such thoughtfulness to making the state of the economy, education, or a war visible to us all.

Both microscopes and telescopes sparked tremendous innovation. Macroscopes have such potential today. As we appreciate our interconnectedness, our sense of who is our community expands. The conditions for greater trust and courage emerge. We act, knowing something about the collective assumptions and intentions we share. We become better equipped to work with upheaval and change.

Let us put these notions to work so that we fully engage with the nascent renaissance that is underway. Begin simply, wherever you are. I offer three suggestions:

• Be compassionate disrupters, asking possibility-oriented questions.
• Creatively engage, interacting with people outside our comfort zone.
• Support wise renewal, telling stories of upheaval turned to opportunity.

Peggy Holman has designed and hosted meetings for diverse groups handling complex issues since 1992, including the National Institute of Corrections, Microsoft, and the Associated Press Managing Editors. In the second edition of The Change Handbook, Peggy and co-authors Tom Devane and Steven Cady profile 61 change methods, including Appreciative Inquiry, Open Space Technology, and the World Café. Her new book, Engaging Emergence: Turning Upheaval into Opportunity (Berrett-Koehler, 2010), dives beneath these change methods to make visible deeper patterns, principles, and practices for change that can guide us through turbulent times.

The post Engaging Emergence: Turning Upheaval into Opportunity appeared first on The Systems Thinker.

In the next pages, I provide some practical tips and advice about the design and use of learning tasks — experiential, hands-on activities — based on my 15 years of experience as an adult educator and leaning heavily on the contributions of Jane Vella in this field. In Taking Learning to Task: Creative Strategies for Teaching Adults (Jossey-Bass, 2000), Vella describes “a different approach, where teaching and learning are integrated and where the learning task is the overall design.” These learning tasks introduce learners to the intricacies of applying what they have learned to their daily work. Despite some disadvantages (they can take a little longer than lectures and can be messier to handle), I believe that learning tasks are an effective way to teach for results. This article will discuss:

1. What “mind shift” is necessary to be able to teach with learning tasks;

2. What is a learning task;

3. What are the four types of learning tasks that, properly sequenced, can generate engagement and fun, no matter what the content you teach;

4. How to debrief a learning task to maximize its learning potential for your students.

So-called “domain knowledge” (concepts, facts, and procedures), while often necessary, seems largely insufficient to empower people to solve problems at work.

Why Learning Tasks

I am biased! My personal way to train in the workplace emphasizes results through group work, learners’ autonomy, and a new role for the trainer as a facilitator of learning rather than a conveyer of content. My biases bring me to see collaboration/diversity and hands-on experiences/action as necessary conditions for learning to take place.

These biases come from my direct observation. So-called “domain knowledge” (concepts, facts, and procedures), while often necessary, seems largely insufficient to empower people to solve problems at work. Adult learners generally are not interested in formal knowledge — the “knowing about” the entire background behind what they are learning. Rather, they are focused on “knowing how,”, “knowing when,” and “knowing if in order to improve their own ability to solve problems, often with limited time and incomplete information, in the context of their day-to-day tasks. The result of this focus is the creation of new meanings, new connections, and new expertise with the qualities of immediate returns, clear transferability, and evident usefulness. Learning tasks support this kind of integration.

In addition, I have noticed that by using learning tasks, aside from helping trainees acquire the necessary skills on the subject at hand, we build a true organizational ability to learn through action and reflection. This kind of learning involves the creation of knowledge rather than the consumption of data. Learning tasks thus nurture students’ capacity for actively integrating new concepts into their existing work practice on a given subject.

Building Blocks for Creating Expertise

Learning tasks are not just fun games and activities that supplement lectures or exercises to practice the content. They are a different way to teach altogether, where the tasks themselves are the whole shebang. According to Vella, “A learning task is a way to structure dialogue. It is an open question put to members of a small group who have been given all the resources they need to respond.” She also says, “A learning task is a way of ensuring engagement of learners with the new content.”

Learning tasks are based on the assumption that new expertise is built through experiences. They expose learners to situations where they can safely practice the content they are learning and collaboratively nurture their own ability to solve problems with their new skills. The work of designing learning tasks is turning content elements into problem-solving experiences set to resemble the learners’ work context. Three key moments make up a learning task: instructions, task, and debrief.

1. The Instructions (5 percent of the total time for the lesson) are given by the trainers to present the activity, demonstrate its basic components, and provide guidance on how to perform it (see “Learning Task Instructions”). So, for example, for a task I assign in my “Emotional Intelligence of Team Results” workshop, I say to students:

• Introduction, Goal, and Reason: “Have you ever thought about what the one thing is that gets you going? Self-awareness is a key skill to build your emotional intelligence. In the next task, we are focusing on your self-knowledge, which the ancients Greeks considered the source of all wisdom. By doing this, we are gaining the clarity required to start building your emotional IQ.”
• Instructions 1: “I invite you to read the poem on page 23 and individually write in your learning journals the responses to the three questions that you find there. I will then ask you to share your thoughts with a person you have never worked with before.”
• Instructions 2:, “Again, Step 1: Read the poem on page 23. Step 2: Write down your answers to the three questions in your learning journals. Step 3: When I ring the bell, please turn to a person you normally do not work with and share your answers. You have 15 minutes for this task.”
• Question:, “Any questions?”

