Caffeine Addiction

It’s 6:00 a.m. on a Monday morning. The alarm clock blares, jolting you out of bed. You shuffle down to the kitchen and grab a cup of fresh coffee. A few gulps and…ahh. Your eyes start to open; the fog begins to clear.

10:30 a.m. — time for the weekly staff meeting. “I gotta have something to keep me awake through this one,” you think to yourself as you grab a cup of coffee and head into the conference room.

By 3:30 p.m. you start to feel that mid-afternoon energy low, so you head down toward the crowded coffee machine for another cup. “I really gotta cut down on this stuff,” you comment to the guy behind you in line. He nods. “I’m a five-cup-a-thy guy,” he confesses. “I just can’t give it up.”

Addiction

For most of us, the word “addiction” conjures up images of alcoholism and drug abuse or more “acceptable” habits such as coffee drinking — dependencies which are rooted in physical and neurological processes. It is not usually viewed as a social or organizational phenomena. But from a systemic perspective, addiction is a very generic structure which is quite prevalent in both social and organizational settings.

As a systemic structure, the “Addiction” archetype is a special case of “Shifting the Burden” (see “Shifting the Burden: The Helen Keller Loops,” September 1990). “Shifting the Burden” usually starts with a problem symptom that cries out for attention. The solution that is most obvious and easy to implement usually relieves the problem symptom very quickly. But the symptomatic solution has a long-term side effect that diverts attention away from the more fundamental solution to the problem (see “Addiction: A Special Case of ‘Shifting the Burden'”).

What makes the “Addiction” archetype special is the nature of the side-effect. In an “Addiction” structure, a “Shifting the Burden” situation degrades into an addictive pattern in which the side-effect gets so entrenched that it overwhelms the original problem symptom — the addiction becomes “the problem.”

With coffee drinking, the problem symptom usually is that you feel tired (see “Coffee Addiction”). When you drink a cup of coffee, the caffeine raises your metabolism, stimulating the body and making the mind more alert. But in doing this, it forces your body to deplete its reserves of energy faster than usual. When the effects of the caffeine wear off in a few hours, you have even less energy than before. You feel sluggish again and reach for another cup of coffee to get a jump start. Over time, your body begins to rely on the caffeine at regular intervals in order to regulate your energy and metabolism.

Organizational Addictions

In organizational settings, addiction can take the form of a dependence on certain policies, procedures, departments, or individuals. The way we think about problems, or the policies that we pursue, can become addictions when we use them without consideration or choice, as an automatic knee-jerk response to a particular situation.

Hooked on Heroics

A common yet very subtle example of addiction in companies is “crisis management” — fire-fighting. Most managers say that they abhor fire-fighting because it wreaks havoc on normal work processes and makes it difficult to focus on the long-term. Yet fire-fighting is a way of life in most companies. Its pervasiveness and persistence is a clue that maybe it is part of an addictive structure.

Suppose you have a new product development project that has fallen behind schedule. The timing of its release is critical to its market success. In fact, the delays have reached crises proportions. You decide to make it a high priority project and assign a “crisis manager” to do what it takes to get that product out on time. This new manager suddenly has enormous flexibility in what he can do to get the product out. When the product is launched on time, he is touted as the hero of the day.

If we look at crisis management from the “Addiction” archetype, the symptomatic problem is the prevalence of crises that occur in the company (see “Hooked on Heroics”). When a crisis occurs, someone practices great heroism and “saves the day.” The problem is solved and the person receives praise for doing a fine job. But what happens to the rest of the organization in the meantime? Oftentimes the solution causes a lot of disruptions which form the seeds of the next problems and perpetuate the crisis cycle.

The insidious side-effect of crisis management is that over time, as crisis management becomes the operating norm, managers begin to become dependent on the use of heroics — the need to have recognition and a feeling of accomplishment in an otherwise paralyzing institution. Usually there are roadblocks to taking action in the company: formalities and rules that say “No, you can’t do this,” “You have to do it this way,” or “We don’t have the resources.” Suddenly when there’s a crisis, people are given tremendous freedom and leeway and are allowed to do what they couldn’t do before. Once it’s over, there is tremendous fanfare: the hero is rewarded or promoted. Over time, the company becomes addicted to continually creating crises, pulling the organization through tremendous turmoil, and creating new heroes.

Breaking the Addiction Cycle

To identify “Addiction” dynamics at work, use the “Shifting the Burden” archetype as a diagnostic to ask questions such as: “What was the addiction responding to?”, “Why did we feel a need to engage in this behavior or create this institution in the first place?”, and “What are the problem symptoms that we were responding to?”

“Addiction” structures can be much more difficult to reverse than “Shifting the Burden” because they are more deeply ingrained. Just as you can’t cure alcoholism by simply removing the alcohol, you can’t attempt a frontal assault on an organizational addiction because it is so rooted in what else is going on in the company.

If your company is addicted to fire-fighting, declaring that there will be no more heroics may be the worst thing you can do. If heroics were the only way your organization knew how to release the accumulated pressures produced by ineffective processes, ending that practice may lead to an eventual explosion or systemic breakdown. To break the addictive pattern, you need to explore what it is about the organizational system that created the crisis and left fire-fighting as the only option.

Innovation

Is there such a thing as a benign or innocuous addiction? One could argue that some addictions are worse than others, and some may not be bad at all. The fundamental problem with any addictive behavior, however, is that it can lead an organization to become very myopic. The addictive solution becomes so ingrained that no other possibility seems necessary. Preventing corporate addictions requires the ability to continually see choices in a fresh way — to shun habitual responses.

The challenge for the learning organization is to get all the members of the organization to continually look at things with fresh eyes. That’s the essence of discovery…and the essence of innovation.

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Juran’s message is all the more ominous if we consider Analog Devices President Ray Stata’s theory. He believes that, contrary to the Boston Consulting Group’s learning curve theory, “learning, properly managed, occurs as a function of time, independent of cumulative volume.” The implication of his statement is startling: we will never catch up with the Japanese because they have a permanent head start on us. In other words, we can’t expect to win the quality race by simply imitating the Japanese; we must innovate and improve upon Total Quality Control.

Integrating TQC and systems thinking can accelerate organizational learning beyond the current capabilities of TQC methods. The two approaches form a synergistic pair whose individual strengths complement each other and provide a balance of learning at all levels of an organization. Used together, they can help build a shared understanding of both conceptual insights and operational processes, forming a powerful new management paradigm I call Systemic Quality Management (SQM).

Beyond TQC: Systemic Quality Management

To be lasting and significant, organizational learning must advance on both the operational and conceptual level. Operational learning means improving behaviors or ways of doing things — changing a machine setting, for example — in order to enhance the performance of a particular system. Conceptual learning involves changing one’s mental models about how the world works, such as reframing a problem in a different context and exploring the implications. Learning at one level without the other is like trying to run a race with one foot nailed to the starting line — you may get off to a quick start, but you won’t go very far.

“…we can’t expect to win the quality race by simply imitating the Japanese; we must innovate and improve upon Total Quality Control.”

The Systemic Quality Management (SQM) model (see “SQM Model” diagram) combines systems thinking, with its conceptual basis, and TQC, with its operational emphasis, into an integrated management paradigm. The top dashed box of the SQM model represents the traditional system dynamics problem-solving approach of gathering data, articulating the issues involved, building a model, running simulation analyses, identifying leverage points, and proposing policy changes. An implicit assumption of this process is that the insights generated will be compelling enough to produce action. In reality, however, policy change recommendations are not always implemented due to a lack of strong operational methods such as those TQC provides.

The bottom dashed box shows a typical TQC quality improvement process — the PDCA (Plan-Do-Check-Act) cycle. Requests from upper management are translated into a plan of action and checkpoints are determined for monitoring progress. The plans are then incorporated into the budget cycle and implemented. Any deviations found at the checkpoints are analyzed, and actions are taken to correct any discrepancies. Although the PDCA cycle works very well in implementing strategic plans and maintaining control over current processes, it is relatively weak where systems thinking is most helpful — identifying the high leverage areas that drive the whole process.

