From my work with both business and education professionals over the last 15 years, I have come to believe that systems thinking’s steep learning curve is related to the fact that the discipline requires mastering a whole package of thinking skills.

STEPS IN THE SYSTEMS THINKING METHOD

Begin by specifying the problem you want to address. Then construct hypotheses to explain the problem and test them using models. Only when you have a sufficient understanding of the situation should you begin to implement change.

Much like the accomplished basketball player who is unaware of the many separate skills needed to execute a lay-up under game conditions – such as dribbling while running and without looking at the ball, timing and positioning the take-off, extending the ball toward the rim with one hand while avoiding the blocking efforts of defenders – veteran systems thinkers are unaware of the full set of thinking skills that they deploy while executing their craft. By identifying these separate competencies, both new hoop legends and systems thinking wannabes can practice each skill in isolation. This approach can help you master each of the skills before you try to put them all together in an actual game situation.

The Systems Thinking Method

Before exploring these critical thinking skills, it’s important to have a clear picture of the iterative, four-step process used in applying systems thinking (see “Steps in the Systems Thinking Method”). In using this approach, you first specify the problem or issue you wish to explore or resolve. You then begin to construct hypotheses to explain the problem and test them using models whether mental models, pencil and paper models, or computer simulation models. When you are content that you have developed a workable hypothesis, you can then communicate your new found clarity to others and begin to implement change.

When we use the term “models” in this article, we are referring to something that represents a specifically defined set of assumptions about how the world works. We start from a premise that all models are wrong because they are incomplete representations of reality, but that some models are more useful than others (they help us understand reality better than others).  There is a tendency in the business world, however, to view models (especially computer-based models) as “answer generators;” we plug in a bunch of numbers and get out a set of answers. From a systems thinking perspective, however, we view models more as “assumptions and theory testers” we formulate our understanding and then rigorously test it. The bottom line is that all models are only as good as the quality of the thinking that went into creating them. Systems thinking, and its ensemble of seven critical thinking skills, plays an important role in improving the quality of our thinking.

The Seven Critical Thinking Skills

As you undertake a systems thinking process, you will find that the use of certain skills predominates in each step. I believe there are at least seven separate but interdependent thinking skills that seasoned systems thinkers master. The seven unfold in the following sequence when you apply a systems thinking approach: Dynamic Thinking, System-as-Cause Thinking, Forest Thinking, Operational Thinking, Closed-Loop Thinking, Quantitative Thinking, and Scientific Thinking.

The first of these skills, Dynamic Thinking, helps you define the problem you want to tackle. The next two, System-as-Cause Thinking and Forest Thinking, are invaluable in helping you to determine what aspects of the problem to include, and how detailed to be in representing each. The fourth through sixth skills, Operational Thinking, Closed-Loop Thinking, and Quantitative Thinking, are vital for representing the hypotheses (or mental models) that you are going to test. The final skill, Scientific Thinking, is useful in testing your models.

Each of these critical thinking skills serves a different purpose and brings something unique to a systems thinking analysis. Let’s explore these skills, identify how you can develop them, and determine what their “non-systems thinking” counterparts (which dominate in traditional thinking) look like.

Dynamic Thinking: Dynamic Thinking is essential for framing a problem or issue in terms of a pattern of behavior over time. Dynamic Thinking contrasts with Static Thinking, which leads people to focus on particular events. Problems or issues that unfold over time as opposed to one-time occurrences are most suitable for a systems thinking approach.

You can strengthen your Dynamic Thinking skills by practicing constructing graphs of behavior overtime. For example, take the columns of data in your company’s annual report and graph a few of the key variables over time. Divide one key variable by another (such as revenue or profit by number of employees), and then graph the results. Or pick up today’s news-paper and scan the head-lines for any attention-grabbing events. Then think about how you might see those events as merely one interesting point in a variable’s overall trajectory over time. The next time someone suggests that doing this-and-that will fix such-and-such, ask, “Over what time frame? How long will it take? What will happen to key variables over time?”

System-as-Cause Thinking: Dynamic Thinking positions your issue as a pattern of behavior over time. The next step is to construct a model to explain how the behavior arises, and then suggest ways to improve that behavior. System-as-Cause Thinking can help you determine the extensive boundary of your model, that is, what to include in your model and what to leave out (see “Extensive and Intensive Model Boundaries”). From a System-as-Cause Thinking approach, you should include only the elements and inter-relationships that are within the control of managers in the system and are capable of generating the behavior you seek to explain.

By contrast, the more common System-as-Effect Thinking views behavior generated by a system as “driven” by external forces. This perspective can lead you to include more variables in your model than are really necessary. System-as-Cause Thinking thus focuses your model more sharply, because it places the responsibility for the behavior on those who manage the policies and plumbing of the system itself.

To develop System-as-Cause Thinking, try turning each “They did it” or “It’s their fault” you encounter into a “How could we have been responsible?” It is always possible to see a situation as caused by “outside forces.” But it is also always possible to ask, “What did we do to make ourselves vulnerable to those forces that we could not control?”

EXTENSIVE AND INTENSIVE MODEL BOUNDARIES

The extensive boundary is the breadth or scope of what’s included in the model. The intensive boundary is the depth or level of detail at which the items included in the model are represented.

Forest Thinking: In many organizations, people assume that to really know something, they must focus on the details. This assumption is reinforced by day-to-day existence—we experience life as a sequence of detailed events. We can also think of this as Tree-by-Tree Thinking. Models that we create by applying Tree-by-Tree Thinking tend to be large and overly detailed; their intensive boundaries run deep. In using such models, we would want to know whether that particular red truck broke down on Tuesday before noon, as opposed to being interested in how frequently, on average, trucks break down. Forest Thinking–inspired models, by contrast, group the details to give us an “on average” picture of the system. To hone your Forest Thinking skills, practice focusing on similarities rather than differences. For example, although everyone in your organization is unique, each also shares some characteristics with others. While some are highly motivated to perform and others are not, all have the potential to make a contribution. Regardless of the individual, realizing potential within an organization comes from the same generic structure. For example, what is the relationship among factors that tends to govern an individual’s motivation?

Operational Thinking :Operational Thinking tries to get at causality—how is behavior actually generated? This thinking skill contrasts with Correlational or Factors Thinking. Steven Covey’s The Seven Habits of Highly Effective People, one of the most popular nonfiction books of all time, is a product of Factors Thinking. So are the multitude of lists of “Critical Success Factors” or “Key Drivers of the Business” that decorate the office walls (and mental models) of so many senior executives. We like to think in terms of lists of factors that influence or drive some result.

There are several problems with mental models bearing such list structures, however. For one thing, lists do not explain how each causal factor actually works its magic. They merely imply that each factor “influences,” or is “correlated with,” the corresponding result. But influence or correlation is not the same as causality.

For example, if you use Factors Thinking to analyze what influences learning, you can easily come up with a whole “laundry list” of factors (see “Two Representations of the Learning Process”). But if you use Operational Thinking, you might depict learning as a process that coincides with the building of experience. Operational Thinking captures the nature of the learning process by describing its structure, while Factors Thinking merely enumerates a set of factors that in some way “influence” the process.

To develop your Operational Thinking skills, you need to work your way through various activities that define how a business works examine phenomena such as hiring, producing, learning, motivating, quitting, and setting price. In each case, ask, “What is the nature of the process at work?” as opposed to “What are all of the factors that influence the process?”

Closed-Loop Thinking :Imagine discussing your company’s profitability situation with some of your coworkers. In most companies, the group would likely list things such as product quality, leadership, or competition as influences on profitability (see “A Straight-Line vs. a Closed-Loop View of Causality”). This tendency to list factors stems from Straight-Line Thinking. The assumptions behind this way of thinking are 1) that causality runs only one way—from “this set of causes” to “that effect,” and 2) that each cause is independent of all other causes. In reality, however, as the closed-loop part of the illustration shows, the “effect” usually feeds back to influence one or more of the “causes,” and the causes themselves affect each other. Closed-Loop Thinking skills therefore lead you to see causality as an ongoing process, rather than a one-time event.
To sharpen your Closed-Loop Thinking skills, take any laundry list that you encounter and think through the ways in which the driven drives and in which the drivers drive each other. Instead of viewing one variable as the most important driver and another one as the second most important, seek to understand how the dominance among the variables might shift over time.

TWO REPRESENTATIONS OF THE LEARNING PROCESS

Factors Thinking merely enumerates a set of factors that in some way “influence” the learning process. Operational Thinking captures the nature of the learning process by describing its structure.

Quantitative Thinking: In this phrase, “quantitative” is not synonymous with “measurable.” The two terms are often confused in practice, perhaps because of the presumption in the Western scientific world that “to know, one must measure precisely.” Although Heisenberg’s Uncertainty Principle caused physicists to back off a bit in their quest for numerical exactitude, business folk continue unabated in their search for perfectly measured data. There are many instances of analysis getting bogged down because of an obsession with “getting the numbers right.” Measurement Thinking continues to dominate!

There are a whole lot of things, however, that we will never be able to measure very precisely. These include “squishy,” or “soft,” variables, such as motivation, self-esteem, commitment, and resistance to change. Many so-called “hard” variables are also difficult to measure accurately, given the speed of change and the delays and imperfections in information systems.

A STRAIGHT-LINE VS.A CLOSED-LOOP VIEW OF CAUSALITY

The assumptions behind Straight-Line Thinking are that causality runs only one way and that each cause is independent of all other causes. Closed-Loop Thinking shows that the “effect” usually feeds back to influence one or more of the “causes,” and the causes themselves affect each other.

But let’s return to our “squishy” variables. Would anyone want to argue that an employee’s self-esteem is irrelevant to her performance? Who would propose that commitment is unimportant to a company’s success? Although few of us would subscribe to either argument, things like self-esteem and commitment rarely make it into the spreadsheets and other analytical tools that we use to drive analysis. Why? Because such variables can’t be measured. However, they can be quantified. If zero means a total absence of commitment, 100 means being as committed as possible. Are these numbers arbitrary? Yes. But are they ambiguous? Absolutely not! If you want your model to shed light on how to increase strength of commitment as opposed to predicting what value commitment will take on in the third-quarter of 1997—you can include strength of commitment as a variable with no apologies. You can always quantify, though you can’t always measure.

To improve your Quantitative Thinking skills, take any analysis that your company has crunched through over the last year and ask what key “soft” variables were omitted, such as employee motivation. Then, ruminate about the possible implications of including them systems thinking gives you the power to ascribe full-citizen status to such variables. You’ll give up the ability to achieve perfect measurement. But if you’re honest, you’ll see that you never really had that anyway.