There is an art in giving good, specific, clear instructions. Instructors present the activity and the materials and check people’s understanding of how to proceed. They clearly state why they selected the activity and what they hope it will accomplish. It is imperative to provide clear goals for the exercise (for example, “We are doing this task for these reasons . . .”), because the smallest omission or lack of clarity will make people practice the wrong way, will thwart their chances of success, and will undermine their learning. Trainers also need to state what the reward is for the activity, that is, what positive outcome will come from doing it right.

2. The Task is the actual exercise (55 percent of the total time for the lesson). Participants work on solving a problem to practice the content to be learned. The task always comes with written resources and materials. For instance, in the previous example, I ask people to go to page 23 to read a poem. The task is about reading, reflecting, and sharing as a way to experientially build self-awareness.

3. The Debrief is the review/ debriefing phase (40 percent of the total time of the lesson). The instructors facilitate a conversation after the activity has taken place that outlines key questions to drive the group’s learning. For instance, in the same example, we can ask students if they liked the poem or not, whether the exercise came easy or not, if it holds some meaning, what they discovered in conversations, and so on. I can share my observations (, “I notice a kind of relief in the room, am I right?”) or my experience (, “I selected this poem because . . .”). The reflection is the critical “harvesting” moment of the learning; below, we will look at strategies that can help maximize its effectiveness.

Four Kinds of Tasks

Jane Vella talks about four kinds of learning tasks and how they should be sequenced to build an effective learning experience:

1. We start with an INDUCTIVE learning task. With this kind of task, we “invite learners to qualify where they are at present in terms of the content, where they begin their study, and what the present conception of the topic includes.” An inductive learning task can be used as a warm-up, but it is never an icebreaker. My inductive learning tasks start the work of learning and demonstrate that I care about how the learners’ backgrounds and knowledge inform their work in the class. By showing this interest right from the start — in the crucial first three minutes that shape people’s perceptions of the entire program — I establish a level of respect for them and for the rich experience they bring.

For example, in a class on effective time management, I opened the session by having participants fill out a form that included the following questions: “What do you hope to learn from this class? What are your time wasters? What situations do you hope to improve with more effective time management skills?” In a customer service workshop, I asked the trainees: “Tell me about your experience with bad customer service.” In an online train-the-trainer course, I requested that attendees send in advance the name of an instructor who made a difference in their lives and why. This step creates a climate that is conducive to learning.

2. We create opportunities for learners to experience the content with an INPUT learning task, in which they meet the new materials hands-on. For example, I once taught a class on federal records management (talk about a dry subject!). Rather than present records management definitions and concepts with a PowerPoint slideshow, I broke the group into teams and gave each team a set of cards with 20 key concepts in federal records management. I encouraged them to sort the ones they were familiar with from the ones that they didn’t know. I told them that in 15 minutes, we would hear the “provisional definition” of the concepts and asked them to pass the cards with concepts they were not familiar with to the other tables. We invited the agency’s Records Management Officer to provide guidance. We only needed his expertise for five key concepts, as the groups pooled their knowledge and managed to come up with the correct definitions for most of the terms on their own.

3. With an IMPLEMENTATION learning task, we invite participants to do something with the new content. This kind of task solicits the learners’ participation, asking them to “wear” the learning and run with it for their own purposes, from their own perspectives. For learners, it is a great chance to bring the content into their own lives; for trainers, it is an opportunity to verify that students have really absorbed the material.

In my “Dialogue as Facilitative Leadership” workshop, I ask trainees to write their own list of possible questions to ask someone with whom they disagree. The questions are based on the concept of open versus closed; the challenge is to ask open questions in response to aggressive statements like “No way” or “This is totally wrong!” The simulation that follows requires trainees to respond to interruptions and defensive statements only with the questions they have designed. In a class about supervisory skills, I created five brief stories that illustrated dilemmas for the main characters similar to the ones the learners were facing in supervising their own staffs. Each case finished with key questions; participants then chose either A or B as a course of action.

4. With an INTEGRATION learning task, we move into the actual use of the skill in the workplace. In a class about a new performance system, for example, I encouraged learners to write the three things they learned in the class, their own plan with dates for implementing it, and the factors they anticipated could derail their efforts, including the potential for routine to take over and cause them to return to their set ways. The conversation about implementation also raised the idea of “enablers,” such as 30- and 60-day follow- ups by web conference and plans for involving the learners’ supervisors in defining and ensuring the ongoing use of the class content.

The Learning Task Debrief

“There was a person constantly talking and disrupting the class. Unfortunately, that person was the instructor.”

Task-based learning is grounded in the assumption that the quality of the learning process depends largely on the quality of the questions we as trainers ask during the dialogue that follows the action. According to World Café founders Juanita Brown and David Isaacs, learning questions “enable us to challenge our underlying assumptions in constructive ways. With a simple and consistent focus on questions that matter, casual conversations are transformed into collective inquiry.” Indeed, learning takes place even after the task has been executed, through a dialogue in which powerful questions unleash the team’s ability to reflect.

The rule is simple. After performing any learning task, always involve students in a learning dialogue, because it is only through conversation that the experience is distilled in usable learning.