Systemic Quality Management blends the conceptual strength of systems thinking and the operational focus of total quality into a seamless process. In a manufacturing environment, for example, the PDCA process could be helping line workers gather data, plot and analyze them, and determine how to make improvements to reduce equipment downtime and increase on-time delivery performance. A systemic study may reveal, however, that the timing of marketing efforts and production schedules systematically produces demand/supply imbalances, creating periods of deteriorating delivery performance (see “Marketing-Production Connection” diagram). The real leverage may lie in coordinating the activities of the two functions by building a shared understanding of how the two are interdependent.

SQM Model

The Strategic Quality Management (SQM) model fuses the conceptual strength of systems thinking (top) and the operational focus of total quality methods (bottom) into a seamless process.

The Systemic Quality Management model emphasizes the importance of creating shared understanding about the whole system. Building shared understanding through the use of systems thinking tools such as management flight simulators and learning labs can enhance the PLANning and DOing steps of the PDCA cycle by providing a common base of conceptual models. The analysis and action produced through the PDCA cycle can, in turn, generate new data which would feed into the data gathering process and the next cycle of the PLANning stage. By fusing these two methodologies, Systemic Quality Management provides an integrated and balanced approach to organizational learning.

TQC as a Vehicle for Organizational Learning

TQC’s contribution to organizational learning is strongest on the operational side. But TQC is not just about improving production steps and reducing cycle times — it is a thought revolution in management. TQC has forced managers to abandon old mental models of viewing quality/cost and quality/productivity as either/or decisions. It is also changing managers’ definition of quality from conforming to specifications to satisfying customers’ needs.

The concept of building-in quality rather than inspecting-in quality has prompted a major shift in the way managers once viewed the production process. This change in the prevailing mental model has driven solid achievements at the operational level: statistical quality control (SQC) has improved quality and lowered production costs through smaller variances and reduced scrap rates; separate quality inspectors are becoming obsolete as workers learn to inspect their own work for defects; and a customer-oriented approach has increased customer satisfaction.

As quality steadily improves at companies using TQC, there is no doubt that a great deal of learning continues to take place at the operational level. But beyond the initial mental breakthrough required at the outset of instituting TQC, new learning opportunities at the conceptual level become less available. Managers can go on advocating improvements within the current framework of organizational policies and traditions without gaining much insight about the whole system.

Systems Thinking and Organizational Learning

Unlike TQC’s more operational focus, systems thinking’s underpinnings are conceptual in nature. Systems thinking advocates approaching problems from the basis of the whole, rather than reducing problems to individual pieces and trying to understand each part. Whereas TQC focuses on analyzing the separate parts that make up the whole, systems thinking strives to synthesize the constituent parts.

Systems thinking helps break through functional walls in organizations by providing a framework for understanding the importance of managing the interconnections between various functions. Systems thinking is also useful for gaining deeper insights into the nature of complex systems, finding leverage points within the system, and testing assumptions about the viability of various policies.

By emphasizing the importance of trying to understand a problem, not simply solve it, systems thinking attempts to transform problem-solving organizations into learning organizations. A learning organization is one that consciously manages its learning processes through an inquiry-driven orientation among all its members. That is, learning organizations actively and explicitly encourage both operational and conceptual learning to ensure that areas of strategic importance are not neglected.

Building a learning organization means continually developing the capacity to create one’s vision of the future. In order to design and implement effective policies and achieve desired results, managers need to look at their organization and its environment as a unified system. A systems perspective makes it easier to pinpoint the high-leverage actions that will produce significant, long-lasting improvements. But acquiring such an understanding will require ongoing management education that trains managers to blend analysis and synthesis into a new style of thinking. As they do, managers will begin to take on new roles and acquire new skills.

Marketing- Production Connection

A successful marketing campaign produces a bulge in orders, swamping the factory. The factory starts to run at maximum capacity to get the orders out the door, but on-time performance suffers (BI). New orders fall as customers experience long delays (B2). As new orders slow down, the factory is able to improve on its delivery performance. But in the meantime, marketing has decided to launch a new campaign to counter the fall in new orders (83), starting the cycle again.

Researcher and Theory-Builder

In learning organizations, managers will be responsible for enhancing the quality of their thinking, not just the quality of their doing. This means becoming theory-builders: creating new frameworks for continually testing strategies, policies, and decisions. It will also require the skills and inquiring perspective of a researcher who is engaged in active experimentation.

Unfortunately, we usually think of experimentation in organizations as “Hey, I’m just trying something new so don’t hold me accountable,” or “Let’s see what happens.” In such a setting, there is little opportunity for learning. Real experimentation will mean that managers, as researchers and theory builders, will actively formulate hypotheses and conduct “controlled” experiments to test them. Systems thinking provides an array of tools for running such experiments. Two in particular are management “flight simulators” and learning laboratories.

Creating Learning Environments

The necessary elements for learning are a set of tools, a context for the learning, and a structured setting for conducting experiments. Baseball teams, for example, have their equipment, game rules, and practice fields. Airline pilots have flight simulators, air space grids, and simulated flight conditions. No team would dream of starting the regular season without practice games, nor would airlines risk multi-million dollar airplanes and the lives of hundreds of passengers in order for pilots to learn by trial-and-error.

Managers, on the other hand, do not have comparable tools and environments for experimenting and learning — in management, initiation by fire is the rule. However, management flight simulators now offer managers the equivalent of a pilot’s flight simulator, so they can experiment with various policies without fear of “crashing and burning” real companies.

Appropriately, the first management flight simulator developed at the MIT Sloan School of Management was based on an airline — People Express. Each entering class of masters students at the Sloan School spends a day developing their strategy and “piloting” the simulated airline (see “‘Flying’ People Express Again,” November 1990 for a more complete description of the simulator). Each team makes five quarterly decisions as the players struggle to manage the growth of the start-up airline. Spreadsheets, graphs, and internal management reports containing competitor and market information help them chart their progress. Through repeated trial-and-error experimentation, the students gain simulated experience managing the challenges of managing a rapid-growth company. People Express and other simulators are currently in wide use in academia as well as corporations.

If the simulator is analogous to a sports team’s equipment, the learning lab can be thought of as a manager’s practice field. Learning labs provide a structured learning environment where management teams can test out new strategies and policies, reflect on the outcomes, and collectively discuss the central issues. Managers can accelerate time by rapidly simulating a real life system and then stop the flow of time at each decision point to reflect on their actions.

By making operating assumptions explicit and testing those assumptions within the learning lab, managers are encouraged to reflect on not only the quality of their decisions, but how they arrived at those decisions. The learning lab environment promotes conceptual learning by helping managers develop an inquiry mode of learning — to continually “think about their thinking” and break away from outmoded frames and perceptions.

Just as TQC provided workers with methods for approaching their work more scientifically, systems thinking provides managers with tools and a framework for continually testing and improving their decision-making. By synthesizing these two methods into an integrated process, the Strategic Quality Management model captures the dual nature of managers’ new work — rethinking issues and testing the outcomes on a conceptual as well as operational leve1.

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Right or wrong, the Seattle protests highlighted the widespread influence that corporations exert on people’s lives today. As social institutions, companies have an unprecedented impact on individuals, families, communities, nations, and the planet itself. For instance, who among us does not struggle with the challenge of balancing family and work life? Who among us may not someday benefit from biotechnology breakthroughs? Who among us is not concerned about the impact of manufacturing waste on the environment? Who among us does not take advantage of cheap and reliable telecommunications? The pure size, scope, and transnational nature of the modern corporation have given it a unique — and growing — role in our daily lives.

A Tool for Corporate “Response-ability”

With this level of influence come new demands for responsibility, as the demonstrations in Seattle showed. Simply put, the more impact that corporations have on people’s lives, the more people will insist that businesses take responsibility for their actions. Doing so requires “response-ability” — the ability to acknowledge people’s concerns and create innovations to address those concerns. It means being open to change and learning. This is not a new challenge, but the importance and complexity of the task have increased with globalization. Thus, tackling the opportunities and dangers that face today’s businesses requires an equally radical shift in the nature of change processes and strategies.

The practice and philosophy of Appreciative Inquiry (AI), while still in its nascent stage, is emerging as a revolutionary approach to this kind of change and learning. AI first arose in the early 1980s, when David Cooperrider, a graduate student at Case Western Reserve University, conducted an organizational diagnosis of the Cleveland Clinic. During his research, he was amazed by the level of cooperation, innovation, and egalitarian governance that he observed within the organization. Cooperrider and his adviser, Suresh Srivastva, analyzed the factors that contributed to the functioning of the clinic when it was at its best — its moments of exceptional performance. In the mid 1980s, they published the first widely distributed description of the research, theory, and practice of Appreciative Inquiry in the article “Appreciative Inquiry in Organizational Life” in Research in Organization Change and Development, vol. 1, edited by W. Pasmore and R. Woodman (JAI Press, 1987).

AI is based on a deceptively simple premise: that organizations grow in the direction of what they repeatedly ask questions about and focus their attention on. Why make this assumption? Research in sociology has shown that when people study problems and conflicts, the number and severity of the problems they identify actually increase. But when they study human ideals and achievements, peak experiences, and best practices, these things — not the conflicts — tend to flourish. (Did you ever notice that beginner bicyclists tend to steer toward whatever they’re looking at most — like the big rock at the side of the road? See “Watch Out for the Rock!”)

By encouraging people to ask certain kinds of questions, make shared meaning of the answers, and act on the responses, AI serves as a wellspring for transformational change. It supports organizationwide (i.e., systemic) learning through several means:

• Through widespread inquiry, it helps everyone perceive the need for change, explore new possibilities, and contribute to solutions.
• Through customized interview guides, it emphasizes questions that focus on moments of high performance in order to ignite transformative dialogue and action within the organization.
• Through alignment of the organization’s formal and informal structures with its purpose and principles, it translates shared vision into reality and belief into practice.

A Closer Look at Appreciative Inquiry

To see how this process works, imagine what would happen if you shifted the focus of inquiry (i.e., the process of gathering information for the purpose of learning and changing) from the deficits or gaps in your organization to its successes and accomplishments. Instead of asking, “What are our problems? What hasn’t worked?” you might say, “Describe a time when things were really going well around here. What conditions were present at those moments and what organizational changes would allow more of those conditions to prevail?” This simple shift in perspective constitutes a powerful intervention in its own right that can begin nudging the whole company in the direction of the inquiry.

How? Organizations are manifestations of the human imagination. That is, no organization could exist if one or several individuals hadn’t envisioned it first (even if that vision was sketchy or incomplete). The learnings that surface through the AI process begin to shift the collective image that people hold of the organization. In their daily encounters, members start to create together compelling new images of the company’s future. These images immediately initiate small “ripples” in how employees think about the work they do, their relationships, their roles, and so on. Over time, these ripples turn into waves; the more positive questions participants ask, the more they incorporate the learnings they glean from those questions in daily behaviors and, ultimately, in the organization’s infrastructure.

Unlike many behavioral-science approaches to change, AI does not focus on changing people. Instead, it invites people to engage in building the kinds of organizations and communities that they want to live in. AI thus involves collaborative discovery of what makes an organization most effective, in economic, ecological, and human terms. From there, organization members weave that new knowledge into the fabric of the firm’s formal and informal systems, such as the way they develop and implement business strategy or the way they organize themselves to accomplish tasks. This process represents true learning and change.

Finally, AI rests on another deceptively simple notion: that organizational members are competent adults capable of learning from their own experiences and from those of others. In a company that truly believes this precept, everyone feels energized by new knowledge and change. As AI becomes a regular way of working, employees at all levels and all functions identify best practices that the organization can build on in order to respond to new challenges. They then spread that knowledge and initiate action as a matter of routine.

Consultant Diana Whitney has summarized Appreciative Inquiry in the following way:

• AI is a high-participation, full voice process targeted at organizational innovation. People at all levels of an organization engage with one another to discover, dream, and design the corporation’s future.
• AI is an organizational learning process designed to identify and disseminate best practices. AI assumes that people possess high levels of competence and encourages them to discover what works within their own organization as well as in other businesses and organizations.
• AI fosters positive communication and can result in the formation of deep and meaningful relationships. Through simple interpersonal communication, people build relationships, accomplish work, and express value.
• • AI can be used to radically redesign the governance structures and processes of an organization. By applying what they learn from the inquiry, people begin to redesign the organization’s social architecture — its systems, structures, roles, and measures — in ways that better align it with their dreams and needs.

One of the most attractive aspects of AI is its flexibility. Organizations that have implemented AI have found that it engages individuals and teams while it simultaneously provides a framework for companywide innovations.

The Five “D’s”

Thus, AI is a way of managing and working as well as a process for organizational learning and change. From the latter perspective, it is an ongoing, iterative cycle consisting of five phases: Definition, Discovery, Dream, Design, and Delivery/Destiny (see “The Five ‘D’s’ of Appreciative Inquiry” on p. 1). In large companies, the process often begins by engaging individual units or divisions. In small companies, everyone can take part right from the start.

Definition. This phase is arguably the most important one in the AI cycle, because it establishes the initial focus and scope of the inquiry. Defining the direction of inquiry is much more than just sharpening a problem description. Because organizations move in the direction of the questions they ask, the choice of questions is vital.

In the Definition phase, the organization’s focus shifts from describing the problem to determining what its members want to achieve and what they need to know to get there. For example, when a Mexican cosmetics firm wanted to solve the problem of discrimination against women, the management team first asked consultants to help them understand the causes of this unequal treatment. Dissatisfied with the direction their conversations were taking, they decided to shift their focus — to inquire instead into the causes and conditions that contribute to excellent cross-gender relationships in the workplace.

This change led the organization to a whole new body of knowledge about the issue. The members of the firm then came up with a compelling vision that they could work toward based on the conversations that took place during the inquiry process: a business world in which everyone is treated fairly regardless of gender. Not long thereafter, the company won an award for having one of Mexico’s most supportive workplaces for women.

Discovery. In the Discovery phase, participants interview hundreds, sometimes thousands, of people from within and outside of the organization. Interviewers use a customized guide to gather information on the line of inquiry that the group identified during the Definition phase. Frequently, a small group of volunteers develops the guide. These volunteers often represent a diagonal “slice” of the organization, along with representatives from key partners outside the company’s formal boundaries (i.e., customers and suppliers). Sometimes this volunteer group conducts the interviews; other times, hundreds of people gather to interview each other. During the Discovery phase, the organization identifies “best practices,” “life-giving forces,” or “root causes of success.”

This practice represents a dramatic departure from normal statistical “sampling.” AI operates on the premise that the act of asking positive questions is as important as the data it elicits. For that reason, the more people interviewed, the stronger the organization’s movement in the direction of the inquiry.

Dream. Participants then come together to build on the new learnings developed during the Discovery phase. They also ask larger questions, such as “What is the world calling us to become? What are those things about us that, no matter how much we change, we want to continue to do in the future?” Dream meetings can range from small teams to “summits” in which hundreds of people participate.

During this phase, people throughout the business create images of what life in the organization and its relationships with key constituents would look like if the company’s very best practices became the norm rather than the exception. This approach differs greatly from other visioning processes, because these dreams are grounded in what participants know to be the system’s past or present capabilities. For example, the employees of a transnational pharmaceutical company developed the following dream:

“The Research Organization of ABC Pharmaceuticals has four significant assets: an energizing work environment that affords freedom of action at all levels; a research process that is market-focused, goal-oriented, and strategically driven; world-class science supported by state-of-the-art technologies; and multi-disciplinary collaboration that transcends internal and external boundaries.

“Our people like to work here. The work environment is creative and empowering. . . . Our collaborative culture leads to sharing across functions. . . . People leverage and learn from each other’s expertise to jointly reach our organization’s goals. ABC Pharmaceuticals is a scientific Center of Excellence!”

Design. During the Design phase, participants identify the high-leverage changes in the organization’s systems, processes, roles, measures, and structures necessary for achieving the dream. Participants craft micro-images, or design statements, for redesigning the corporation’s infrastructure. For example, a consumer products distribution company wrote the following micro-image (one of about 20) describing its ideal strategy development process:

“DIA accelerates its learning through an annual strategic planning conference that involves all 500 people in the firm as well as key partners and stakeholders. As a setting for strategic learning, teams present their benchmarking studies of the best five other organizations, deemed leaders in their class. Other teams present an annual appreciative analysis of DIA, and together these databases of success stories (internal and external) help set the stage for DIA’s strategic, future search planning” (from “A Positive Revolution in Change: Appreciative Inquiry,” by David Cooperrider and Diana Whitney in Appreciative Inquiry: Rethinking Human and Organizational Change, by Cooperrider, et al. (Stipes Publishing, 2000)).

The Design phase is more than just breaking down the dream into short-term actions; it is about “translating” the dream into the “language” of the organization’s social architecture. It is about enacting the essence of the vision in the policies, core processes and practices, and systems — all of the formal and informal structures that sustain the corporation’s essence.

Delivery/Destiny. In the Delivery/Destiny phase, the organization fleshes out, experiments with, and redesigns yet again the innovations that it identified during the Design phase. The hallmarks of this phase are creativity, innovation, and iteration — buttressed by ongoing inquiries into the progress being made and the effectiveness of the changes. Employees work to identify, highlight, and expand what is working well. They also continue to innovate where needed, so that the organization can grow and learn.

The main challenge that groups face during this stage is sustaining — and even magnifying — the inspiration that characterizes the earlier phases. We come from a “project mentality” that values clear starts and conclusions. But we are increasingly confronted with a world in which change does not occur during a separate time period, after which we get back to business as usual. Rather, change is now the very water in which we swim.

We are increasingly confronted with a world in which change does not occur during a separate time period, after which we get back to business as usual. Rather, change is now the very water in which we swim.

First Steps Toward Appreciative Inquiry

There’s no one right way to engage in Appreciative Inquiry; indeed, the process can take many different forms. The examples in the following section illustrate just a few of the many different ways that organizations have applied Appreciative Inquiry — with variations on the topic of inquiry, the process for discovering exceptional moments, the method used in dreaming new futures, and the innovations developed in the Design and Delivery/Destiny phases. But the following conditions seem to be present when Appreciative Inquiry has been most effectively incorporated into a process of organizational learning and change:

• The organization honestly acknowledges any difficulties that currently exist. After all, this kind of struggle often provides the impetus for change. AI practitioners don’t advocate denying negative emotions or problems. Rather, they encourage participants not to dwell on them.
• The organization’s formal and informal leaders have expressed a need or desire for deep inquiry, discovery, and renewal. They’ve also demonstrated an openness to grassroots innovation.
• The organizational culture supports participation of all voices, at all levels — with the understanding that, when participative processes are used, outcomes cannot be known in advance.
• People throughout the organization see change as an ongoing process, not a one-time event.
• The company’s leaders believe in the organization’s capabilities and agree that accessing this “positive core” can drive learning and change.
• The organization supplies the structures and resources needed to collect “good-news stories” and support creative action (from “Appreciative Inquiry: An Overview” by Kendi Rossi, from the AI List Serv, 1999).

These conditions can expedite the AI process, but they are not prerequisites. Unlike other approaches to intentional change, with AI, you can start anywhere, anytime, and with anyone. Most companies learn AI by doing it. The very act of inquiring into the best moments of an organization’s life begins to shift the system. As this process continues, individuals become open to wider applications of Appreciative Inquiry. They begin with some trepidation and generally end up with a strong commitment to the principles and practice.

AI in Action

AI has been used to catalyze change in a wide range of efforts: from business process excellence, diversity, and knowledge management, to customer service, mergers and acquisitions, and community development. Though it is still in its infancy, proponents of this work have scored some remarkable successes, as the examples below reveal.

In 1999, Nutrimental SA, a food manufacturing facility in Paraná, Brazil, shut down so that all 700 employees could talk together about how to beat the stiffening competition facing the company. The co-CEOs invited David Cooperrider (currently a faculty member at Case Western Reserve University) to facilitate. Cooperrider asked employees to identify “the factors and forces that gave life to the company when it was most effective, most alive, and most successful as a producer of high-quality health foods.” In an interview, Cooperrider described what happened:

“With cheers and good wishes, a smaller group of 150 stakeholders — employees from all levels, suppliers, distributors, community leaders, financiers, and customers — launched a four-day strategy session during which they articulated a new and bold corporate dream. Participants said, ‘Let’s assume that tomorrow, when we wake up, a miracle will have occurred: We’ll discover that all of Nutrimental’s best qualities have come to the fore in exactly the way we would like. What would we see when we arrived at work that would tell us that this miracle had happened? What would be different?’ Over the following days, participants clarified three new, strategic business directions.

“Six months later, Nutrimental’s profits had increased by a whopping 300 percent. The co-CEOs attributed these dramatic results to two changes: bringing the whole organization into the planning process, and realizing that organizations thrive when people see the best in one another, when they can affirm their dreams and ultimate concerns, and when their voices are heard.”

At about the same time, in Harlow, England, members of an internal organization-development (OD) group at a transnational pharmaceutical company and their clients decided to use AI in evaluating an intervention. The goal of the initiative had been to improve core business processes and, ultimately, the quality of life for their research scientists. The OD practitioners and representatives from the research community fanned out to ask questions of both the scientists who had participated in the intervention and their supervisors.

But rather than asking whether the intervention worked, they asked how it had helped people to work together more effectively and in what ways the quality of their work lives had been enhanced. As a result, the evaluators compiled a rich collection of data, in the form of stories, themes, and recommendations, that promises to yield even more powerful interventions in the future.

In a primary school in Maine, Tom Morrill, the new principal, faced a faculty struggling with the impact of a recent merging of three schools into one. After a few brief meetings with a consultant, the school’s leadership team decided to engage the faculty and staff in three two-hour meetings. During the meetings, participants identified the best aspects of the cultures they had left behind and explored ways to carry those elements forward into a shared future. Morrill described the outcome of this approach:

“People’s interactions focused on what was working well or on kernels of possibilities, as opposed to lists of what was wrong. Now, you hear teachers talking about AI frequently. We have also used AI in decision-making. I’ve purposefully moved to a more inclusive decision-making model, which reflects people’s desire for inclusion. Also, team leaders have used AI to create reporting processes and even staffing arrangements. This has built better school unity and has strengthened communication. People are getting better about working and planning together.”

Appreciative Inquiry as an approach to intentional change is still evolving. We are all in the process of learning how to use this radically different, yet breathtakingly simple approach in ways that truly energize and sustain learning organizations. But we do know that AI is best learned by doing.

In Leading the Revolution, Gary Hamel said: “The world is increasingly divided into two kinds of organizations: those that can get no further than continuous improvement, and those who’ve made the jump to radical innovation.” Companies that see the need for the latter approach to change are increasingly turning to Appreciative Inquiry as a tool for making this leap. We invite you to do the same.

Bernard Mohr (bjmSynapse@aol.com) is the founder of The Synapse Group, Inc., an international consultancy in the fields of organizational learning, design, and capability building. His focus is the collaborative innovation of new work settings that are ecologically sound and economically sustainable, and that bring out the best in human beings. He is a founding partner of Appreciative Inquiry Consulting and co-author of the forthcoming book, Appreciative Inquiry: Change at the Speed of Imagination (Jossey Bass, 2001).

