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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VISION DEPLOYMENT MATRIX

SIR, THE COMMITTE HAS DONE ITS WE’VE GOT THE MISSION AND PURPOSE ‘DOWN To TWO WORDS: BOTTOM LINE!

Obviously, making money is important. A manager who says profit is unimportant is like a coach who says, “I don’t care if we win or lose.” Both lose credibility in their ability to bring out the best in their teams. But to confuse an essential requirement for success with an organization’s actual purpose is like thinking that breathing is the primary reason for living. Our entire industrial enterprise has been crippled by this erroneous assumption. Yet it is so deeply ingrained that in many circles, anyone who questions it may immediately be called crazy themselves.

“Shifting the Burden” to Return on Investment

Regardless of the origin of the mental model that profitability equals core purpose, managers still feel hamstrung by it. Many feel they can’t focus on core purpose as long as they are bound by this frantic need for short-term profits. But it is a Catch-22: to ultimately meet medium- and long-term bottom-line demands, they must focus on core purpose.

These managers and their organizations are caught in a “Shifting the Burden” dynamic, where a more immediately appealing “quick fix” impairs a system’s ability to address the real root causes of a problem (see “Dangers of Bottom-Line Thinking”). The fundamental solution to this bottom-line focus is a potentially lengthy, soul-searching effort to develop a sense of core purpose and build strong relationships with investors, customers, and employees (B2). Since this kind of process is slow and seemingly risky, many managers opt for the quicker fix: “We’ll show investors we can enhance returns by doing something really dramatic right now.” Declaring “the purpose of our company is maximizing return on investment to stockholders,” they institute tough financial measures, hastily cutting staff and R&D. Improved financial statements attract investment from capital markets, which allows them to survive in the short-term (B1).

But this strategy has dangerous side-effects. While this stance attracts short-term capital, it also demands even more short-term bottom-line measures. The managers’ fear of becoming controlled by the numbers becomes a self-fulfilling prophecy. And to long-term investors, this approach telegraphs a lack of focus on the business itself.

Customers. Meanwhile, the company has also sent an implicit message to customers: “The fundamental purpose of our firm is returning investment to shareholders. We merely depend upon you for our revenues.” Which can be interpreted as: “We’re willing to make money off you in any way we can.” This may be one of the key causes of eroding brand loyalty, because customers realize (possibly through a decline in product quality or through more aggressive marketing) that the customer relationship is no longer fundamental. The eroding loyalty in turn reinforces the belief among managers that customers only care about price. Over time, the company can drift into becoming a low value-added commodity producer.

Employees. In addition, the implicit message of a “return on investment” focus for employees is the same: “Our purpose is to use you as a resource and make a buck off your back in whatever way we can.” This intangible factor often evokes bitter, expensive labor-management battles and sharp declines in morale. Any company that focuses all its energies toward maximizing profits has a remarkably different feel than one where personal and shared visions are as important as monthly financial statements.

Top Management. A similar pressure bears on the top management team. The new short-term focus adds powerful reinforcement to the idea that managers should put aside their personal wants, aspirations, feelings, and desires to add value, and focus on the corporation’s financial measures. The senior managers’ potential vision, creative force, and effort thus remains untapped. The managers become like sports players who spend every possible moment looking over their shoulders at the score board instead of focusing on the game.

The Alternative: Building Purpose from Scratch

In “Shifting the Burden” structures, the greatest leverage always comes from finding your way back to the fundamental solution. This may mean weaning your company from the “maximum return” addiction and raising capital by aligning investors, employees, and customers with your purpose and vision.

At Hanover Insurance, for example, former president Bill O’Brien spent 20 years defining his company’s vision, values, and sense of common purpose. “In those days,” he explains, “when mainstream businessmen believed the only purpose of business was making money, we were very radical. We said that the purpose of our company was three-fold: to give the American people the maximum value for their property and liability insurance dollar, to provide each employee with the help and environment necessary to become all he or she was capable of becoming, and to earn a profit to fuel our growth, provide for a rainy day, and reward ourselves. It was a mission statement, although nobody had heard of that word yet.”

Part of O’Brien’s work at Hanover involved developing a set of core values by which the company and all of the employees would operate. These included:

• merit—making decisions based on intended results, not on politics
• openness—being more honest in communications among employees and with shareholders
• localness—making decisions at the level closest to the problem

These principles helped operationalize the vision in a way that all stake-holders could see and understand. For example, the value of openness led to a rethinking of how shareholder reports were written. According to O’Brien, “I had worked in four companies before Hanover, and had seen first-hand how sometimes the reports to shareholders were not forthright interpretations of actual performance…. Not only did the shareholders tend to see through this, but it also made it impossible for employees to trust us…. At Hanover, starting in the 1970s, we sent the same report to front-line managers as we sent the board of directors, with no spin on the news.”

The alternative to the hard work of clarifying vision and values that occurred at Hanover is to arm yourself against potential invaders and maintain a high stock price at all costs. But this cultivates a negative vision, and negative visions tend to backfire. Building a corporation whose stock price reflects the value we create, on the other hand, can be a positive, motivating experience for all employees.

Core Purpose and Performance

We have seen some powerful linkages between this work on defining core purpose and the deeper examination of a company’s core competencies and economic value. Gary Hamel and C.K. Pahalad’s work, for example, in Competing for the Future, describes the definition of a company’s core competencies as key to developing an enduring competitive advantage for the future. It is not enough, they argue, to design new products and develop patents; a company must view the competencies that reside in those processes as their competitive advantage. However, identifying what areas to develop competence in requires a clear sense of organizational purpose.

Another approach that is complementary to clarifying core purpose and core competencies is EVA (Economic Value Added), an analytical framework that challenges many traditional notions of corporate financial performance, including narrow definitions of profitability and earnings per share. EVA is described in the book The Quest for Value, by G. Bennett Stewart III (Harper Collins, 1991), and is being used with substantial success by companies such as Coca-Cola and Quaker Oats.

Developing an enduring vision for an organization is not an immediate process, and it will certainly take longer than simply decreeing that all employees must produce more return to share-holders. Every organization’s process for developing its sense of purpose will be different — depending in large part upon the current relationship between the company and its investors, employees, and customers. Building such a purpose means embarking on a developmental journey, but unless organizations begin the journey, they will, in effect, be adrift — with no purpose at all.

For more on developing a corporate strategy for building a shared vision, see “Building Shared Vision: How to Begin.- The Fifth Discipline Fieldbook (New York: Doubleday. 1994). page 312. Hanover Insurance’s experience Is described In more detail on page 306 of the Fieldbook.

Art Kleiner is co-author and editorial director of The Fifth Discipline Fieldbook, and author of the forthcoming The Age of Heretics, a history of the social movement to change large corporations for the better.

Bryan Smith is co-author of The Fifth Discipline Fieldbook and president of Innovation Associates of Canada (Toronto, Ontario).

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The most revealing category seems to be Blood Chemistry, which displays your individual specs relative to an acceptable range or value. The line items I hurriedly search for are “Cholesterol” and ‘Triglycerides.” It is amazing what I say to myself when I see those numbers: “I better cut out the fat…I need to invest in more exercise…I really thought I was in better shape.” All of this data and my mental model of what it is telling me can even make me change my whole lifestyle — at least for a little while.

In a business enterprise, the equivalent of the Blood Chemistry test is the earning strength of business over time; a true indicator of business health and future performance potential. The financial investment community calls it EBITDA or Earnings Before Interest, Taxes, Depreciation, and Amortization. It is also amazing what we say to ourselves when we see those earnings numbers: “I better cut out the fat (reduce costs)…I better invest in more exercise (new assets and technology)…I really thought I was in better shape (what are our shareholders going to think?).” It is our mental models about this information that compel us to take particular actions to enhance an earnings stream or correct an earnings leak.

Enhancing Earnings

For many years, I have participated in gatherings both within and outside of Armco where people have debated different strategies designed to enhance earnings. The most common conversations would result in a list including the following topics:

• How to increase sales volume
• How to increase selling price
• How to lower costs
• How to increase productivity
• What new technology to invest in
• What new assets to invest in
• How to expand profitable business lines
• How to exit unprofitable business lines

These actions are typically recognized as the hard measurable actions that can most dramatically enhance earnings. We went through years of making these lists before we realized we were relying on the same old solutions. Not only were we using the same old tools, but we had always relied on the same thinking to test our beliefs about our business.

All along we assumed that our people were continually learning by experience. We also thought we needed new programs such as Total Quality Management to involve people in the process, to give them more responsibility and accountability. And then individuals would be empowered to enhance earnings.

We didn’t realize how much we were fooling ourselves.

Learning and Earning

At one session, after making the same list once again, we suddenly noticed that we had already seen all of the ideas before. At similar crossroads in the past, we would usually bring in someone from the outside and ask for new ideas, trusting their thinking. But this time, we attempted to illustrate our dilemma by trying to help people to “see” things on the inside, to get to what is behind all of our work behavior.

