The Paradox of KSFs

Most of us approach a large, complex issue by breaking it down into manageable parts. By focusing on a few aspects at a time, we sometimes succeed in improving the parts, but we often fail to address the problem as a whole. In the long run, this approach robs us of resources that we could have used to look at an issue from a systemic perspective.

We can find ample evidence of the limits to a factors approach in medical literature. In Sweden, for example, researchers tried to reduce cardiovascular risk factors in 3,490 business executives. After five years of intervention and 11 years of follow-up, the executives had reduced their risk factors by an average of 46 percent, yet they had a higher death rate than members of a control group. A similar study in the U.S. produced comparable results.

We might dismiss these studies as statistical flukes if the consequences weren’t so serious. The sad reality is that these results probably reflect many of our efforts, not just in healthcare but in virtually every facet of our organizations. Although we focus time and again on improving single factors, we fail to acknowledge that the health of most individuals—and most systems—is greatly determined by the relationships among critical loops. The line “the operation was successful, but the patient died” sums up the pitfalls of the factors approach to complex systems.

Beyond Factors to Loops

To create long-lasting success, we need to extend our factors approach and identify the interrelationships among the factors that drive the dynamics of the system—in short, to identify the Key Success Loops (KSLs).When we take a systemic approach, we realize that the lowest meaningful units of analysis are loops, not individual factors—and we no longer initiate actions on any factors until we distinguish the critical loop or loops involved.

Now, imagine being given the same charge as before from corporate (see “Key Success Loop Approach”). We begin in the same way, by brainstorming and then prioritizing KSFs (Step 1). But instead of leaping into action by assigning the factors to teams, we take each of the high-priority factors and identify at least one reinforcing loop that will make the factor self-sustaining without continued external investments (Steps 2 and 3). We integrate all of the loops into a single diagram, in which the individual loops are connected by the factors they have in common (for example, B and D in Step 4).We then look at the diagram as a whole and decide where to make the investments that would help support the success of the entire system (Step 5). Only after we have developed a sufficient understanding of the system will we assign teams to implement specific success loops. Each team then collaborate closely with those teams whose loops are directly connected to theirs (Step 6).

Launching a New Venture

Let’s walk through a simplified example of a Key Success Loop approach. Suppose we want to launch a new business venture in our organization (see “New Business Venture Success Loops”).We begin by brainstorming a list of KSFs that we believe are important to our success, such as number of new products, skilled people, profit, and ability to meet customer needs (Step 1).

We then focus on the first factor and try to identify a key loop that would make it self-reinforcing. We can ask either “What would an increase in the number of new products cause?” or “What would be an important driver of growth in the number of new products? ”The first question leads us downstream in the arrow flow to “Revenues,” while the second takes us in the upstream direction to “Acquisitions.” Either way, we try to create a reinforcing loop around the original factor (Step 2).We then repeat the process with the remaining factors (Step 3).

After we have created a loop for each KSF, we look for common variables in the individual loops. In this example, loops R1 and R2 can be linked through “Revenues” and “# of New Products” (Step 4). Once we have a diagram that maps the key linkages, we can begin to identify the best places to make high-leverage investments (Step 5). Now we are ready to assign teams to focus on each of the loops through a collaborative effort in which each team understands its loop in the context of the larger system (Step 6).

Benefits of KSLs

Moving beyond Key Success Factors to Key Success Loops offers a number of advantages. First, because the loop approach links you to a broader set of variables, you reduce the risk of focusing on the wrong factors. Even if you initially pick the wrong factors, the process of mapping the loops increases the likelihood that you will include the most important ones. Also, identifying the loops decreases competition for limited resources. When everyone can see the interconnections, teams are less likely to “pump up” their own factors without regard for the effect on others. Loops can also provide a clearer picture of where investing in one point could positively affect multiple factors. Finally, rather than being stuck in the “Ready, Fire, Aim” syndrome that many organizations experience, emphasizing KSLs can actually give you a viable “Ready, Aim, Fire” approach.

Daniel H. Kim is a co-founder of Pegasus Communications, Inc., and publisher of The Systems Thinker.