Author’s Note: Many of the concepts in this article have evolved from ongoing dialogues, both verbal and written, with my colleagues in the Appreciative Inquiry Consulting founders’ group: Jim Ludema, Diana Whitney, Adrian McLean, Marsha George, Jane Watkins, David Cooperrider, Marge Schiller, Diane Robbins, Steve Cato, Frank Barrett, Joep de Jong, Mette Jacobsgaard, Jim Lord, Ada Jo Mann, Anne Radford, Judy Rodgers, Jackie Kelm, David Chandler, Ralph Kelly, and Barbara Sloan.

The post Appreciative Inquiry: Igniting Transformative Action 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.

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

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

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

Seven Indicators of the Need for a New Leadership Paradigm

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

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

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

Criteria for a New Paradigm

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

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

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

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

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

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

Implications of a Paradigm Shift

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

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

New Leadership Mindsets

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

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

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

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

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

Skills

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Knowledge

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

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

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

Impact by Sector

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

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

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

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

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

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

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

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

The New Status Quo

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

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

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

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

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

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When formalized into new patterns of working together often through the creation of new umbrella

organizations with participants from diverse parts of society these mutually beneficial outcomes represent societal learning. Societal learning is a process of changing patterns of inter actions within and between diverse organizations and social units to enhance society’s capacity to innovate. Large scale problems such as poverty and environmental degradation require substantial societal learning in order for lasting change to occur.

Societal learning almost always involves the collaboration of the three organizational “sectors”: government, business, and civil society organizations (labor, community-based, religious, and nongovernmental entities). These sectors represent the three key systems of our society: political (government), economic(business), and social (civil society) (see “The Three Sectors”). All organizations can be categorized as being in one of the three organizational sectors, or as a hybrid of them. Any business that wants to profoundly alter its operating environment, any government that seeks to undertake fundamental reform, and any people who want to improve the world must partner with others from outside their sector.

Although societal learning represents an enormous challenge, the good news is that we have learned a lot about this process, and we have increased our capacity to make it happen. Still, the concept of undertaking big systems change is just beginning to influence the ways in which organizations operate.

Challenges of Societal Learning

Although related to individual, group, and organizational learning, societal learning is particularly challenging to achieve. Why? First, it necessarily involves changes in how complex institutions from different sectors operate, both separately and in tandem. So, for instance, in partnerships among environmentalists, government agencies, and corporations, all parties must embrace diverse view-points, forge new visions, and be willing to operate differently in the future than they have in the past. Reaching this level of cooperation and accommodation takes much work and a high degree of commitment, but the goal in this case, enhancing environmental sustainability is deemed well worth the effort.

Often, organizations discover that they must redefine the business they are in. In developing countries, many construction companies no longer regard themselves merely as builders of physical infrastructure, but rather as part of a joint effort to create sustainable water systems. This shift in perspective has enormous implications for how these businesses organize and undertake work. For instance, in order to engage the local communities in planning and building the infrastructure, they must take a broader approach to achieving their goals than simply completing project milestones on a tightly managed timetable.

Second, this kind of learning can take place on a local or regional level, but it also happens with global scale projects. For example, the Youth Employment Summit (YES) is a nongovernmental organization (NGO) that seeks to generate 500 million new employment opportunities for youth around the world over the next 10 years. This work involves generating cultural change through the interaction of businesses, governmental agencies, nonprofits, and others to boost the position of youth in society. An effort of this scope requires tremendous resources human, financial, and so on and profound levels of learning to accomplish.

Dynamics of Societal Learning

Given their ambitious goals, societal learning initiatives must go well beyond simply coordinating organizations and resources often referred to as single loop learning or first order change because it occurs within current structures and assumptions. Societal learning requires a shift in mental models and the development of new structures and processes, known as double loop learning or second order change.

Like organizational learning, societal learning deals with exploring the deep, underlying structures that drive behavior, surfacing the basic assumptions

we hold that limit our options, and developing innovative approaches to persistent problems. For instance, throughout the U. S., intense interaction between the banking industry and community based organizations (CBOs) revealed that the bankers’ view of poor neighborhoods as unprofitable markets was grounded not just in social biases but in fundamental business assumptions (see “Banking on Community Development”). Through their discussions with community representatives, the bankers began to understand that their assumptions about the poor were wrong. They also found that their rigid ideas about their own product lines, product development approaches, and delivery systems were the real limiting factors to the success of banking services in the neighborhoods, not the limited resources of the people who lived there. Working with CBOs and churches, the banks revamped their business models in order to better serve and profit from the community. Making this change happen took the creative synergy of all parties involved.

This kind of shift in thinking can spur complex synergies and powerful innovations. For example, the banks found that they needed to design new product development tools, because traditional telephone surveys and focus group methodologies were inadequate for conducting market research with individuals who don’t have strong English-language skills. The CBOs thus became expert articulators of their constituents’ needs and worked with the banks to develop, deliver, and manage leading edge products. Similarly, in South Africa, organizations engaged in constructing sustainable water systems discovered that the government’s budgeting process was a barrier. Once government leaders became aware of the problem, they changed the process, leading to a whole range of opportunities.

Such collaborations can even produce the more rarefied triple loop learning, which involves rethinking the way we actually think about an issue. Through their work on change initiatives, many poor people and wealthy people, business people and bureaucrats, social activists and conservatives have come to fundamentally change how they regard one another. By coming together in productive new ways, these groups create rich networks of social capital that allow societies to accomplish things they could not have done before.

Systemwide Change

In systems thinking terms, the challenge of those involved in societal learning is to understand and address numerous large and complex feedback loops. In development and change management terms, the challenge is to transform learning at a project and intellectual level into broad, sustainable systemwide change.

Because successful societal learning initiatives usually require innovations in business, government, and civil society simultaneously, some change agents are intentionally fostering organizational networks called intersectoral collaborations (ISCs). These collaborations can form at the community level, as with many community development initiatives; at the state level, as with education and workforce development programs; and at the international level, as with the worldwide “clusters” in natural resources, water and sanitation, youth, and traffic safety initiated by the World Bank.

Such collaborations facilitate interactions among organizations from each of the three sectors in an effort to generate and apply new knowledge. Collaborating involves recasting roles, responsibilities, and allocation of benefits from the partnership. The key outcome of the process is new relationships among the three systems that lead to improved results for the organizations involved and for society as a whole.

ISCs are potent social change vehicles because:

• They bring together perspectives from each of the three key sectors of society.
• They strive to develop actions that produce value for each of the different sectors.
• They offer a broad reaching mechanism for disseminating learnings and gaining adoption of new approaches throughout society. So, rather than having a government representative urge businesses to change how they operate, business people use their own business networks to champion change, based on business experience, in a language that other business people understand.
• They provide tremendous opportunity for mobilizing the diversity and scale of resources necessary for bringing about the desired change. Business comes with its financial and production assets, government with its rule making and tax resource assets, and civil society with its foundation funding and volunteer workforce.

To fully appreciate the distinctive qualities that the collaborating organizations have to offer, we must understand the generic differences among the three sectors (see “Attributes of the Different Sectors”). For instance, the “Assessment Frame” refers to how members of a sector decide whether or not their output is “good.” Government is particularly concerned with legality; business focuses on profitability; and civil society thinks in terms of equity and justice. Therefore, to be successful, a societal change initiative must produce these three outcomes.

In addition, understanding the core competencies of partner organizations helps participants better define their own roles in learning initiatives. This process emphasizes the rationale for bringing organizations in different sectors together in the first place: to combine core strengths and offset weaknesses. An entity in one sector may be less able to accomplish a certain task than an organization in another sector. For instance, a business may be proud of customers’ trust in its products, but it is impossible to compare consumer confidence to the level of trust that a good civil society organization, such as a church, can build within its community.

Civil society organizations tend to define their issues as “problems,” whereas businesses like to frame them as “opportunities.” YES originally defined its goals from a problem and social justice perspective young people lack jobs. Through their work with business partners, organizers came to understand that failing to articulate the business benefits of their mission might ultimately limit its appeal. YES was then able to identify a number of positive business outcomes, ranging from market development opportunities to support for human resources planning, that their program might produce.

Through productive debate and dialogue among the diverse participants, ISCs can maximize the contributions of each sector and produce innovations that are valuable for all involved (see “Potential Outcomes by Sector” on p. 4). These innovations typically could not be thought of or implemented by the participants on their own. For this reason, to be successful, collaborators must be willingly to share their own goals and processes openly.

For example, environmentalists have been able to point to creative ways in which businesses can significantly

reduce their energy costs; similarly, interaction with consumer advocates has led some companies to move from merely complying with government regulations to creating new products and markets by anticipating changing consumer desires and the resulting legislation. Thus, it is important to understand the distinct goals of organization members and build mutual commitment to achieving them. Partners must also be able to define collective goals part of a shared vision.

Developing a Societal Learning Initiative

Developing a societal learning initiative requires patience, vision, and commitment. These transformations take time. About two decades passed before substantial changes occurred in the banking industry in inner cities in the U. S. However, as knowledge about how to collaborate on complex ventures grows, we’re considerably reducing the length of time it takes to realize successful outcomes. Depending on the scale and complexity of the task at hand, some initiatives can achieve significant results within three to five years.

Sometimes the collaborations begin as an NGO program, sometimes out of an event that produces common recognition that a problem/opportunity requires the resources of diverse organizations, and sometimes under the leadership of an influential individual or organization, such as a government agency. Often associations and federations of organizations take the lead in these initiatives, because such entities represent a large number of constituents faced with the same problem. However, societal learning efforts must also include frontline organizations, such as individual businesses, because these participants have different knowledge and concerns than do the associations that represent them and their industry partners and competitors.

Because these largescale projects are at the leading edge of what we know how to do in terms of creating change, they require ongoing learning and the development of innovative processes and structures. Organizers of societal learning ventures should keep the following principles in mind:

1. Make learning the guiding framework. Adopting a learning framework means that leaders must incorporate a planning action reflection cycle into every aspect and stage of the project. To do so, all participants need to agree that initial plans will be intentionally broad and that details will develop as the project proceeds. In the case of the World Bank clusters mentioned above, participating organizations began with a relatively vague idea about what they might do together. After getting to know one another, they developed learning agendas that included both looking at current strategies for working together and under taking experiments with new joint activities. A disciplined process to engaging participants in gathering data and analyzing it in real time is also a key way to develop common understanding about new ways to work together more effectively In addition, adopting a learning framework means providing workshops and other opportunities for skill development, because changing systems requires that we also change individual behaviors including our own. For example, the concept of, “co-leaders” is a natural extension of the need for peer like relationships among sectoral organizations. Rather than having “one captain of the ship,” several people share leadership. Currently, few people have the skills and few organizations have the structures and processes to share leadership responsibilities. We need to develop these abilities to move ahead with significant social change efforts.

2. Use action learning to support the societal learning process. Action learning involves developing knowledge about how to approach an issue and then creating a strategy for doing so, while at the same time gathering data to refine the approach. Coupled with systems thinking skills, this methodology can help people simplify and clarify complex problems. The World Resources Institute is using this technique to develop management tools to help governments, NGOs, and companies fulfill commitments made in international environmental conventions.

3. Begin by thinking through the full spectrum of issues involved in addressing a challenge. Governments and development agencies have long thrown money at the problem of inadequate water services in the developing world. Time and again, they have organized government bureaucracies or hired international engineering firms to build infrastructures of pipes, dams, and water treatment plants. Within six months, the new infrastructure is often in disrepair, and people are getting water through their traditional methods. Now that’s a fix that fails!

In this example, the well-intentioned parties wrongly define the problem as strictly a technological one, rather than also being one of societal learning. Analyzing the current situation and the intended outcome would define not just the necessary physical infrastructure, but also the changes in behavior, beliefs, resources, and organizational support required to optimize outcomes. The analysis should also show critical barriers to success; for instance, many people in the developing world think of water as being free and are unwilling to pay for it; communities cannot afford to remain dependent on outside experts to operate and maintain the system; and communities need to have a regulatory structure to monitor the system and ensure that it functions to quality standards.

4. Map the current system. Participants should take the time to identify all stakeholders in the system and analyze the relationships among them. Doing so offers planners a sense of the current reality, the key stakeholders, and the actors involved. It can also help them to identify organizations that are “early movers” an important category in any change process, because they are the ones most likely to lead the effort.

5. Follow the traditional planning action reflection learning process. Convene the players to investigate possible new directions; collectively design pilot projects and implementation steps; define learnings; plan for scaling up the initiative; scale up implementation, and so on. One important task is to develop tools to address classic problems that frequently crop up, such as maintaining the commitment of organizational participants; addressing “glocal” (global local) concerns (ensuring that the venture responds both to local needs and those of outside participants); maintaining organizational simplicity in the face of task complexity; and producing valuable outputs for both the overall project and the individual organizations. Regular review processes are part of the important work of formalizing feedback loops.

Unintended Consequences

Given the large number of variables in such global efforts, there are often many unintended consequences. In the banking example, some CBOs found that their increasingly close ties to the industry undermined their support from within their communities. Construction companies in developing countries realized they had to rethink their business model. And by decentralizing and privatizing public services, governments often discover that they need new budgeting, monitoring, and regulatory processes. All of these lessons reflect deepening societal learning. When the collaborations are working well, these lessons will be ongoing and profound.

As with any innovation, societal learning can involve substantial conflict. In successful collaborations, dynamic tension does not go away, but the parties find ways to harness that tension. Sometimes, the disappearance of tension indicates that societal learning is not occurring that collaborators are having difficulty getting beyond the exchange of pleasantries to get to the hard work of grappling with deeper issues and differences. Or, the lack of conflict might indicate that societal learning has already occurred, and the collaboration is moving into a maintenance stage. The absence of tensions usually indicates that participants should reassess the purpose of the collaboration, whether it has resulted in societal change, whether the change is limited to a small group of organizations, whether external change has made the collaboration irrelevant, or whether there is a new purpose that the group wants to develop.

Enormous Potential

Organizations often approach today’s problems and opportunities from yesterday’s perspective. Nevertheless, much has changed in the last decade. In that time, many new NGOs and businesses have formed; even more important, there are now improved global networks including the World Business Council for Sustainable Development, the International Business Leaders Forum, and CIVICUS (a civil society organization) that are engaged in intersectoral collaborations. Through experiments with these collaborations over more than a decade, we have vastly improved our knowledge about how to develop and sustain them. In this way, we have substantially increased our capacity for societal learning and our ability to effectively address complex issues such as the environment, war, and poverty and to create outcomes that are win win for all segments of society.

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Two Generations of Knowledge Management

While many of us were just grasping what the term knowledge management means, innovators at the Knowledge Management Consortium International (KMCI), the organization that McElroy heads and for which I serve as a board member, were already creating a new and improved iteration of the concept. Although some people may be tempted to dismiss this advance as being simply a case of old wine in new bottles, McElroy draws a bold line in the sand between these two distinctly different versions of knowledge management (KM). He explains how first-generation KM approaches are largely based on the notion that organizations are machines; from this perspective, knowledge and information are close cousins in that both are effectively managed through the use of technology. Practitioners of second-generation KM, on the other hand, adopt a more organic view; they regard information as a distant precursor to knowledge and view social processes as more critical than technology for creating new knowledge.

First-generation KM is based on the assumption that knowledge is a well-defined commodity that can be easily used by people throughout a company and that the main task of KM initiatives is to leverage the use of existing knowledge by sharing it freely throughout an organization. Technology becomes valued as an efficient means to accomplish this goal. Therefore, first-generation KM approaches typically focus on the use of technology to collect, analyze, and store data — especially best practices — that organizations can use to improve performance. For instance, a company’s sales force may use wireless systems to capture insights and lessons learned about customer buying patterns and competitor strategies. They then channel this information to someone within the organization who will organize it, conduct meta-data analyses to draw overarching conclusions, and place the results into a computer database. Such databases are then made available to employees through corporate intranets. Employees may access information such as lists of handy selling tips for approaching customers with certain profiles and strategies for increasing sales that have been developed and used successfully by other members of the sales force. Some of these database systems use “Yellow Pages” directories and expertise profiling to help practitioners connect with those colleagues who have demonstrated successes.