The dialogue that follows a learning task allows people to “talk the learning out,” to express it, to verbalize it, to give it words, to reflect on it. Here we make learning visible through several iterations in order to produce an output, an actual shareable product. No matter how imperfect or partial this product is, it is nevertheless “owned” and serves as a basis for further learning.

For example, in a class on systems thinking, I introduce causal loop diagrams through a learning dialogue. Without explaining the concepts of reinforcing and balancing loops, I distribute a document called “Peter Russell’s Credit Report,” explaining that this fictional gentleman’s poor credit rating can be traced back to the interplay of two variables: the amount of debt and the number of credit-card transactions. I draw a reinforcing loop of those two variables and explain that this is another way to describe his situation. I then distribute other sample artifacts that illustrate similar situations and ask them to read them at their tables (for example, “Jenny’s Diet” is about the interplay of variables in weight-loss decisions; “Mark Is Always Late!” focuses on the interplay between people’s perceptions of others and reality, and so on). After students have read the stories, I ask them to jot down the variables they see in action, identifying the loops similar to the one I have written on the wall. The focus is on getting them to verbalize their understanding in order to introduce the new ideas “balancing loop” and “reinforcing loop.”

For each kind of task (inductive, input, implementation, or integration), I have identified four partial sets of questions (see “Questions for Prompting Learning Dialogues” on p. 5). You can use these questions in the dialogue that debriefs the learning tasks to ensure a rich and productive conversation around the task experience.

• After an INDUCTIVE learning task (one that starts the training session and evokes previous learning), the trainers’ focus is on listening and clarifying, while probing the rich experience participants bring to the class. The instructor ensures that trainees fully participate in the activity and prepare them for plunging into the content. By conducting a learning dialogue right after an inductive learning activity, trainers establish a safe space for everyone to speak. The conversation also gives people a chance to articulate what they already know about the content and review their experience with it.
• After an INPUT learning task (one that presents new content), trainees ask a lot of questions. In this phase, instructors clarify the concepts presented as new content and invite participants to describe what happened during the activity, to explain the content or their thinking about it, and to extract meaning and knowledge from the experience. Depending on the content or context of the task, much of the dialogue after these input activities involves clarifying the input and ensuring understanding. Instructors focus on articulating the content, making sure that people participate, and tolerating a few mistakes.
• After an IMPLEMENTATION learning task (one that centers on applying what participants have learned in their own context), the dialogue meets the content in its most challenging aspect: application. This conversation normally raises a lot of questions, comments, opinions, and disagreements, allowing for multiple perspectives to emerge. In my experience, after an implementation task, you can expect a learning dialogue to go anywhere most likely to disputing the key learning ideas and assumptions. For example, in our class “The Virtual Trainer,” which is about teaching using web-conferencing technologies, when we ask participants to structure a lesson plan that makes for effective online engagement, the conversation often goes back to the benefits of doing face-to-face sessions and to the importance of understanding the audience’s needs in order to select the right training media. By allowing trainees to express these different perspectives, which normally enrich the perspective of everyone involved, we honor the freedom of the learning process. In these situations, instructors need to use their emotional intelligence, negotiation skills, and conflict management abilities to ensure that group members give fair consideration to the concepts being taught and that they do their share of work or analysis.
• After an INTEGRATION learning task (one that brings the learning into the trainees’ work life), the dialogue normally addresses the future. In this phase, the conversation should clearly identify two or three specific actions that students can implement immediately, individually or as a group, as a follow-up after the class.The rule is simple. After performing any learning task, always involve students in a learning dialogue, because it is only through conversation that the experience is distilled in usable learning.

In conclusion, when we design a class using learning tasks, our lesson plan looks like an accordion. The basic sequence “Instructions–Task–Debrief is the building block of the program; as such, it is repeated several times. First, we position an “Instructions–Inductive Task–Debrief block, then an “Instructions–Input Task–Debrief.” An “Instructions–Implementation Task–Debrief follows, and we close with “Instructions–Integration Task– Debrief.” Organized and assembled in various fashions, those elements create powerful learning programs.

A Learning Community

“Learning cannot be designed. Ultimately it belongs to the realm of experience and practice . . . It slips through the cracks; it creates its own cracks. Learning happens, design or no design.”

We know that telling is the least effective way to teach. In these pages, I have provided an alternative practice through the use of learning tasks. Our basic assumption is that trainers don’t need to spoon-feed concepts to trainees. Trainers should become experts in finding great, creative, new ways to have people learn something, rather than being experts in what people learn. Yes, the trainer needs to know about the content. But that’s not enough.

By shifting focus from conveying content to creating a learning experience, the job of a trainer becomes:

• Setting up learning tasks that allow trainees to experience the content first-hand;
• Giving clear instructions about the tasks to be performed;
• Being a resource during the actual tasks as well as sitting back and letting trainees do the work;
• Facilitating learning conversations by debriefing the task through the use of great questions.

Trainers who use a task-centered approach play yet another role they support the creation of a community of learners.

Trainers who use a task-centered approach play yet another role — they support the creation of a community of learners. A key element is building a sense of openness and trust in the group. A well-executed debrief after a learning task is essentially an exercise in community building.