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

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

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

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

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

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

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

Growing Challenges

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

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

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

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

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

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

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

SUCCESS ENGINE PART I

The Engine of Success

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

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

SUCCESS ENGINE PART II

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

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

THE DARKER SIDE OF GROWTH PART I

The Dark Side of Growth

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

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

THE DARKER SIDE OF GROWTH PART II

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

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

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

The Emotional Side of the Structure

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

THE DARKER SIDE OF GROWTH PART III

The Outcomes

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

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

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

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

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

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

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

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

The Issue of Inclusiveness

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

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

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

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

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

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Clarity of Intention

Intention is critical to achieving success. You may have an idea of the results you want and the direction you’re heading when you take on a project, but most often you lack clarity about your goal, let alone knowledge of how to measure success if you achieve it.

When the intention is not clear, attention drifts and leads to confusion. In such circumstances, you often end up compromising your own efforts and receive less than what you desire or even deserve. Without a crystal clear intention, you rarely experience a sense of accomplishment even if your more general intentions are fulfilled.

To increase your clarity of intention, ask yourself the following questions:

• What is it that I really want?
• What evokes passion and joy in my heart?
• How passionately do I feel about it?
• What am I willing to give up (sacrifice) to achieve the desired goal?
• If I have more than one intention, which one should I first attempt?

These questions bring to the surface some of your assumptions and passion, helping you to prioritize your intentions (and hence your actions). Finally, exploring your intention creates a pathway to discovering your unique purpose in life. When you are aligned with what you want at head, heart, and gut level, chances are your actions are also aligned, and you increase the likelihood of achieving the results you’re seeking. Constant practice helps you to stay focused on what you want until you get it.

Awareness

Awareness is of two kinds: self-awareness and awareness of the world around you. When you develop self-awareness — of both your competencies and weaknesses — you gain a better understanding of who you are and what you want and, equally important, a clear picture of who you’re not and what you don’t want. By developing a deeper awareness of where others are coming from and remembering that you’re also a player in creating the situation, you may be able to relax and become interested in others and their point of view.

Awareness is dynamic. It is about continually being vigilant against complacency. You need to continually and dynamically reassess where you are with respect to where you were and where you want to go.

There are four mental processes that act as enemies to awareness.

• Personal Expectations and Standards. Everyone has their own set of standards and internal expectations. You pick them up from people whom you respect and like the most. Whatever their standards are, you attempt to live up to them even though your competencies and passion might not allow you to reach those expectations and meet those standards. Only by becoming aware of them can you do something about them.
• False/Incorrect Knowledge. You sometimes assume things about yourself and others that are plainly not true. Because you didn’t face any challenges when you first made these assumptions, you sometimes take it for granted that they must be true. And if you get some proof that you might be right in one extreme situation, you may think that your assumptions are universally correct. This is the source of misidentified and incorrect knowledge. Once you have such knowledge, we rarely verify it in the real world, and it becomes a block to awareness.
• Wild Imagination (and Attachment to It). There is time for dreaming and fantasizing, and there is time for focusing and getting things done. Unfortunately, imagination can at times be so seductive that you’re unwilling to accept that it is fantasy, not reality. At this point, it becomes a block to awareness.
• Memory of Past Successes and Failures. Faulty memory can also trap you into believing that your recollections are right and the new data is wrong. And often past successes are bigger blocks to awareness than past failures. Of course, failure is a stepping

  CYCLE OF LEADERSHIP SUCCESS

  

  When followed, this cycle can help leaders achieve higher levels of success.

  Developing and practicing awareness requires becoming mindful of your own thoughts, feelings, and body sensations. They give you early warning signals if you pay attention. You can become aware of your own thought processes by using reflective or contemplative practices, writing a journal regularly, and continual examination of your intentions. Most awareness is tacit, but you can learn to pay better attention to your body signals, pains and pleasures, and energy shifts. They tell you to slow down your actions and reflect on the meaning of those body signals. The more aware you are of yourself, the sharper your senses become in observing your surroundings.

