It might help to think of organizational learning as an ongoing journey (see “Organizational Learning Journey: A Roadmap”). Although each company’s path will look slightly different, assessing your organization’s knowledge base and learning skills is a good place to start. This information provides a baseline against which you can measure your progress toward becoming a learning organization.

Learning Serves the Business Vision

Planning your organizational learning journey begins with knowing where you want to go. Articulating a vision for both the business and the organization will help define your destination — the higher purposes you want to serve through the specific learning initiatives. Starting with an organizational vision ensures that the learning needs of the company are driven by business and organization goals.

Organizational Learning Journey: A Roadmap

The stages of the organizational learning journey include an articulation of the business and organizational vision, an evaluation of the company’s learning needs. and the development of a learning strategy that will achieve the firm’s learning objectives

Different learning needs call for different learning styles and practices. For example, at Electricite de France, safety concerns do not allow nuclear power plant operators to experiment or to take risks on the job, so their learning takes the form of incremental improvements based on TQM techniques. By contrast, Kodak is experimenting with electronic imaging products that go well beyond its traditional lines of chemical-based films — a change that may require the firm to learn how to redesign key processes. Because of this need, Kodak fosters a creative and relatively high-risk environment aimed at rethinking its business over the long term. Although they differ in style, the learning practices at each company match its particular learning needs.

Once you have articulated your company’s business vision and defined its learning needs, you will want to get a better sense of the organization’s current learning condition. To assess this, there are three key areas to consider:

• Knowledge Base: the strengths and weaknesses of your organization’s knowledge base and the knowledge areas to be reinforced
• Learning Practices: the management and operating practices that foster or hinder learning
• Learning Climate: the work culture and its effect on learning

Knowledge Base

In today’s economy, knowledge, not capital assets, is the primary source of wealth. While there are some exciting new methods for measuring and valuing knowledge capital, few organizations have studied how they themselves create, store, and use that capital. You can start your learning assessment by mapping your organization’s business processes in terms of knowledge generated and used.

This is exactly what one European company did five years ago. The company faced increasing pressures from global competitors in the baby-diaper business, as a recent result of product innovations. Company personnel began a Knowledge Base Assessment by defining what the company knew how to do in all its business processes, and then assessed their knowledge position versus what they viewed as world-class practices. Then they unbundled the knowledge base into precisely defined areas of know-how, determined the competitive impact of each area, rated their own performance versus that of the competition, identified gaps in the knowledge base, and designed corrective actions (see “Strategic Knowledge Map”).

The results prompted a wake-up call. Company employees recognized that they needed to reinforce the company’s knowledge base. They defined the areas of collaboration needed to fill the gaps in the base and entered several strategic alliances with other firms. The collaborative partners found the approach so helpful that they, in turn, initiated Strategic Knowledge Mapping in their own companies.

When you assess your firm’s knowledge base, it’s important to remember that knowledge comes in many forms, not just in databases and procedure manuals. Tacit knowledge — based on experience and practice — can be as important as explicit knowledge. For example, Matsushita developed a bread-making machine in the late 19:30s. When early prototypes could not replicate the art of high-quality bread-making, developers apprenticed themselves to master bread-makers to discover the tacit knowledge that these experts could not communicate explicitly. Your knowledge map should show the strategic importance of both tacit and explicit knowledge.

Learning Practices

Successful learning does not happen by accident. One hallmark of a learning organization is a purposeful learning approach designed to create knowledge and translate it into effective action. How can you create learning practices?

You can begin by looking for learning cycles. Successful learning typically follows a sequence:

1. Shared awareness of a need for learning
2. A common understanding of the situation
3. Aligned actions, with measured results
4. Joint review and communication of results
5. Collective reflection about the learning process

(For examples of these steps in action, see “Supporting the Learning Cycle” on page 5.)

A summary way to view your company’s existing learning practices is to compile an inventory of your organization’s use of specific learning practices. This profile will provide a sense of where the organization perceives gaps between current conditions and the desired future reality, and can indicate priority areas for attention.

Learning Climate

In order to foster organizational learning, you should focus on enhancing individual and group skills, designing support structures for ongoing learning, and creating an overall organizational attitude that encourages learning. All of these aspects make up an organization’s “learning climate.”

A learning climate has both “soft” and “hard” components. On the soft side, cultural norms can either support or hinder learning. The hard side of a learning climate includes the structures and technologies that support open communication, knowledge management, and teamwork. One way to sense your organization’s learning climate is to look for evidence of the following conditions:

Curiosity. A culture that values curiosity and inquiry adopts learning behaviors naturally. Simulations and experiments follow from “what if” questions. Questions about what customers think and what competitors are doing lead to environmental scanning and targeted studies of the outside world.

For example, Sharp defines its product development vision as “optoelectronics,” a grand but undefined term. The breadth and open-endedness of the term spurs the curiosity of employees, who ask, “What does that mean? How can this term fit my work?” The creation of Sharp’s overhead projection computer display is one result of the creative tension prompted by such purposeful ambiguity.

Recognition of Conflict and Errors. Learning requires openness to new ideas, even when they generate controversy. Conflict should be welcomed as the means to develop common understanding, rather than suppressed for the sake of harmony.

Organizations that celebrate the discovery of errors, rather than search for blame, will learn from their mistakes. A good example of this comes from a team that writes documentation for electronics products. Each month the team celebrates the discovery of documentation errors with a bonfire of obsolete manuals — the bigger the better!

Leadership. The leader of a learning organization is not the traditional hero, individually responsible for tough decisions. Instead, he or she is the designer of corporate culture who accepts the uncertainty implied by experimentation. This is a very different model of leadership, and if it is embraced by top management, it is likely to be diffused to all management levels. Those being led can tell you which model of leadership is prevalent in your firm.

Staff Development. The implicit employment contract between a firm and its employees has changed. Long-term employment guarantees are being replaced by employer-supplied opportunities to maintain and expand knowledge and skills. Look for learning opportunities not just in the training department, but in job experiences that broaden responsibilities across functions.

Information and Communication Systems. Technological solutions to the challenges of creating, storing, and sharing knowledge include groupware, corporate knowledge bases, and videoconferencing. As you trace the flow of knowledge through your organization, look for how well these technologies are used.

Team-Based Work. Some work environments encourage learning efforts by single individuals, while others foster collective work. Learning organizations tend to encourage interaction and problem solving by teams. To assess whether your organization values individuals or teams, look at the recognition and reward systems. Is performance measured individually or in groups? Do rewards go to stars or to stellar team efforts? Are major initiatives personalized (as when a project takes on the name of its leader, such as the Grace Commission) or do they remain the responsibility of teams?

Some artifacts are subtle. For example, when we visited the offices of a construction equipment producer, a manager explained that coffee stations were placed in such a way that the design staff and customer service staff were forced to share stations. This set-up guarantees that design staff have at least informal opportunities to learn from the voice of the customer.

Incomplete Learning Cycles. Your search for learning practices should include problems as well as successes. One way to diagnose learning problems is to look for patterns of consistently broken learning cycles (see “Incomplete Learning Cycles”). If your organization has many stories of fact-finding and analysis, but few examples of taking action, it may be trying to learn vicariously (“analysis paralysis”). If there is lots of action but little analysis and planning, your learning may be accidental at best (the “ready, fire, aim” approach). If your firm regularly progresses to aligned action but can’t seem to learn from results, you may not have adequate measurement, review, and feedback systems in place. You “reinvent wheels” because the results from past wheel designs were never internalized.

Guidelines for Assessing Learning

Once you know what to look for as you assess your company’s learning efforts — knowledge management processes, learning practices, and the learning climate — you need to know how to find them. The following activities can provide guidelines for assessing your company’s progress:

Self-Assessment. Because learning is embedded in day-to-day activities and organizational culture, guided self-assessment can yield valid results. Train a member of each group in the principles of organizational learning and have these people lead structured interviews that identify learning practices and climate factors. This training also prepares selected process members to facilitate the learning action plan that should follow an assessment.

Group Interviews. Interviews that are intended to tease out learning practices are better done in groups rather than one-on-one. This is because learning practices at the team and company level depend on group dynamics, such as communications and coordinated efforts. Participants who describe both sides of knowledge transfers can offer more complete perspectives than those who relate to just one side.

Stories. Clinical questions about learning lead to abstract answers, bur stories and anecdotes can help people vividly recall their learning practices. Ask interviewees to remember incidents when change took place rapidly and effectively, when they mastered new processes, or when a good practice was diffused rapidly throughout the organization.

Artifacts. Anthropologists search for artifacts that offer tangible clues of how a society behaved. What artifacts might a learning assessment find? For example, publicly displayed performance scorecards, often seen in production facilities, show a concern for measurement and feedback.

Ongoing Assessment

The assessment process can provide a wonderful opportunity to train staff members in learning principles. Scientists from Hawthorne to Heisenberg have discovered that measuring a process inevitably causes it to be altered. In the same way, when learning is measured, learning processes are altered. With this in mind, you can design assessment interviews to serve as training in the principles of organizational learning, and improve your learning state even as you measure it.

Above all, it is important to continue to measure your company’s learning activities over time. Conducting an initial learning assessment can provide a valuable baseline of learning practices against which to evaluate progress, but overall assessment should become an ongoing part of the organizational learning process. This is especially important because the learning needs of a company will change as it revises its vision and strategy. Making progress on the journey toward creating a learning organization requires a continual realignment between the goals of the company and its chosen learning path.

