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.

Over the last century, people such as Ford, Rockefeller, and Carnegie have been our entrepreneurial icons. Today, Gates, Bezos, and the founders of many thousands of dot.com startups fill the newspapers and our imagination. This dream of creating something new and, in the process, engendering wealth, power, and prestige has spread around the globe. New businesses are proliferating in the Pacific Rim, South America, the Middle East, and Europe — places that, not so long ago, were marked by rigid class and economic systems that discouraged entrepreneurial effort.

The entrepreneurial journey, however, is rarely straight or easy. And success, once achieved, is not always what the company’s founders anticipated. As a business grows in size and complexity, it becomes harder for them to manage in the informal, family-like ways that led to early success. Leaders face a paradox: In order to manage and continue growth, more effective control requires letting go. That is, entrepreneurs need to entrust others to manage much of the organization and to institute systems, such as budgets and quality control, that partly replace or supplement their vigilance. Then, once effective business processes have been introduced, the organization must find ways to reinfuse itself with the spontaneous, creative energies of the start-up days to avoid growing stagnant and dry. In the most successful companies, this cycle, from entrepreneurial to professional and back to entrepreneurial, may repeat many times over.

The entrepreneurial journey is rarely straight or easy. Leaders face a paradox: In order to manage and continue growth, more effective control requires letting go.

In other words, successful entrepreneurs — those who build, sustain, and continuously renew their businesses — must learn to balance risk taking, hard work, and self-reliance with forethought, delegating authority, and trusting their staff. The same is true for entrepreneurial endeavors in large, otherwise bureaucratic organizations. This uncommon balance of entrepreneurial and professional leadership is hard to achieve. No wonder so many entrepreneurs cannot complete their journey: 50 percent of start-ups are out of business after the first year; 80 percent close by their third year.

For all but the most talented (and lucky), the tricky process of integrating entrepreneurial with professional leadership requires meeting certain challenges and acquiring new practices. It means a major shift in “business as usual” for everyone in the company. Although no single approach to change can accommodate every entrepreneurial culture, most entrepreneurs — and those who work for them — will recognize their own experiences and the efficacy of many of the recommended action steps in the transition process outlined below.

The Entrepreneurial Personality

The entrepreneurs’ personality drives and shapes the organizations that they build. On the upside, people who launch start-ups generally possess high energy and enthusiasm, enjoy building things, have enormous reserves of creativity and intuition, and live for excitement and challenges. They are visionaries who rarely stay focused on the small things in life but try to change the world in some substantial way. And they are willing to assume responsibility for almost everything that happens in their organization; take frequent, calculated risks; and persevere in the face of great odds and almost constant pressure. Through their actions, drive, purposefulness, and decisiveness, entrepreneurs inspire effort and loyalty in others.

On the downside, entrepreneurs can be arrogant, impulsive, distrustful, and controlling. They often think they can do the job better than anybody else, yet they dislike doing routine tasks. Entrepreneurs prefer initiating and developing projects, not running them — but they want to be in charge of every aspect of the organization. These contrary qualities, left unchecked, eventually isolate the company’s founders, cutting them off from the information and people who have been the organization’s lifeblood.

In the early days of most startups, profit often takes a backseat to growth. Planning tends to be ad hoc.

Budgets and financial controls are almost absent. Training takes place on the job. Roles and responsibilities are defined by the tasks at hand, often shifting and overlapping one another.

In the short term, when organizations are small, they benefit from entrepreneurial qualities. For one thing, informality makes businesses agile and adaptive to market demands. For another, because the founders are clearly in charge — with power and prestige flowing directly from them and from those in close relationship with them — workers know who they’re accountable to. Plus, many employees, themselves caught up in the excitement and often given strong incentives, are willing to do whatever it takes to fulfill the entrepreneurs’ vision.

In the long term, however, problems tend to arise. The tight hierarchical structure of most start-ups inhibits the development and retention of strong managers and people’s capacity for autonomous action — especially when the entrepreneurial leaders can no longer devote time to the organization’s internal operations because they must work to position the company in the market. In addition, burnout and disillusionment run high in many employees, who sincerely try, but frequently fail, to maintain the entrepreneurs’ feverish pace and sense of unwavering commitment.

A Developmental Crisis

At some point in the life of every growing organization, ad hoc planning and determined, centralized leadership become inadequate for dealing with the complex tasks at hand. Signs of this inadequacy become evident when, for example, the company’s capacity to handle customer demands decreases, employees start missing key details such as order fulfillment, and the company burns venture capital faster than it builds products. Despite these clear warning signs, entrepreneurs and their management teams may not be ready to implement the processes that characterize professional management: careful planning; clearly defined roles and responsibilities; monitored budgets, financial performance, and product quality; and the entrusting of major responsibilities to someone other than the leadership team.

For a time chaos seems to reign. People feel confused and anxious about the company’s direction. Managers may be overwhelmed by the volume of work and the magnitude of their duties, but they feel they don’t have the time, budget, or expertise to hire the right support staff. So they fall into “fire-fighting” mode, trying to do everything themselves, partly because they don’t think their subordinates have the expertise or knowledge to do so, and partly because the company’s founders have modeled this kind of controlling behavior. This approach creates a “Limits to Success” scenario, in which the company’s incapacity to handle complexity limits its ability to grow (see “The Limits to Entrepreneurship”).

Even as they flounder, the leaders struggle to create an infrastructure that will help them meet the challenge of growth. But attempts to install processes such as information systems or budgets frequently fail: The entrepreneurs don’t yet have the skills to make them work or the habit of depending on them. Nor do they have the time — the demands of the present seem to conspire against their own long-term interests.

So just as the founders build the infrastructure, they tear it down again, relying on guts, determination, intuition, and even harder work. This method doesn’t succeed either, so they renew their efforts to institute policies and procedures. The entrepreneurs may go back and forth several times, in a maddening effort to escape their dilemma. Morale drops, and employee skepticism about the capacity of the management team to lead them through the crisis grows.

