Network thinking has brought about vast improvements in efficiency in all these sectors. But while such ideas have had an enormous impact on technology, we have yet to see comparable gains in understanding social systems. Social networking software and websites such as MySpace claim to provide a meaningful way to bring people together from around the world in virtual communities. However, these Internet-based solutions have gained a negative reputation for harboring child predators and others who take advantage of the web’s anonymity to deceive their victims. The purpose of this article is to introduce the history, scientific theory, and research behind how true value is created in social networks — and to provide ideas for starting to leverage this knowledge for the good of organizations and beyond.

Not in My Space!

Over the past few years, social networking websites have exploded seemingly out of nowhere. MySpace, which was founded less than four years ago, now has more than 100 million users. PC Magazine defines social networking as “a web site that provides a virtual community for people interested in a subject. It provides a way for members to communicate by voice, chat, instant message, videoconference and blogs.” The use of social networking software to form relationships online is a logical extension of the Internet’s communication capabilities. All indicators suggest that social networking providers will continue to flourish, even as new technologies emerge that improve virtual connections, such as Web 2.0 (web-based communities and hosted services that facilitate collaboration and sharing between users) and telepresence services.

But the popularity of existing services is being shadowed by concerns of child predation and social deception. Four families are suing MySpace after their underage daughters were sexually abused by adults they met through the site. Congress introduced the Deleting Online Predators Act of 2006, and although it did not pass the Senate, it is likely to be considered again by the 110th Congress.

Beyond concern over legal liability for the actions of people who use their services for criminal purposes, technology companies need to take into account their brand image. Over the long run, those that allow antisocial behavior to flourish — even if it’s through benign neglect — will likely be less successful than those who promote social well-being. In an ever-more crowded marketplace, the adoption of socially responsible technologies will become an important new competitive differentiator.

While technologies such as MySpace claim to be novel social networking solutions, the science of studying and understanding social networks has been developing for at least 100 years. By applying this rich body of work to the business world, I have found that value is created in collaborative social systems that run across a company’s traditional organizational chart. Enterprises that learn how to create an environment that accelerates the functioning of such networks through mutual acceptance, respect, and co-inspiration will realize large gains in performance and the well-being of their workforce. While current social networking technologies are likely to become passé as new technologies emerge, our understanding of social networks will become a core competency for organizations that find themselves in an integrated global economy.

Social Network Mapping vs. Social Network Analysis

The father of social network measurement was J. L. Moreno, M. D., an Austrian gestalt psychiatrist who, in 1915, began charting social relations by drawing “sociograms” that showed group relations as line drawings connecting people. In developing “sociometry,” now referred to as social network mapping, Moreno sought to study social groups in order to recognize and acknowledge the value of each person. Moreno was influenced by George Herbert Mead, who developed qualitative research methods, and by the American educator John Dewey. Dewey saw individuals as inseparable from their social context, just as society is meaningless apart from its realization in the lives of its individual members. Additionally, just as Dewey influenced W. E. Deming and Walter Shewhart in the creation of continuous quality improvement processes, he also influenced Moreno to use social measurement as an action science to continuously improve social well-being.

Sociologists and anthropologists use social network measurement to uncover the overall structure of a social system. In this context, a system can be small, like a family or a manufacturing line, or large, like trade balances among nations. With this knowledge of the interrelationships and social rules in a given culture, social scientists can better understand, for instance, the spread of HIV, with the goal of stopping the epidemic.

Analysis is defined as the decomposition of the whole, so social network analysis, as practiced today, generally focuses on individuals and their roles. For example, someone with many more social connections than others might be described as a “hub.” In contrast, I have followed the path of what I call social action research in order to understand the science of social systems and how human communities generate social, biological, and financial well-being. Instead of observing a network from the outside, following Moreno’s methodology, social action researchers invite everyone in a group to join them in reflecting on their daily actions by employing qualitative research practices, such as participant observation and unstructured interviews, to generate survey questions.

This process is useful in at least two ways. First, managers can refer to the maps when creating strategies and planning work processes to ensure that they enhance rather than detract from the working of the social networks involved. Second, when employees are asked for their views on how they are creating value for their organization, they feel respected, important, and inspired to perform at an even higher level.

Construction of Social Network Graphs

In business, the survey questions employed in social action research typically refer to the creation of value. For example, the following questions were used in studies at Hewlett Packard:

“With whom have you collaborated on the_______________?”

