From the Founding EditorL

ast summer, my wife and I saw a wonderful production of Wagner’s Der
Ring des Nibelungen performed beautifully by the Seattle Opera. In studying
for this event, I learned that when Wagner rst conceptualized the nal opera,
Götterdämmerung, or The Twilight of the Gods, he thought the earth should bedestroyed, but the Gods would live on. As Wagner matured and saw more of
the world, he changed his mind about the ending. He decided that the only way
humanity would learn anything is if the Gods and all of their creations die withthem. The message I took from this is that it requires a large catastrophe before
we wake up, reexamine our mental models, beliefs, and values, and try to improve on them.
I can’t help but feel that the destruction of the World Trade Towers comes
about as close to a Götterdämmerung as we can imagine. The big question is,‘‘Will we learn anything? Will we reexamine our assumptions about the natureof the world and our role in it?’’ The theme of this issue, though it comes almosta year later, is addressed to the possibilities for learning that September 11
provides for us. There are several such possibilities:
1. We can reexamine our beliefs and assumptions about global values. Are there values
that apply across all cultures, or do we have to face the uncomfortable possibility
that different cultures have different but equally strongly held assumptions, and thateven within a culture or a religious group there are irreconcilable value differencesthat have to be dealt with? New kinds of intercultural and interreligious dialogues
will have to be found.
2. We can reexamine our own political role in international affairs and face the uncomfortable proposition that not everyone shares democratic values of the sort we cherish. New kinds of coalitions and roles may have to be found.
3. We can reexamine our economic assumptions about what kind of economic help ismost helpful and what kind of economic and political system would be most helpful
to the poorer nations of the world. New assumptions might have to be entertained
about what kind of political system works best under what circumstances.
4. Finally, and an extension of the last point, we might have to confront the possibility
that as long as there is the great North/South divide between the developed world
and the less developed, often impoverished world, the problems of terrorism won’t
abate because the economic, social, and cultural soil in which such levels of anger
get nourished continues to characterize large portions of the world. We might haveto consider that ‘‘evil’’ is born of anger and frustration. Until we deal with the conditions that produce such anger and frustration, we will continue to see the fruits of
those feelings. New roles for the major sectors of society will have to be found.
Many of the articles in this issue try to deal with these dilemmas. The assumption thatany one sector of society —industry, government, nongovernmental organizations, theUnited Nations, and so on—can solve the problems of poverty and powerlessness isperhaps the least tenable. Yet, inventing new roles for business and government is noteasy. September 11 was a wake-up call. I hope that enough of the globe has woken up torethink how we are proceeding.

Ed Schein
REFLECTIONS, Volume 3, Number 4

1

In This Issue
Edgar H. Schein and Karen Ayas

D

2ealing with conditions that reinforce the social divide and bridging the gap between
the ‘‘haves’’ and ‘‘have-nots’’ are daunting tasks, but ones that we are neverthelesscalled to address.
The collection of articles in this issue helps us understand the dynamics and thedesign aws inherent in our political and economic systems and invites us to reexamine
our paradigms, the very assumptions and values we hold onto and impose on the world
with the best intent. Each article offers a complementary perspective on how we mightproceed and how our roles— as corporate leaders, legislators, educators, economists, activists, and others—need to change if we are to work together toward a long-term, effective solution.
We begin with C.K. Prahalad, who questions our long-held views on the economic
viability of serving the poor and urges us to rethink our business models and strategy. A
shift in mental models of ‘‘the poor as a problem to be dealt with’’ to ‘‘the poor as animmense opportunity’’—a market that includes the 4.5 billion people at the bottom of theeconomic pyramid—could potentially lead to wealth creation and bene t for all involved.
Harvard Business School marketing professor V. Kasturi Rangan, while echoing Prahalad’s views, offers a complementary perspective, emphasizing the need for a value
proposition that transcends the individual business goals and truly enhances the qualityof life for those at the bottom of the economic pyramid. That Prahalad’s vision and strategy
can be put into action is conrmed in the commentary by André van Heemstra, a top
executive from Unilever. Vindi Banga, CEO of Hindustan Lever, in his comments provides
some successful examples from India of meeting this challenge.
While businesses are likely to have high leverage in today’s world, they alone cannot
shift the dynamics of the widening gap between the poor and the afuent. Steven Waddell
offers an alternative to failed attempts by business-led or government-led initiatives. The
societal learning approach he proposes rests on a new type of collaboration among corporations, government, and civil society. Barbara Waugh, an activist, and Betty Sproule,a business development manager, both from Hewlett-Packard, offer a list of provocative
questions based on their own initiative of providing Internet access to the poor. Kumi
Naidoo, secretary general of Civicus, underscores the need for new skills to realize effective intersectoral partnerships and identi es the challenges of operationalizing societal
learning globally.
The inherent, systemic design aws and the unintended consequences of globalization are demonstrated next in Jeff Gates’s carefully crafted and fact-based article. He
forewarns of a future governed by  nance fundamentalism, should the current trends
continue. Gates urges economists, legislators, and corporate leaders to forge a paradigm
that stops today’s radical redistribution of wealth from poor to rich. Arthur Warmoth, in
his insightful commentary, offers the role of corporate executives, the design of money,
and the economics of the commons as additional key elements for an effective long-term
solution.
Frances Moore Lappé and Anna Lappé, based on their research on the world’s poorest for their book Hope’s Edge: The Next Diet for a Small Planet, stress the need for creating
and sustaining healthy markets. They share stories of market innovations—markets that
operate within a set of public rules guided by values such as honesty, trust, and mutuality—that illustrate hopeful beginnings of a global society where the poor are resourcefuland free from dependency on the moneylender.
Karin Eyben, Libby Keys, Duncan Morrow, and Derick Wilson bring us the lessons
learned from a community that has lived with terrorism for over a decade, Northern

Volume 3, Number 4, REFLECTIONSSCHEIN AND AYASIn this Issue

Ireland, where political and religious tensions reign and a deadly fear prevails. Their work,
illustrated by two case studies, brings us the possibility of reconciling differences acrossand within different communities, generating new ways of meeting and being together,engaging in dialogue, and learning across traditional identity and sectoral lines.
While multinational corporations and Western governments make large contributions
to the poor, when this is perceived as a manifestation of American power and control, athreat to the locals, and disrespect to their social identities, it can be a source for anger,
frustration, and hate. John Child calls us to reect on the very roots of terrorism, highlighting the importance of national identities and the deeply held beliefs that de ne them.
Lotte Bailyn comments on the new role and responsibilities US business leaders would
need to build truly multinational corporations.
Bettye Pruitt and Katrin Käufer next present a tool for con ict resolution and transformation, based on learning histories of civic scenario-building cases in South Africa,
Colombia, and Guatemala. They share some of the rich experiences in a workshop convened by the United Nations Development Program (UNDP) in Antigua (Guatemala), anddescribe the invisible relational dynamics in civic dialogue processes, providing a theory
informed by practice. Manuel Manga comments that the peaceful future requires not onlytransformational conversation but also leaders at all levels who can take the process from
dialogue to action. In her comments, Elena Martinez from the UNDP underscores thestrong contribution of such a theory for understanding the frequent failure of multistakeholder dialogue and for helping leaders in Latin America have a dialogue that can transform conict into positive change.
Barry Sugarman provides us with a detailed account of the second SoL Research
Greenhouse, a memorable gathering held 10 days after September 11, that brought practitioners, consultants, and researchers together. With this article, we also inaugurate a
new section that will feature research briefs. Read on to explore current research, engage
in early-stage collaborative projects, or simply continue the generative conversations thatbegan at the Greenhouse. Rita Kowalski, a non-SoL participant, shares her impressions
from the Greenhouse and her experience of being welcomed into a true community.

3

REFLECTIONS, Volume 3, Number 4

Contributors

4

Lotte Bailyn is the T Wilson (Class of 1953) Professor of Management, MIT Sloan Schoolof Management.
Vindi Banga is chairman of Hindustan Lever Limited, India.
John Child is professor of commerce, University of Birmingham, UK.
Karin Eyben is a research ofcer for Future Ways at the University of Ulster.
Jeff Gates is a former counsel to the US Senate Committee on Finance, author of The
Ownership Solution and Democracy at Risk, and president of the Shared Capitalism
Institute.
Katrin Käufer is a visiting scholar at the Massachusetts Institute of Technology.
Libby Keys is a coordinator at Future Ways, University of Ulster, and the Western Routes
Civic Leadership Program, Western Region Councils.
Rita Z. Kowalski is special projects manager, US Department of Veterans Affairs.
Anna Lappé is the coauthor of Hope’s Edge: The Next Diet for a Small Planet and cofounderof the Small Planet Fund.
Frances Moore Lappé is the author of Diet for a Small Planet and coauthor of Hope’s
Edge: The Next Diet for a Small Planet. She is the cofounder of the Small Planet Fund.
Manuel Manga is an international consultant who focuses on leadership, language, andlearning.
Elena Martinez is assistant administrator and regional director, UNDP Latin American
and Caribbean Bureau.
Duncan Morrow is a lecturer in politics and codirector of Future Ways at the University
of Ulster.
Kumi Naidoo is the secretary general of Civicus.
C.K. Prahalad is the Harvey C. Fruehauf Professor of Business Administration, Universityof Michigan, and chairman of the board, PRAJA, Inc.
Bettye H. Pruitt is the president of Pruitt & Company, Inc.
V. Kasturi Rangan is the Eliot I. Snider and Family Professor of Business Administration
and Chairman of the Marketing Department, Harvard Business School.
Emily Sper is a photographer, graphic designer, and author-illustrator in Boston, MA. Her
photographs have been exhibited in the US and abroad. ^ www.emilysper.com&
Betty A. Sproule is a manager of e-Inclusion Programs, Hewlett-Packard Philanthropy
and Education.
Barry Sugarman is a social scientist. For 20 years a professor of management and amanager in the nonprot sector, he is now SoL Research Coordinator.
André R. van Heemstra is a member of the board, Unilever N.V.
Steven J. Waddell is director of The Collaboration Works.
Arthur Warmoth is a professor of psychology, Sonoma State University.
Barbara Waugh is the cofounder of World e-Inclusion, Hewlett-Packard Company.
Derick Wilson is a senior lecturer in community relations and codirector of Future Waysat the University of Ulster.

Volume 3, Number 4, REFLECTIONSStrategies for the Bottomof the Economic Pyramid:
India as a Sourceof Innovation
C.K. PrahaladT

6

C.K. Prahalad
Harvey C. Fruehauf Professor of Business
Administration
University of Michigan
Graduate School of Business
Chairman of the Board
PRAJA, Inc.
cprahalad@praja.com

he solution to the increasing divide between rich and poor throughout theworld requires a signi cant shift in the mind-sets not just of managers andentrepreneurs, but also of politicians, nongovernmental organizations (NGOs),and bureaucrats. Our focus should be on experimentation and not on further
renement of unsuccessful models and solutions. While generating new ideas
and experimenting are important, the capacity to generalize (or building a theory of why something works) is basic for transporting business solutions acrossregions and across the world. We must celebrate innovation and give it visibility
so that others can extract the principles and apply them elsewhere.
The examples I give here have not yet become global opportunities but arein various stages of development. All will undergo a transformation and morph
into something different. All focus on the bottom of the economic pyramid,
speci cally in India. But all have the potential to be global opportunities andpoint to some common themes (see table 1).
In India, signi cant economic progress in a wide variety of  elds —fromagriculture to custom software, professional services, and ne chemicals—hasbrought a new sense of optimism. The success of India in nontraditional industries around the world and especially the business success of Indians abroad
have created a new opportunity. The Indian diaspora is becoming a conduit for
new ideas in international relations and entrepreneurial growth. But the Indiaof the past—poverty, inequality, indifference, and inef ciency—has not loosened its grip. As in other parts of the world, two distinct populations are emerging—an enthusiastic, globally competitive India and an India of the very poorand the disenfranchised. In this article, I present a perspective on how to bridge
the increasing divide. I concentrate on how we can develop strategies for thebottom of the economic pyramid. My starting point: How do we conceive of amarket built around the very poor? How do we embrace new approaches toinnovation? Can we convert our apparently insurmountable problems of poverty into a global opportunity to serve 4.5 billion poor around the world—inmarkets similar to India’s— who have similar problems?

Escaping the Past to Create the FutureÓIn order to create a new India, we need to recast assumptions that have guided
public and private policy for the past 50 years of independence.
2002 by the Society for Organizational Learningand the Massachusetts Institute of Technology.