Scientific Thinking: The final systems thinking skill is Scientific Thinking. I call its opposite Proving Truth Thinking. To understand Scientific Thinking, it is important to acknowledge that progress in science is measured by the discarding of falsehoods. The current prevailing wisdom is always regarded as merely an “entertainable hypothesis,” just waiting to be thrown out the window. On the other hand, too many business models are unscientific; yet business leaders revere them as truth and defend them to the death. Analysts make unrelenting efforts to show that their models track history and therefore must be “true.”

Seasoned systems thinkers continually resist the pressure to “validate” their models (that is, prove truth) by tracking history. Instead, they work hard to become aware of the falsehoods in their models and to communicate these to their team or clients. “All models are wrong,”” said W. Edwards Deming. “Some models are useful.” Deming was a smart guy, and clearly a systems thinker.

In using Scientific Thinking, systems thinkers worry less about outfitting their models with exact numbers and instead focus on choosing numbers that are simple, easy to understand, and make sense relative to one another. Systems thinkers also pay lots of attention to robustness they torture-test their models to death! They want to know under what circumstances their model “breaks down.” They also want to know, does it break down in a realistic fashion? What are the limits to my confidence that this model will be useful?

The easiest way to sharpen your Scientific Thinking skills is to start with a computer model that is “in balance” and then shock it. For example, transfer 90% of the sales force into manufacturing. Set price at 10 times competitor price. Triple the customer base in an instant. Then see how the model performs. Not only will you learn a lot about the range of utility of the model, but you also will likely gain insight into the location of that most holy of grails: high-leverage intervention points.

A Divide and Conquer Strategy

As the success of Peter Senge’s The Fifth Discipline: The Art & Practice of the Learning Organization has shown, systems thinking is both sexy and seductive. But applying it effectively is not so easy. One reason for this difficulty is that the thinking skills needed to do so are many in number and stand in stark contrast to the skill set that most of us currently use when we grapple with business issues (see “Traditional Business Thinking vs. Systems Thinking Skills”).

By separating and examining the seven skills required to apply systems thinking effectively, you can practice them one at a time. If you master the individual skills first, you stand a much better chance of being able to put them together in a game situation. So, practice . . . then take it to the hoop!

“Barry Richmond is the managing director and founder of High Performance Systems, Inc. He has a PhD in system dynamics from the MIT Sloan School of Management, an MS from Case Western Reserve, and an MBA from Columbia University”

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What Does Systems Thinking Involve?

Why Use Systems Thinking?

Systems thinking expands the range of choices available for solving a problem by broadening our thinking and helping us articulate problems in new and different ways. At the same time, the principles of systems thinking make us aware that there are no perfect solutions; the choices we make will have an impact on other parts of the system. By anticipating the impact of each trade-off, we can minimize its severity or even use it to our own advantage. Systems thinking therefore allows us to make informed choices.
Systems thinking is also valuable for telling compelling stories that describe how a system works. For example, the practice of drawing causal loop diagrams forces a team to develop shared pictures, or stories, of a situation. The tools are effective vehicles for identifying, describing, and communicating your understanding of systems, particularly in groups.

When Should We Use Systems Thinking?

Problems that are ideal for a systems thinking intervention have the following characteristics:

• The issue is important.
• The problem is chronic, not a one-time event.
• The problem is familiar and has a known history.
• People have unsuccessfully tried to solve the problem before.

Where Should We Start?

When you begin to address an issue, avoid assigning blame (which is a common place for teams to start a discussion!). Instead, focus on items that people seem to be glossing over and try to arouse the group’s curiosity about the problem under discussion. To focus the conversation, ask, “What is it about this problem that we don’t understand?”

In addition, to get the full story out, emphasize the iceberg framework. Have the group describe the problem from all three angles: events, patterns, and structure (see “The Iceberg”).
Finally, we often assume that everyone has the same picture of the past or knows the same information. It’s therefore important to get different perspectives in order to make sure that all viewpoints are represented and that solutions are accepted by the people who need to implement them. When investigating a problem, involve people from various departments or functional areas; you may be surprised to learn how different their mental models are from yours.

How Do We Use Systems Thinking Tools?

Causal Loop Diagrams. First, remember that less is better. Start small and simple; add more elements to the story as necessary. Show the story in parts. The number of elements in a loop should be determined by the needs of the story and of the people using the diagram. A simple description might be enough to stimulate dialogue and provide a new way to see a problem. In other situations, you may need more loops to clarify the causal relationships you are surfacing.

Also keep in mind that people often think that a diagram has to incorporate all possible variables from a story; this is not necessarily true. In some cases, there are external elements that don’t change, change very slowly, or whose changes are irrelevant to the problem at hand. You can unnecessarily complicate things by including such details, especially those over which you have little or no control. Some of the most effective loops reveal connections or relationships between parts of the organization or system that the group may not have noticed before.
And last, don’t worry about whether a loop is “right”; instead, ask yourself whether the loop accurately reflects the story your group is trying to depict. Loops are shorthand descriptions of what we perceive as current reality; if they reflect that perspective, they are “right” enough.

THE ICEBERG

How Do We Know That We’ve “Got It”?

Here’s how you can tell you’ve gotten a handle on systems thinking:

• You’re asking different kinds of questions than you asked before.
• You’re hearing “catchphrases” that raise cautionary flags. For example, you find yourself refocusing the discussion when someone says, “The problem is we need more (sales staff, revenue).”
• You’re beginning to detect the archetypes and balancing and reinforcing processes in stories you hear or read.
• You’re surfacing mental models (both your own and those of others).
• You’re recognizing the leverage points for the classic systems stories.

Once you’ve started to use systems thinking for inquiry and diagnosis, you may want to move on to more complex ways to model systems-accumulator and flow diagrams, management flight simulators, or simulation software. Or you may find that adopting a systems thinking perspective and using causal loop diagrams provide enough insights to help you tackle problems. However you proceed, systems thinking will forever change the way you think about the world and approach issues. Keep in mind the tips we’ve listed here, and you’re on your way!

Michael Goodman is principal at Innovation Associates Organizational Learning

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As we will see, most organizations and people have mastered the ability to adapt to new situations and challenges. They can learn and improve, as long as the basic causes of their success do not change. But sometimes managers and enterprises become addicted to old ways of operating and making decisions, and thus fail to function well in a new environment. The result is decline. To understand the powerful dynamics that cause this turn of events, we must investigate the systems within which these organizations and managers operate.

Adaptation Versus Addiction

Adaptation and addiction differ in subtle ways. Adaptation takes place when we observe the symptoms of a problem and then take an action that counteracts the problem. Addiction occurs when we observe the symptoms of a problem and then take an action that suppresses the symptoms of the problem but makes the actual problem worse.

For example, lei’s say that you have just moved to a new area and find yourself spending a great deal of time alone. The number and quality of your social relationships are important indicators of the health of your personal system. Moving causes a decline in your system’s health when it leads to loneliness. An adaptive response to your loneliness could be to get involved with activities in your new community, to make connections with people at your new workplace, or to join a few clubs with members you find compatible.

The cause-effect mechanisms at work in this process are illustrated in the diagram “Adaptation” (p. 2). If the quality of your social life is important to you, then any change that causes loneliness in effect decreases the health of the system. After a delay, perceived health also goes down. When perceived health declines, the gap between perceived and desired health—between where you think your health is and where you want it to be—increases. So you take action to close the gap. In an adaptive system, the consequence of an action counteracts the problem and restores the health of the system. The whole process is a balancing loop that holds perceived health close to the level of health you actually desire.

But let’s look at another scenario, one of addiction. Say that when you find yourself feeling lonely, rather than trying to meet people, you have a few drinks. Drinking alcohol depresses the emotional center in your brain that causes you to experience loneliness. Thus, over the short term, the alcohol suppresses the symptoms of loneliness (sadness, self-pity, and so forth). But when you drink to an extreme, the quality of your social life deteriorates even further, making you even more lonely. So the action you took to ease the problem eventually only worsens it.

The cause-effect relations involved in addiction have two subtle differences from those associated with adaptation (see “Addiction” on p. 3). First, we take an action whose consequence raises our perceptions of the health of the system, but not the actual health. Second, our action actually damages the system’s real health.

Addiction, therefore, is a process by which an external problem can send us into a damaging cycle that quickly feeds on itself. Eventually, we don’t even need an external problem to spur us to take action; we simply generate our own internal problems through our addictive behavior—like someone who drinks salt water to quench his or her thirst.

Unfortunately, it is fairly easy to slide from adaptation into addiction, because it is usually difficult to measure the true health of any system. We often rely on symptoms—indirect measures—to determine the perceived health of the system. But information about symptoms typically comes to us only after a delay. The information also may contain deliberate biases or random errors. As a result, we take an action – that will eventually damage our true health, because the short-term symptoms cause us to feel better than we did before. A classic example of this pattern is smoking cigarettes, which can bring us immediate pleasure, but will also damage our health in the long run.

An Addictive Response in Organizations

Enterprises often become addicted to patterns of behavior that have brought them success in the past. They persist in pursuing policies that are no longer productive, until there is some sort of collapse within the organization, such as excessive outsourcing of technology until there is virtually no internal capacity left. This failure can happen when the feedback loops governing the firm’s success manifest a phenomenon called shifting dominance.

The “dominant” loop in a system is the one that principally controls the system’s behavior over a certain, often extended, period of time. When one loop dominates for a decade or more, a whole generation of managers, a set of control systems, and even a mythology grow up around the lever points that activate the loop governing the enterprise’s success; for example, “Marketing promotions are always the answer to a sales slump.” The company leaders see these lever points as the keys to their prosperity and act in ways that reinforce them.

But eventually, any loop will lose its dominance; another set of causal mechanisms will become more important. Then the usual lever points no longer lead to success, and the managers are left with a heritage of ineffective policies and irrelevant myths. At this point, the firm should drastically revise its policies. But often it simply redefines its measures of success so that the old policies still appear attractive. Why does this occur, and what can we do to prevent it from happening?

The Market Growth Model: Shifting Dominance at Ace Electronics

The concept of shifting dominance first became real to me in the 1960s when I encountered a model created by David Packer, an early member of the Industrial Dynamics Group at the Massachusetts Institute of Technology’s Sloan School of Management. Out of the group’s investigations evolved an elegant theory, later called the Market Growth Model, that illustrates the mechanics and importance of shifting dominance.