• reduction of quality escalations in inkjet supplies
• ink-elastomer chemical interaction studies
• development of HP’s first digital projector
• creation of product detection software
• sale of computers and servers

The quality of social network data depends on the relevance, timeliness, and validity of the questions used. The survey is designed for individuals to complete. It includes the name of the person completing the survey, the date, the question, and a table for them to identify those with whom they collaborate, how often they collaborate, and the role or location of those they have identified. As surveys are returned, the individuals named are also sent the same survey to complete. This process continues until no new people have been identified (snowball sampling) or until the group decides to suspend the surveying.

The collected data is then compiled. Usually, a social network with a given kind of interaction among a group of people is graphically depicted by a number of points connected by lines. In traditional graphs, each point is called a “node,” representing a person, and each line is called a “connection,” representing relationships between people. In social action research, dots are replaced with the names of people. The lines also have arrows indicating who identified whom as a network member. Finally, each connection can be associated with a value, which usually is the frequency of contact or interaction.

In this example, the social network data shows a relationship between Dennis, Maria, and Yan. Dennis and Maria, and Maria and Yan, have the strongest connections because they meet most frequently and share reciprocal interactions. At the same time, the relationship between Dennis and Yan is the weakest, because it is unidirectional and less frequent.

But we must be careful in making sweeping generalizations using social network graphs. For example, there can be value in weak ties. In our example, it could be that Dennis had valuable information that Yan needed to complete a work assignment. Our explanations of social network graphs must be validated by those involved in the study, which is again why the qualitative research is so important in preceding the social network survey.

Study of Social Network Graphs

Once the social network graph is constructed, it is shared with those participating in the study. This is a reflective process, as those involved in the network validate the quality of the data and in turn respond to its findings. Perhaps the study reveals that an important position is missing from the network, and participants take action to “fill the hole.” In response to another study, employees may choose to expand the number of connections within a social network; for example, a company that becomes more customer centered by shifting the structure of their social networks to include customers.

Following are some of the traditional features of social network graphics that can offer valuable information about their functioning and sources of leverage for change:

Density

Density is a measure of overall connectedness. It is arrived at by dividing the number of ties by the number of possible ties between people.

In this example, there are 5 ties between Maria, Peter, Dennis, and Katy out of 12 possible ties, so the density of this social network is .42. Density measures fall between 0 and 1.0, with 1.0 representing the greatest density or connectedness. The higher the density, the stronger the connections between team members. A low density score could potentially show conflict in the group or structural barriers that prevent members from communicating effectively.

Centrality

Centrality is considered a measure of power, importance, or influence in social networks. It is derived simply by counting the number of connections a person has. In this example, Maria is the most “central” person in the network, followed by Chris and Darla, with Dennis, Katy, and Peter being the least central. Here again, we would rely on the qualitative interviews to learn more about Maria’s role. In some studies, we have found that the person in Maria’s position is a program manager that everyone depends on to keep them on track. Perhaps Maria is the supervisor of Dennis, Katy, and Darla and peer of Chris and Peter. In yet another context, Maria might be the creator of a rumor that is circulating about the office.

Structural Holes

When I use social network mapping as a learning process, those in the network construct and examine the maps themselves. Participants commonly observe structural holes — individuals missing from the diagram who have the potential to contribute to the network’s performance. In one case, a manager was called in to mitigate conflicts between Hewlett-Packard and a plastics supplier. He witnessed long, grueling meetings between the two organizations where little if anything was accomplished. The manager opened his journal and drew this picture representing the engineers in his organization and in the vendor’s organization:

His sociogram showed connections within the organizations but more importantly showed structural holes between the two organizations. With engineers from both organizations present, the manager drew connections for all to see, suggesting that team members from both organizations should work as one team. As the age-old saying goes, a picture is worth a thousand words. In this case, quite literally the picture was worth thousands of dollars. Engineers from the two companies immediately began to fill the “holes” by collaborating, saving hundreds of thousands of dollars over the next year.

Social Systems and Living Systems

I have presented a number of traditional social network concepts. When looking at social network graphics, it is important to realize that, like photographs, they are snapshots of how social networks have formed. Social networks are constantly changing, and our greatest leverage lies in understanding them from a perspective of living systems. As currently practiced by many consultants using tools such as those described above, social network analysis is the separation of a social network into its component parts. It attempts to describe or make comments about an individual’s role within a network. So, going back to the social network in which Maria played a central role, an analysis might conclude that Dennis is an isolated “node” in the network and should be more of a team player. Or from a knowledge management perspective, Maria may be seen as a “hub” in the network and therefore should be promoted.