1. Wealth creation is more important than distributive justice. Income inequalities are as much a major issue in the US as in India or Brazil. We

Volume 3, Number 4, REFLECTIONSPRAHALADStrategies for the Bottom of the Economic Pyramid

must focus on increasing the income of everyone as we maintain our concern for income redistribution.
2. Countries of India’s size and diversity need more than one model of development to create wealth. Until recently, the room for local experimentation
was very limited. Fortunately, the states under different local governments
are now able to experiment with different approaches to development.
3. There is no rural and urban divide. Even as rural incomes increase and thenumbers of rural rich equal the urban rich, the debate still assumes thatthe rural and urban problems are distinct. We must work toward creatinga seamless market that makes goods and services available to all. Increasing the access of rural producers to urban markets should be a priority.
4. Market forces can cope with the problems of the poor; the private sector canbe trusted with infrastructure investments and capital-intensive industries.
The lesson worldwide is that a strong government role in industry is inappropriate. Deregulation and privatization are increasingly a global phenomenon. Are we willing to shed our commitment to the public sector fastenough? Can we trust market mechanisms that re ect true economic costs?
5. Income inequities cannot be alleviated through a system of overt and implicit
subsidies. Subsidized electricity, food, water, housing, and other necessities reect our commitment to a just society. No one can continue to  nancethese subsidies, which are maintained at the expense of growth.
6. Development involves primary education and primary health care, not justhigher education and advanced medicine. While India has some of the best
institutions of higher education, the scope, quality, and universality of primary education is less than adequate. Why? Asian development —be it inJapan, Taiwan, China, South Korea, or Malaysia—has demonstrated theimportance of universal, high-quality primary and secondary education
coupled with sound health care.

A Basic Shift in Mind-set
India and other countries with a similar economic divide can become a sourceof innovation if the mind-sets of managers and public policymakers undergo asigni cant shift. For example, if we conceptualize the problem of India as the
problem of poverty, then we have a set of standard prescriptions. But if we ask
ourselves the question: ‘‘How do we convert the poor into active consumers?,’’we will develop new, interesting, and innovative solutions. I see the need fortwo signi cant transitions: Policymakers must conclude that converting the poor into a vibrant market is more likely to succeed than previous efforts. Fifty years of effort toalleviate poverty using the tested tools— subsidies and governmental
Table 1 Necessary mind-set changes
From

To

Poor as a problem

Poor as an opportunity to innovate, aglobal market of 4.5 billion

Poor as wards of the state

Poor as an active market/consumers

Old technologies

Creative bundling of the most advanced
technology with a local avor

Follow the West

Selectively ‘‘leapfrog’’ and innovate

Focus on resources andconstraints

Focus on creativity and entrepreneurship

Capital limitations

Limitations to information and accessEfciency in a known model

Innovation of a new model

REFLECTIONS, Volume 3, Number 4

7

PRAHALADStrategies for the Bottom of the Economic Pyramid

8

Figure 1 The emerging market:
India. Traditional and emerging
focus

programs—have failed; 500 million Indians still subsist on less than $1 per day. The income disparities
are still large and increasing. We have to adopt a new
approach.
 Creating new markets to include the poor and the disadvantaged, and innovations related to that effort, isthe real bene t of globalization. In the debate about‘‘globalization’’ and the alienation of the poor and thedisenfranchised, the argument is that globalization
will further accentuate the problems of income andopportunity disparity. We have to challenge this assumption and create appropriate incentives.

Prerequisites to Managing the Transition
First, we must recognize the nature of the opportunity. See, for example, theeconomic pyramid in India shown in  gure 1. This model of income distribution
is not peculiar to India, but represents other emerging markets such as China
and Brazil. The similar perspectives of managers in multinationals, large Indian rms, politicians, the bureaucracy, and the NGOs are striking. All assume, either implicitly or explicitly, that the lower three levels are the responsibility of
the governments and NGOs. The business managers in large  rms still focus
primarily on the top tier, with few rms attempting to penetrate the second.
The Indian view of middle class is in the second and third tiers, not necessarily
a great opportunity for multinationals as they are currently con gured. But asa prerequisite for the transformation of India, we have to organize the unorganized sector. We have to create a market out of the abject poor. We must focus
on the lower three levels.
However, the bottom of the economic pyramid imposes several new managerial demands:
First, the price-performance relationships of all existing products and services must be dramatically altered. An ice cream cone that costs 25 rupees or a bottle of shampoo that costs 50 rupees will not do. Why can’t
there be a good-quality ice cream cone for one rupee?
Second, the model must be scalable. For example, while NGOs do a phenomenal amount of service in India, their work and innovations are noteasily scalable or transferable. We cannot serve 700 million Indians at
the bottom of the pyramid if we do not develop business models that arescalable.
Third, the models must be environmentally sustainable. The resourceintensive products and technologies used in mature markets will be unsustainable in the long term. For example, we must curtail the use ofwater, energy, and materials. Given the shortages in both rural and urban
India, water use and pollution of the existing water supply are serious
problems. Production methods as well as products must consume littleof the limited resources without sacri cing functionality.
Finally, we must focus on harmonizing the most advanced technologies andlocal conditions to create innovative solutions to address the opportunities at the bottom of the pyramid. Ironically, the bottom of the pyramid
may be the springboard for the most creative use of advanced technologies. The speci cations of the requirements for satisfying the needs ofthe bottom of the pyramid can be captured (see  gure 2).
Solutions to the bottom of the economic pyramid must satisfy all four conditions. In some types of businesses, we may need to satisfy only three. For
example, the nancial services industry need not focus as much attention on
the sustainable development dimension as the packaged goods industry does.
However, it has to focus on the other three dimensions.

Volume 3, Number 4, REFLECTIONS

1. Develop Low-Cost Refrigeration:
Ice Cream for the Poor
Many in India consider an ice cream cone a ‘‘luxury item.’’
I am told that it is taxed. But ice cream on a hot summer Figure 2 Emerging markets as
day is a welcome relief. Why shouldn’t all Indian children the test bed of innovation
have an ice cream cone when they feel like it? A cone for
20 rupees (the price in New Delhi) is not the answer. However, an ice creamcone for one rupee would make this dream a reality for all India’s children.
A cost breakdown of ice cream suggests that about 40% to 50% is forrefrigeration. Even when one pays the price for refrigeration, a good-quality
product is rare. Ice cream should be stored at –188 C to retain the best texture.
In most parts of India, with signi cant brown- and blackouts, the probabilityof a steady –188 C is low. Furthermore, in areas where electricity is unavailable,
ice cream vending is unlikely. Is there a solution to this problem?
The scientists at the Hindustan Lever Limited (HLL) in Bangalore havefound an interesting solution by inventing a safe, inexpensive, and sustainable
technology solution.1 Current methods of vending have the following characteristics: one kilowatt of electricity per kilogram of ice cream during intercity
transport; four kilowatts per kilogram of ice cream during in-store vending
operations; the risk of CFC leakage, which is a toxic carcinogen; and the equipment containing the coolant is capital intensive.
Thus, the cost of ice cream in India is too high to develop a mass market.
The consumption per capita is a meager 0.05 kilogram per person per year
compared with 0.5 kilogram per person per year in Thailand and 10 kilograms
per person per year in the US. Even if India reaches the levels of consumptionin Thailand, it will need an additional 2.5 billion kilowatts of electricity.
HLL’s innovation focuses on creating a nontoxic, noncorrosive coolant system for safe, low-cost, and low-weight, mobile vending machines. The uniquecontributions are:
1. The system uses coolants that are nontoxic and nonpolluting. All the salts
used are edible to eliminate pollutants. Furthermore, by dramatically altering the energy requirements, it adds to sustainable development.
2. By creating a novel approach—a heat shield instead of the traditional heatsink—this approach almost approximates a ‘‘refrigerationless’’ vending
system. Under trial, the ability to insulate and maintain temperature invending carts was superior to current best practice. Most important, thecapital costs of the ‘‘vending box’’ are low.
3. The system has the capacity to dramatically alter the cost of ice cream. HLL
is developing the technology further to create a new refrigeration systemfrom the factory to the end consumer to further reduce refrigeration costs.
Maybe someday India will have ice cream at the point of sale.
4. The system ful lls the four criteria I set out for serving the bottom of the
pyramid: it alters the price-performance relationship, is scalable, contributes to sustainable development, and represents a unique high-technology
solution.
5. While India still does not have a good-quality cone for one rupee, children
can get a good-quality cone for three to ve rupees.
Imagine the opportunities when this type of innovation is applied to refrigeration platforms, not just for ice cream, but for vegetables, dairy,  sh, meat,
and, most important, medication. In addition to dramatically altering ‘‘farm toplate’’ waste (estimated at almost 10% in India), it could make many ordinary

REFLECTIONS, Volume 3, Number 4

PRAHALADFive innovations critical to markets like India’s demonstrate that India can become the source of such creativity
for the world.

Strategies for the Bottom of the Economic Pyramid

Creating a Market: Five Innovations

9

PRAHALADStrategies for the Bottom of the Economic Pyramid

Hindustan Lever Limited
When a local rm, Nirma, challenged Hindustan Lever Limited (HLL), a subsidiary of Unilever, plc, in its detergent business by creating a new business system that consisted of anew product formulation, manufacturing process, distribution, packaging, and pricing,
HLL initially dismissed Nirma as a low-end producer, not a competitor in its served market. As Nirma grew rapidly, HLL realized both its opportunity and its vulnerability. Nirma
was attacking from the bottom of the pyramid.
HLL responded by creating a new product that dramatically reduced the ratio of oil towater in the detergent, reducing signicantly the pollution associated with washingclothes in rivers and other public water systems. It decentralized production, marketing,and distribution to take advantage of the abundant labor pool in rural India and to penetrate quickly the thousands of small outlets where people at the bottom of the pyramid
shop. It reinvented the cost structure of the business, making the product more affordable.
This experience has allowed HLL to radically change its business models across theboard. Unilever has also beneted. It transported the business principles (not the productor brand) to create a successful detergent, Ala, in Brazil, and has adopted the bottom of
the pyramid as a strategic priority at the corporate level.

day-to-day products available to the poor at affordable prices. More important,this system can be exported to other, similar markets.

2. Provide Access to Credit

10

Caught between moneylenders and landlords, most poor people in India cannot
escape poverty. Access to credit is critical. Several innovations such as the Grameen Bank (in Bangladesh) have demonstrated that a well-developed, carefully
managed commercial system of microlending can help people move out of poverty. Can the organized banking sector create strategies for the bottom of the
pyramid?
As part of my consulting with John Reed, CEO of Citibank, we exploredthe bene ts of extending the served market of commercial banks to include thepoor. ‘‘Serving a billion consumers’’ became shorthand within Citi for a bold
move to fundamentally challenge and change the assumptions behind banking
and price-performance levels. The goal was not to disburse ‘‘governmentsponsored subsidies’’ but to build fundamentally new business models in distribution, price-performance levels, features and functionality, and easy access.
Reed committed to building a totally different kind of nancial services company that looked more like a branded consumer-goods rm, à la Coca-Cola.
Bangalore was chosen as a place to experiment, create, and re ne a newmodel. By developing a new high-technology distribution solution, Citi createdSuvidha to attract a consumer who is ATM oriented rather than branch-bankoriented. The exibility of a 24/7 solution (better than a branch solution) allowed customers to conduct transactions in any networked ATM so they are
not stuck with one location. The experiment achieved breakeven three years
ahead of schedule and exceeded all expectations. Suvidha now has more than
150,000 customers in Bangalore alone. Citi is ready to launch its business modelin Mumbai and the rest of India. ICICI Bank and the Housing Development
Finance Corporation (HDFC) offer similar services. Soon, no signi cant playerin nancial services will be able to ignore the customers on the third and fourthlevels of the economic pyramid.
The strength of the business model is still plagued by the cost of building
an ATM network and the literacy required for operating the ATM. What if an
ATM network emerged as an independent service that a consortia of banks
could own and participate in? What if identication became increasingly simple
through an iris-recognition engine attached to ATMs? (Recognition based on
the iris in the eye has proven to be more accurate than  ngerprints or othermethods.) What if we combine the capabilities of an ATM network with local
credit checks by peers (as in Grameen Bank)? The experiments by Citi, ICICI,

Volume 3, Number 4, REFLECTIONS

3. Build a Low-Cost Logistics System
The dubbawallahs of Mumbai, ofcially known as the Nutan Tif n Box Suppliers Association (NTBSA) are an incredible success story.2 This elegant logistics system is built on the public train service infrastructure. The dubbawallahs
deliver 175,000 meals and make 350,000 transactions per day. They have abetter than six-sigma record; they make no errors, have a good safety record,
and are on time. They carry packages for about 25 kilometers (one way) at a
cost of service per month of approximately 200 rupees (US$4). At any one time,about 5,000 people are employed and are organized as a cooperative withelected ofcials on a governing board. A coding system allows the 5,000 ‘‘semiliterate’’ workers (seventh-grade education is a prerequisite) to aggregate andsort the boxes twice—at the train station of origin and the destination.
The NTBSA is a model of managerial and organizational simplicity. The
basic unit of organization is one individual who is responsible for 30 customers.
Dubbawallahs are part of a team of 20 to 25 individuals. The team leader (arole that the most senior person on the team typically assumes) is responsible
for the team’s ef cient functioning. Each month, the group’s total earnings arepooled and divided equally among all members including the leader. Each dubbawallah is a businessman in his own right.
The 200 teams elect an executive committee of  ve that governs the entire
cooperative. The committee resolves con icts, sets the social agenda, and administers welfare activities associated with the cooperative. The teams are,therefore, self-administered work units that share a common agenda with otherteams. The entire system is self-regulating and totally scalable.