As we attempted to map the dynamics using a causal loop diagram, we discovered that we were caught in a reinforcing loop in which our current knowledge led to the same traditional solutions and ways of enhancing earnings. We were, in effect, coming up with a lot of new ways to use the same old hammer. It was only as we challenged ourselves to analyze these old tools and methods that we discovered a major constraint in our system — our capacity to introduce new knowledge and tools to help people test current behaviors and areas for change.

As we explored this constraint, we realized that we were caught in a “Growth and Underinvestment” situation. At the core of “Growth and Underinvestment” is a reinforcing loop that drives the growth of a performance indicator and a balancing force (or forces) which opposes that growth (essentially the two loops that make up a “Limits to Success”). The additional loop in “Growth and Underinvestment” shows how deteriorating performance can justify underinvesting in the very capacity that is needed to lift the limit to growth.

In our case, the adequacy of our current knowledge was balancing our ability to enhance our earnings. At the same time, we justified our underinvestment in new knowledge because we undervalued the connection between knowledge and bottom-line performance (see “Capacity to Enhance Earnings Stream”). Whenever the word learning came up, everyone avoided it because it was perceived as a “soft” issue. We therefore allowed ourselves to defend our lack of knowledge to shield us from what really was limiting us.

Measuring Hard vs. Soft Investments

To further explore this “Growth and Underinvestment” situation, we attempted to challenge our assumptions behind capacity investment decisions. Traditionally, justifying investment in new capacity requires actual accounting data that proves the inadequacy of current strategies and capacity. In this case, however, the capacity issue we were dealing with — knowledge — was hard for us to quantify.

I have yet to hear anyone connect an investment in learning as a direct influence on enhancing earnings. In most cases, if the subject surfaces at all, someone says, “That is soft stuff. We need the hard stuff that we know we can trace to the bottom line.” The operating belief is that addressing soft issues (such as the impact of learning on earnings) would take money and attention away from the real enhancement opportunities — the hard actions.

Once we discovered that we were using the words soft and hard to divert our attention away from robust business thinking, we recognized that our reliance on “hard” data in our investment strategy was distracting us from the most fundamental driver of earnings…new knowledge. We had justified the underinvestment in learning by investing instead in technology and equipment, and by participating in self-talk to defend our denial and further justify the underinvestment in learning. Meanwhile, our earnings growth potential suffered. By investing on the hard side, we were also able to avoid (at least for the time being) the long delay associated with investments in learning and developing new ways of thinking.

As a result of our discussions, we have discovered that it is easy to fall into the trap of thinking that “what is measurable is what is important.” Measurability is one reason why most people want diagnostic tests when they go to a physician; it gives them results in data form. Ideally, the tests should help get at the root of most health problems, but they often fall short of this goal and lead to taking only symptomatic solutions.

A business, like the human body, is a complex system whose behavior is often counterintuitive. The solutions that are the most empirical and easier to apply are often the ones that can have the most drastic results. The issues that traditionally have been classified as “soft,” on the other hand, may actually have the highest leverage for producing long lasting change. Therefore, to change our current ways of thinking, we need to recognize that enhancing our organization’s capacity to acquire new knowledge (or learning) is directly linked to our capacity to think, act, and change. These factors have a direct influence on earnings.

So instead of relying on words such as hard and soft to defend our current thinking, we are focusing more on the language of systems thinking to promote a more systemic approach to issues. Our new thinking about these issues has led us to work toward investing more in formulating the tough questions, instead of spending money to find the measurable answers.

Creating Open Spaces for Learning

Investing in learning, therefore, includes not only a financial investment in training and workshops, but also in efforts to create the open space in which we can think about the way we think. This includes research to discover and analyze current work behaviors as well as investments in new ways to surface and unlock the way we think and learn. Generative dialogue, mind-maps, competency modeling, and systems thinking are all effective ways to focus on being behavior-based rather than program-based in our learning.

Before we acknowledged these issues in our company, open space for thinking was something we did not respect. Creating this open space required us as individuals to have the courage to ask the tough questions and to challenge traditional ways of thinking. It also required us to bring defensive routines out into the open while being supportive of each other. Essentially, creating an open space enabled us as a group to turn a potentially negative process into a learning process.

The real long-term value of this kind of thinking is in leading an organization to go beyond empowering its people. Today, the word empowerment is used in the context of giving responsibility. A step beyond empowerment, however, is “inspirement.” Inspiring people means that individuals will come looking for responsibility and ownership. It will be a driving factor in helping us to create healthy businesses — just as individuals can work toward creating a more healthy lifestyle.

B.C. Huselton is the VP of Human Resources and Business Systems at Armco Worldwide Grinding Systems. He is Armco’s liaison officer to the M.1.T. Organizational Learning Center, and will be a presenter at the 1993 Systems Thinking Action Conference.

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Of course, the observations would be exactly the same. This is precisely the dilemma that occurs in a “Growth and Underinvestment” structure: how can you tell whether your customers are defecting because of actions you are taking, or simply because of the “natural” dynamics of the product lifecycle?

A Dying Product Line

A manager in a Fortune 500 consumer products company (CPC) once told a story about a product they had decided to discontinue. They felt that its projected future market potential was not worth further investment. In fact, they were convinced the product was entering its dying stages, so they decided to hasten the inevitable by shutting the plant down.

At the same time, however, they were just beginning a strategic alliance with a Japanese manufacturer who wanted to take over the product line. As a gesture of good will, CPC agreed to license the product — on the condition that they would not renew the license if the Japanese firm was unable to sell at least 5000 units per year. Much to their surprise, the Japanese firm sold over 15,000 units in the first year alone.

It was the same product, manufactured at the same plant, which was operated by the same people. How, then, was the Japanese firm able to produce results CPC could not even imagine, let alone achieve? The answer lies, in part, in understanding the dynamics of the “Growth and Underinvestment” archetype.

Growth and Underinvestment

The “Growth and Underinvestment” structure is a special case of the “Limits to Success” archetype (see “Growth and Underinvestment: Is Your Company Playing with a Wooden Racket?” Vol. 3, No. 5). The storyline of the archetype can be described as follows: A company experiences a growth in demand that begins to outstrip the firm’s capacity. When the capacity shortfall persists, the company’s performance (such as on-time delivery) suffers and demand decreases. The fall in demand, however, is then seen as a reason for not making future investments in capacity, rather than a symptom of past underinvestments. This leads to a self-fulfilling cycle of continued underinvestment and falling demand. In the end, the decision to shut down production, as in CPC’s case, may seem the only appropriate action.

How, then, can an organization avoid doing something that it cannot even see? As in the case of the earth-centered view of the universe, we need a theory that provides us with a different interpretation of the same observations. The following seven-step process can help us use the “Growth and Underinvestment” archetype to better assess investment choices.

1. Identify Interlocked Patterns of Behavior

Ancient astronomers studied the movement of the sun and related its orbiting patterns to the changing seasons. Similarly, to recognize a “Growth and Underinvestment” archetype, we need to identify relevant patterns that appear to be interconnected — such as capacity investment decisions with customer orders or performance measures (e.g. de-livery delay). If there appears to be a systematic correlation, it may be an indication that the two are causally linked.

2. Identify Perceptual Delays

A critical step in analyzing how investment decisions are made is identifying the delay between the time when performance falls (e.g. deteriorating service quality) and when additional capacity actually comes on line. A significant source of that delay is in perceiving the declining performance (see “Underinvesting in Service Capacity”). Questions such as “How fast do we believe we should respond to falling performance measures?” or “What are the internal ‘hurdles’ that a product must pass?” can help surface mental models that may be blinding the organization to the need to invest.

3. Quantify and Minimize Acquisition Delays

In order to identify acquisition delays, you need to have a clear idea of the procedures and people that will be involved in the process of deciding and acquiring the additional capacity. Quantifying those delays requires a thorough understanding of how the whole process actually operates — not the just way it is “supposed” to work.

Minimizing both the perceptual and acquisition delays is important because if the time delay in adding capacity is too long, the performance measure will continue to deteriorate until product sales falls off. When sales fall, it alleviates the pressure on the performance measure (B2) which, in turn, can send a signal that further investments are not necessary (B3). The lack of investment pushes the two balancing loops into a figure-8 cycle that becomes a vicious reinforcing spiral of deteriorating quality and lower demand. Although the decreasing product sales are a result of the company’s inaction, it looks as though the customers have made a unilateral decision not to buy the product.

4. Identify Related Capacity Shortfalls

Expanding capacity for a product often entails further investments in many areas to develop support mechanisms and infrastructures. Expanding service capacity, for example, may lead to increased sales that will outstrip capacity somewhere else. If other parts of the system are too sluggish to capitalize on the added capacity, the customers may still view the company as providing poor service. Demand will then drop, thus kicking off the figure-8 dynamic described above.

5. Check for Eroding Performance Standards

To what extent are current investment decisions based on standards derived from past performance? For example, a 50-hour work week or a 3-month backlog may be the currently accepted signals that trigger additional investments, but the signal to expand may seldom come because of the demand-dampening effect that results when we wait too long to invest. An additional danger lies in the existence of a link between current performance levels and the performance standard, because it can also create a reinforcing cycle of eroding standards that leads to underinvestment and further erosion (R4).