Packer and his colleagues applied system dynamics to a firm I will call Ace Electronics. In its earliest days, Ace had an enormously superior product. Its sales were limited only by the company’s capacity to market and sell the product. The dominant loop governing the firm’s profits was composed of its expanding sales force, growing orders and backlogs, swelling production capacity, and increasing deliveries (R4 in “Market Growth”). Because the budget for the marketing and sales department was a percentage of sales income, its budgets expanded, and the sales force grew even more. This loop produced rapid growth.

For a long time at Ace, the market growth loop was dominant, and a group of people who knew how to make this loop operate moved up through the firm’s ranks. However, eventually the dominance shifted within the system (B5 in “Market Growth”). The sales force booked far more orders than the factory could produce, so the order backlog started to increase. When the sales force could not promise timely delivery in a technologically sophisticated and rapidly changing market, its effectiveness in booking new orders declined. Sales began to drop. Before, expanding the sales force increased profits; now it cut into them.

When we find ourselves unknowingly caught up in a situation of shifting dominance, we often blame each other for our faltering fortunes. Ace is a perfect example of this phenomenon. We can imagine that the company leaders agonized over why the sales staff wasn’t as good as it used to be, what kind of new incentives were needed to whip the sales staff back into shape, and so forth. But in shifting dominance, the problem actually originates within the system in the form of an addiction to the old ways of doing things. Managers can push a sales force as hard as they like and still fail to revive sales—the system simply doesn’t respond to this kind of force when the control has shifted to a different loop.

As one particularly destructive result of Ace’s failure to adapt to change, the company eventually developed an addiction to a new, short-term “solution”: downsizing. Many companies fall into the trap of firing people in order to make the bottom line look good on the next quarterly report. Downsizing lowers costs and temporarily kicks up profits. But if it’s not done well—and often it isn’t—downsizing also drastically reduces the quality and size of the staff and dulls a company’s competitive edge. As its niche shrinks, the company has to fire even more people in order to boost its profits. The addictive cycle of downsizing takes over.

The Difficulties of Breaking Addiction

If the pitfalls of addiction seem so obvious, why is it so difficult to break out of addictive processes? There are three main forces that work against an individual or organization seeking to break the cycle of addiction.

The Pain of Withdrawal. One reason is that withdrawal is extremely painful. Remember that perceived health, which drives our actions in the addictive system, is affected by two factors: actual health and the consequences of the actions we take (see “Addiction” on p. 3). These addictive consequences progressively damage actual health, which means that we have to take more and more of the addictive action to offset the consequences. The process becomes a spiral of increasing use.

Codependency. When we get ourselves into the trap of addiction, it’s astonishing how the various components of the system work in collusion to sustain the addictive behavior. This subtle reorganization of the system to support the addictive action is called codependency and is another reason that breaking an addiction is so difficult.

Drifting Goals. Addiction has many forms. One interesting variant of the addictive structure occurs with the addition of a causal link that produces what is commonly known as “Drifting Goals.” If we don’t get what we want, we start to want what we get. When we lower our aspirations, the addiction causes progressive deterioration of our goal.

If we don’t get what we want, we start to want what we get.

For example, imagine a firm that borrows more and more in order to finance its operations. One symptom of a company’s health is its debt-equity ratio; there are industry standards that indicate the appropriate ratio of debt to equity in a healthy firm. When debt rises above this level, a company will undertake efforts to increase profitability or sell off assets to reduce debt. But if these efforts fail and the debt-equity ratio remains high, management may get used to the higher levels of debt and stop trying to reduce them. Spokespeople for the firm may even develop elaborate rationalizations indicating why the higher levels are acceptable. Of course, over the long term, high levels of debt can be fatal to an organization.

Understanding and Changing Systemic Structure

Addictive behaviors, with their self-perpetuating, destructive cycles, can seem particularly stubborn. But cycles of addiction can be broken, allowing us to respond more adaptively to situations of shifting dominance.

What is the key to breaking addictive responses in organizations? One place to begin is to familiarize ourselves with the laws of systemic behavior and learn to work with these laws (see The Fifth Discipline by Peter Senge). Most of the principles of systemic behavior apply directly to the process of addiction and contain the seeds of a solution (see “Moving Beyond Organizational Addictions” on p. 4).

The most effective way to combat organizational addiction is to learn to understand the system. When we do that, we can anticipate an imminent shift in dominance and prepare ourselves for it; in other words, we can design an adaptive instead of an addictive response. We can also identify opportunities to create new feedback loops that let us catalyze a desirable shift in dominance. But beware of spending too much time creating loops that aren’t going to dominate. The key is to make a change that will grip the system and take it down a different path.

To beat personal addictions, we often must place our trust in the potential of the system to change. Likewise, in organizations, if we build up confidence in a group’s ability to work together, to stay committed to each other, and to cope with problems in a way that will produce satisfactory results in the long run, we can get through withdrawal together. With the high turnover rates the business world is experiencing under downsizing, it has become harder for workers to place their faith in anyone or to adopt long-term perspectives. However, only trust can help an organization establish a sense of stability. Despite all the pressures to do otherwise, we must work to cultivate a culture of trust.

Herman Daly, a leader among economists in analyzing sustainable development, once made a statement that is profoundly applicable to the challenges discussed in this article: “The paths to sustainability are unknown, not because they’re hard to find, but because we never looked.” Let’s start looking for long-term solutions to organizational addictions.

Dennis Meadows is director of the Institute for Policy and Social Science at the University of New Hampshire. He directed the system dynamics graduate program at Dartmouth College for 16 years. He has written eight books that apply systems thinking to social and corporate issues.

Editorial support for this article was provided by the editorial staff and Joy Sobeck.

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What Is Organizational Anxiety?

Anxiety can be an insidious force: Not only does it sap energy levels and damage our health, it also eats away at job performance and stifles innovation and creativity. Like individuals, organizations can also suffer from symptoms of anxiety. Over the long run, anxiety can reduce an enterprise’s strategic adaptability and effectiveness.

In recent years, researchers have looked at anxiety from an intriguing new perspective. As they see it, the origin of anxiety is the struggle between life and death. This struggle that rages within individuals also takes place in work groups and organizations. Of course, organizations do not experience death in the same way that individuals do; however, they do face the very real possibility of financial or operational demise. Organizations can cease to exist through bankruptcy, takeover, mergers, and so forth. As a result, they experience their own brand of anxiety

Defenses Against Anxiety

Literature abounds on how work-groups and organizations try to cope with the destructive feelings of anxiety. According to one theory, some companies resort to a form of defense that combines three tactics called splitting, projection, and introjection that individuals often use to fend off anxiety. Splitting happens when we separate the “good” aspects of our lives from the “bad.” We then project “bad” qualities onto others and introject “good” qualities into ourselves. This tactic helps us to feel more in control of our panic, because we turn our attention to judging and trying to control others.

For example, an anxious manager might split good and bad by considering himself all-powerful (he introjects good into himself) while at the same time dismissing subordinates as unworthy (he projects bad onto others). Even worse, a manager in this frame of mind might be compelled to act on these projected feelings by punishing workers with extra work, impossible schedules, unreachable goals, and so forth. Companies tend to “institutionalize” this kind of behavior. Employees may quit and new ones may be hired, but the tough schedules and unattainable goals persist regardless of the individuals employed at any given time.

Groups or organizations that are leaderless can suffer more anxiety than most. For example, self-directed work teams may have difficulty making decisions if no leader steps forward. The team may become ineffective as it struggles to search for a leader, thus creating what can be paralyzing anxiety.

In these cases, the people involved often defend themselves against fearful emotions in three ways:

• Dependency. The group stops trying to solve its problems and instead waits for a “messiah” to save it.
• Pairing. Two individuals related to the group (for example, two group members, or one member and an outside consultant) combine to try to oust someone they consider a “bad” member.
• Flight/Fight. Group members blame all problems on an outside cause, or they pretend that no problem exists.

Defense mechanisms are neither good nor bad, and indeed can help protect us from emotional overload. But, the way these mechanisms are stitched together in an organization’s mental model can create the exact opposite of what the group wants and needs: Instead of reducing the anxiety, the behavior only worsens it. And mental models are notorious for leading to self-fulfilling prophecies: We see only what we expect to see, and then we act in ways that bring about results that confirm our assumptions.

When anxiety lodges itself in a company’s collective mental model of how things work, it will continue to perpetuate itself until the organization’s behavior changes to balance or reduce the increasing anxiety. For example, many organizations pride themselves on their “heroic” acts. When crises strike, creating high levels of anxiety, a few heroes step forward to “save the day.” The organization rewards the heroes. At the same time, by giving rewards, the organization inadvertently encourages the creation of future crises, which will lead to more anxiety and then to additional rewards for heroic action. This behavior is a perfect example of self-perpetuating anxiety.

Anxiety Amplified

Defensive actions can trigger reinforcing processes that serve to amplify and perpetuate anxiety. Here are examples of three reinforcing loops that can sustain or even worsen anxiety in organizations. Although these loops were created by a work group at a large company, they reflect dynamics experienced by many organizations.

The “Messiah” Loop. In this dynamic, if Anxiety about the organization’s performance intensifies, employees look for a “messiah”(Search for Savior). This search diminishes workers’ Accountability, in turn reducing their Perceived Ability to Succeed. The diminishing of workers’ self-esteem then leads to an increase in Anxiety.

The loop contains a bitter irony: The group searches for a savior to ease its anxiety, but waiting for a “messiah” only leads to more anxiety. The team could design a more fundamental, enduring solution to their anxiety by focusing instead on learning and performing. Sadly, however, the “quick fix” of seeking a savior diminishes the organization’s need for—and thus its ability to apply—a more fundamental solution.

THE “MESSIAH” LOOP

if Anxiety about the organization’s performance intensifies, employees Search for a Savior. This search diminishes workers’ Accountability, in turn reducing their Perceived Ability to Succeed and increasing Anxiety.

The “Manic Defense” Loop. In this reinforcing process, anxious managers project the organization’s problems onto their subordinates and then try to punish them. To justify this punishment, the managers focus obsessively on quantitative measurements, slavishly using them to control the action around them. Through this emphasis on metrics, the managers deplete the organization of the physical, financial, and—perhaps most important—psychological resources the team members need to succeed. All of this ultimately leads to even more intense anxiety.

In the “Manic Defense” loop, increased Anxiety leads to more Focus on Metrics, which in turn causes Resources Used for Measuring to go up. As Resources Used for measuring rises, Resources Available for Projects diminishes, which in turn increases Resources Requested. The diminished resource base for projects puts added pressure on those trying to complete projects. The project manager then requests more resources in order to complete the projects. As Resources Requested increases, Percentage of Resources Received is reduced because of the multiple demands on the system created by the additional resources requested for measurement.

This development further cuts into Perceived Ability to Succeed and ultimately heightens Anxiety.

The “Fight” Loop. We call the third reinforcing process the “Fight” loop because it captures the way anxiety sparks conflict within the team and encourages an aggressive desire to have one’s own viewpoints and decisions prevail. Increased Anxiety leads to increased Internal Competition, which leads to a greater Need to Be Right. Intensifying the Need to Be Right reduces the level of inquiry (Questions), which also lowers Understanding and increases the Resources Used for Making Decisions. More employee time and energy is needed to make decisions when there is little understanding of the issues facing the organization. The rest of the loop follows the “Manic Defense” loop, ultimately creating even more Anxiety.

Understanding Our Own Role

As we look at the three reinforcing loops, we can begin to see how team members themselves might create and intensify their own anxiety. Often, factors viewed as external causes for anxiety, such as perceptions of failure or layoffs, could really be internally driven. To surface these factors, we might ask, “Who is perceiving this failure—our own organization, stockholders, or customers?” If it is our own organization, we can begin to search for ways to change that perception. If we have suffered layoffs, could it be that our business is cyclical? If so, how is our organization perpetuating industry cycles? Many organizations aren’t aware of the role they play in perpetuating not just their own business cycles, but those of the entire industry.

Thus, often what an organization views as “not our problem” is just that. The organization tries to behave in a way that will produce positive results, but inadvertently creates undesired outcomes. This is an example of what Jay Forrester called “the counter-intuitive behavior of social systems.” Realizing that we often cause our own problems may be embarrassing, but it is also good news, for whatever we create in a system, we may be able to change if we gain insight into it.

In Search of Balancing Loops

The dynamics shown in the three loops present a grim image of the system of organizational anxiety. The picture is particularly discouraging because all the loops are reinforcing, creating a vicious cycle. But the picture does not have to remain grim: Reinforcing processes are not all necessarily bad. Just as the reinforcing loops in the diagrams can heighten anxiety exponentially, they can also reduce anxiety, if they are turned around to become virtuous cycles.

The lack of balancing loops is another important piece of information about the systems the diagrams depict. Without balancing loops, there are no processes in place for returning the system to equilibrium after a disturbance caused by the reinforcing loops. All three loops amplify the central variable—Anxiety—and no loops have been identified that keep it under control.

When drawing their system of anxiety, teams often neglect to build balancing loops into their models, perhaps because people tend to notice things that create rapid change (R loops) more than forces that keep things stable (B loops). Also, when addressing a specific problem, team members may focus on how their anxiety is worsening, not on how it might be alleviated.

Clearly, though, balancing loops have to exist in every organization; otherwise, the place would unravel toward anxiety-induced paralysis, anarchy, or some other extreme endpoint of a reinforcing process. Some sort of balancing dynamic often subtly works to keep the situation relatively under control. In fact, these hidden loops can create the sense of oscillating, persistent anxiety experienced by the staff.

Balancing loops that might control anxiety could include coping mechanisms such as open communication, flexible work hours, and personal leave time. Unfortunately, if the reinforcing loop around anxiety dominates the system, these coping mechanisms may never be able to balance out the increasing anxiety. Communication may open up and temporarily reduce anxiety, but then a sudden crisis may shut down communication and thereby increase anxiety again. This pattern causes the organization to ride the waves of anxiety time and again.

A team can also balance their anxiety by linking a new, outside force to Anxiety in a way that will ease feelings of fear rather than heighten them. If, for instance, the members of a group develop coping mechanisms in their private lives (loving families, close-knit communities, and so forth), they might be able to calm their collective anxiety, as shown in “Reversing Anxiety.” As the Use of Private-Life Coping Mechanisms increases, Anxiety and the Search for a Savior decrease. Account-ability and the group’s Perceived Ability to Succeed are then enhanced, leading to less of a need for reliance on the coping mechanisms.

REVERSING ANXIETY

As the Use of Private-Life Coping Mechanisms increases, Anxiety and the Search for a Savior decrease. Accountability and the group’s Perceived Ability to Succeed are enhanced, leading to less of a reliance on coping mechanism.

A Systemic Makeover

According to the field of System Dynamics, there are two main ways of actually changing a system: Shifting Loop Dominance or Direction, and Changing Loop Structure so as to alter the flow of feedback through the system. Here are some additional strategies for breaking the cycle of anxiety.

Shifting Loop Dominance or Direction. Often, the main loops in a system all lead to greater anxiety. For this reason, teams may want to explore how they can weaken those loops and reshape the system. For example, the “Messiah” loop could be reversed if team members gave up the search for a savior and instead enhanced their own empowerment and accountability. A team could weaken the “Manic Defense” loop by consciously reducing the focus on metrics. To do this, management could cut back on the number of metrics used, employ other ways of measuring the company’s performance, emphasize customer service over internal metrics, streamline bureaucracy, free up resources used for measuring, and so forth. Finally, a team could disarm the “Fight” loop by finding ways to reduce internal competition and the need to be right, by promoting inquiry skills (Questions), and by lessening resources used for making decisions.

Changing Loop Structure.We can actually reshape a systemic structure by incorporating new variables and links and removing others. By making these changes, we can alter the pathway by which feedback flows throughout the system. There are many possibilities for creating new links. In dealing with a system of organizational anxiety, one valuable addition might be the use of inquiry skills. Inquiry skills include methods of conversing that can overcome barriers to understanding and learning, whether the barriers are organizational or interpersonal. Thinkers such as Chris Argyris, David Bohm, and William Isaacs have written extensively about this set of skills. In the case of an anxious team, as the group gets more and more practice in using inquiry—and begins to achieve some success—it will learn to use these tools more readily in response to a surge in anxiety

Looking Ahead

Of course, a causal loop diagram is only an early step in the process of solving a systemic problem. Actually changing a systemic structure takes a lot more than just redrawing links. To reshape the way they do things, a group will need to think about what the links in its drawings mean.

For example, the more managers understand the anxiety-intensifying system that they’ve helped to create, the more motivated they may feel to restructure that especially irksome “Manic Defense” loop. Instead of projecting their anxiety onto “bad” subordinates, they could learn to recognize both the good and the bad in the way their organization operates. In a difficult but profoundly healthier process, the team members would examine things in a far more systemic way than the traditional short-term perspective on metrics allows, and would join together to do the hard work essential for improving their performance.

Making attitude changes isn’t simple or easy, and the team will need to dig even deeper to find the best leverage points for change. However, altering some key mental pictures of how things work is an organization’s best hope for pulling itself out of the anxiety-ridden system it has created. Talking about their anxiety system and drawing causal depictions of it can give a team vital insight into how they are creating their own problems.

The team might learn more at this stage if they also used a computer simulation model of their anxiety system. Modeling their system would require them to identify the things they think most strongly drive the loops, and it would give them a way to test the insights that they found while drawing the loops. In addition, modeling would make it easier for them to redesign the problematic structures in their system.

The group could then design interventions that apply pressure to any leverage points it identifies in the earlier steps. In many cases, the most powerful interventions would involve using new tools—particularly inquiry skills—for deepening the organization’s collective knowledge about itself. If all goes well, the team will grow less dependent on self-defeating defense mechanisms and rely increasingly on its own strengths, knowledge, skills, and resources.

An Example: ABC, Inc

A computer manufacturer, ABC, Inc., had suffered some significant business failures that generated a tremendous level of anxiety in the organization. Arguments over how to price products became the focus of people’s anxiety. The “old-timers” thought that the company should maintain its high prices to reflect its image as a pioneer in the industry and as a producer of high-quality products. On the other hand, the “newcomers” thought that customers were becoming more price sensitive because of the lower prices offered by ABC’s competitors.

The first step to resolving the impasse was to have both sides share their mental models of what was creating the anxiety over pricing. Using tools such as the ladder of inference, the groups discussed their own interpretations of the data they used to make pricing decisions. One manager reported, “Our data show that our best customers are more concerned about quality and are willing to pay the higher price.” Another stated, “All our customers care about is a low price. We are being destroyed by our competition.” Each side held tightly to its position and blamed the other group for undermining ABC’s success.

The groups then developed causal loops that captured the two perspectives. Through this process, they found that price was not the key issue; the real issue was defining what type of organization ABC would be in the future. Would ABC be an innovative producer of high-quality products, or would it be a mass producer of relatively high quality, but less innovative goods?

At this point, the company created a computer simulation to test the financial impact of the two scenarios. The simulation revealed that the innovative strategy would result in a loss of customers. However, by charging more per unit, the company could make up much of the lost revenue. Further investigation showed that customers who buy lower-priced products tend to demand more technical services, cutting further into revenues. This finding made the mass-production scenario less appealing in the long run.

By using causal loops and simulation in this way, ABC diffused the anxiety within the organization and took the focus away from blaming individuals for the company’s troubles. ABC was also able to make more informed decisions regarding its pricing and long-term business strategy.

Eradicating Anxiety

It is easy to view organizational anxiety as something that is out of a group’s—or anyone’s—control. But the discussion above shows how we can play a role in creating our own anxiety. Managers and employees often become trapped in mental models that only worsen their anxiety. Yet the team is far from helpless to control its behavior. We all possess the power to change our attitudes and behaviors in order to reshape dynamics that we ourselves have created. With this enhanced understanding, we can then take intelligent steps to manage or even eradicate anxiety and thereby enhance our effectiveness.

For references and further reading, please see Anxiety in the Workplace: Using Systems Thinking to Deepen Understanding (Pegasus Communications, 1998).

Janet M. Gould Wilkinson is director of the Organizations as Learning Systems project at the Massachusetts Institute of Technology.

John J. Voyer is associate professor of business administration and co-director of the MBA program at the School of Business, University of Southern Maine.

David N. Ford is an associate professor in the system dynamics program at the University of Bergen in Norway and a visiting professor in the School of the Management of Technology and Economics at the Chalmers University of Technology in Sweden.

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We regularly find ourselves stuck in futile conflicts over the choices we face. How can intelligent, committed people in the same organization be so divided? Could it be that both sides are right? If so, how does the conflict come about? And how can you and your team leverage the differences that exist among you? Help lies in understanding the structure of paradox.

Managing Paradox

In their study of organizational effectiveness, James Collins and Jerry Porras noted that a distinguishing characteristic of highly visionary companies is the capacity to manage paradox. These authors define such capacity as “the ability to embrace both extremes of a number of dimensions at the same time” (Built to Last, p. 44). This rare capability seems to allow successful companies to avoid falling into a pattern of values-based conflict, with parties becoming increasingly polarized around “either/or” choices.