Edited from “Measuring Learning: Assessing and Valuing Progress.” Reprinted with permission from the Third Quarter 1995 issue of Prism. The quarterly journal for senior managers, published by Arthur D. Little. Inc.

Nils Bohlin is a vice president of Arthur D. Little International and coordinator of Its global Pharmaceutical Industry Practice, based In Stockholm. He is also the leader of Arthur D. Little’s learning organization project in Europe.

Paul Brenner Is president of Arthur D. Little Program Systems Management Company. specializing in information and program management services to government and Industry.

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• Are the possible ecological dangers of pesticides worth the potential benefits of increased crop yields and lower disease rates?
• Is an aggressive foreign policy a deterrent to belligerent nations or will it create a more fertile atmosphere for war?
• In a novel, can we analyze the protagonist’s actions from more than one viewpoint?

Connection circles are thinking tools designed to help students understand complexity. Using them as graphic organizers, students generate ideas about changing conditions within a system. They choose the elements they think are most important to the change and draw arrows to trace cause-and-effect relationships. In this way, connection circles help students delve into an issue and manage a number of different ideas at once.

Connection circles are an intermediate step to creating causal loop diagrams (CLD). Students often don’t know where to start in creating a CLD. Connection circles let them generate ideas about elements and connections first. Then, they can unravel the feedback loops that drive the changes in the story.

How They Work

In this article, we demonstrate how to use connection circles to understand a magazine article about the health risks associated with rising french-fry consumption (, “Eyes on the Fries” by Rene Ebersole, Current Science, March 1, 2002).

1. Choose a story. It may be a newspaper or magazine article, a book chapter, or a work of fiction. The more change over time that occurs in the story, the more effective the connection circle will be.

2. Simplify the article. Although connection circles allow students to understand complex articles, vocabulary and content could still be beyond the readers’ range. In addition, a piece of writing may include a level of detail that distracts students from the big ideas and themes. Briefly discuss the central problem in the article.

3. Create teams of four students each. Although this format is not necessary, we have found that collaborative conversations improve students’ thinking. Ask students to read the article— independently, shared orally in groups, or aloud as a class.

4. Give each student a copy of the connection circle template (a circle printed in the middle of a piece of 8 1/2˝ x 11˝ paper) and briefly explain the first step of the “Connection Circle Rules.”

5. As a class, brainstorm two or three elements, and ask students to write them around the outside of their connection circles. Draw a connection circle on the board or overhead to use as a class example (see “Sample Circle”).

SAMPLE CIRCLE

Throughout the lesson, guide the discussion to ensure that students are specific in their language and that they describe either some sort of change or something that can change., “French Fries” figure prominently in the story, but that label is too vague. A more useful label to show the change in quantity might be “French Fries Sold” or “French Fries Eaten.” Similarly, “McDonald’s” is a major topic of the article, but what quantity about McDonald’s might increase or decrease? Phrases such as “Number of McDonald’s Restaurants” and “McDonald’s Profits” might more accurately describe factors in the story that can shift over time.

Also remind students that elements may be tangible, such as “Number of Restaurants,” or intangible, such as “Concerns About Health Risks” or “Desire to Change the Law.” Often intangible elements are key to the changes in the story.

7. Ask volunteers from each team to suggest elements for the sample class circle. Students may add or delete elements from their circles as they hear others’ ideas. Although the class may suggest and discuss many different elements, the final circles should have no more than five to 10 elements.

8. Ask a volunteer to describe a causal connection between two of the elements around his or her connection circle.

• Does an increase or decrease in one of the elements cause an increase or decrease in one of the others? For example, as the number of french fries eaten goes up, it causes the fat consumption to go up as well.
• To represent this statement, draw an arrow from “Number of French Fries Eaten” to “Fat Consumption,” as shown in “Connecting Elements.”

Here are two other possible connections:

• An increase in fat consumption can cause an increase in concerns about health risks.An increase in the number of McDonald’s restaurants will likely cause an increase in french fries sold.

9. Let students work in teams to connect the elements in their connection circles.

• Emphasize that elements are not limited to one connection and that some elements may not have any connections.
• Students should be prepared to state explicitly how and why the connections work. For example, in our sample connection circle, an arrow leads from “Fat Consumption” to “Concerns About Health Risks.” The reasoning is that an increase in fat in a person’s diet causes an increase in susceptibility to higher levels of cholesterol, obesity, and other conditions detrimental to well being.

10. Ask students to search their circles for paths that make a closed loop. In other words, can they begin at one element of the circle, follow connecting arrows to other elements, and end up back at their starting point, as shown in “Closing the Loop.” Students should trace each loop in a different color.

Ask students to draw each closed loop separately and tell the story of that loop. For example, an increase in the number of french fries sold causes an increase in profits. The corporation can then use those profits to open more restaurants. An increase in restaurants causes an increase in french fries sold, and the loop begins again, reinforcing itself each time around.

11. Distribute a blank overhead transparency sheet to each team. Assign one student in each group to draw a feedback loop on the sheet to share with the class.

CONNECTING ELEMENTS

CLOSING THE LOOP

So, an increase in “French Fries Sold” causes an increase in “French Fries Eaten” and, in turn, “Fat Consumption.” Higher fat consumption can lead to a rise in concerns about health. When concerns grow sufficiently, the sale of fries may decrease, as customers try to eat healthier foods. Continuing around the loop again, a decline in “French Fries Sold” means that fewer are eaten and consequently a drop in “Fat Consumption.” A drop in fat consumption decreases “Health Concerns.” With fewer health concerns, over time, “French Fries Sold” might increase, sending the loop around again.

This feedback loop is self-balancing. Tracing around the loop, an initial increase in one element eventually comes back to cause a decrease in that element, balancing back and forth each time around the loop.

12. When the work of each team is displayed, challenge students to discover loops that share a common element. In our sample connection circle, “French Fries Sold” appears in at least two feedback loops. As students talk their way around the loops, they describe the changing behaviors of the elements in the story.

Bringing the Lesson Home

Students like using connection circles to figure things out. The tool may appear complicated at first, but after one class demonstration, students are usually ready and able to use it in a wide range of applications. Here are some questions to help guide the discovery process:

• Which elements have lots of arrows going in and out? Why? An element with lots of arrows in and out tends to be a leverage point in the story. Because of all their connections, key elements create lots of changes. In a connection circle about “Eyes on the Fries,”, “French Fries Sold” might have lots of arrows going in and out because it drives the key issues raised in the article.
• What is the significance of an element that has no arrows pointing to it? When an element has no arrows pointing to it, it is not being changed by any other element represented in the circle. If it is important, the student may need to add another variable that causes the first variable to change.
• What is the significance of an element that has no arrows coming from it? No arrows out means that the element doesn’t influence anything that is currently in the circle. The student may need to add one or more new elements.
• What is the significance of an element with no arrows connected to or from it? No arrows at all means the element is not critical to the part of the story being traced, or other elements have been omitted that need to be included.
• What does it mean when a pathway of arrows leads back to the starting element? When a pathway of arrows loops back to the original element, there is feedback in the story. Each closed loop identified is a feedback loop. When one element in the loop changes, the effect ripples through the whole loop, eventually affecting the original element as well.

  For example, in R1 of “Reinforcing and Balancing Loops,” as the “Number of McDonald’s Restaurants” goes up, “French Fries Sold” also goes up, causing “Profits” to rise. Higher profits tend to increase the number of restaurants being opened, starting the process again. This is a reinforcing loop, commonly known as a vicious or virtuous cycle.

  Another kind of feedback loop is a balancing loop. In contrast to a vicious cycle, a balancing loop does not spiral in the same direction, but rather see-saws back and forth. For example, in B2 of “Reinforcing and Balancing Loops,”, “French Fries Sold” increases “French Fries Eaten,”, “Fat Consumption,” and, ultimately, “Health Concerns.” If health concerns grow strong enough, french fry sales will be driven down.

  Follow the loop around a second time and notice what happens to the elements. When health concerns grow, the number of french fries sold and eaten go down. Fat consumption is reduced, and eventually health concerns should lessen. Over time, with fewer health concerns, people might start to buy more french fries again.

• What happens when elements from the connection circle are in more than one feedback loop? The loops will interact in ways that make the behavior interesting and often quite complex! As demonstrated in the previous paragraph, the sale of french fries creates profits but also creates health concerns. Profits increase the number of restaurants, and more restaurants mean more french fries sold. But health concerns tend to reduce the number of french fries sold. The loops push in different directions, causing tension and complexity in the story.

  The goal of using this tool isn’t to find one specific connection circle that will correctly describe a given topic or article. Rather, the circle is designed to generate ideas and to clarify thinking about complex issues.

  Connection circles help us brainstorm about what is changing and trace webs of relationships within systems to understand those changes. The connection circle examples in this story demonstrate one way to interpret “Eyes on the Fries,” but they are not the only way.

  Teachers and students will be happy that thinking, not memorizing, is the key to learning from this activity. Try creating connection circles and watch your students start paying attention to the shape of change.

REINFORCING AND BALANCING LOOPS

This article is adapted from a chapter in The Shape of Change (Creative Learning Exchange, 2004), by Rob Quaden and Alan Ticotsky, with Debra Lyneis. Illustrations by Nathan Walker. For information about or to purchase the book, go to http://www.clexchange.org/shapeofchange/ or to http://www.pegasuscom.com.

Rob Quaden and Alan Ticotsky are teachers in the Carlisle Public Schools in Carlisle, Massachusetts. Quaden is an eighth-grade algebra teacher and Carlisle’s math curriculum coordinator. Ticotsky is Carlisle’s science curriculum coordinator and a former elementary classroom teacher. Deb Lyneis works at the Creative Learning Exchange, helping teachers publish their system dynamics curriculum material for other teachers to use.

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This article will explore the manifestation of generations in the workplace through the lens of a compelling model that considers generational “personas” throughout history and their cyclical relationship to each other. By examining the dynamics of the generations present in today’s organizations, including their collective strengths, limitations, and the generational biases they may hold, I hope to provide a fresh perspective on workplace conflicts, leadership blind spots, and the promise of intergenerational collaboration as a means to elevate organizational potential and future success.

Generations Theory

There are a number of research studies, articles, and books that describe the historical and socioeconomic trends that influence the traits of different generations. Foremost, however, is the research conducted by historians William Strauss and Neil Howe. Strauss and Howe’s seminal book, Generations: A History of America’s Future 1584 to 2069 (William Morrow and Company, Inc., 1991), examines the socioeconomic, cultural, and political conditions throughout American history and their impact on the formation of distinct generational characterizations, or “peer personalities.” A number of factors influence peer personalities, including the cultural norms for childrearing at the time, the perception of the world as members of the generation start to come of age, and the common experiences the generation encounters as it enters the adult world. In this way, a generational identity is formed that has distinct effects on the environment and, in turn, younger generations.

After examining the history of the United States, Strauss and Howe maintain that each generation falls into one of four archetypes that repeat in a fixed, cyclical pattern, roughly every 80 years. The archetypes are Prophet, Nomad, Hero, and Artist (see “Generational Archetypes”). At a macro level, generations in each archetype tend to share similar experiences and have comparable impacts on the culture as they move through the four stages of maturity: childhood, young adult, midlife leader, and elder. For instance, Prophet generations tend to be indulged as children, immersed in spiritual self-discovery as young adults, preoccupied with moral principles as midlife leaders, and vision-driven as elders. Artist generations, on the other hand, are inclined to be smothered and overprotected as children, sensitive and conforming as young adults, tolerant and indecisive as midlife leaders, and empathetic to younger generations as elders. These archetypal tendencies impact the culture as they surface in social activism, leadership styles, organizational priorities, and national policy.

Each generation overcorrects what it perceives to be the excesses of its predecessors. Accordingly, at any given time in history, each archetype’s collective reaction to the social climate of the times, together with its related influence on those times, creates a predictable and repetitive pattern of both generational personas and social phases (see “Generational Cycles,” p. 2). In essence, the cyclical recurrence of the four archetypes serves as a natural balancing process that manages the inevitable tension between two powerful and polar social forces — civic order and personal fulfillment. The effect of this loop is to impel the evolution of society forward in a spiral process not unlike the seasonal changes of nature: from summer’s heat to autumn’s harvest, followed by the cold of winter and the eventual germination of spring (for more information, see http://en.wikipedia.org/wiki/Strauss_and_ Howe).

The Strauss and Howe model asserts the possibility that, at some level, we as a society have been here before. If history repeats itself, it does so because of the complex tensions and ongoing negotiations between the equally important human precepts of order and freedom, secular stability and spiritual fulfillment, communal good and individual rights. If our relationship to these core principles is informed by our generational experience, then many of our own mental models, biases, and behaviors will, to some degree, be tied to our place in time and reinforced by our peers. In addition, this model suggests that each generation has a crucial place in this evolutionary cycle, a particular contribution to make, one that may not be obvious to those blinded by their generation’s limited perspective. Generational theory and the data that supports it can expose the intergenerational biases that covertly occupy our workplace and illuminate the cooperative potential that exists in our current place in time, as we confront the future and strive to tackle the looming issues of our day.

With the implications of this theory in mind, let’s take a closer look at the four generations currently in the workforce.

The Generations of Today’s Workplace

The landscape in today’s workplace includes four different generations, each with a distinct set of defining experiences and attributes — both strengths and limitations — that characterize its overall leadership and cultural impact. There are of course individual exceptions to and variations from this big-picture model; nonetheless, I invite you to consider how your generation’s collective characteristics might, in some respects, be true for you, and whether that insight can inform the way you perceive and interact with others.

There are differing opinions on the birth years that define the generations; however, the dates given below reflect those published by Strauss and Howe, who present strong justification and sociological relevance for the ranges they cite.

Silent Generation (Artist Archetype) Born: 1925–1942

The Silent Generation still maintains a small presence in the workforce, although most make up today’s senior citizen demographic. Silents were children during the Great Depression and World War II. Largely overprotected by their parents, they were quiet and obedient, living with food rationing and the daily fear of bad news, be it a foreclosure, a layoff, or a war casualty. Outflanked in both numbers and stature on one end by the great sacrificing war heroes of the older G. I. generation, and on the other end by the indulged new generation of postwar “victory babies,” Silents were expected to do little more than tow the line of progress. As a generation, they married early, had children quickly, and subsequently endured the highest divorce rate in history. Nonetheless, many Silents went from penniless children to affluent elders. Committed to public interest advocacy, the Silent Generation produced Civil Rights leaders like Martin Luther King, Jr. and Malcolm X, and while they still hold approximately 25 percent of national leadership positions in state and federal government, they have yet to produce a U. S. president.

As leaders, Silents tend to focus on process and protocol, endlessly refining approaches, mediating differences, and seeking elegant ways to build compromise. They were the fine-tuning engineers who put Neil Armstrong on the moon, the expert proponents of Total Quality Management, and the tolerant designers of integrated school systems. Often viewed by other generations as timid, unconfident, and ineffective, the Silent generation nonetheless exhibits the kind of modesty and poise that serves as a quiet reminder of the enduring virtues of respectful process, genteel behavior, and inclusive conduct, standards that will likely have a crucial role in our global future.

Baby Boom Generation (Prophet Archetype) Born: 1943–1960

Both in size and prowess, the Baby Boom is the dominant generation of our time. Boomers grew up in an era of indulgent parenting and prosperous times. As “Leave It to Beaver” youth, they were expected to follow in the G. I.s’ footsteps and build the next golden age. Confident and filled with the potential of creative independence, Boomers have not, however, embraced the grand civic destiny that their parents envisioned for them. Rather, the “Me” generation has rebelled against authority, resisted conforming to the status quo, and taken the notions of individualism and generational identity to a new level. From the “consciousness revolution” of the 1960s and 1970s, to the “yuppies” of the 1980s, to the polarized culture wars of today, the Baby Boomers as a generation are known for their fixation on self, youth, individual expression, and intractable moral convictions about right and wrong. Communal and well-networked, their collective passions and values have become a mainstay in our culture and are squarely reflected in our nation’s consumer, corporate, and leadership trends.

Baby Boomers inhabit the most powerful leadership positions throughout the United States — including the presidency — and hold much of the experiential, institutional, and political knowledge in the workplace. As leaders, Boomers tend to be vision- and mission-focused, sometimes to the point of being unwilling to move ahead without a highly principled course of action in place. As transformers, they frequently seek to reorganize, redefine, or overhaul their organizations. In every sector, Boomers often want to make their mark through an improvement, distinction, or change. Many lack the discipline, however, to see transitions through or are intolerant to the resistance that comes with change.

Often married to their work, Boomers have embraced the 24/7, driven, competitive work ethic and, as a result, tend to remain short-term focused — be it the end of the quarter, the budget cycle, or their term. For many, this pressure-driven mentality can trigger reactive decision-making, trumping more systemic, long-term strategic thinking. As they retire, the Baby Boom generation will enter their Elderhood — the phase of life during which past Prophet generations have made their most potent leadership contributions.

X Generation (Nomad Archetype) Born: 1961–1981

Xers came of age in the 1970s and 1980s, when the prevailing message of the day was to grow up fast. Primarily children to working, in many cases divorced parents from the Silent generation, Xers were deemed “latch-key kids” for the adult-centric childrearing practices that left many youngsters largely unsupervised by today’s standards. Self-reliant and street-wise at an early age, leading-edge Xers graduated from college in greater debt than any previous generation. Many were forced to take low-level, low-paying “McJobs” as they sought entry into the Boomer dominated, “leaner and meaner,” competitive marketplace. Criticized as “slackers” by the media, Xers learned to rely on their finely honed survival skills and comfort with the fast-paced, changing landscape of the Information Age. Independent, pragmatic, and technologically resourceful, Xers are currently some of the most sought-after employees in the workforce.

As casualties of the era of corporate downsizing, Xers tend to be skeptical of promises and grand policy visions and, hence, demonstrate little organizational loyalty. Their pragmatism leads them to measure their success on their most recent accomplishments or acquired skills versus contributions to a greater vision. There are relatively few Xers in leadership positions today, with the exception of the high-tech industry and entrepreneurial ventures. Xers tend to be highly pragmatic, no-nonsense, action-oriented, good at learning on the fly, and opportunistic (which can appear to Boomers as unprincipled). They can be good team collaborators when not bogged down with idealistic debates and tend to be proficient with deliverables and project management. Accustomed to fending for themselves, most Xers prefer to focus on their own sphere of influence — family and friends. Many aren’t willing to embrace the 24/7 work ethic, and often put work-life balance over income and career advancement. Xers have little awareness of their greater collective force as a generation, and as such often lack the networks and connections needed to influence institutions and the power to make beneficial changes.

Most organizations have failed to recognize the need to prepare Xers to take the lead in the coming generational shift. Lacking much formal leadership training or mentoring, Xers often struggle with the subtle nuances of leadership and can appear draconian when making decisions. History, however, holds a promise to leaders who strive to earn the trust of this talented generation. The X generation’s collective life skills and deep devotion to the future welfare of their children will arouse for many the courage to commit to meaningful challenges and the endurance to see through hard times.

Millennial (Y) Generation (Hero Archetype) Born: 1982–2002

The oldest Millennials (or “Gen Y,” as some call them) are just now entering the workforce. They have a different set of childhood experiences than the other three generations, and while they are still quite young, they are nonetheless making themselves known. Largely children of Baby Boomers, Millennials were born at a time when there was a tremendous social investment in children and childhood programming. From “baby on board” stickers announcing their presence to fully scheduled days being bustled from one adult-led activity to another, Millennials have led highly protected and programmed lives. They were indoctrinated into the paradigm of standardized testing and are byproducts of the self-esteem movement that infiltrated school curricula in the 1990s, proclaiming all children to be “winners.” As such, Millennials are accustomed to frequent praise for all activities and accomplishments. The digital communication age is their birth right, and they are technologically superior to older generations, including Xers. Because of the on demand capability to access information, many Millennials have a global understanding of the world and value diverse cultures, experiences, and environments. They tend to be accepting of differences and measure people on the quality of their talent and output, rather than on physical or cultural characteristics (for additional details, see Managing Generation Y by Carolyn A. Martin and Bruce Tulgan, HRD Press, 2001).

As they enter the workplace, Millennials bring enthusiasm along with a sense of entitlement. Many expect career-track guidance, supervisory oversight, and regular, appreciative acknowledgement. They are confident, bold, and willing to speak up for what they want. As employees, they will seek environments that address their needs for structure and adequate direction, balance between personal and professional pursuits, up-to-date technology, and a socially conscious mission.

The challenge of this generation lies in their heavy reliance on external stimuli and direction from above. They tend to lack the self-reliant skills of the Xers, and have little internal aptitude to process and effectively learn from failure. Given the demographic reality of the workforce over the next 20 years — according to the American Society of Training and Development, 76 million retiring and 46 million entering — skilled Millennials will have their choice of employers. Optimistic, technologically masterful, and civically focused, the Millennial generation promises to be a competent and highly productive workforce; however, they will need sufficient oversight, on-the-job training, and clear direction from older leaders—and they have the demographic power to demand it!

Intergenerational Conflicts in the Workplace

When considering the diverse perspectives, values, and competencies that exist in our multigenerational workforce, it becomes easier to glimpse the many possibilities for collaboration and cooperation that may be present. But collaboration of this magnitude will require some changes in the status quo. Before we can move into a productive future of shared vision for an intergenerational workplace, the two groups with the greatest leadership leverage— Boomers and Xers — must each take stock of the biases and mental models they hold in order to discover their intergenerational synergy.

Generational Biases. Intergenerational conflicts arise primarily from the biases that each peer group has about the others. Individually, we may be unaware of the insidiousness of these biases. Left unacknowledged, they have a profound effect on our ability to recognize areas of compatibility and work toward common purposes. Focusing on the Boom and X generations, “Boomer and Xer Biases” gives examples of commonly held biases each has of the other.

In essence, the biases each group has of the other reflect a generation centric perspective, one that fuels a belief that “my way is the right way” and “your way doesn’t measure up to my values.” These biases are further substantiated by peer reinforcement, as members of each generation talk among themselves about the way they see others. This dynamic interferes with the capacity of individuals to listen to and respect the perspectives and contributions of others, thereby blocking meaningful collaboration in teams, supervisory relationships, and between colleagues. Conducting candid discussions in mixed generational groups about the biases that exist can be an effective way to disarm the negative impacts they may have on collaborative thinking. Exposing biases can also illuminate important social issues that need to be addressed.

Generational Mental Models and Blind Spots. Our generational perspective contributes to the mental models we hold about ourselves, the world, and the way things “should” be. These beliefs create blind spots that can become our undoing as we pursue our values and seek to accomplish our goals. Likewise, they can have a powerful effect on our culture.

The generational mental models held by the Baby Boomers are clouded by the assumption that others see the world as they do. This is a typical perspective of powerful and dominant generations who, having had such a massive impact on the culture, are often unaware of how that impact is experienced by other generations. A prominent mental model shared by many Boomers is the tendency to view the rebellious era of their youth as their generation’s greatest contribution. This belief is reflected by Boomer obsessions with 1960s nostalgia, retro fashion, classic rock, and youthful enhancements like Botox and Viagra. There is a sense in which Boomers still view themselves as children, rather than the adult leaders and authorities that they are.

This self-immersion in the glories of the past — in which many Boomers “Questioned Authority” and waged adolescent wars against “The Man” — stands in stark contrast to the fact that, today, they are the establishment. The systemic impact of this reality is profound: If the collective attention of the leading generation appears to be focused on youthful notions of a time long gone, then who is attending to the present reality and the responsibilities of leading for the future? Certainly some individuals are doing so, but at the macro level, from the perspective of younger and older generations looking on, Boomers have all the positional and cultural power to affect change for the future. Yet as a generation, they appear fixated on preserving their youth, focused on competitive one-upmanship, mired in intractable positions, and inattentive to what is required for long-term sustainability. Such a perspective has eroded trust, respect, and confidence in Boomer leadership and colors the mental models of younger generations.

Accordingly, the mental models held by the X Generation are clouded by distrust and pessimism. As a less dominant and younger generation, they are naturally attuned to hypocrisy, and use any evidence of it to justify their cynicism and detachment. Disconnected from their own collective power, a mental model common to many Xers is the perception of themselves as loners who are on their own and have little in common with those outside of their intimate circles. As a result, most Xers see no point to activism and the spurring of institutional change. Rather, they prefer private solutions to public issues and seek to improve the quality of life within their own small sphere of influence. Practical and perhaps initially effective, the systemic impact of this perspective has its dysfunctional qualities. If this generation indeed has a deep commitment to family and the future of their children, yet remains apathetic about influencing the vision and direction of the institutions that affect them (employers, public schools, national agenda), then how will that bode for the future of their children? If Xers continue to opt out, they will in effect be leaving that future to chance.

Thinking Systemically About Workforce Demographics: A Case Study

Five years ago, the Center for Food Safety and Applied Nutrition (CFSAN) at the U. S. Food and Drug Administration surveyed its workforce and discovered that most employees had been there for more than 25 or less than 5 years, and that the Center would be facing large numbers of retirements in the near future. This data impelled CFSAN leadership to prioritize the task of preparing their organization for the future. A high-level task force was appointed to study the situation and come up with concrete recommendations for a credible succession plan. After a year of investigation and with strong commitment from the entire organization, CFSAN created a Leadership Legacy Steering Committee. This group became responsible for designing a leadership development program that accounted for the needed skill sets and demographic reality of the Center’s workforce.

Rather than starting at the top (as is more typical), CFSAN began training first-line supervisors in the art and skills of leading people. Not only did this decision address the greatest need, it also signaled to more junior employees that they mattered and that this initiative was not just another perk for top management. As well as a solid training component, the program features mentoring and shadowing opportunities with senior leaders, promoting deeper intergenerational relationships and increasing the transfer of vital institutional knowledge. In addition, participants have opportunities for developmental assignments in different units and special team projects, both of which enhance collaborative relationships across Center departments.

The second level, for middle managers, which began last year, is aimed at emerging leaders who demonstrate the savvy and potential to lead at an organizational level. The third level focuses on senior managers and will emphasize strategic leadership skills.

CFSAN is accomplishing this effort despite severe budget cuts and increasing workloads. The organization continues to be led by Baby Boomer administrators who have committed to securing the future of the organization. They recognize that the best hope for ongoing success will come from younger employees who are motivated to take on larger responsibilities and feel empowered by the earnest attention paid to their development.

History’s Promise: Intergenerational Collaboration?

Historical trends show that major secular crises recur every 80 years or so, the last one beginning with the Great Depression in 1928. The leadership combination of an elder Prophet generation, providing vision and a strong moral compass, together with a mid-life Nomad generation, fortified with sturdy persistence and expertise, was ideally suited for enduring the crisis and forging a new order. The Prophet and Nomad generations of that time were able to face the extreme difficulty through collaboration and generational cooperation. Their leaders found the courage to tell the truth, call forth needed sacrifice, and provide the hope that led the nation through the ordeal.

The challenges that face the nation’s institutions and communities today are deeply complex. No single generation can adequately address these issues without the cooperation and contributions of the others. The best hope for the future of our organizations and our culture rests on our capacity to form a shared vision that encompasses the best of what each generation values and has to offer. Whether Boomers and Xers can overcome the self-serving biases and limiting mental models that keep the two generations from collaborating for the future is unknown. It may require that external conditions worsen so that the stakes become higher. And perhaps the young Millennials — in seeking clear direction and oversight from leadership — will call the others to task, necessitating Boomers and Xers to come together to effectively lead this emboldened and demographically powerful workforce.