PRAHALADStrategies for the Bottom of the Economic Pyramidand HDFC are the beginning of a breakthrough in thinking—the belief that thebottom of the pyramid could be an attractive commercial opportunity and thatthe poor will pay for good, appropriate service. Can these innovations be leveraged in markets such as Brazil, Mexico, or China? Citigroup can target a consumer group of 400 million to 600 million people around the world with its
model. Why not ICICI and HDFC?

Banking for the Poor
Grameen Bank in Bangladesh uses local knowledge, peer-group evaluation, a focus on
women, and specic, viable projects to extend credit and mitigate risks in lending to thepoor. Started just 20 years ago by a college professor, Muhammad Yunus, Grameen Bank
provides microcredit to more than 3 million poor customers in over 35,000 villages. In
1996, the bank loaned more than $1 billion in Bangladesh, with an average loan size of$15. Even more impressive, Grameen has achieved a 99% repayment rate, higher thanany other bank in the Indian subcontinent and certainly the envy of credit card issuersaround the world. It achieves these results while lending only to the poorest of the poor.
The availability of microcredit is transforming those villages with access to it by jumpstarting widespread entrepreneurial efforts, creating new employment, and raising theoverall standard of living.
French banker Jacques Attali has created PlaNet Finance, an Internet site that links
thousands of microcredit groups around the world into a network for sharing solutions
and lowering costs. Ultimately, the goal is to develop an automated solution for tracking
and processing the millions of small loans associated with microlending. If processing andtransaction costs can be reduced, they can then be bundled together and sold on a commercial basis to large nancial institutions such as Citibank.
The logical extension of microlending is microbanking. Standard Bank in South Africa
has developed a successful, low-cost business model. Through use of ATMs and electronictransfer of funds, Standard Bank now serves three million low-income customers throughits AutoBank E service and is adding 50,000 customers a month. People can open accounts with a deposit as small as $8. They are then shown how to use a cash-point cardby staff people who speak a variety of African dialects. An interest-bearing ‘‘savings
purse,’’ part of every account, encourages poor customers to save. Although interest rates
on deposits are low, they are superior to keeping cash in a jar. Computerization makes it
possible to lend money to people with no collateral and no formal address.

REFLECTIONS, Volume 3, Number 4

11

PRAHALAD
Strategies for the Bottom of the Economic PyramidAll the team members hail from the same villages around Pune district.
They have a strong social bond, common language, and pride in what they do.
The strength of the system depends on common protocols, disciplines, and ashared agenda. There is no organizational structure, managerial layers, or explicit control mechanisms.
If the system is so efcient, why use it only for food? What if this logistics
system were combined with secure courier service and the Internet? Couldn’t
it become a low-cost, high-quality, highly decentralized system of logistics torival FedEx and DHL? Couldn’t we replicate it in other parts of the world by
grafting it onto a good public infrastructure?

4. Rationalize Retailing

André R. van Heemstra
Member of the Board
Unilever Rotterdam

Commentaryby André R. van Heemstra

12

C.K. Prahalad focuses on a huge potential in
the Indian market: the poor, who cannot afford to make a mistake in spending whatlittle money they have and for whom there
are no trivial purchases. Reducing cost andintensifying distribution are essential tobringing products within the range of incipient consumers. But equally important is accountability, the guarantee of consistency inproducts. This is the role of the brand.
At Hindustan Lever, we do our best to realize Prahalad’s vision. Through our brands,
we seek consumers’ trust by marrying
world-class research and technology to rsthand knowledge of their requirements. A
mother wants to give only the best to herchildren. Healthy ingredients cannot be delivered at the expense of taste. Availability
cannot be at the expense of quality.
The originality of Prahalad’s thinking isthat he discovers many different routes topoverty reduction, embracing market mechanisms as well as traditional state provision.
We salute the challenge he poses to movefrom seeing the poor as a ‘‘problem,’’ toseeing the poor as an ‘‘opportunity,’’ a tremendous spur to our capacity to innovate
and create. He challenges us to see the poor
as worthy of the same dignity and respect
as other consumers, and to respect the exercise of choice in their lives and for theirfamilies. The optimism of Prahalad’s vision is
infectious. It is a worthy goal to work for‘‘the ending of poverty and ignorance anddisease and inequality of opportunity,’’ eachin their own way and to the best of theirabilities.

The cornerstone of Indian retailing is the local store. It is a small, often dusty
and noisy, cramped space, with clearly de ned peak hours, operated by local
entrepreneurs. There are more than 200,000 such grocery stores. Can andshould the retailing sector bene t from a low-cost, high-technology application,such as a point of sale (POS) system? Can the fragmented grocery-retailing
sector bene t from the modern tools of inventory management? What level ofworking capital could be released in the entire system if we applied modern,systemwide stock management? The estimated working capital currently employed in India is equivalent to an entire year’s gross domestic product.
TVS Electronics is testing a unique POS system that combines high-techfeatures at low cost and is customized for small retailers.3 Some features of thissystem are:
1. Stock management with a prompt and alarm for low-stock items
2. Calculation of slow-moving items
3. Sales return handling
4. Payments—cash, credit card (accept but not verify)
5. Bill printing in multiple languages to suit local needs; it can currently print
in English and 11 Indian languages.
6. Pricing and ability to change prices
7. Handling petty cash
8. Power backup
9. Handheld bar-code reader
10. Internet capability
The system is priced under $1,000, an order-of-magnitude improvement overanything available elsewhere. It is a robust POS for a fragmented groceryretailing system that can exploit the bene ts of the Internet and create the capacity at the local level to manage stocks. Essentially, this approach enables thefragmented system to reap the bene ts of the integrated grocery chains of theWest, without destroying entrepreneurial and low-cost local operators.
Couldn’t such a system have applications in other areas, such as pharmaceutical retailing (where entrepreneurs must keep detailed records in addition
to stock data and bill printing) or in the textile trade? Could such a system havea market in Brazil, Mexico, or China?

5. Revolutionize Health Care
The quality of health care available to the poor in India is appalling. Of the 30
million blind people in the world, 6 million are in India. An additional 12.5
million are estimated to suffer from poor eyesight. Most cannot afford to go toan urban hospital. The quality of eye clinics varies, and access depends on when
and where the clinics are held. Can we develop a cataract operation that includes the implantation of an intra-ocular lens for less than 500 rupees?
Aravind Hospital, headquartered in Madurai, Tamil Nadu, has developed
a unique system of eye care:

Volume 3, Number 4, REFLECTIONS

1. More than 1,000 free eye clinics a year
2. Transportation to hospitals to ensure quality and provide board and lodging
for patients
3. A team of one doctor and two nurses to operate on about 50 patients per
day in a consistent but repetitive work pattern that resembles a fast-foodchain
4. Social workers to teach the patients and the family about good eye care
The Aravind Hospital operates on more than 200,000 patients per year (making
it the world’s largest eye-care facility). It is commercially run and highly profitable. More than 60% of the very poor get free care, and 40% pay about $10,
as compared with $1,600 for Medicare in the US.
Can this model be franchised to other parts of India? Couldn’t the Aravindmodel be used in other countries with similar problems— very poor patientsliving in inaccessible areas? In fact, the Aravind model is relevant to most partsof Asia, all of Africa, and most of Latin America.
India represents a great opportunity for innovation in health care. It has alarge incidence of infectious diseases and high rates of diabetes, cardiac problems, and stress. For example, consider the spread of HIV and AIDS.4 There are
more than 4 million infected in India, and a growing number that represents
more than 12% of the global infected population. HIV in India is primarily
spread through heterosexual contact; truck routes are major conduits for the
spread of the disease. The economic consequences to India are signi cant. Dr.
Lalit Nath, director of the All India Institute of Medical Sciences in New Delhi,
estimates, ‘‘The AIDS virus . . . is costing the country about $13.8 billion ayear.’’ Lifetime costs of care per person may be two years’ wages, or 24,000
rupees per person.5
Why can’t India pioneer methods to systematicallymonitor the spread of the disease? Why can’t it develop
inexpensive and totally reliable testing methods (say, 5 rupees per test)? Why can’t it track the infected individuals
through the course of their disease? Why can’t it commit
to treatment modalities that do not cost more than 10 rupees per day?
The immediate response of professional researchers is
likely to be, ‘‘It is impossible. You do not understand HIV.’’
I see this as no different from a one-rupee ice cream cone, 1,000-rupee bankdeposit, 200-rupee logistics service per month, or 500-rupee cataract surgery.
As managers and public policymakers, we have to commit to providing commercially viable solutions to the bottom of the pyramid. Needless to say, there
is a global market for any viable method of HIV detection and treatment.

Is it the poor at the bottom of the
pyramid who are not ready toinnovate or the elites who areunwilling to change their beliefs?

Abundant Opportunities but Limited Imagination
India is intriguing for its sheer size and the nature of problems facing the bottomof the pyramid. Each problem can be turned into a test bed for innovations in

REFLECTIONS, Volume 3, Number 4

PRAHALAD

Two billion people around the world have no electricity. They burn kerosene, candles,
wood, and dung, which are dangerous, polluting, and unhealthy. To achieve a sustainable
form of rural electrication, Solar Electric Light Fund (SELF) created a fundamentally different model premised on small-scale, on-site power generation using renewable energy
sources. SELF brokers the purchase, installation, and operation of household-scale, solar
photovoltaic units. Through a revolving loan fund, SELF gives rural villagers the nancial
means to own and operate their own electrical systems, which both creates employment
and reduces dependence on other sources. Since its founding in 1990, SELF has launchedprojects in China, India, Sri Lanka, Nepal, Vietnam, Indonesia, Brazil, Uganda, Tanzania,
South Africa, and the Solomon Islands.

Strategies for the Bottom of the Economic Pyramid

Solar Electric Light Fund

13

PRAHALADStrategies for the Bottom of the Economic Pyramid

Ultra-Violet Waterworks
Centralized water treatment facilities are prohibitively expensive in most poor, rural areas.
More than one million children die each month from disease spread by contaminatedwater. Ultra-Violet Waterworks (UVW) technology, however, puries diseasecontaminated water on an affordable, small-scale basis. One solar-powered UVW canserve more than 2,000 villagers, ensuring clean water year round at a cost of about 10
cents per villager per year. UVW uses 6,000 times less energy than boiling. WaterhealthInternational has now formed to nance and distribute this technology throughout thedeveloping world.

water usage, conservation, and pollution and waste management. Moreover,India’s poor have demonstrated that they are ready to adopt new technologicalsolutions, if in their self-interest. Potato farmers are willing to use satellite images of plant stress downloaded from the Internet to develop their unique version of ‘‘precision farming.’’ Fishermen and women are willing to use satellite
images of schools of  sh to develop  shing strategies. Everyone is willing touse cell phones. Is it the poor at the bottom of the pyramid who are not readyto innovate or the elites who are unwilling to change their beliefs?
India is not starved of opportunity or resources, but starved of imagination.
It has to create a global innovations laboratory for the world’s poor —a potential
market of 4.5 billion people. These innovations—especially focused on sustainable development —will become standard practices in developed markets aswell.

Moving Forward

14

Entrepreneurs must experiment and succeed to give India the condence needed
to move forward. My hope is that we will start the debate and the experimentation. The less fortunate have always been with us. Nehru eloquently reminded
India of her most basic task in his famous speech: ‘‘The service of India means
the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. The ambition of the greatest
man of our generation has been to wipe every tear from every eye. That may bebeyond us, but as long as there are tears and suffering, our work shall not be
over.’’The sheer mass and the resilience of the poor must give us condence thatthey do not want to be left behind and that they will do their best. It is my hopeand dream that soon all the people of India and the world will have access toa minimum quality of life. That is the obligation of the privileged few. I ask thesame question Nehru so prophetically posed more than 55 years ago: ‘‘Are webrave enough and wise enough to grasp this opportunity and accept the challenge of the future?’’Acknowledgment
This article is derived from C.K. Prahalad’s speech after receiving the Shri Lalbahadur Shastri Award for Excellence in Public Administration and Management Sciences from the president of India on September 30, 2000, in New Delhi.

Notes
1. Data from M. Nataraj, chief technology of cer, HLL, and Vijay Naik, senior scientist,
HLL.
2. Research by Rama Bijapurkar and Ashok Jain.
3. Data from Gopal Srinivasan, managing director, TVS-E, and P. Parthasarathy and his‘‘tireless and imaginative gang’’ of developers.
4. Assistance from Dr. Amita Bhatt of Johns Hopkins University.
5. Partnerships for Health, June 7, 2000, Washington, DC.