6. Avoid Self•Fulfilling Prophecies

As in CPC’s case, we need to ultimately question the deep set of assumptions that drive our capacity investment decisions. The BCG Growth-Share matrix is an example of a framework for making strategic investment decisions that can lead to self-fulfilling prophecies. Through rigorous analysis based on a set of assumptions, the process produces categories — question marks, stars, cash cows, and dogs — which guide investment decisions. Problems arise when the labels outlive the relevancy of the analysis and simply become self-sustaining prophecies, i.e., you believe that a product is a “dog,” therefore you underinvest in it, and it stays a dog. Avoiding that danger requires going back and challenging the basic assumptions about the product, which includes reevaluating both the product and the market.

7. Search for Diverse Inputs

Challenging basic assumptions requires having multiple viewpoints which can move the discussion beyond current understanding. When making investment decisions, try to involve people who have a new perspective on issues such as who the customers are and what they see as the benefits of the product. This may help you break out of the box of current thinking, which is particularly important if you arc contemplating abandoning a product.

Encouraging “Intrapreneurs’

The real message of the “Growth and Underinvestment” archetype is that investment decisions should be made from a fresh perspective each time. Instead of relying on past performance or past decisions, try playing “intrapreneur” and look at the process as if you are introducing a brand new product. This may provide the necessary perspective to see new life where others see only a dead product.

Note: The “Growth and Underinvestment” archetype is a special variant of the “Limits to Success” archetype. It is difficult to illustrate with general examples because it requires specific detailed information about how investment decisions are made within companies. For additional help in using this archetype, see “Using ‘Limits to Success’ as a Planning Tool,” Vol. 4, No. 2.

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If you were a little bit better, you might have been willing to invest in a new high-performance racket. But you decide that tennis is really not for you. Besides, another friend has just given you a pair of ski boots. They’re a little beat up and a bit tight at the toes, but then again you don’t know whether you’ll like skiing….

Growth and Underinvestment

The above scenario is an example of the “Growth and Underinvestment” archetype at work. At its core is a reinforcing loop that drives the growth of a performance indicator and a balancing force which opposes that growth (loops RI and B1 in “Growth and Underinvestment Archetype”). An additional loop (B2) links performance to capacity investments, and shows how deteriorating performance can justify underinvesting in capacity needed to lift the limit to growth. This propensity to underinvest in the face of growth makes “Growth and Underinvestment” a special case of the “Limits to Success” archetype (see “Limits to Success: When the ‘Best of Times’ Becomes the ‘Worst of Times,— Toolbox, December 1990).

In the tennis example, the reinforcing process is practice, which improves performance (loop RI in “Practice Makes Perfect?”). Improvement slows, however, as you reach the point at which the equipment limits your ability (loop B1). If your decision to purchase better equipment is dependent on your past performance, you may fall victim to this archetype. Without investing in better equipment, your performance will likely plateau — or even decline as you become frustrated and spend less time practicing. The result then justifies your decision not to invest in a new racket.

Legacy of the Past

Often in a “Growth and Underinvestment” situation, ghosts of past failures remain as a systemic legacy, influencing current decisions. A classic example is the story of a capital equipment manufacturer. The company’s CEO had seen an industry downturn in which the company had been saddled with too much capacity, so he was cautious about expanding. The company’s product was selling well, however, and a backlog began to pile up — three months’ worth of orders, then four, then five. The CEO continued to believe that it was just a temporary spurt. When the backlog grew to six months, he finally agreed to expand production capacity.

It took about a year and a half for the additional capacity to come online. In the meantime, demand trailed off as people found alternative sources. The company gradually worked off the backlog, and orders started to pick up again. After a couple of years they were in a similar backlog, but the CEO was even more reluctant to invest in new capacity because of what appeared to be a continual cycle of growing and falling demand.

The “Growth and Underinvestment” archetype reveals that the company’s slow response may actually have created the cyclical demand. The reinforcing action of marketing activities, coupled with the balancing action of delivery delays, trace out a “Limits to Success” archetype, in which the limit is production capacity (loops RI and B1 in “Capacity Delays and Underinvestment”). As performance declined relative to performance standards, the perceived need to invest increased, until investments were finally made (loop B2).

Because of the delay in capacity coming online, however, delivery performance continued to decline for a while, hurting new orders. In the meantime, deliveries began to increase and the company crawled out of backlog. This led the CEO once again to question the need to invest in capacity, making him even more conservative the next time they were in a backlog situation.

Downward Spiral

If this dynamic continues through many cycles, customers are not likely to keep coming back. The result may be a downward spiral of cutting back on investments: the two balancing loops lock into a figure eight dynamic in which the effects of the reinforcing loop no longer have much impact on growth, while the combined balancing loops create a counter-reinforcing process of continual cutbacks. As demand goes down, delivery performance goes back up, creating less need for capacity investments. If capacity dips below the level needed to service incoming orders, performance will go down again, reducing demand even further. Perceived need to invest will be decreased, so investments will decrease, leading to even less capacity over time (as older equipment depreciates or is taken offline). Thankfully, the reverse situation can also be true: the two balancing loops can trace out a reinforcing loop that continues to expand demand and performance.

Breaking the Cycle

To determine whether a Growth and Underinvestment” structure is at work, start by looking for patterns of oscillations in customer demand. If you overlay that with capacity investments and find that they follow the same pattern, you’re probably in a “Growth and Underinvestment” situation.

If a company waits until it receives signals from the marketplace to invest in capacity, it may be too late to prevent some fall-off in demand that will result because of the delay between investment decisions and capacity coming online. The key is to develop a way of assessing capacity needs relative to demands before the performance indicator starts to suffer.

Take some time early in the growth phase to determine what the limits may be, especially with respect to capacity. Studying the market response and characteristics of your target customers during an upswing can help you anticipate future capacity needs.

Also make sure internal systems are set up to deal with growth: if you have an aggressive growth strategy but a sluggish internal system for responding to performance shortfalls, then you might have created a structural inability to handle continued growth.

Most importantly, explore the assumptions driving your capacity investment decisions. Past performance may be a consideration, but it should not dominate your decisions. Instead, identify the marketplace factors that are driving growth. Otherwise you may end up with investment decisions that are too dependent on past experience and not on present (and future) needs.

“Growth and Underinvestment” and other archetypes can be found in The Fifth Discipline By Peter Senge (Doubleday).

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First of all, we shouldn’t lose sight of the obvious: organizational learning has to do with improving performance. If a team is learning, we expect it to perform better. We wouldn’t consider a basketball team that continues to perform below its potential — regardless of its intellectual sophistication — to be a learning team.

But gauging learning just by performance can be a trap. I think a common misconception these days is that organizational learning is synonymous with improving performance. People are saying, “if product development times, manufacturing cycle times, defect rates, etc. arc getting better, then that organization is learning.” But those figures can be misleading. A team or a company can do all the wrong things and get good performance for a short period of time. The employees may be taking short cuts that will kill them five years down the road in order to get those manufacturing cycle times down, or they can be improving one performance index by wreaking havoc in other parts of the organization. Likewise, a team or a company can be doing a lot of things right but the results won’t show up for a while, either because of intrinsic delays or because there arc forces outside their control that are depressing results.

Signs that organizational learning is occurring are a lot more subtle and harder to measure than performance indicators, primarily because we are not used to looking for them. The sort of things we are going to have to learn to look for are a feeling of spirit and energy throughout the organization, and a sense of alignment. We will have to learn how to recognize an insightful, internally consistent diagnosis of a complex problem and a willingness among co-workers to continually test their favored diagnoses. People will start talking about their jobs differently. For example, you might ask someone “What are you doing?” and instead of rattling off their job description, they will refer to their sense of purpose, the customers they serve, and how their work interacts with others.

“Then we will begin to learn what never could have been learned individually — no matter how bright we are, no matter how much time we take, and no matter how committed we are.”

Another thing we would sense if an organization was learning is a difference in the quality of dialogue. There would be a real freedom among people to acknowledge what they don’t know. An atmosphere of questioning and experimentation would exist at all levels of the organization. People would feel comfortable saying, “Here is where our thinking is right now and here is where we want to be,” and would actively search out new ideas and input.

Perhaps surprisingly, there would also be a lot of conflict occurring in the organization. At Innovation Associates, we have often said that in highly aligned groups there is much conflict of ideas. People’s alignment — their commonality of purpose — would give them the confidence to disagree in a way they normally wouldn’t. As people become partners in creating a common vision, they will begin to feel a responsibility to challenge each other’s thinking in order to gain deeper levels of understanding needed to achieve that vision.

Along with this willingness to challenge thinking, there will also be an understanding of how to probe more effectively into other people’s viewpoints. Conflict will take on a different meaning — it won’t be a personal attack, pitting one person’s opinion against another. Instead, it will be a joint inquiry into how those differing perspectives can be combined to form a deeper understanding of the problem or issue at hand. This type of inquiry would show up in a conversation on the shop floor where one employee would say to another, “Oh, you don’t see it the way I do? That’s interesting. What leads you to see it differently?” Then we would start to see a greater balance between dialogues of inquiry and advocacy.