Here, then, is the fulcrum on which the developmental crisis turns: The organization must undergo fundamental change in order to survive, but few current employees are prepared or qualified to make the shift to a new operating mode — including the entrepreneurs. More often than not, only when the organization brings in a more professionally oriented leadership team does it survive — and, all too often, this move stems not from the entrepreneurs but, partly or entirely against their wishes, from a board of directors or venture capitalist.

Professional Leadership Organizations

In contrast with entrepreneurs, professional managers tend to be consistent, cautious, detail-oriented, and conservative in their personal styles. Yet, in their own way, they are far-seeing. Long-term planning, for instance, comprises a central part of their activity, as does the training and retention of able managers to guarantee the organization’s future. These leaders emphasize financial and product-quality controls that allow for course corrections when performance varies from goals. They also work to develop and maintain strong relationships with customers and suppliers. In short, professional managers create formal organizational structures, in which goals, operational processes, and roles and responsibilities are explicitly articulated, implemented, and monitored.

To begin to incorporate professional leadership into their organizations, entrepreneurial leaders must execute the following practices:

1. Delegate responsibility and authority. As organizations grow in size and complexity, the entrepreneurs must hire effective managers and trust them to do their jobs. To ensure a smooth transition, leaders should put this management team in place before launching major new initiatives.

2. Behave consistently. To some degree, entrepreneurs must curb their impulsive tendencies. Employees work better when they know what to expect in their jobs, what tasks they are responsible for, and how their performance will be evaluated. If entrepreneurs cannot limit their impulsiveness, they should hire an intermediary, such as a COO.

3. Plan and prioritize. Entrepreneurs, with input from managers and employees, need to set clear goals and priorities, even if it means letting go of some alluring tasks and opportunities. With this guidance, managers can effectively marshal organizational resources to accomplish the goals.

4. Communicate openly and effectively. Instead of keeping plans and financial data close to their vests, entrepreneurs need to share vital information with their staffs. Managers need this information to help plan and execute projects well.

5. Institute controls. Entrepreneurs must recognize the need to monitor key organizational processes, such as budgets and performance, and trust other people to do much of the oversight.

As crucial as it is for entrepreneurs to implement these professional practices in order for their companies to survive, most initially resist doing so. As we’ll see below, they and their staff are ill-equipped to handle the turbulence that arises as the company moves toward a new mode of operation.

Characteristics of Transition Periods

One of the major reasons that organizational transitions falter is that leaders do not anticipate and account for the uncertainty and difficulty that change brings to the entrepreneurial journey. Change rarely, if ever, follows a straight line, from conception to planning to realization. The process of managing change involves negotiating unexpected twists and turns, stops and starts, frustrating regressions and forward leaps of breathtaking speed and magnitude.

We can attribute this inability to navigate the change process in large part to the failure of our business culture to create an image of the journey that is both positive and realistic. So we continue to cling to the old idea that we can plan change step by step, and we become bewildered by the contradiction between this seductive myth and the tumultuous reality that we actually encounter.

The transition from entrepreneurial to professional leadership involves more than simply the development — or importation — of new skills and new processes. It also requires considerable physical, emotional, and intellectual stamina, as well as a capacity to move ahead with clear thinking and action in the face of inevitable uncertainty. Entrepreneurs who are leading their businesses to a mature level of development must be able to both fly with the waves of progress and endure stagnant times, and to let go of cherished ideas and often valued people, while promoting others who have not yet proven trustworthy.

We know that an entrepreneurial organization has completed the passage from old to new when it achieves a stable synthesis of its entrepreneurial origins and its professional future that fits its own distinctive purposes. This synthesis — merging creativity with controls — represents a new paradigm; that is, a new way for people in the organization to think, act, and feel that balances the best of the past and the promise of the future.

Developing a New Organizational Infrastructure

To integrate entrepreneurial leadership with professional management successfully, entrepreneurs and their organizations must move through four developmental stages.

1. Recognize the need for basic change. To begin the transition, the entrepreneurs, and then everyone else in the company, must perceive the need for change. Entrepreneurs generally understand why the organization must transform itself, but they often fail to act on this insight. Still believing that survival is paramount, they insist that they don’t have the time or resources to build a new infrastructure, hoping that small adjustments combined with determination and hard work — virtues that led to early success — will carry the day.

Entrepreneurs and their closest employees often cling to a culture that feels to some like family and to others like comrades waging war together against a hostile, uncomprehending world. At this stage discord may arise between the core group and formerly trusted lieutenants, who understand the risks to the organization if it doesn’t adopt a more professional infrastructure. It usually takes the financially oriented people, such as accountants and venture capitalists, to hammer home the need for implementing new systems and policies.

Once the entrepreneurs accept the inevitability of organizational transformation, the most effective way to convince other people in the company about the need for change is to create an environment where they can talk honestly about the challenges the organization is facing.

Action Items:

• Assemble a small transition management team that includes at least one employee who is not part of the entrepreneurs’ inner circle, one outsider (preferably a board member or an organizational development consultant), and the entrepreneurial leaders. Launching this process with a facilitated retreat can be helpful.
• Write a diagnosis that indicates current problems and reasons why the organization needs to change. Be sure to gather input from throughout the organization. You may want to introduce tools to support open discussion, especially if the organization’s culture has discouraged candid feedback in the past.
• • Identify areas of the company that have already changed or have been moving toward a professionally managed style and support these developments. You might want to provide workers in these areas with financial incentives, broaden their managerial roles, or publicize their accomplishments within the organization.
• Create informal dialogues at all levels of the organization about the company’s challenges and people’s fears around the change process. For example, at one company a manager instituted “Bagels with Steven,” a weekly meeting at which employees were allowed to vent frustration and confusion about the changes. Once employees felt their concerns were being taken seriously, they began to offer suggestions about the organization’s future path.
• Articulate a vision of what the organization might look like — and accomplish — in its new form.