Although such tools are technologically impressive, they tend to focus on identifying isolated elements of knowledge, out of their natural context, and fail to address the fundamental process by which knowledge is created in individuals and groups. Second-generation KM seeks to address this shortcoming. The notion that sharing tips about how a colleague successfully achieved a sale presumes that others can effectively use a similar strategy without changing what they believe, how they think, or how they perceive selling situations. Such an approach reduces selling from an art that is developed over years of experience to a form of behavioral mimicry.

The Knowledge Life Cycle

Whether or not you subscribe to the increasingly popular view that first-generation KM has already proven to be ineffective, McElroy gives compelling reasons to consider switching to second-generation KM. He addresses how (1) organizational learning is linked to KM, (2) knowledge drives innovation, (3) complexity and systems thinking are related to KM, and (4) corporate policies can be an important lever for creating knowledge and innovation (see “10 Key Principles of Second-Generation Knowledge Management” on p. 8). For example, in first-generation KM schemes, such as those that focus on creating formal mechanisms for sharing best practices, knowledge is driven by what we might call “supply-side considerations.” That is, the mere availability of new knowledge is assumed to be sufficient reason to distribute it to employees throughout the organization — regardless of whether they are satisfied with the knowledge they are currently using or even have the capability to use this new material. According to McElroy, second-generation KM approaches are primarily demand-driven. A good example is what human resource professionals call “just-in-time” training (JITT). Through JITT, employees can access training when they believe they need it to solve problems that concern them, rather than attend management-mandated workshops that may or may not provide them with timely information.

In addition, according to the KMCI knowledge life-cycle model that McElroy presents, high-quality knowledge evolves over time through dialogue within communities of practitioners who are committed to understanding what works best. Technological fixes, such as the one described above, are not a substitute for nurturing the essential social processes that contribute to developing new knowledge — they are an adjunct. It is this idea that McElroy tries to impress upon advocates of first-generation KM, who portray computer-based fixes as a main feature of KM rather than as a tool for facilitating it. Because of this limited view of KM’s applicability, it is not surprising that many executives have become skeptical of the discipline’s promise for delivering sustainable competitive advantage.

Knowledge-Friendly Policies

In its essence, The New Knowledge Management espouses the perspective that managers cannot directly manage many critical organizational processes, such as knowledge creation, but they can influence them by judiciously altering certain factors. Xerox’s Palo Alto Research Center (PARC) is one enterprise that has organized knowledge management processes around people’s natural behaviors. For example, because workers tend to congregate around coffee pots, the company has installed white boards and markers in those areas to assist people in capturing the knowledge that emerges through informal conversations. In addition, because studies at Xerox revealed that people also tend to engage in conversations in stairways, the company facilitated this process by widening those areas so coworkers can remain on the stairs and chat while others still have room to pass by.

Likewise, McElroy argues that corporate policies often unintentionally stifle knowledge creation by favoring efficiency, and that managers should scrutinize and modify processes to be “knowledge-friendly.” In the latter portion of the book, in his description of the Policy Synchronization Method (PSM), he alludes to some key policy levers for systematically redesigning organizations to facilitate knowledge processing and innovation. PSM helps managers do a baseline diagnostic assessment of the effectiveness of current knowledge-processing systems and then alter policies and processes to yield greater innovation in how knowledge is created.

The importance of this naturalistic view of husbanding organizational processes, as opposed to managing them, cannot be overstated. The simplistic industrial engineering notions of Fredrick W. Taylor and others once served the prevailing Newtonian/ Cartesian mental models of managers well, but that era is over. Today, managers are killing organizations by sacrificing innovation to the god of efficiency. We shouldn’t be surprised to learn that stagnant, ineffective processes are traceable to an organization’s failure to create new knowledge, or that the solution lies in finding innovative ways to harness people’s talents, or intellectual capital, rather than in installing new hardware and software. Historically, tools and technology have always worked best when used to augment people’s know-how and understanding. While technologies can often replace people in simple, routine situations, they can’t generate innovation in complex, dynamic environments — that’s where the real value of second-generation KM is most apparent.

Does McElroy find the ultimate answer for achieving high organizational performance? Probably not. But in this writer’s opinion, he convincingly points toward a direction where it may be found, when many other so called knowledge management gurus remain bewitched by the lure of first-generation KM solutions. Second-generation KM — and McElroy’s book — provide a viable conceptual framework for effectively linking KM to systems thinking and organizational learning. In doing so, it offers a promising way for us to create and sustain organizational success.

Steven Cavaleri, Ph. D., (cavaleri@ccsu.edu) is professor of management at Central Connecticut State University in New Britain, Connecticut. He also serves as editor of the journal The Learning Organization.

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The good news, according to Tony Wagner, former co-director of the Change Leadership Group at the Harvard Graduate School of Education, is that the key qualities necessary for innovation—curiosity, collaboration, associative or integrative thinking, and a bias toward action and experimentation—are skills that can be learned rather than being strictly innate. Nevertheless, in his latest book, Creating Innovators: The Making of Young People Who Will Change the World (Scribner, 2012), he makes the case that most of our schools, at all levels, are failing to provide students with the hands-on, collaborative learning that fosters creative, critical thinking. Instead, they continue to prepare students in traditional ways for a career path that no longer exists.

Breaking the Mold

To illustrate that a different way of teaching and learning is possible, Wagner introduces several educational programs that are striving to break the existing mold, including the High Tech High network of K–12 schools in San Diego, California, Olin College in Needhaam, MA, the MIT Media Lab, and Stanford’s d. school. The essential difference between these programs and other, more conventional ones is that these schools promote:

• Collaboration versus individual achievement
• Multidisciplinary learning versus specialization
• Trial and error versus risk avoidance Creating versus consuming
• Intrinsic versus extrinsic motivation

Wagner quotes Richard Miller, president of Olin College, on the college’s goal, one that is largely shared by the other leading-edge institutions Wagner studied:

We’ve trying to teach students to take initiative—to transmit attitudes, motivations, and behaviors versus mere knowledge. Today, it’s not what you know, it’s having the right questions. I see three stages in the evolution of learning: The first is the memorization-based, multiple-choice approach, which is still widely prevalent; then there’s project-based learning where the problem is already determined; finally, there’s design-based learning where you have to define the problem. That way of learning is part of every class here. We are trying to teach students how to frame problems versus repeat the answers.

To achieve this objective, schools require a new kind of educator, one who serves more as a coach and co-learner than as an authority in an academic subject. Wagner highlights two graduate schools of education that have developed new teaching models: the High Tech High Graduate School of Education and the Upper Valley Educators Institute in Lebanon, NH. In both of these programs, novice teachers spend most of their time working with a mentor in a school setting rather than sitting in lectures learning about education theory. In this way, these programs resemble the approach to teacher education used in Finland, a country that has produced outstanding results on international assessments. Interestingly—but maybe not surprisingly, give how entrenched traditional educational philosophies have proven to be—neither the High Tech High Graduate School of Education nor the Upper Valley Educators Institute has received accreditation from its respective regional accreditation agency.

Finding a Path

Given the scant attention paid to fostering creativity, it’s no shock that the young innovators whom Wagner features in the book worked hard to create their own opportunities. Kirk Phelps left Phillips Exeter Academy and Stanford University without graduating, yet at 29 has already had successful careers at Apple working on the iPhone and SunRun, a leading home solar power company. Zander Srodes became an advocate for sea turtle conservancy, authoring a book, leading ecological tours, and earning numerous youth achievement awards and grants—all while struggling in the classroom. Syreeta Gates, who founded SWT Life, which provides New York City teens with entrepreneurial coaching and personal development training, dropped out of City Technical College of New York before finding a sense of purpose through volunteer work.