I think ultimately, the truest sign of a learning organization at work will be when people begin to enter into these dialogues of joint inquiry instead of always advocating their positions. Then we will begin to learn what never could have been learned individually — no matter how bright we are, no matter how much time we take, and no matter how committed we arc. What couldn’t be learned individually will become possible as a group. That will be organizational learning.

Peter Senge, co-founder of Innovation Associates (Framingham, MA), is the director of the MIT Organizational Learning Center and author of The Fifth Discipline: The Art and Practice of the Learning Organization (Doubleday: 1990).

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Why has accountability, which is merely a principle of sound managerial practice, gotten such a bad rap? Senior managers have too often invoked it as a way of getting things done that they themselves don’t know how do in our less-than-perfect organizational systems and structures. Sometimes this dubious ploy actually works. After all, when their boss says, “Just get it done!” many people can — through sheer willpower, brute force, and long hours — overcome managerial abdication, systemic dysfunctionality, and structural flaws. But the wear and tear burns people out and suboptimizes the whole.

As a managerial technique, holding people accountable after casually tossing a goal or task to them — without setting the context, securing the necessary resources, and providing the proper structure — is destructive. It generates negative emotions and behaviors and a widespread negative response to the proper and requisite notion of accountability. Nevertheless, accountability leadership is crucial for managers to move forward to more productive ways of doing business.

Rehabilitating Accountability

As a first step in rehabilitating accountability, I give you the following accurate, useful definition of the concept: “Accountability is the obligation of an employee to deliver all elements of the value that he or she is being compensated for delivering, as well as the obligation to deliver on specific output commitments with no surprises.”

The essence of employee accountability becomes clear by comparing the role of an employee with that of an independent contractor. A contractor is accountable for delivering a measurable, usually quantifiable, product, service, or result. Repair the roof. Install a phone system. Collect past due accounts. In the process, the contractor has the absolute right to be paid as long as you receive the value you requested. He is left on his own to create his own processes to secure resources, generate efficiencies, and produce results.

Employees, on the other hand, are accountable for delivering value consistent with the total requirements of their role while coordinating with other company processes and functions. In turn, they have the right to be compensated at a level consistent with the value they contribute. Employees are (by law!) paid every day, come what may. They also typically receive training, development, and benefits. But in order to follow through with their commitments, they need the appropriate resources, support, and guidance about expectations about their performance.

Fixed vs. Relative Accountabilities

Thus, in an organization, the term “accountability” refers to an employee’s obligations, some of which are fixed and some of which are relative. Fixed accountabilities comprise the employee’s obligations to deliver outputs and to use resources and processes precisely as specified by the employer. They are necessary to keep processes in control and can be summarized in two distinct categories:

• Commitment. Employees must fulfill the output commitments exactly, in terms of quantity, quality, and timeparameters, as defined in their assignments, projects, services, and other deliverables — unless the manager agrees to adjust them. Under no circumstances can the employee surprise her manager at the due date with changes.
• Adherence. Employees must simultaneously observe and work within defined resource constraints — that is, the rules and limits established by policies, procedures, contracts, and other managerial guidelines, as well as by law.

Relative accountabilities have to do with the employee’s exercise of judgment to maximize value; they include the following four categories:

• Reach. Employees are expected to add as much value as they can by signing on for ambitious yet achievable targets, rather than hanging back or committing to “low-ball” goals.
• Fit for purpose. Employees must continually strive to ensure the optimal means of producing appropriate outputs that support the purpose for which the outputs were designed in the first place.
• Stewardship. Employees must manage company funds and other resources efficiently and seek ways to continually improve and conserve those resources, wherever possible
• Teamwork. Employees must recognize that it is the concerted effort from and between everyone that generates profit in any organization, rather than isolated efforts to maximize personal output. Therefore, an employee must accommodate other people’s work across the organization to maximize the total organizational value — even if her job becomes more difficult in the process.

Many managers do a poor job of defining, explaining, and gaining commitment to fixed accountabilities with their subordinates and holding them to those commitments (see “Management Terminology”). Even more fail to properly explain relative accountabilities and to accurately assess their subordinates’ effectiveness in delivering on them. For that reason, some managers over-budget expenses so they’ll look good next year; some salespeople sell customers more than they need, just so they’ll reach their sales quota this year; some operating personnel pay too much for materials because it’s easier than shopping around — all are failing to fulfill their relative accountabilities. Clearly articulated relative accountabilities are the antidote to the pursuit of narrow goals, waste of resources, and lack of team play that renders so many employees, and their companies, ineffective.

QQT/R

Managers’ accountabilities include some that are unique to the managerial role. Chief among them is being clear with their subordinates about what (the quantity and quality of output) they are expected to deliver and how much time they have to deliver it. Managers are also accountable for providing the resources employees need to complete their assignments.

In virtually any environment, when I ask employees how clear their managers are about what they are accountable for getting done, most will say, “Not very.” In manufacturing, for instance, a supervisor may specify an increase in quantity but not the acceptable reduction, if any, in quality. Yet statistical process control and just-in-time working require unambiguous clarity about accountabilities and the interaction between quantity, quality, time, and resources.

Many managers assume their subordinates know what they are accountable for, not realizing the tension and anxiety they inadvertently cause by failing to be clear. Typically, a highly responsible subordinate will make her best guess at reading her boss’s mind, hoping to be in the right ballpark. Then, a few months later when she gives him a progress report and he says, “That’s not at all what I wanted,” she ends up feeling frustrated and distrustful.

Management scientist Elliott Jaques has developed a small but powerful tool that can be useful for clarifying fixed accountabilities: QQT/R. The slash in QQT/R does not indicate arithmetic division; it merely separates employees’ output accountabilities (quantity, quality, and time frame) from their resource constraints (see “QQT/R”). This expression is the simplest way for managers to accurately define assignments that they are delegating to their subordinates.

QQT/R creates unequivocal clarity regarding obligations. The formula puts all four variables on the table so managers and subordinates can examine, discuss, adjust, and commit to each one explicitly. The variables are both independent and interdependent, summing up real-world constraints and possibilities and exposing potential tradeoffs among them.

With the tradeoffs out in the open, managers and their subordinates are positioned for a hard-hitting, objective conversation about the manager’s goals and resources and the employee’s ability to meet those goals given current conditions. When this process is ignored or done haphazardly, employees are saddled with their managers’ unrealistic or unfair expectations, and managers delude themselves with their employees’ acquiescent or deceptive commitments to fulfill those expectations. When managers extract so-called stretch commitments from employees that are obviously unobtainable, or when they fail to provide adequate resources for an effort, employees know what’s happening and feel they’ve been taken. Similarly, when employees won’t commit to challenging goals, they are sabotaging their managers and their company.

Some managers fear that tools such as QQT/R inhibit initiative and creativity. But QQT/R does just the opposite, because it inspires employees to figure out how best to deliver on their commitments — not to decide what they are to deliver. The best employees delight in improving processes and conserving resources while hitting their QQT objectives. QQT/R should not be construed as top-down either. It should be the outcome of active, vigorous, two-way discussion between managers and their subordinates.

Other managers initially believe that QQT/R cannot be applied to people in analytical or research positions or other areas of knowledge work. Our clients involved in research, product, technology, and market development, as well as similar functions, don’t use QQT/R just to define results per se. They also use it to mutually define the processes, steps, and resources that must be developed in order to yield the intended results (see “A Technology QQT/R” on page 4).

QQT/R is not meant to be a straightjacket or a rigid set of rules. Rather, it is a useful tool for managers and employees to use in developing clearly articulated, mutually agreed upon commitments. It is the most efficient means of ensuring that the output delivered to managers is really the output they wanted. Significantly, QQT/R captures some of the managers’ accountabilities as well as those of employees by defining the resources the manager commits to deliver.

Yet being clear about the QQT/R does not capture all managerial accountabilities. In addition, managers must provide their subordinates the support and working conditions they need to deliver on their accountabilities. This support may include coaching subordinates to enhance their effectiveness and providing constructive feedback. The bottom line is that a manager is accountable for her subordinates’ outputs. She cannot blame her inability to deliver her commitments on her subordinates’ failure to meet their targets. You might say the manager’s credo for the 21st century must be: No excuses about your subordinates’ QQT/Rs! No surprises about your own!

Accountability and Authority

Managers must also be accountable for giving subordinates the authority they need in order to deliver on their obligations. Holding employees accountable for achieving a goal that they haven’t been given the authority to achieve is what I call “managing for fantasy.” Invariably, doing so generates stress, frustration, and resentment in employees. Even when the result is obtained, it is usually at the cost of suboptimizing overall organizational results (see “Managing for Fantasy”).

The reverse of this problem authority without accountability — is also prevalent. For example, an employee may be given authority over processes, people, or other resources but not held accountable for how well he or she manages or what results are achieved. When that happens, the employee eventually becomes self-absorbed and develops a sense of entitlement. In this fantasy culture of undisciplined performance and variable teamwork, one’s attitude is always “me first, productivity second.”