This approach can have value, but to me, it doesn’t go far enough in generating a systemic understanding of social networks. I have found that insights from the study of living systems and cognition provide the philosophical explanations for a deep understanding of social systems.

In 1951, social scientist Gregory Bateson reconceived psychiatric practices by describing a way of viewing the world that shifted from focusing on:

1. parts to the whole,
2. categorization to integration,
3. the individual to interactions,
4. systems outside the observer to systems that include the observer.

This shift was an initial step in leading us away from analysis and separation to systems thinking. But from my perspective, the most profound contributors to understanding social systems are the co-founders of the Matriztic Institute, Dr. Humberto Maturana and Professor Ximena Davila. They explain in great detail how human beings are born to collaborate and how we can move from a culture of pain and suffering to a culture of well-being through what they describe as “liberating conversations.” To me, this perspective offers new questions and insights into the value and practice of studying social networks. Based on their work, we begin our research with a simple statement: “Everything that is said is said by an observer.” We follow up with a fundamental question: “How do I do what I do as an observer of systems?”

This last question in particular is vital, because it brings forth the role of the observer in the social system they are reflecting upon. When someone interested in a particular network realizes that, whatever they do to the network, they do to themselves, too, they are likely to take socially responsible actions. In studying the work of Maturana and Davila, we also learn that social systems are dynamic and that anything that occurs in the social system is determined by its underlying structure.

Studying social systems is an important departure for organizations. Since the late 1800s, we have been accustomed to see organizations as machines. In the Industrial Age, the physical sciences became the frame of reference for guiding economic growth. Using scientific tools of separation, specialization, analysis, and reductionism, a new image of organizations emerged: the organizational, or org, chart. The org chart depicts hierarchy and areas of specialization. Although some still believe that organizations function based on the structures shown in these charts, many people are finding that the life sciences lead to a more valid understanding of social systems in organizations today. This shift in perspective raises new possibilities by leveraging the concepts of self-organization, collaboration, inter- and intra-organizational social networks, and multidimensionality.

Self-Organization

Are social networks static or dynamic? This is not a trivial question. Managing an organization’s effectiveness will depend on the answer to this question. If you believe that social networks are static, you will presume that relationships are always the same. If, however, you believe that social networks are dynamic, you will want to continually refresh your assumptions about how value is being created. Social action research or practices such as management by walking around become critical learning processes for understanding collective knowledge.

By mapping social networks over time, I have found that they are dynamic and constantly changing, even if the members stay the same. People self-organize as employees create new connections, weaken old connections, and so on in response to new opportunities. Self-organization is an important systemic principle, because performance and productivity are maximized as those within the social network have the freedom to organize their own relationships. You might think of self-organization as the antithesis of bureaucracy. Research has shown that the greatest reward for employees is making a timely contribution to their company, and self-organization is the group process for doing so. (See illustration above.)

Collaboration

Humans are social beings. We can pick out a familiar face among hundreds of pedestrians. At a very early age, infants recognize facial patterns. Biologically, facial recognition stimulates a neural network in the amygdala region of the mid-brain, which is also the center of our emotions. Neuroscientists claim that more than 90 percent of the information we receive from others we obtain through facial expression and body language. Unlike any other species, humans are neurologically wired to be social.

As Maturana and Davila have described, we humans are loving beings and are biologically structured to collaborate. This relationship of mutual acceptance expanded as humans formed groups to survive. Through this innate social behavior, we can accomplish tasks without having to spend time deciding on what group structure is most fitting. While companies spend a fortune on organizing their workforce, social systems require no funding or intervening because of their biological nature.

Social network structure varies. Some networks are based on command and control or dominant and obedient relationships. Other networks are distributive in nature, such as the rumor mill that exists in most organizations. Collaborative social networks are social systems in which everyone is accepted as a legitimate member by everyone else. They are cohesive and natural, and are the source of social capital or optimal group productivity. These systems are also the source of value creation, innovation, and performance breakthrough. This illustration shows optimal cohesion, as every member of the social network is connected to every other member in a seamless support system they created for a man with disabilities.

Whenever I have studied how value is created in the workplace, I have mapped collaborative social systems. In our expanding global economy, the performance challenge for executives is to create the conditions for collaboration to occur. Research has shown this can be done by (1) giving employees the freedom to organize themselves and (2) generating reflective conversations on how value is created.

Inter- and Intra-Organizational Social Networks

The theory that underlies most org charts is that work flows from the top of the organization down through the ranks. However, studies of how work actually gets done have consistently shown that it happens in social systems that span the organizational chart horizontally, not vertically. For a department in a large enterprise, I have plotted the collaborative social networks across the organization chart, shown above in blue shading.

The boundaries of value-creating social systems do not end within the organization. I have also studied collaboration in social systems that include two or more organizations. The rejection of plastics created by outside vendors for Hewlett-Packard’s inkjet cartridges was completely eliminated during the most aggressive inkjet cartridge launch in HP’s history, in part due to a collaborative network that included four Hewlett-Packard sites, two formerly competitive plastic suppliers, and subject matter experts. These parties worked closely in developing the use of transducers in plastic injection molding processes.

In another instance, in Puerto Rico, a network of HP engineers and engineers from their supplier Nypro joined forces on a project that refurbished worn manufacturing line parts instead of throwing them into local landfills. This network of collaboration had multiple effects. First, the initiative created social well-being by giving participants the freedom to innovate and the joy of accomplishment. Second, it generated biological well-being, as the factory no longer dumped heavy metals into Puerto Rico’s already taxed landfill waste dumps. Finally, it led to financial wellbeing by saving HP hundreds of thousands of dollars. You might recognize this example as the one cited earlier in the article in which the manager identified structural holes and asked engineers from both organizations to collaborate. In doing so, they saved HP more than $700,000.

Multidimensionality

As social beings, we coordinate our actions in conversations within closed systems that include other business units, vendors, universities, family, and friends in a continuously changing present. This statement challenges our traditional thoughts of the org chart network, isolated internally and externally, as the source of value creation. In his 1982 book, Out of the Crisis, W. Edwards Deming drew an alternative value-production system as a network of suppliers->producers->consumers. In my work, I have found that our networks are multidimensional; for example, in the HP example cited above, those in the social system generated business results but also social and biological well-being.

The illustration at the bottom of page 5 shows the social system of people supporting a man with disabilities who grew up in a state institution. By providing this man with the support he needed to have a job, the network brought his productivity to 100 percent with perfect quality. In doing so, they improved his wages from $0 at the state institution to more than $1,500/month plus benefits, enabling him to leave welfare and public assistance. This shift allowed the man to move from the institution, which cost tax-payers $80,000/year, to his own community, where he became a taxpayer and owned his own condominium. His case is a prime example of how to leverage living, multidimensional, collaborative systems and, in the process, create value and well-being.

Systems Laws

The work of the Matriztic Institute goes a step further to describe systemic laws that can expand our understanding and application of social systems thinking.

Structural Determination

Imagine going to the stadium to watch your favorite sports team, or perhaps you are at a concert hall getting ready to listen to a symphony. You anticipate an extraordinary performance and then learn that an exemplary player has been replaced. Your immediate response may be incredulity. You may think, “How could they perform without this person?” If you do not find an adequate explanation for your question or if you aren’t satisfied with the substitute, you may become disappointed and critical.

Your disappointment in this instance stems from an innate understanding of the law of structural determination. As explained by Maturana and Davila, structural determination states that everything that occurs in a system is determined by the system’s structure. Engineers will immediately understand this concept. They are experts at developing new products as a system and making sure that the interconnected parts are structurally compatible. The same law can be applied to social systems, such as a team, an orchestra, or a workplace. In these settings, performance is determined by the structure of the social network. If critical people are missing, performance will suffer. If there is a lack of collaboration among members of the network, group productivity will diminish, and cost will increase. Emotions will turn from excitement to disappointment as participants and other stakeholders realize that the output may not be of the caliber they had anticipated.

These things often occur in the workplace through restructuring, reorganization, and voluntary workforce reductions. In one case, I mapped a social network that was generating new IT products. First one person and then two others were assigned new roles in the company. The executive in charge of the new IT products noticed a slowing of performance, and it took those remaining in the network months to reorganize their efforts. By understanding social network mapping and the systemic law of structural determination, executives can anticipate how changes to a network will affect its efficiency and overall performance.

Conservation

To exist in the rapidly growing global economy, companies are told they need to keep up with the competitive environment they find themselves in. New management concepts and abstractions are continually emerging to guide organizations through these complex, dynamic challenges. To capitalize on these innovative methodologies and perspectives, managers are told they must promote an internal culture of change. But the management literature tends to focus on new concepts instead of understanding how work is done.

I propose that managers must learn how value is created in our networked world. Although change is inevitable, it is equally important to conserve those practices that improve efficiency, value creation, and well-being in collaborative social systems. When initiatives inadvertently disrupt the network of relationships through which work is accomplished, they can backfire and leave the company even more vulnerable to outside pressures than before.

Research has shown that value is created in dynamic, collaborative social systems that connect people across business units, companies, continents, and cultures. To be successful in the global economy, organizations will need to develop new practices based on understanding social systems.

Although change is inevitable, it is equally important to conserve those practices that improve efficiency, value creation, and well-being in collaborative social systems.

Unfortunately, technological developments labeled as social networking can actually obscure our understanding.

The work of Humberto Maturana and Ximena Davila expands our knowledge of social systems. This knowledge will have positive effects on organizations of all kinds. First, by developing practices that support self-organizing social systems, managers will improve organizational efficiencies through productivity gains. Second, because the quality of our social systems translates to the quality of our knowledge, reflective studies of social systems will lead to financial, social, and biological well-being. Finally, as we reflect on our social nature, we discover that we too live our lives in social networks. Through this insight, we become socially responsible and generate greater social well-being.

Dennis Sandow is president of Reflexus Company, a research company studying performance and knowledge creation in collaborative social systems. Prior to starting Reflexus, Dennis conducted research on social networks and social capital at the University of Oregon. Dennis is a research member of the Society for Organizational Learning and lives in Oregon with his wife and two adult children.

The post Extending Systems Thinking to Social Systems appeared first on The Systems Thinker.

Peter Senge: Organizations will have to be much more in tune with and ultimately responsible for their impact on social and environmental wellbeing. In addition, to remain competitive and successful, they will need to tap the collective intelligence, spirit, and energy of their people. Bill O’Brien used to say that in the 20th century, to be effective, organizations focused on developing manufacturing, financial, and, to some degree, marketing sophistication, but they operated with mediocre people skills. In the 21st century, while manufacturing, financial, and marketing expertise will remain important, organizations that will thrive will have comparably sophisticated people skills.

These two imperatives will increasingly intertwine. As former Volvo and IKEA CEO Goran Carstedt said, the challenge is to develop organizations “worthy of people’s commitment.” Most of us can see that our current approach to globalization is creating great stress in the world. Organizations, especially businesses, that seek to tap the insight, commitment, and creativity of their people will need to be committed to enhancing social and environmental wellbeing, not just to making money.

TST: What changes are most needed in the next decade? Where is the highest leverage for bringing about the kinds of changes you think would help our world?

Any enduring change strategy includes building and sustaining networks of collaborators across many boundaries.

Senge: SoL (the Society for Organizational Learning) operates from the assumption that collaboration among organizations is, and will increasingly be, vital to sustaining deep changes in the traditional management culture. When I say management culture, I mean the prevailing and often unquestioned assumptions and taken-for-granted practices of management in Industrial Age organizations. One traditional assumption is that, rather than having several performance requirements, the sole purpose of a business is to maximize return on invested capital.

Another is that, to enhance performance, managers need to focus everyone on “the bottom line,” what accounting theorist Tom Johnson calls “management by results,” rather than on enhancing the capacities of people at all levels to understand complexity and to learn.

These narrow assumptions may have led to innovation and success in the past, but today, what any individual organization—whether a business, hospital, governmental agency, or school—can do alone to significantly break from the cultural mainstream is very small. Each one operates as if it were tied to a rubber band. Even if an organization innovates significantly for many years, it eventually gets snapped back to the norm. For example, at any one point in time, you can always find a small number of highly innovative schools in which kids are engaged and teachers love their work. But virtually all return to average within 5 to 10 years.

From my standpoint, any enduring change strategy includes building and sustaining networks of collaborators across many boundaries. For the past several years, SoL has focused on bringing together large multinational companies, prominent nongovernmental organizations, and key governmental agencies to work on significant issues around environmental sustainability. For example, oil companies that establish residency in a country, such as Nigeria, Angola, or Venezuela, to produce oil over 50 or more years, have traditionally justified their efforts by promising that the country would be better off as a result. But there are several reasons to challenge this premise. Many countries that have exported large quantities of oil for years have seen little real economic, social, and environmental progress. Many end up as permanent oil exporters with little modern industry and strained relationships with the oil companies. Much of the profit goes to corrupt regimes that squander it long before it benefits the society at large. “Rigged rules and double standards” in global trade, as a recent Oxfam report puts it, favor developed countries’ exports over developing countries’ exports, hindering industrial diversification in emerging economies. For oil companies to deliver on their promise for economic and social development in exporting countries, they cannot work alone, and SoL members are looking for ways to foster collaboration within these countries and among different multinational organizations to help this process.