Virtually all of Wagner’s interview subjects benefited from the guidance of a mentor and participation in unconventional learning experiences. In many cases, the mentor’s efforts weren’t recognized or well compensated by mainstream institutions but instead were done as labor of love. Such is the case of Amanda Alonzo, who works as a science teacher and science fair faculty advisor. She spends as many as four hours a day after school mentoring 40 students a year on their science fair projects. For her efforts, she receives only a $1,800 stipend on top of her teacher’s salary.

Encouraging Creative Work

So where do we go from here? Wagner is aware that schools alone can’t shoulder the burden for developing innovators—parents and employers have a role to play as well. Based on his interviews with innovators and their families, he identified ways in which parents can encourage the “spirit of play, passion, and purpose that are the wellsprings for creative work.” Some of these include allowing plenty of time for play and discovery; encouraging reading; providing toys that encourage imagination and invention; limiting screen time; and allowing kids to make and learn from mistakes.

Wagner also interviewed business leaders, including Tom Kelley from IDEO and Annmarie Neal from Cisco Systems, about how management practices need to change for young innovators to thrive in corporations. Many of the characteristics they described as being vital—such as the free flow of information up and down the organization and trust— are reminiscent of the characteristics of a learning organization as described by Peter Senge in The Fifth Discipline more than two decades ago.

The US Army is also aware of the need for a new organizational model. According to the report, “The Army Learning Concept for 2015,” “[T]he Army cannot risk failure through complacency, lack of imagination, or resistance to change.” The report recommends three steps for establishing a more effective learning model, including converting classroom experiences to collaborative problem-solving events; tailoring learning to the individual learner’s experience and competence level; and using a blended learning approach that incorporate simulations, gaming technology, and other technology-based instruction.

Staying the Course

Recognizing that change can take time, Wagner concludes the book with a letter to today’s young innovators, who may have to persevere in less-than optimal circumstances. To encourage them to stay the course, he quotes dancer and choreographer Martha Graham:

There is a vitality, a life force, an energy, a quickening that is translated through you into action, and because there is only one you in all time, this expression is unique. And if you will block it, it will never exist through any other medium and it will be lost. The world will not have it. It is not your business to determine how good it is nor how valuable nor how it compares with other expressions. It is your business to keep it yours clearly and directly, to keep the channel open.

The rest of us have an obligation, too, to give members of the next generation the tools they need to flourish. If we don’t, they will pay the price for our failure of imagination and foresight.

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

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Similarly, many of us live our lives as though we are trying to run out the clock. Instead of using our strengths to achieve what we desire and take some risks in the process we take the safe route and vainly attempt to prevent failure. For instance, in our personal lives, we delude ourselves into believing that we will drop our prevent defenses and do work that we really care about after we achieve the next milestone a promotion, a larger house, a college education for our kids. But what often happens is what a participant in one of the poet David Whyte’s seminars poignantly described: “Ten years ago I turned my head for a moment and it became my life.”

This individual understood that she had not taken advantage of the fact that our lives are emergent. One step leads to the next. An authentic life is like going up a darkened staircase. The third step is visible only after we step from the first step to the second step.

If we give up our defenses for just a moment, new possibilities begin to reveal themselves and emerge.

When we insist on being able to see the third step from the first step, we become paralyzed and fossilized. One of my MBA students recently asked if it was a good rule to replace older workers with younger ones in order to increase corporate creativity. A young mind, I replied, can be as fossilized as an older one. However, because the fossilization process is in its earliest stages with people new to the workforce, it frequently goes unrecognized. But unfortunately, many of us make the choice as young adults to stop learning, to stop growing, and to become paralyzed, by insisting on guarantees rather than trusting the emergence of life.

When we are authentic, we set in motion events that compound themselves and lead to discovery and growth. In contrast, when we choose to lead a life characterized by prevent defenses, the choice we faced at 20 is there again at 30 and again at 40 and again at 50 and again at 60. The characters in our personal drama change, the organizations we work for change, but the choice to be authentic or to run out the clock is frozen at the same place with the same real content. By the same content, I mean that if at 30 we tried to insure that we would receive a promotion by always agreeing with what our manager said, we would face the same dilemma again at a later date. After a while, preventing failure can become a habit that inhibits discovery.

Organizational cultures employ prevent defenses too. All organizations have a “culture”—an unwritten way of seeing and then responding to their business environments. The culture leads to a set of unspoken beliefs about the organization and how it operates—beliefs that drive people’s behavior in the organization. When the business environment changes and it always does—these beliefs become increasingly problematic, because they no longer support the way the company must operate.

But examining our beliefs in order to change them is not something individuals do easily—it feels risky and opens us up to criticism from others. We often fall back on “This is how we do things here” to prevent examination of our underlying mental models. Rigid hierarchal structures that prevent dialogue also hinder organizational learning and reflection. But as long as the organization does not openly examine the beliefs that are holding it back from being more responsive to its environment, its prevent defenses will almost guarantee defeat.

“In defenselessness I will be strong, and I will learn what my defenses hide,” states A Course in Miracles. If we give up our defenses for just a moment, new possibilities begin to reveal themselves and emerge. These possibilities are treasures of which we have not yet dreamed, waiting to emerge in our lives, in our organizations, and in our economies.

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Overcoming School

Although a key factor in creativity and learning, curiosity is rarely mentioned—or encountered—in the classroom or on the job. Earlier this century, the educator John Dewey said “school should be less about preparation for life and more like life itself.” Those of us who complained in high school that what we were taught had no relevance to our lives now face the absolute relevance of learning in order to make a living. Too often, though, the school of our real adult lives—the workplace—still has an aura of oppression.

Despite the supposed “intrinsic pleasure” of learning, we usually settle for the extrinsic rewards of salary and career advancement and forgo the rest. But this cheerless learning is merely another kind of labor; a courtship without passion, forced by the arranged marriage of another’s interests with our time and effort. However, when we brush against our own interests, our hearts and minds race faster. Nevertheless, many organizations undertake learning initiatives in the tradition of schooling, without giving workers the imprimatur to savor its guilty pleasures.

But, as our rapidly evolving economy increasingly demands that we use our minds rather than our muscles, we can hardly afford not to understand this passion for knowledge and embrace it, especially in the workplace. The leading edge of knowledge, curiosity can accelerate breakthroughs in productivity and performance like few other forces. When workers become curious, they suddenly have an immediate and truly personal stake in the process of discovery. Explicit recognition of the value of curiosity to an organization’s progress is a declaration of every worker’s capacity to catalyze change.

Signature Questions

Yet, it’s possible to read many of the major works in the field of organizational learning without ever coming across the word “curiosity.” Is something important missing here, or is the word’s absence merely trivial?

What we really want our “learning organizations” to do is create new knowledge. If this is our aim, then we must forswear our usual re-mixing of what is already known. Nor can we rely on external resources to tell us what we should be curious about. To create new knowledge, we must discover the signature questions of our organizations—those that we are uniquely able to ask, that are at the same time expressions of everything we already know and everything we don’t know. These signature questions are at the very heart of the knowledge creation process, and they are the engine for “curious organizations.”

Growing Curiosity

From this perspective, if the leaders of the knowledge economy are to resemble gardeners rather than charismatic heroes, as suggested by Peter Senge in an interview in Fast Company, then they should think of their organizations as curiosity “farms.”

To that end, if we refashioned our learning organizations into “curious” organizations, what would they look like? How would they function? What would happen if we assembled a “curious team” and gave it room to develop a refined sense of its own kind of knowledge-creating process and the independence to manage that process according to its needs? Would a curious team work together differently and produce different outcomes than a learning team? How might such outcomes be used to advance our organization’s mission or improve its bottom line?

Rod Williams is a clinical psychologist curious about knowledge-creation processes in human systems. He is also the marketing and e-commerce manager at Pegasus Communications.

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