2. Commit to and plan for change. Once the organization as a whole recognizes the need for transforming the company, everyone must commit to implementing a plan of action — even when present demands and financial risks are daunting.

Again, obstacles abound. In entrepreneurial organizations, the act of planning itself is problematic; it often violates the cultural norm. In response, leaders tend to hedge their bets: “Let’s do it, but I reserve the right to change course when I think it necessary.” Or they may languish in indecision, perhaps initiating change several times in small ways, then pulling back. Or the entrepreneurs may do an inadequate job of planning, saying “An hour or two should do the job. I know where we need to go, anyway.”

Entrepreneurs may also delegate the planning process to others and then override or limit their authority to implement the plan. This interference generally upsets the managers, who may engage in a struggle with the entrepreneurs for power. This process could have a positive outcome, by bringing the entrepreneurs’ ambivalence about the change process out in the open. Or it could cause the entrepreneurs to halt change efforts or alienate staff members.

Action Items:

• In consultation with the rest of the staff, identify any obstacles to change, including constraints on employees’ time, lack of material resources, and internal resistance to the initiative.
• Develop a plan to overcome these obstacles, and move the organization in the desired direction.
• Continue to support the people, teams, and processes in the organization that are already moving toward professional management, rather than focusing on correcting problems.
• Continue to hold dialogues, particularly with key personnel, to head off polarized situations. Bring ambivalence about change into the open by having people acknowledge their own doubts.

3. Implement the plan while tolerating instability. Once the organization is committed to the change process, everyone must execute the plan of action confidently, leaving little doubt about which direction the company is headed. For example, one key indicator of commitment is the entrepreneurs’ willingness to go outside of their circle of loyalists to hire and empower professional managers. These new leaders must possess the requisite skills to meet the organization’s needs — and may require higher levels of compensation than the existing pay scale supports.

Developing a new organizational infrastructure requires considerable time, energy, and skill. As change proceeds, anxiety in the organization will reach new heights, because key measures might get worse before they get better — customer complaints may jump, business may flag, and financial concerns may grow. These challenges will test everybody’s commitment to the plan. The leaders will probably spend many sleepless nights wondering what happened to their organization. Intense power struggles may emerge between the old and new guard of managers, or among members of each.

Initially, some employees may leave the company. Long-time workers may wonder if they will retain their jobs; others will develop a bunker mentality, determined to wait out the change “fad.” Many may feel betrayed by the entrepreneurs, who seem to have gone over to the “other side.” The professional managers, on the other hand, may feel the entrepreneurs are moving too slowly and sporadically.

In such trying times, the leaders and their close managers may be tempted to revert to old ways, once again seeking to micromanage every detail of the operation. Entrepreneurs may in fact respond to the instability by becoming dictatorial, uncertain, and indecisive, or by becoming dependent on a newly hired professional. Depending on their behavior at this time, the founders’ credibility might be seriously jeopardized.

The challenge for all is to tolerate the instability and the identity crisis — both the actual work disruptions and the mental and emotional responses to these disruptions. To do so, all employees must focus on maintaining a clear vision of what the changes can eventually do to help the company achieve it goals and appreciate the disruptions as natural “growing pains.”

Action Items:

• Develop a timeline that indicates when the company hopes to complete each aspect of the strategic plan. This timeline will help orient and reassure all the players that there is a solid plan for the future.
• Solicit the help of a coach or mentor — perhaps a board member who has successfully gone through the entrepreneurial process or a consultant—for moving through the transition.
• Provide guidance and training for loyal, long-time employees. Interview those outside the inner circle to see what they think of the changes. Reiterate and revise the change plan, making sure that each person can actually visualize their potential career path in the new structure.
• Continue to converse with employees, recognizing how change brings loss and regrets, and help make these feelings acceptable. Identify and discuss areas of instability, doubt, and tension until they are resolved or modulated.

4. Integrate the old and the new.

The final developmental challenge is to retain the entrepreneurial spirit in the new and improved organization. Often, in the name of efficiency and order, organizations kill off the sense of adventure that built them. But that energy is what allows companies to remain innovative and stay on the cutting edge of their industries. After the transition, the business must still compete in fast and constantly changing markets and technologies; if it grows sluggish, officious, and conservative — in short, bureaucratic — it will fail to remain competitive.

To that end, the new management systems need to act in the service of the entrepreneurial spirit. The organization needs to continually find ways to integrate the best of the old and the new, and to stabilize itself around this integrated way of doing business. For the leaders, the challenge is giving the management team room to exercise their skills and stabilize the organization while, at the same time, providing them with vision and support.

The organization needs to continually find ways to integrate the best of the old and the new.

The alternative to integration is both conflict — between those who represent the entrepreneurial style and those who advocate planning and controls — and fragmentation — in which various departments and people operate in contradictory, disjointed ways. Each group believes it understands more fully than others the strategy that the company needs to follow. Factions can fall into a kind of cold war, an unstable form of stability that creates constant tension and undermines performance.

Action Items:

• Identify and measure the value of what is “old” (flexibility, creativity) and what is “new” (infrastructure, controls). Outline how the company will synthesize the best of both to create something more effective than either style.
• Continue to define and redefine how the organizational plan will allow the company to move forward to meet the demands of growth, competition, quality, and so forth. In order to adapt all employees and tasks into the new organization, the plan needs to be flexible and responsive to new ideas and unintended consequences.
• Introduce methods to sustain openness, flexibility, and creativity, such as continuous learning and scenario planning. Create or maintain entrepreneurial aspects of the organization through equity and profit-sharing practices and spinning off new products into new companies or divisions.
• Create new roles for entrepreneurs who want to remain engaged with their companies in a different capacity, so they can still provide overarching vision and leadership. In order to satisfy their need for action, create opportunities for entrepreneurs to take on special projects, such as leading a major product development process.