When trainers see knowledge as book knowledge — facts and trivia — and individuals as lonely learners mandated to absorb something, then they don’t perceive the need for dedicating time to building a learning community. With this mindset, it is not surprising that community-building work is often ignored and dropped in favor of more “meaningful” activities. But the fact is that learning communities are the very engine that makes learning turn into change for organizations. Without it, the organizations we work with can’t reap the full benefits of new approaches.

Training adults by using learning tasks embraces the action/reflection paradigm, develops real-world learning as situated expertise, and builds communities of learners. Besides, by spreading the joy of learning, training professionals can have a profound, positive impact on organizational change. And, isn’t that what our work is all about?

The post Learning Tasks: Turning a Dry Subject into an Engaging Experience appeared first on The Systems Thinker.

I suggest an often overlooked lens that provides a deeper understanding of these phenomena and a range of more

effective leadership strategies. This is a person-in-context lens in which phenomena are understood as the interactions of individuals and groups with the systemic contexts in which they and others exist. When we fail to recognize context, events are misunderstood and energies misplaced. A missing leadership competency is seeing, understanding, and mastering the systemic contexts in which we and others exist.

In this article, I describe the consequences of blindness to context and the productive possibilities we derive from context sight. The first main section describes four common system contexts: Top, Middle, Bottom, and Customer. The second section discusses the four contexts as they apply to individuals and the third as they apply to groups. In both sections, I describe familiar scenarios that result from context blindness and produce personal stress, strained or broken relationships, and diminished organizational effectiveness. I also lay out some principles for seeing context and describe the positive difference that seeing context can make for leaders and others in organizations.

The fourth main section of the article presents a case that illustrates the limitations of personal orientations while demonstrating how seeing contexts deepens our understanding of situations and reveals more comprehensive and productive leadership strategies.

Seeing, understanding, and mastering context is an essential leadership competency. There is a difference between knowing that people operate in different contexts and experiencing relationships with people from different contexts in the day-to-day turmoil of leading modern organizations. I end with a discussion of the implications for leadership development.

Four System Contexts

A PERSON IN THE TOP CONTEXT

This section describes four common system contexts: Top, Middle, Bottom, and Customer (Oshry, 1994). This is not to imply that these are the only contexts in which people function, but these four are essential to our understanding of organizational interaction, and they are the four that I know very well from my work over the past forty years with both the Power Lab (Oshry, 1999) and the Organization Workshop, both described on page 4. What is important to understand is that Top, Middle, Bottom, and Customer are not just hierarchical positions; they are conditions all of us face in organizational interaction, conditions we move in and out of from event to event. So in that sense, all of us are Top/Middle/ Bottom/Customers.

A PERSON IN THE BOTTOM CONTEXT

• The Bottom Context: Vulnerability. We are in the Bottom context (“A Person in the Bottom Context”) of vulnerability whenever we are on the receiving end of decisions that affect our lives in major or minor ways. Plants are shut down, health and retirement benefits are changed, restrictive governmental regulations are put in place, new initiatives are instituted, current initiatives are abandoned. All of this happens to us without our involvement.
• The Top Context: Complexity and Accountability. We are in the Top context (“A Person in the Top Context”) whenever we have been designated responsible for a system or piece of a system — whether it is the organization as a whole, a division, unit, task force, family, project, team, or classroom. The Top context tends to be one of complexity and accountability: lots of inputs to deal with, difficult issues, issues from within and without the system, issues that aren’t dealt with elsewhere float up to you, and complex decisions must be made regarding the form, culture, and direction of the system. Whenever we are in that Top.

• The Middle Context: Tearing. We are in the Middle tearing context (“A Person in the Middle Context”) whenever we are pulled between the conflicting needs, demands, and priorities of two or more individuals or groups. We are Middle between our work group and our manager, between a spouse and a child, between supplier and manufacturing, between our executive group and the board, between one executive and another.

• The Customer Context: Neglect. We are in the Customer context of neglect (“A Person in the Customer Context”) whenever we are looking to some individual or group for a product or service that we need in order to move on with our work, and that product or service is not coming as fast as we want, at the price we want, or to the quality we had hoped for.

To reiterate the basic point: regardless of what positions we and others occupy, we and they are constantly moving in and out of these contexts: sometimes as Top, sometimes as Bottom, sometimes as Middle, and sometimes as Customer.

Awareness of Persons in Context

We do not reflexively see context; we see people, and we tend to experience our interactions as person to person. Sometimes we are blind to the context others are living in, and sometimes we are blind to our own context. The basic point is that we are not just interacting people to people; we are people in context. Failure to recognize that can lead to serious misunderstandings, inappropriate actions, and dysfunctional consequences. In this section, I discuss the contextual principles at work on the personal level, provide some examples of what that context looks and feels like, and offer some strategies a leader can take in this situation to address the gap.