We have seen the systemic opportunities that can come from collaboration in communities, businesses, government offices, and nonprofits. By seeking to build the intergenerational connections that will lead to shared understanding, knowledge, and vision, we can elevate the potential of our organizations by harnessing the natural balancing forces inherent within the generational mix. This process, however, starts with a leader’s willingness to ask important questions about the future, questions that seek to understand the complexity and truth arising from diverse perspectives. In this way, the path forward will be much clearer and the solutions more promising.

Deborah Gilburg is a principle of Gilburg Leadership Institute, a leadership development firm specializing in generational dynamics and organizational succession planning. For more information, visit www.gilburgleadership.com. Deb will be presenting a concurrent session at this year’s Pegasus Conference.

The post Empowering Multigenerational Collaboration in the Workplace appeared first on The Systems Thinker.

Groups in Context

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

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

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

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

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

  FOUR PERSONS IN A TOP CONTEXT

  

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

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

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

FOUR PERSONS IN A BOTTOM CONTEXT

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

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

In order to develop powerful peer groups, we need to

A SYSTEM DIFFERENTIATING

A SYSTEM HOMOGENIZING

A SYSTEM INDIVIDUATING

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

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

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

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

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

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

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

Principle 4: Overcoming the Illusions of System Blindness

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

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

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

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

Systems in Practice: The Case of the Rigid Manager

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

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

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

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

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

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

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

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

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

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

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

Implications for Leadership Development

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

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

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

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

Conclusion

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

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

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

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

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

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

Lost in Financial Crisis

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

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

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

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

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

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

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

The Implications of Global Finance

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

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

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

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

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

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

The Rise of the Virtual Economy

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

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

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

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

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

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

A Ray of Hope

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

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

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

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

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

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

Moving Beyond the Virtual Economy

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

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

Pathway to Sustainability

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

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

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

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

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

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

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

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

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

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

Poised as we are on the knife’s edge between socio-environmental disaster and a liveable future, one question cuts to the core of our future: Will the result be chaos and the even more repressive and dictatorial regimes so often arising from chaotic conditions? Or will we emerge from the eggshell of our lndustrial Age institutions into a new world of profound, constructive organizational change?

The answer lies in the very concept of organization and in the beliefs and values of individuals.

Formation of a Chaordic Organization

Our current forms of organization are almost universally based on compelled behavior — on tyranny, for that is what compelled behavior is, no matter how benign it may appear or how carefully disguised and exercised. The organization of the future will be the embodiment of community based on shared purpose calling to the higher aspirations of people.

Formation of a chaordic organization is a difficult, often painful process, but one also filled with joy and humor. Entirely different dynamics of judgment, behavior, capacity, and ingenuity can evolve. Small shifts in deeply held beliefs and values can massively alter societal behavior and results — in fact, may be the only things that ever have. That is my hope for our future.

I know it can happen. I’ve been there — or at least gone part of the way — during the formation of VISA and other chaordic organizations. It’s very difficult to put in words, for in truly chaordic organization there is no destination. There is no ultimate being. There is only becoming.

Forming a chaordic organization begins with an intensive search for Purpose, then proceeds to Principles, People, and Concepts, and only then to Structure and Practice. It can’t be done well as a linear process. Each of the six elements can be thought of as a perspective, a sort of “lens” through which participants examine the circumstances giving rise to the need for a new concept of organization and what it might become. The most difficult part is to understand and get beyond the origin and nature of our current concepts of organizations; to set them aside in order to make space for new and different thoughts. Every mind is a room filled with archaic furniture. It must be moved about or cleared away before anything new can enter. This means ruthless confrontation of the many things we know that are no longer so.

Purpose

The process can easily begin with a deceptively simple question: “If anything imaginable is possible, if there are no constraints whatever, what would be the nature of an ideal organization to . . . ?” Finishing that question is all-important. It is essential to determine with absolute clarity, shared understanding, and deep conviction the Purpose of the community. From that, all else must flow. It is what will bind the group together as worthy of pursuit. The first attempt nearly always results in platitudes; impressive words full of smoke and mirrors with which everyone can quickly agree without discomfort and easily implement with a bit of institutional cosmetology. To get beyond platitudes, it becomes necessary to agree on what a “purpose” really is.

In truly chaordic organization there is no destination. There is no ultimate being. There is only becoming.

To me, purpose is a clear, simple statement of intent that identifies and binds the community together as worthy of pursuit. It is more than what we want to accomplish. It is an unambiguous expression of that which people jointly wish to become. It should speak to them so powerfully that all can say with conviction, “If we could achieve that, my life would have meaning.” Making a profit is not a purpose. It may be an objective; it may be a necessity; it may be a gratification; but it is not a purpose!

It is not necessary to perfect the purpose, or any other part of the process, before proceeding to the next. It is only necessary to obtain agreement that the present expression of purpose is good enough to permit exploration of principles, and that each expression of a principle is good enough to go on to the next. Every principle will call into question and refine the purpose. Every principle will call into question and refine every other principle. In looking through each “lens,” that is, each perspective of the process, both that which precedes it and that which lies ahead, will be illuminated and improved.

Principles

Conceiving the Principles is an extremely complex part of the process. The same difficulty returns. Platitudes inevitably emerge. It is necessary to reach agreement on what a principle is. By principle I mean a behavioral aspiration of the community, a clear, unambiguous statement of a fundamental belief about how the whole and all the parts intend to conduct themselves in pursuit of the purpose. A principle is a precept against which all structures, decisions, actions, and results will be judged. A principle always has high ethical and moral content. It never prescribes structure or behavior; it only describes them. Principles often fall quite naturally into two categories: principles of structure and principles of practice.

Purpose and principle that can lead to a chaordic organization cannot be devised by leaders and imposed on a community as a condition of participation. They must be evoked from the minds and hearts of members of the community. They are not frozen mandates to be obeyed under penalty of banishment from the community. They are a living set of beliefs capable of evolving with the participation and consent of the community. Properly done, they will never be capable of full realization. “Honor thy father and mother” is a true principle, for we all understand what it means, yet it gives us no instruction as to method. There are infinite ways to honor a father and mother.

The whole of the purpose and principles should constitute a coherent, cohesive body of belief, although it is inevitable that one principle may be in conflict with another. Where conflict exists, decisions should be balanced so that no principle is sacrificed to another. Paradox and conflict are inherent characteristics of chaordic organization.

It is not uncommon for even the most perceptive group to meet bimonthly for three days of intense discussion, for more than a year, before arriving at clarity and agreement on such a body of belief. Long before they are through, they will discover that it is not a somber process, but full of laughter and joy. There will be growing respect and trust. There will be growing commitment. There will be realization that what they are doing is as much about personal transformation as it is about organizational reconception. If there is not, the effort will never achieve its full potential.

People

When a sound body of belief is reasonably complete and agreed upon, the group can then begin to explore the People and Organizations that would need to be participants in the enterprise in order to realize the purpose in accordance with the principles. It sounds simple, but rarely is. When people set aside all consideration of existing conditions, free themselves to think in accordance with their deepest beliefs, and do not bind their thinking with structure and practices before considering meaning and values, they usually discover that the number and variety of people and entities to participate in governance, ownership, rewards, rights, and obligations are much greater than anticipated. They usually find their deepest beliefs require transcendence of existing institutional boundaries and practices. Determining the people and institutions required to realize the purpose in accordance with the principles brings realization of just how narrow and restrictive existing institutions are in relation to the exploding diversity and complexity of society and the systemic nature of seemingly intractable social and environmental problems.

Awareness arises in all members of the working group that they cannot represent only their own views and beliefs, for a good many members of the community they hope to form are not at the table. They must, to the best of their ability, act on behalf of the larger potential community and not bind its hands by trying to perfect the work they have begun. They are really trustees attempting to bring into being a chaordic organization capable of attracting a diversity of others and enabling them to continue its evolution. It is at this point that most groups more fully realize the magnitude of the task in which they are engaged. It is well that they do, for the point of frequent failure lies just ahead.

Concept

With Purpose, Principles, and People well established comes realization that it is unlikely that any existing form of organization can enable those people to achieve the purpose in accordance with their principles. Something new must be imagined; a new concept of organizing relationship. Again, definition helps. By Concept I mean a visualization of the relationships between all of the people that would best enable them to pursue the purpose in accordance with their principles. An organizational concept is perception of a structure that all may trust to be equitable, just, and effective. It is a pictorial representation of eligibility, rights, and obligations of all prospective participants in the community. The feedback part of the process never ends. Developing a new concept calls into question purpose, principles, and people. Every part of the process illuminates all subsequent and preceding parts, allowing each to be constantly revised and improved.

The conceptual part is where the old internal model returns time and again to derail the process. It is impossible to describe how difficult it is to imagine all the permutations and possibilities of human relationships that arise when one truly accepts that organizations exist only in the mind; that they are no more than conceptual embodiments of the ancient idea of community. At this point in the process it is so easy, so comfortable, so reassuring to avoid the difficulty by allowing old concepts to emerge camouflaged in new terminology. Breaking through the old eggshell to stand wet and shivering in a new world of possibilities is a frightful thing. Especially when crawling back in is clearly an option. Extraordinary insights emerge when there is realization that any concept of relationships that can be imagined can be codified and legally brought into being.