Realizing the Dream

In summary, if entrepreneurs want to create a lasting enterprise that impacts their industries well into the future, they need to lead their organizations in making the transition from a startup to a professional culture. By integrating professional leadership (effective planning, budgets, and quality control) with the entrepreneurial spirit (openness, flexibility, and the ability to think “outside of the box”), organizations can continuously renew themselves and achieve long-term, sustained success.

Barry Dym, Ph. D., is president of WorkWise Research & Consulting. He has 30 years of experience as an entrepreneur, organizational development consultant, author, teacher and psychotherapist.

The post Integrating Entrepreneurship with Professional Leadership appeared first on The Systems Thinker.

Traditional Forms of Consulting

Over time, a number of different kinds of consulting assistance have developed, including expert advise on specific topics or methodologies, research (both internal and external), training, and coaching and facilitation. In most cases, these methods have a specific content and outcome as their objective, for example, a strategic or sales plan, identification of a target market, rating of customer or employee satisfaction, or a set of new skills to meet market demands. In these instances, the client assumes that the consultant has a better or correct answer, and the value of the engagement depends on the consultant’s successful delivery of this solution to the client.

In contrast, facilitation — and, in some cases, coaching — is quite different. A superb facilitator doesn’t lead a group to the decision he or she recommends; instead he or she helps a group function better together. The value of this kind of work comes from the facilitator’s ability to help generate effective group processes — not in his or her content expertise. In fact, the facilitator’s effectiveness diminishes dramatically if he or she tries to lead the group to a specific answer.

We are now seeing the need for enabling infrastructures —  infrastructures that enable groups with changing members to meet changing goals in the context of changing environments.

But this kind of facilitation usually doesn’t affect groups outside the one that is involved in the intervention. And in rapidly shifting situations, the processes that both the expert and the facilitator bring — while completely appropriate in specific instances where they are used knowledgeably — may actually undermine the group’s productivity by creating dependency on a third party. Thus, in addition to the traditional consulting activities described above, we are now seeing the need for services that provide enabling infrastructures — infrastructures that enable groups with changing members to meet changing goals in the context of changing environments.

Enabling Infrastructures

What are enabling infrastructures?

They are the support mechanisms that make it possible for — or enable — a group to be highly effective, even if the members of the group change. Enabling infrastructures are a combination of processes and tools organized in specific ways so that they support people individually and collectively in sustaining superior performance. Just as hollow bones, wings, and receptors that can sense updrafts (among other characteristics) enable a bird to fly, a combination of invisible processes, visible tools, and intentional organization enable a group to function at consistently high levels.

For example, within a company, enabling infrastructures might include mechanisms for mentoring, coaching, and peer support; a corporate culture that sustains transparency, open communication, and development of interpersonal skills; disciplined gathering, sharing, and responding to feedback from throughout the organization; and attention not only to financial health but also to emotional energy.

These processes, tools, and organizational types sustain groups as they gather information, remember, focus, create sense and meaning, project into the future, take action, get feedback, and learn — all functions that enable people to choose goals effectively and sustain high levels of performance in pursuit of their goals, both as individuals and in collaboration. Most organizations already have support for some or all of these activities, but take them for granted. Building enabling infrastructures requires conscious intent; active integration of processes and tools; careful organizational design; and a set of criteria against which to evaluate success and make changes where necessary.

In addition to the specific processes and practices that support the change process, ongoing coaching and support are vital parts of an enabling infrastructure. But most organizations don’t have the resources to provide rich support services to every person. This is a problem of scale. A longstanding human response to problems of scale is to build automated tools. In many organizations, an intranet connects everyone and provides a beginning platform for services that might support every person. A growing number of developers are creating social software — programs to facilitate interaction and collaboration.

Technology, with its ability to offer time- and effort-saving support to many people, can be a powerful part of an enabling infrastructure, but it isn’t enough; more than 50 percent of all installed software languishes from lack of use. Thus, the enhanced communication and information capabilities offered by social software must be complemented — and often, in fact, preceded — by other forms of training, coaching, and facilitation.

Some Examples in Practice

For instance, an R&D group in a global technology company faced frequent changes in the team’s membership, management structure, competitive landscape, and nature of the products they were developing. To create an infrastructure that would enable high levels of performance despite constant shifts, this group added to their staff meetings the disciplined process of reviewing summaries of feedback gathered from each person through the company’s intranet concerning a wide-ranging and constantly changing set of balanced scorecard areas — supported by ongoing coaching and facilitation. While in the beginning, both meeting facilitation and individual coaching was provided by an outside facilitator, the long-term goal was for other staff members to develop expertise in this arena. As carefully selected new members arrived, the group paid close attention to getting to know them and helping them understand “how we do things around here” — going slow by investing time and energy to insure that, when needed to, they could go fast.

The TEC organization is a pioneering example of the power of an enabling infrastructure to connect individuals and groups beyond traditional organizational boundaries. TEC (www.techonline.com) is an organization that brings together small groups (usually around 15 people) of entrepreneurs once a month to give each participant the benefit of advice from peers using a carefully designed facilitated process. Monthly meetings are supplemented with coaching for each group member and a host of online services.

In their meetings, TEC members are not focused on a single opportunity or problem but on the changing opportunities and problems that arise over time in each participant’s business. Group facilitators are carefully selected, receive ongoing training, and get feedback on their effectiveness. Participants are screened for quality and group fit.