  Empathy

  While clarity of intention and awareness set you on the path to success, empathy and compassion help you to gain the support of others.

  Empathy is the foundation for emotional intelligence. By being kind and empathetic, you allow yourself to build lasting relationships with your colleagues, employees, and customers. When conflict and divisiveness arise, a warm and affectionate attitude can diffuse the tension. At that point, it becomes possible to become open to the idea of further exploration for an amicable solution.

  The practice of empathy requires demonstrating openness, mutual respect, and trust in your relationships. Deep listening—not just to the words but the meaning behind the words is the foundation for an empathetic relationship. Sharing from the heart and feeling the pain of others nurtures relationships. Empathy begets more empathy and is the source of a creative partnership.

  Appreciation

  While empathy opens the door, appreciation welcomes you in. By appreciating and acknowledging others, you increase their state of happiness. They, in turn, reciprocate and contribute happiness back to you and others they touch. Appreciation is also about self-acceptance, as you can only appreciate others to the extent that you can appreciate yourself. Self-acceptance accelerates the process of self-development. Unfortunately, most people rarely appreciate who they are and what they receive.

  Appreciation is not flattery, but rather a genuine acknowledgment of a person’s contribution. Honest appreciation lets others know that you honor and respect who they are. It also boosts morale and amplifies what gave rise to that appreciation in the first place.

  Make it a ritual every day to find something positive that you have done or some contribution that you have made to others. Even if the work you have done has not yet produced the desired result, appreciate the steps you have taken so far. Similarly, appreciate what others do in their struggle to achieve the results they want. Be authentic when you give such feedback. Then you and the other person can discuss how to improve the efforts and get the desired results later on.

  Stretching Beyond Your Own Limits

  Your free will to take actions that stretch you beyond your comfort zone gives you the ability to change the course you’re on. To do so, your intentions must be clear, active, and flexible. In this stretch mode, you become immensely creative and passionate. Without such passion, you wouldn’t even attempt to stretch in the first place.

  Yes, stretching beyond your own perceived limits requires risk taking, and people are naturally uncomfortable about taking risks and facing the possibility of failing. So-called “failures” often create mental blocks and boundaries, most of which are self-imposed. By learning to stretch beyond your comfort zone, you begin to break through these mental barriers and discover your untapped potential. When you know that you’re appreciated and not judged, you have an easier time stretching beyond your limits.

  To practice stretching your limits, find opportunities to learn and be vulnerable. Vulnerability does not mean being weak. It is about being in the state of not knowing and hence being open to learning. Your ability to learn is directly proportional to your ability to be vulnerable.

  The key is to be willing to fail and then ask questions instead of making assumptions. Practice telling the truth when you’re not sure of what the implications may be. Doing so serves to create an environment of nurturing and caring in which other people can also let their guard down and discover themselves to be bigger than they ever imagined.

  Letting Go of What Doesn’t Work

  While the first five principles can get you to the edge of success, success eludes those who do not know when to let go and move on. By learning to let go of your old mindsets, you begin to discover new possibilities and new approaches. Letting go doesn’t mean giving up; it means not worrying about the result while continuing to perform the action. That posture gives you the freedom to act in a relaxed yet focused manner and frees you to be more natural in order to bring out the best in yourself.

  Letting go is also about flexibility and good judgment. When you know what to let go of and when to do so, you can take responsibility for what you can hold onto and for how long you must do so.

  The Cycle of the Six Principles

  Intention provides the direction and focus for your actions. Awareness gives you the capacity and intelligence to go after your goal. Empathy helps you to build partnerships with others, and appreciation is the key to motivation and productivity. Stretching beyond your perceived limits helps you to grow and meet challenges, and letting go of your attachments assures not only success but also accomplishment. And when you succeed in what you have undertaken, it is time to go back and clarify your intentions all over again as you set new goals. By practicing these six principles with self-awareness, you can achieve not only success, but also self-discovery.