Another project within the SoL community is based on German chemist Michael Braungart’s idea of “intelligent materials pooling.” In their new book Cradle to Cradle: Remaking the Way We Make Things (North Point Press, 2002), Braungart and U. S. architect William McDonough discuss the adverse environmental and health effects of current industrial products. They propose a business model in which companies collaborate to eliminate toxins from their products and integrate natural systems ideas, such as continuous reuse, into product design. This paradigm has become increasingly attractive to companies, especially in Japan and the European Union, where some governments have started passing legislation that holds private industries responsible for their products after the periods of use are over.

The basic idea is that if you produce something, you own it forever. Ideally, we’ll get to the point where every product we come in contact with can be indefinitely recycled or remanufactured, and nothing ever goes into a landfill. In this way, we start to “close the loops,” as the environmentalists would say, just as nature does. Nature doesn’t generate waste. End products or byproducts of one living system are nutrients to another. What companies can do on their own to support such changes is often very limited. There may be no cost-effective substitute for many widely used chemicals, like PVCs, and the research costs to a company for redesigning its products could be prohibitive. But a group of companies could pool their purchasing power and work collaboratively with chemical producers to find substitutes, just as they could pool research efforts.

TST: What are some of the challenges organizations face as they collaborate with multiple stakeholders?

Senge: Let’s look at the automobile industry. Part of the EU legislation I was just referring to requires companies to give a complete account of all the material components of a car they intend to sell. Why do we need to know this information? Well, probably about 90 percent of a vehicle’s materials, starting with the seat fabric, is toxic to people. For example, in most new cars today, you can see a thin film on the inside of your window in the morning. That is not moisture; rather, it’s outgassing from the dashboard’s components. Braungart and McDonough point out that many of the widely used materials in everyday products are carcinogenic substances that remain in living systems for a long time. In other words, they’re harmful to humans and other life. In the pharmaceutical industry, drugs are regulated to avoid the production of dangerous products. In most other industries from which we buy, use, and discard products, however, up until recently, little such regulation has existed.

But just the task of identifying material components is daunting. In making an automobile, you deal with a complex web of suppliers, few of who know the chemical composition of the products they’re selling. In addition, companies selling vehicles in Europe are now faced with phase-out schedules for particular chemicals, starting with heavy metals such as lead, mercury, hexavalent chromium, and cadmium. In many cases, nobody knows how to remove these elements from vehicles or what material can be used as a substitute.

As SoL member companies collaborate, we are finding connections and possible synergies. For example, we recently discovered that Pratt &Whitney has developed a product that eliminates hexavalent chromium from fasteners. But because this product was developed for the aircraft industry, it was unknown to auto and motorcycle manufacturers. Another collaborative project involves building common databases so that product designers can quickly determine the chemical constituents of different materials, their potential environmental and health consequences, and preferred alternatives, where they exist.

TST: Have any organizations successfully collaborated and designed sustainable product development processes?

Senge: About five years ago, Nike, Inc., began to address a serious discrepancy between its mission and its products. Founded on a vision of fitness and vitality, Nike was making products that included potentially harmful chemicals. Several Nike leaders started meeting with external and internal designers for the company to explore more sustainable practices in product design, manufacturing, and distribution. Eventually, this group evolved into a substantial network of designers and producers who are collaborating to figure out how to integrate sustainable product development into the company’s core strategy for success. Nike now sells an entire line of organic clothing made from cottons produced by small farmers around the world. It’s currently trying to figure out how to mass-produce nontoxic organic fibers so they can use these materials in more of their products. To pursue such large-scale collaborations, Nike initiated SoL’s materials pooling project.

TST: Who will be the movers and shakers making an impact in society in the next few years?

Senge: It depends on how you interpret the phrase “movers and shakers.” In our present society, the media tends to focus on the CEO, who is typically regarded as the key to the company’s success. But the types of leadership truly critical to an organization’s prosperity are not ones you usually read about in the newspapers or Fortune magazine. In the change efforts I’ve been engaged in, I’ve found that the local line leaders and what we call “internal networkers” are making the greatest impact on changing how our larger systems work.