Many decisions that groups face involve a choice between opposing values. Thus, when resolving a dispute, a team may feel the need to choose between the rights of an individual member and the well-being of the group as a whole.

Because the two choices are opposites, the group will take actions that support one value rather than the other. For example, in an emergency, people within a group may be expected either to “pitch in” and take actions that help the group as a whole, leaving aside their personal objectives for a time, or to complete their personal objectives first and help the team if they have spare time. Group norms and organizational reward systems tend to encourage one approach over the other.

In many cases, though, the values are interdependent. Over time, an organization requires both values to be healthy (Barry Johnson, Polarity Management). Thus, when any group is formed, a cycle begins between opposing values (see “Circularity of Values”). Initially, the team feels a strong need for one value, such as individualism. Team members then take actions that value individualism. If unchecked, however, individualism destroys the cohesiveness of the group. So, individualistic actions eventually create a need for actions that value community. Over the long run, this focus on community will in turn create a need for individualism, as group members lose their sense of personal identity. Some investigators of organizational culture refer to this movement between opposites as the “circularity of values“ (Hampden-Turner and Trompenaars, The Seven Cultures of Capitalism).

For example, Performance Management Associates (PMA), a small consulting company founded by Ralph and Sarah, had experienced consistently high demand for its services. Ralph was known for introducing leading-edge management concepts to organizations in need of change. He continually sought new ideas and built them into his consulting work. Ralph’s clients found his approach innovative and challenging.

Sarah, on the other hand, had long recognized that Ralph’s ideas were of limited value for businesses unless they could be further developed into systems and training products. By framing Ralph’s insights in ways that organizations could implement and use, Sarah helped clients institutionalize needed changes. She brought stability and quality control to PMA.

Encouraged by their company’s success, Ralph and Sarah hired two new consultants. With the support the additional staff would provide, Ralph planned to increase the pace of his innovative work, Barry and Frank, the newcomers, were excited by the prospect of further developing Ralph’s ideas.

CIRCULARITY OF VALUES

In this reinforcing loop, healthy circularity operates, as actions supporting one value create a need for its opposite.

However, at PMA, Barry and Frank felt they were approaching clients with half-formed products. Worse, Ralph kept coming up with new ideas even though the old ones still weren’t fully developed. Barry and Frank grew frustrated with their work. When they complained that life at PMA had gotten too chaotic, Ralph felt they didn’t understand the principles on which he and Sarah had built the business.

Thus, after years of success, PMA reached a state of crisis. The new consultants threatened to leave the organization. And several clients voiced their concern about the errors that sometimes crept into PMA’s administrative practices.

The introduction of new people at PMA disrupted what had been a healthy movement between the opposing values of innovation and product quality. At the same time, Ralph’s increased focus on innovation ultimately became detrimental to the organization as a whole. As we will see, PMA needed to learn how to manage opposing values, or paradox, in this new configuration.

Unconscious Assumptions

The movement between two opposites rarely happens smoothly. Often, the delay between actions that support one value and the growth in the need for its opposite leads to an unconscious overemphasis on the original value. For instance, when a group clearly sees a gain from actions valuing the individual, it tends to resolve subsequent dilemmas in favor of the individual. Over time, the team will find that it emphasizes individualism without consciously thinking about the alternative. In this way, the group creates an unconscious assumption that pursuing one value ahead of its opposite is the best way to act. Thus, individualism may become part of the group’s culture—its unconscious assumptions regarding the best way to act. This is represented in “Over-reliance on One Value” as the variable “Strength of Individualism,” which grows as a result of loop R2.

Another factor that causes imbalance between opposing values is that, as group members act in support of a value, they build their capacity to support that value (R3). An organization that has a history of valuing individualism is likely to have built up systems and skills that support individualism.

PMA was experiencing similar dynamics based on the values of “innovation” and “quality”: The company could invest in finding new products or in improving the quality of existing ones. Ralph found that his efforts to introduce innovative products brought gains in the form of satisfied customers. His capacity for generating further innovations also grew. Not surprisingly, his assumption about the benefits of innovation became embedded in PMA’s culture. This dynamic explains why Ralph, and PMA, pushed for more and more innovation in their work, despite the problems this created.

Finally, as mentioned earlier, “Actions Valuing Individualism” will eventually lead to a need for “Actions Valuing Community.” As the need to value community grows, the “Utility of Individualism” and the group’s gains from its actions valuing individualism also fall (B4). B4 thus acts as a limit to the growth that comes from the reinforcing processes in R2 and R3.

Conflicting Cultures

As at PMA, most organizations include groups with opposing values. Some focus on the gains to be made by sticking with the values that have brought them success in the past. Barry Johnson refers to such groups as “tradition-bearers.” As the need for the opposite value grows, other members of the organization act as “crusaders” for new values.

Tradition-bearers and crusaders within organizations conflict over values. As the strength of each group’s culture develops, so does the belief that the other’s values are wrong. At PMA, Ralph’s ever-growing belief in the value of innovation led him to reject calls for greater stability.

So far, the description of interdependent opposites has focused on the behavior of those in the organization holding the primary value (individualism in the diagram, or innovation in PMA’s case). Within most organizations, these dynamics will be mirrored by those holding the opposing value. It is easy for any group to look past the interdependence of the values that are in conflict. An organization has experienced gains based on its values and has made a commitment to those values by developing capacity around them. We often feel that if one value is good, its opposite must be bad (De Bono, I Am Right, You Are Wrong).

In addition, any group can readily find examples of the misuse of the opposing value. A value is misused when people continue to apply it past the point where it starts to undermine its opposite. Thus, extreme individualism destroys a group’s sense of community. Concern for community, taken too far, erodes individual freedom and opportunity.

This pattern allows people holding one value to categorize all those holding the opposite value as extremists who want to take the rejected value too far. So, for example, people who value individualism may label those with values that focus on community as “communists.” People who value community may label those with individualistic values as “anarchists.”

At PMA, Ralph could point to numerous examples of clients who suffered from their reluctance to adopt new ideas, and these cases intensified his reliance on innovation. Frank and Barry, on the other hand, saw plenty of clients who were unable to institutionalize change based on their work with PMA. In their view, these examples confirmed the need for higher levels of product quality at PMA.

Leverage

The circularity of values is a naturally occurring cycle in living systems; for instance, there is constant movement between inhaling and exhaling, exertion and relaxation, integration and differentiation. Healthy movement between these opposites is needed to sustain the system. Problems arise because of the unconscious over-reliance on one value at the expense of another. Conflict between groups within an organization is usually a tip-off that this unconscious process has begun.

Many people assume that solutions to problems caused by values-based conflict must involve power. Those crusading for a change in organizational practices feel that they should have more power in order to exert a greater influence. Tradition-bearers use the power they have to hold on to what they value. However, power-based strategies address only the symptoms of the structure of interdependent opposites; they resolve conflict by allowing one group to “win.” In the future, either the conflict will return because the need for the “losing” value remains, or the system will die. To expose the self-destructive nature of this power-based approach, Johnson encourages people to imagine the effect of treating breathing (inhaling and exhaling) as a conflict and having one side “win” at the expense of the other.

The back-and-forth dynamics within the structure tend to draw participants’ attention away from the healthy operation represented by the outside loop (see “Values-Based Conflict“). To gain leverage, participants need to become aware of the possibilities that emerge when the outside reinforcing loop is working well. Those functioning within the system should also become conscious of the interdependence of the opposing values. Dialogue can be a useful tool for surfacing the need for a circularity of movement between values.

People must be willing to move away from what they value in order to bring about the vision they desire—while trusting that the organization will eventually come back around the loop. They do not have to give up what they believe; they just have to live with a delay before their beliefs take center stage again. According to Robert Fritz, without awareness of this cycle, groups may oscillate between values rather than applying those most likely to bring about the greatest gains and highest leverage.

In Polarity Management, Johnson describes a simple yet powerful approach to attaining this leverage. His method involves charting both the upside and downside of each of the opposing values. This allows people to see and feel the need for movement between the values, determine the direction of movement currently needed, and establish how they will recognize the need to change emphasis. This approach is one way to achieve what Hampden-Turner describes as “reconciliation of values.”

At PMA, Sarah recognized the need to stop the values-based conflict. Her solution was to split the company into two divisions. At one division, Barry, Frank, and Sarah concentrate on customizing and running existing programs for clients, and on improving the quality of PMA’s services. At a separate location, Ralph develops new products. Once he develops a product, he passes it on to the other group, so that he can move on to new ideas.

The new structure allows everyone at PMA to appreciate all the values contained within the company. Ralph now sees the need for quality. Barry and Frank are increasingly innovative in their own work, building on a foundation of solid products. They often consult Ralph about ways to improve their practice. The reconciliation of values at PMA has had a beneficial impact on the company’s work with clients as well. Because client organizations also require this movement between innovation and quality, the company can offer them consulting services at whichever stage of the cycle the clients find themselves. As members of one division of PMA see their clients’ gains diminishing, they might refer them to the other division.

Interdependent Opposites and Organizational Learning

Research by Hampden-Turner and Trompenaars suggests that English speaking democracies (such as the U.S., U.K., Canada, Australia, and New Zealand) are characterized by:

• putting universal rules ahead of relationships
• putting individual rights ahead of community health
• dealing with complexity analytically as opposed to integratively
• awarding status on the basis of achievement rather than ascribing status on some other basis (for example, age or experience)

Each of these pairings follows the dynamics illustrated in “Values-Based Conflict”; for example, Universal Rules could be featured at the top of the diagram, with Relationships featured at the bottom. Because many groups and organizations in the West follow the pattern of valuing rules, individualism, analysis, and achievement, we could group all four of these values at the top and call them “Cluster A,” and then group relationships, community values, integration, and ascription at the bottom and call them “Cluster B.”

Organizational cultures within English-speaking democracies tend to overemphasize the Cluster A values. We can view the disciplines of organizational learning as a movement designed to compensate for this over-reliance. So, for instance, team learning emphasizes relationships and community ahead of managing or controlling individuals through the use of universal rules. Systems thinking encourages integrative thinking over analysis. Learning organizations may award status to members of the organizational community who share the community’s vision, rather than to those who achieve success according to analytically derived performance indicators.

Organizational learning practitioners thus take on the role of crusaders for values opposite to those unconsciously held by many in their organizations. Yet this crusading inevitably generates conflict with tradition-bearers. To support their crusade, practitioners may inadvertently enter into low-leverage, power-based strategies. They would do better to make the circularity of the values in contention visible to all, using the techniques described above.