Principle 1: When We Are Blind to Others’ Contexts

Principle 1: When we are blind to others’ contexts, we are likely to fall into scenarios in which we misunderstand others’ actions, attribute inaccurate motives to them, respond in ways that negatively affect our relationships with them, and diminish our personal and organizational effectiveness:

• ‘‘Arrogant’’ Tops. We may have a brilliant idea for organizational improvement. We send it to Top and await an acknowledgment, maybe even a promotion. To us, this is a great idea with potential for increased organization effectiveness. But to our Top, struggling to survive in this world of complexity, it may be just another complication in an already complex world. A week goes by with no response from Top. Two weeks. Nothing. Our reaction: It’s those arrogant Tops again! We get mad, we withdraw, and we lose our enthusiasm for making any more contributions.
• ‘‘Resistant’’ Bottoms. We’ve just developed an exciting new initiative that could really make a difference to our workers and ultimately to the organization. For the workers, it means more involvement, more empowerment, more opportunity to make a difference. We bring it up to our workers, but there is no enthusiasm. To us, this is an exciting initiative, but to our workers living in this world of vulnerability, this is the latest installment of ‘‘them’’ doing it to ‘‘us’’ again. What have they got up their sleeves this time? What happened to last year’s exciting new initiative? Just wait it out; this too shall pass. We conclude that our workers are just too far gone for anything to excite them.
• ‘‘Weak’’ Middles. We’ve just made a simple request to our Middle; it’s about support we need from him on our project. That’s all we’re asking for. To us, it’s a simple request, but to our Middle struggling to survive in a tearing world, supporting us is working against someone else who is pressing Middle to support her. So instead of a strong commitment to support, we get a weak wishy-washy I’ll see what I can do. Where did we ever get such a weak Middle!
• ‘‘Nasty’’ Customers. We’re trying to be helpful to a disgruntled customer whose product has once again been delayed. There’s nothing we can do about product delivery, but we do want to soothe Customer’s ruffled feathers, so we invite Customer out for coffee; we also suggest a tour of the facility and present our customer survey form. Instead of gratitude, we get an angry reaction from Customer. To us, we are making reasonable gestures; to Customer living in the world of neglect, our nice gestures are simply more neglect! Some people are just unreachable by kindness!

Leadership strategy 1 comes into play in all of these situations:

Leadership strategy 1: Take others’ contexts into account. Make it possible, even easy, for them to do what it is you and your system need them to do.

There is no arrogant Top, resistant Bottom, weak Middle, or nasty Customer. What we have are people — just like us— struggling to cope with their respective contexts of complexity and accountability, vulnerability, tearing, and neglect. Our problem is that we have been reaching out and reacting as if these are just person-to-person interactions. In our context blindness, what we’ve done is increase the complexity of Top, the vulnerability of Bottom, the tearing of Middle, and the neglect of Customer, which is not what we had intended.

The challenge for us is to take context into account. This involves having an understanding of others’ context, having some empathy for them, not reacting to their initial responses, staying focused on what it is we are trying to accomplish, and being strategic, that is, rather than being blind to context, taking other people’s contexts into account. Given the context they are in, how do I make it possible for them to do what I need them to do? So, incorporated into my strategy are the following challenges: How do I reduce the complexity of Top, the vulnerability of Bottom, the tearing of Middle, and the neglect of Customer?

Principle 2: When We Are Blind to Our Own Contexts

Principle 2: When we are blind to our own contexts, we are vulnerable to falling into scenarios that are dysfunctional for us personally, for our relationships, and for our systems. We respond reflexively to these contexts — not all of us, not every time, but with great regularity — without awareness or choice. It is as if these scenarios happen to us without any agency on our part.

• Burdened Tops. When we are Top, living in the context of complexity and accountability, we are vulnerable to reflexively sucking responsibility up to ourselves and away from others. It’s not a choice we make; it simply happens. We don’t see ourselves doing anything. It is just crystal clear to us that we are responsible for handling the complexity we are facing. The more regularly we do this, the more we increase our stress, the more we dilute the brain power that can be brought to bear on situations, the more we gradually disable others so that when we need them, they aren’t there for us.
• Oppressed Bottoms. When we are Bottom, living in the context of vulnerability, we are vulnerable to reflexively holding others responsible for our condition and the condition of the system. Again, we do this without awareness or choice. It’s crystal clear to us that they are responsible, not us. The more regularly we do this, the more righteous we become in our victimhood and the more bitter toward others; the less energy we devote to dealing with the very problems we are facing, and the less agency we feel in our lives. The system suffers from misdirected energy that is devoted to whining, complaining, resisting, and, possibly, sabotaging — energy that could have been focused more productively on the business of the system.
• Torn Middles.When we are Middle, living in the tearing context, we are vulnerable to sliding in between other people’s issues and conflicts and making them our own. It becomes crystal clear to us that we are responsible for resolving their issues. What makes this especially stressful is that they hold us responsible for resolving their issues. Sliding in between weakens us: we become confused, uncertain whose priorities to serve; we may not fully satisfy anyone, we get little positive feedback; and possibly we doubt our own competence. Middles cope with this tearing in different ways: some reduce the tearing by aligning themselves with Tops, others by aligning with Bottoms; in either case, they create tension with whomever they are not aligned. Other Middles cope with the tearing by bureaucratizing themselves, making it difficult for anyone to get to them. And still others burn themselves out shuttling back and forth, attempting to explain each side to the other, trying to placate all sides, struggling to please everyone. In all of these coping mechanisms is a loss of independence of thought and action. No independent Middle perspective is brought to bear, and as a consequence, the system loses whatever value such perspective could provide.Blindness to our own context results in personal stress, fractured relationships with others, and diminished organizational effectiveness.
• Screwed Customers. When we are Customer, living in the context of neglect, we are vulnerable to staying aloof from delivery systems and holding them responsible for delivery. It becomes crystal clear to us that they, not us, are responsible for delivery. So when delivery is unsatisfactory, we feel righteously angry at the supplier and personally blameless. Since it’s clear to us that we have no responsibility in the delivery process, whatever contribution we might have made to the quality of delivery is lost.

In all of these scenarios, blindness to our own context results in personal stress, fractured relationships with others, and diminished organizational effectiveness. The solution is to turn to leadership strategy 2:

Leadership strategy 2: Recognize the context you are in, move past the reflexive disempowering response, and use the possibility of whatever context you are in to strengthen yourself, your relationships with others, and the system.

To master our own context, we need to understand that in system life, we are constantly moving in and out of Top, Middle, Bottom, and Customer contexts. We need to be able to recognize whatever context we are in at the moment. Am I Top, Middle, Bottom, or Customer in this moment? We need to be able to notice our reflex response in whatever context we are in. Am I sucking up responsibility to myself and away from others? Am I holding THEM responsible for my condition and the condition of the system? Am I sliding in between other people’s issues and conflicts and making them my own? Am I staying aloof and holding the delivery system responsible for delivery?

Sometimes the clue to context lies in our feelings: I’m feeling burdened or oppressed or torn or screwed. What is that feeling telling me about the context I am in, and how I am responding to it? Am I feeling burdened because I’m sucking responsibility up to myself? Am I feeling oppressed because I’m holding others responsible? Am I feeling torn because I’m sliding in between others’ issues? Am I feeling screwed because I’m holding the delivery system responsible for delivery?

Awareness allows us to avoid the negative consequences of blindness. Beyond that, it opens up more powerful and productive possibilities for responding to context, possibilities that strengthen ourselves and our systems— for example:

• In the Top context of complexity and accountability, instead of sucking responsibility up to myself and away from others, my challenge is to be a person who uses this context as an opportunity to create responsibility in others.
• In the Bottom context of things that are wrong with my condition and the condition of the system, instead of holding THEM responsible for all that is wrong, my challenge is to be a person who is responsible for my condition and the condition of the system.
• In the Middle context of tearing, instead of sliding in between and losing my independence of thought and action, my challenge is to maintain my independence of thought and action in the service of the system.
• In the Customer context of neglect, instead of standing aloof from the delivery process and holding it responsible for delivery, my challenge is to be a person who shares responsibility for delivery.

We are much more powerful and more contributing system members when, in the Top context, we are creators of responsibility in others; when, in the Bottom context, we are responsible for our condition and the condition of the system; when, in the Middle context, we maintain our independence of thought and action; and when, in the Customer context, we share responsibility for the delivery of products and services. Living from these transformative stands demands that we use more of our potential in whatever context we are in, and it enables us to focus more of our creative energies on the business of the system. These stands also raise unique challenges for us. As Tops, we need to give up some control; as Bottoms, we need to give up our dependency and blame; as Middles, we need to give up our need to please everyone; and as Customers, we need to give up our sense of entitlement.

These are the payoffs and the prices to be paid for seeing, understanding, and mastering the systemic contexts in which we are living. In this section, we explored the leadership challenges of seeing, understanding, and mastering individuals in context. Now we turn our attention to groups in context.

The post People in Context, Part I appeared first on The Systems Thinker.

In part one of this series, I stated, “A mental model is a model that is constructed and simulated within a conscious mind.” A key part of this definition is that mental models are not static; they can be played forward or backward in your mind like a video player playing a movie. But even better than a video player, a mental model can be simulated to various outcomes, many times over, by changing the assumptions.

Mental Simulation

Remember the example from part one of the child reaching for the hot stove? One possible outcome we can simulate is that the child does not get burned. We can simulate this outcome by altering our assumptions. We could include a parent in the room who rescues the child in the nick of time. Or, we could simulate the child slipping just before reaching the stove-top because, in the photo, the hardwood floor appears slippery. This kind of mental simulation allows us to evaluate what may happen, given different conditions, and inform our decision making. You don’t have to make any decisions while looking at the picture, but imagine what actions you might take if the scene above was actually unfolding in front of you.

It seems effortless to mentally simulate these types of mental models. Most of the time, we are not even aware that we are doing it. But other times, it becomes obvious that our brain is working rather hard. For example, looking at the chess board below, can you determine if the configuration is a checkmate?

It is indeed. But I’ll bet it took noticeably more effort for you to mentally simulate the chess game than it did with the child near the stove scenario. Think about the mental effort that the players make trying to simulate the positions on the board just a few moves ahead in the game.

The paper “The Magical Number Seven, Plus or Minus Two: Some Limits on Our Capacity for Processing Information” by G. A. Miller (1956) established that people can generally hold seven objects (numbers, letters, words, etc.) simultaneously within their working memory. Think of “working memory” as you would think of memory in a computer. It’s like the amount of RAM we have available to perform computations within our mind. And it’s not very much. This means if people want to do any really complex information processing, they’ll need some help. Over the last 50 years or so, the help has come from computers. (In fact, IBM designed a computer specifically for playing chess, dubbed “Deep Blue”).

Digital computers have catapulted humankind’s ability to design, test, and build new technology to unbelievable levels in a relatively short period of time. Space exploration, global telecommunication, and modern healthcare technology would not have been possible without the aid of computers. We are able to perform the computation required to simulate complex systems using a computer instead of our minds. Running simulations with a computer is faster and more reliable.