Although enabling infrastructures often differ from organization to organization in the ways in which they are implemented, they share many goals and characteristics. For example, they are designed to facilitate group processes rather than support teams in reaching a specific goal. And they include careful selection of participants as well as an emphasis on the interaction among people and their tools. A successful enabling infrastructure builds in processes (prototyping, training, coaching, buddy-systems, feedback mechanisms, etc.) to support participant needs and sustain high levels of collaboration. Further, as processes tend to degrade over time, continuous feedback specifically on the quality of the group’s interactions helps to maintain quality and secure resources when required.

A New Focus

As shown above, when thinking about enabling infrastructures, we must include a combination of disciplined processes, individual coaching and training, and automated support with an intentional organizational design and focus. In the design process, I believe it will be helpful to use a series of criteria against which to judge our efforts; that is, the initiative must be continuous (not event-based), be based on multiple processes (not “just” learning or feedback), support every person (not only leaders or poor performers), and generate autonomy (not dependency on consultants).

In writing this article, I want to draw attention to enabling infrastructures as a new area in which consultants can have an impact by describing how it is different from traditional consulting services. By creating this distinction and point of focus, I invite systems thinkers to contribute to creating the systems, practices, experience, and body of literature that will help support the development of these needed services in a rich and humane way.

Mary Ann Allison (maa@allisongroup.com) is coauthor of The Complexity Advantage (McGrawHill Professional, 1999), which the Wall Street Journal described as having “the power to change a business in startling ways.” She is the chairman and chief cybernetics officer of the Allison Group, LLC, a New York–based international consulting firm.

The post Helping Groups to Function on Their Own: A New Form of Consulting appeared first on The Systems Thinker.

Senior staff talked about the need for change and actually learned new skills such as how to make more reliable commitments, but they had an uncomfortable feeling that they were not addressing the really critical issues.

This situation is all too common in organizational life:

• We have noble aspirations for what we want to achieve.
• The costs of conducting business as usual are high and growing.
• We make changes that should work but don’t seem to get at the core issues.
• We can’t get traction on making the most important changes.

It raises two questions:

1. Why do1people persist in making seemingly superficial changes?
2. What would motivate them to make the changes that would best enable them to accomplish what they want?

We’ll answer both in turn.

A Perfectly Designed System

One of the premises of systems thinking is that systems are perfectly designed to achieve the results they are producing. At first glance, when we look at how dysfunctional our existing systems can be, this premise seems absurd. For example, why would people create a system that produces low-quality products delivered late at the expense of their own personal health and well-being?

However, on closer observation the premise leads to some important insights:

1. People experience payoffs from the system as it is currently designed.

For example, the senior managers of the medical informatics group came to recognize that the existing system acknowledged them for their ambitious vision and commitment, motivated them to work hard in service of this vision, and averted the need to challenge their clients’ own unrealistic expectations.

2. One of the most common payoffs is that the current system allows people to avoid “paying the price” of changing their behavior.

For example, for the senior managers of the medical informatics group, many of whom are doctors themselves, making more reliable commitments would require them to plan their work more carefully. However, the physicians in charge did not have strong planning skills. Developing these skills would have required them to acknowledge their weakness in this area and take time away from delivering on their current commitments.

In addition to evading paying the price of change, there are several other typical benefits to conducting business as usual. These include:

3. The solutions that people have employed so far work well enough in the short term.

For example, when the senior managers in the medical informatics group make promises to their clients, the very act of making a commitment temporarily removes external pressure from them to perform. Because they are people of high integrity, they believe that their commitment means that they will deliver the result. Moreover, they experience the act of making a promise as motivation to work as hard as they can to succeed.

4. These short-term benefits reinforce the belief that people are doing the best they can. They do not have to consider the longer-term consequences of their actions that often undermine their effectiveness.

For example, the medical informatics managers take comfort in the belief that their noble aspiration, innate intelligence, and hard work are sufficient to achieve their vision. Belief in the power of one’s passion and persistence is perfectly understandable, even though these qualities might be necessary but not sufficient to achieve great results. The managers fail to recognize that making commitments without realistically thinking through the time, resources, and focus required to be successful is a quick fix that leads over time to delivery shortfalls, quality problems, and reduced credibility with clients.

5. The short-term benefits people experience tend to meet normal human needs for competence and acknowledgement of their good intentions and effort. Experiencing these immediate payoffs also enables people to blind themselves to their responsibility for subsequent problems with execution. Rather than take ownership for these problems, they convince themselves that they are doing the best they can and others are to blame when things do not work out as expected over time.

For example, the medical informatics group prides itself on working extremely hard to achieve a significant vision, and staff members can easily point to external obstacles, such as the corporate culture or clients’ unrealistic expectations, as preventing them from being as successful as they could be.

“Cost Benefit Analysis of Change vs. No Change” can help people expand their awareness of the benefits and costs involved in changing. It helps people explicate not only the more obvious benefits of changing and costs of not changing, but also the frequently hidden benefits of not changing and costs of changing.

COST BENEFIT ANALYSIS OF CHANGE VS. NO CHANGE

In order for change to occur, the product of cells 1 and 2 must exceed the product of cells 3 and 4.

Five Steps to Achieving More of What You Want

There are five steps you can take to increase your ability to achieve more of what you really want:

1. Reinforce the case for the desired outcome, i.e., make your vision (the benefits of changing) and costs of not changing as visceral as possible.

2. Acknowledge that the status quo, however overtly dysfunctional, also produces benefits you value.

3. Clarify how your current actions actually undermine the vision you want to achieve. Systems maps can assist this process by tracing the long-term unintended negative consequences of people’s well-intentioned behavior. Illuminating these consequences:

• Reduces your attachment to your current behavior and the accompanying benefits of maintaining the status quo;
• Increases the perceived costs of not changing because you can now see how your actions lead to worse rather than better performance.

4. Look for ways to achieve the benefits of both the status quo and the desired state. It makes sense to look for both/and solutions that maximize benefits of both the status quo and the desired state, and to implement these solutions where they exist. However, given a system’s tendencies toward better before-worse behavior (i.e., “there’s no free lunch”) and worse-before-better behavior (i.e., “pain before gain” or the need to make upfront investments for long-term success), finding these both/and solutions is not so easy.