Reconciliation

All groups face challenges involving opposing values. Indeed, the very nature of values and the structure of paradox lend themselves to conflict. Groups too easily see the benefit to be gained from their own values and a danger in pursuing values held by others.

The structure of paradox also encourages groups to pursue their traditional values until they experience crisis. But by definition, a crisis cannot be resolved by relying on the assumptions that originally got the organization into the situation (Mitroff et al., Framebreak). As we have seen, overemphasis on one value requires a shift to its opposite to undo harm that has been done. “Managing Opposing Values” provides examples of the results of either managing or mismanaging common pairs of opposing values. Only when these are managed well can an organization sustain itself over time.

Most diverse, complex organizations already possess the values required for building a sustained future. The challenge groups face is to reconcile these differing values—the same values that often generate the most heated conflict within the organization. Rather than experiencing differences in values as a struggle that immobilizes an organization, people should enjoy these differences as diversity that infuses the organization with vigor and variety.

Philip Ramsey is a lecturer in Training and Development and Organizational Learning at Massey University in New Zealand. He is the author of the Billlbonk series, a set of stories that teach systems thinking and organizational learning concepts.

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But if we are not going to define “leanness” in financial terms, how should we define it? I believe we need to expand our thinking to include the application of employee competency to achieve leanness. I strongly believe that people are a company’s only long-term competitive advantage. As such, we should view them as assets and resources to be developed, rather than as line-item expenses to be controlled. By taking this approach, we might discover value-added activities that would enable us to keep employees on the payroll even during tight times.

Business Process

Within Harley-Davidson’s motorcycle operations, we are trying to establish a business process that will accommodate such thinking. At the top of our business process diagram is an umbrella that sets the context for our work (see “Business Process: Setting the Context”). Under this umbrella, we identify the values, issues, and stakeholders that are the basis for our vision statement, which is to be “a leader of continuous improvement in the quality of mutually beneficial relationships with all of our stakeholders.” We measure our progress in achieving that vision against the following statement: “The key to our success is to balance stakeholder interests through empowered employees focused on value-added activities.”

These statements could be viewed as esoteric rhetoric. But we hope they will operate instead as a guiding light toward effective leanness. If we adopt this view, then we can start to utilize the workforce as a resource, creating an environment in which all employees seek to apply their competencies to value-added activities that can result in employment security.

In this context, “employment security” is dramatically different from conventionally stated job security. In employment security, the employee’s focus is on ensuring that the company survives, while job security centers on ensuring that he or she continues to do the same thing day in and day out. If all employees focus on creating employment security by providing value-added activities (in conjunction with others with complementary competencies), the result will be a lean organization. In addition, their work will generate additional resources to develop the company further, enabling the company to become more externally and future oriented.

The Role of Financial Measurement

Defining leanness in terms of value-added activities does not eliminate the need for financial measures. In order for the company to survive over the long term, it must be financially viable, and all of the employees must understand this. A primary measure of employee effectiveness is the company’s financial results. Those results come only when employees deliver value-added activities that are recognized as such by the customers. Therefore, if customers are not purchasing our products, it is up to all employees to seek ways to apply their competencies toward creating new products or services that will ensure the long-term financial viability of the company. If this strategy is not recognized and adopted by all employees, it is likely that leanness will have to be associated with meanness in the form of down-sizing efforts that have cost reduction as their only objective.

In order to survive, Harley-Davidson had to experience such a downsizing. In 1982, we reduced our workforce by 40%. It was not an easy decision, but we did it as humanely as possible—far more humanely than our bankers thought necessary. However, this approach put us in good stead with the people inside the company, because they knew that we were in crisis and they put forth the extra effort to help the company recover.

While that result sounds great, I can’t help but speculate that if we had consciously worked on having all employees focus on value-added activities, the solutions to our problems could have been identified much earlier. By redefining our approach to leanness, we are hopefully putting ourselves on the right path to prevent a recurrence of that difficult experience.

Rich Teerlink is president and chief executive officer of Harley-Davidson. Inc.

Reprinted with permission from Collective Intelligence (Vol. 1 . No.1) May 1995. ©MIT Center for Organizational Learning. All rights reserved.

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The answer is usually unspoken but real. Coaching is something I do to improve another person or team; it’s part of my job. Learning happens to me; it makes me feel vulnerable. Learning focuses on my weaknesses, pressuring me to change the way I think and behave. Besides, I’m a professional, with established competencies and knowledge. I’m paid to get results, not to learn.

Thus, managers’ most common response to the growing demand for corporations to become learning organizations is to scramble to be the teacher, not the taught—the coach, not the coached. But, to be an effective coach, an individual must understand the nature of learning. And to understand learning, a coach must be actively engaged in the learning process and personally familiar with the kinds of vulnerabilities and obstacles a learner experiences.

Developing Learning Capability

Learning, coaching, and building a learning culture are critical to the success of modern businesses. Because learning increases our ability to perform, the capacity to grow capability is becoming indistinguishable from the capacity to grow wealth. However, unacknowledged resistance to learning and coaching can make it difficult for us to realize the ideals of the learning organization.

As children, we were naturally engaged in learning in everything we did. Thus, as adults, we don’t really need to learn how to learn, as much as we need to remember what we once knew. We need to unlearn some of the attitudes and practices we picked up from our formal education that seriously undermine our natural appetite and inherent capability for learning.

The Inner Game approach (see “The Inner Game” on p. 2) is about unlearning the personal and cultural habits that interfere with our ability to learn and perform. The goal is simple, if not easy: to give ourselves and our team’s greater access to our innate abilities. The approach can be summarized in a simple formula:

Performance = Potential – Interference

“Potential” includes all of our capabilities—actualized or latent—as well as our ability to learn; “Interference” represents the ways that we undermine the fulfillment or expression of our own capacities.

Diminishing the Obstacles to Learning

We can achieve increased capacity for performance and learning either by actualizing potential or by decreasing interference—or by a combination of both. In my experience, the natural learning process—which is how we actualize potential—is gradual and ongoing. By contrast, reducing interference can have an immediate and far-reaching impact on learning and levels of performance. Thus, a successful model for skill development must take into account the phenomenon of interference.

But beware: The barriers to learning are often well guarded and may become even more entrenched when challenged. Coaches must generally be gentle in their approach to surfacing interference to learning and performance in an individual or team. Hints, suggestions, and indirect probing, though they may seem to take longer than a more direct approach, are usually more successful over the long run.

I learned a great deal about interference and how to help people work through it while coaching tennis and golf—two sports in which the obstacles to performance are difficult to disguise. And I have continued to find these sports excellent examples for exposing hidden obstacles to learning and performance. In addition, tennis and golf show the kinds of results that can occur when one succeeds in diminishing the impact of interference.

One of my favorite examples is what I call “the uh-oh experience.” A tennis ball is coming toward a player who thinks she has a weak backhand. As the ball approaches, she thinks.

“Here comes a probable mistake.” She tightens her muscles, steps back defensively as if to avoid the threat, then slashes jerkily at the ball. When this action results in either an error or an easy shot for the opponent, she confirms to herself, “I really do have a terrible backhand,” and unwittingly sets herself up for the same results on the next similar shot.

If a coach tried to correct each of the elements of the player’s stroke that were incorrect, it would take months of “learning.” However, if the coach worked at eliminating the player’s negative self-talk by focusing her attention instead on perceiving the details of the ball’s trajectory, most of the positive behavioral changes would take place without conscious effort. Working at changing a player’s perception instead of his or her behavior saves time and frustration for both student and coach.

Below is a partial list of obstacles to growing capability:

• The assumption that “I already know.”Professionals often feel that they must present the appearance of already knowing everything and already being perfectly competent. This is an obstacle to learning that young children do not share.
• The assumption that learning means remediation. For many people, the suggestion that they should learn means there is something wrong with them or their level of performance.
• Fear of being judged. We learn this early, through teachers and parents who used judgment as a means to control behavior and effort.
• Doubt. The uncertainty we feel when we face the unknown is a prerequisite for learning. Young children are not embarrassed by not knowing something. However, as we age, we are taught to feel stupid or incompetent if we lack knowledge or experience or are unable to perform up to expectations. We are especially vulnerable to this feeling when faced with the challenge of unlearning something. The prospect of acknowledging that we might have invested time and effort in a perspective that is no longer valid can seem especially threatening.
• Trying too hard to learn and to appear learned. This phenomenon is a derivative of fear and doubt, and leads to constricted potential and mistakes. Our errors then confirm ours self-doubt and bring about the very outcome that we feared.

Revealing the barriers to learning and performance can be an important first step in maximizing an individual’s or a team’s potential. To find the greatest leverage for reducing obstacles to learning in the workplace, I believe we should start with our definition of work itself. The way we see “work” has an impact on how we perceive everything we do in the workplace.

What Is Work?

If you ask executives the meaning of the word work, they focus on work as doing something—as accomplishing a goal, such as providing a product or service. In other words, to many people, work means performance. But definitions that equate work with performance can be limiting, especially in the current business environment.

Are there other results of work? When I ask executives this question, they generally offer responses that refer to two other distinct aspects of work. One is the domain of experience: How you feel while working is also a result of work. While working, people feel satisfaction, meaning, accomplishment, and challenge, as well as frustration, stress, anxiety, and boredom. Everyone at work experiences feelings that range from misery to fulfillment.

A second set of answers fall into the category of learning: While working, you can grow, develop know-how and skills, and improve your ability to communicate, plan, and strategize. Like performance and experience, learning is a universal and fundamentally human result of work—people of all ages, cultures, and levels of expertise are either learning and growing or stagnating and “devolving” while working. Adults can learn while working, just as children learn naturally while playing.

The Work Triangle

How are these fundamental results of work—performance, experience, and learning—related? They are unquestionably interdependent. If individuals aren’t learning, their performance will decline over time; if their predominant experience of work is boredom or stress, both learning and performance will suffer. These three results can be represented in a mutually supportive “Work Triangle,” with performance at the apex, and experience and learning at the base angles (see “The Work Triangle” on p. 3).

When I ask a group of executives, “Which of the three work results gains the greatest support and encouragement in your work environment?” their response is overwhelmingly, “Performance.” I then place my marking pen at the center of the Work Triangle and slowly draw a line toward the performance apex. “How much more priority is performance given over learning and enjoyment?” I ask. As the pen reaches the top of the triangle, a voice usually says, “Stop there.” In response, the majority chants, “Keep going,” until the line has gone past the apex and is several inches outside the triangle. There is a general chuckle and a sense of a common understanding of corporate priorities.