They’re the ones operating on the ground implementing innovative ideas like materials pooling, turning schools around so students can excel, and creating community leadership organizations that eliminate gang warfare.

Many of us have the mental model that somebody—some senior leader or manager—must be controlling the organization’s systems, which we ourselves feel overwhelmed by. But from a systemic perspective, the reality is just the opposite. Most large institutions are so complex that no one person—no “mover or shaker” in a position of authority—can bring about the needed change. Rather, when lots of people at all levels of an organization start to do things differently, they begin to enact new systems.

TST: How do we get a critical mass of people doing things differently?

Senge: For one, through the sharing of generative ideas, ideas that can change how people think and act. The Industrial Revolution is a perfect example of how a set of ideas can produce wide-scale change without a single plan or group in charge of the process. Over a long period of time, hundreds and thousands and ultimately hundreds of millions of people started doing things a little bit differently than they had before. As a result, factories sprang up, assembly lines were developed, public schools were created, and entrepreneurial activity exploded. As these concepts grew in people’s minds, the way work was organized changed dramatically—for better and for worse.

How did these ideas spread?

Mostly through stories. Academic books usually have less short-term impact than a compelling story told informally over and over. Even more powerful is a reinforcing pattern of stories that gradually starts to build an idea in people’s heads. For example, many of us have begun to internalize the notion that we’re inextricably linked with others around the world because we all live on one increasingly smaller planet—a public consciousness that did not exist 50 years ago. Regardless of whether the idea evolved from seeing pictures of the earth from space or television images from the other side of the planet, or being able to work around the clock with colleagues from Asia and Europe—we’ve begun to accept the “story” that we are all to a certain degree interdependent. This is a historic change but it’s just at its beginning; we still to a large extent identify first with our own tribe or country.

Although we’re beginning to realize how interdependent we are, few people know how to transcend the boundaries that still separate people and institutions. Just like the beginning of the Industrial Revolution, where people embraced the idea of reorganizing production for efficiency without knowing how to accomplish it, we’re at the early stage of enacting systems that support an interdependent world. The idea has credibility, but we’re still not sure how to do things differently. As I mentioned earlier, one way is to build networks of people and organizations who are implementing diverse ideas of interdependency and sustainability. Then, sharing stories of projects such as the materials pooling initiative can inspire more examples.

There’s no end to what people can do. I’ve been particularly impressed with innovative projects in which young people are trying to think globally while doing things locally. Young people today have grown up acutely aware of the stresses in the world, especially those living in poverty or in countries with obvious social divisions. They’re beginning to network with each other internationally to initiate changes addressing social and environmental imbalances.

For example, Pioneers of Change, an emerging global network of people in their 20s and early 30s, is involved in significant social change projects to produce healthy communities around the world. One of its members is developing a network of villages based on sustainable agriculture in Rwanda. Another is starting the first management school in Croatia. Another group, Roca, located in Massachusetts, is composed of former gang members focused on helping teenagers leave their gangs and build their communities. If you listen carefully to these young people, you’ll understand that they’re all working on the same basic issue—how can we humans learn to live together in this world.

TST: The Fifth Discipline has been out for more than 10 years. Has its popularity resulted in the effects you hoped for? How do you view your own purpose now? Has it changed over the last 10 years?

Senge: I don’t think my sense of purpose has changed very much. But it does get clearer. If you pay close attention, hopefully you learn more each day about what you’re here to do in the world.

I have always been concerned with the imbalances in our patterns of development. I think the Industrial Age is a historic bubble, just like the “dot com” financial bubble. I don’t think it will continue, because I don’t think it can continue. The Industrial Age has ignored the reality that human beings are part of nature; instead, it has operated based on the idea that nature is a resource waiting to be used by us. If we go back to the idea of interdependency, human beings depend on nature in many ways for our survival. This is where traditional economics breaks down. Economics says that if the price of a commodity rises, demand for it will go down and a less expensive substitute will replace it. But there are no substitutes for air and water. There is no substitute for a healthy climate. These are common elements shared by everybody. Systems of management that do not value the “commons” cannot continue indefinitely. It’s that simple. We don’t know when we will hit the wall—we’re probably hitting it right now. By some estimates, private soft-drink companies now own rights to more than 10 percent of the drinkable water in the world. If these companies are allowed to continue their current system of management, which focuses on exponential growth of their products, this percentage will grow even further. We have not yet seen the implications of some of our patterns of development.

I never expected The Fifth Discipline to have as much impact as it did.

Partly, I attribute its success to a pervasive awareness of these sorts of problems. As the old adage goes, “There’s nothing more powerful than an idea whose time has come.” No one knows what is needed, but we sense that we face immense learning challenges, which are not just individual but collective and which concern how our institutions shape our collective actions. For example, if you live in China, where economic development is happening so rapidly, everyone can clearly see the social and environmental consequences in the pollution, congestion, and social stresses that have sprung up almost over night. Unlike past industrialization in North America and Europe, which unfolded over four or five generations, or longer, China’s industrialization is taking place within one generation.

Interestingly, The Fifth Discipline and the fieldbooks (The Fifth Discipline and The Dance of Change) have become quite popular in China. Schools That Learn is about to be translated, even though it contains nothing about Chinese schools. I have found that the ideas about rethinking our systems of management and leadership on a personal level hold a particular appeal in China. In the recent past, the Chinese education system has followed Western models—urban Chinese schools look pretty much identical to urban schools in the West, in terms of what they teach and how they teach. Yet, deep down, I feel the Chinese, like all people, long for a system of management and education that reflects their own distinctive culture. Personal and institutional learning offers an integrating thread that speaks to the diverse problems we all face.

TST: Can we really make the world better by making our organizations better, or is this a naïve hope?
Senge: I don’t think it’s naïve, I think it’s inescapable.

Turn the statement around: How are you going to change the world without changing organizations, since organizations are what shape how the world works today? For example, it’s impossible for one individual, or even a local community, to destroy an entire species, yet species around the world are becoming extinct at an alarming rate. Who is responsible for this critical situation? It’s clear that the destruction of Earth’s ecosystem is a result of millions and millions of individual actions mediated by the activities of our current global network of institutions. Governments are important but not adequate to meet the depth and breadth of the changes we face. To begin to shift our course, I believe, requires deep personal change in all of us, in the sense that we must “expand our circle of compassion,” as Einstein said, beyond tribalism. These personal changes, in turn, will shift how institutions such as businesses and schools function.

How are you going to change the world without changing organizations, since organizations are what shape how the world works today?

So if organizations don’t change, how can the world change? What is naïve is to believe that any one person has the answer for how to do it, that there’s a single strategy or way to do it, or that change can happen quickly. Going back to our earlier conversation, ultimately, large-scale transformation occurs when new ideas take root in people’s minds and inspire them to do things differently—many things by many people.

For example, today’s business leaders are recognizing that, in order for their companies to remain competitive, they must consider the health of their employees—not just medical issues but also personal well-being. They’re beginning to understand that having a group of committed, imaginative, patient people, who can work well together based on a strong sense of purpose, will make a bigger difference in whether the company is successful than any amount of money spent on technology and marketing. As this idea of employee well-being gradually grows in people’s minds, we’ll start to see changes in organization design and management practices. But it will not happen quickly. Promising innovations will come and go. Nevertheless, even as individual innovative firms struggle, the larger trend—the collective learning across many organizations and many cultures—will continue.

For example, Plug Power is a small manufacturer of fuel cells. It is struggling, as are all the firms in this critical but nascent industry. Its CEO comes from Ford and its senior technical officer from Xerox. Both accomplished remarkable results in those two companies, but they innovated faster than the overall company cultures could absorb. Together they, along with a few hundred other folks, are now doing something that stands to be much more important than either cars or copiers for our future creating commercially viable steps toward an environmentally sustainable energy system. They are now together because of a larger network of innovators that connected not only Ford and Xerox but several other firms, and eventually resulted in pathways for innovators coming together that otherwise would not have existed. This is exactly how change occurs in nature—the new grows up in the presence of what already exists and eventually becomes viable collectively, not as isolated individuals.

The idea that real change occurs in large networks of innovators has been one of the biggest surprises to me. I had originally thought that individual organizations could initiate and sustain significant innovation in management and culture. But I’ve discovered that, while an individual firm may run into difficulties with this process, once people cross the line into working in a way that touches who they are as human beings, and they know that this way of working together is possible, they do not go back. They may go elsewhere, but they do not go back.

The post The Inescapable Need to Change Our Organizations: An Interview with Peter Senge appeared first on The Systems Thinker.