Once a group makes its way through Purpose, Principles, People, and Concept and can see the harmony that can be achieved between them, a transformation takes place. By this time, they have filled the practice part of the process with a rich variety of objectives and activities that might be realized if the organization they visualize can be brought into being. The questions shift from “Are we going to do this?” to “How quickly can we achieve it?” Success is by no means assured. The group may fail to communicate it properly to others. They may fail to obtain the resources. They may fail to achieve enough understanding and support from others to bring it into being. If they are an existing organization, they may fail to develop a successful process of transformation. But nothing will keep them from the attempt.

Structure

The most frustrating part then begins. They must shift from conceptual thinking, to which they have become accustomed and grown to love, to the pragmatic, meticulous, grinding work of Structure. By structure I mean the embodiment of purpose, principles, people, and concept in a written document capable of creating legal reality in an appropriate jurisdiction, usually in the form of a charter and constitution or a certificate of incorporation and bylaws. It is the written, structural details of the conceptual relationships — details of eligibility, ownership, voting, bodies, and methods of governance. It is the contract of rights and obligations between all participants in the community.

Many difficult questions arise in the structural process, primarily because it is rare when the deepest beliefs of people fit old concepts of organization. Every such effort raises new structural questions different from all others. How to embed purpose and principles in the constitutional documents? How to create equal legal responsibility of directors and management to guide the organization in accordance with the purpose and principles as well as in accordance with sound financial management? How to create new concepts of ownership not dominated by monetary markets? How to involve all affected parties in deliberations and decisions free of domination by any? How to preserve purpose and principles from capricious change, yet provide adequate means for their evolution? How to embody in the constitution an immune system to the recentralization of power and wealth? How to ensure and protect rights of self-organization? How to equitably balance competition and cooperation? The answers are emerging and are improving with every attempt.

Practice

Long before the structural work is finished, everyone realizes that they need not worry about the practices of the community. By Practice I mean the deliberations, decisions, and acts of all participants in the community functioning within the structure in pursuit of purpose in accordance with principles. They realize they should not bind participants in the new community to any practice, no matter how desirable it may appear in advance. Their responsibility is to bring into being an organization in which all participants can have an active, creative, equitable role in deciding what practices will best achieve the purpose in accordance with the principles, and effectively undertake them. The organizers have long since realized that they are engaged in the process not to command and control, but to act as trustees to bring into being an organization more in harmony with the human spirit and the natural world— an enabling organization aligned with the higher aspirations of humanity. They will be faced by the thousand and one difficulties required to bring it into being and nurture it to maturity, but that will no more dissuade them than the difficulties of birthing and raising a child will dissuade an aspiring parent.

From my experience, profit becomes a barking dog begging to be let in.

When the structure is complete, the entirety of the work results in a charter package, which is temporarily frozen. It is usually in the form of a massive civil contract between an unlimited number of people and institutions which meet eligibility requirements for participation. The contract of participation is often no more than a single page acknowledging receipt of the structural documents and agreeing to abide by them as they then exist or are thereafter modified, which is relatively risk-free. Modifications are determined by the participants, of which they are one. No participant has inferior or superior rights and obligations. The contract creates irrevocable rights, but allows withdrawal at any time should the participant judge benefit no longer outweighs obligation. If sufficient participants accept the new concept and structure, it comes into being, its governance structures are formed, its momentary state of arrested development ends, and it resumes evolutionary self-organization. The process of actualization may be considerably different with respect to an existing hierarchical organization, particularly one constrained by institutionalized monetization. However, the fundamentals of reconception will be much the same.

When such an organization is brought into being, it will inevitably attract the people required for its success, since they will be drawn to the clarity of shared purpose, principles, concept, and structure. With clarity of shared purpose and principles, the right people, an effective concept, and proper structure, practice will be highly focused and effective since human spirit, commitment, and ingenuity will be released. Purpose will then be realized far beyond original expectation. People will come to see that the process is not a closed circle. Achieving purpose beyond expectation enlarges confidence and calls into question the original purpose and principles. And an enlarged and enriched purpose will enlarge and enrich in concept an ever widening and ascending spiral of complexity, diversity, creativity, and harmony — well, let’s call it what it is — evolution. And what about profit? Well, from my experience, profit becomes a barking dog begging to be let in.

Reprinted with permission from Birth of the Chaordic Age by Dee Hock. Copyright © 1999 by Dee Hock. Published by Berrett-Koehler Publishers, Inc., San Francisco, CA 94111-3320.

Dee Hock is founder and CEO Emeritus of VISA International. He is currently founder and CEO of the Chaordic Alliance, a nonprofit committed to the formation of practical, innovative organizations that blend competition and cooperation to address critical social issues. The Alliance also seeks to develop new organizational concepts that more equitably distribute power and wealth and are more compatible with the human spirit and the biosphere.

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As Peter Senge points out in The Fifth Discipline, many organizations suffer from the same learning disability as the frog. Their internal detection mechanisms are geared for responding only to quick, dramatic changes in their environment, not to slow, more incremental ones. Hence, the same businesses that would sound all kinds of alarm bells if they experienced a sudden 5-percent drop in market share will quietly adapt to an annual 0.5-percent erosion over 10 years without recognizing this slow downward spiral as a crisis.

Although the boiled-frog syndrome has often been associated with the “Drifting Goals” archetype, there are many ways in which an organization can “get boiled.” In the “Shifting the Burden” structure, things seem to improve in the short term, even as the water gets hotter and hotter over time. Therefore, this archetype warns us about the long-term consequences of relying on a symptomatic approach to addressing problems.

The Urgency of Now

The “Shifting the Burden” systems archetype produces behavior quite similar to that generated by the “Fixes That Fail” structure (see “Fixes That Fail: Why Faster Is Slower,” V10N3). Both archetypes tend to cause people to take actions in response to acute problems, and both tend to reinforce the use of quick fixes. In this way, the two archetypes are driven by the urgency of the here and now, which leads to unintended consequences that end up making the original situation worse in the future.

The difference with the “Shifting the Burden” archetype is that it requires a deeper understanding of what’s needed to keep the system healthy than does the “Fixes That Fail” structure. This is because addressing a “Shifting the Burden” scenario often necessitates identifying not so much a solution to a problem but rather the fundamental capability that the organization needs to develop over the longer term.

Prudent Outsourcing or Shifting the Burden?

Let’s look at an example. In “Boiled Through Outsourcing,” we see a situation in which a refrigerator manufacturer faces a shortage of engineers to work on a new product design (labeled “Problem-Symptom Peaks” in the diagram). Management knows that they need to add more engineers if the company is going to be able to handle these kinds of projects internally. But because they must begin work on the new product right away, they choose to outsource the engineering to Company A.

BOILED THROUGH OUTSOURCING

The manufacturer faces a shortage of engineers to work on a new product design (problem symptom). Management knows that they need to add more engineers (fundamental solution). But because they must begin work on the new product right away, they choose to outsource the engineering (symptomatic solution). The company repeats the same dynamics time and again, lessening its own internal capability.

At the same time, because company leaders recognize the need to build up their own staff, they initiate actions to hire and develop internal capacity. However, those efforts quickly wane when the problem symptom—the need for experienced refrigeration engineers—declines because Company A is doing such a good job. Other, more pressing issues occupy the company’s attention, and the capacity-building effort gets put on the back burner until the next staffing shortfall occurs. At that point, the company repeats the same dynamics.

This approach leads to a pattern of behavior in which the problem symptom continually resurfaces. Each time, the company makes efforts to address both the symptomatic and fundamental problems. However, when the quick fix proves successful in handling the problem in the short term, the organization continues to rely on that tactic over the longer run. As a result, efforts to seek a lasting, more fundamental solution decline. If left unchecked, the company will eventually “boil” like the poor frog— that is, face serious financial and performance difficulties.

Breaking Out of a Reactive Orientation

Although choosing to invest in the more fundamental solution is better than pursuing a symptomatic solution, both actions are inherently reactionary. This is because the two approaches are driven by the need to solve what is currently wrong rather than by the desire to create the future you want. Hence, even opting for the fundamental solution can produce problem symptoms that come and go. This is because no matter how the symptom gets reduced, the amount of effort devoted to its solution varies with the severity of the symptom—it rises when the problem is acute and falls when it is “under control.”

FROM A REACTIVE TO A GENERATIVE ORIENTATION

Breaking out of a reactive orientation requires shifting from problem-solving to developing a vision of what you want to create—a generative orientation.

Breaking out of this reactive orientation requires a shift from problem-solving to developing a vision of what you want to create—a generative orientation (see “From a Reactive to a Generative Orientation”). In our example of the refrigerator manufacturer, this approach would mean having a clarity of vision about the kind of engineering capability the company wants to maintain and then developing that skill base—regardless of whether the organization is experiencing shortfalls at the moment or not. The company may still experience problems with staffing shortages during this time. However, when it encounters them, the organization will be able to use symptomatic solutions as temporary stop-gap measures, while it continues to steadily build its underlying capacity.

Does our refrigerator manufacturing example mean that all outsourcing is a case of “Shifting the Burden”? The answer to that question depends on your organization’s vision of what it wants to keep as its core competencies. If you inadvertently ended up outsourcing what you considered a core competency, such as refrigeration design, then you would be caught in a “Shifting the Burden” dynamic. On the other hand, if you decided that competence in payroll systems and health-benefit programs was not key to your core business, outsourcing those functions might be a prudent decision.

Out of the Boiling Pot and . . .

The “Shifting the Burden” structure shows that, in addition to refining our organizations’ mechanisms for detecting slow, gradual changes, we need to develop better direction-setting systems. Otherwise, we may improve at making course corrections but never clarify what course we really want to take. That approach would be analogous to our poor frog jumping from one pot to another whenever it feels the water heating up, but never pur-suing a more fundamental solution by seeking a nice lily pond instead. Even with improved temperature-sensing mechanisms, if the frog keeps hopping from one pot to the next, the odds are that, sooner or later, it will end up on someone’s dinner plate.

Daniel H. Kim, Ph. D., is publisher of The Systems Thinker and a member of the governing council of the Society for Organizational Learning.

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In the West, we tend to think of leadership as a quality that exists only in certain people. Thus, we search for special individuals with leadership potential, rather than trying to develop leadership potential in everyone. We are easily distracted by the melodrama of people in power trying to maintain their power and others trying to wrest it from them. When things are going poorly, we blame the situation on incompetent leaders, thereby avoiding any personal responsibility. When things become desperate, we can easily find ourselves waiting for a great leader to rescue us. Through all of this, we miss the bigger question: “What are we, collectively, able to create?”

Because of our obsessions with our leaders, we forget that, in its essence, leadership is about learning how to shape the future. Leadership exists when people are no longer victims of circumstances but participate in creating new circumstances. Ultimately, leadership is about creating new realities.

Exploring such a view of leadership through a book is almost a contradiction in terms, because this territory cannot be fully mapped out conceptually. In Synchronicity, Joe chooses to enter this territory through his own story. The result is an unusual book: a deeply personal, reflective account of one person’s journey. This approach may be rare among business books, but Joe’s insights and the process by which he came to them are inseparable. His life has been his vehicle for learning, just as his learning has been about how leaders must serve life.

A Personal Tale

The story begins when Joe’s father, Leon Jaworski, became the Watergate Special Prosecutor. During the harrowing investigation, father and son asked each other the same questions the nation would soon ask: How could this have happened? How could our highest and most trusted officials act like common criminals?

These questions eventually led Joe to a remarkable series of undertakings, including leaving the prestigious international law firm he had helped to build in order to create the American Leadership Forum (ALF). The ALF is a national network of professionals committed to bringing forth a new generation of public leadership. Later, Joe accepted a four-year position as head of scenario planning for the Royal Dutch Shell Group; joined the MIT Center for Organizational Learning, where he works with a consortium of leading corporations to build learning organizations; and founded the Centre for Generative Leadership, a professional consortium that collaborates with clients to develop the leadership required to shape the future.

Below the surface details of the activities Joe describes were profound personal changes he experienced, guided by a series of meetings with remarkable people including John Gardner, Harlan Cleveland, and Francisco Varela. Joe especially valued his 1980 conversation with the physicist David Bohm, which planted the seeds for a radical view of how human beings can shape their destiny. This new view centered on learning to operate in the moment, to participate meaningfully in the unfolding of reality, and to tap into the deeper domain of wholeness.

For me, Joe’s story represents one person’s journey taken on behalf of all of us who are wrestling with the profound changes required in public and institutional leadership for the twenty-first century. Our lifelong experiences with hierarchy cast a long shadow, and abuses of hierarchical authority, sadly, are still with us today, eliciting deep concerns about our collective capability to lead ourselves. In this book, we get a glimpse of what committed people can do to positively affect public leadership.

Joe’s descriptions of his meetings with various thought leaders beautifully demonstrate the personal orientation required for a learning organization to operate. With his ability to wonder and to question, and with the sense of destiny that travels with him, people tend to be open around Joe. They also tend to feel that by telling him their story, their story will actually be heard. In this way, all of the conversations that Joe mentions in this book contribute threads that make up the deeper fabric of his message.

Moving as it does between historic public events and key intellectual discussions, Joe’s story naturally draws us in. We are all seeking greater insight into these remarkable times, when there is so much cause for both despair and hope. Even as our political and institutional leadership is losing respect and credibility, we are gaining a greater understanding of how the universe works, which is leading to an historic shift in worldview. Perhaps the two trends are connected — our institutions and leadership are falling apart precisely because they are grounded in a way of thinking about the world that is increasingly obsolete and counterproductive.

The sixteenth-century Newtonian mechanical view of the universe, which still guides our thinking, has become increasing dysfunctional in these times of interdependence and change. As Synchronicity implies, the new leadership must be built on new understandings of how the world works. Nothing will change in the future without fundamentally new ways of thinking.

Fundamental Shifts of Mind

At one level, the larger purpose of Synchronicity is to suggest that we can shape our future in ways that we rarely realize. Joe’s story offers an emerging understanding of how this might come about, primarily through the book’s organizing principles (see “A Conceptual Map”).

Second, when we go through this shift of mind, our sense of despair about being able to influence reality begins to ease. We start to realize that, in fact, everything around us is in continual motion, and that nothing in nature stays put. This realization lets us see the world as a place of continual possibility, and allows us to feel more alive. Sadly, because of how we think, we’re strangling the life out of ourselves. When we start to see the world more as it is, we stop strangling ourselves.

Third, when this fundamental shift of mind occurs, our sense of identity also shifts and we begin to accept each other as legitimate human beings, not just the stored-up images, interpretations, feelings, doubts, and anxieties that each of us evokes in one another.

Fourth, when we start to accept this fundamental shift of mind, we begin to see ourselves as part of the unfolding of reality. We also see that it’s actually impossible for our lives not to have meaning. At a deep level, our lives cannot help but have meaning, because everything is continually unfolding, and we are connected to that unfolding in ways we can’t even imagine. This participation is actually our birthright. It’s what it means to be alive.

Fifth, operating in this different state of mind and being, we come to a very different sense of what it means to be committed. In our traditional image of commitment, things get done by hard work and sacrifice. We vacillate between getting things done by telling ourselves to work harder, and feeling guilt because we think we’re not good enough to accomplish our goals.

But neither of these states of being has anything to do with the deeper nature of commitment. When we operate in the state of mind in which we realize we are part of the unfolding, we can’t not be committed. In this state, nothing ever happens by accident. Every single thing is part of what needs to happen right now. We make only the mistakes that we have to make to learn what we’re here to learn right now. This is a commitment of being, not a commitment of doing. Our being is inherently in a state of commitment as part of the unfolding process.

We’ve all had those perfect moments, when things come together in an almost unbelievable way, when events that could never be predicted, let alone controlled, remarkably seem to guide us along our path.

This discovery leads to a paradoxical integrity of surrender: We actualize our commitment by listening, out of which our “doing” arises. Sometimes the greatest acts of commitment involve doing nothing but sitting and waiting until we just know what to do next.

In most organizations today, managers who adopt this attitude would be considered nonmanagers because they are not doing anything to fix problems. We’re hooked on the notion that commitment and activity are inseparable. So we create a continual stream of activity, making sure that everybody sees us doing lots of things so they’ll believe we’re actually committed. If we stay busy enough, maybe we’ll even convince ourselves that our lives have some meaning even though, deep down, we suspect that everything is hopeless, and we’re helpless, and we couldn’t possibly affect anything anyhow.

One of the interesting indicators of this paradoxical connection between our sense of helplessness and our ceaseless activity is how much difficulty we have actually saying, “You know, I can’t do anything about that.” I often find that people in organizations feel they have to create a belief that they can make change happen in order to justify their meaningless activity. As a result, they get caught in an enormous set of contradictions. At one level, they believe they can’t influence anything. At another level, they create a story that says, “We can make it happen,” and they busy themselves doing things that they know won’t have any impact. We live in a contradictory state of frenzied commitment, of treading water, knowing we’re actually not going anywhere. But we’re terrified that if we stop, we’ll drown. Our lives will be meaningless.

Sixth, when a commitment of being, rather than doing, starts to operate, there is a flow around us. Things just seem to happen. We begin to see that with very small movements, at just the right time and place, all sorts of consequent actions are brought into being. We develop “an economy of means,” where, rather than getting things done through brute force, we start to operate very subtly. A flow of meaning begins to operate around us, as if we were part of a larger conversation (which is, incidentally, the ancient meaning of dialogue). We start to notice that things suddenly are just attracted to us in ways that are very puzzling. A structure of underlying causes, a set of forces, begins to operate, as if we were surrounded by a magnetic field with magnets being aligned spontaneously in this field. But this alignment is not spontaneous at all — it’s just that the magnets are responding to a more subtle level of causality.

Last, when we are in a state of commitment and surrender, we begin to experience what is sometimes called synchronicity. People tend to elevate synchronicity into a sort of magical, mystical experience. In fact, it’s very down to earth. Water flows downhill because of gravity. Of course, gravity itself is a pretty mysterious phenomenon. It seems to be a type of field, as if all physical objects in the universe have some sort of attraction for one another. But even though no one knows exactly how gravity works, we can observe the result: water flows downhill. We don’t argue about the result because it is observable. That’s much the way synchronicity seems to operate in this field of deep commitment.

In the same sense, this attractiveness, the field that starts to develop around people who have experienced these shifts of mind, creates a phenomenon that Joe calls predictable miracles. Miracle is a funny word because it connotes the unusual or mysterious. But in fact, what is “miraculous” might be just what is beyond our current understanding and way of living. If we were not making such an immense effort to separate ourselves from life, we might actually live life day to day, minute by minute, as a series of predictable miracles.