Accountability vs. Responsibility

Another common mistake is confusing accountability with responsibility. In the purest sense, responsibility is what an individual demands of himself or herself. It has to do with one’s conscience, aspirations, and internal standards. Accountability has to do with specific obligations one has to another individual based on mutual commitments each has made to the other. Unfortunately, most organizations use these words interchangeably as a way to make people feel accountable when they don’t actually have the necessary authority.

When employees are unclear about or lack the authority they need to deliver on their accountabilities, they fall back on their own sense of personal responsibility. Because most companies have highly responsible employees, those employees take it upon themselves to get the job done, usually at considerable cost to themselves and their coworkers. As a consequence, they always end up suboptimizing overall organizational effectiveness.

For example, a client of ours in the metal fabricating business asked me to talk with their newly promoted assistant superintendent Sam Travers, a 12-year veteran. Since the promotion, Sam had grown irritable and disruptive. His leadership style included yelling, threatening, cursing, and even kicking cans around. After talking with Sam, I found him to be courteous, reasonable, intelligent, and mature. If anything, he was fully aware of his so-called accountabilities — and chief among them was keeping his area’s machines operating at 80 percent of capacity, or more. However, the machine operators were subordinate to their shift supervisors, not to Sam, and they feared their supervisors would dock their pay, write them up, suspend them, or fire them if a machine broke from being cranked too high. The supervisors, busy fighting fires elsewhere, told Sam to handle the problem himself. Only by screaming at the operators could Sam get them to work faster. He had no managerial authority over the operators yet he felt responsible for getting those machines running at 80 percent or better.

An employee who is working hard but not getting the intended results, or who is achieving results only at considerable cost to coworkers, subordinates, or the larger organization, is probably acting responsibly. With such individuals, you must first review their accountabilities and set them in the context of overall company goals. The next crucial step is to ascertain whether the person has both the commensurate authority and the resources to get the job done. Gaps in the accountability-authority equation may be resolved simply or may require rethinking the alignments in your structures and processes.

LEAD People to Accountability

So what is the solution to this accountability crisis? How can we build accountability leadership in our organizations? The four cornerstones of accountability leadership are “LEAD” — leverage, engagement, alignment, and development. LEAD represents a systemic way of thinking and acting that greatly increases a manager’s effectiveness. It starts with the concept that managers exist to leverage people’s potential so that they can achieve more than they could alone. To get this leverage, managers must engage their employees’ enthusiastic commitment and ensure that they are in alignment with the organization and one another. To maintain leverage over the long term, managers must develop their people’s capabilities so they can apply their full potential to the work of the organization.

Let’s look more closely at each element of the system:

Leverage. In an accountability framework, managers are hired to leverage the creative capabilities of their people to make the total result of their contributions greater than the sum of the parts. A lever is a simple tool that enables someone to lift a heavy object higher than he could on his own. Similarly, leadership, when properly practiced using the levers of engagement, alignment, and development, enables people in a company, department, or team to accomplish something that would not otherwise be possible.

To help employees exercise judgment, the most important leadership practice a manager can deploy is setting context.

The key for managers to become effective leaders is to understand what they are leveraging. They’re not leveraging employees’ fixed accountabilities — the defined assignments and the rules of engagement surrounding the assignment — but rather their relative accountabilities — the value added by their application of judgment and discretion. In other words, managers must fully leverage the collective mental force of their people in order to elevate the whole organization’s ability to deliver value to the customer and, ultimately, to the shareholder.

To help their employees exercise their judgment, the most important leadership practice a manager can deploy is setting context. Doing so consists of including your subordinate in your own thinking and in your manager’s thinking, and then incorporating your subordinate’s thinking into your own. This approach improves upon the quality of a manager’s plan and it helps a subordinate to think, plan, and make adjustments intelligently — that is, in a way that best supports the bigger picture.

Engagement. Effective managers engage commitment by understanding what goes into a healthy “psychological contract,” a term coined by Harry Levinson in the 1950s to describe how managers understand and create the conditions necessary for people to feel supported and successful. This contract represents an implicit — often unspoken — understanding and agreement on what the company will provide, and what the employee will provide, to make the relationship work. It is not to be confused with an employment contract, a legal device detailing what employers and employees owe each other. Rather, the psychological contract rests upon a foundation of mutual commitment to each other’s success.

Negotiating strong, mutual, and reciprocal contracts requires that managers attend to what their employees value, how they define success, and what demonstrates to them that the organization supports their pursuit of success. As a general rule, employees perceive their companies as being committed to their success when they provide:

• A safe, healthy work environment
• Respectful, trustworthy relationships
• Regular opportunities for providing input to the organization, its goals, and one’s own assignments
• Valuable, personally meaningful, and challenging work
• The resources and authorities necessary to meet accountabilities
• Assistance in reaching one’s full potential within the organization
• Recognition and appreciation of one’s contribution
• Fair compensation
• A commitment to organizational success and perpetuation

If an employee — or your entire workforce — fails to demonstrate the level of engagement sought, use the preceding list as a diagnostic checklist. Invariably, at least one and usually more of these elements will be missing. This shortcoming is your clue to remedial actions that you might take.

Finally, it’s worth mentioning that context setting and QQT/Rs are part of the psychological contract. Employees prefer clarity, not vagueness. The very process of jointly defining intentions and ambitious and attainable QQT/Rs creates engagement.

Alignment. Employees are aligned when they understand the relationship between their activities and goals and those of their organization, managers, and coworkers — and then act on that understanding. Alignment enables employees to best use their judgment to craft, with others, the day-to-day, often minute-to-minute adjustments that will best support management’s thinking in light of changing conditions.

Alignment ensures that employees are not only accountable for accomplishing their own individual missions — the QQT/Rs — but that they deliver their accountabilities in such a way that ensures they fit into, and support, the whole. With that framework, employees can be expected to chart and continually adjust a course to reach optimal solutions — together. So by setting context, a manager brightens the light on the areas where employees should focus and dims it on areas where they do not need to do so.

To be most useful, context must be translated into a fully articulated decision-making framework within which subordinates can make optimal trade-offs. This framework guides subordinates when they must make decisions involving key dimensions such as revenue, costs, profits, quality, quantity, timeliness, customer satisfaction, or an objective such as winning a new market. Within such a framework, employees not only understand the context in terms of their manager’s thinking and intentions, but they also understand the umbrella of alternative logic within which they must operate.

Development. Employee development, as a continual, career long process, represents the surest path to a workforce that functions with enthusiastic commitment at its full potential. If there truly is a talent gap and companies cannot find and retain enough high performers, then senior executives need to start taking employee development seriously. This means understanding what development entails, creating a talent-pool development system, and holding each manager accountable for effectively developing her own employees — both in role and in careers.

To fully develop an employee’s potential, you need to have a good idea of what that potential is. The purest handle you can get on an employee’s potential involves assessing his ability to handle complexity. This point is quite important, because position levels in organizations are closely related to the complexity of the tasks and the kind of judgment involved in the work of those positions.

Broadly, the tasks of employee development fall into two areas: developing subordinates in their current positions (through coaching) and developing subordinates to improve their fit for higher-level positions in the future (through mentoring). In other words, managers must be accountable for coaching their immediate subordinates and for mentoring their subordinates’ subordinates.

What It Takes to LEAD

The system that I have labeled LEAD lacks the iron-fist approach of the old command-and-control style of management, as well as its paternalism and its limited view of employee potential. LEAD also eschews the passive approach associated with employee empowerment, self-directed work groups, and similar laissez-faire reactions to command and control.

Instead, LEAD begins with a clear mandate for managers to leverage their people to their highest levels of achievement, as individuals and as a group. LEAD recognizes that managers will draw forth employees’ best efforts not by the unilateral issuing of orders, but by enthusiastically engaging their employees’ commitment in their work. Furthermore, LEAD aligns those efforts when managers construct with their subordinates a powerful context — conveying management’s thinking and intentions — as well as practical decision-making frameworks. And finally, LEAD looks to the long-term value of the individual and the organization by holding managers accountable for effectively developing their employees to their fullest potential.

To implement LEAD, you need a clear view of your managerial role, the flexibility to adopt new viewpoints, and the patience and intelligence to learn new skills. You also need the energy and commitment to work with yourself and your people, to try and fail and try again until the system becomes part of your everyday managerial-leadership practice. In addition, you need the courage to establish LEAD as an accountability for every manager and to assess each manager’s value — and right to remain a manager — against this standard. Implementing accountability leadership does require hard work, but I fervently believe that business leaders and managers who undertake it can use LEAD to their competitive advantage.

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Why is this relationship problematic? First, although learning is clearly essential for sustained individual and organizational performance in a changing environment, at times the costs may be more visible than performance benefits. Learning can be messy, uncertain, interpersonally risky, and without guaranteed results. Moreover, not all learning leads to improved performance; it depends on what is being learned and how important it is

for particular dimensions of performance. Although some learning is straightforward (the knowledge is codified and readily used by newcomers), other forms rely on experimentation and exploration for which outcomes are unknown in advance. Lastly, time delays between learning and performance may obscure or even undermine evidence of a clear causal relationship.

As described in this article, organizations can at least partly address these challenges through leadership that creates a climate of psychological safety and that promotes inquiry. But first, let’s go into more detail about some of the ways in which a focus on learning can actually appear to undermine performance.

Impediments to Learning

Where catastrophic failure is possible, mistakes are inevitable, or innovation is necessary, learning from failure is highly desirable. Yet research suggests that few organizations dig deeply enough to understand and capture the potential learning from failures. Why this resistance to learning?

Psychological and Organizational Barriers. A multitude of barriers can preclude learning in teams and organizations. These include limitations in human skills or cognition that lead people to draw false conclusions, and complex and cross-disciplinary work designs that can make failures difficult to identify. Additional barriers include lack of policies and procedures to encourage experimentation or forums for employees to analyze and discuss the results.

Learning about complex, interconnected problems also suffers from ineffective discussion among parties with conflicting perspectives. Status differences, lack of psychological safety, and lack of inquiry into others’ information and experiences related to substantive issues can combine to ensure that a group as a whole learns little.

Powerful individuals or respected experts can stifle dissent simply by expressing their opinions. Social pressures for conformity exacerbate the impact of leaders’ actions, particularly when large status and power differences exist among leaders and subordinates. In addition, people in disagreement rarely ask the kind of sincere questions that are necessary for them to learn from each other. We tend to try to force our views on others rather than educating them by providing the underlying reasoning behind our perspectives, as Chris Argyris and Donald Schön showed long ago (see Argyris, C. and Schön, D. Organizational Learning: A Theory of Action Perspectives, Addison-Wesley, 1978).

More generally, the human desire to “get it right” rather than to treat both success and failure as useful data greatly impedes learning. Individuals prevent learning when they ignore their own mistakes in order to protect themselves from the unpleasantness and loss of self-esteem associated with acknowledging failure. People may also deny, distort, or cover up their mistakes in order to avoid the public embarrassment or private derision that frequently accompanies such confessions, despite the potential of learning from them. In addition, people derive comfort from evidence that enables them to believe what they want to believe, to deny responsibility for failures, and to attribute a problem to others or the system.

Similarly, groups and organizations tend to suppress awareness of failures. Organizational incentives typically reward success and punish failure, creating an incentive to hide mistakes. Teams and organizations are also predisposed to underreact to the threat of failure when stakes are high, different views and interests are present, and the situation is ambiguous. Such groups can fail to learn and hence make poor decisions.

Multiple mechanisms can combine to inhibit responsiveness and preclude learning in group settings. First, people tend to filter out subtle threats, blocking potentially valuable data from careful consideration. They also remain stubbornly attached to initial views and seek information and experts to confirm initial conclusions. Groups silence dissenting views, especially when power differences are present. They spend more time confirming shared views than envisioning alternative possibilities. Organizational structures often serve to block new information from reaching the top of the organization. Rather, they tend to reinforce existing wisdom.

IMPACT OF PSYCHOLOGICAL AND ORGANIZATIONAL BARRIERS TO LEARNING

While proactively seeking to acquire new capabilities often takes a toll on short-term performance, over time, it benefits both the individual and the organization. Avoiding learning behaviors, on the other hand, can undermine long-term performance.

Inability to Learn from Failure. Most organizations’ inability to learn from failure stems from a lack of attention to small, everyday problems and mistakes. Organizations that embrace small failures as part of a learning process are more likely to innovate successfully. Likewise, organizations that pay more attention to small problems are more likely to avert big ones, especially where tasks are interconnected. Despite the increased rate of failure that accompanies deliberate experimentation, organizations that experiment effectively are likely to be more innovative, productive, and successful than those that do not take such risks (see especially Sitkin, S. B., “Learning Through Failure: The Strategy of Small Losses,” in L. L. Cummings and B. M. Staw (Eds.), Research in Organizational Behavior, Vol. 14: 231–266, JAI Press, 1992, and Cannon and Edmondson (2005), cited above).

Small failures arise not only in the course of purposeful experimentation, but also in daily work that is complex and interdependent. When problems inevitably arise during the course of business in these situations, workers can either simply compensate for or work around problems, or they can seek to resolve the underlying cause by notifying those who can help to correct them. The former would likely go unnoticed, while the latter would expose poor performance. Nevertheless, compensating for problems can be counterproductive if doing so isolates information about problems such that no learning occurs.

In hazardous situations, small failures not identified as problems worth examination often precede catastrophic failures. Small failures are often the key early warning sign that could provide a wake-up call needed to avert disaster down the road. Yet, in recognizing small failures in order to learn from them, individuals and groups must acknowledge the performance gaps.

Collective learning requires valuing failure and being willing to incur small failures in front of colleagues. It requires being willing to enhance rather than reduce variance. Learning groups must proactively identify, discuss, and analyze what may appear to be insignificant mistakes or problems in addition to large failures. When organizations ignore small problems, preventing larger failures becomes more difficult (see “Impact of Psychological and Organizational Barriers to Learning”).

The Learning Mindset

Given the above challenges, this section describes some of the theoretical alternatives for promoting organizational learning that enhances future performance. It ties together different but related ideas from research at several levels of analysis (see “Learning Mindsets at Multiple Levels of Analysis,” p. 4).

Advocacy and Inquiry Orientations. As discussed above, organizational structures and processes can severely inhibit the ability of a group to effectively incorporate the unique knowledge and concerns of different members. Key features of group process failures include antagonism; a lack of listening, learning, and inquiring; and limited psychological safety for challenging authority. These kinds of individual and interpersonal behaviors have been collectively referred to as an advocacy orientation (Garvin and Roberto introduced this term in “What You Don’t Know About Making Decisions,” Harvard Business Review, Vol. 79, No. 8, September 2001).

For example, simple but genuine inquiry into the thinking of other team members could have generated critical new insights about the threat posed by the foam strike to the Columbia space shuttle. Instead, NASA managers spent 16 days downplaying the problem and so did not view the events as a trigger for conducting detailed analyses of the situation. A recent analysis by Roberto, Bohmer, and Edmondson concluded that NASA’s response to the foam strike threat was characterized by active discounting of risk, fragmented, discipline-based analyses, and a wait-and-see orientation to action. When engineers became concerned about the foam strike, the impact of their questions and analyses was dampened by poor team design, coordination, and support. In contrast to the flat and flexible organizational structures that enable research and development, NASA exhibited a rigid hierarchy with strict rules and guidelines for behavior, structures conducive to aims of routine production and efficiency. The cultural reliance on data-driven problem solving and quantitative analysis discouraged novel lines of inquiry based on intuitive judgments and interpretations of incomplete, yet troubling information. In short, the shuttle team faced a significant learning opportunity but was not able to take advantage of it due to counterproductive organizational and group dynamics.

In contrast, effectively conducting an analysis of a failure requires a spirit of inquiry and openness, patience, and a tolerance for ambiguity. Such an inquiry orientation is characterized by the perception among group members that multiple alternatives exist, frequent dissent, deepening understanding of issues and development of new possibilities, filling gaps in knowledge through combining information sources, and awareness of each others’ reasoning and its implications. Such an orientation can counteract common group process failures. Learning about the perspectives, ideas, experiences, and concerns of others when facing uncertainty and high-stakes decisions is critical to making appropriate choices.

Confirmatory and Exploratory Responses. Leaders play an important role in determining group orientation to an observed or suspected failure. Analyzing the Columbia Shuttle tragedy, Edmondson and colleagues suggested that when small problems occur, leaders can respond in one of two basic ways. A confirmatory response — appropriate in routine production settings, but harmful in more volatile or uncertain environments — reinforces accepted assumptions, naturally promoting an advocacy orientation on the part of leaders and others. When individuals seek information, they naturally look for data that confirms existing beliefs. Confirmatory leaders act in ways consistent with established frames and beliefs, passive and reactionary rather than active and forward-looking.

In uncertain or risky situations or where innovation is required, an exploratory response may be more appropriate than seeking to confirm existing views. An exploratory response involves challenging and testing existing assumptions and experimenting with new behaviors and possibilities, the goal of which is to learn and to learn quickly. By deliberately exaggerating ambiguous threats, actively directing and coordinating team analysis and problem solving, and encouraging an overall orientation toward action, exploratory leaders encourage inquiry and experimentation. Leaders seeking to encourage exploration also actively foster constructive conflict and dissent and generate psychological safety by creating an environment in which people have an incentive, or at least do not have a disincentive, to identify and reveal failures, questions, and concerns. This form of leader response helps to accelerate learning through deliberate information gathering, creative mental simulations, and simple, rapid experimentation.

Rather than supporting existing assumptions, an exploratory response requires a deliberate shift in the mindset of a leader — and of others — that alters the way they interpret, make sense of, and diagnose situations. When leaders follow an exploratory approach, they embrace ambiguity and openly acknowledge gaps in knowledge. They recognize that their current understanding may require revision, and they actively seek evidence in support of alternative hypotheses. Rather than seeking to prove what they already believe, exploratory leaders seek discovery through creative and iterative experimentation.

Learning-Oriented and Coping-Oriented Approaches. When implementing an innovation such as a new technology or practice, leaders can orient those who will be responsible for implementation by responding in one of two ways. They may view the innovation challenge as something with which they need to cope or as an exciting learning and improvement opportunity. A coping-oriented approach is characterized by protective or defensive aims and technically oriented leadership. In contrast, learning-oriented leaders share with team members a sense of purpose related to accomplishing compelling goals and view project success as dependent on all team members.

In a study of 16 cardiac surgery departments implementing a minimally invasive cardiovascular surgery technique, successful surgical team leaders demonstrated a learning-oriented approach rather than a coping approach. Learning-oriented leaders explicitly communicated their interdependence with others, emphasizing their own fallibility and need for others’ input for the new technology to work. Without conveying any loss of expertise or status, these leaders simply recognized and communicated that in doing the new procedure they were dependent on others. In learning-oriented teams, members felt a profound sense of ownership of the project’s goals and processes, and they believed their roles to be crucial. Elsewhere, the surgeon’s position as expert precluded others from seeing a way to make genuine contributions beyond enacting their own narrow tasks, and it put them in a position of not seeing themselves as affecting whether the project succeeded or not. Learning-oriented teams had a palpable sense of teamwork and collegiality, aided by early practice sessions.

Organizing to learn and organizing to execute are two distinct management practices, one suited to exploration and the other to exploitation respectively.

In addition, team members felt completely comfortable speaking about their observations and concerns in the operating room, and they also were included in meaningful reflection sessions to discuss how the technology implementation was going. In teams that framed the innovation as a learning opportunity, leaders enrolled carefully selected team members, conducted pretrial team preparation, and engaged in multiple iterations of trial and reflection. Dramatic differences in the success of learning-oriented versus coping oriented leaders suggest that project leaders have substantial power to influence how team members see a project, especially its purpose and their own role in achieving that purpose.

Organizational Exploitation and Exploration. Inquiry and advocacy orientations describe individuals and groups; exploration and exploitation are terms that have been used to describe parallel characteristics of organizations. In mature markets, where solutions for getting a job done exist and are well understood, organizations tend to be designed and oriented toward a focus on execution of tasks and exploitation of current products or services. In more uncertain environments, knowledge about how to achieve performance is limited, requiring collective learning — or exploration in which open-ended experimentation is an integral part. In sum, exploration in search of new or better processes or products is conceptually and managerially distinct from execution, which is characterized by planning and structured implementation and amenable to formal tools such as statistical control.

Organizing to Learn and Organizing to Execute. In the same way that leader response drives group member orientation, the mindset of organizational leaders as well as the structures and systems they initiate play a large role in determining firm behavior and capabilities. Organizing to learn and organizing to execute are two distinct management practices, one suited to exploration and the other to exploitation respectively.

Where problems and processes are well understood and where solutions are known, leaders are advised to organize to execute. Organizing to execute relies on traditional management tools that motivate people and resources to carry out well-defined tasks. When reflecting on the work, leaders who organize to execute are well advised to ask, “Did we do it right?” In general, this approach is systematic, involves first-order learning in which feedback is used to modify or redirect activities, and eschews diversion from prescribed processes without good cause.

In contrast, facing a situation in which process solutions are not yet well developed, leaders must organize to learn: generating variance, learning from failure, sharing results, and experimenting continuously until workable processes are discovered, developed, and refined. Motivating organizational exploration requires a different mindset than motivating accurate and efficient execution. Leaders must ask not “did we succeed?” but rather “did we learn?”

In this way, organizing to learn considers the lessons of failure to be at least as valuable as the lessons of success. Such a managerial approach organizes people and resources for second-order learning that challenges, reframes, and expands possible alternatives. Practices involved in organizing to learn include promoting rather than reducing variance, conducting experiments rather than executing prescribed tasks, and rewarding learning rather than accuracy.

Creating systems to expose failures can help organizations create and sustain competitive advantage. For example, General Electric, UPS, and Intuit proactively seek data to help them identify failures. GE places an 800 number directly on each of its products. UPS allocates protected time for each of its drivers to express concerns or make suggestions. Intuit staffs its customer service line with technical designers, who directly translate feedback from customers into product improvements. At IDEO, brainstorming about problems on a particular project often enables engineers to discover ideas that benefit other design initiatives. At Toyota, the Andon cord, which permits any employee to halt production, enables continuous improvement through frequent investigation of potential concerns.

Leading Organizational Learning

Edmondson’s research has identified several success factors for leaders seeking to incorporate learning into their efforts to manage their organizations effectively. These include recognizing and responding to the need for learning versus execution, embracing the small failures from which organizations can learn, and maintaining the ability to shift nimbly between learning and execution as needed.

Diagnose the Situation and Respond Accordingly. Rather than vary their style as appropriate for the situation, in practice leaders tend to employ a consistent approach. They frequently gravitate toward organizing to execute, particularly when associated practices are consistent with the organization’s culture. However, being good at organizing to execute can hamper efforts that require learning. When leaders facing a novel challenge organize to execute rather than employing a learning approach, their organizations miss opportunities to innovate successfully.

Several years ago, the new chief operating officer at Children’s Hospital and Clinics in Minnesota, Julie Morath, exemplified a mindset of organizing to learn. Emphasizing that she did not have the answers, she invited people throughout the organization to join in a learning journey, aimed at discovering how to ensure 100 percent patient safety.

Organizing a team to experiment and learn about an unknown process requires a management approach that embraces failure rather than seeking perfect execution.

Embrace Failure. Organizing a team to experiment and learn about an unknown process requires a management approach that embraces failure rather than seeking perfect execution. Discovery and expeditious trial and error are the keys to successful learning. In the Electric Maze®, an interactive learning exercise created by Interel, participants recognize how unnatural collective learning is for most managers. Teams of students must get each member from one end of the maze to the other without speaking. Individuals step on the maze until a square beeps, at which point the individual must retrace his or her steps back to the start.

To optimize the learning process, the team should “embrace failure” (symbolized in the Electric Maze exercise as “beeps going forward”) and systematically collect as many “failures” as quickly as possible. More typically, however, the need to learn is hampered by the perceived interpersonal risk of “failing” in front of colleagues by stepping on a beeping square. In reality, only by stepping on beeping squares can the team learn quickly and discover the true path forward. The exercise offers a palpable experience to show managers that the desire to look as if one never makes mistakes hinders team and organizational learning.

Maintain Flexibility and Shift as Needed. Some business situations require innovation and execution simultaneously, or in rapid sequence. However, shifting from organizing to learn to organizing to execute can be difficult. Participants in the Electric Maze exercise come to appreciate this challenge as well. To find the correct path through the maze requires organizing to learn.

Once the path is discovered, teams are required to have participants walk through the path as quickly as possible with minimal error. In practical terms, this means the teams must shift their behavior from learning to execution, something that most teams find difficult. The Maze exercise illustrates that managing a team for superb execution of a known process calls for a different approach than managing a team to experiment and discover a new process. The ability to recognize situations that require learning and the flexibility to shift from execution to learning requires awareness as well as skillful management, posing significant challenge to many leaders and competitive advantage to leaders with such ability.

Implications for Performance Measurement

The implication of the complex relationship between learning and performance for performance measurement is worth a brief discussion. Performance is easier to measure in execution contexts than in exploratory learning contexts. In the latter, performance can be challenging to measure in the short term, even if it contributes to clear performance criteria in the long term.

Consider the Electric Maze exercise again. In the second phase, excellent performance is error-free, rapid completion of the task—every member traversing the discovered path. In the first phase, success requires encountering and learning from failures, but how many is the right number? How fast should experiments be run? As in this example, the success of experimentation is far more difficult to assess than the success of execution.

Clearly, there are situations in which it is appropriate to measure performance against quality and efficiency standards. This is true when tasks are routine. However, employee rewards based primarily on indices measuring routine performance, such as accuracy and speed, can thwart efforts to innovate. Stated goals of increasing innovation are more effective when rewards promote experimentation rather than penalize failure. At Bank of America, for example, innovation was an espoused value. Leaders targeted a projected failure rate of 30 percent as suggestive of sufficient experimentation. However, few employees experimented with new ideas until management changed its reward system from traditional performance measures to those that rewarded innovation. Truly supporting innovation requires recognition that trying out innovative ideas will produce failures on the path to improvement.

Leaders need to align incentives and to offer resources to promote and facilitate effective learning. Supporting improvement requires understanding that mistakes are inevitable in uncertain and risky situations. Organizations must reward improvement rather than success, reward experimentation even when it results in failure, and publicize and reward speaking up about concerns and mistakes, so others can learn. Policies that reward compliance with specific targets or procedures encourage effort toward those measures but may thwart efforts toward innovation and experimentation.

Given the problematic nature of the relationship between learning and performance, to provide incentives for learning, performance measurement must examine learning, not just performance. Useful tools include surveys, questionnaires, and interviews to examine attitudes toward and depth of understanding regarding new ideas, knowledge, and ways of thinking. Process measures are also helpful. Direct observation is useful for assessing behavioral change due to new insights. Finally, performance measurement must consider improvement by measuring results over time. Groups that improve more over a fixed time frame or that take less time to improve must be learning faster than their peers.