In the competitive world of business, it is easy to see why performance may be given priority over learning and experience. But what are the consequences of pursuing performance at the expense of learning and experience? In any but the shortest timeframe, the consequences are dire: performance itself will fall. And what will be management’s typical response? More pressure on performance, resulting in even less time and fewer resources directed toward learning or quality of experience.

How does the emphasis on performance play out in practice? Take your average sales manager who meets weekly with his sales representatives. The conversation usually focuses on performance issues, such as, how many calls did you make? What were the results of those calls in terms of sales? What are your plans for next week?

But what if the manager were committed to his own learning, as well as to his team’s development? He might also ask: What did you find out from customers that you didn’t know before—about their resistances, their needs, their perception of our products, how we compare to our competitors? How are different customers responding to our latest promotion? Did you gain any insights into your own selling skills? What is the competition doing? What are you interested in finding out next week? Did you learn anything that might help others on the team?

Our definition of work should include the worker’s experience and learning, as well as his or her performance. The real value of this redefinition of work is that it includes me as an individual. I directly and immediately benefit from the learning and experience components of the Work Triangle. The “Experience” side of the triangle reminds me that I can’t afford to neglect personal fulfillment during my working hours in the hope of enjoying myself only during vacation time or on weekends. I can never replace the hours of my life I spend at work, so I need to make the most of them.

The “Learning” side of the triangle reminds me that my future work prospects depend on the growth in in my capabilities. Even if I’m fired from my present job, I take with me what I have learned, which I can leverage into productive and valued performance elsewhere. When my customers, managers, teammates, and the surrounding culture pressure me for performance results, the Work Triangle helps me remember that the person producing those results is important, too. I neglect my own learning and quality of experience at great peril to myself as well as to my future levels of performance.

The Tunnel Vision of Performance Momentum

The definition of work that focuses strictly on performance results at the expense of learning and experience produces a kind of tunnel vision that prevents workers from being fully aware and focused. I call this state of unconsciousness “performance momentum.” At its worst, performance momentum is a series of actions an individual performs without true consciousness of how they relate to his or her most important priorities. Some call this mode of operation “fire-fighting.” Examples include getting so caught up in a game of tennis that you forget it is a game, or engaging in conversations that undermine a relationship for the sake of merely winning an argument. In short, performance momentum means getting caught up in an action to the extent that you forget the purpose of the action.

I don’t know of a more fundamental problem facing workers today. When individuals are caught up in performance momentum, they tend to forget not only important performance goals, but also their fundamental purpose as human beings. For example, my need to finish an article by the requested deadline obscures the reasons I chose to write the article in the first place, and dampens the natural enjoyment of expressing my thoughts and convictions. The person caught up in performance momentum neglects learning, growth, and the inherent quality of the work experience.

THE WORK TRIANGLE

The fundamental results of work—performance, experience, and learning—are interdependent. If individuals aren’t learning, their performance will decline over time; if their predominant experience of work is boredom or stress, both learning and performance will suffer.

The tunnel vision that results from performance momentum is difficult to escape when individuals are working in a team that confirms and enforces the focus on performance. Any activity that is not seen as driving directly toward the goal is viewed as suspect. However, when a team or individual sacrifices the learning and experience sides of the Work Triangle to performance momentum, long-term performance suffers. More important, however, the individual suffers. And because the individual constitutes the building block of the team, the team suffers as well.

Balancing the Work Triangle

A simple method for assessing the balance among the three elements in the Work Triangle is to evaluate the way an individual or team articulates performance goals in comparison with learning and experience goals. It is revealing that many employees, when asked about learning or experience goals, are vague and express less conviction than when discussing performance goals. Setting clear learning goals is a good way to begin rebalancing the Work Triangle.

However, the distinction between learning and performance is often blurred. Even individuals who have worked on plans for the development of their competencies often fall into the trap of expressing their learning goals in terms of performance; for example, “I want to learn to focus more on the customer”; “I want to learn to reach higher sales quotas”; and“ I’m working on learning how to get a promotion. ”The general rule for distinguishing between learning and performance goals is that learning can be viewed as a change that takes place within an individual, while performance takes place on the outside. Learning is an increased capacity to perform; performance is the evidence that the capacity exists.

A good way to focus on learning goals is through the acronym QUEST.

Q—qualities or attributes you might want to develop in yourself or others

U—increased understanding of the components of any person, situation, or system

E—development of expertise, knowledge, or skills

S—capacity for strategic, or systemic, thinking

T—capacity to optimize what you do with time

Teams and individuals can use QUEST to help form goals regarding what capabilities they want to develop. To be most effective, these objectives should support immediate performance goals but at the same time apply to many future performance challenges.

Coaching: A Conversation That Promotes Learning

When executives list the qualities, skills, and expertise they want from employees, they often list intangible attributes, such as creativity, accountability, sense of humor, team player, problem solver, and so on. So, how can you get the qualities and capabilities you want from people? The first response to this question is usually, “We have to do a better job in hiring.” Clearly, it is important to hire capable people. But the real question is how to build the capabilities in the people you have hired, and how to keep those qualities from diminishing.

Unfortunately, the tools of managing performance are not particularly useful for promoting or developing important qualities and core skills. And it is difficult to imagine a course that teaches the rudiments of initiative or cooperation. So what is left? The word I use for the capacity to promote such desired attributes is coaching.

Coaching is a way of being, listening, asking, and speaking that draws out and augments characteristics and potential that are already present in a person. An effective coaching relationship creates a safe and challenging environment in which learning can take place. Coaches know that an oak tree already exists within an acorn. They have seen the one grow into the other, over time and under the right conditions, and are committed to providing those conditions to the best of their abilities. Successful coaches continually learn how best to “farm” the potential they are given to nurture.

A primary role of the coach is to stop performance momentum by calling a time out and providing questions or perspective that can encourage learning. Actual learning happens through experience—taking actions, observing the results, and modifying subsequent actions. To turn a work experience into a learning experience, a particular mindset must be established beforehand. Establishing this perspective can be done through something I call a “set-up conversation,” which an individual can conduct alone through self-talk or with a coach. The set-up conversation helps make the learner aware of the possibilities that the imminent work experience could yield. In conducting one of these conversations, the coach asks questions that aid in focusing the individual’s or team’s attention.

At the end of a work experience, the coach and individual can hold a “debrief conversation.” During this interchange, they might “mine” the gold of what was learned and refine questions to take into the next work experience. In this way, experience itself becomes the teacher. The coach’s role becomes helping the learner as valuable questions of the “teacher” and interpret the answers.

Coaching is very different from what we are generally taught as managers or teachers. We cannot teach work teams and individuals how to grow capabilities—in the sense of the transference of information in a class-room environment. Nor can we build capabilities through managerial techniques—for example, requiring certain abilities and rewarding employees when they display them or punishing them when they don’t. Neither can we measure learning, because we can’t directly observe it. In sum, it is the learner alone who controls the process and perceives its benefits. Managers don’t even need to reward employees for learning—if learning indeed takes place, it will lead to improved performance. And employers generally award bonuses, raises, and promotions based on an increase in a worker’s performance results.

Employees and managers cannot afford to wait for their corporate cultures to become learning cultures. Workers benefit from an expanded definition of work that includes learning and experience goals, and therefore must make the commitment to achieve those objectives. But companies also benefit from this new perspective on work. Wise are the corporate leaders who recognize that redefining work in this way is a difficult task, but that the company and its shareholders also gain advantages from a balanced Work Triangle. The best managers will provide what support and resources they can to the effort, and will make it their mission to shape their workplace into an optimal learning environment. The payoff will be improved business results and a corporate culture that attracts employees who equally value growth in capabilities.

Tim Gallwey is credited with founding the field of sports psychology. His four best-selling books on The Inner Game have deeply influenced the worlds of business and sports. For the last 15years, Tim has spent most of his time working with companies that want to find a better way to implement change. This article is based on a working progress called The Inner Game of Work, to be published in 1998 by Random House.

Editorial support for this article was provided by Janice Molloy.

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As a process leader or facilitator, how can you use systems thinking as part of an effective group process? The following are some overall considerations that should be addressed.

Engage, Don’t Convince

If learning is the objective, then you want everyone to be thinking hard about the problem at hand. To be engaged, people need to feel that their ideas are being heard, examined, and tested. Whether you are presenting a diagram, or facilitating the development of one, it is important to get everyone engaged in creating a shared understanding of the problem. This approach may generate more debate, but it is much better to finish a meeting with strongly felt, irreconcilable differences in the group than to finish with weak acquiescence to an analysis that no one truly believes.

Presume that every view has merit. Whenever anyone makes a suggestion or offers a fragmentary theory, listen to it, inquire into it, and draw out the assumptions. If necessary, help articulate the conditions under which it would be valid. This will draw out more ideas and create a sense of shared problem-solving.

Pursue differences. Areas of conflict often provide the greatest opportunities for learning. One of the most common sources of disagreement in systems thinking diagrams is fuzzy or changing definitions of variables (see “Clarifying Variables”). Work through these issues to gain clarity about what each variable means, and add variables if needed. This process will ensure that the finished diagram represents the collective understanding of the group.

CLARIFYING VARIABLES

Listen for the frequent mistake of changing the interpretation of a variable in a loop.

Treat Theory as Theory

Every causal loop diagram represents a theory (or model) of the way things work. When we create systems diagrams, we are trying to ensure that our solutions are well grounded in a theory of what caused the problem in the first place. In this way, we reduce the possibility that we will end up with solutions that address only the symptoms of the problem. Because each loop diagram is a theory:

• It is important to know who is advocating the theory. If it’s yours, say so. If it’s unclear, ask. A danger signal comes when no one is willing to take ownership of a particular theory. Some groups believe (or hope) that data will point the way to a theory independent of the personal commitment of any person. This rarely happens. Encourage people to suggest a hypothesis, a mechanism, or theory about how things are happening.
• Every theory should be tested vigorously. Since theories are by definition never complete or universally true, it is important to clarify under what conditions or assumptions the diagram will be valid and helpful (see “Testing Theory”). When a model fails a test, ask, “If that theory doesn’t work, what explanation might work better?”If testing a diagram becomes an issue of right vs. wrong, the discussion can quickly deteriorate into a win-lose situation and learning will suffer. Be careful when presenting your own diagrams—if challenged, it is easy to become defensive and lose the openness which is necessary for real inquiry.
• You can facilitate inquiry by asking, “As you see it, how does X cause Y? What’s your rationale? What is the data? Can you give me an example?” (Or just make sure someone asks questions like these.) Once you have heard the answers, state your point of view (“Well, that doesn’t quite work for me.. ..”), but share your own line of reasoning as well.

Remember that an effective group process brings out several alternatives before closing in on one. Without some guidance, most groups will settle for the first reasonable suggestion without investigating other possibilities.

Be Clear About Process

It is usually helpful for a group to have a “road map” for the process. Make sure that all participants have a clear understanding of the overall systems thinking process—if necessary, post a chart of the systems thinking steps (see “Six Steps to Thinking Systemically,” March 1995). From time to time, make sure the group stops to note where it is situated in the process.

Use the Diagram as a Learning Tool

Groups are often reluctant to add variables and links to their diagram until they’re sure that the line of thinking is sound. But the group may need to see an idea in the diagram in order to respond. To avoid this “chicken-and-egg” situation, encourage the group to use the causal loop diagram to support group thinking, not just to record finished, tested thoughts.

Show every suggestion or idea in the causal loop diagram. If someone says, “Longer hours will cause more turnover:’ then add that to the diagram. If someone responds, “I think the improved spirit will keep turnover low,” show this as well. If the ideas don’t work out, then change the diagram back to its original configuration.

The key to making this technique practical is to use self-adhesive notes (such as Post-Its). Put each variable on its own self-adhesive note, using a size large enough to be visible to the whole group. Arrange the notes to illustrate a chain of cause and effect. If the chain seems accurate, then ink in the arrows between variables. Magnetic vinyl tiles and a white board are another good alternative.

Being a Systems Thinker

Being a systems thinker yourself is perhaps the most important single factor for supporting systems thinking in your group. If people see that you model the behaviors and skills you are trying to encourage, it will provide a powerful example. If they hear you say one thing, but see you do another (not “walking the talk”), it can have a negative impact on the work. The actions and bearing of a single individual can be a strong force in setting the overall tone for an approach, regardless of that individual’s level or position in the organization.

Richard Karash (Boston, MA) is a consultant, facilitator, and trainer in the disciplines of the learning organization.

Editorial support for this article was provided by Colleen P Lannon.

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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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In 1982, however, a period of massive change began. The president of the college was forced to resign, and the college subsequently went through four presidents over a span of 13 years. After the most recent departure, an interim CEO was brought in to “clean up the mess” while the board of directors searched for yet another replacement.

Although the interim president was considered highly competent, he had a reputation for being more like Atilla the Hun than Stephen Covey in terms of his leadership style. And despite the board’s assurances that any interim replacement would not be eligible for the position, the acting president was eventually hired permanently. This decision, on top of years of change and instability, sent the organization into a state of shock. Daily rumors circulated about potential firings, and few people in the college felt secure enough to take risks. In order to regain our effectiveness as an organization, we needed to somehow work on rebuilding our community. But first, we needed to address the underlying issues that had bred a culture of fear and mistrust.

Examining the Culture

In September 1994, I discovered an article in The Systems Thinker by Greg Zlevor entitled “Creating a New Work-place.” The article asserted that all organizations operate at some point along a “community continuum”: somewhere between “disciety” (dysfunctional society) and “community.” It seemed to me that in order to improve our organizational climate, we first needed to identify where we were on the continuum.

I shared the article with the director of research at MATC, and together we decided to conduct a “quick-and-dirty” survey based on Zlevor’s model to get a sense of how our colleagues viewed our organization (see “MATC Community Survey”). Once it was complete, we mailed the survey to the entire management council of the college (over 125 people).

To our surprise, we were inundated with phone calls the next morning. Many of the callers were struck by the candor of the statements, which were considered “undiscussables” in the organization. (The statements were taken verbatim from Zlevor’s description of the different positions on the continuum.) Some callers had questions about confidentiality (their names were inadvertently included on the back of the survey, due to the internal mail routing labels). Several callers wanted to know if the new president was behind the survey. Still others were relieved that our organization was beginning to talk about these issues:

Amazingly, we received more than an 85% return rate on the surveys. We separated the responses into five piles, each representing a point along Zlevor’s continuum. The results were almost perfectly bimodal: people either saw the college as dysfunctional (“This place is so political”) or formative (“We have our ups and downs, but mostly ups”). We surmised that because there was no shared sense of the community as a whole, people’s experience of the college depended to a large extent on the ups and downs of their daily experience.

We brought our data to the next meeting of the senior administrators (all of whom had been recipients of the survey) in order to explore the results. The dynamics of the ensuing discussion were as revealing as the survey results had been. Some people immediately demanded to know, “Why was my name put on the back of the survey?” Others became defensive, wondering, “Why wasn’t I told about the original article?” The group as a whole seemed to attack the validity of the survey itself, asking, “Why was this even done?” Their reactions seemed to reflect the overall climate of the organization—one of fear, mistrust, and well-entrenched defensive routines. At the conclusion of the meeting, they recommended that the entire survey episode be put to rest. However, it was not going to be forgotten that easily.

MATC Vision Deployment Matrix

To get a better picture of current reality at the college, and to paint a picture of the desired future. the STOL group used a tool called the Vision Deployment Matrix!”. This diagram shows the collective responses of the STOL group to the first two columns of the matrix.

Reframing the Work

Earlier that year, a small group of people representing a cross-section of management began meeting regularly to learn more about systems thinking concepts and tools. The official title for the group was STOL—for Systems Thinking and Organizational Learning—but we jokingly referred to our get-togethers as “Systems Thinking over Lunch.” Since our group had been using different case studies to hone our skills, I brought up the survey as a good opportunity to explore the larger dynamics at play in the organization. However, we quickly realized that the implications of this project were larger than any of our previous case studies—it really involved reframing how we thought about the nature of our entire organization.

As one of the ways to provide a framework for this effort, we decided to use the Vision Deployment Matrix TM, a tool developed by Daniel Kim for helping groups articulate an action plan for moving from current reality toward a shared vision (see “Vision Deployment Matrix T”: A Framework for Large-Scale Change,” February 1995). The nine members of our STOL group filled out the Vision Deployment Matrix individually, then worked together to weave the individual perspectives into a collective matrix (see “MATC Vision Deployment Matrix”). After we filled out the first two vertical columns of the matrix—”Desired Future Reality” and “Current Reality”—we decided to get the president’s input to see how his perceptions compared to our own.

After hearing a short explanation of the matrix, the president also filled out the first two columns. Interestingly, his responses were similar to ours. For example, in the box that indicated the systemic structures needed to achieve the vision, the STOL group had noted a need for “shared decision-making” and “effective communications,” while the president expressed a desire for “more constructive meetings.” This gave the STOL group confidence that the president shared our understanding of the vision and current reality of the college. In addition, his willingness to participate sent an important signal that he supported our efforts to examine and improve our organizational culture.

Improving Communication

Through the process of developing our matrix, we began to realize that one of our biggest obstacles to achieving our vision of improved community was the unspoken mental models held by members of the college—the untested assumptions that were preventing open and effective communication. This became clear at the next meeting of the Management Council, when the president gave a presentation on the issues facing the organization. After his talk, the STOL group then conducted a “left-hand column” exercise, in which the participants wrote down on the right side of the page what the president said, and on the left side they voiced what they thought or felt in reaction to his comments.

What the group discovered through the process was that we all tend to hear what we expect to hear. For example, the people who anticipated hearing only “bad news” heard precisely that. Those who expected to see a “tough guy” in the president had their predictions confirmed. And, intriguingly, the people who were open to organizational change saw the shifts that were occurring as a positive development for the college (see “Left-Hand Column: One Perspective” for an example of this exercise). This exercise opened up our awareness of the significant role our mental models play in selecting what we hear and don’t hear, and it had the desired effect of opening the group up to a deeper level of conversation. Our work in developing a deeper level of community was beginning to take hold.

Preliminary Results

When the STOL group developed its Vision Deployment Matrix, we noted that one of the indicators of progress toward developing community would be an openness in communication throughout the administration of the college, as well as an increased ability as a group to suspend our assumptions and inquire more deeply into each other’s reasoning. The area where we have seen the greatest progress toward this goal has been in the Management Council meetings. In the past, they were full-day sessions that consisted primarily of lectures given by the president and/or his direct reports. The attendees often felt “talked at” for hours on end. There was very little participation, and many attendees passed the time by surreptitiously doing paperwork. When we did a quick analysis of the cost of the meetings, we discovered that the college was spending approximately $100,000 per year on a function that yielded very little benefit.

We decided, therefore, to use the Management Council meetings as an opportunity to work on developing better communication, and to begin to tap into the collective intelligence of the members. We shortened the meetings to half-day sessions, eliminated the speakers, and refocused the agenda on working together in small groups to tackle some of the serious issues facing our institution. At the first of the redesigned management meetings, two college-wide issues that were generally considered to be undiscussables were addressed: (1) how to better implement the entire CQI process; and (2) how to productively examine the positive and negative effects of the changes that occurred within the organization during the last several years.

In order to facilitate more productive communication at the meeting, we assigned people to small groups, each of which represented a cross-section of the college. As the groups were invited to share their insights with the entire council, previously undiscussable issues were sufficed, and some very productive conversations ensued. For example, the “undiscussable” issue of a compensation and benefits inequity between union and non-union employees was raised, and specific recommendations were made for further action. After the meeting, we shared the outputs with the president (who chose not to be present during the meeting so as not to inhibit open communication), and we forwarded the results to the CQI Steering Committee of the college.

Left-Hand Column: One Perspective

After a talk by the president to the Management Council the STOL group conducted a left-hand column” exercise. In order to surface the mental models operating in the group.

Our Ongoing Work

The evaluations from our first redesigned Management Council meeting were very positive. Many people commented that the college was “finally moving forward.” But even as we are celebrating this modest success, we recognize that we have a long way to go toward our goal of developing a healthy community at MATC. In order to continue our work on organizational integration and community building, the STOL group has identified four areas for further action:

• continue to work on building communication and trust
• make systems thinking courses and materials available to others at the college
• continue to develop systemic solutions for problems at the college, working with the president to effect high-leverage changes
• re-survey the Management Council to accurately assess current reality at the college

As we develop our skills in community building and in creating structures that will sustain that community, we believe we can make a profound difference in the organizational culture. With the help of organizational learning tools, we are confident that our culture will continue to move toward openness and community.

James B. Rieley directs the Center for Continuous Quality improvement at Milwaukee Area Technical College. He also consults with business and industry, government, and educational institutions. Editorial support for this article was provided by Diane J. Reed and Colleen P. Lannon.

This story was presented at the 1995 Systems Thinking in Action”‘ Conference.

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