What Makes a Model Useful?

Models that we can simulate using computers come in many forms. For example, a model could be a financial model in a spreadsheet, an engineering design rendered with a CAD program, or a population dynamics model created with STELLA. But what makes any of these models useful? Is it the model’s results? Its predictions? I think the ability to explain the results is what makes a model truly useful.

Models are tools that can contribute to our understanding and decision-making processes. To make decisions, a person needs to have some understanding of the system the model represents. A business finance model, for example, can be a useful tool if you understand how the business works.

Consider a model that does not provide any explanatory content, only results. This type of model is often referred to as a “black box.” It gives you all the answers, but you have no idea how it works. People rarely trust these types of models, and they are often not very useful for generating understanding.

The most useful models are structured so that the model itself will provide an explanatory framework that enables someone to ask useful questions of it. Those questions may be answered by experimenting with the model (simulating) which, in turn, can help deepen a person’s understanding of the system.

This is an important feedback loop in a person’s learning process. This feedback loop can be accelerated if the model provides explanations and can be simulated with a computer.

Transforming your mental models into visual models that are easier to understand and experiment with will deepen your understanding and help you communicate your models more effectively.

Modeling Dynamic Systems

Dynamic systems are notoriously difficult to understand. A survey of opinions and policy proposals concerning the recent global economic crisis, healthcare reform in the US, and climate change will yield a myriad of mental models about how these systems work, and what action we can take to improve them. These systems are hard to understand because they challenge our mental capacity to model and to simulate them. Systems problems are characterized by non-linearity, delays, and competing feedback loops, all of which are challenging to understand.

As a result of the complexity that is inherent within dynamic systems, you’ll often find a lot of debate and mistrust of proposals to change them. Think about how complex issues are presented in newspapers, in blogs, on television, and in the workplace. Typically, projections concerning what will happen if we adopt one proposal or another will be presented with little explanation of how the proposal will change the system’s behavior. People have difficulty engaging in meaningful discussion about how to actually solve problems without any common ground for understanding the dynamics of the system.

This is why developing a visual representation of how a system is structured underpins the philosophy behind systems thinking and simulation software such as iThink and STELLA. In this article, I’ll show how this works using STELLA.

Stocks and Flows

The mental model of the learning process pictured above is a visual representation of cause and effect relationships. These cause and effect relationships can be modeled operationally using stocks and flows to simulate them using STELLA.

A stock is an accumulation within a system. Think of it as a bathtub. Like a bathtub, stocks can be filled and drained. In STELLA, stocks are indicated by a rectangle. Stocks can be anything that accumulates— water, money, people, anger, and motivation are all examples of stocks.

A flow can add to, or subtract from, a stock. Think of the faucet running water into the bathtub as it fills. The stock is the accumulation of water in the bathtub, and the flow is the rate at which the water is flowing in.

In the example below, the Population stock increases as people are born. If people are born at a constant rate, then we’ll see a linear increase in the Population over time.

Similarly, the deaths flow pictured below removes people from the population, causing the level to drop over time.

The clouds on the ends of the flows represent infinite sources or sinks. In the model above, deaths flow into a cloud, which is outside the system boundary and therefore can accumulate infinitely.

Feedback Loops

Feedback loops are what enable systems to run themselves. They are difficult to simulate mentally, but easy to construct using stocks and flows. A connector (red arrow) indicates a dependency between two parts of a system. In the model below, the births flow is dependent on the Population level and birth rate.

The birth rate is represented using a converter. Converters can contain expressions or constants that can be used to modify other parts of the model. As you might suspect, the births flow is defined as Population * birth rate. By representing the birth rate with a converter, we can easily see that the flow of births is a function of both Population and birth rate.

This structure creates a reinforcing feedback loop. Notice the population exhibits exponential growth when simulated over time. There is nothing limiting the growth of the population. One way to limit the growth is to add a balancing loop.

The relationship between the size of the Population and the death rate form a balancing loop. The death rate changes based on the Population size and therefore limits the growth of the population. If the population grows too dense, deaths occur at a higher rate.

Now that we have explored the basic building blocks (stock, flow, connector, converter) and how to map out feedback loops, we can build, and experiment with, a real model of a complex feedback system.

Predator-Prey Dynamics

A classic example of a complex feedback system is the dynamics exhibited by predator-prey populations. A remarkable dataset from the Hudson Bay Company in Canada of lynx and snowshoe hare pelt trading records gives us a rare look at an isolated natural system. The records span almost a century, beginning in 1845. From these records, we can infer the population levels of both species.

At first pass, it seems that there was little keeping the hare population in check other than the lynx population (hares are the primary food source for lynx). What is interesting here is the oscillation pattern. How does the interaction between the two population systems generate this oscillation? Let’s try to answer this question by constructing a model that we can easily understand and experiment with.

Understanding the System

What is your mental model of how a lynx population increases or declines over time? My guess is that it may include a long list of external factors (industrialization, weather, urban sprawl, etc.), but the core of the mental model probably contains operational understanding: Births and deaths ultimately control the population level. Converting this mental model into an operational stock and flow model in STELLA looks like this:

The more lynx you have in a given population, the more lynx are born. This is a reinforcing feedback loop. As the population increases, lynx may start dying at a faster rate because they run out of some resource, such as food. This is a balancing feedback loop. Here are the results after I run the simulation:

We can see the population exhibits S-shaped growth. The value at which the population levels off is the number of lynx that is sustainable within this particular system.

This simple model is congruent with most people’s mental models of population dynamics: The population grows or declines based on the limits of what is required to sustain it. But let’s go a bit deeper and think about how this works. What we have modeled is two feedback loops (reinforcing and balancing) competing with one another.

The graph above illustrates that the reinforcing feedback loop dominates at the beginning of the simulation, but as the population grows, the balancing loop takes control and dampens the growth. Lynx are still being born when the population level stabilizes; it’s just that the number of deaths has become equal to the number of births. Sometimes a balancing loop is referred to as a “goal-seeking loop.” The level of the stock stabilizes when the goal is met.

Take a moment to think about how the feedback loops within the lynx and hare populations could interact with one another to generate the oscillation we saw. We know that each population in isolation will grow until the carrying capacity of the system limits it. What would happen if we modified the model diagram to show the dependency between the lynx and hare population?

I have connected the Lynx population with hare deaths and the stock of Hares with lynx death fraction via the hare density variable. (The lynx death fraction changes based on the density of hares in the given area.) I now have a useful model of a complex system: It is easy to understand how the model is structured, and I can experiment with the model by simulating different scenarios.

Experimenting

I have initialized the values in the model so that it begins in “dynamic equilibrium”— lynx and hares are dying and being born, but the population levels stay the same. This is like a bathtub that has the faucet running at the same rate as the water leaving through the drain. The level stays constant, but water is cycling through. In this case, we have many generations of lynx and hares, but within the respective populations, the number of births and deaths are equal.

If we begin with the model in a steady-state, we’ll easily recognize change in behavior as we experiment. Let’s explore the impact of trapping on the populations, since we know both species were trapped for pelts when the data was collected.

I have added an additional outflow to the stock of Lynx that represents trapping. I defined the outflow so that trapping begins after 10 years. At that point, 100 lynx are trapped and removed from the stock of Lynx. Pictured below is the graph after the simulation is run with this new scenario:

And here is the graph after I set lynx trapped to 500 and ran the simulation again:

In both experiments, the populations begin oscillating at the moment the trapping suddenly reduces the lynx population. How can our knowledge of the feedback loops at play in this system help explain these results? We know that in this model, the size of the hare population is limited only by the number of lynx. When that number suddenly drops, the hare population increases because there are not as many lynx hunting the hares. What happens to the lynx population? Because there are more hares and fewer lynx, the lynx population increases as well. (There is ample food available for the reduced lynx population.) The reinforcing loop of births increases the population level, unconstrained by its balancing loop (Figure 1).

Then something interesting happens: The hare population peaks as the lynx population reaches its pre-trapping level. At this point, the lynx population has increased to a level that limits the growth of the hare population (Figure 2). Lynx are eating hares faster than they can reproduce because of the increased hare density and number of lynx hunting. In other words, the hare population’s balancing loop is limiting hare growth.

For a few years following the hare population’s peak, the lynx population continues to grow. During this period (as the hare population falls and lynx population rises), the reinforcing births loop dominates the lynx population level (Figure 3). There are ample hares available to prevent the lynx population from starving; the lynx balancing loop is not limiting their growth.

A few years later, the lynx population’s balancing loop kicks in as the number of hares plunges downward. There are not enough hares left to support so many lynx, so they die at a much faster rate. This rapid decline in lynx has the same effect on the hare population as trapping lynx: It begins another cycle of the populations overshooting the carrying capacity of the system, and subsequently collapsing.

How did our understanding of the model structure help us understand the results of our experiments? We traced the cause of the oscillation back to the behavior of the feedback loops at play within the population systems. In doing so, we gained a deeper understanding of the system that includes the behavior of two interdependent balancing loops. This understanding can lead to more questions: Will we observe the same behavior if we trap hares instead of lynx? How can we stop the oscillation? How will the oscillation change if we include the hare population’s food constraint in the model?

In the early 1900s, the mathematicians Lotka and Volterra came up with a pair of non-linear, differential equations to describe the dynamics of a predator-prey system. (They did not have the luxury of computers and software). The same oscillating behavior is observed in economic systems, and as a result the Lotka-Volterra equations played a role in the development of economic theory. It is the understanding of the dynamics of oscillation that is useful here — much more so than the numbers. This understanding enables us identify the structures that cause this behavior. When we observe oscillatory behavior in the future, our mental models will be more accurate, and we’ll be better equipped to make an informed analysis.

Better Mental Models, Simulated More Reliably

Our world is only going to become more complex, and we need good thinkers helping to make it a better place for everyone. Sharing systems models with people is a great way to increase their understanding of feedback loops and system dynamics. Building models yourself is even more valuable, because you’ll learn a lot about your own mental models and improve them. Practice will help you to construct better mental models, simulate them more reliably, and communicate them more effectively. Improving these skills will help inform what actions you take in the face of complex, systemic problems.

Jeremy Merritt is a lead software engineer at i see systems, Inc. This article originally appeared on the Making Connections blog and is reprinted with permission.

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