Supporting improvement requires understanding that mistakes are inevitable in uncertain and risky situations.

Conclusions

This brief article calls attention to some of the challenges and tensions that exist when trying to improve team or organizational performance through proactive learning. We note several ways in which learning and performance in organizations can be at odds. Notably, when organizations engage in a new learning challenge, performance often suffers, or appears to suffer, in the short term. Struggling to acquire new skills or capabilities often takes a real, not just apparent, toll on short-term performance. Moreover, by revealing and analyzing their failures and mistakes — a critical aspect of learning — work groups may appear to be performing less well than they would otherwise.

The work reviewed here has elucidated the challenges of learning from failure in organizations, including the challenges of admitting errors and failures and production pressure that make it difficult to invest time in learning. These challenges are at least partially addressed by managerial efforts to create a climate of psychological safety and to promote inquiry. Leadership is thus essential to foster the mindset, group behaviors, and organizational investments needed to promote today’s learning and invest in tomorrow’s performance.

Amy C. Edmondson is the Novartis Professor of Leadership and Management and chair of the doctoral programs at Harvard Business School. Her research examines leadership influences on psychological safety, learning, collaboration, and innovation in teams and organizations.

Sara J. Singer, M. B. A., Ph. D., is assistant professor of Health Care Management and Policy at Harvard School of Public Health and an assistant in Health Policy in the Institute for Health Policy, Massachusetts General Hospital. Her research uses organizational safety, organizational learning, and leadership theories to understand and address the causes and consequences of errors and adverse events.

The post Confronting the Tension Between Learning and Performance appeared first on The Systems Thinker.

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

The Power of Culture

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

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

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

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

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

The Complexity Factor

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

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

Culture: Ties That Bind

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

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

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

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

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

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

The Practice of Systems Discovery

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

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

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

The Role of Leaders

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

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

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

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

The post Changing Organizational Culture from a Liability to an Asset appeared first on The Systems Thinker.

This process usually begins with the CEO. Pressured by shareholders’ demands or analysts’ expectations, top executives sacrifice their personal lives by working 70-hour work weeks. At the same time, they demand that everyone in the organization do the same, pressuring them to produce more with fewer resources. However, results do not necessarily follow. Instead, tension increases, and commitment, energy, and creativity all decline.

Executives justify sacrificing their souls because they believe that everything is secondary to the bottom line. However, this assumption is based on the erroneous belief that people need to work harder in order to produce better outcomes. This is not true. Working harder tends to produce more—but of the same. If companies want to increase their competitiveness, they need to constantly create new products and services, new strategies, new processes, and often a new organizational culture. As the cliché goes, they need to work smarter, not harder.

Feeding the Soul

But current working conditions don’t support working smarter. According to quality pioneer Edward Deming, our prevailing system of management is based on fear. Fear of failure, fear of being embarrassed, fear of not getting a promotion, or fear of getting fired. Fear is the dominant emotion—the main source of energy and the impetus to action.

But when human beings are in a state of fear, do they behave in innovative or habitual ways? Habitual, of course! When we’re afraid, we almost always revert to our most ingrained patterns of behavior. In fact, brain physiologists explain that the primitive part of the brain takes over—the limbic system, where our “fight or flight” programming resides.

Why does management by fear still persist? Most organizations are still designed based on what Douglas McGregor termed “Theory X”—the idea that employees are unreliable and uncommitted, and work merely to earn a paycheck. From this perspective, people need to be bullied or frightened into acting on behalf of the organization. “Theory Y,” however, offers another possibility—that employees are responsible adults who want to make a contribution. Based on this alternative mindset, it is possible to consider aspiration as a source of action—one that is far more effective than desperation ever could be.

Businesses can learn a lot from sports and the arts in this regard. Ask an athlete what usually happens when she mentally repeats “Can’t miss” or “Can’t fail” before or during a performance versus repeating “I’ll make it” or “I’ll get it.” Thinking about what you want to create works much better than thinking about what you want to avoid. Picasso pointed out that if you trace the history of any great piece of art, the crucial moment in its development inevitably came when the artist had the vision of what needed to be created. Why would business be different? Being able to articulate what deeply matters to us is a powerful source of energy. As the old saying goes, “Dreams feed the soul.”

Accessing the Soul

Visualizing what we want to create doesn’t mean escaping reality; it means being present in a new way. The martial arts offer an excellent example of handling challenges from a posture of creativity rather than fear. The essence of disciplines such as karate and aikido is to develop a capacity to be more and more quiet, centered, and relaxed in dangerous situations. Martial artists know that, by doing so, they can produce outstanding results.

During the last several years, the Society for Organizational Learning has sponsored a research project involving interviews with more than 150 leading scientists, artists, and government, business, and religious leaders. One of the conclusions reached by the researchers has been that the internal place from which a leader operates matters; in other words, the quality of consciousness determines the quality of performance.

If these ideas seem too abstract, take a moment to reflect on the best decisions you have made in your life, professionally or personally. Now remember where you were when you made those decisions. Were you in the office, feeling stressed or desperately grasping for an answer to your problems? Or were you taking a shower, driving quietly, or observing your kids? I wager it was the latter.

When Leonardo da Vinci was painting “The Last Supper,” the church commissioner was impatient for the painting to be completed and complained to the Duke that Leonardo occasionally took long breaks from his work. The commissioner argued, “If a gardener doesn’t take his hands off his scissors during the whole day, why does [da Vinci] need to leave his paintbrush?” But Leonardo understood that he needed incubation periods, away from the work, in order to produce his best. With humor, he replied to the Duke, “Great geniuses sometimes work better when they work less.”

Different fields of knowledge have alternative explanations for this phenomenon. Psychologists would say that our unconscious mind processes information, in quantity and speed, thousands and thousands of times more effectively than our conscious mind. When we turn off our conscious mind, we let the unconscious mind work better and the answer suddenly comes to us. Spiritual leaders would say that, in silencing our mind, we access our soul, which is our full potential and knows all.

Connecting Souls

Although individual performances are important, companies increasingly rely on decisions and actions taken by teams. Here, again, businesses can take lessons from the world of sports. High-performing sports teams sometimes find themselves “in the zone,” where they experience peak performance. Bill Russell, the star center of the 11-time world champion Boston Celtics, spoke of those special times:, “Every so often a Celtic game would heat up so that it became more than a physical or even a mental game, and would be magical. That feeling is very difficult to describe, and I certainly never talked about it when I was playing. When it happened, I could feel my play rise to a new level. It came rarely, and would last anywhere from five minutes to a whole quarter or more. … It would surround not only me and the other Celtics, but also the players on the other team, even the referees.”

In researching all kinds of high-performing teams—heart surgeons, firefighters, astronauts, trial lawyers, business teams, and others—Carl Larson of the University of Denver found the same phenomenon reported in different terms: the atmosphere of the room becomes “super-charged”; there seems to be a “group mind” or “collective wisdom”; team members experience the sensation of being “a conscious part of even a more conscious whole” and feel a “luminous transparency” between all the participants. David Bohm, the famous quantum physicist, once explained this experience to consultant Joseph Jaworski as “a single intelligence that works with people who are moving in a relationship with one another.”

If you want scientific proof that this “single mind” could exist, consider the experiment by Mexican neurophysiologist Jacobo Grinberg-Zylberbaum. Two people meditated together for a period of 20 minutes, aiming to feel each other’s presence. They then entered separate Faraday chambers (metallic enclosures that block all electromagnetic signals) while attempting to maintain their direct communication. One of the subjects was shown a flash of light that produced electrophysiological responses; the responses were measured by a machine. In about one in four cases, although no electromagnetic signals could have been transmitted between the two subjects, the brain of the person who hadn’t been exposed to the light showed electrical activity quite similar to that displayed in the first subject.

In my work as consultant, I have seen several groups experience this special kind of connection. Most of the time, the precipitating factor was that people talked openly and listened deeply—or, as I prefer to say, talked and listened from the heart. And as many ancient cultures believed, the heart leads directly to the soul.

Stop Giving Up, Start Using It

In modern society, we take for granted the existence of gravitational and magnetic fields. Executives and managers must also learn to recognize that every company produces its particular social field, created by people’s thoughts and emotions, relationships, and the organization’s physical space. This field is an invisible but powerful force that influences the quality of shortand long-term performance.

Giving up your soul doesn’t create a promising field and it doesn’t produce the best possible results, even over the short run. The alternative strategy: Start really using your soul—feeding, accessing, and connecting. By doing so, you will produce much better outcomes in all senses—financial and material, but also physical and spiritual. As Joseph Jaworski says, “Anyone who walks into a locker room of a championship team can feel the energy, the excitement, the mutual trust and the extraordinary sense of the possible.” Why can’t you feel the same when entering your office? It can be this way, as long as you bring your soul along for the ride.

Tácito Nobre is a senior consultant with Axialent (www.axialent.com).

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