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As in the NASA case, most executives either overlook or dismiss the underlying systemic structures and embedded processes that make up an organization’s culture. Because culture is untidy, muddled, and abstract, people tend to ignore it when making complex decisions or seeking concrete solutions. Consequently, many leaders act as if their decisions are objective and logical. They pretend that clusters of interests, organizational attitudes, or ingrained patterns of behavior do not influence their choices or affect business results. Only when crises occur do they scramble to look for reasons below the surface. It is our task as systems practitioners to draw attention to these misperceptions before disaster strikes.

The Power of Culture

Every organization has a unique culture. With minimal effort, groups with as few as 10 employees will develop chains of command, acceptable codes of behavior, and unique language that support and sustain their beliefs and attitudes. For example, in the “startup” frenzy of Silicon Valley in the 1980s, the engineers and young programmers who populated the computer industry, many fresh out of high school, balked at wearing traditional business attire: dark suit, white shirt, and staid tie. The casual dress they preferred stood for and propagated a cultural belief that hardware and software developers are independent, creative individuals who work best when not bound by the constraints of hierarchical authority.

Ignoring the hidden impact of organizational culture can have serious consequences.

Over time, this attitude led to a series of practices, procedures, and policies that came to characterize the Silicon Valley culture. For example, Apple Computers was one of the original and most well-known startups in California. Employees and managers alike wore sandals or hightop sneakers, ragged blue jeans or shorts, and collarless tee shirts; played basketball on outdoor courts set up by the company; and binged on junk food while working grueling hours. Cofounder and CEO Steve Jobs declared his programmers “artists” and “pirates,” and he rewarded their commitment with perks of stock options and working retreats at cushy resorts. His claims that Apple products were “magical” and would “change the world” became embedded in the organizational culture and convinced many – media, shareholders, directors, and employees – of the superiority of the company’s hardware.

Unfortunately, this cultural climate had numerous unintended consequences. Demanding product schedules fueled a pattern of divorce, health problems, and even suicide. And despite the hyperbole, for practical reasons, such as pricing, the products failed to gain dominance in the marketplace.

The Apple example shows how an organization’s culture develops over time, how it affects the way the enterprise operates on a daily basis, and how it is perceived within and outside of its walls. It also illustrates how executives frequently make crippling judgments when they do not factor the effects of their organization’s culture into their strategic and tactical decisions.

The Complexity Factor

Because of the complexity of an organization like NASA, the likelihood that multiple and conflicting views will develop is high. Within the space agency, three subcultures each saw the space shuttle through their unique lenses. Petroski says that “to scientists the vehicle (shuttle) was a tool.” For the NASA managers who lobbied Congress for the Agency’s budget, the shuttle was a technology, and even a flawed mission was proof of success. But the managers’ view was light years away from that of the engineers, a group who, according to Petroski, “achieve success in their designs by imagining how they might fail.” In 1986, when the two groups clashed over the safety of Challenger, managers, fearing a loss of public support and political funding if the shuttle did not fly, pulled rank and ignored the engineers’ advice.

With both of the doomed flights, these groups faced off with little or no understanding of each other’s views or agendas. From the evidence, we might hazard a guess that NASA’s overarching culture didn’t support healthy collaboration or respect for differing opinions, and that dissent and conflict were suppressed. Fortunately, most organizations do not regularly make life and death decisions. Nevertheless, the NASA case reiterates that ignoring the hidden impact of organizational culture can have serious consequences.

Culture: Ties That Bind

The image of the “iceberg,” commonly used in the systems thinking literature, is useful to conceptualize the role of culture (see “Looking Beneath the Surface”). We can consider culture to be a systemic structure that shapes and is shaped by individuals’ feelings, attitudes, and beliefs as well as by official and informal policies and procedures. These structures give rise to patterns of behavior and, ultimately, to specific events. Because events are easily visible and patterns and structures are usually hidden from sight, we often focus our problem solving on the surface level.

Using published reports about NASA, we can use the iceberg model to explore how its culture might have contributed to the shuttle tragedies.

Events: The space exploration program is a symbol of vibrant scientific endeavors and military strength. To the public and politicians, space flights serve as a gauge of success. Thus flights are the focus of NASA’s multiple goals and are the observable events or outcomes of its programs.

Patterns: In both failures, the managers’ subculture exercised its authority in the face of engineering and scientific concerns. Following each shuttle accident, NASA management focused on the technical issues that led to the failures and didn’t delve beneath the surface to explore the human factors that might have contributed, that is, how people in the organization communicated with each other and made decisions.

Structures and Cultural Beliefs: NASA’s executives, the manager subgroup, understood the need for ongoing government funding. Because they perceived that delays in flights could affect political support, public enthusiasm, and financial backing for the program, they overrode the engineers’ recommendations. The NASA culture supported this unilateral decision making and squelching of conflicting opinions.

Rarely, if ever, can we pinpoint a single reason for a success or failure, and too often, we miss the complexity. By delving beneath the surface to examine the elements of an organization’s culture, we can uncover potential risks or opportunities that might otherwise go unnoticed and remedy or leverage them.

The Practice of Systems Discovery

Different tools are useful for casting light on an organization’s culture, including climate surveys and organizational gap-analyses. Whatever the nomenclature, input gathered from face-to-face interviews is critical to uncovering the deep belief systems that drive what organizations do. The commonality among these activities, regardless of name, is that (1) information is gathered from across the organization, (2) the input is grouped into thematic categories, and (3) the data/themes are analyzed. This process works best when people from throughout the organization participate in a face-to-face process. Online employee surveys cannot uncover systemic gaps as they lack the level of detail needed to make complex situations clear.

Uncovering the beliefs and behavior from throughout the organization raises our awareness of underlying assumptions, stereotypical attitudes, disrespectful behavior – even fear of conflict. Awareness coupled with motivation can build better collaborations and, in turn, more effective thinking and acting.

Initiating this process in an organization can be difficult! Rarely will executives expend for information about the environment or agree to a massive reengineering project. But as we have seen from the NASA example, surfacing underlying dynamics can be vital to an organization’s success. The key is to keep the process simple., “Steps for Surfacing Belief Systems” provides a skeletal checklist for practitioners.

The Role of Leaders

The CEO and the organization’s managers set the tone for any and all interventions through their actions and dedication. If today’s leaders are skeptical that organizational culture is key to operational and financial success, unlocking the mysteries of an organization will be beyond his or her reach. And many executives are “naysayers,” labeling the management of interpersonal issues as soft skills and relegating it to the “nice-to-have” column. This is a fallacy. These are the challenging issues of the workplace, and they require sophisticated skills. Pretending that interests and attitudes do not impact the bottom line is a mistake.

But, buyer beware! There is no panacea or “flavor of the month” solution, only the hard collaborative work of delving into the forces that cause our organizations to work the way they do. Executives must comprehend the rigorous demands of what they are “buying.” Not all problems can be solved with a single effort. We, the practitioners, must set clear and realistic expectations for an intervention. Sell simply; see complexity; seek clarity.

The news today is littered with stories of organizational failure. Executives can and must learn from these, but it is the meaty challenge of systems practitioners to look at the dynamics that led to these sensationalized failures and translate them into terms that managers value and understand. The bottom line is that cultural knowledge is an important asset for success.

Pat Salgado is a principal with Hatteras Consulting Group located in Pleasanton, California. She worked inside Silicon Valley computer companies for 15 years and more recently was the CEO of a large performing arts theater. Pat holds a Ph. D. in Human and Organization Systems from the Fielding Graduate Institute.

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In the West, we typically attribute success to individual factors: a person’s innate intelligence and drive to achieve. But why do some so-called geniuses rise to the top of their professions while others fail to have an impact? To answer this question, Gladwell delves beneath the conventional wisdom and finds that factors such as a person’s birth month or year, family background, or even random opportunities play more of a role in people’s achievement than we previously thought.

Birthday Bonanza

To illustrate his point, Gladwell cites a study of Canadian youth hockey players that reveals a surprising fact: In any elite group in this league, “40 percent will have been born between January and March, 30 percent between April and June, 20 percent between July and September, and 10 percent between October and December.” A similar trend, with a weighting toward different months, shows up in U. S. baseball leagues and European soccer teams. What explains this strange phenomenon?