Volume 3, Number 4, REFLECTIONSPRAHALAD

Commentary
Like Prahalad, I have long pondered why commercial marketers around the world focus
mainly on the 2 billion people at the top of the pyramid to the detriment of the 4billion people below. Frankly, there is no good answer, other than the one offered by
Prahalad: ‘‘They simply do not know how to do it protably.’’ Therein lies a lost market
opportunity, on which I elaborate. I would size up the population pyramid somewhat
differently (see gure 1).
While the population distribution of 20/60/20 shown in the gure would differ
from economy to economy, emerging markets in general display a distribution in whichperhaps the top 20% of consumers (depending on the political and economic structure)experience commercial markets, with a free exchange of products and services formoney. At the bottom of the pyramid, governments, aid agencies, and nongovernmentalorganizations pretty much do the job of getting food, clothing, shelter, and health care
to poor consumers, often inefciently and inadequately.
Then there is a big bulge in the middle, which I like to call ‘‘submerged markets’’because they do not necessarily have the market infrastructure and supporting institutions that characterize the commercial markets at the top of the pyramid. But at thesame time, these markets are not totally dependent on the aid and social infrastructureserving the people at the bottom of the pyramid. For example, consumers in that bulge
may not have bank accounts or credit facilities, but they could probably borrow moneyfrom pawnshops and moneylenders or from individuals and other parallel channels atabove-market rates. They may have to walk miles to access markets, especially in rural
areas, which may be open only one day a week. Sometimes these markets may operate
on a barter principle. Many of the laborers and peasants who compose this market may
not receive any protection from the labor laws or worker benets granted to those in
the formal sector of the economy. In fact, many urban workers in the formal economy
are very much part of the ‘‘submerged market’’ as well. Health care is almost always
delivered through a surrogate system of health practitioners, most of whom may nothave much formal medical training.
Despite all this, every consumer in this ‘‘submerged market’’ participates in a market mechanism; there is an exchange of goods and services for money or monetaryequivalent. The markets in which they transact, however, are partially hidden from theview of multinationals or even large national manufacturers. Even if these players knew
about them, they would be unable to fully operate there because the informal rulesthat govern these markets would not meet their standards of reliability and comfort.
Therein lies the sad tale of a missed opportunity. Of course, there are exceptions.
In India, Hindustan Lever, a company that has been well proled by Prahalad, has done
an exceptional job of serving the rural markets with its portfolio of detergent bars, toilet soaps, shampoos, tea, and cooking oil. Similarly, Madura Coats, a company I worked
for in India, had a phenomenal distribution system for supplying thread to thousands oftailors across the length and breadth of the country, particularly in the rural markets.
But in order to do this, one needs imagination and entrepreneurship, and that is Prahalad’s point. Incremental approaches are hardly ever successful.
Prahalad suggests four criteria for advancing business principles here: dramatic increase in price/performance relationship, scalability, environmental sustainability, andharmonizing advanced technologies for local conditions. I would like to offer two additions to this pithy and excellent list. First, the business model must demonstrate economic sustainability (not just environmental sustainability), and second, it should offer avalue proposition that truly enhances its consumers’ quality of life. This second criterionmust transcend individual business goals and address the question at a larger societal
level. Let me clarify each.
First, I address the issue of economic sustainability. I was one of the early businessacademics to visit and spend time at the Aravind Eye Hospital in Madurai, South India,
which I wrote up as a business case (Rangan, 1993). Subsequently, the hospital has
been widely recognized as a leader and innovator, as Prahalad points out. If you ask
yourself why Dr. Venkataswamy (Dr. V, the hospital’s founder) has been so successful,

REFLECTIONS, Volume 3, Number 4

V. Kasturi Rangan
Eliot I. Snider and Family Professor of
Business Administration
Chairman, Marketing Department
Harvard Business School
Vrangan@hbs.edu

Strategies for the Bottom of the Economic Pyramid

by V. Kasturi Rangan

15

PRAHALADStrategies for the Bottom of the Economic Pyramid

Figure 1 The structure of markets
in developing countries

the four criteria highlighted by Prahalad come to the fore, but even more important is
Dr. V’s brilliant management of the pyramid presented in gure 1. The Aravind model
serves customers across the entire hierarchy of the pyramid. In fact, Dr. V. uses ‘‘paying
patients’’ from the top of the pyramid (20%) to subsidize ‘‘free’’ patients in the middle
and bottom tiers. Sometimes the subsidy goes from the middle to the bottom tier. Aravind Eye Hospital sees its mission as serving the bottom two segments of the pyramid,
but Dr. V was astute to realize that in order to provide sustainability to the enterprise,
resources have to be self-generating rather than at the mercy of donors. So patientsfrom the top of the pyramid are a core part of Aravind’s customer base. This then calls
for a hybrid organizational design that serves the rich and poor simultaneously, witheach segment receiving a unique and satisfying value proposition; Dr. V and his management team at Aravind have done it brilliantly. It is the drive for economic sustainability that drove much of the business model design at Aravind, a key aspect of thebusiness innovation.
Second, I address why societal value-added should be an important criterion as
well. Let us take the one-rupee ice cream cone illustration Prahalad offers. Do the customers in submerged markets need one-rupee ice cream cones, even if it were possible
to provide the technological solution? My answer would be, ‘‘It all depends.’’ If the ice
cream cone were a way to deliver a daily required dose of proteins and calories, itwould be a great innovation. However, if it just delivers the same lifestyle and pleasure
to those at the bottom of the pyramid as to those at the top, then I must argue thatthe billions of dollars invested in technology and distribution systems would be a wasteof national resources. There ought to be better use for those scarce resources. Someone
has to make those allocation calls in a developing country, perhaps not the government.
Every business should ask itself whether it is producing a socially valuable goodthat would enhance the customer’s quality of life (not just the perception). Without
such fundamental value guidance, we could unwittingly create a demon that, insteadof enhancing its customer’s value, could in fact diminish it for a personal prot.
A subtle balance between social value and business protability drives much of theinnovation in ‘‘submerged markets.’’ That is why one needs a business model characterized by value for customers and shareholders as well as values of social good. It is adifcult balancing act, but entrepreneurs in developing countries have amply demonstrated that they are fully ready for the challenge.

Reference
Rangan, V.K. ‘‘The Aravind Eye Hospital, Madurai, India: In Service for Sight’’ (Boston: Harvard
Business School Case, 1993, 9-593-098).

16

Commentary
by Vindi Banga

Vindi Banga
Chairman, Hindustan Lever Limited, India

Businesspeople have traditionally ignored the poor as having no real ability to afford
their offerings. Consequently, they have viewed the billions of people living at the ‘‘bottom of the pyramid’’ as a problem to be dealt with by the government and nongovernmental organizations. In my experience, this is largely for two reasons: One, people inbusiness have no emotional connection with poor consumers. They are far removed
from them in the way they live their lives. Two, they bring their traditional businessmodels with them in their minds. These models are designed to offer products and solutions to the relatively afuent. Is it then surprising that they believe there is no business opportunity at the bottom of the pyramid?
I have enormous sympathy with Prahalad’s view. The vast population base multiplied by a small disposable income provides an enormous market potential. If one
spends a little time with this ‘‘bottom of the pyramid’’ population, it is immediately apparent that they have the same aspirations and needs as the more afuent. Everyone isinterested in enhancing the security and quality of life.

Volume 3, Number 4, REFLECTIONS We are totally committed to providing products and solutions for the people at thebottom of the pyramid.

 We do this by understanding and identifying their needs and aspirations; we encourage our management to spend a lot of time living with this group of people.

 We do not believe in cost-plus pricing. Rather, we set a target price that the con-

PRAHALADStrategies for the Bottom of the Economic Pyramid

The challenge is for us to be able to provide solutions that meet their needs, thatare affordable, and that yield a reasonable business return. My company has recognized
this and taken several initiatives.
Shampoo was a luxury, with the price of the cheapest bottle being 50 rupees($1)—a big barrier when the majority of the population earned only 40 rupees per day.
The answer was single-use sachets available at one rupee (less than 2 cents) per unit. A
complete new business system was required, spanning the development of low-cost
capital equipment, low-cost packaging, an appropriate distribution system, and so on.
The result? Last year, we sold 3 billion sachets, which is three times what we sell inbottles. We have been able to explode our market, while enhancing the quality of life,
at a very acceptable level of protability. We have several other successful examples likeshampoos in our business, spanning various everyday-use categories.
In summary:sumer will pay. We then deduct an acceptable margin to arrive at a ‘‘challenge cost.’’ We nd a way to meet the challenge cost by involving an interfunctional team. Key

to this is our ability to deploy advanced technology solutions and innovative supply
chain management.
Apart from business growth, there is also the satisfaction that, in our own small way,
we are contributing to the overall economic and social development of a very large
section of Indians.

17

REFLECTIONS, Volume 3, Number 4

Six Societal Learning
Concepts for a New Era
of Engagement
Steven J. Waddell

R

Steven J. Waddell
Director
The Collaboration Works
swaddell@prodigy.net

18eecting on events of September 11, Tom Higgins, president of Business for Social
Responsibility, which has 1,400 leading global company members, commented, ‘‘The
business community has to renew its own commitment to engagement with all of its
diverse stakeholders’’ (Higgins, 2001). Also referring to September 11, Francois Roussely,
CEO of the global French electricity company EDF, asked: ‘‘Economic globalization ows
into political and social globalization: Have we forgotten this in the last few years?’’ (Belot,2001).
Perhaps at the forefront of related events are the globalization protests that began ona large scale in Seattle. These protests and emerging visions are partly a response to a
decade of the ‘‘Washington Consensus,’’ which held that businesses had to lead global
development —a revolutionary view after decades of government-led strategies proved
incapable of producing the needed scale of development. However, the strategy embodied
by the consensus is not working, or certainly not well enough. The economic and welfare
gap between the North (developed countries) and South (developing countries) is, withthe exception of the Asian Tigers, greatly widening. Poverty is increasing in absolute
numbers, and almost all environmental indicators in every region are rapidly declining(UN Development Program et al., 2001).
So if government- and business-led development strategies have demonstrated theirlimitations, what might the ‘‘commitment to engagement’’ to which Higgins refers look
like? What approach will take better account of Roussely’s political and social forces, alongwith economic forces? The answers are almost certainly associated with the collaborative
leadership successes of business, government, and civil society organizations (CSOs).1
These successes, based on a societal learning approach, are engaging major economic
sectors such as banking and involving major businesses such as Dole Foods, Cisco, Shell,
and Nike, to mention a few. For all the participating organizations, the collaborations
involve new mental models, new skills, different business strategies, creativity, and intensive and extensive dialogue.

ÓWhat Is Societal Learning?

2002 by the Society for Organizational Learning and the Massachusetts
Institute of Technology.

Societal learning is associated with individual, group, and organizational learning. Brown
and Ashman de ne societal learning as ‘‘articulating new paradigms that can alter theperspectives, goals, and behaviors of social systems larger than particular organizations’’(Brown and Ashman, 1998). Like other learning, it involves cycles of observe-re ect-planact and produces new capacity for learning. However, it works at a much larger scalebecause the new capacity is societal. Societal learning develops new relationships, strategies, and organizational structures to do what could not be done before, so it is criticalto addressing issues such as sustainability, poverty, and culture clashes. Business isnding that societal learning is increasingly important for enhancing pro tability. For

Volume 3, Number 4, REFLECTIONSExamples of Societal Learning
Innovation in the basic concepts of how we organize ourselves is at the heart of societal
learning. In the US, an example of highly problematic societal learning is the institutionof slavery. Changing it has meant learning how to transform the underlying laws, economic structures, and social relationships. After a century and a half of effort in the US,
this societal learning has produced real, yet still incomplete, change. But it has also produced important lessons and knowledge about how to create societal change more effectively and quickly. These lessons and knowledge have expanded substantially during thepast 10 years with particularly intense experimentation with a wide variety of global
issues.
Traditionally, banking services for black Americans and the poor were much lessaccessible than for whites. This became particularly noticeable when banks left inner cities
as black Americans moved in. A successful societal change process involved community
activists pressing for change, followed by government legislation through the Community
Reinvestment Act (CRA), and topped off with action by traditionally resistant banks.
The CRA is an imaginative piece of legislation that strongly encourages banks to havedialogues with their communities. It did not, however, prescribe targets or solutions. The
government also obliged banks to provide information about their business to the public,
which allowed the CSOs to make more reasoned and innovative suggestions to banks forchange. Where the parties were able to develop true dialogue, some amazing changes
occurred. The banks began to understand that their mental models about their businesswere a problem. Particularly critical was the assumption that they had the right products(for middle- and upper-income people) and delivery structures (branches were too costly
for the poor) (Waddell, 1997a, 1997b).
Now people from banks and community groups have long-term, intense relationshipsthat have greatly reduced delivery costs and engaged CSOs in developing and delivering
products and maintaining relationships. For example, rather than take a legal disciplinary
approach to missed payments, CSOs react with an educational, peer-group support approach that has proven more effective. Moreover, the banks and CSOs developed joint
positions to lobby government to make its programs, such as small business lending, more
effective. This represents fundamental reorganization of roles and relationships between
diverse social segments, which is typical of societal learning.
Examples from around the world promise to be particularly important in addressing
the North-South gaps. Traditional approaches to building water projects for the poor inSouthern countries resulted in breakdowns shortly after installation and speedy decay.
Instead, the postapartheid government of South Africa engaged nongovernmental organizations (NGOs) and communities in the construction process, based on a systems perspective that saw community ownership and capacity building as critical for long-term
maintenance. The government also understood that commercial companies’ protoriented goals prevented them from working with communities in the same ways as
NGOs, for whom improving communities’ welfare is usually a core objective.
This analysis was the basis for a consortia that included NGOs and for-prot companies like the global water company, Vivendi. The consortia collaboratively de ned theirmembers’ roles and coordinated their activity. The NGOs organized the communities sothey could participate in the construction process —both the planning processes and theactual construction—and build local capacity to maintain the water system infrastructureand ensure that villagers were committed to paying for it (Waddell, 2000).
A more modest example is found in a small town in Zambia. A South African supermarket opened and imported its produce from its South African farms. The local farmers’market for their produce disappeared. The villagers were so angry that they threatened
to burn down the supermarket. A collaborative intervention developed so the local farmers
could work with the supermarket to produce vegetables of the type, quality, quantity, andpredictable delivery dates required by a modern supermarket. This collaboration, however, required engaging NGOs to help develop the farmers’ capacity, the government to

REFLECTIONS, Volume 3, Number 4

WADDELL
Six Societal Learning Concepts for a New Era of Engagementgovernment, it is important for improving public welfare. In civil society, it is increasing
the enrichment of communities.

19

WADDELL
Six Societal Learning Concepts for a New Era of Engagement20

improve the roads for delivery, and the supermarket to negotiate a sensible contract for
both parties. This example demonstrates that societal learning, along with rethinking the
product line, can bring together people who are traditionallyoutside the commercial sector in creating a coordinated strategy. In the end, the supermarket has better and cheaper
produce, and the local farmers have improved livelihoods.
Another bene t is that the Zambian operation of the huge
Indian company, Tata, is working with the new networks todevelop bicycle transportation for moving products from thevillage to the supermarket (Waddell, 2001b).
Societal learning may also take place internationally.
Cisco is training people around the world to build and maintain its systems. It creates ‘‘academies’’ in collaboration withgovernment, educational institutions, and NGOs. All theseparties see themselves as responsible for developing a relevant education system, rather
than simply seeing it as the government’s responsibility (Waddell, 2001a, 2001b).

Societal learning . . . can bring
together people who are
traditionally outside thecommercial sector in creating acoordinated strategy.

Societal Learning as Loops
There are three types of learning—single, double, and triple (Argyris and Schon, 1978);societal learning always involves triple-loop learning, but often ‘‘gets stuck’’ at doubleloop learning.
Single-loop learning involves change within the current rules of the game. For example, changing the quantities in a quota system describes a single-loop learning modelof change. The quota system and the way quantities are de ned are accepted. The only
variable is the number.
Societal learning means rede ning the rules of the game, as associated with doubleloop learning. In the banking example, new rules obliged the banks to supply information
they had never provided before. New regulations required that banks report on theiroutreach activities with communities. For a long time, banks treated these demands simply as an additional regulatory reporting burden; many banks still do. However, in someinstances, the right combination of people both in banks and in communities made something different happen, resulting in triple-loop learning. The difference was that the parties
talked and listened to each other. They explored options for reorganizing their previously
adversarial relationships. They were willing to change to achieve what they discovered
could be a mutually bene cial arrangement.
In triple-loop learning, participants question the way they think about the rules andthe game. The banks began thinking of themselves as agents for community development.
In the water project, the companies were no longer construction companies, but developers of sustainable water systems. The Zambian supermarket came to understand thatits business also meant creating a local economy. And Cisco learned that it is not justtraining people to work on Cisco products, but also strengthening public education.
Often, initiatives get stuck at the double-loop level or below, blocked by mental models. For example, many banks cannot get past the idea that government is forcing themto do something adverse for them. Some businesses in water system initiatives maintaina transactional stance. Or businesses may move into a community with their own supply
system and wipe out local suppliers. And there are more failed school-business initiatives
than successes.

Societal Learning Leadership Concepts
Knowledge of the six core societal learning concepts for the new era of engagement willease the development of societal learning and make choices clearer, expectations more
realistic, and frustrations easy to address.

1. Action Framework —Societal Systems Building
Societal learning requires knitting together societal systems in a way that is analogous
to creating cross-functional activities in a business. Functional units can be barriers to

Volume 3, Number 4, REFLECTIONS

2. Power Source—Appreciating Differences
Although people may say, ‘‘We’re all basically the same,’’ in fact, understanding ourdifferences is critical to effective action. If we do not recognize diversity, we will be aware
neither of actions that destroy it nor of the latent power that it often represents. But evenmore important, we will not even understand how to meld differences to derive the unusual power of synergies.
Societal learning leaders must pay attention to differences between the organizational
sectors (see table 1). For example, without recognizing that goals differ among the sectors,
it would be hard to understand other collaborators’ unhappiness with the outcomes. A
government’s administrative mental model is one of policies, laws, and enforcement;
business’s is a framework focused on the outcome and inventive entrepreneurial activity
to achieve it; and civil society thinks of the world in a developmental framework in which
solutions must develop from the bottom.
In the South African water project, these organizing imperatives proved extremely
confusing for the participants. The NGOs saw that the projects could not be implemented
faster than the communities were ready to move. Meanwhile, the company engineers
were accustomed to highly predictable work plans because they had to coordinate substantial resources and numbers of people.

REFLECTIONS, Volume 3, Number 4

WADDELL
Six Societal Learning Concepts for a New Era of Engagement

coordination or potential synergies. A systems perspective focuses on the end
goals (products and services) and deepens understanding of roles, interdependencies, and long-term implications of actions. Societal learning must deal withthe major cultural, economic, geographic, racial, and other complex divides.
A particularly important division provides a way to organize large societal
change—the division between the three organizational sectors of government,
business, and civil society. These represent the three basic societal systems:
political, economic, and social, which, in turn, relate to human dynamics analysis that distinguishes three archetypes among people: those who relate to theworld mentally, physically, or emotionally (Seagal and Horne, 2000). The way
the organizational sectors interact re ects cultural systems and their mental
models, which are all highly dependent on the natural environment system(see gure 1).
In systems thinking, unintended consequences arise from actions, as is
Figure 1 The four-sector model
the case with government- and business-led development models. The unintended consequences of government-led development included growth in bureaucracy
and corruption. Unintended consequences of the business-led development included anincrease in wealth disparity and short-term xes.
The development of a society is necessarily a societal learning process that changes
culture, represented by how the political, economic, and social systems interact, whichemphasizes interdependence. Intersectoral collaborations (ISCs) occur where the social
contract is negotiated: where each sector’s roles, responsibilities, rewards, and bene ts
are rede ned. For example, a business-led development model vastly increases the rewards for the economic system. Given that the most sophisticated economic organizations
are in the North, the wealth and power of that region vastly increases.
Balance among the three systems and their interactions is critical. At an October 31,
2001, meeting of the World Bank Board’s Committee on Development Effectiveness, theUS was one of only two countries that pressed for greater expansion of privatization
initiatives. Other countries have begun to see events like September 11 and the globalization protests as a feedback loop of the unintended consequences of a systems imbalancepromoted by the Washington Consensus strategy.
On a more modest level, in all the examples I’ve mentioned, the response has addressed the unintended consequences of dysfunctional relationships among the sectoral
systems. The traditional approach to banking resulted in ghettos; in water services, it
resulted in broken systems; in the supermarket example, it produced unemployed farmers;
and in education, students graduated without the latest skills. Societal learning leadersneed to understand their actions and strategies in the context of these system relationships.

21

WADDELL

Table 1 Distinctive characteristics of the sectors’ core logics
Government

Business

Civil SocietyPrimary interest

Political

Economic

SocialSix Societal Learning Concepts for a New Era of Engagement

Primary control
agentsVoters/rulers

OwnersCommunities

Primary power form

Laws, police, nes

Money

Traditions, values

Primary goals

Societal order

Wealth creation

Expression of values

Assessment frame

LegalityProtability

Justice

Goods produced

PublicPrivateGroup

Dominantorganizational form

Governmental

For-prot

NonprotRelationship basis

Rules

Transactions

ValuesTemporalframework

Election cyclesProt-reporting/business cycles

Sustainability/
regeneration cycles

22

Although these differences can produce problems, ironically, they also provide therationale for ISCs. A major reason to collaborate is to create synergies by combining thedistinct resources of the organizational sectors and offsetting their weaknesses to produce
new competencies. Societal learning leaders will be skilled at creating these synergistic
processes to do the engaging to which Higgins refers.
Table 2 identi es some key resources and weaknesses. In the banking example, NGOs
provided access to their knowledge of communities that commercial organizations could
not match. In poor communities, poverty is highly correlated with weak language skills
and suspicion about outsiders, so traditional focus groups and telephone surveys do not
produce the information needed to serve the market.
Conversely, collaborations offset the weaknesses of unisectoral approaches. For example, rather than setting up private schools that would put education beyond the reachof the masses, Cisco developed its academies in public schools. And as the Zambians
worked together collaboratively, they addressed the tendency of business to ignore its
impact on farmers.
Government weakness is a traditional rationale for privatization. But societal learning
experience suggests that too often the potential role of civil society in making privatization
work is ignored (Plummer and Waddell, 2001). NGOs were critical to developing solutions
in all the examples mentioned. Moreover, privatization often occurs without developing
regulatory and other governmental resources, and then often produces corruption andignores the poor. For example, government action was needed to move the banks beyond
their adamant refusal to talk with communities; Cisco tapped the network of government
schools resulting from public policy; in Zambia, a reinvigorated government commitment
to provide roads was necessary; and in the South African water project, the government
brought NGOs and business into a working relationship.
The unintended consequences of systems thinking are also important. As collaborating organizations become more familiar with each other, they begin to take on each other’scharacteristics, which inevitably has an impact on their partners’ resources. For example,
NGOs that become like businesses lose touch with their communities, and businesses that
become like NGOs are seen as poor investments and lose access to capital markets.

3. Key Operating Dynamic—Coproduction
There are many reasons for a business to engage with other sectors, including philanthropy, social responsibility, and corporate citizenship. All have their place, but experience with societal learning suggests that the most powerful reason is coproduction formutual gain.
To collaborate effectively, organizations must articulate their goals and how toachieve them through collaboration (see table 3). For example, a powerful reason for theVolume 3, Number 4, REFLECTIONS

Civil Society

Regulatory and taxation powers

Capital and nancial assets

Enforcement apparatus

Production systems

Inspirational and volunteer
assetsSpecialized knowledge on policy
impactSpecialized knowledge on
industry

Government reputation

Business reputation

Community bonds
Specialized knowledge on
community or issue
Community reputation

WeaknessesInexibility in applying rules

Tendency to monopolize

Slow pace of decision making

Disregard for externalities

Restricted (interest) focus—
amateurism

Complexity of jurisdictions/levels

Integration of long-term concerns

Scarce materials

Dif culty in internal coordination

Inequality of outcomes

Fragmentation (scale)

Desire to control other sectors

Transactional parochialism

Ideological parochialism(political correctness)

Zambian supermarket’s collaboration was to address a threat posed by angry farmers; thefarmers participated because they saw a future livelihood; the government participated toaddress its responsibility for providing public service.
Mutual gain demands mutual commitment. If one collaborating organization is notachieving the results needed to maintain its participation, either it must reassess its original goals or other participants have to help it achieve its goals. Coproduction involves
committing to each other’s goals.
Traditional negotiating approaches to coproduction relationships are highly problematic. Negotiators tend to have a win-lose perspective based on a ‘‘me versus you’’ mental
model. Instead, continually exploring differences with a spirit of ‘‘we’re all in this together’’ is critical.
Coproduction requires leaders who are not afraid to take a backseat or share power.
‘‘Captains of the ship’’ analogies are replaced by ‘‘codirectors’’ who reect true collaborative leadership.

WADDELL

BusinessResources

Government

Six Societal Learning Concepts for a New Era of Engagement

Table 2 Sectors’ generic resources and weaknesses

4. Spirit of Relationship —Collaborating
In contrast to traditional decision making based on wealth and majority votes, societallearning decision making emphasizes participation and consensus. To understand thedistinctive qualities of societal learning leadership, I de ne ‘‘partnership’’ as an intrasectoral relationship and ‘‘collaboration’’ as intersectoral. Partnerships are relatively simple
because they are between organizations with the same core logics, whereas collaborations
are more complex because the core logics are different.
‘‘Collaborators’’ during the World War II were people with roots in a non-Nazi group,
oppressed by Nazis, and working with the Nazis. This sense of working with the enemy
is at play in intersectoral relationships and emphasizes the perils of making assumptions.
In the South African water project, the large companies had worked in business-only consortia and had mental models about how consortia should work. However, governmentdeveloped consortia that include an NGO have different logics that require a different
approach if the goals, organizing frameworks, and other attributes are to be successful.
It was absolutely essential that the consortia produce a functioning water system in acommunity before an election so that the president could stand in front of it and use it as
an example of his government’s achievements. Likewise, for the NGOs, it was critical that
communities be empowered to run their own water systems, rather than be dependent
on outside company contractors. For the companies, pro ts had to compare favorablywith those of their other projects.
‘‘Collaboration’’ fosters tension. Tension is the source of creative second- and thirdloop learning. A lack of tension might indicate that the tasks have simply been routinized
into a new system, but may mean that the collaborators are losing touch with their roots
or losing interest.

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23

WADDELL

Table 3 Some generic potential outcomes by sector
Government

Business

Civil SocietyImproved public services

Expanded markets

Six Societal Learning Concepts for a New Era of Engagement

Improved accountability

New products

Poor have increased accessto goods and services

Reduced direct
involvement in ruleenforcement while
increasing its
effectiveness

Lower production anddelivery costs

New economic
opportunities

Expanded bankable
investments

Improved basic medical andhealth care, education

Improved human resources

Reduced environmental
impact of development

24

Improved welfare

Local support for activity
Improved quality, regularity

Strengthened local cultures
Social cohesion

Collaborating emphasizes shared power. Access to all the resources of the sectors is
not something that can be forced; it requires proactive participation. Participants must
be motivated to mobilize their resources and nd new ways to use them more creatively.
In Zambia, the supermarket’s buying power, integrated with the resources of the othersectors, could produce a better quality product at a lower price, once its mental model
shifted from the traditional way of obtaining produce. But none of the collaborators werein a position to ‘‘force’’ the others to contribute. For leaders used to working in a hierarchy, collaboration dependent on inspired proactive participation and highly dispersed
leadership can be uncomfortable; issues seem ‘‘out of control.’’
All groups have different interpretations of the concept of ‘‘voting’’ in their decision
making. In government, the basic concept is one person –one vote; in civil society, this isoften mixed with the idea of one community–one vote; and in business, there is a one
dollar–one vote tradition. In collaborations, the general decision-making basis is rooted
in the concept of consensus, but this does not mean that everyone has to agree. Rather,no important stakeholder can disagree. Some may feel strongly in favor of a decision, andothers may not agree but not see it as important enough to oppose. But a key stakeholder’s
opposition usually indicates the need for a different strategy.
Exactly how collaborators will work together is never initially known. Indeed, if aframework is too de ned, it will undoubtedly reduce the potential for creativity. Approaching societal learning with an emphasis on the learning gives a greater chance of
success. Learning supports continual capacity development and quality improvement.
ISCs are a particularly good environment for misunderstandings to arise, because themental models vary and language is used differently. At one meeting, an environmentalist
and a businessperson almost came to blows over the word goal, before they discovered
it had different meanings for each of them. To the environmentalist, it implied a range ofpossible outcomes over the medium term; to the businessperson it implied accountability
to speci c end-month targets.

5. Lubricating Forces —Dialogue and Learning
Collaborations are notoriously ‘‘high-blame’’ environments, where one party accuses theother of betrayal or doing something other than what was agreed on. Behind the words
are mental models and unrecognized assumptions.
Dialogue is critical for societal learning leaders with diverse mental models to think
together. William Isaacs identies four capacities that dialogue requires: Voicing—speaking the truth of one’s perspective
 Listening—without resistance Respecting —awareness of the impossibility of fully understanding others’ positions
 Suspending— suspension of assumptions, judgment, and certainty (Isaacs, 1999)
These dialogue skills allow investigation of creative opportunities that can develop between the sectors.

Volume 3, Number 4, REFLECTIONS

6. Hard Work—’’Emerging the Future’’
Societal learning leaders will be explorers, ready to investigate opportunities and change
themselves and their direction in response to their experiences. For the banks, there wasa general idea that they could help spur community development, but no substantial
understanding about the complex government, civil society, and business interactions
involved. The South African consortia had a mission, but whether it was achievable remained a question. The Zambian farmers–supermarket collaboration grew from researchers’ inquiries. The Cisco academies developed from nearly 30 years of experiments withbusiness-school partnerships in the US.
These experiences describe a collective version of what Otto Scharmer, working withothers, refers to as ‘‘emerging the future,’’ a process of becoming aware and learning fromthe future as it emerges: restructuring, redesigning, reframing, and regenerating (Scharmer,
2001). His perspective emphasizes the visionary aspect of societal learning that is criticalfor moving forward and describes the depth of change involved.

WADDELL
Six Societal Learning Concepts for a New Era of Engagement

However, the sectors have different perspectives on the role of dialogue. Civil societies
see business as acting without sufciently engaging people in dialogue, and business sees
civil societies as continuously talking without really doing anything. Both need to addressthese different attitudes toward the role of dialogue to work together effectively.
Framing activity as action learning helps deal with different attitudes and also develops an environment without blame. The essence is to create the well-known cycle ofobserve-re ect-plan-act. Rather than aiming for complete agreement and clarity, a lessdemanding degree can be accepted as a norm for advancing. Seeing that the activities are
an experiment and that collaborative regular reviews will assess the action’s impact supports this norm. Critical to the whole process is de ning the goals of the participants.
Once the collaborators have de ned goals, they must commit to them and to helping
others reach their goals.
Good dialogue requires changing traditions of secrecy about fundamental issues. For
example, the banks had to give the NGOs enough information to achieve the needs ofgood collaboration and also respect individual client privacy. In Zambia, supermarket
chain owners had to discuss their pricing and markup system with the farmers to create
fair  nancial outcomes.

Conclusion
To encourage development and societal learning requires engaging the three distinct setsof organizations—business, government, and civil society. Although we have learned
much to help societal learning leaders, the tasks are still enormous. Perhaps most challenging is to address questions that remain almost unmentionable. For example, Northerncompanies provide direct investment in the South because they can make more than they
invest for their almost entirely Northern shareholders. There must be collaborative strategies so Southerners can become owners and receive the wealth, or we simply continue
a process of exploitation. Some issues are even more sensitive, such as the enormous
income differences between people typically involved in North-South collaborations.
Despite the scale of challenges for societal change, the successes and our developing
knowledge demonstrate that there is reason for optimism and value in pushing ahead.
Addressing grand challenges is not just a task for societal learning leaders, but a corequality of great leadership itself.

Note
1. The term civil society is gaining international favor to describe organizations sometimes referred
to as the nonprot, voluntary, third, or independent sector. As this article explains later, nonpro t
is simply a legal attribute that many of these organizations share.

References
Argyris, C. and D. Schon. Organizational Learning: A Theory of Action Perspective (Reading, MA:
Addison-Wesley Publishing, 1978).

REFLECTIONS, Volume 3, Number 4

25

WADDELL
Six Societal Learning Concepts for a New Era of EngagementBelot, L. ‘‘Les Geants occidentaus s’interrogent sur leur comportement dans les pays emergents.’’
Le Monde (November 3, 2001): 14 .
Brown, L.D. and D. Ashman. ‘‘Social Capital, Mutual Inuence and Social Learning in Intersectoral
Problem-Solving,’’ in Organizational Dimensions of Global Change, ed. D.D. Cooperrider (Beverly Hills, CA: Sage, 1998): 139–167.
Higgins, T. ‘‘The Benets of Engagement.’’ Editorial. BSR Perspectives ^ http://www.bsr.org/
BSRMagazine/Perspectives/editorial.cfm& (December 10, 2001).
Isaacs, W. Dialogue and the Art of Thinking Together (New York: Currency Doubleday, 1999).
Plummer, J. and S. Waddell. ‘‘Key Actors in Partnerships Focused upon the Poor’’ in Focusing
Partnerships: A Sourcebook for Municipal Capacity Building in Public-Private Partnerships, ed.
J. Plummer (London, UK: Earthscan, 2001).
Scharmer, O. ‘‘Presencing Emerging Futures: Illuminating the Blind Spot of Leadership,’’ speech,
Ogunquit, ME, 2001.
Seagal, S. and D. Horne: Human Dynamics: A New Framework for Understanding People and Realizing the Potential in Our Organizations (Waltham, MA: Pegasus Communications, 2000).
United Nations Development Program, United Nations Environment Program, World Bank. World
Resources 2000–2001 People and Ecosystems: The Fraying Web of Life (Washington, DC: World
Resources Institute, 2001).
Waddell, S. ‘‘Building a New Form of Enterprise: A Study of Partnerships Between CommunityBased Organizations and Banks,’’ in Expanding Housing Opportunities for all Americans: Partnerships Provide the Best Avenue, ed. A. George (Washington, DC: National Community
Reinvestment Coalition, 1997a): 43–228.
Waddell, S. ‘‘Outcomes of Social Capital Strategies of Banks and Community-Based Organizationsin the US: The Four Pros of Property, Pro t, Processes and Products.’’ IDR Reports 13 (1997b).
Waddell, S. ‘‘Emerging Models for Developing Water Systems for the Rural Poor: From Contracts to
Co-Production. Research and Survey Series’’ (London, UK: Business Partners for Development—Water and Sanitation Cluster, 2000). ^ http://www.bpd-waterandsanitation.org& .
Waddell, S. ‘‘Cisco Systems Vision Yields Social Capital and Meaning.’’ Re ections 3 (2001a):
20–21.
Waddell, S. What Works in Engaging Business in Youth Employment Strategies. (Baltimore, MD:
International Youth Foundation, 2001b).

Commentaryby Barbara Waugh and Betty A. Sproule

26
Barbara Waugh
Cofounder, World e-Inclusion
Hewlett-Packard Company
barbara_waugh@hp.com

Betty A. Sproule
Manager, e-Inclusion Programs
HP Philanthropy and Education
betty_sproule@hp.com

Our questions and reections arise from our joint experience in the past year helping HewlettPackard develop a business initiative to bring the advantages of the Internet to the poor at thebottom of the economic pyramid.
1. Many employees lead active lives in more than one sector. How can we leverage themultiple-sector membership of our employees to forge connections with the other sectors?
2. Many employees have roots, relatives, and values in emerging markets. How can we leverage their multicultural, multi-class, and multilingual intelligence and latent commitment? How
might they help with the dire and unspoken questions Waddell asked in his article?
3. Have September 11 in the US and atrocities elsewhere in the world blurred the lines between the sectors? For example, given that terrorism is bad for business and is rooted in poverty,
how are corporations rethinking their role in ending poverty in the world—traditionally the concern of the civic and government sectors? More than a desire for prot informs the excitement
within Hewlett-Packard and across the corporate sector at Hewlett-Packard’s intent to develop
protable business models for ending poverty.
4. How are the functions of social responsibility, product stewardship, philanthropy, diversity,
government affairs, and prot-making—traditionally separate functions in many companies —partnering to contribute to new business models for intersectoral collaborations (ISCs) and societal development?
5. How can triple-loop learning that occurs in a small part of the company contribute to thelarger company’s learning, not ‘‘ghettoization’’ or death of the transformed part?
6. Within the emerging ecosystem of ISCs, do some collaborative algorithms have a higher
success rate than others? For example, is a successful collaboration more likely among a country
government, a World Bank, and a global company, than among, say, an indigenous NGO closely

Volume 3, Number 4, REFLECTIONSWADDELL

Commentary
by Kumi Naidoo
The past 10 years have witnessed growth of exploration and experimentation in intersectoral engagement for meeting certain social development goals. It is vital, however, during this particularly
challenging moment in world history that we recognize that this is still an emerging art. Consequently, ensuring that we nd the right language to describe, understand, and analyze what is atstake and what is being pursued is critical.
Many often use the word partnership far too loosely, when, in fact, it is a continuum of relationships that exists between different sectors. Minimally, there is interaction (initial contact andexploration of potential relationships); beyond there is engagement (a more structured relationshipincluding at least one programmatic intervention). The most mature form of relationship, still relatively rare, is a full-edged partnership (a reasonably formal, medium- or long-term relationshiparound a set of social deliverables and goals).
To make signicant progress in intersectoral partnerships, all parties must invest and contribute new skills. Some key words to bear in mind in operationalizing Waddell’s framework include
clarity of vision and purpose, constant self-regulation of the relationship, commitment, communication, consistency, and change management. Perhaps the most important ingredient to successful
partnerships is a candid assessment of power issues in intersectoral relationships. Failure to deal
with this openly and transparently has caused several partnerships, particularly between businessand civil society organizations, to crumble.
In many developing countries, the indigenous business sector is often weak and emerging, as
is increasingly the case with the state. This raises the important challenge of ensuring that the
global economy is transformed over time to be more equitable in how benets and, ultimately,
ownership are shared around the world. Given that the past two years have seen growing levels ofpolarization between business and civil society, it is critical that the agenda of societal learning
includes questions of structural power. We have to confront the growing levels of inequality within
nations and particularly between rich and poor nations. Unless we do this, many civil society organizations, particularly those advocating for great social and economic justice, will struggle to embrace the kind of progressive societal learning for which Waddell argues.

Kumi Naidoo
Secretary General
Civicuswww.civicus.org

Six Societal Learning Concepts for a New Era of Engagement

tied to and identied with the people, a local government, and a global company? Does scale isomorphism help, hinder, or make no difference to success rates?

27

REFLECTIONS, Volume 3, Number 4

Globalization’s Challenge:
Attuning the Global to
the Local
Jeff Gates

Relation is the essence of everything that exists.
— Meister Eckhart

A

Jeff Gates
Former counsel to the US Senate
Committee on Finance
Author, The Ownership Solution and
Democracy at Risk
President, Shared Capitalism
Institutewww.sharedcapitalism.org

28

Ó2002 by the Society for Organizational Learning and the Massachusetts
Institute of Technology.

s a model for improving the human condition, globalization gears its operations toan unadorned assumption: ‘‘maximize nancial returns and—trust the model—everything will work out ne.’’ US money managers invest $17 trillion worldwide based onthat premise, up from $1.9 trillion since 1980. As I show, the global reach of that simplistic
model is a key reason wealth is being rapidly redistributed worldwide—from poor people
to rich, from poor country to rich, and from the future to the present.
Globalization has the potential to be a positive force for modernity. Instead, it operates
as a capital markets-led, government-enforced process that radically redistributes wealth,in the same sense that ‘‘wealth’’ stems from weal, implying a condition or state of wellbeing. To produce genuinely global well-being that’s sensibly shared and environmentally
sustainable, globalization requires a counterforce to today’s wealth-redistributive trends(see the sidebar).
Consider the  nancial trends that accompany the current combination of globalized
capital and globalized commerce: Since 1985, economic decline or stagnation has affected 100 countries, reducing
the incomes of 1.6 billion people (Speth, 1999). For 70 of those countries, average
incomes are less in the mid-1990s than in 1980, and in 43, less than in 1970 (UN,1999: 2).
 In 1960, the income gap between the fth of the world’s people living in the richest
countries and the fth in the poorest countries was 30 to 1. By 1990, the gap hadwidened to 60 to 1. By 1998, it had grown to 74 to 1 (UN, 1999: 28).
 Meanwhile, the world’s 200 wealthiest people doubled their net worth in the four
years to 1999, to $1,000 billion (UN, 1999: 28).
 Three billion people live on $2 or less per day, while 1.3 billion of those get by on $1
or less (UN, 1999: 3).
 The income of the top 1% worldwide (50 million people) equals the total income
received by the poorest 57% (2.7 billion people) (Milanovic, 2002).
 With world population expanding 80 million each year, World Bank President JamesD. Wolfensohn cautions that, unless policymakers address the ‘‘challenge of inclusion,’’ 30 years hence, 5 billion people could be living on $2 or less per day.
 The UN Development Program (UNDP) reports that 2 billion people suffer from malnutrition. In three decades, the human family could include 3.7 billion malnourishedmembers.
 The UNDP’s assessment: ‘‘Development that perpetuates today’s inequalities is neither sustainable nor worth sustaining’’ (UN, 1996).

Volume 3, Number 4, REFLECTIONSGlobalization’s Challenge

Physicist Hans-Peter Dürr, former president of Munich’s Max Planck Institute, offers a
useful way to visualize the quandary facing today’s leaders. A 25-year colleague of Werner
Heisenberg, father of the uncertainty principle, Dürr asks that we imagine a  sherman
who concludes that all sh are longer than two inches. What makes him think that? Well,it’s not a sh if he can’t catch it with a net. He also relies ona market test: no one wants to purchase a  sh he can’t catch.
Of course, what our sher fails to see (or perhaps, tomention) is that his net is woven with two-inch holes. His
net embodies metrics certain to ‘‘screen’’ for what he nds.
Before he chose that particular net, the possibilities were
open. But once he makes his choice, the possibilities arelimited by the woof and warp of the net he favors to do his shing.
Therein lies the systems-design challenge facing leaders learning to cope with thisera’s de ning phenomenon: the globalization of nance. Like the  sher’s net, the resultsof globalization are determined by those who weave its rules to screen out certain values
and favor others. That’s the nature of self-designed systems. In a democracy, we thepeople design the net and, in the designing, choose the forces that inuence us. That selforganizing insight led the nation’s founders to opt for democracy over divine right, con dent that political freedom and human dignity are better served by the dialogue ofself-determination than by the decrees of distant decision makers.
Democracy’s design preference is clear: shing works best when shers choose theirown nets. Every functioning democracy has rules to ensure that its citizens retain inuence over those forces that have an in uence over them. Robust democracies offer a netweaving process for people to choose the in uences they favor in their pursuit ofhappiness. In that pursuit, a steady supply of ‘‘ sh’’ isgenerated —from which a nation’s people monitor, reappraise, and reweave their nets, constantly sorting throughjust what sort of values they agree to pursue. To make iteven more self-responsive, We (as in We the People) reserve the right to periodically change leaders so We canlive in a system that enables Us to have lives of dignity andmeaning. The self-governing goal is the General Welfare,
while the pursuit of individual happiness is the preferredmeans.
The net cast by globalization is woven of strands traceable solely to  nance. What globalization seeks is  nancial
returns. That’s its mental model, its value-seeking net.
When that type of ‘‘sh’’ is caught, the system signals ‘‘Eureka!’’ And then signals itself to do it again and again, adinnitum. This nance-calibrated feedback system serves
as globalization’s ‘‘guidance system,’’ the invisible software that runs silently in the background, catching just thesort of sh that  nance favors. Any value that fails to register as a nancial value on globalization’s return-seeking
radar screen is, by design, screened out. So how do weknow this nance-guided system works? We also rely on amarket test: no money manager wants a value that fails toshow up as a  nancial return.
This self-reective aspect of  nance-led globalization
makes change challenging. Yet the design principle underlying both markets and democracies mandates that globalization include a self-design component capable ofattuning globalization to a bandwidth of values broader
than what nance is capable of detecting. In its worldwide
pursuit of nancial returns, the impact of globalization is



GATES

Promise and Peril of Self-Designed Systems

Like the sher’s net, the results ofglobalization are determined bythose who weave its rules to screenout certain values and favor others.

REFLECTIONS, Volume 3, Number 4© Emily Sper

29

GATES
Globalization’s Challenge© Emily Speroften felt on human, social, and natural capital that, being
place-based, is not always improved by nancial capital’s
highly mobile, single-minded pursuit. Without a practicalmeans for attuning global capital to local values, globalization is destined to be perceived as just another remote
force that robust democracies are obliged to resist.
Democracies ‘‘show up’’ in the give-and-take of civic
discourse. The capacity for ongoing dialogue is the measure of a democracy’s robustness as a system meant tooperate as a marketplace of ideas. The vitality of that dialogue determines the woof and warp from which thesocietal net is woven. Dialogue is the domain where values are prioritized and meaning is made. It is in those
networks of dialogue that democracies reside, and fromthat realm the system’s rules emerge. Democracies succeed to the extent that they evoke those relationships required to ensure that the system
grants inuence to those its operations inuence.

Responsibility via Relationships

30

Responsible and sustainable commercial behavior is best advanced within a policy environment that views nancial capital as a societal tool—and ownership patterns as ameta-tool that can help identify and advance societal goals. Currently, globalization’s
nance-xated mind-set runs roughshod over an array of values that robust democracies
rightly hold dear—social justice, equal opportunity, civil cohesion,  scal foresight, political equality, environmental sustainability, and so on. No intelligent system would dothat. No robust learning system would continue to do that. No robust democracy would
dare do that.
There lies the fast-growing discontent with today’s version of globalization, and its
seeming inability to align its operations either with the nonnancial values of those on
whom it has an impact or with those broader democratic values in which free enterprisesystems are imbedded. The culprit, I suggest, is the current paradigm’s indifference toownership patterns. The alternative is clear. In the US alone, just three money managers(Fidelity, Merrill Lynch, and Barclays Global) hold $1.9 trillion in funds that are indexed—
invested to mimic the behavior of capital markets as a whole. More aptly described as‘‘money on autopilot,’’ that phenomenon reects the inclination of nancial capital tooperate free of any inuence from those its operations affect.
The future favors those leaders—in both the private and the public sectors—whoview ownership patterns as a net for sorting good inuences from bad. Systems-savvy
business leaders are beginning to realize that they must foster more richly textured and personalized relationships
within their rms. For instance, US-based Herman Miller, an
8,000-employee trendsetter in furniture manufacturing, haslong been a leader in participative management. Early on,
the  rm embraced decision-making methods meant to enhance the rm’s ‘‘cognitive competence’’ and the ‘‘collective
commitment’’ of its workforce. Consistent with that stance,
its leaders chose to ensure that, in every position, they haveboth an employee and an owner. That strategy  nds support
in US tax law that, since 1975, has incentivized employee
ownership in more than 11,500 rms covering roughly 10% of the US workforce(www.nceo.org).
Herman Miller’s embrace of insider shareholding transformed how its leaders appriseshareholder value because now directors and managers are obliged to poll insiders about
their values as shareholders. As the company’s ownership ‘‘net’’ was rewoven to create
a component of ‘‘up close’’ ownership, that relationship gave employees a right to havetheir values reected in the company’s operations. What did they value? Far more responsible than capital markets, they said we want our company—whose operations impact our community—to become a leader in environmentally sustainable business

The future favors those leaders —inboth the private and the public
sectors —who view ownership
patterns as a net for sorting goodinuences from bad.

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practices, a particularly challenging task for a  rm whose
operations depend on a wide range of products (woods,
paper, cardboard, bers) and synthetic chemicals (paints,
plastics, varnishes, solvents).
Yet since implementing its insider-owner strategy,
Herman Miller’s primary production facility has cut by
90% the trash it hauls to land lls. Re ecting its commitment to eliminate waste, the company annually ships 2
million pounds of scrap fabric for reuse as insulation for
car-roof linings and dashboard padding, saving landll fees
and creating a new prot center. Luggage makers buy its
leather scraps for attaché cases, while its ‘‘AsNew’’ program repurchases its used of ce partitions and refurbishes
them for resale.
Herman Miller’s commitment to those values now affects others with whom it does business, creating a ripple
effect. With its insider-induced focus on ‘‘closing the recycling loop,’’ the rm prefers
green suppliers and recycled inputs whenever feasible (its corrugated-box specs require
40% recycled content). With cultural support from a vision statement describing both thecompany and its employee-owners as ‘‘corporate stewards,’’ Herman Miller evoked environmental values consistent with those communities where its operations generate nancial value for all its shareholders.
The ‘‘missing piece’’ was the dialogue required to tailor the  rm’s operations to values
that are personal and local. Remote, capital market-style ownership is incapable of catalyzing that attunement. Create property relations imbedded in the personal and the local,
and responsibility has an opportunity to become imbedded in those who must execute
those values. It helps too that the capital structure is designed to ensure that wealthcreation is shared with those who help create that wealth. Consistently ranked among the
top 25 most admired US companies, Herman Miller also routinely ranks  rst in its industry
across a broad range of performance benchmarks, nancial and otherwise.
This systems-design tale is worth telling because corporate responsibility was neither
forced from the outside nor dictated from the top. Instead, it emerged from a leadershipinitiated blend of property relationships and management practices. That strategy, in turn,was nudged along by a rule-making policy environment that encourages up-close ownership. By combining participative ownership relations with participative workplace relations, the  rm cultivated conditions that enabled it to evolve and change in ways that
better reect the values of those most directly affected by the  rm’s physical operations.
Those values (and those possibilities) are typically opaque or invisible to off-site investors
and to  nancial markets.

© Emily Sper

31

Leadership in a Globalizing Era
For globalization to proceed sensibly and sustainably, leaders must redesign nance—its
driving force—so that globalized capital transforms ownership patterns that are now dangerously detached, disconnected, and ‘‘depeople-ized.’’ For global commerce to operate
in a manner consistent with the values of self-determination, leaders must imbed in uencein those communities where the inuence of globalization is felt.
Legislators and executives are the systems architects—the rule makers and the pattern givers. From their decisions, political and commercial tools either grant or deny anation’s people the feedback loops that self-organized systems require. The natural habitatof property patterns is not physical but legal and economic. Executives must rely onpolicymakers to craft the framework of rules from which the shareholder relations emergethat determine what those executives do. Managers and directors are the shareholders’hired hands. If we are to have a more personalized and ‘‘up close’’ capitalism, lawmakers
must craft rules to evoke that result. Because ownership is now so remote and detached,
executive decision making is largely reduced to the question of how best to pursue  nancial returns, regardless of the broader impact on communities, on nature, or on anythingthat happens beyond the payback period of current investments. The systemic risks that

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32

Examples of Wealth Redistribution
1. From the bottom to the top. The wealth of the Forbes 400 richest Americans grew an average$1.44 billion each from 1998 to 2000, for a daily increase in wealth of $1,920,000 per person. Thenancial wealth of the top 1% now exceeds the combined household nancial wealth of the bottom
95%.1 The share of the nation’s after-tax income received by the top 1% nearly doubled from 1979
to 1997. By 1998, the top-earning 1% had as much combined income as the 100 million Americans
with the lowest earnings.2 The top fth of US households now claim 49.2% of national income, while
the bottom fth gets by on 3.6%.3 Between 1979 and 1997, the average income of the richest fth
jumped from 9 times the income of the poorest fth to 15 times.4 The pay gap between top executives and their average employees in the 365 largest US companies widened from 42:1 in 1980 to
531:1 in 2000.5
2. From democracies to plutocracies. Today’s capital markets-led, ‘‘emerging markets’’ development model is poised to replicate US wealth patterns worldwide. For instance, World Bank researchfound that 61.7% of Indonesia’s stock market value is held by that nation’s 15 richest families. The
comparable gure is 55.1% for the Philippines and 53.3% for Thailand.6 Worldwide, there is now
roughly $60 trillion in securitized assets (stocks, bonds, and so on), with an estimated $90 trillion in
additional assets that will become securitizable as this model spreads.
3. From the future to the present. Unsustainable production methods are now standard practiceworldwide, due largely to globalization’s embrace of a nancial model that insists on maximizing netpresent value (largely what stock values represent). That stance routinely and richly rewards those
who internalize gains and externalize costs, such as paying a living wage or cleaning up environmental toxins.
4. From poor nations to rich. The neoliberal version of globalization assumes that unrestrictedeconomic ows will benet the 80% of humanity living in developing countries as well as those 20%
living in developed countries. Yet the UN Development Program (UNDP) reports that the richest fthof the global population now accounts for 86% of all goods and services consumed, while the poorest fth consumes just over 1%.7
5. From developing nations to developed nations. In all three ecosystems suffering the worst
declines (forests, freshwater, and marine), the most severe damage has occurred in the southern temperate or tropical regions. Industrial nations (located mainly in northern temperate zones) are primarily responsible for the ongoing loss of natural capital elsewhere in the world.8 In its July 2001 report,
the International Panel on Climate Change conrms that relentlessly rising global temperatures— due
primarily to hydrocarbon use in the 30 most developed economies—are poised to create catastrophic
conditions worldwide. Agriculture, health, human settlements, water, animals—all will feel the impact
on a planet that’s warming faster than at any time in the past millennium. Throughout the panel’s
2,600 pages of analysis, one theme remains constant: the poor of the world will be hardest hit. According to GEO 2000, a UN environmental report: ‘‘The continued poverty of the majority of theaccompany today’s return-seeking myopia suggest that business leaders have a responsibility to lobby lawmakers for rules that favor up-close and genuinely ‘‘people-ized’’
shareholding.
The role of leadership in a democracy is to identify where the forces of globalization
are out of sync with the principle of self-organizing systems, because that remains thestandard against which the success or failure of both democracies and markets must be
apprised. That self-design component—animated by a designed-in preference for ongoing
dialogue—is what makes democracies perform better than hierarchical, top-down, andcentrally administered systems.
The corporation, as a creature of private property, views shareholding as the required‘‘entry fee’’ for wielding inuence. As globalization’s key actor, economic inclusion requiresthat the architects of globalization craft a corporate policy environment that evokes genuinely broad-based and locale-attuned corporate ownership. Otherwise, self-governance willcontinue to give way to the self-reective forces of nance, that all-pervasive proxy for offsite ownership rights. A component of local ownership is required to upgrade each rm’s
learning capacity, drawing on that relation as a ‘‘learning loop’’ to help overcome the faulty,
incomplete, and missing information that typies commercial operations attuned solely tocapital markets.
Because property relationships emerge from the workings of  nance, the rules governing  nance must be redesigned. Historically, capitalism has been designed only tocreate more capital. Globalization requires that it be designed to create more ‘‘capitalists’’as well.

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planet’s inhabitants and excessive consumption by the minority are the two major causes of environmental degradation.’’
6. From families to nancial markets. The work year for the typical American has lengthened by
184 hours since 1970. That’s an additional 412 weeks on the job for about the same pay. US parents
spend 40% less time with their children than in 1970.
7. From free-traders to protectionists. Nations in the Organization for Economic Cooperation andDevelopment channel $362 billion a year in subsidies to their own farmers while restricting agricultural imports from developing countries and insisting that debtor nations repay their foreign loans inforeign currency, which they can earn only by exporting.9
8. From debtors to creditors. In 1999, leaders of the G7 nations agreed to a debt initiative for
Heavily Indebted Poor Countries, aiming to cap debt service for the world’s 41 poorest countries at
15% to 20% of export earnings. By comparison, after World War I, the victors set German reparations at 13% to 15% of exports.
9. From law abiders to law evaders. Roughly $8 trillion is held in tax havens worldwide, ensuringthat globalization’s most well-to-do can harvest the benets of globalization without incurring anyof the costs. 10
Notes
1. E.N. Wolff, ‘‘Recent Trends in Wealth Ownership.’’ (New York: New York University, a paper forthe conference on ‘‘Benets and Mechanisms for Spreading Asset Ownership in the UnitedStates,’’ December 10–12, 1998). Household nancial wealth refers to assets that can be readilyliquidated.
2. Congressional Budget Ofce Memorandum. Estimates of Federal Tax Liabilities for Individuals
and Families by Income Category and Family Type for 1995 and 1999 (Washington, DC: Congressional Budget Ofce, May 1998).
3. See www.census.gov (‘‘income’’ at Table H-2).
4. Reported in The Economist, June 16–22, 2001.
5. ‘‘Executive Pay Special Report,’’ Business Week, April 9, 2001.
6. S. Claessens, S. Djankov, and L.H.P. Lang. ‘‘Who Controls East Asian Corporations?’’ (Washington,
DC: The World Bank, 1999).
7. United Nations Human Development Report 1998 (New York: Oxford University Press, 1998): 2.
8. L. Brown et al., State of the World 2001 (Washington, DC: Worldwatch Institute, 2001).
9. W. Bello, ‘‘The WTO: Serving the Wealthy, Not the Poor,’’ in Does Globalization Help the Poor?
(Washington, DC: International Forum on Globalization, 2001): 27.
10. The IMF estimates that the amount in offshore tax havens grew from $3.5 trillion in 1992 to$4.8 trillion in 1997. Other estimates, also badly dated, put the amount as high as $13.7 trillion.
See D. Farah. ‘‘A New Wave of Island Investing.’’ The Washington Post National Weekly Review(October 18, 1999): 15; and A. Cowell and E.L. Andrews. ‘‘Undercurrents at a Safe Harbor.’’ New
York Times (September 24, 1999): C1.

Relationship-based Risk Management
The problem with globalization is not the corporate entity, as some critics insist. Nor is
globalization a malady per se. The systems dysfunction lies in today’s combination of:(1) the narrow bandwidth of values to which the corporation gears its operations; and(2) the current state of corporate ownership —abstract, remote, and concentrated. In
effect, the corporate entity is handicapped by a lack of feedback loops. The result is a
globalizing force (nancial) that has created a world many experience as disconnected,
speeded up, and dumbed down.
The sensible prescription: policy environments in which ownership patterns become
more personalized, localized, and human-sized. In a private-property system, that’s the
only sustainable way a globalized private enterprise can adapt its operations to the legitimate concerns of those inuenced by its operations. Absent that personalized ‘‘connectedness,’’ globalizers have no right to expect relief from regulation, even where it’s heavy
handed, high priced, and hindsighted. Those in uenced by globalization have every rightto insist that globalization’s net be woven in such a way that it operates in a mannerconsistent with local values.
The leadership lesson is clear: self-organized commercial behavior—whether global
or local—is best advanced with a policy mix that treats up-close ownership as a tool foradvancing a broad array of values. Today’s returns-obsessive economic model—when
combined with today’s exclusive and detached ownership—runs roughshod over a vastarray of values that people have no intention of forfeiting in order to boost someone else’s nance-calibrated values.
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Dumbed-down by Design
The risks that sovereign nations face are increasingly complex—global, systemic, interdependent, multidimensional, and transgenerational. The best risk-management strategy
lies in a commitment to prove the truth of an age-old axiom: ‘‘If you want peace, workfor justice.’’ Instead, today’s globally dominant, neoliberal economic model charges
blindly ahead, its operations governed by a Newtonian-age mental model: Do A, get B.
Just maximize nancial returns and—trust us—everything will work out ne. If only
living systems were so simple. The neoliberals’ insistence on a mechanistic model conrms that their model is antiquated and prone to mistake nancial data for much-needed
knowledge.
What globalization now requires is leaders in both the public and the private sectors
willing to insist on the wholesale shift to a model that nurtures relationships that help thesystem manage itself. The shift to a self-designed system requires systems-savvy legislators conversant in the role of property patterns as potential feedback loops through which
private enterprise learns—and through which its operations can optimize a broader spectrum of values rather than mechanistically maximizing the narrow bandwidth of values( nancial values) to which the prevailing paradigm is now attuned. Leaders are obliged
to enhance the system’s capacity for learning. That’s the only leadership legacy that endures.
Today’s neoliberal version of self-design insists on a feedback system that grants
dominance to a representational rather than a real world. Though neoliberals offer intellectually eloquent theories about their academically elegant models, their maps routinely
fail to match the territory. Plus their indifference about ownership patterns ensures thatthe bulk of globalization’s nancial bene ts are routinely captured by the nancially sophisticated few. Critics charge that their preference for a ‘‘people-free free enterprise’’—along with their implication that the world revolves around Wall Street—replaces theDivine Right of royalty with the Divine Right of capital markets.

Conclusion

34

The neoliberal version of globalization urges that nations ally to make the world secure,not for the forces of democracy, but for the forces of  nance. That fanciful stance is basedon the assumption that the free ow of global capital will evoke fair, efcient, and sustainable free-enterprise democracies. Instead, insistence on that prescription has ravaged
the natural world, ignored the legitimate needs of the poor, and fed the unbridled greed
of a privileged few. It’s instructive that, in historian Arnold Toynbee’s search for thecommon factors that led to the decline of 21 civilizations, he identied just two: concentrated ownership and in exibility in light of changing conditions. In a systems-attuned
world, those would be seen as two sides of the same coin.
We possess the nancial know-how to remedy today’s concentrated ownership. Plus
we now know that locale-imbedded ownership patterns can enhance enterprise  exibility
while also narrowing today’s fast widening ‘‘democracy de cit’’—that yawning abyss
between globalization’s intended and actual behavior. What the needed paradigm shift
requires is leaders willing to view property as a relationship well suited to inject a broader
range of values into the current model’s money-myopic operations. The future favors
those leaders able to evoke the relationships through which the promise of democracy
can  nd its full expression, condent that the globalization of democracy must meansomething more than the right to choose poverty.
The immediate challenge faced by US democracy is the urgent need to replace today’s
neoliberal political leadership, both Demopub and Republicrat, with lawmakers supportive of the shift to a more participatory economic paradigm. In that more inclusive andcommonsense world, property relationships will be seen for what they are: a hopefulmeans for evoking a more just, stable, and sustainable future.

References
Milanovic, B. ‘‘True World Income Distribution, 1988 and 1993: First Calculations Based on Household Surveys Alone.’’ Economic Journal 476 (January 2002): 51–92.

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Speth, J.G. ‘‘The Plight of the Poor.’’ Foreign Affairs (May/June 1999).
United Nations Human Development Report 1996 (New York: Oxford University Press, 1996): 4(emphasis added).
United Nations Human Development Report 1999 (New York: Oxford University Press, 1999).

Commentary
by Arthur Warmoth
Jeff Gates has put his nger on the most critical political and ecological problem of the contemporary world: the systems design aws in globalization. And he has identied some key elements inthe solution. I suggest that there are three additional conceptual threads that might be pulled inan effort to untangle the web of human and ecological tragedy called ‘‘globalization.’’Thread 1—The Rank and File of Corporate Ownership
Gates’s rst target is appropriately ‘‘systems-savvy business leaders,’’ the opinion leaders in themost powerful sector of the globalizing economy. