Systems Thinking [PDF]

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This is the first of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 1

An Introduction to the Systems Approach By H. William Dettmer There is no question that in our age there is a good deal of turmoil about the manner in which society is run. Probably at no point in the history of man has there been so much discussion about the rights and wrongs of the policy makers…[Citizens have] begun to suspect that the people who make the major decisions that affect our lives don't know what they are doing… They don't know what they are doing simply because they have no adequate basis to judge the effects of their decisions. To many it must seem that we live in an age of moronic decision making. —C. West Churchman The Systems Approach [Introduction] [1:vi] Sounds like Churchman is talking about us today, doesn't it? The preceding quotation comes from the introduction to his seminal book on systems thinking, The Systems Approach, written in 1968. That's sad testimony to the fact that few decision makers in the world have learned much about complex systems in the last 37 years. In the immortal words of Winston Churchill, “Man will occasionally stumble over the truth, but usually he just picks himself up and continues on.” We've been “continuing on” for four decades. It's time to go back and revisit that truth we stumbled over in 1968. We can snicker at the fact that life seemed so much simpler then. The world has “gotten smaller” as travel, communication, the information age, and the Internet have combined to connect people and societies as never before. As economies have evolved from regional to national to transnational to global, our organizations have grown in size and complexity. It is nearly impossible for the people running them to fully understand what goes on “where the rubber meets the road” in nations, governments, and companies. Analysis versus Synthesis Since the turn of the century (the 20th century, that is), the accepted approach to dealing with increasing complexity is to try to reduce it into manageable “bites” and address them in isolation. This approach is referred to as analysis. We analyze a complex situation or issue by trying to break it down into component pieces and consider each in isolation from the others. This kind of thinking has its roots in analytic geometry, where one basic axiom is that the whole is equal to the sum of its parts. Think about that for a moment. The underlying assumption behind this conclusion is that all of the parts are essentially independent of one another. But although this mathematical thinking might apply to bricks and other inanimate objects, it fails when applied to dynamic, homeostatic, or cybernetic systems [2:28-31]—which generally include any organic systems, or those where human beings have a role. And unfortunately such systems are the ones that exert the most influence on our lives. We see the failure of the analytical approach all the time: The Rohr Corporation's Riverside, California, plant recorded a 55% increase in profits in 1996. Great news, if all you focus on is short-term profits. When you look at the larger system, you see the reason for that increase is better “efficiency” (meaning cost cutting) temporarily had a greater impact than the 3% decline in sales. Or, as the corporate treasurer enthusiastically observed, “Costs have come down quicker than our revenue has decreased.” [3:G-1]. (I'm sure the 3,500 people laid off at Riverside by Rohr in the © Copyright Goal Systems International, 2006

preceding few years are immensely gratified to know that!) The Rohr story is a classic example of selfdelusion by analytical thinking. If an analytical approach to management is counter-productive, what should we be doing instead? A holistic, or whole system approach is considerably better suited to the kinds of complex organizations we usually encounter today. What's the difference between an analytical and a systems approach? The systems approach represents synthesis-thinking with an integrated perspective about the whole enterprise. Before one can synthesize, one must first analyze. In other words, we first take the system apart (usually conceptually-it's not often practical to physically deconstruct the systems we normally work with) to understand the functions of each link or component. Once the components are fully understood in isolation, we study the interactions among components to understand how the system as a whole functions. Understanding these interactions requires integrating the components into something larger and more capable than the components represent alone. In the fourth installment of this series, we'll examine analysis and synthesis in more detail. And in the ninth installment, we'll consider some tools to help us visualize and manage a system as an integrated whole. A Paradigm Shift In 1962, Thomas Kuhn introduced the word paradigm [4:x] to describe a pattern of knowledge, rules, assumptions, or thinking. The difference between an analytical approach to management and a synthesis approach might easily be characterized as a paradigm shift, or a significant change in the “rules of the game.” Paradigm shifts can be either evolutionary (i.e., a slow pace of change) or revolutionary-dramatic, short-term, and immediate high impact. The rise to primacy of air travel over ships was an evolutionary change. The advent of the atomic bomb was a revolutionary shift-almost overnight-in the way we looked at national defense. The shift from analysis to synthesis in the way we consider systems is assuredly an evolutionary paradigm shift. It's been under way for nearly 40 years. It started in engineering, where synthesis has been the source of creativity and innovation. Even now, an Internet search on “analysis versus synthesis” will turn up a preponderance of engineering references. But since Churchman's work, the concept of synthesis has begun a transition from the purely technical arenas to the sociological, ecological, environmental, and philosophical. So far, this transition seems to have been neither consistent nor continuous. In fact in some respects, as our world has become more complex, many leaders and managers seem to have retreated even more deeply into analytical thinking: “If our world is getting more difficult to manage, we need to analyze the situation more. We need more detailed information!” (Who was is that said “the definition of insanity is doing the same thing over and over, and expecting a different result”?) The Importance of Theory Theory can be a slippery word. Many (most?) people outside the science community don't really understand the meaning of the word. I frequently hear executives say, “I don't have time to worry about theory-I'm too busy dealing with the real world.” A similar comment one frequently hears is, “Well, that's only a theory.” Both statements indicate an erroneous perception that theory is no more than speculation, or a best guess. Nothing could be farther from the truth. W. Edwards Deming, one of the people who taught the Japanese the concepts of quality that they subsequently used to hammer the west economically for the last quarter of the 20th century, said this about theory: Experience alone, without theory, teaches management nothing about what to do to improve quality and competitive position, nor how to do it…Experience will answer a question, and a question comes from theory. [5:19]

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Without theory, there is no learning…Theory is a window into the world. Theory leads to prediction. Without prediction, examples and experience teach nothing. To copy an example of success, without understanding it with the aid of theory, may lead to disaster. [6:106]

Deming was not the first or only system thinker, but because of his impact on Japanese business, he happens to be one that many people pay attention to. Not long before he died, Deming proposed what he called his system of profound knowledge. [6: 94-118] Successful transformation of any organization, Deming suggested, depending on a thorough understanding of four components of profound knowledge. These components include appreciation for a system, knowledge about variation, the theory of knowledge, and an understanding of psychology. Grossly oversimplified, Deming was saying that if you don't see your environment as a system of interdependent parts, you don't understand the nature of variation within and among those parts, you have no clue about why or how you know what you know about your system, and you don't comprehend the psychology that drives the humans that make up your system, you haven't got a chance success-except by dumb luck. (And who would be comfortable depending on that?) In the sixth installment of this series, we'll see how Deming's idea of profound knowledge will help us understand and manage our systems as systems. The Scientific Method All of these concepts we've examined so far-analysis and synthesis, the importance of theory, and Deming's system of profound knowledge-represent the underlying foundation for an effective systems approach to management. But they are no more than a foundation without a methodology to follow. The scientific method is an excellent transition from foundation to practice. The scientific method begins with informal observation of discrete phenomena or events. The person practicing the method, sensing a connection of some kind among the events and using inductive logic, generalizes a hypothesis to explain the cause-and-effect relationship between them. This hypothesis is then tested either by experimentation or more intensive observation to confirm or refute the hypothesis. If the hypothesis is invalidated, it's usually “thrown away.” On the other hand, if there seems to be some confirmation in the experiments or observations, then the hypothesis takes on the characteristics of a theory: a proposition with some evidence to support it. As time goes on and more data on the subject is accumulated, some aspects of the theory may be reinforced, and some data points that don't fit the theory may be discovered. If these data can't be adequately explained in light of the theory or accepted knowledge, then the theory may be abandoned. However, it is more likely that the theory will be modified to fit the existence of the outlying data points. In this way, the theory is improved, and our knowledge of reality is enriched. In other words, we have learned something! This learning is at the heart of Peter Senge's classic management book, The Fifth Discipline. [7] The importance of learning in any endeavor cannot be overemphasized. George Santayana once said, “Those who cannot learn from history are doomed to repeat it.” This is another way of saying “Learn from your mistakes, or you'll have to do them over again until you get it right.” (Remember the definition of insanity, mentioned earlier?) Summary There is a paradigm shift underway, from analytical thinking to systems thinking. In time, it will transform the way business is done, in commercial enterprise, government, and the not-for-profit sector. You can ride the leading edge of this wave, or you can swim like the devil to try to catch up with it after it's passed. Over the next twelve months, we'll see how you can do the former, if you're so inclined. We'll see how theory and sound methods will contribute to the challenge of learning more about our systems, how they function, and how to get improvement efforts right the first time. © Copyright Goal Systems International, 2006

Winners make things happen. Losers let things happen, or watch things happen and wonder what happened. —Unknown

Endnotes 1. Churchman, C. West. The Systems Approach. New York: Dell Publishing Co., 1968. 2. Athey, Thomas H. The Systematic Systems Approach. New Jersey: Prentice-Hall, 1982. 3. “Rohr reports big increase in earnings,” The Riverside (California) Press-Enterprise, May 22, 1996, p.G-1 4. Kuhn, Thomas S., The Structure of Scientific Revolutions. Chicago, IL: University of Chicago Press, 1962. 5. Deming, W. Edwards. Out of the Crisis. Cambridge, MA: MIT Center for Advanced Engineering Study, 1986. 6. ______. The New Economics for Industry, Government, Education. Cambridge, MA: MIT Center for Advanced Engineering Study, 1993. 7. Senge, Peter. The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Doubleday, 1990.

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This is the second of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 2

Business and the Blitzkrieg H. William Dettmer It would be foolish, however, to disguise the gravity of the hour. It would be still more foolish to lose heart and courage or to suppose that well-trained, well-equipped armies numbering three or four millions of men can be overcome in the space of a few weeks, or even months, by a scoop or raid of mechanized vehicles, however formidable. We may look with confidence to the stabilization of the Front in France… —Winston Churchill, May 19, 1940 [1:17-18] Prophetic words—too bad they were completely wrong. Thirty-two days later, in the same railroad car, at the same place where Germany signed an unconditional surrender in 1918, Hitler accepted the surrender of France. During World War II, no battle group struck more fear into the hearts of its opponents than the German panzer corps. In 1939-40, fast-moving tank divisions, operating in independent, flexible, small groups, swept across Poland in 26 days. The Baltic States fell in less than a week, Denmark in four hours, and France in five weeks. [2] British forces on the continent were pushed back against the sea at Dunkirk. The only reason they survived to be evacuated across the English Channel (by small boat flotilla) was that the Germans inexplicably decided to stop their advance. Later, in 1942, Rommel's panzers similarly ran the north coast of Africa from Egypt to Morocco, devastating British forces. The British and French armies, in particular, were standing, well-trained professional armies. Why, then, were the German panzer corps so effective while their opponents acted so confused? Learning from Experience The difference: The Germans learned more from their experience in World War I than the Allies (including the Americans) did. While the British, French, and Americans focused on deploying technology improvements, they pretty much prepared mentally to re-fight the direct, slow-moving frontal engagements of “the war to end all wars.” (Too bad it really wasn't that!) Spearheaded by the creative Prussian military genius, Heinz Guderian, the German Army developed the concept of maneuver warfare we know as the blitzkrieg - literally, “lightning war”—and it caught the world totally by surprise in 1939. [2] For decades, businesses throughout the world have operated much the same way the French and British did in 1939: they're fighting the last engagement, albeit with newer technology, such as the Internet, ebusiness, and sophisticated information systems such as Enterprise Resource Planning (ERP). But their thinking, and the behavior that springs from it, remains the same as it always has been. However, as in 1939, times have changed. While the world has “grown smaller,” it is in many respects a less stable place now than it was in the 1930s. This is especially true of economics and politics. Maneuver Warfare

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German tacticians created the blitzkrieg to defeat discrete, known opponents through speed, flexibility, agility, and surprise--a concept that can be generally characterized as maneuver warfare. It has long been accepted that these same attributes of maneuver warfare can be translated into other domains, such as business. But whereas the military application of maneuver warfare is aimed at discrete, specific opponents, its application to business is may be less distinct. Yes, maneuver tactics in business can be particularly effective in head-to-head competition between specific competitors. But their greater value may be in their ability to help a business respond rapidly to a volatile, ever-changing operating environment. In other words, the concepts of maneuver warfare can help organizations deal with the uncertainty of a world that, more than ever before, is not standing still. Moreover, by understanding maneuver warfare as a potential strategic advantage, companies can develop a level of comfort embracing what Peter Drucker has called “discontinuous change”—even seeking it out or, better yet, leading it! Our real opponent in business is the uncertainty of a volatile, constantly changing environment, as much as it is any particular competitor. In such circumstances, is the ability to change directions (and actions) “on a dime” any less important just because we're responding to events, rather than opponents? There's an old saying: “When life hands you lemons, make lemonade.” Sound simple enough, but the ability to make this kind of adjustment on short notice demands the flexibility and agility—the responsiveness—that maneuver warfare offers. But it's one thing to say this; it's quite another to apply it. So it's appropriate to examine the philosophical foundation on which the blitzkrieg and its success were built. The Conceptual Foundation of Blitzkrieg Tactics The ability of the German panzer divisions to sow such dramatic confusion and fear among their adversaries depended on four interrelated concepts that were impressed into every member of those units: einheit, fingerspitzengefühl, auftragstaktik, and schwerpunkt. [1:51-59] Okay, so these words are a real mouthful for those not fluent in German. Let's take them one at a time. Einheit. (pronounced “aye'n-height”). The literal meaning of the word is mutual trust. It's the sense of well being a member of a cohesive team realizes from knowing that he or she can depend utterly on fellow team members—superiors, subordinates, and contemporaries alike—for help, support, or just faithfully doing what's expected of them. Mutual trust can't be mandated or imposed. It develops over time—it's earned, by all parties to the mutuality, and that doesn't happen overnight. Einheit is more than simple camaraderie, though it includes that, too. It's knowing that other team members will be in the right place at the right time to do whatever the situation dictates in fulfilling their responsibilities for mission accomplishment. Fingersptizengefühl. (pronounced “finger-SHPITZ-in-geh-fyool”) Literally “fingertip feel,” or “touch,” it really implies intuitive skill. This is the consummate skill in doing something that comes from having done it so many times, or for so long, that, as the song of the same name goes, “nobody does it better.” It's the kind of expertise that world-class musicians such as Yitzhak Perlman or Yoyo Ma have. They don't need to read the music and consciously translate it to hand movements; the music just flows from their heads, where they hear it in all its detail, through their fingertips to the instrument—instinctively and inherently correct the first time. Fingerspitzengefühl is inextricably tied to einheit. As a team works together over time, they become better at what they do, both individually and collectively. This breeds confidence in one another, which is fundamental to realizing mutual trust. Who would you trust more: a world-class performer with whom you'd worked regularly, or a newcomer you've never seen before and know only by their résumé or press notices? © Copyright Goal Systems International, 2006

Auftragstaktik. (pronounced “OWF-trags-TACtic”) This is a virtual or implied contract between superior and subordinate. Simply put, the superior tacitly avoids ordering a subordinate to do something. He or she asks the subordinate to accept the responsibility for getting it done. Einheit and fingerspitzengefühl figure prominently into the auftragstaktik. Because the team has worked together repeatedly for a long time, they have developed an intimate knowledge and respect for each other's skills and capabilities. Superiors know what subordinates are capable of and where their limitations lie. For their part of the contract, superiors avoid asking subordinates to take on responsibilities beyond their capabilities without having a valid, justifiable reason. For their part of the contract, if they accept the superior's charter, subordinates agree to accomplish what has been asked of them, applying the steel selfdiscipline that comes of fingerspitzengefühl and every last ounce of their effort to get the task accomplished as the superior expects it to be done. The subordinate implicitly trusts the superior not to ask more of him or her than they are capable of doing. The superior implicitly trust the subordinate to deliver what he or she has agreed to do without continually having to be checked or prodded. Schwerpunkt. (pronounced “SHVER-punked”) Literally, “hard or difficult point,” the real meaning is more like center of gravity, or focus point-the place where the majority of effort is directed. For the German panzers, this was the target of the main thrust of combat efforts. In the practice of constraint management [3], this is the system constraint. Two underlying assumptions are inherent in the concept of schwerpunkt. The first is that in a complex operation, some parts of the organization—the ones most directly responsible for the schwerpunkt—are more critical to immediate success than others. But going hand in hand with the schwerpunkt is the idea of nebenpunkt, or essential supporting activities. The classic (and most successful) example of the military application of the blitzkrieg—and schwerpunkt and nebenpunkt as well—is the German attack on France in 1940 through the Ardennes Forest. With French and Belgian troops massed in the Belgian plains against German Army Group A, German Army Group B moved quickly through the narrow roads of the Ardennes toward the city of Sedan. Thinking this approach improbable, the French defended Sedan with third-rate troops and reserves. As the Germans slashed through the Ardennes, the French defenders broke ranks and ran, even before the panzers completed their crossing of the Meuse River. Army Group B wheeled around to the north and enveloped the French and Belgian armies from the rear. (Turn this whole layout 90 degrees clockwise, and you essentially have General Schwarzkopf's “left hook” maneuver with the VII and XVIII Corps in Operation Desert Storm.) In the conquest of France, the schwerpunkt was the Ardennes penetration. The nebenpunkt was the supporting role played by Army Group A, whose primary function was to draw the attention of French and Belgian forces (which it did most successfully) while Army Group B circled around from behind. We'll examine this concept of schwerpunkt and nebenpunkt more in the fourth installment of this series. Leading by Intent The immediate benefit in einheit, fingerspitzengefühl, auftragstaktik, and schwerpunkt accrues primarily to the senior commander (the CEO, if you will). Rather than having to specify in detail everything he wants each subordinate to do, the commander can lead by intent. The leader of a blitzkrieg-oriented organization can describe the desired outcome and assign the resources to trusted team members, who, by virtue of their mutual trust, intuitive skill, and complete understanding and acceptance of the mission contract, can be utterly depended on to deliver the results. Subordinates are comfortable exercising their own initiative in their pursuit of the mission, and superiors are completely comfortable letting them do so. Summary What do the blitzkrieg and its underlying concepts have to do with a systems approach to management? As we saw in the first installment, the increasing complexity and size of the economic and political organizations in our world make an authoritarian control model impractical. No leader of such a system can possibly keep tabs on everything. In as unstable and dynamic an environment as we live in today, © Copyright Goal Systems International, 2006

changes are demanded faster than their impacts can be analyzed—sometimes even faster than information about the need to change can be passed. Success depends on responsiveness and agility, which in turn depend on the independence of team members to act without constantly requiring approval. Such independence depends on their willingness to take initiative, which in turn rests on a climate of mutual trust (einheit), intuitive skill and capability (fingerspitzengefühl), the confidence and assurance of an implied mission contract (auftragstaktik), and an unswerving focus on the most important effort (schwerpunkt). In the future, all organizations will have to become faster, more responsive, more agile, and more unpredictable (to their competitors) or risk being relegated to “loser” status. And we know what losers do—they let things happen, or watch things happen and wonder what happened! We don't want that to be us, do we? Tactical agility is the ability of a friendly force to react faster than the enemy. It is essential to seizing, retaining, and exploiting the initiative. Agility is mental and physical. Agile commanders quickly comprehend unfamiliar situations, creatively apply doctrine, and make timely decisions. [4] Endnotes 1. Richards, Chet. Certain to Win. Xlibris Corporation, 2004. 2. Macksey, Kenneth. Guderian: Creator of the Blitzkrieg. New York: Stein and Day Publishers. 1975. 3. Goldratt, E.M. The Haystack Syndrome: Sifting Information from the Data Ocean. Great Barrington, MA: The North River Press, 1990. 4. U.S. Army Field Manual 3-0, Operations

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This is the third of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 3

Destruction and Creation: Analysis and Synthesis H. William Dettmer Let us not lose sight of the fact that the etymological root of the word analysis is “anal.” —Unknown The word “analysis” has been overused, to the point becoming a cliché. We have environmental analysis, business analysis, financial analysis, cost-benefit analysis, metallurgical analysis, spectrographic analysis, and systems analysis (which has come to refer too narrowly to information systems). Even these are only a partial list. We're virtually awash in analyses. The concept of analysis is deeply embedded in our lives, but where did this concept come from? And why should you care about it? Since the Renaissance, analysis has been the foundation of problem solving. But as we move from the 20th into the 21st century, it's becoming clearer that analysis alone is an incomplete, suboptimal way of understanding and functioning in our world. Worse, without the next step—synthesis—practicing analysis alone is a dangerous way of operating. Analysis Equals Reductionism What, exactly, is analysis? Simply put, it's a process of reducing a complex whole, or system, into its component parts—manageable “bites”, if you will—and dealing with those parts in isolation. Take an automobile, for example. The engine is a complex system made up of many components. If the engine runs roughly, the analysis approach is to mentally “deconstruct” the engine into carburetion (or fuel injection), fuel supply, fuel transport system, and combustion chamber (cylinders). The person repairing the engine “analyzes” the situation: he or she examines and “tweaks” each of these parts individually. Fuel injectors are checked, and perhaps cleaned. The fuel pump is checked for proper operation and the filter replaced. Spark plugs are cleaned or replaced, and timing may be adjusted. Then the components are rejoined again. Often the car is returned to the owner with all these things done (accompanied by a substantial bill!), and the owner finds that the engine doesn't run substantially more smoothly. The reason may be that the repair person failed to “synthesize” the system again—to ensure that all the adjusted components actually function well together. The assumption underlying the concept of analysis is reductionism, the idea that all the reality of our ultimate experience can be reduced to indivisible parts. [1:9] From the 15th through the 19th centuries, a reductionist philosophy predominated all scientific inquiry and the expansion of human knowledge. It was assumed that if a phenomenon was deconstructed sufficiently and the parts examined, understanding of the phenomenon was assured. In fact, this thinking is embodied in one of the basic axioms of analytic geometry: the whole is equal to the sum of its parts. But a funny thing happens with complex systems: interdependence among the parts rears its ugly head—what some have called synergy comes into play! The reductionist, or analytic approach reached its culmination with the concept of scientific management in the early 20th century. The father of scientific management, Frederick W. Taylor broke down (analyzed) complex industrial activities into component tasks, sought to make those tasks more efficient, and “glued” the more efficient components back together again. The expected result was a more efficient, effective system. Taylor's disciples, including Frank and Lillian Gilbreth and Henry Gantt, extended and refined Taylor's analytic approach to management well into the 1950s essentially unchanged. © Copyright Goal Systems International, 2006

Deficiencies in Analysis Because early organizational (specifically, industrial) systems were simple, the analytic approach was much more effective than the alternative—which was more or less ad hoc. But as the complexity of organizational systems increased to the point where no one person could have complete visibility on all components simultaneously, the “cracks in the plaster” of the analytic approach began to show. Analysis could no longer explain the difference between the whole-equals-the-sum-of-the-parts and observed results that were disproportionately higher (or lower) than expected. In other words, the success of an analytical approach “topped out.” The problem is that parts of systems have properties that they lose when separated from the whole system, and the whole system has essential properties that none of its parts does. Ackoff provided an effective analogy: The eye detached from the body can't see, yet the human body as a whole can run, play piano, read, write, and do many other things that none of its parts can do by themselves. [1:16] What does all this mean? Basically, that the essential properties (and thus the ultimate performance) of a system derives from the interactions of its parts. And these essential properties are lost when the system is taken apart. In other words, a system is a whole that cannot be understood by analysis alone. Synthesis: The Second Half of the Equation What, then, is the key to resolving this deficiency? The answer is synthesis. Simply put, synthesis is amounts to putting things together. Sometimes these are pieces known to be part of a system, for example, the rebuilding of an automobile engine from its disassembled parts. In other cases, it may be the combination of things never thought of as “going together” before, to create new concepts, solutions, or realities. Synthesis is not a new idea; it's as old as analysis. As Ackoff has pointed out, Aristotle dealt with both. [1:17] But in our current world of complex systems, synthesis becomes more important than most people realize. Analysis and synthesis are complimentary processes; though they can be considered separately, they can't really be separated. Systems thinking doesn't deny the value of analysis, however. Rather, it emphasizes the fact that there is another side to the system equation that has, until recently, been ignored or overlooked. In 1976, John R. Boyd, a retired U.S. Air Force colonel whose chief claims to fame had been his development of the energy-maneuverability theory and the latest-generation fighters (the F-15 and F-16), tackled the issue of analysis versus synthesis in a paper entitled Destruction and Creation. [3] The core of Boyd's argument was that creativity was essentially the outcome of a process of analysis and synthesis, which he referred to as destruction and creation. Boyd suggested that new ideas and breakthrough solutions to particularly challenging problems resulted from mentally deconstructing multiple known existing concepts or processes, then selectively reassembling key elements to form a completely new concept—thus, the characterization as “destruction and creation.” Creativity and Synthesis: Building Snowmobiles. In the mid-1980s, Boyd offered an analogy to illustrate this process of analysis (destruction) and synthesis (creation). [4] He challenged people to think of four seemingly unrelated mechanical systems: a set of snow skis, a boat with an outboard motor, a bicycle, and a military tank or tread-type earthmover. Each of these is a discrete device with its own purpose. Boyd suggested mentally deconstructing these into their component parts and selectively re-combining parts from each to for a new “whole” that would not otherwise exist. He discarded the bindings and poles from the snow-skis, retaining only the “boards.” From the outboard boat, he retained only the gasoline-powered motor; from the bicycle, the handlebars, and from the earthmover, a tread. He recombined these concepts (the functions of the different parts) to form…a snowmobile! © Copyright Goal Systems International, 2006

The snowmobile concept became Boyd's short-hand analogy for characterizing the domain of competition. He separated people into two types: those who could conceive and build snowmobiles, and those who couldn't: [5:156] “A loser is someone (individual or group) who cannot build snowmobiles when facing uncertainty and unpredictable change; whereas a winner is someone who can build snowmobiles and employ them in appropriate fashion, when facing uncertainty and unpredictable change.” [5:182] Hand in hand with being able to build snowmobiles, Boyd suggested, is adaptability—the capability to respond to a situation with variety and rapidity. Variety is an outgrowth of analysis and synthesis. Rapidity implies the ability to analyze and synthesize quickly. Paradigms Let's briefly consider a concept seemingly unrelated to Boyd's destruction-and-creation process: the idea of paradigms. The term was coined by Thomas Kuhn in 1962, in his seminal book, The Structure of Scientific Revolutions. [6:x] Kuhn's original treatise dealt with the evolution of scientific theories, particularly the physical sciences. Through the later work of others, primarily Joel Barker [2], it has since come to be applied more widely (and broadly) to the realms of business management, societal development, and social interaction. Grossly oversimplified, a paradigm is a model, a set or rules, or a pattern of behavior that defines current, accepted (and acceptable) thinking about a domain or subject. For example, the game of baseball is a paradigm operating within the confines of a stadium and the organizational structures behind the competing teams. Behavior of those within this paradigm is largely prescribed within relatively well defined boundaries. Concepts associated with other paradigms (e.g., football, tennis, or aviation) are excluded from baseball “thinking.” Likewise, at the higher economic and political levels, capitalism and democracy are also paradigms. Thinking within these paradigms is somewhat constrained by the “traditional,” the accepted, or common practice. Kuhn introduced the notion that paradigms change over time, as more and newer information is discovered. In most cases, this change is evolutionary, rather than revolutionary. As Barker has pointed out, however, paradigm “shifts” can often be dramatic. The Internet and its many and varied uses is an example of such a rapid paradigm shift. A key characteristic of paradigms and their associated shifts is the idea that they naturally evolve or “happen”—they're not consciously directed. Summary: Our OWN Synthesis To summarize what we've seen so far, let's do a little “destruction-and-creation” of our own. Ackoff, Churchman, and other system thinkers maintain that the widespread current practice of analyzing systems and issues alone—that is, breaking them down into their component parts and maximizing performance of the discrete parts—is a flawed practice, because it ignores the central role of interdependencies. Kuhn and Barker suggest that the rules of the “meta-game” change over time, sometimes with dramatic shifts that must be discerned and accommodated. Failure to do so can leave one “behind the power curve.” That's an aviation term implying that the pilot has allowed the aircraft enter a condition where much more power is required just to maintain or arrest a deteriorating flight condition. Or, in management terms, “Have you seen them? Which way did they go? I must be after them, for I am their leader!”

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And finally, Boyd maintains that the kind of destruction-and-creation process (analysis and synthesis, in Ackoff's terms) he recommends produces the ability to dictate rules and results of an engagement. The people and organizations that become really good at doing this can achieve a much greater degree of influence over their environment. (Boyd referred to this as “improving their capacity for independent action.” [3] So, what does our “snowmobile” look like? If paradigms govern conventional thinking about how things happen, or must be done, and if our organizations are arrangements of systems, sub-systems, and metasystems that can't be effectively managed analytically, then the application of a conscious, pro-active method of destruction-and-creation (analysis and synthesis),systemically applied, can put practitioners of such methods at a tactical advantage over competitors. It can also keep them ahead of the environmental changes that evolve over time—and perhaps be in a position to drive or lead revolutionary paradigm shifts. Which position would you rather be in: chasing after a changing environment, or leading the change? In our next installment, we'll examine the O-O-D-A loop, a prescriptive approach to applying analysis and synthesis to secure the “high ground”—Boyd's improved capacity for independent action—in our chosen fields. Endnotes 1. Ackoff, Russell L. Ackoff's Best: His Classic Writings on Management. New York: John Wiley & Sons, 1999. 2. Barker, Joel. (http://www.joelbarker.com) 3. Boyd, John R. Destruction and Creation. An unpublished paper. (http://www.goalsys.com/id17.htm) 4. Boyd, John R. “Revelation,” part of the August 1987 version of the larger unpublished briefing, A Discourse on Winning and Losing. Cited in Hammond, Grant T., The Mind of War: John Boyd and American Security, Washington, D.C.: The Smithsonian Institution Press, 2001, p.182. 5. Hammond, Grant T. The Mind of War: John Boyd and American Security. Washington, D.C.:The Smithsonian Institution Press, 2001. 6. Kuhn, Thomas S. The Structure of Scientific Revolutions. Chicago: The University of Chicago Press, 1962.

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This is the fourth of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 4

Operationalizing Sun Tzu: The O-O-D-A Loop H. William Dettmer Those who win every battle are not really skillful-those who render others' armies helpless without fighting are the best of all. —Sun Tzu, The Art of War [1:67] By now most people have heard of the ancient Chinese general, Sun Tzu, and his writings about military strategy called The Art of War. Sun Tzu lived about 2,400 years ago. What many may not realize, however, is that The Art of War is a compendium of cogent military thought that has been amplified and expanded upon through the 12th century AD by other skillful Chinese generals—“the best of Chinese military genius”, one might say. Somewhat fewer people (but still a significant number) are aware that principles articulated in The Art of War can be translated to the domain of business. Some business schools even require students to read The Art of War as part of their curriculum. However, though they may have done such required reading, very few business students of Sun Tzu are really adept at translating those precepts to practice. Some authors (McNeilly, for one) have done so and written about it. [2] Clearly, there are parallels between military engagements and business, or, for that matter, with competitive sports, or other comparable activities where winning or losing (however one defines those) is possible. The principles in The Art of War can be effectively applied to such situations, whether the opponent is a specific adversary or even just an unforgiving environment itself. The Art of War is replete with useful information, both strategic and tactical—too much to analyze at length here. That's not the purpose of this installment in any event. For our purpose—showing how to make that application leap that so many haven't been able to do—it's sufficient to select a few of Sun Tzu's key principles. Here are the ones we'll address: 1. If you know others and know yourself, you will not be imperiled in a hundred battles…if you do not know others and do not know yourself, you will be imperiled in every single battle. [1:82] This principle addresses the importance of understanding your own system-its capabilities, needs, objectives, and values-as well as those of your opponents. 2. Unless you know the mountains and forests, the defiles and impasses, and the lay of the marshes and swamps, you cannot maneuver with an armed force. [1:116] This principle emphasizes the need to fully understand the external environment in which you—and your adversaries—operate in. In business, this is more than just the market conditions or the regulatory environment. It includes the political and cultural environment as well. 3. I have heard of military operations that were clumsy but swift, but I have never seen one that was skillful and lasted a long time. It is never beneficial to have [an] operation continue for a long time. [1:58] In this observation, Sun Tzu points out the importance of speed in commencing and concluding operations and activities—of not allowing things to drag on. © Copyright Goal Systems International, 2006

4. Act after having made assessments. The one who first knows the measures of far and near wins. [1:119] The emphasis here is on making assessments. This is another way of saying “synthesize all your information into a clear picture of what is going on and where you stand in the situation; then act.” (presumably with the speed advised in 3, above!) 5. Generals who know all possible adaptations to take advantage of the ground know how to use military forces. If generals do not know how to adapt advantageously, even if they know the lay of the land they cannot take advantage of it. [1:126] 6. Adaptation means not clinging to fixed methods, but changing appropriately according to events, acting as is suitable. [Zhang Yu] [1:125] 7. A military force has no constant formation, water has no constant shape: the ability to gain victory by changing and adapting according to the opponent is called genius. [1:113] These three precepts are all about flexibility and the capability to adjust (or adapt) to new situations— again, quickly. 8. In battle, confrontation is done directly, victory is gained by surprise. [1:94] Here Sun Tzu makes the point that the most visible or obvious engagement is not where war is actually won. In other words, the direct engagement is no more than a way of fixing the adversary's attention while the decisive engagement is concluded at a point where the enemy is weak-and not as well prepared. In other words, “Hit `em where they ain't.” The O-O-D-A Loop John Boyd, a retired Air Force colonel whose concept of destruction and creation we examined in the last installment, conceived a four-step prescription to guide the prosecution of military operations to swift, ultimate victory. Boyd called this prescription the O-O-D-A loop. And in the same way that Sun Tzu's principles are applicable to business operations, so too is Boyd's O-O-D-A loop. Moreover, the O-O-D-A loop provides highly focused guidance for effectively applying the specific Art of War principles cited above. It can be considered a command-and-control loop. [3:165] “O-O-D-A” is an acronym that stands for observe, orient, decide, and act. These are sequential activities that guide leaders to effective decisions. The act step that culminates this process ultimately produces changes in the environment that merit a new, subsequent round of observations, followed by a second cycle of orientation, decision, and action. Boyd suggested that individuals or groups that could cycle through these four steps faster than their adversaries had a tactical advantage. To the extent that they could execute the cycle two or more times faster than their opponents could complete one, they would actually increase the opposition's confusion about the competitive situation to such a degree that the opponent's efforts might totally collapse. The accompanying figure provides a detailed picture of the OO-D-A loop. It's worth examining these steps in somewhat more detail. Observe Observation, the first step in the O-O-D-A loop, is a search for information. The information that should be sought is, first and foremost, the nature of unfolding circumstances-the tactical situation. Only slightly less urgent is what Boyd called “outside information.” This could include the environment; the behavior and tendencies of oneself and one's opponents; the physical, mental, and moral situation; and potential © Copyright Goal Systems International, 2006

allies and other opponents. [4:62] It must be emphasized that this is not a passive step-it requires a concerted, active effort to seek out all the information possible, by whatever means available. Moreover, bad news is the only kind that will do you any good. [4:63] What you're looking for—what you can best capitalize on—are data that don't fit with your current orientation, or worldview (and especially the worldview of your opponent). It is these “mismatches” that offer the potential for learning something that your adversaries don't know, thereby creating a tactical advantage that you can exploit. Orient Orient is the “big O” in the O-O-D-A loop, as you can see from the complexity of that part of the illustration above. Notice that there are three arrows leading out of the orient block, but only one leading in, reinforcing the notion that our orientation to the world shapes the decisions we make, the actions we take, and what we choose to observe-what we look for-in the world around us. Our orientation is a synthesis of multiple contributions, including cultural traditions, previous experiences, genetic heritage, and new information based on unfolding circumstances. These contributions are then analyzed and synthesized (remember the snowmobile analogy from the last installment?) into a new, updated picture of reality—a worldview. To the extent that a tactician or strategist is able to synthesize a more accurate picture of reality than his or her opponent, the quality of decisions and the effectiveness of actions improve, sometimes dramatically. To the extent that the tactician/strategist can deny that accurate picture to the adversary, the quality of the opponent's decisions and the effectiveness of his actions deteriorate. Boyd referred to this analysis-and-synthesis process as “many-sided, implicit cross-referencing.” [4:62] It's orientation, however, that drives everything else. The faster we can orient ourselves, the greater the congruence with objective reality that we can make our orientation, the better and more effective our observations, decisions, and actions will be. Decide In concept, this is an explicit step, meaning a discrete, conscious activity following hard on orientation. However, Boyd also realized that intuitive understanding of the situation and one's own capabilities (the fingerspitzengefühl discussed in our first installment) makes the decision step implicit, rather than explicit. This is a highly desirable situation, because it speeds the cycle time of the O-O-D-A loop. As early as the 17th century, the quintessential samurai, Musashi, emphasized the need to practice incessantly until this fingerspitzengefühl (not Musashi's word, obviously!) made the sword an extension of the warrior's arm and action instinctive, without having to think about it. In other words, implicit decision and action. Act The act step is largely self-evident. Action is the whole reason for going through the O-O-D steps in the first place. But it's crucial to keep in mind that the very action we attempt to execute will, itself, influence the environment in which we act. The environment will change, possibly only slightly, but more likely dramatically. This change in the “playing field” renders our orientation, or worldview, invalid to some degree: it introduces a mismatch between reality and our perception of it. The quicker we realize that this mismatch is developing, the sooner we can adjust our orientation to more closely approximate the new reality and act again. And this is the cyclic nature of the O-O-D-A loop. Speed A final word about speed. The more factors there are to consider, the more difficult it is to analyze and synthesize them all quickly. Knowing what to focus on and what can be ignored is crucial. Speed comes © Copyright Goal Systems International, 2006

from the implicit ability to do this, rather than from the explicit step. With experience and skill, an explicit decide step can be bypassed, and action becomes an implicit outcome of orientation, as Musashi intended. Moreover, the decision on what indicators to look for, or observe, in the external environment also becomes implicit (thus faster). Conclusion In the next installment, we'll see how the observe and orient steps constitute the heart of what Peter Senge has called learning organizations. And the following installment will introduce the concept of system constraints as a means of separating what's important to synthesize from what isn't in the mass of data that observation produces. The one who figures on victory at headquarters even before doing battle is the one who has the most strategic factors on his side…The one with many strategic factors in his favor wins, the one with few strategic factors in his favor loses— how much more so for one with no strategic factors in his favor. Observing the matter in this way, I can see who will win and who will lose. —Sun Tzu, The Art of War [1:56]

Endnotes 1. Sun Tzu. The Art of War (translated by Thomas Cleary). Boston, MA: Shambhala Publications, 1988. 2. McNeilly, Mark. Sun Tzu and the Art of Business: Six Strategic Principles for Managers. NY; Oxford University Press, 1996. 3. Hammond, Grant T. The Mind of War: John Boyd and American Security. Washington, D.C.: The Smithsonian Institution Press, 2001. 4. Richards, Chet. Certain to Win. Xlibris Corporation. 2004.

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This is the fifth of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 5

The Learning Organization: Adapt or Die! H. William Dettmer How can a team of committed managers with individual IQs above 120 have a collective IQ of 63? —Peter Senge [7:9] An interesting question Peter Senge poses. I've seen the phenomenon myself, and other prominent instances abound. For example, consider an excerpt from a recent article in USA Today about Delta Airlines: On Monday [Delta] will launch an updated Delta.com [web]site that has streamlined features, including a focus on core consumer services such as booking trips, checking flight information, viewing itineraries, and monitoring frequent flier mileage..."This is our primary focus of our marketing for the second half of the year," chief marketing officer Paul Matsen said...The troubled airline hopes to cut costs by luring more travelers to its website—and away from its telephone reservations lines. [2] If Delta is fishing for more customers, they're not using very persuasive bait. The day before, Delta's chief executive officer, Gerald Grinstein, warned employees that cost-cutting efforts so far are not enough to keep Delta out of bankruptcy. Wall Street was so thrilled at this news that Delta's shares immediately plummeted 26 percent. [1] This isn't a unique situation. Delta has had hard times before. Other airlines (United comes to mind) have had worse. Still other airlines (Eastern, Braniff and Pan American) have even failed to survive. In other words, there is no shortage of lessons out there about how not to run an airline, and at least one example (Southwest) of how to do it right. As Yogi Berra once said, “You can observe a lot just by watching.” You'd think that airline executives would learn something. But apparently, you'd be wrong. As George Santayana once said, those who cannot learn from history are condemned to repeat it. (There's that word “learn” again!) The Learning Organization In The Fifth Discipline: The Art and Practice of the Learning Organization, Peter Senge defined a learning organization as one that is continually expanding its capacity to create its future. That's an intriguing definition, but one that says more about the outcome than the process. Senge suggests that organizations aspiring to create their futures need to be able to learn in ways that Delta and the other airlines in financial trouble obviously haven't. The airlines are trying to survive. But survival learning, also referred to as “adaptive learning,” while necessary, is reactive rather than proactive. Creating futures requires what Senge calls generative learning--a horse of a distinctly different color. According to Senge, a successful learning organization satisfies five indispensable criteria: [7:6-10] 1. It practices system thinking. 2. Individual employees and leaders strive for personal mastery in all their activities. © Copyright Goal Systems International, 2006

3. Employees and leaders alike have a shared mental model of the world—the organization, its markets and competitors, and environment. 4. Its leaders have a vision of where they want the organization to go. 5. Team learning is central to its activities and success. Senge maintains that systems thinking and team learning are incomplete without shared vision, personal mastery, and mental models. I can't dispute that. But for the purposes of this discussion, we'll acknowledge the importance of the middle three and focus on the first and last. Team Learning: What is it? The concept of teams inherently assumes that the coordinated efforts of many are more effective than the isolated effort of any individual—or even a collection of individuals. Anyone who has listened to a good symphony orchestra or watched a world-championship sports team intuitively understands this. Organizations are composed of teams. In small companies, a single team may be the organization. Larger organizations may be comprised of many discrete teams. Either way, the concept of “team learning” is somewhat of a non sequitur. Since team is an abstract classification of a group of individuals, it's a little difficult to understand how learning can occur at an abstract level. Individuals can learn, and if a group of individuals that don't constitute a team learns the same lesson, it's difficult to justify that “team learning” has occurred. I submit that the concept of team is inherent in how its members operate and interact with one another, not in how they learn. Senge himself makes the following observation: "Team building" exercises sent colleagues whitewater rafting together, but when they returned home, they still disagreed fundamentally about business problems. Companies pulled together during crises, and then lost all their inspiration when business improved. [7:15] When individual faces on the team (or in the company) change, expertise—previous learning—is resident only in the remaining individuals, whether they are executives, managers, supervisors, or line employees, not in the team. Any learning subsequently transferred to new team members comes from individuals, not "the team." Collective learning occurs at multiple hierarchical levels: individual, group, organizational, societal. With each increasing level of complexity, the challenge of learning (and institutionalizing that learning) becomes more difficult. It requires more conscious, concerted effort, and sustainability at the organization level is uncertain at best. This kind of learning is usually driven by one person (or a few committed individuals). Individual learning becomes team or organizational learning only when leaders institute a conscious effort—either by personal example or by directed policy—to seek out new information that could potentially change the nature of the operating environment, or the interactions of those who operate within it. In other words, establishing effective organizational learning is a responsibility of leadership. Team Learning Versus Teamwork The point here is that the operative word is “learning,” not “team.” The important activities associated with learning are capture, retention, recall, and application—in other words, how the learning is used to enhance teamwork. The distinction is important, because in the final analysis, all that is important from the team perspective is that team members recognize the need to aspire to learn (individually), to share what they've learned with other members of the team, and to internalize themselves the learning of others that is shared with them. © Copyright Goal Systems International, 2006

So, if learning occurs at the individual rather than at the team level, where does the “team” concept fit into the scheme of things? Effective teams are like well-oiled, finely-tuned machines. The various members work “seamlessly” with one another—virtually without friction. This doesn't happen naturally. It requires concerted effort and practice, practice, practice. In 1645 Miamoto Musashi, the prototypical samurai warrior, wrote A Book of Five Rings in which he described what it took to become a samurai: "Practice is the only way that you will ever come to understand what the Way of the warrior is about...Words can only bring you to the foot of the path." [5:94] The team learning that Senge refers to [7:9] is not functional expertise. It's composed of two distinctly different domains: teamwork and systems thinking. We've already touched on the idea of teamwork in this installment, and if you recall, we've seen it earlier, too, in the second installment, “Business and the Blitzkrieg.” Remember the essential tenets of the blitzkrieg: Einheit (mutual trust), fingerspitzengefuhl ("fingertip feel"), auftragstaktik (moral contract), and schwerpunkt (focus point)? [6:52-58] Trust and the moral contract are the bedrock upon which effective teamwork is built, and they must be learned. They may be introduced to individuals, but they can only be learned as a team. What about fingertip feel and the focus point? The former is equivalent to Senge's criterion of personal mastery. And the focus point—schwerpunkt—requires a systems thinking perspective, another key Senge criterion. Systems Thinking: The Key to Effective, Efficient Teamwork Systems thinking must also be learned on an individual basis, but it must be applied by teams to be effective. Whether that team is a small, cohesive unit or a large organization, or even society as a whole, systems thinking is a team function in successful organizations. (Refer to the first installment, “Systems Thinking” for a more detailed review of systems thinking.) How does one (or an organization) apply systems thinking? In the last installment, “Sun Tzu and the OO-D-A Loop,” we examined the maneuver warfare philosophy of John Boyd and its elegantly simple expression, the O-O-D-A loop. [3:190] The O-O-D-A loop has direct impact on both individual and organizational learning. Observation and Orientation Recall that the first two O's in O-O-D-A stand for observe and orient. [3:163-164] Their relationship to organizational learning is crucial. According to Boyd, the observation step is a process of gathering information, from both within and without. This information can come from a variety of sources: the media, research, direct observation, experimentation, or clandestine intelligence activity, to name just a few. What are the potential targets of these activities? Generally, they fall into three classifications: our own operations, the actions and activities of others (e.g., competitors), and the external environment (e.g., politics, economics, international developments, technology advances, catastrophic events, etc.). Observation might be characterized as “situational awareness”—an aviation term that means paying attention to everything that's going on around you. But obviously at some point paying attention to everything indiscriminately can lead to sensory overload. Leaders and teams need a way of separating what's important from what isn't; otherwise, they can drown in data. This is where orientation comes in. The orient step can be described as a process of interpretation and synthesis. (Refer to the third installment, "Analysis and Synthesis.") By analysis and synthesis, the © Copyright Goal Systems International, 2006

separation of the important from the trivial—and the integration of the important parts into a useful whole—takes place. Boyd described orientation as one's "world view," or how we visualize what's going on around us. In other words, our understanding of the world, how it affects us, and how we affect it. To the extent that our perception of the world actually matches reality, we're confident in our ability to function effectively in it. To the extent that reality diverges from our view of how things are, or ought to be, we experience difficulty and confusion, which normally show themselves as failures. How do we come to our orientation (world view)? Boyd suggests that it's the integration of many factors: cultural traditions, previous experiences, our own analysis and syntheses, new information, and even our genetic heritage, from which we derive our psychophysical skills. [3:189] The chief problem: people's world view becomes entrenched—static—while at the same time reality is anything but static. To the extent that there is a mismatch between an organization's orientation and reality, policies or practices based on that orientation become increasingly invalid or even irrelevant. Performance deteriorates and failures occur. Such failures are hard to miss, even by busy leaders and manages. And naturally, they try to correct these problems. In other words, they react to a deteriorating situation. But inevitably, without a systems thinking perspective, these reactions are based on the aforementioned invalid policies or procedures—the result of an entrenched world view—so those reactions are often not effective. They may even exacerbate an already unfavorable situation. As reality diverges further from the organization's orientation, reactions become progressively less effective. The Solution The solution should be obvious: make a concerted effort to seek out new information (observe), then try to fit it into our world view, adjusting (orient) the world view as required to logically accommodate the new information. Done properly, effective orientation reduces the mismatch between perception and reality, pointing leaders toward revising policies and procedures that are more effective in the real, competitive world. Richards points out that “since what you're looking for is mismatches, a general rule is that bad news is the only kind that will do you any good.” [5:63] What this means is that we must be actively gathering information, looking for mismatches between it and our orientation, and adjusting our world view, and the policies that spring from it—and do this faster than our competitors—in order to gain tactical or even strategic advantage. Thinking about all this "learning business," is it clear now how Delta, United, American, and the other airlines have failed to observe and orient properly? So, how is your organization doing at learning? You live and learn. Or you don't live long. —Lazarus Long [4] The ability to learn faster than your competitors may be the only sustainable competitive advantage. —Arie de Geus [7:4] Endnotes 1. “CEO's cost-cutting memo sends stock into dive,” USA TODAY, Thursday, July 28, 2005, p. 3B. 2. “Delta hopes fliers will flock to new web site,” USA TODAY, Friday, July 29, 2005, p. 6B. 3. Hammond, Grant T. The Mind of War: John Boyd and American Security. Washington, D.C.:The © Copyright Goal Systems International, 2006

Smithsonian Institution Press, 2001. 4. Heinlein, Robert A. The Notebooks of Lazarus Long (illustrated by D.F. Vassallo). San Francisco: Pomegranate Artbooks, 1995. 5. Musashi, Miamoto. A Book of Five Rings (Victor Harris translation). London: Allison and Busby, 1974. 6. Richards, Chet. Certain to Win:The Strategy of John Boyd Applied to Business. Xlibris Corporation, 2004. 7. Senge, Peter. The Fifth Discipline: The Art and Practice of the Learning Organization. NY: Doubleday, 1990.

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This is the sixth of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 6

Systems and Constraints: The Concept of Leverage By H. William Dettmer Give me a lever long enough and a place to stand, and I can move the world. —Archimedes, 287-212 BC If he didn't actually discover it, Archimedes certainly popularized the concept of leverage. In the third century BC, he designed war machines exploiting the lever for the armies of Greece in their pursuit of empire in the Mediterranean. As the quotation above implies, an understanding of leverage can enable one to apply force to something far out of proportion to one's individual strength. The concept of leverage applies to systems, too—particularly to organizational systems. But before we see how, let's revisit the concept of a system. Deming characterized a system as a network of interdependent components that work together to accomplish the aim of the system. [1:50] As soon as we acknowledge the idea that a system is composed of multiple component parts, a question immediately arises: Are all the components equally important, or are some more instrumental than others in striving for the goal of the system? In most organizations, people act as if all components are equivalent. For example, everybody is considered an "equal member of the team." But is this really the case? Does every component contribute equally to the system's success? As George Orwell observed in his classic allegorical novel, Animal Farm, "all animals are equal—but some are more equal than others." [5:Ch.10] The Pareto Principle In 1906, Vilifredo Pareto, an Italian economist, observed that 80 percent of Italy's wealth was owned by 20 percent of its population. [6] In the 1930s, Joseph Juran observed a similar relationship—what he referred to as "the vital few versus the trivial many." Though he didn't cite Pareto in particular, his observation of the "80/20 rule"—meaning 20 percent of a system is responsible for 80 percent of its results—became known as Pareto's Principle. Howard Gardner uses the Pareto Principle as a teaching example, and in the process, he points out that "it is important to be judicious about where one places one's efforts..." [2:9] The wisdom of the Pareto Rule is generally accepted. What is less commonly understood is the key underlying assumption behind it, which Gardner hinted at and Orwell said somewhat more explicitly: not all of the system's components are equally important in achieving its goal. The Concept of a System Constraint All systems, whether open or closed, are limited (or constrained) in some way. Organizational systems are no exception. What, exactly, is a system constraint? It's some factor that limits what the system can achieve. Were it not for this limiting factor, the rest of the system might be able to achieve much more in realizing its goal. The limiting factor may be internal or external to the system. It may be a physical component, a condition, or an imposed policy of some kind. Whatever it is, however, it does frustrate efforts from within the system to achieve better performance.

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Goldratt has characterized constrained systems as chains, and a system's constraint as the “weakest link” in that chain. [3:53] Conceptually, this is an adequate analogy, but it does tend to imply a linear nature of processes that might oversimplify some systems. The important point of the analogy, however, is that some identifiable factor or component restricts the system's ability to perform. The System Constraint: An "Archimedes Point" Let's synthesize a few concepts. The first is the idea of a system constraint, or limiting factor. The second is the Pareto Principle—20 percent of the system is responsible for 80 percent of its results. And the third is the mental model of a system as a chain with one weakest link. (By definition, there is only one in a chain, or we'd have to call it only a weak link, not the weakest link.) The hybrid result might be something like this. Since systems are composed of many interdependent parts, all working toward a common goal, and since the 80/20 rule generally applies to most systems, it follows that not all system components are equally capable—or equally crucial to the success of the system. And since the least capable part of the system—the "weakest link"—determines the maximum performance of the whole chain, it follows that this weakest link (the system constraint) should represent an "Archimedes Point"—a leverage point that if force is properly applied, offers the greatest potential for system performance improvement. The Myth of Efficiency According to the Pareto Principle, 80 percent of a system's performance results from only 20 percent of the system. But E.M. Goldratt, widely credited with conceiving constraint theory, suggests that the ratio might be more like 99-to-one. [3:53] In the early 1980s, when he was focusing almost exclusively on the application of constraint theory to manufacturing, Goldratt articulated nine principles for optimizing production technology (OPT). [4] While they refer to bottlenecks rather than constraints, three of these principles have significant implications for systems thinking: 1. The level of utilization of a non-bottleneck is not determined by its own potential but by some constraint in the system. 2. An hour lost at the bottleneck is an hour lost for the total system. 3. An hour saved at a non-bottleneck is a mirage. If we substitute the word constraint for bottleneck, these three principles make a powerful statement about efficiency in systems. Recalling that the system's constraint—the "Archimedes point"—represents Pareto's critical 20 percent (or, as Goldratt maintains, the critical one percent), the implication of the first principle, above, is that efficiency really doesn't matter much in 80 percent (or 99 percent) of the system! The third principle, concerning the insignificance of saving time at a non-constraint, reinforces this point. The second principle, concerning the criticality of efficiency at the system constraint, is the converse of the first and third—it emphasizes the importance of ensuring efficiency at the system constraint. The conclusion we can draw from this discussion of the Pareto Principle, leverage points, and nonconstraints is crucial in simplifying management's primary job: ensuring overall system success. It's that we must worry about efficiency really at only one point in the system: the constraint or leverage point. The efficiency at non-constraints—almost all of the rest of the system—matters only when a nonconstraint's inefficiency puts it in danger of becoming the system constraint. Consider how important this could be for overstressed managers. It's not necessary to watch everything in the system with equal attention or intensity. In other words, when the system constraint is known, only a very few key metrics must be closely monitored to ensure system success. And by extension, only a few key nodes of the system—in most cases just one—require rapid response to deviations or variances. By focusing on the critical few at the expense of the trivial many, the quality of management improves and the probability of system success increases. © Copyright Goal Systems International, 2006

Breaking Constraints: How Much Improvement? What is required to actually increase the performance of a system? Clearly, based on what we've seen so far, efforts to do this should be aimed at the "Archimedes point"—at least in the short term, or it's likely they'll be wasted. But how much system improvement can we expect? Say, for example, we know that our system constraint is the capability of the sales department. If we double the size of the sales force, can we expect to see overall system performance double? Possibly in some circumstances, but only up to the level of the next constraining factor. If the production process had been only 80 percent utilized before the sales force was doubled in size, the increase in system performance could be no more than 20 percent, at most. The production process capacity would constrain system performance before all of the added sales capability could be effectively used. So there's another lesson here: when a system constraint is broken, the system's performance improves, but only up to the level of the next most restrictive factor. That factor becomes the new system constraint, which brings up still another lesson: it's not possible to completely eliminate all constraints, so the system's leverage point moves every time a constraint is broken. Consequently, it's crucial for system leaders to know where the system's leverage point lies, where it will move to when the system's constraint is broken, and what the best choices of action are for maximizing the leverage at that new point. Five Focusing Steps: A Prescription for Maximizing System Performance E.M. Goldratt created a five-step process for managing system constraints: [3:58-63] 1. Identify the system constraint. Determine the factor that most limits the system's ability to perform. This factor could be internal (a resource, knowledge or competence, financial condition, or policy). Or it could be external (market demand, competitive environment issues, materials and suppliers, or government regulations and laws). 2. Decide how to exploit the current constraint. What action is required to wring the most efficiency and effectiveness from the current leverage point? This action will differ depending on what that limiting factor is. Sales constraints require different actions to break than production or supply constraints. 3. Subordinate all other parts of the system to the exploitation of the current constraint. This is a shortor medium-term tactic. The objective is to maximize system performance while working on a longer term strategy to break or eliminate the constraint from its current location. It requires all non-constraints—all elements of the system other than the leverage point—to subordinate (or sacrifice) their own efficiencies in the interest of maximizing the efficiency of the leverage point. In other words, this is the tacit recognition that the Pareto Principle applies to all systems. It's pertinent to mention that exploitation and subordination normally don't require the expenditure of more money—usually the only thing required is to change the way current assets or resources are used. 4. Elevate the constraint. "Elevation" in this case means to increase capacity. Whether that means purchasing more equipment, hiring more people, or expanding facilities, elevating the capability of the leverage point requires spending more money. But notice that this does not happen until after maximum system performance has been realized through exploitation and subordination. This is where many (most?) organizations make a serious mistake of omission: they ignore the opportunities to wring the maximum performance out of their existing leverage point before they run out and spend more money (sometimes a lot of money!) on more physical capacity. 5. Go back to the first step. It's possible that the exploit and subordinate steps may change the leverage point. But if they don't, the elevate step certainly will. Thus, leaders must be constantly on watch for a shift in the leverage point from one point in the system to another. Knowing that in different locations, the leverage point requires different tactics for exploitation and subordination, it's absolutely critical for © Copyright Goal Systems International, 2006

leadership to actively search for a shift in leverage point location and change their system improvement tactics accordingly. Cycling through these five Focusing Steps should be a continuous process for all systems—a neverending systemic continuous improvement process. This is the only way to ensure that a system is performing to its highest potential levels. Summary and Conclusion All systems—whether commercial, government agency, not-for-profit, or social—are constrained in some way. That constraint represents a leverage point in each system, a point at which a measured amount of effort will produce a disproportionate benefit to the system. But a system constraint exists with nonconstraints in a Pareto Principle-type relationship: there are far fewer leverage points (probably only one) than non-constraints. Capitalizing on this knowledge requires the application of a structured, repetitive continuous improvement process—the Five Focusing Steps. In our next installment, we'll begin a systematic approach to system management by exploring a logical way to analyze complex systems. The only things that evolve by themselves in an organization are disorder, friction, and malperformance. —Peter Drucker Endnotes 1. Deming, W. Edwards. The New Economics for Industry, Government, Education. Cambridge, MA: MIT Center for Advanced Engineering Study, 1993. 2. Gardner, Howard. Changing Minds: The Art and Science of Changing Our Own and Other People's Minds. Boston: Harvard Business School Press, 2004. 3. Goldratt, E.M. The Haystack Syndrome: Sifting Information Out of the Data Ocean. Great Barrington, MA: The North River Press, 1990. 4. Robert Lundrigan, "What is this thing called OPT?", Production and Inventory Management, Second Quarter 1986. 5. Orwell, George. Animal Farm. (http://www.online-literature.com/orwell/animalfarm/) 6. http://management.about.com/cs/generalmanagement/a/Pareto081202.htm

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This is the seventh of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. — Part 7

Logical Thinking: The Categories of Legitimate Reservation By H. William Dettmer Most people make decisions based on emotional rather than logical reasons. Only after they've decided emotionally, perhaps even unconsciously, do they look for rational support for their decisions. —Unknown W. Edwards Deming maintained that real, lasting improvement was not possible without “profound knowledge”of one's system. In order to achieve that level of knowledge, Deming said, it was critical to have a thorough understanding in four major areas: [2:96]  Systems  Theory of Knowledge  Variation  Psychology This is a well-known taxonomy. Over the past two decades or more, the quality community has leaned very heavily on the variation aspect. Deming himself in later years emphasized appreciation for a system and psychology. But beyond saying “bring data,” few practitioners of continuous improvement have indicated a real understanding of the second bullet: the theory of knowledge. Epistemology Another term for theory of knowledge is epistemology. Even people who are even familiar with the word aren't clear on its meaning. Epistemology is the branch of philosophy that studies the nature of knowledge, its presuppositions and foundations, and its extent and validity. [6] In other words, how do we know what we know about the world we live in, our part in it, and the interactions between ourselves and others? Why is the issue of epistemology important? Because our understanding of what we know and how we know it is vital—crucial, even—to the quality of our decisions in life. And everybody makes decisions daily, sometimes very important ones. The Three Decision-Making Conditions Anybody making a decision generally does so under one of three mutually exclusive conditions: certainty, uncertainty, or risk. If you know that a particular outcome of your decision is a sure thing, you'll be making your decision under a condition of absolute certainty. For example, if you're contemplating jumping off the top of a 12story building, you can be absolutely certain that, barring divine intervention, the sudden stop at the end will kill you. Decisions like this are usually very easy to make, because you have extremely high confidence in the inevitability of the outcome. Some kinds of decisions can be evaluated by mathematical probability. These are considered decisions under a condition of risk. The typical example of decision under risk is gambling, say poker or blackjack. (“Gambling” is really a misnomer. It's certainly no gamble for the house, which is really playing statistical probability over a large number of individual instances.) Decision under risk depends on being able to assign, with confidence, a mathematical probability to every possible outcome. Obviously, it's possible to determine that probability for, say, taking a card or passing at sixteen in blackjack. © Copyright Goal Systems International, 2006

(Statistically, seventeen is the “magic number”, the point at which your odds of winning are better when you stay with what you already have rather than taking an additional card.) Decision under uncertainty is the tough nut to crack. Unfortunately, this is the situation in which most people find themselves most often—certainly in the decisions that matter most: a person's career, a major financial investment, whether to marry a particular person, or a business decision. Making decisions under conditions of uncertainty means that there are serious doubts about the outcome and that you can't effectively assign discrete mathematical probabilities to the possible outcomes. In other words, it's worse than a crap shoot. If most of our decisions are made under uncertainty, how can we possibly make them, particularly the critical ones, with any degree of confidence that we're doing the right thing? Intuition One way is to use intuition. Everybody has heard of intuition. Many people absolutely depend on it to make the right decisions. Intuition is the act or faculty of knowing or sensing something without the use of rational processes. In other words, immediate cognition or a perceptive insight. It can also be considered having a sense of something not evident or deducible, maybe an impression. [6] When the hair on the back of your neck stands up, it may well be your intuition telling you that something is not quite right. It serves some people very well. But unless you're reliably clairvoyant, intuition can lead you wrong as often as right. Mathematical Models or Simulations One of the most seductive aids people (and businesses) use to help them make decisions is models or simulations. A number of companies (particularly software companies) have made a lot of money selling the idea that a computer is better at making complicated decisions than humans are. When these are fairly routine decisions, this is certainly true—computers can usually make such decisions much faster and more reliably over time than humans, especially for repetitive decisions. But models and computer simulations have a major shortcoming: they require that all the relevant variables in any decision be mathematically quantifiable or at the very least, that mathematical probabilities be assignable. Deming once said, “...the most important figures that one needs for management are unknown or unknowable.” [1:121] He recognized that many important things that must be managed can't be measured. In other words, you can't measure everything of importance to management, but you must still manage them. Computers and simulations are capable of great precision, but as Goldratt once observed, it's often better to be approximately correct than precisely wrong. Making Better Decisions Under Uncertainty Decisions under uncertainty will always be...well, uncertain. But there are ways to reduce uncertainty to a reasonable level. One approach is to combine verifiable facts or evidence, to the extent that it is available, with logically verifiable causality. Most people are comfortable with the idea of basing decisions on facts or evidence, but they're less certain about how logic and facts combine to provide the best available basis for decision making. In the mid-1950s, Luft and Ingham conceived of the Johari window to help explain how members of groups learn to interact. With a little adaptation, the © Copyright Goal Systems International, 2006

Johari window can be used to explain the state of our knowledge about the world around us. (Figure 1) [5:85] The upper left pane of the window (A) represents the domain of our certain knowledge—what we know, and know that we know. The lower left pane (B) represents identified gaps in our knowledge—what we are aware of that we don't know. The upper right pane (C) represents knowledge that we possess, but that we are unaware of, or the significance of it. And the lower right pane (D) is that domain of knowledge that we don't know, and we're ignorant of our own ignorance. Our search for facts or evidence seeks to move the contents of B to A. “Blue sky research” seeks to reduce the size of D and move some of it to A as well. Our search for relationships among known facts seeks to move some of the contents of C to A. But facts alone are not of much use unless and until they are connected in a causality relationship. Rules of Logical Causality: The Categories of Legitimate Reservation The validity (or invalidity) of the causal connections among facts, hypotheses, and conclusions is governed by a finite set of rules called the Categories of Legitimate Reservation (CLR). [4: 34-56] Most of these have their roots in Aristotle's logical fallacies. [3:57-58] There are eight of these rules: 1. Clarity (the complete understanding of a word, idea, or causal connection) 2. Entity Existence (the verifiability of a fact or statement) 3. Causality Existence (the direct-and-unavoidable connection between a proposed cause and a particular effect) 4. Cause Sufficiency (complete accountability for all contributing, dependent causes in producing an effect) 5. Additional Cause (existence of a completely separate and independent cause of a particular effect) 6. Cause-Effect Reversal (misalignment of cause and effect) 7. Predicted Effect Existence (additional expected and verifiable effect of a particular cause) 8. Tautology (circular logic, or existence of effect offered as rationale for a proposed cause) The conscientious application of these eight rules of logic to the facts that we know, and the facts we can uncover, permit us to make causal connections between them, to conclude truths about larger, more complex relationships—to convert mere data to information, and to make sense of aggregated information...knowledge! (Refer to Dettmer, Goldratt's Theory of Constraints for a more comprehensive explanation of the CLR.) Summary and Conclusion In summary, what we truly know about our system, the interactions among its components, and its interaction with the external environment is a function of two factors the volume of verifiable facts or evidence we have concerning the world around us, and the quantity and quality of the logical causal connections we can establish and verify. Our ability to orient ourselves in our environment (step 1 of Boyd's O-O-D-A loop) depends on these two factors. In our next installment, we'll examine the premier tool in the world for making these causal connections: the logical thinking process. Endnotes 1. Deming, W. E. Out of the Crisis. Cambridge, MA: MIT Center for Advanced Engineering Study, 1986. 2. _______. The New Economics for Industry, Government, Education. Cambridge, MA: MIT Center for Advanced Engineering Study, 1993. 3. Dettmer, H. W. Breaking the Constraints to World-Class Performance. Milwaukee, WI: ASQ Quality Press, 1998. 4. Dettmer, H. W. Goldratt's Theory of Constraints: A Systems Approach to Continuous Improvement. Milwaukee, WI: ASQ Quality Press, 1997. © Copyright Goal Systems International, 2006

5. Dettmer, H. W. Strategic Navigation: A Systems Approach to Business Strategy. Milwaukee, WI: ASQ Quality Press, 2003. 6. http://dictionary.reference.com/ 7. Luft, J. Group Processes: An Introduction to Group Dynamics, 2nd ed. Palo Alto, CA: National Press Books, 1970.

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This is the eighth of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 8

Policy Analysis: What to Change, What to Change To, and How to Make the Change By H. William Dettmer Changing things is central to leadership; changing them before anyone else does is creativeness. —Jay's First Law of Leadership Control is the child of planning; crisis management should not be confused with leadership—it's janitorship. —H. William Dettmer All organizations, from families to nations to societies, have policies. A policy is a guiding principle, procedure, or course of action intended to influence and determine decisions, actions or outcomes. [1] Policies tell us how to act or behave under a certain set of conditions. Formal or Informal The policies that most of us are familiar with are usually written and generally widely known. Typical examples are laws , regulations, standard operating procedures, or "house rules." But policies can also be unwritten practices, customs, or etiquette. If you've ever heard someone say, "That's the way we do things around here," or "That's not the way we do things around here," you've heard the expression of informal or unwritten policy. Policies, whether formal or informal, provide stability and a sense of security for the members of an organization--the comfort of the familiar, a sense of security and predictability. People know what to expect, today and tomorrow. Policies Obsolesce But there's a down side to stable, comfort-inducing policies: they tend to be accepted at face value over time, and their continuing relevance is never challenged. This can be particularly dangerous to organizations when the real-world environment changes. Some of such changes are revolutionary, but most are evolutionary. In either case, when there's a "disconnect" between the way the real world is working and an organization's policies, organizational success is likely to suffer. Almost every significant problem or challenge faced by any organization can usually be attributed to the divergence between reality and a policy that was put into place for circumstances or conditions that are no longer relevant. Identifying and Changing Obsolete Policies The core of progress and performance improvement, then, is the determination and expeditious change or elimination of invalid policies. Which necessarily raises several questions: How do we uncover detrimental policies? What should we replace them with? And how should we go about it? One of the fastest, most effective ways to model reality and identify faulty policies is the logical thinking process.

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The Logical Thinking Process The thinking process is a graphical representation of cause-effect logical relationships. It was conceived in the early 1990s by an Israeli physicist named E.M. Goldratt as a way to analyze the performance of complex organizational systems. Its foremost value is as a policy analysis and business decision tool. As such, it is very much a qualitative, not a quantitative tool. The thinking process is designed to provide the answers to the only three questions any manager needs to know: a) what to change, b) what to change to, and c) how to make the change happen. The thinking process is comprised of six distinct logic trees: 1. Intermediate Objective Map 2. Current Reality Tree 3. Evaporating Cloud (Conflict Resolution Diagram) 4. Future Reality Tree 5. Prerequisite Tree 6. Transition Tree The Intermediate Objectives Map helps establish the system's goal, the 3-5 critical success factors that must be achieved to realize the goal, and the necessary conditions that must be satisfied in order to achieve the necessary conditions. In completing the Intermediate Objectives Map, an organization defines the benchmark of desired performance—those high-level milestones that define the organizations desired course of travel. The Current Reality Tree is a cause-and-effect diagram that explains what policies are behind the divergences, or gaps, between what's happening in the real world and the desired course determined in the Intermediate Objectives Map. The originating root causes are inevitably the policies that are inadequate or outdated. The terminal conditions in the diagram are undesirable effects—statements of deviation from the desired course. In between is a clear representation of the component interdependencies that produce systemic results, a view of the system that is typically invisible to observers in their day-to-day work. The Evaporating Cloud, often called a Conflict Resolution Diagram, is a necessary condition diagram intended to help resolve basic conflicts surrounding the need to change policies. It succinctly exposes the contending arguments (change versus don't change) and, most important, the underlying (usually hidden) assumptions behind each side of the change issue. Surfacing these hidden assumptions is the key to resolving the conflict in a win-win manner. The Future Reality Tree is a kind of solution "bench test." It's a way of logically demonstrating that a proposed change will deliver the desired results before investing substantial time, money, and energy in implementing it, only to find out that it was doomed to fail in the first place. By constructing a Future Reality Tree, change agents can enable others in the organization to see how the change is expected to unfold so that serious omissions or errors can be detected and corrected ahead of time. This tree is a kind of "insurance policy" that the contemplated actions are the right ones. The Prerequisite Tree is an implementation planning tool. It helps to structure the complex activities of executing the policy change (the effectiveness of which was validated in the Future Reality Tree). The component activities and tasks—what must happen first, and the obstacles that must be overcome—are arrayed in the sequence required for expeditious, effective execution. The finished Prerequisite Tree usually depicts an interdependent network of activities that are easily convertible into a project activity network. In other words, change implementation can be managed as a formal project, with discrete performance, cost, and schedule parameters. A Transition Tree converts the Prerequisite Tree, which is usually more like a framework of complex activities, into step-by-step guidance for completing these component tasks. This tool can be useful when the tasks are to be completed by people who are not familiar with the steps for doing so. It is also effective in explaining why particular steps must be accomplished in the order specified.

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An Example: The Solomon Trees Nothing substitutes for a good picture. If you follow the links for each tree, you'll see a complete set of thinking process trees constructed to show how the dilemma faced by King Solomon in the Old Testament of the Bible might have been resolved using the thinking process. NOTE: The trees included here were expanded and adapted from thinking process trees originally constructed by Dr. Eric Noreen of the University of Washington. The original trees were first published 1995, in Dr. Noreen's book on the Theory of Constraints. [2]

Now, Solomon didn't really use the thinking process—it hadn't been invented 3,000 years ago when this story reputedly took place. But it could have been used. And, more important, it's representative of the kinds of qualitative problems, the ones not possible to quantify easily, that the thinking process can be so valuable in solving. For those not familiar with the original story, King Solomon was asked by two women to decide which of them should have custody of a single baby that each claimed was her own. Solomon was widely respected throughout Israel for his wisdom, and everyone expected him to justly resolve the dispute. Here’s the full story, in the original King James version. [3] "There came before Solomon two women that were harlots. And one of the women said, 'This woman and I were delivered of children in the same house within three days of each other. But this woman's child died in the night because she overlaid it. " 'And she exchanged her dead baby for mine while I slept. But she claims the dead baby is mine and the living one is hers.' " "And both women protested at one another, each claiming the one living child for her own, and they beseeched Solomon to decide which of them should get the child." —I KINGS 3: 16-22

Solomon had a challenging problem to solve. Let's assume that he knew how to use the thinking process. If so, he would have first constructed an Intermediate Objectives (IO) Map to help keep him oriented toward his overall goal, and the critical success factors that must be satisfied to achieve it. The IO Map is read from top to bottom, verbalizing it as "In order to...I must." Here’s what Solomon’s IO Map might have looked like. Keep in mind that the "system" we're viewing in these trees is a personal one—these are Solomon's personal trees, not the kingdom of Israel's, so they reflect his goal and necessary conditions. With his "compass" set in the IO Map, Solomon then constructs a Current Reality Tree (CRT) that accurately characterizes his immediate situation. Solomon’s CRT is on the next page. © Copyright Goal Systems International, 2006

The CRT is read a little differently than the IO Map. Start from the bottom and read each block with the words "If", "and", or "then" preceding them, as indicated on the diagram. A complete causal statement has at least two blocks connected by an arrow—a cause (the "if" statement) and an effect (the "then" statement). Contributing dependent causes are the "and" statements. The critical root cause—the one that, if addressed, solves the problem—lies at the bottom of the tree. This tree provides focus to improvement efforts. Solomon is faced with a dilemma: how to be just and resolve the dispute between the women at the same time? His next step is to construct an Evaporating Cloud (EC). This is another tree that is read "In order to...I must...” Solomo’s EC is just below the CRT. The injection is an idea for a solution to the dilemma—but it needs a little logical testing before Solomon is ready to try to implement it.

Logical verification comes from a Future Reality Tree (FRT). It's another "if-then" tree, like the CRT, and Solomon's FRT demonstrates how his chosen injection from the EC leads to the effects he desires—ones that reflect the satisfaction of the IO Map's necessary conditions. Solomon’s FRT is on the following page.

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But Solomon was no dummy. He recognized that the "law of unintended consequences" often came into play. In scrutinizing his FRT, he saw what is known as a "negative branch"—a logical future extension of the injection that leads not to desired effects, but instead creates new undesirable effects that did not exist before the injection was applied. The negative branch that Solomon discovered is below the FRT. How he dealt with it is on the next page. After "trimming" the negative branch, Solomon went back and modified the original FRT. That revised FRT is also on the next page.

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With his course of action now clear before him, Solomon was ready to plan the implementation of his injections. For this, he used a Prerequisite Tree (PRT), provided on the following page. Notice, again, this is an "in order to...we must..." kind of tree. Each task in the rectangular blocks is needed to overcome an obstacle with which it's paired. But in its entirety, the PRT shows the sequence of activities that must place and the order in which they must occur. Also, if there are tasks that can be completed in parallel, rather than in sequence, this is indicated, too. Solomon's final task is to orchestrate the stepby-step execution of the FRT and the PRT. Another "if-then" tree, the Transition Tree (TT) reveals the logical sufficiency of the individual step-by-step actions needed to do this. Solomon’s Transition Tree is at the bottom of the following page. Solomon, of course followed these steps, and the rest, as they say, is history.

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Conclusion The thinking process is a tool of unique capability. Governed by the Categories of Legitimate Reservation, it provides a rigorously logical cause-and-effect picture of the reality as it exists now, and as it might exist in the future. As no other tool does, it excels at revealing the complex interdependencies among system components, and between the system and its environment. The thinking process and these capabilities are more thoroughly explained in other sources. [4,5]

While the thinking process was originally designed to solve problems, it has much broader applicability in the domain of strategy development and deployment, as we'll see in the next installment.

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The essence of management is recognizing the need for change, then initiating, controlling and directing it, and solving the problems along the way. If it were not so, managers wouldn't be needed—only babysitters. —H. William Dettmer

Endnotes 1. http://dictionary.reference.com/ 2. Noreen, Eric; Debra Smith, and James Mackey. The Theory of Constraints and Its Implications for Management Accounting. Great Barrington, MA: The North River Press, 1995. pp. 172-182. 3. Holy Bible, King James Version. 4. Dettmer, H. W. Goldratt's Theory of Constraints: A Systems Approach to Continuous Improvement. Milwaukee, WI: ASQ Quality Press, 1997. 5. ____________. Breaking the Constraints to World-Class Performance. Milwaukee, WI: ASQ Quality Press, 1998.

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This is the ninth of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 9

Strategic Navigation: Strategy Development and Deployment By H. William Dettmer It is more important to know where you are going than to get there quickly. Do not mistake activity for achievement. —Mabel Newcomber If you don't know where you're going, when you get there you'll be lost. —Yogi Berra If you don't know where you are going, every road will get you nowhere. —Henry Kissinger Great minds think alike. Perhaps that's why the preceding quotations from Yogi Berra and Henry Kissinger are so similar! Both of them make a powerful statement about goals. Even more to the point are a few lines from the song "Paint Your Wagon," from the musical play of the same name by Lerner and Lowe: Where am I going? I don't know. When will I get there? I ain't certain. All that I know is I am on my way! ... ...Paint your wagon, and come along! What a statement! Think about it—"I have no clue where I'm going or when I'll get there...but why don't you join me?" Unfortunately, this is the way many organizations—businesses, government agencies, not-for-profit organizations—operate these days. Not intentionally, perhaps, but they do it all the same. I'm reminded of a statement by an executive of a company who said, "We're a non-profit organization...but it wasn't planned that way!" They may have nice warm, fuzzy visions about where they'd like to be in the future, but when it comes to getting there, they're often clueless. Or, at best, mistaken about the route they believe will get them there. Worse, if they do get there, they often find that's not where they really wanted to be at all! Strategic Planning In the mid-1960s, some companies, dissatisfied with the short-term focus of annual business planning, began to look for ways to stabilize their journey into the future—and at the same time assure desired outcomes with a higher degree of confidence. The vehicle they chose was strategic planning. But strategic planning didn't quite live up to expectations or the hype. Henry Mintzberg, perhaps the foremost authority in the world on strategic planning, identified the principal failings of strategic planning as it evolved from its beginnings through the early 1990s. [1] He discovered that most organizations disregarded the interdependencies inherent among different organizational functions, and between the organization and the external environment. He also noted that most strategic plans were ponderous and inflexible, and that they emphasized the plan more than the development of strategy. Finally, he observed that most strategic plans were difficult—if not impossible—to implement effectively. © Copyright Goal Systems International, 2006

This is unsettling for most organizational leaders to come to grips with. On the one hand, they don't want to get wrapped around the axle with time-consuming, ponderous planning efforts that don't adequately come to grips with reality, are difficult to execute, and are quickly (and frequently) overcome by events. But on the other hand, they're not comfortable "flying by the seat of their pants," being reactive rather than proactive, and most important, not knowing whether they're doing the right things to realize the goals they've set for the organization. This is especially true for companies in the high-tech sector, where the competitive environment changes from year to year, and product lifetimes are measured in months rather than years. One CEO of an information technology company observed, "Forget ten-year planning horizons. I'm not confident where we'll be two years out." A serious dilemma, indeed. As the King of Siam said in the Broadway play The King and I, " 'Tis a puzzlement!" The Systems Approach We've examined various aspects of systems thinking and the systems approach throughout the preceding eight installments of this series. Now it's time to see how they combine to help us create and deploy strategy that is: [2:45]      

Optimal. As "lean and mean" or as detailed as we need for our situation. Fast. Constructed in a matter of days or weeks. Flexible. Responsive to changing circumstances, i.e., can "turn on a dime." Integrated. Considers and accommodates all relevant interdependencies. Deployable. Relatively straightforward in execution. Visible. Everyone can see how their part in the execution fits in with every other, and in the context of the overall strategy.  Accountable. Lends itself to clear assignment of accountability and easy monitoring of success. A methodology that can deliver all of these outcomes clearly depends on a thorough understanding of systems thinking, as we discussed in Installment #1, which means that it inherently considers the concept of system constraints (Installment #6). It would draw on the precepts of maneuver warfare (Installments #2 and #4) and embody both analysis and synthesis (Installment #3). And it should afford the opportunity for organizational learning (Installment #5). Finally, the product of such a methodology would have to be logical, and that logic should be easy for everyone in the system to understand (Installments #7 and #8). See how all of this systems stuff starts to fit together? The Constraint Management Model The methodology I propose for successfully navigating an organization's course into the future is called the Constraint Management Model (CMM). It's a logical, systematic way of deciding where the captains of organizations want to take their ships, the course they'll need to follow to get there, how to know when they deviate from the planned course, and what to do to get back on course. The CMM has seven basic steps: [2:52] 1. 2. 3. 4. 5. 6. 7.

Define the paradigm Analyze the mismatches Create a transformation Design the future Plan the execution Deploy the strategy Review the strategy

This taxonomy combines the basic principles of systems thinking, maneuver warfare (as embodied in the O-O-D-A loop), and cause-effect logic. Define the Paradigm. This is an information-gathering step that includes research on external economic, political, sociological, and technical conditions. It represents a "world view"—as complete picture as possible of the organization and its environment. It also requires defining the organization's goal and critical success factors, in light of that world view—where does the organization want to be with respect to that situation? © Copyright Goal Systems International, 2006

Analyze the Mistmatches. The next step is to define the organization's existing condition in comparison with both the external environment and the desired goal and critical success factors. In other words, perform a "gap" analysis: what is the size and scope of the deviation between where the organization is and where it wants to be? The definition of this gap establishes a kind of vector—a magnitude and direction of the course change needed to close with the goal. Create a Transformation. Once the size and direction of the gap is determined, the organization must decide what to do about it. In most cases, some kind of policy change will be required. After all, the current way of doing things, in the presence of a change in the environment, led to the gap in the first place, so a major change will almost always be required. Inevitably, the prospect of such a change will pose some kind of dilemma, engender resistance, or generate some other kind of conflict. These dilemmas must be resolved, and "breakthrough" ideas are often required. Design the Future. Even a breakthrough idea is only an idea. It doesn't become a robust solution until and unless its effects are thoroughly mapped out, the "law of unintended consequences" accounted for, and the effectiveness of the strategy in reaching the goal is validated. The process of doing all this is, in effect, the creation and logical verification of a strategy. This is the heart of the strategy development process. Besides creating a new "map," it also ensures that the map truly leads logically to the desired outcomes. A key part of this map is the major initiatives or projects that must be implemented to produce the desired directional change. Plan the Execution. Once the strategy is established and logically validated, the next step is to figure out how to make it happen. Execution planning involves accomplishing the key initiatives needed to advance the strategy. These initiatives were identified in the Design the Future step. Each initiative is usually comprised of multiple component detailed tasks. Often these tasks are required to overcome discrete implementation obstacles. In most cases, their accomplishment has some kind of sequential dependency. Implementation of initiatives is frequently complex enough to make it prudent to manage them as discrete projects. And if there are multiple initiatives, their respective executions might better be coordinated as a meta-level project. In concert, the implementation of these various initiatives represents the deployment of the entire strategy. A meta-level project, then, provides executive-level visibility for that deployment. Deploy the Strategy. The next step is to actually commence action to execute the plan. As part of the preceding step ("projectizing" individual initiatives), metrics for performance, schedule and cost are normally established. Responsibility and authority for each project is assigned in the deployment step, and resources are allocated to the project leader. While the preceding steps in the CMM process can usually be completed in a relatively brief period of time—perhaps a matter of weeks—the duration of actual execution depends entirely on the nature of the initiatives. Some might be completed in a month or less, while others might take a year or more. Either way, this is an ongoing step that is not considered complete until the initiatives are all implemented. It's normally in this step than unanticipated difficulties tend to arise. If the preceding two steps (Design the Future, Plan the Execution) were conscientiously done, these "glitches" should be no more than minor adjustments to execution. In rare instances, an entire initiative may require re-thinking. Either way, this is why good project management is required for the deployment phase. Review the Strategy. The seventh step of the CMM is a monitoring step. It's also an executive responsibility, and it's ongoing. In the navigation analogy, it's equivalent to continually checking to be sure that as time goes on, the organization is closing the gap between where it is and where it wants to be—the destination defined by achievement of the goal established in the first step. To the extent that this is not happening, or not quickly enough, the captain of the ship (organization) must reassess the external environment and the mismatches between it and the organization's performance. It's a fact of life that our world environment is continually changing. Sometimes these changes are revolutionary, even catastrophic, such as those resulting from the terror attacks of 9/11. More often they're evolutionary—they "sneak up" on us, as the digital age has. Either way, the failure of leaders to recognize the new gaps (the course deviations) these environmental changes pose, and do something about them, represents a dereliction of duty and a detriment to the organization. © Copyright Goal Systems International, 2006

Summary and Conclusion Figure 1 shows the entire Constraint Management Model. Notice that the seven steps actually incorporate the four stages of Boyd's O-O-D-A loop. [3] Like the O-O-D-A loop, the CMM is a cyclical process, the last step leading seamlessly back to a successive iteration of the first, and continuing ad infinitum. Review of the strategy (step 7 in the CMM) is equivalent to the second observation. The second definition of paradigm and analysis of mismatches represents the second orientation. Remember (from Installments #2 and #4) that Boyd's O-O-D-A loop is the foundation of maneuver warfare. It's the mechanism by which speed, or reduced decision cycle time, is achieved. Though Boyd articulated four discrete steps, remember that he intended the last two steps, decide and act, to become implicit eventually, meaning that decision and action would take place as Musashi intended: "sword becomes no-sword; intention becomes no-intention." [4] Boyd reflected that in the O-O-D-A loop as implicit guidance and control arrows leading out of the orientation step indicate. (See Figure 2)

Figure 2. O-O-D-A Loop [3]

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But there's an element missing from this discussion of strategic navigation, and it's implicit in steps 6 and 7 of the Constraint Management Model: leadership—a topic we'll take up in the next installment. Obstacles are those frightful things you see when you take your eye off the goal. —Hannah More The future is the time when you'll wish you'd done what you aren't doing now. —Unknown Victory awaits the one who has prepared everything in advance— people call it luck. Defeat is certain for the one who did not make the necessary preparations in time—people call it misfortune. —Roald Amundsen Vision without action is a daydream. Action without vision is a nightmare. —Japanese proverb By losing your goal, you have lost your way. —Friedrich Nietzsche Long-range planning does not deal with future decisions, but with the future of present decisions. —Peter F. Drucker In about five years there will be two types of CEOs: those who think globally and those who are unemployed. —Peter F. Drucker Endnotes 1. Minzberg, H. The Rise and Fall of Strategic Planning. New York: The Free Press, 1994. 2. Dettmer, H. W. Strategic Navigation: A Systems Approach to Business Strategy. Milwaukee, WI: ASQ Quality Press, 2003. 3. Hammond, Grant T. The Mind of War: John Boyd and American Security. Washington, D.C.: Smithsonian Institution Press, 2001. 4. Musashi, Myamoto. A Book of Five Rings (1645).

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This is the tenth of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 10

Leadership in Complex Systems By H. William Dettmer It is better to have a lion at the head of an army of sheep, than a sheep at the head of an army of lions. —Daniel Defoe Good leaders never set themselves above their followers— except in carrying out their responsibilities. —Unknown Leadership, at its highest, consists of getting people to work for you when they are under no obligation to do so. —Unknown

Leadership—it's one of the most over-used, least-understood, misinterpreted words in the world today. It's become hackneyed, almost meaningless, like "paradigm," "quality," and "walk the talk." What Is It? Part of the reason for this is that there is no commonly accepted definition of leadership. And many of the various definitions are imprecise, leaving them open to widely differing interpretations. Even Warren Bennis, perhaps the foremost author on leadership, has observed: Literally thousands of empirical investigations of leaders have been conducted in the last 75 years alone, but no clear, unequivocal understanding exists as to what distinguishes leaders from nonleaders...It's as if what Braque once said about art is also true of leadership: "The only thing that matters in art is the part that cannot be explained." [1:4-5]

Or, as Supreme Court Justice Potter Stewart once observed about pornography, "I may not be able to define it, but I know it when I see it." Okay, let's test that premise. Here's a list of names from history and current events from a variety of venues—sports, military, business, and the international stage. Which would you consider to be effective leaders? Why? Winston Churchill Ray Kroc Dwight Eisenhower Adolf Hitler Martin Luther King, Jr. Alfred P. Sloan Pete Carroll Jim Jones Erwin Rommel

Bill Gates George S. Patton Herb Brooks Saddam Hussein Martin Luther Dave Thomas Franklin Roosevelt Edwin Land Bernard Ebbers

Gerry Faust "Chainsaw" Al Dunlap Thomas Watson Mohandas Gandhi Julius Caesar Kenneth Lay Michael Milken Kim Jong Il Grand Ayatollah Sistani

An eclectic bunch, that. There are undoubtedly others worthy of consideration, but the point is that, love 'em or hate 'em, somebody considers each of them to be a "great" leader. If that isn't testimony to the lack of a standard definition of leadership, I don't know what is. © Copyright Goal Systems International, 2006

Even much of the literature purportedly written on the subject is vague. Consider Margaret Wheatley's Leadership and the New Science. [2] Leadership is 50 percent of the title but only mentioned in passing, relatively speaking. In a 197-page book, the index cites only ten pages where it's even mentioned, and nowhere is it defined. [2:189] Even Deming wasn't particularly clear on what leadership really was. The seventh of his famous fourteen points was "Institute leadership," though his elaboration on the topic didn't do much to define what leadership actually was. [3:54-59] He did say that leaders should be coaches rather than authoritarians, but beyond that, Deming was not particularly clear about the subject of leadership. Manager or Leader? One of the most common outcomes of the inability to define leadership is that many frequently mistake management for leadership. The two are distinctly different, though that distinction often escapes people. As a U.S. Marine once said to me, "Things are managed; leadership is about people." Interestingly enough, though, when observers look at organizations to determine whether they are well led, they tend to use the same measures of merit—things like profit or loss, cash flow, return on investment, and stock price—as are used to assess effective management, despite the substantial distinction between the two. Measure of merit such as these are, of course, only really relevant to for-profit businesses. Government and not-for-profit systems have even more difficulty assessing effective leadership. All of which begs the question: Is it possible to be an effective leader without being a good manager? Or vice-versa? (That's a rhetorical question—I leave it to you to think about it!) Our Definition One advantage in the absence of consensus on a definition of leadership—for us, anyway!—is that we're at liberty to create our own...and who's to say we're wrong?! Okay, how do we go about this? Let's start with some common elements that most people might agree on and see if we can fit them together in a logical way that "works" for a number of people in a variety of circumstances. The first of these would have to be... Followers. Let's face it—it's tough to lead if there's nobody to follow! If we accept the Marine idea that leadership is about people rather than things, then the concept of a leader is pretty much meaningless with the "led." Have you seen them? Which way did they go? I must be after them, for I am their leader! —Unknown

Action. Another element almost certainly is action. Leaders do things, they don't just talk about them. They're proactive. They may employ others to do the things they want done, but if they're making the decisions about what to do, applying the resources (e.g., people, time, energy, money, etc.), and keeping the pressure on, then for all intents and purposes they are acting. In addition, according to Bennis and Nanus, a leader "...is one who converts followers into leaders, and who may convert leaders into change agents." [1:3] So here we have the combination of followers and action. Power. Bennis and Nanus defined power as "the basic energy to initiate and sustain action translating intention into reality. Without it, leaders cannot lead." [1:15] Power itself (as used in the leadership context) comes from influence, which has a few important components: credibility, inspiration, and compulsion. Credibility comes from integrity—the believable expression of values, ethics, principles, and the followthrough on them. In other words, "walking the talk."

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The only way leaders can make their values tangible and real to followers is through their behaviors and actions. Employees look to their leaders as role models of how they should behave. And when in doubt, they believe actions over words, without fail. —John Gardner As a leader, you need courage born of integrity in order to be capable of powerful leadership. To achieve this courage, you must search your heart, and make sure your conscience is clear and your behavior is beyond reproach. —Konosuke Matsushita

Inspiration is the ability to get others to act willingly in ways that you want them to when they're not under any obligation to do so. And compulsion, of course, is the capacity of the leader to force followers to comply with his or her expectations.

French and Raven proposed five bases of interpersonal power that contribute to inspiration and compulsion. [4: 331-333] Expertise and charisma normally inspire people. Legitimacy formally conferred, rewards dispensed, and coercion applied (in the form of punishment) tend to compel expected behavior. Figure 1 illustrates the necessary condition relationships among these elements. So, now it's time to define leadership leadership ourselves. For our purposes, we'll consider leadership the exercise of power to influence people to do willingly, in a coordinated way, what they may not be under any obligation to do. There's a subtle characteristic of this definition that warrants emphasis—it is completely neutral to value judgments about purposes, ends, or results. The determination of good versus bad leaders can only be made with reference to those purposes or results, not the activity of leading itself. But the interesting thing is that this definition applies to the activity of leadership at all levels of any system. Whether you're leading a team of volunteers or a country, leadership involves the art of motivating and focusing other people's efforts toward a desired end. Leadership: Essential to Effective Systems How does effective leadership contribute to the kind of systems approach we've been talking about throughout this series? Recall from the second installment, Business and the Blitzkrieg, that successful maneuver warfare requires agile, flexible forces. The speed of the blitzkrieg depends on initiative and decisive action from subordinate elements—both characteristics of leadership. This of course means that leadership is not confined to senior executive levels alone. In fact, the kind of confident, decisive © Copyright Goal Systems International, 2006

leadership required to capitalize on opportunities presented by rapidly changing situations can't exist in vertical hierarchies that depend on centralized authority. What's the alternative? Senge, et. al., attribute the problems of overcoming resistance to change and maneuvering in new directions to the "love affair" most organizations have with what they call the hero-CEO. The hero-CEO is the exceptional leader who is preeminent because his or her "unique mix of skill, ambition, vision, charisma, and no small amount of hubris." [5:10-12] Rather than eliciting and developing leadership capacity throughout the organization, the hero-leader is brought in to inject new life into the organization, which in commercial companies usually means cutting costs (and people), boosting productivity and profit. And of course, hero-CEOs favor the tactics that put them where they are today—"been there, done that, got the T-shirt." Consequently, the hero-CEO's tactics typically discourage risk-taking. Subordinates vie for the heroCEO's attention and favor, often competing with one another instead of cooperating. The ultimate result is that people tend to depend on the hero-CEO to provide solutions to major problems and cling to habitual ways (that may be more comfortable during turbulent times) rather than risk bringing forth new ideas. Senge, et. al., maintain that leadership and initiative must be actively developed in three parts of the organization: the line, the internal "network" (support staff and front-line people whose jobs typically cross functional lines), and among executives. Bennis and Nanus, who saw leaders as developers of other leaders and change agents, would have approved of this. But the odds of this happening in an organization with a hero-CEO are likely to be low. Moreover, as the guardian of the entire system, one of a leader's central responsibilities is to ensure that the system does not become suboptimized to any single factor. But hero-CEOs often suboptimize their systems to short-term performance, especially when they perceive that it may be important to those who appointed—and incentivized—them (i.e., the board of directors). More on this shortly. Leadership and the Blitzkrieg What should a leader's function be? If we remember our definition of leadership—the exercise of power to influence people to do willingly, in a coordinated way, what they may not be under any obligation to do—and if we accept the idea that organizations these must be agile, maneuverable, and flexible, then we're forced to conclude that: 1. Centralized, top-down control is not going to be helpful. We're going to have to nurture the development of leaders within the organization, as Senge, et. al., have suggested. [5:16-21] This intermediate leadership is then capable of assuming initiative in crucial situations when the unexpected happens. 2. Authority, and the responsibility that goes with it, must be deployed to subordinate leaders. The heroCEO must give way to decentralized, subordinate decision making. This "letting go" is extremely uncomfortable to traditional bosses. Hero-CEOs, by definition, are almost incapable of doing it. 3. Senior leaders must safeguard the positional security of their subordinates. This is going to require leaders to institute two of the key elements of the blitzkrieg, as described by Richards (and discussed in the second installment) [6:51-57]: einheit (mutual trust) and auftragstaktik (a moral contract). Subordinate leaders must know they have the trust of their superiors. And they must intuitively know that their superiors will support them and safeguard their security when they take initiative in unexpected circumstances, and not punish them for making mistakes. 4. Leaders must provide a clear, unequivocal vision of the goal and the general strategy for attaining it. Richards refers to this as "leading by intent," rather than by direction. [6:78-79] The U.S. military even provides a formal element of operations planning to satisfy this need for clear direction without excessive specification: a document called the commander's intent. It affords the senior commander to describe for his subordinates his vision for what the coming operation should achieve and how it should unfold. Then, in the best tradition of the blitzkrieg, subordinate commanders (leaders) are free to innovate and initiate © Copyright Goal Systems International, 2006

on their own—if they've been developed and encouraged to do so by top leadership. By being "inside the boss's head," they're able to respond rapidly and confidently to unexpected developments without having to waste valuable time going back up-channel for guidance. They instinctively do what the commander would do if he were there, without having to ask—speed and continuity. No senior leader could ask for more than that. The New Leadership Conflict In many organizations, especially in the forprofit sector, a blitzkrieg leadership approach will pose a significant dilemma for the executive: doing what the system's owners expect versus doing what's required to support and reinforce the initiative of subordinates. (Figure 2) Why is this a dilemma for the leader? Clearly to succeed at leading, the leader must satisfy the objectives of the system's owners—the shareholders and their proxies, the board of directors who put the leader where he or she is. In most cases, that objective is financial success. At the same time, in order to succeed in today's volatile, rapidly evolving external environment (with often earth-shaking events such as 9/11, or the bursting of the "dot-com" bubble), the leader must stand at the head of a well-coordinated, fast-reacting, agile organization—the kind of unit embodied in the blitzkrieg philosophy of einheit, fingerspitzengefuhl, auftagstaktik, and schwerpunkt. [6:51-57] But shareholders and board members are usually focused on short-term financial performance, and they are typically influenced heavily by Wall Street analysts. While these analysts occasionally think beyond the current or next quarter, their understanding (and application) of true systems thinking leaves much to be desired. Moreover, boards of directors typically motivate CEOs and other senior executives with lucrative reward and compensation packages tied to short-term financial performance. This "carrot-andstick" combination sways even systems-thinking minded leaders toward short-term financial suboptimization of the system. While good for short-term financial performance, leaders are often pushed toward decisions that can shatter the trust of the employees upon whose performance the organization depends. This then is the leader's conundrum: Establish and preserve the trust of the "organizational commandos" who really produce the agility and fast reaction, or sacrifice that trust to the gratification of shareholders' short-term financial objectives. What's the solution to this dilemma? Unfortunately, that's a subject for another day (and, not coincidentally, a forthcoming book on systems thinking). Summary and Conclusion "Leadership" is one of the most-used and most-abused words in the English language. Yet few people can agree on a common definition for it. Leadership is different from management, through the two words are often (erroneously) used interchangeably. Leadership is closely related to power—and power comes from sources other than just formal authority. It's not sufficient to be a "systems thinker." The successful practice of a systems approach to managing complex organizations requires the kind of leadership that can cause people to willingly—even eagerly— do what the leader wants them to do, even though he or she may not be able to compel compliance. Such leadership is most effective when practiced through intent, rather than explicit direction, and it includes the freedom for teams and individuals to exercise initiative to cope rapidly with situations for which no explicit guidance has been given, which may not have been anticipated, and in which the opportunity for success may be lost in delays. © Copyright Goal Systems International, 2006

Ultimately, the leader must resolve the basic leadership conundrum—balancing the pressures from above for short-term success with the need to create and sustain a responsive, agile organization. In our next installment, we'll examine another concept with roots in the military environment, specifically the Air Force: the wingman concept. This concept bears directly on the leadership conundrum and the fostering of einheit (mutual trust). The trouble with being a leader today is that you can't be sure whether people are following you or chasing you. —Unknown The bureaucracy of any organization is very much like a septic tank—the really big chunks always rise to the top. —Imhoff's Law In order to be a leader, a man must have followers. And to have followers, a man must have their confidence. Hence the supreme quality for a leader is unquestionably integrity. Without it, no real success is possible, no matter whether it is on a section gang, on a football field, in an army, or in an office. If a man's associates find him guilty of phoniness, if they find that he lacks forthright integrity, he will fail. His teachings and actions must square with each other. The first great need, therefore, is integrity and high purpose. —Dwight D. Eisenhower Leadership is the ability to hide your panic from others. —Unknown Leadership cannot really be taught. It can only be learned. —Harold Geneen

Endnotes 1. Bennis, Warren, and Burt Nanus. Leaders: The Strategies for Taking Charge. NY: Harper and Row (Perennial Library), 1985. 2. Wheatley, Margaret J. Leadership and The New Science: Discovering Order in a Chaotic World (2nd ed.). San Francisco: Berrett Kohler Publishers, 1999. 3. Deming, W. Edwards. Out of the Crisis. Cambridge, MA: MIT Center for Advanced Engineering Study. 1986. 4. Gibson, James L., John M. Ivancevich, and James H. Donnelly, Jr. Organizations: Behavior, Structure, Processes (7th ed.) IL: Richard D. Irwin, Inc. 1991. 5. Senge, Peter, A. Kleiner, C. Roberts, R. Ross, G. Roth, and B. Smith. The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations. NY: Currency Doubleday, 1999. 6. Richards, Chet. Certain to Win. Xlibris Corporation, 2004.

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This is the eleventh of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 11

The Wingman Concept: Security and Reinforcement By H. William Dettmer Excerpt from the movie Top Gun [1], about the U.S. Naval Fighter Weapons School. The scene is a multiaircraft training engagement between two two-seat F-14s (piloted by call signs "Maverick" and "Hollywood") and two single-seat A4s (piloted by call signs "Viper" and "Jester"). "Goose" is the backseat weapons officer in Maverick's plane. Maverick: Goose! There's Viper! Three o'clock low! Goose: Stay with Hollywood, man—we're his cover! Hollywood: Don't you leave me, Maverick! Maverick: Hollywood, you're looking good. I'm going after Viper. Goose: Mav, don't leave him! Maverick: Goose, Hollywood's okay—I want viper! [Maverick breaks out of the formation, pursues Viper's A4, failing to notice that Jester has shaken Hollywood off his tail and is lining up behind Maverick. An intermittent missile firing tone sounds on Maverick's interphone.] Maverick: Goose! Check our tail! Goose: Shit! There's Jester! [Steady missile lock tone signifies successful missile intercept.] Jester: Bingo! Maverick's dead. You're out of there, kid! Goose: "The Defense Department regrets to inform you that your sons are dead because they were stupid..." [SCENE: In the fighter weapons school locker room after the mission] Jester: That was some of the best flying I've seen yet. Right up to the part where you got killed. You never, never leave your wingman. Iceman (another F-14 pilot): Maverick, it's not your flying, it's your attitude. The enemy's dangerous, but right now you're worse than the enemy. You're dangerous and foolish. You may not like the guys flying with you, they may not like you. But whose side are you on? Maverick: That was stupid! I know better than that! That'll never happen again.

Scenes like the preceding one from Top Gun are enacted daily in different parts of the world, by aviators of different countries and services. Well, maybe not the stupidity demonstrated by Maverick, but certainly the formation flying in simulated combat operations. Rarely—maybe once every ten years—such multiaircraft combat engagements happen for real. And all the daily training, such as that depicted in Top Gun, serves to prepare combat crews for the day when their lives will be on the line and they must behave and perform together completely intuitively. In other words, their actions, reactions and support for one another happen without even having to think about it. This level of skill is not new. In installment 4, we discussed the philosophy of Miyamoto Musashi, the prototypical samurai warrior, who hammered on the need to practice incessantly until the sword became an extension of the warrior’s arm and the warrior's action became instinctive, without having to think about it. In other words, Boyd's implicit decision and action. © Copyright Goal Systems International, 2006

The Wingman Concept But military aviators, particularly in the U.S., extend that implicit, instinctive behavior beyond their own personal skills alone, and into their teamwork with their compatriots. In other words, they and their fellow pilots operate as a single, coordinated unit. This is what the wingman concept is all about. The Air Force and the Navy understand this concept, and all that it implies, in a way that people outside the military flying community likely never will. In fact, they virtually invented it. Military fliers are normally the only ones who fly multiple airplanes in close formation the most frequently. In any aircraft formation, one is designated as the leader. All others in that formation, then, are wingmenso named because their position in the formation is to the side of the leader, beyond the end of the leader's wing. Their position is specifically planned to enable them to watch the leader and follow his lead through every complicated movement of the formation. Regardless of the formation configuration, and there are many (see Figure 1), all of the aircraft and pilots other than the leader are considered wingmen, even if they aren't flying in a position precisely to the side of the leader's wing. In a broader sense, we could say that in formation flying, there is a leader and followers. (Remember this discussion of leadership and followers in the last installment?) The Foundation of the Wingman Concept The wingman concept is based on three characteristicsone might even call them virtues: loyalty, integrity, and commitment. The similarity between the blitzkrieg concepts of einheit (mutual trust) and auftragstaktik (moral contract) between the leader and the led, or between contemporary team members, is not coincidental. (Refer to installment 2, Business and the Blitzkrieg) [2:51-59]. In formation flyingperhaps the ultimate expression of coordinated behaviorand especially in combat situations, trust among air crews must be complete and unequivocal. Loyalty, integrity and commitment of each air crew (both leader and wingmen) to one another and to the successful execution of the mission essential and unquestioned. Lives depend on it. The wingman's primary function, as the Top Gun excerpt implies, is protection of the leader's blind spot (the so-called six o'clock position, directly to the rear—180 degrees out from the leader's point of focus). As roles and responsibilities change during dynamic situations, leaders can temporarily become wingmen and vice-versa. In any case, whomever is leading trusts the wingman without reservation to protect his rear. Effective application of the wingman concept, like the blitzkrieg, manifests itself in the tacit knowledge and confidence of everyone involved what everyone else will do at the required time. It's this kind of utter dependability that enables a flight of aircraft to perform as a unitary team, subordinating their own individual performance and recognition to the benefit of the whole formation. Such coordinated performance is what allows a formation of stealth fighters over Iraq in 1991 to release two laser-guided bombs in rapid sequence from exactly the right point in space, the first one blasting the armored door off a fortified bunker, and the second one instantaneously entering the bunker through the hole just created by the first. The Wingman in Business The transferability of the wingman concept to the non-military environment should be self-evident, but often people fail to recognize it. Perhaps the most visible example would be a highly skilled professional © Copyright Goal Systems International, 2006

football team. Holes in the line open up an instant before the running back reaches them at full speed, allowing him to achieve a big gain. Pass receivers run complicated pass routes, turning back to look at the quarterback after the ball is already airborne on its way to them. Simultaneously, offensive linemen keep defensive players from reaching the quarterback just long enough for him to get the pass off...and not a moment longer. Meanwhile, the quarterback, without even looking at or coordinating with his blockers, knows just how long he can hold the ball before he has to get rid of it. And the timing of all this is compressed into less than four seconds. Likewise, the wingman concept can apply to a business situation. But it seldom happens. Okay, maybe business doesn't have the same built-in life-or-death consequences that military combat aviation does. But businesses are no less comprised of coordinated activities than are multi-aircraft combat missions. So why are businesses often “siloed” in their efforts, while aerial combat remains a team effort? Motivation is certainly one factor. It's hard to get up for teaming with a bunch of people you may experience some friction with, or have no shared objective with, when you know that at the end of the day you'll be going home, sitting down in front of the television with a cold drink, and putting your feet up. On the other hand, when you realize that you may not live to see the sunset (or sunrise), it's not hard to take a vital interest in what your teammates are doing, and how they'll interact with you. A Mutual Reinforcement Culture In the last installment, we talked about the importance of leadership and the differences between leadership and management. Since mutual reinforcement in not naturally motivated by survival instincts in business, it becomes the leader's responsibility to instill it. There is a heavy psychological component to this task, which we'll address in more detail in the next installment. For now, it's sufficient to emphasize that leaders in non-military situations need to devote considerably more attention to establishing a mutual reinforcement and support culture than military leaders, for the simple reason that they don't benefit from a life-or-death motivation. Inculcating a mutual reinforcement (wingman) culture in a typical business environment requires fostering a whole-system view of the organization. Especially when teams are cross-functional, it's absolutely essential that everyone have a big picture perspective. In the past, even the military wasn't very good at doing this. But in the past several decades, particularly since the advent of the all-volunteer force, all the services have made a concerted effort to help those operating "where the rubber meets the road" understand how their efforts contribute—sometimes critically so—to the reinforcement of their compatriots and the success of the mission as a whole. If you doubt this, just listen to almost any television interview of a soldier in (or just back from) Iraq. They express confidently and eloquently that they understand what they're doing and why, and their pride in doing it. Can people in typical business situations do the same thing? Dilbert comic strips [3], by virtue of their popularity, demonstrate through their resonance with a large audience that this is probably not the case. Summary and Conclusion The wingman concept of mutual support and reinforcement has been around a long time. Though it's most commonly associated with military aviation, it has its roots in the underlying principles of the blitzkrieg (einheit and auftragstaktik). The synergy possible through the mutual reinforcement culture is significant, but it doesn't come naturally, either to the military or the commercial sector—though it's easier to promote in the military, where lives may be on the line. In the civilian sector, the wingman concept has no less potential, but it requires considerably more effort from senior leadership to instill. In our next installment, we'll see some ways this might be done. Endnotes 1. Top Gun, Paramount Pictures, 1986. 2. Richards, Chet. Certain to Win. Xlibris Corporation, 2004 3. Scott Adams, Inc., distributed by United Features Syndicate, Inc. © Copyright Goal Systems International, 2006

This is the twelfth of a series of 12 articles on systems thinking, a way of understanding complex organizations and society offering significant promise for improving the leadership and management of commercial companies, not-for-profit organizations, and government agencies. Part 12

Logic and Emotion in Changing Minds By H. William Dettmer “When you’ve got them by the balls, their hearts and minds will follow.” —Framed needlepoint reputedly on the wall of the office of Charles Colson, President Nixon’s legal counsel in 1973

Here’s a typical scenario. It may even sound familiar to many of you. You develop a comprehensive, sound problem analysis and solution for it. You present it to your decision-maker: what the problem is, what the solution is, and how it should be deployed. And despite a generally favorable (or neutral) reaction, ultimately nothing happens—no decision, or a rejection. There’s no shortage of opinions on why organizations—or, more precisely, people—resist changing. Many of these opinions can be found in books, most of which usually provide some prescription on how to overcome such resistance. Very few of these prescriptions work. Or if they do, they don’t work for very long. The reason that this happens is that…  Logic is not enough to persuade people  Human emotion, motivation and behavior enter into the equation, and these factors are likely to be even more decisive than logic As Winston Churchill once observed, “Man will occasionally stumble over the truth, but usually he just picks himself up and continues on.” Change and Risk Figure 1 shows a typical emotional dilemma. It’s known as Efrat’s cloud. [1:118-119] It characterizes the internal conflict most people experience when they contemplate changing their lives. Their objective is to be happy. In order to do that, they must feel both satisfied and secure. Now, in order to feel satisfied, they must initiate change of some kind. But in order to feel secure, they must resist change—that is, cling to the status quo. Why does satisfaction require change? Essentially, it’s because the pleasure associated

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with satiation eventually wears off.1 One must find new horizons or challenges to conquer. Or, as Efrat Goldratt put it, “Satisfaction comes from achieving a difficult objective, when there was substantial doubt about the probability of success.” Why is there security in resisting change? Security is defined as a sense of well-being that comes from predictability of the events in one’s life. [1:118] We feel secure because we can predict what’s going to happen in our lives…today, tomorrow, next week, or next month. Beyond that, who knows? But we’re confident it won’t be too different, as long as we stay in our nice, secure little cocoon and don’t change much. But change poses a risk for its initiator. In the security-versus-satisfaction dilemma, changing clearly leans toward the “satisfaction” side. Not changing, naturally, leans toward the “security” side. And the degree to which a particular person—a decision maker, if you will —embraces or resists change depends on their predisposition to search out or avoid risk. This is a personality trait, and some people get a kind of “high” from taking risks. Risk-takers are those for whom their need for satisfaction outweighs their need for security. The risk-averse are exactly the opposite. And a significant number of people lie somewhere in the middle. In other words, for most people, some degree of calculated risk is acceptable. The Technology Adoption Life-Cycle In 1995, Geoffrey Moore, a consultant at Regis McKenna Associates in Silicon Valley, offered the technology adoption life cycle as a way of explaining why and how some new product introductions succeed while others fail miserably. [2] Moore suggested that the acceptance of new technology by the public approximated a bell curve. The curve had two extreme tails and a large mainstream in the middle. Relatively little of the population lies at the extremes. Most is in the middle. I suggest that a similar phenomenon applies to methods or practices. Figure 2 illustrates Moore’s concept applied to management methods.

On the far right are the completely risk-averse. Most of the populations is composed of reluctant risktakers and conservative risk-takers. On the left extreme are the ambitious risk-takers and those with a 1

Except maybe for people like Hugh Hefner!

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“death wish.” Notice that there’s a gap, or chasm between the ambitious risk-takers and the conservative risk-takers. I suggest that adoption of revolutionary new methods is akin to the embrace of new technology—it’s related to the decision maker’s degree of risk aversion. Mental Models Most readers are familiar with Peter Senge. His book, The Fifth Discipline [3], is still a best-seller today. Senge third discipline is the concept of mental models, which he defined as: “…deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action. Very often, we are not consciously aware of our mental models or the effects they have on our behavior.”

But the concept didn’t originate with Senge. In 1974, Argyris coined the term “mental maps” to explain people’s behavior. [4] Argyris maintained that the mental maps we create in our minds help us plan, implement, and review the actions we take. In addition, Argyris contended that how humans behave is often at odds with what they claim they do. Argyris called this incongruent behavior. In other words, their mental maps direct their behavior in ways that may be diametrically opposed to what they say they do. How important are mental models in the human make-up? In 2003, Laurence Gonzales wrote a magnificent book entitled Deep Survival: Who Lives, Who Dies, and Why. [5] It’s a fascinating look into the world of extreme survival situations. Call it “field research,” if you will. Using actual case studies, he describes extreme situations in which some people lived, other situations where people died, and even some situations where some lived and some died in the exact same situation. Gonzales investigated these cases to find out why this happened. Not surprisingly, he found that in extreme survival situations, people often let their long-held mental models overrule their common sense—even at the risk of death. This is particularly true in stressful situations, when the tendency is to revert to instinct. In one such case, a guy who was lost in the Rocky Mountains deliberately left his compass behind along with some of his gear to lighten his load. He didn’t have a map, because he didn’t think he’d need one. And he kept walking deeper into the mountains instead of out of them, because his mental model told him that civilization was just over the next ridge— but it wasn’t. But the important conclusion Gonzales drew from his research was that mental models are actually “hard-wired” into the human brain. Gonzales cited the research of Antonio Damasio, a medical doctor with a Ph.D. in neuroscience as well. In 1994, Damasio wrote a book called Descartes’ Error [6] in which he biologically refuted the notion of Rene Descartes, the 18th century French philosopher, who proposed that logic and emotion occupied completely separate parts of the human brain. This view had been prevalent for the 200 years since Descartes’ time. Not only do mental models exist, according to Damasio, but they are actually “hard-wired” into the brain in the form of neural networks—a specific arrangement of connections and firing sequence of neurons. These networks continually “rewire” themselves as new learning occurs, but the transition is slow. One might say that it happens in an evolutionary way, not a revolutionary one. In other words, time is a factor—sometimes a lot of it. ©Copyright Goal Systems International, 2008

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Evolutionary Psychology This brings us to the work of Robert Wright, who wrote a book called The Moral Animal: Why We Are the Way We Are. [7] This book explores the emerging field of evolutionary psychology, but Wright translated fundamentals and principles into words and concepts that laymen can understand. Wright demonstrated that human behavior does evolve in response to a changing environment, but this happens over extended periods of time. However, once human behavior is established according to some norm, it doesn’t change easily. Paradigms Finally, there’s the subject of paradigms. The term was first introduced in 1962 by Thomas Kuhn. [8] For decades since then, it’s been used, abused, and redefined to suit different purposes by a host of management experts. In fact, it’s been so overused that it’s lost its impact, if not its meaning. According to Kuhn, a paradigm is a pattern or model that describes how things must, or do, happen within the confines of some domain. This model might be considered “the rules of the game.” Some examples of paradigms include organized sports, economics, societies, industries and business, geopolitics, and scientific bodies of knowledge. The accepted state of our knowledge about systems and their interactions might constitute a paradigm. This knowledge shapes behavior within systems—say, the banking or home mortgage system, for example. As with mental models and evolutionary psychology, paradigms may be modified or refined, but they are rarely replaced. But why is this so? Synthesizing Everything Let’s put everything that we’ve discussed so far together: our discussion of security versus satisfaction; theories of action and incongruent behavior; risk-taking versus risk-aversion; mental models; evolutionary psychology, and paradigms. Figure 3 (next page) is a cause-and-effect logic tree that explains how these various theories combine to produce executive behavior we often see concerning decisions to make major changes. Read the tree from bottom to top, preceding the text in each box with the words “If…”, “…and…”, or “…then…”, as appropriate. What this tree is saying is that revolutionary change has a low probability of success because people’s mental models cause them to resist it, even though they may profess to support it. And even if a revolutionary change is adopted, it won’t be likely to have much “staying power.” In other words, after some period of time, behavior of executives (from whom all other in a system take their cues) will revert to a greater degree of congruency with their mental models—what their neural networks are telling them is required for “survival.” In some cases, revolutionary changes may “stick,” but these instances are relatively few in number, and they may occur only when the system’s survival is perceived to be at risk without such change.

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Mental Models: The Role of Security and Satisfaction Let’s not forget that in the scheme of evolution, the underlying goal is survival and propagation of the species. In the business world, this might be interpreted as “job security.” This can be a powerful force for retaining and reinforcing the status quo.

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Now, if we consider Efrat’s cloud (Figure 1), which is focused on individual happiness, we can better understand the powerful psychological forces underlying resistance to change. On the other hand, as individuals, we long to realize satisfaction in our lives. This provides some degree of stimulus for change. Efrat’s cloud is a mental model, but most people are completely oblivious to it. Yet it subliminally guides their behavior to balance security and satisfaction—in other words, a compromise. That balance, for most of the population is tilted in favor of security—resisting change. (See Figure 4) Executive Acceptance Whose security and satisfaction are we talking about when we’re trying to introduce a revolutionary new business paradigm—which constraint theory, lean, and six sigma most certainly are? It’s the security and satisfaction of decision-makers—executives! Subordinates in the organization generally follow the lead of their executives. Let’s look briefly at another logic tree (Figure 5, next page). What this tree is telling us is that once people reach executive levels, they become more conservative in their decision making, and thus less likely to initiate or approve radical change. They’ve reached a position of status, authority, prestige, and possibly highly desirable perquisites, and they’re reluctant to risk those. Even if they were ambitious risk-takers in their drive to achieve power, once they get it, they want to keep it. They can’t go anywhere from there but down, and their behavior may adjust from risktaking to risk-aversion. This naturally leads them to avoid or delay risky decisions, while embracing and approving low-risk decisions that aren’t likely to have much, if any, effect on their position and power. A paradigm-changing decision, such as the embrace of new management methods or products, is more likely when a company and its executive find themselves in a “survival” situation, where they must do something different or die. If things are going “okay”—not great, but not that bad, either—the odds are very low that an executive will embrace a revolutionary change like TOC…unless he or she is an ambitious risk-taker. And we all know there aren’t very many of those. Another way of saying this is that “the good is the enemy of the better.” This is particularly true of larger, established, more bureaucratic businesses, rather than smaller, “hungrier” businesses on the way up. The latter are often run by executives who are responsible for day to day operations as well as future direction and results—small to medium-sized businesses that may be family-owned and operated. Conclusions So, what can we conclude from this line of reasoning?  First and most important, people’s behavior is “hard-wired” and largely emotional.  Second, people behave according to their mental models, which provide a comfort zone.

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 Third, logical persuasion is likely to have little impact, in spite of what it might seem like at the time it’s attempted. (Remember incongruent behavior?) Emotion is a much more powerful actor.  Fourth, relatively few people—those whose need for satisfaction outweighs their need for security— will risk changing on their own. And of those that do, most will do so only cautiously or reluctantly.  Fifth, people’s actions often don’t reflect their words about it.  And, finally, true behavioral change occurs naturally at a more evolutionary rate, not a revolutionary one. Implications So, what are the implications of these conclusions? First, the odds of success for revolutionary change by persuasion alone are very long. A more likely outcome is rejection, or reversion to past behavior. Incremental, evolutionary changes have a better chance of long-term success. But they require patience! Second, if you’re determined to attempt revolutionary change in the face of these long odds, imposed change has a better chance of success—at least for the short term. How New Ideas “Get In.” This brings us to the question of how new ideas get into an organization in the first place. Deming once observed that truly profound, game-changing knowledge must come from outside of a system; it doesn’t naturally reside within it. Moreover, he said, it has to be invited in. In other words, someone has to actively seek it out and bring it in. The problem with introducing something game-changing is that in most cases the people with the decision-making power—the executives—are too busy running the company on a day-to-day basis to worry much about searching out new ideas, or new ways of doing things. They don’t have the time or the inclination to go to conferences like this. They may not even have much time to do professional reading in journals that might provide them exposure to paradigm-shifting methods (even if they were inclined to consider them). Who actually does this kind of external research to find out “what’s out there?” It’s people in the middle levels of large organizations—the working professionals who aspire to upper management. Maybe even department heads. But not usually executives. The exception to this tendency, as mentioned above, is small-to-medium sized privately-held companies, whose owners are often the executives in charge. These executives have to wear two hats. Besides running the company, they have to originate the breakthroughs that will grow the company. So these are the companies where radical new methodologies are embraced by decision-makers and actually have a better track record of success. When a new idea or method penetrates an organization at the middle level, it requires persuasion up the chain of command. When it enters at the top, it can be imposed down the chain. Executive-Led Change Change initiated by an executive is no guarantee of long-term success, and maybe not even short-term success. It’s definitely required for initial success, and the best example of this is Jack Welch and Six Sigma at General Electric. ©Copyright Goal Systems International, 2008

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But even executive-imposed change is no guarantee of sustainability. Because the change was imposed in a revolutionary way, behavior may revert when the executive leaves. And with rare exceptions, executives don’t stay in their positions for very long. Not “evolutionarily long,” at any rate. Again, the prime example is Jack Welch at General Electric. After he retired, Jeffrey Immelt took GE in a completely different direction—into the ditch, as it happened. There are no easy solutions to this problem. The best that can be offered is a possible model for change, and it’s not particularly new or original. A Change Implementation Model Figure 6 comes from The Logical Thinking Process. [9] It doesn’t specify how to win the heart and mind of the top leader, but that particular step has to happen first, and logic alone won’t do it. Once it does happen, this model provides a potentially effective roadmap for implementation and sustainment. 1. Briefly, the leader’s commitment precedes everything else. 2. Then the leaders must define the new, modified behavior required of both themselves, and of subordinates.

3. Simultaneously, leaders must communicate the new mission, task, or charter to all subordinates, and… 4. Visibly demonstrate—by their own behavior—their commitment to the new way of doing things. This requires a cognitive acceptance on their part of the need to change and the value of doing so.

5. Only these first four steps have a chance of engendering subordinates’ understanding of their charter and their commitment to it. 6. This brings us to the ubiquitous feedback loop: managing performance though behavior modification techniques. Whole books have been written about this topic, so I won’t go into that here. Suffice it to say that TOC tells us nothing about this vitally important contributor to long-term success. But if you don’t measure and correct behavior to the desired standard over a long period of time, the ©Copyright Goal Systems International, 2008

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evolutionary change will not occur—behavior will revert. This is where most newly-embraced philosophies and methods ultimately fail. Finally, if all of this is done effectively, the desired outcomes should be achieved—if you’re lucky. And then leaders must grasp that success and hammer it home as reinforcement from the executive level, as proof that the changes were the right things to do. Behavioral Reinforcement All this paper addresses is the cognitive side of changing the status quo…emotionally internalizing the need to change. There’s a powerful behavioral side that must also be considered. If you’re fortunate enough to overcome the cognitive challenge with the organization’s leader, the nature of evolutionary change still means that extensive reinforcement will be required for an indefinite transition period if a change is ultimately going to succeed. It takes a long time to modify mental models.

Endnotes 1. Dettmer, H. William. Strategic Navigation: A Systems Approach to Business Strategy. Milwaukee, WI: ASQ Quality Press, 2003. 2. Moore, Geoffrey, Inside the Tornado. NY: HarperBusiness, 1995. 3. Senge, Peter M. The Fifth Discipline: The Art and Practice of the Learning Organization. NY: Doubleday, 1990. 4. Argyris, Chris and Schön, Donald. Theory in practice: Increasing Professional Effectiveness. San Francisco: Jossey-Bass, 1974. 5. Gonzales, Laurence. Deep Survival: Who Lives, Who Dies, and Why. NY: W.W. Norton & Co. 2003 6. Damasio, Antonio R. Descartes’ Error: Emotion, Reason, and the Human Brain. NY: Putnam, 1994. 7. Wright, Robert. The Moral Animal: Why We Are the Way We Are: The New Science of Evolutionary Psychology. NY: Vintage, 1994. 8. Kuhn, Thomas S. The Structure of Scientific Revolutions. Chicago: University of Chicago Press, 1962. 9. Dettmer, H. William. The Logical Thinking Process: A Systems Approach to Complex Problem Solving. Milwaukee: ASQ Quality Press, 2007.

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