It turns out that, in Canadian hockey, the cut-off date for eligibility for a certain age bracket is January 1. At age 10, kids born right after the cut-off date have an advantage over those born later in the year in terms of size, speed, and coordination. As a result, the older 10-year-olds are more frequently chosen to participate in elite leagues, receive better coaching, play with more skilled teammates, and participate in more games and practices. Over the long run, these “more talented” players are more likely to make it to the professional ranks.

This pattern of behavior describes what in systems parlance is known as a “Success to the Successful” dynamic (see “Success to the Older Child”). As Gladwell says, “The professional hockey player starts out a little bit better than his peers. And that little difference leads to an opportunity that makes that difference a bit bigger, and that edge in turn leads to another opportunity, which makes the initially small difference bigger still—and on and on until the hockey player is a genuine outlier. But he didn’t start out an outlier. He started out just a little bit better.”

SUCCESS TO THE OLDER CHILD

This same dynamic also plays out in education. Children who are on the older end of the spectrum tend to have an advantage over their younger peers that amplifies over time. In a study by economists Kelly Bedard and Elizabeth Dhuey, older fourth graders scored significantly higher on a test of math and science skills than younger fourth graders. Gladwell comments, “That’s the difference between qualifying for a gifted program or not.” And once students land in gifted programs, they are likely to benefit from the best teaching, the highest-quality materials, the most up-to-date technology, and so on.

Inadvertent Privileging

So, what’s the solution to this inadvertent privileging of some over others? Gladwell suggests setting up two or three youth hockey leagues per age bracket, divided by months of birth. For the lower grades, school systems could create separate classes for kids born January through April, May through August, and September through December. Another solution would be to follow the Danish system of not assigning kids to different academic tracks until they are out of elementary school, when their maturity levels out.

The takeaway is that simple policy decisions often have powerful unintended consequences. By looking at patterns of behavior, we can identify those effects and find ways to improve the system. Breaking free from the “Success to the Successful” dynamic would create truly equal opportunities for all, to the benefit of all.

Janice Molloy is managing editor of The Systems Thinker and content director of Pegasus Communications.

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The “Fixes That Fail” Storyline

In this structure, a problem symptom gets bad enough that it captures our attention; for example, a slump in sales. We implement a quick fix (a slick marketing promotion) that makes the symptom go away (sales improve). However, that action triggers unintended consequences (diverts attention from aging product line) that make the original symptom reappear after some delay—often worse than before.

Some people know this dynamic from mismanaging their finances. Whenever they run short of cash, they use their credit cards to “solve” this shortfall. Unfortunately, the additional debt increases their monthly credit-card payments, causing them to run short of cash the next month. They again “fix” the problem by using their credit card to cover an even greater shortfall (because more dollars are going to pay the finance charges on the debt). Many juggle their debt among several credit cards by paying one card off with checks written on another. But with each round, the debt burden grows heavier and heavier, which may be why we currently have the highest consumer debt levels in history and record personal bankruptcies—all in a booming economy! This is the basic storyline of the “Fixes That Fail” archetype Let’s take a closer look at how and why this systemic structure behaves the way it does.

Of Heroes and Scapegoats

Many managers report that their organizations experience certain problems over and over again. Most seem to accept these challenges as a fact of life. Only a few see the cause as “hard-wired” into their businesses. However, from a systemic perspective, whenever patterns of behavior recur over time, they must be driven by structures that are designed into the way the system operates—intentionally or not. To better understand why we would create such structures, we need to take a closer look at the behavior of this archetype (see “The Hero-Scapegoat Cycle”).

THE HERO-SCAPEGOAT CYCLE

When a problem symptom becomes a crisis, we look for a hero to drive it back to acceptable levels using quick fixes. By the time the unintended consequences of those fixes cause the problem symptom to reach crisis level again, we’ve promoted the hero. We therefore scapegoat the new manager for failing to keep the problem under control.

Organizations usually have target levels against which they monitor performance; for example, inventory levels. If a problem symptom exceeds its desired level, such as excess inventory, we may notice this trend but not act on it right away, because we’re focused on other, more dire crises. When the symptom eventually reaches crisis proportions, we then shift our attention to that problem. At this point, because the situation has become so dire, we often look for someone who can “save the day” (e.g., slash inventory levels). Sure enough, we find a person who can drive the symptom down to the desired level in a hurry and then reward her with a promotion.

In the meantime, the delayed consequences of the hero’s actions (lack of product availability due to low inventories) begin to have an impact, and the problem symptom returns (higher inventory levels). When it again reaches the crisis level, we blame the person who is currently overseeing that function for failing to do his job, fire him, and look for our next hero. However, in this archetype, it may well be that the first hero is the person who put the current crisis in motion and that the scapegoat is the person who set the stage for a more lasting solution to take hold. But, because of delays in the system, these realities are often obscured.

Win Today, Lose Tomorrow

So, why do so many organizations fall into the “Fixes That Fail” trap? Why can’t people recognize the vicious cycle that keeps repeating the same patterns of events? One of the reasons is that the delays in the system mask the true nature of the cause-and-effect relationship. The narrow time frames that often drive decision-making in organizations also compound the problem.

For instance, our results are more likely to deteriorate over time if the delay for the unintended consequences to affect the system is long than if the delay were shorter. This is because, without the feedback supplied by the unintended consequences, the “improvements” actually appear to make things better in the short term (see “Fixes That Fail over Time”). And yet, when we view the situation from a longer time horizon, we find that today’s “desired” levels are far higher than yesterday’s “crisis” levels. From a longer perspective, we see that those short-term successes are part of a series of steps toward longterm failure. This pattern shows how companies can go bankrupt even as individuals are continually rewarded for doing a great job.

FIXES THAT FAIL OVER TTME

Over the short term, we applaud the progress we are making. And yet, when we view the situation from a longer time horizon, we find that the current “desired” levels are far higher than yesterday’s “crisis” levels used to be. Thus, those short-term successes are actually part of a series of steps toward long-term failure.

What Alarm Bells?

Another problem associated with this archetype can occur even when we do make changes so that quick fixes are no longer needed. Now, this may sound like a good thing, but it all depends on how we do it. Unfortunately, many organizations solve the problem by adapting to the poorer performance level, which then becomes the new norm (or desired level).

For example, we may have had a desired first-run capability of 95 percent or better from our production line (that is, 95 percent of our motorcycles run the first time off the assembly line), but we often find ourselves operating at a crisis level of only 90 percent. Because our plans are based on the higher level, our ability to provide predictable performance drops.

In order to improve predictability, we lower our desired level to one we know we can achieve (90 percent), with plans to eventually bring our capability back up to 95 percent. The danger of such a move is that once we have factored the poorer performance into operating plans, it becomes less visible as an issue that needs attention. In other words, what once caused alarm bells to ring no longer rings any bells, because we have in effect disconnected them. Although we no longer reach the crisis level or require frequent fixes, we have embedded the poorer performance in our system, and we no longer notice it.

In this situation, we have fixed our problem by getting caught in a different archetypal structure called “Drifting Goals.” We end up “fixing” things by changing our criteria of what constitutes a crisis.

Finding Fixes That Last

Of course, the answer is not that we should never apply quick fixes. There are many circumstances for which we absolutely have to implement short-term solutions. The danger lies in failing to recognize that all quick fixes are merely stopgap measures that buy us time to get to the root causes of those problem symptoms.

One of the most important points to address about this archetype is the relationship between the delay for the unintended consequences to show up and the timing of organizational performance assessments. If you suspect that you may be caught in a “Fixes That Fail” dynamic, look for a repeating pattern of quick fixes, determine how often these fixes occur, and compare that to the frequency with which you typically review performance. If the review time horizon is about the same as or shorter than the time between fixes, then try lengthening the time frame so that it’s at least three or four times the delay period. This will help provide a more accurate picture of the actual “progress” being made.

Daniel H. Kim, Ph. D., is publisher of THE SYSTEMS THINKER and a member of the governing council of the Society for Organizational Learning.

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