5. Choose consciously. Where tradeoffs between short and long-term payoffs are required, you need to make a deliberate choice in favor of those actions that are likely to produce the longer-term result you say you really want. Alternatively, you can accept that the benefits of the status quo are more important than your espoused vision—and consciously choose to maintain the status quo.

David Peter Stroh (dstroh@bridgewaypartners.com) is a founder and principal of Bridgeway Partners and an expert in applying systems thinking to organizational and social change.

The post Exposing the Hidden Benefits of Business As Usual: Why the Status Quo is So Difficult to Change appeared first on The Systems Thinker.

Over the years, universities have tried to address these concerns. To provide some real-world context, many business schools use case studies and require class projects. To help students see the interconnectedness of the business functions, some programs have integrated two or more course topics (such as finance and marketing) into one class. Unfortunately, there is little evidence that these or other actions have significantly improved how students perform once they graduate.

Of course, graduating from a business program is not the end of a manager’s education, but the beginning. New hires are trained by their employers and given opportunities to learn on the job. In addition, virtually all large organizations have some form of management development program. In fact, it can be argued that business schools provide a broad foundation in general management skills and organizations provide the finishing touches as they groom middle- and upper-level executives to suit their company’s specific needs and corporate culture.

Teaching students about systems is not the same as teaching students to think systemically!

Unfortunately, based on empirical evidence, company-run management development programs do not perform much better than business schools in educating managers in the nuances of organizational life. Every day, financial reports come out showing that companies are failing to perform as expected. Poor performance has resulted in a high turnover rate among upper-level executives. In 2000 alone, 40 CEOs of Fortune’s top 200 companies were fired or asked to resign. A recent study of firms listed on the Fortune 500 showed that about 30 companies drop off the list every year. The average life of firms on the S&P 500 is only a paltry 25 years.

There are many explanations for the phenomena described above. The rate of change in business has accelerated at an unprecedented rate. The product life cycle in most industries is rapidly decreasing. A company’s innovative ideas are quickly copied by its competitors and just as rapidly become the industry standard. Given these circumstances, it is not surprising that businesses have short lives, and more and more upper-level managers are making bad, even illegal, business decisions.

This brings us back to the original question—Are we failing to adequately prepare our business leaders? If the answer to this question is yes, as the evidence seems to indicate, then we must ask two more questions: How are we failing? And what exactly do we need to change?

This study hypothesizes that, at least in part, the answer to both questions is related to the development of systemic thinking skills. During the last decade of the 20th century, several well-respected management experts, including Peter Senge, Russell Ackoff, W. Edwards Deming, and Jay Forrester, published books and articles emphasizing that businesses are complex social systems, and management practices must change to be effective in this environment.

At first glance, it appears that universities have embraced the experts’ recommendations. In fact, the word “systems” has become omnipresent in business programs. Students are taught about production systems, accounting systems, information systems, financial systems, and so on. In addition, the quality movement introduced the need to manage processes, which by their nature cut across functions. Consequently, managers must learn to manage crossfunctionally. As a result, many business curricula teach these concepts.

But are these actions adequate to prepare managers to be successful in what some are calling the Systems Age? We would argue that teaching students about systems is not the same as teaching students to think systemically!

We don’t mean to indict current teaching practices. There is no question students must learn about systems. Studies have shown that a student’s acquisition of operational skills is heavily dependent on the conceptual knowledge they are provided at earlier stages of their education. For that reason, students must first be made aware of how businesses fit the systems paradigm and what types of subsystems are embedded within them. They also need to learn about the various elements that make up the different types of subsystems in a business, along with how they work and interact. Similarly, working on cases and projects helps students better understand the idea of systems. Nevertheless, none of these activities is the same as helping managers to think systemically.

Defining Systemic Thinking

What exactly does it mean to think systemically? Unfortunately, there is no simple answer to this question. Ackoff acknowledged this difficulty when he provided the following definition:, “Systemic thinking is holistic versus reductionistic thinking, synthetic versus analytic.” While this definition is accurate, it is not precise. It provides a correct definition of the concept, but it doesn’t help us understand what cognitive processes are involved in thinking systemically.

Undoubtedly, when experts such as Ackoff define systemic thinking, they are implicitly including these processes. However, implied skills are of little use from a teaching perspective. If educational programs are going to help students learn to think systemically, they must make these cognitive processes explicit and teach techniques for developing the skills associated with them. Therefore, we developed a specific operational definition of systemic thinking for this paper. This definition is based on the integration of ideas from several researchers in systems theory. The focus of the definition is on the cognitive processes necessary to gain holistic insight into a situation and the implications of making changes to the status quo.

Synthetic Thinking. In part, the difficulty in defining systemic thinking lies in the fact that it encompasses multiple skill sets; therefore, we have developed the definition in parts. The first segment focuses on the concept of holistic/synthetic thinking included in the definition provided above by Ackoff. In a 1981 publication, Ackoff explained that for the past 400 years, we have been trained using the analytical paradigm. Consequently, we view the terms “analysis” and “thinking” as synonyms. In reality, analysis is only one method of perceiving the world around us.

Ackoff goes on to differentiate analytical thinking and synthetic (holistic) thinking. Analytic thinking attempts to understand a system by breaking it into its smaller parts and studying these parts in isolation. Once the analyst understands the parts, he or she tries to explain the behavior of the whole based on the behavior of the parts. In contrast, synthetic thinking starts by trying to understand the larger context that the system operates within. Once the individual understands the role of a system within its larger context, he or she tries to explain the behavior of the system based on that role.

Looking at the two types of thinking from a different perspective, analytical thinking helps people understand what the parts do and how they work, while synthetic thinking explains why the parts do what they do. Ackoff points out that when a system is disassembled, it loses its essential properties and so do its parts. Furthermore, a crucial factor for understanding system behavior is observing how the parts interact. Consequently, he maintains that it is impossible to truly understand a system through analysis, thus making the case for developing synthetic thinking skills.

Synthetic thinking is particularly important in today’s businesses, which have evolved into multi-minded, multi-purpose social systems. We now recognize organizations as being part of a larger purposeful system (society) with many subsystems (functional areas and/or teams) and parts (employees), all seeking to fulfill their own individual purposes. Ackoff and Jamshid Gharajedaghi (2003, http://www.acasa.upenn.edu/System _MismatchesA.pdf) assert that many of the problems we currently see in business and other social systems are, at least in part, due to our managing social systems as if they were mechanical or biological entities. If leaders don’t properly recognize and manage the various purposes held by the business, its subsystems, and its parts, organizations will experience high employee turnover, functional infighting, and a whole host of other problems.

To manage a multi-minded, multi-purpose social system, managers must understand why the various elements of the system behave as they do so they can acknowledge, prioritize, and subordinate these objectives as necessary over time. In short, a holistic approach to decision-making is necessary. Consequently, the first part of the definition of systemic thinking used in this paper is synthetic or holistic thinking.

Characteristics of Complex Systems. While holistic thinking is an essential part of systemic thinking, it does not sufficiently describe all of the cognitive processes necessary for thinking systemically. Forrester noted that social systems are a particularly complex kind of system. In addition, he identified several characteristics of complex systems that make it difficult for people to understand and work with them. These factors include:

• Cause and effect are often separated in terms of both time and space.
• Problem resolutions that improve a situation in the short term often create bigger problems in the longer term and vice versa.
• The subsystems and parts of a system interact using multiple, nonlinear feedback loops. This complex flow of interactions often results in counterintuitive behavior.
• Due to the time delays between cause and effect, people become accustomed to situations. They then reduce their goals and objectives to accommodate what they originally viewed as an unacceptable situation.

Notice that two of the factors identified by Forrester focus primarily on time and two focus primarily on complex interactions. Consequently an operational definition of systemic thinking should include capabilities related to understanding behavior over time and interactions between the parts of the system.

Most people learn the concept of cause and effect at an early age through simple situations. If I touch a hot stove, I get burned. If I don’t watch where I am walking, I’ll stumble over something, and so on. John Sterman points out that these simple situations teach us to have an eventoriented view of the world. Under this view, people see the world as a series of simple cause-and-effect relationships, where an effect has a single cause that occurred shortly prior to the effect. This perception prompts us to treat problems as isolated incidents and view solving them as a discrete, linear process: We recognize a problem, identify alternatives, select and implement solutions, and resolve the problem. While this belief holds true when working with simple systems, it creates serious problems when dealing with complex social systems.

Peter Senge succinctly articulated the common misperception of eventoriented thinking in his classic book, The Fifth Discipline:, “Today’s problems come from yesterday’s solutions.” As stated previously, the parts in a social system all have objectives and are constantly interacting. Because of the interdependency of the parts, we cannot make changes in isolation. There are always feedback loops that create unintended consequences, and they commonly include time delays.

Dynamic and Closed-Loop Thinking. Barry Richmond used the term “dynamic thinking” to describe a decision-maker’s ability to see a phenomenon as the result of behavior over time rather than as a reaction to an isolated event. Dynamic thinking also includes viewing the structure of a system as contributing to the problem rather than merely attributing it to outside forces, as we often believe. Richmond referred to the capability to understand how the interactions of the parts of a system and its environment feed back to shape the ultimate result of any intervention as “closed-loop thinking.” The definition of systemic thinking developed for this study is the combination of these three cognitive processes:

• Synthetic Thinking–studying the role and purpose of a system and its parts to understand why they behave as they do
• Dynamic Thinking–examining how the system and its parts behave over time
• Closed-Loop Thinking–investigating how the parts of a system react to and interact with each other and external factors

Because people generally have an event-oriented view of the world, they do not readily apply these skills. In fact, Forrester asserted that the human mind is incapable of truly understanding the behavior of complex social systems without the assistance of tools and technology. In 2000, Linda Booth Sweeney and John Sterman tested this claim. Administering an exercise to graduate students at MIT, they found that people have difficulty conceptualizing the behavior of even simple social systems. This difficulty appears to transcend age, national origin, educational background, and other demographic variables. Because most people don’t have the ability to think systemically, in order for us to understand and work effectively with social systems, we must be trained in systemic thinking tools and concepts.

“Today’s problems come from yesterday’s solutions.”
—Peter Senge

Do our education systems provide this training? The next section provides initial results from a survey of faculty working in business colleges at several major universities in the U. S. The survey focused on the teaching of systemic thinking in academic business programs.

Teaching Systemic Thinking

Despite the evidence that systemic thinking is a necessary skill for managers and that they need training to develop that skill, we found that management educators are still uncertain about the role higher education is playing, or should play, in facilitating this task. A quick exploration of various business curricula revealed that relatively few programs offer a course that explicitly refers to systemic thinking.

The purpose of our study is to provide some initial insights into this issue and stimulate further research and discussion on the topic. Here we present some preliminary results from the survey related to the following questions:

• How do faculty define the concept of systemic thinking?
• What level of importance do faculty assign to systemic thinking skills relative to other curriculum objectives?
• To what extent is systemic thinking taught in graduate business schools?
• Do faculty differentiate between teaching about systems and teaching systemic thinking?

The data used to answer these questions was obtained from a webbased survey that was distributed electronically to approximately 2,900 randomly chosen faculty members teaching at the top 63 business schools in the U. S. Over a period of about four weeks, 297 responses were received. The following sections provide the basic statistics from the survey results related to the four questions above.

How Do Faculty Define the Concept of Systemic Thinking? Respondents were provided five different options for defining systemic thinking and asked to select the one they felt best described the concept. In addition, they were given space to supply their own unique definition or supplement/combine any of the available definitions. Since the purpose of the question was to ascertain how respondents defined systemic thinking, it was important not to provide an obvious best answer. Consequently, none of the definitions incorporated all three of the elements discussed above. The specific question, the alternatives available, and the resulting selections made by respondents are provided below.

Which of the following best describes how you would define systemic thinking?

• 16% – Eliciting inputs from multiple disciplines and perspectives to develop a more complete understanding of a situation
• 13% – Identifying the optimal combination and arrangement of resources needed to achieve a desired outcome
• 19% – Studying how the different parts of an organization interact to achieve a desired outcome
• 7% – Mapping work flows to determine how information and material cut across an organization to create value
• 35% – Understanding how different parts of an organization interact, react to changes over time, and send feedback to affect performance
• 10% – Other
• 6% – Never heard of systemic thinking/have no idea how to define it
• 3% – All of the above
• 1% – All of the above plus an understanding of how it interacts with the environment

What Level of Importance Do Faculty Assign to Systemic Thinking Skills?

There were three questions in the survey related to this issue. The first two questions asked the respondents to rate how strongly they agreed with the following statements:

Teaching students to think systemically is an essential part of a graduate business program.

• 33.7% – Strongly Agree
• 40.7% – Agree
• 20.2% – Unsure
• 3.0% – Disagree
• 1.6% – Strongly Disagree
• 0.7% – No response

Systemic Thinking should be part of every class in a graduate business program.

• 12.8% – Strongly Agree
• 39.0% – Agree
• 24.6% – Unsure
• 12.8% – Disagree
• 3.0% – Strongly Disagree
• 7.7% – No response

The third question asked the respondents to rate how important systemic thinking was relative to other thinking skills. The thinking skills were: Critical Thinking, Analytical Thinking, Systemic Thinking, and Creative Thinking. In addition to the four choices, a space was provided for them to write in a different skill that they felt should be included. They were then asked to divide 100 points across these skills, based on how they perceived their relative importance. The only restriction on the allocation of the points was that the sum across all the skills had to equal 100.

Please allocate 100 points across the following thinking skills, according to how you perceive their relative importance.

• Critical Thinking 27.14 (Average score across all respondents)
• Analytical Thinking 26.35
• Systemic Thinking 22.01
• Creative Thinking 21.14
• Other (Communication skills, Core business knowledge etc.) 3.22

It is interesting to note that a majority of faculty believes that systemic thinking is an essential part of a business education, but it is still ranked significantly below analytical thinking in relative importance.

To What Extent is Systemic Thinking Taught in Graduate Schools of Business? The survey included several questions related to this issue, but most of them dealt with how the different disciplines (Accounting, Finance, Marketing, etc.) addressed the topic.

The first question simply asked the respondents if systemic thinking was taught in their curriculum; 42% answered “yes,” 18% answered “no,” and 40% were “not sure.” The followup questions were then directed to the 42% who answered “yes” to the initial question. The follow-up question and responses are shown below.

Does the program at your school do an adequate job teaching systemic thinking?

• 9.7% – Strongly Agree
• 36.3% – Agree
• 39.5% – Unsure
• 12.9% – Disagree
• 1.6% – Strongly Disagree
• 0 – No response

Do Faculty Differentiate Between Teaching About Systems and Teaching Systemic Thinking? If respondents said that they taught systemic thinking, they were referred to a list of systems-related topics that were unique to their chosen field and asked to identify which of the items they used in their teaching. For example, in operations management, the list included Lean Production Systems and Supply Chain Management. In addition, some items were listed that could be used to provide a more holistic view of an event but were not related to behavior over time or feedback loops. In operations, these included Value Stream Mapping, Fishbone Diagrams, and the DMAIC Cycle.

Finally, all the lists had tools specifically designed for systemic thinking. These included causal loop diagrams, stock and flow maps, and system archetypes. The intent of the question was to differentiate those teaching about systems from those teaching tools that could be used to think systemically. We haven’t yet completed a detailed analysis on this data. However, preliminary results appear to support our hypothesis that the majority of faculty are teaching about systems and not teaching students to think systemically. This belief is based on the fact that few of the faculty that identified themselves as teaching systemic thinking used traditional systemic thinking tools. In fact, most said they taught systemic thinking by covering various systems concepts and teaching about different types of systems.

Conclusion

There are two huge ironies related to this study. First, we used an analytical process to define systemic thinking! Second, we used survey methodology to study the teaching of systemic thinking. Surveys are a research methodology in which findings are based solely on correlation, while systemic thinking is about understanding causation. Perhaps this is a necessary transition from one research paradigm to another (that is, you use elements of the old paradigm to define the new). At least that is the excuse we are giving!

Despite these ironies, we hope that this study will stimulate serious discussion on this topic. Several experts have predicted a growing need to think systemically, and empirical evidence supports their predictions. It is our view that we are at a point where systemic thinking should no longer be viewed as merely an interesting concept, but that it has become a necessary managerial skill. As such, those responsible for grooming the next generation of managers must incorporate the tools and techniques designed to develop these skills into their training programs and curricula. If we don’t, can we really expect better performance from future managers?

J. Brian Atwater (batwater@b202.usu.edu) is associate professor in the College of Business at Utah State University. Vijay Kannan (vkannan@b202.usu.edu) is professor in the College of Business at Utah State University. Alan A. Stephens (alans@b202.usu.edu) is department head and associate professor in the College of Business at Utah State University.

This article is adapted from a “Thought Piece” written for the In2: InThinking Network, February 2, 2005. It was developed using material from an ongoing research project being conducted at Utah State University. The authors welcome any insights readers may want to share on this issue.

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