1996 by Peter M. Senge. Excerpted from Synchronicity: The Inner Path of Leadership, by Joseph Jaworski (San Francisco: Berrett-Koehler. 1996). Reprinted with permission from Berrett-Koehler (1-800-929-2929).

Editorial support for this article was provided by Laurie Johnson.

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Contrary to conventional wisdom, Americans are proving not only able but willing to separate their garbage. In fact we’re becoming such ferocious recyclers that old newspapers are piling up by the ton with no place to go.

As the market for used newsprint crashes, some recyclers are getting discouraged, and some purveyors of conventional wisdom are saying, see there? Recycling just doesn’t work. There’s no market for it.

It would be more accurate to say we don’t know if recycling works; we haven’t yet tried it. When we do, gluts and scarcities will be signals not that there’s no market, but that the market is working the way it always works — in fits and starts.

What we are doing so far is separating, not recycling. We’re beginning to reclaim materials before they get to the dump. We have barely begun to close the loop — to reuse major materials in the same products: newspapers back to newspapers; plastic soda bottles back to soda bottles.

Product-to-same-product recycling is the only kind that can work in the long run.

Product-to-same-product recycling is the only kind that can work in the long run. Turning newspapers into cattle bedding will be helpful for a while, but eventually it will clog, either because we use newspapers faster than cattle bedding, or vice versa. Similarly the plastics industry is congratulating itself too soon for turning soda bottles into plastic flowerpots. Given the nation’s consumption rate of soda versus flowerpots one can easily predict a market collapse due to flowerpot glut.

What works is illustrated by the nation’s one smooth-running and economical recycling system—aluminum cans back into aluminum cans.

Even when newspapers are printed on recycled newsprint and the plastics industry makes new bottles out of old, there will be glitches, scarcities and overflows. These are inevitable in the evolution of any production system, especially one that is guided by the market. The only way the market can sense a large potential supply of something new is to let that something accumulate somewhere. The only way the market can stimulate a demand is to bring the price down low enough, and be sufficiently assuring about future supply, to stimulate new users.

In short, don’t let a temporary newspaper glut discourage you. We’re just at the beginning of a major industrial transformation. We’re working out a material-supply system consistent with a finite planet. It will be totally different from the wasteful, polluting system we have now — and it will take a while to get it right.

It’s worth keeping part of our attention cast ahead of the immediate economics to the place where we’re ultimately headed. A sustainable, economic, ecologically supportable materials system will re-use everything it can. It will add virgin materials only as necessary to sustain product quality. It won’t waste materials on unproduc-tive purposes such as packaging—it will use uniform and minimal packaging, standard bottles or boxes of standard sizes, interchangeable among products, for easy re-use. Only the label will distinguish the product.

” ..gluts and scarcities will be signals that the market is working the way it always works—in fits and starts.”

Marketers will have to attract consumers with a reason to buy their product that’s more important than glitzy packaging.

For easy recycling the use of mixed materials in manufacture (like the infamous squeezable ketchup bottle with seven different laminated plastics) will be discouraged. Products will be designed to last longer and be easily repairable. There will be thriving businesses that refurbish or recapture the components of large appliances. All this can be brought about simply by adding a tax to each product equivalent to the real cost of its disposal. That’s not distorting to the market, it’s correcting the market by adding a cost signal that should have been there all along.

When materials are finally so well used that they must be thrown out, they will be more carefully separated than they are today. First and most important, toxics — heavy metals, organic chemicals, radioactive materials — will not be allowed at all in municipal waste streams or sewage treatment systems. Toxics will go into entirely separate collection and disposal systems.

With the hazardous wastes out of the way, all organic wastes will be composted, along with sewage sludge. That single step will reduce garbage volume by 30 percent and provide tons of safe, free fertilizer. If glass, paper and metals are recycled, that would bring the garbage flow down to just 10 percent of what it is now. And that doesn’t include the possibility of recycling plastic.

No part of this dream system is impossible. Every piece of it is operating somewhere. Denmark has a model system for processing toxic wastes. The Netherlands has a massive composting system, as do many American cities. Technologies exist to reclaim paper, glass, metal and some plastics. Put them all together and we’d have the same material quality of life but with less mining, less air and water pollution, less traffic, less taxes, and 90 percent less stuff to haul to the curb every week.

Along the way toward a sustainable materials system — or any large social goal — there will be fits and starts, market failures, and disappointments. It’s worth hanging in there. We’re on the right track.

Donella Meadows is an adjunct professor of environmental and policy studies at Dartmouth College. She writes a weekly column for the Plainfield. NH Valley News.

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The Dynamics of Insecurity

At the heart of an escalation dynamic are two (or more) parties, each of whom feels threatened by the actions of the other (see “Escalation Archetype” ). Each side attempts to keep things under control by managing its own balancing process. Actions taken by A, for example, improve A’s result relative to B. This decreases A’s feeling of threat, so A eases off its activities (B 1). B, on the other hand, now feels threatened by A’s relative advantage and increases its activities in order to improve its result over A (B2). The interaction of the two parties trying to unilaterally maintain control produces a reinforcing spiral in which nobody feels in control.

In school, a few harsh words can quickly lead to a playground brawl. In a more deadly confrontation, the escalation structure can lead to catastrophic consequences. The Cuban Missile Crisis in October of 1962, for example, caught U.S.. President Kennedy and Soviet Chairman Khrushchev in an escalation structure that led their countries to the brink of nuclear war.

The crisis began with the discovery of offensive nuclear weapons being constructed in Cuba — contrary to repeated public assurances by the Soviet chairman. The U.S. called for complete dismantling and withdrawal of the missiles. The Soviets first denied the existence of any such missiles. Then they acknowledged the missiles but refused to remove them, claiming they were defensive. Kennedy responded by ordering a naval blockade around Cuba to prevent more missiles from being shipped. Tensions were high. The Soviets pressed for accelerated construction of the missiles already in Cuba. The United States massed over 200,000 troops in Florida to prepare for an invasion.

When a United States U2 reconnaissance plane was shot down over Cuba, Kennedy’s advisors unanimously proposed launching a retaliatory strike. But Kennedy stopped short. “It isn’t the first step that concerns me,” he said, “but both sides escalating to the fourth and fifth step. And we won’t go to the sixth because there [will be] no one around to do so.” Had Kennedy not broken the escalation structure at that juncture, the forces unleashed might have been beyond anyone’s control to stop.

De-escalation

The Cuban missile crisis was one incident in a larger dynamic — the Cold War. Although that particular crisis was resolved, it did nothing to defuse the mutual distrust between the two countries, so the ‘arms race continued (see “Arms Race” diagram). The balance of power shifted over time as each side built more arms in response to a perceived threat from the other. Yet, the very act of building arms to “balance” the situation only led to further threat, which strengthened the other side’s “need” for even more arms.

It takes two to have an arms race, but only one to stop it. Unilateral action can break the escalation dynamic by robbing it of its legitimacy. If one side stops building arms, the source of threat diminishes, giving the other side less reason to invest in more arms. The escalation can then run in reverse. A recent newspaper headline, “Gorbachev escalates arms cuts,” shows how the arms race is now being driven rapidly in reverse.

Wars on Many Fronts

Escalation dynamics, because they thrive in a competitive environment, are pervasive in business. The common logic is that whenever your competitor gains, you lose (and vice versa). That logic leads to all kinds of “wars” — price wars, advertising wars, rebate and promotion wars, salary and benefit wars, labor and management wars, divisional wars, marketing vs. manufacturing department wars, and so on.

At the core of each of these wars is a set of relative measures that pits one group against another in a zero-sum game. In a typical price war (see “Price Wars” diagram), company A wants to “buy” market share by cuttings its price. As its sales and market share increase, B’s market share decreases. B retaliates by slashing its prices, generating more sales for B at the expense of A’s sales. In the short run, consumers may benefit from low prices. But in the long term, everyone may lose, since depressed prices mean less ability to invest in new product development, customer service, and overall attractiveness for the next round of competition.

Reversing or stopping such price wars is difficult. As competitors, A and B cannot collude to set prices. Nor is either company likely to stop unilaterally, since in the absence of other distinguishing features, the market usually favors the one with the lower price. In the heat of battle, a company can easily get locked into one competitive variable, such as price, and neglect to emphasize other strengths. Texas Instruments learned that lesson the hard way. Even though Texas Instruments had a superior technical product, it had to write off its entire personal computer business (the 1199/ 4A) as a result of a vicious price war with Commodore.

Insecurity

As the term “threat” suggests, the escalation archetype is about insecurity. In our playground example, the name-calling threatens our reputation and makes us insecure about our identity. The Cuban Missile Crisis and the arms race threatened the national security of both countries. Engaging in a price war reveals each company’s insecurity about its ability to hold on to customers on a basis other than price.

If you find yourself caught in an escalation dynamic, drawing out the archetype can help you gain some perspective. The following questions are useful for identifying escalation structures. With advance knowledge, you can design strategies around them or use them to your advantage:

• Who are the parties whose actions are perceived as threats?
• What is being threatened, and what is the source of that threat?
• What is the relative measure that pits one party against the other — and can you change it?
• What are the significant delays in the system that may distort the true nature of the threat?
• Can you identify a larger goal that will encompass the individual goals?
• What are the deep-rooted assumptions that lie beneath the actions taken in response to the threat?

The description of the escalation archetype is based on the systems archetypes presented in The Fifth Discipline by Peter M. Senge, Doubleday 1990.

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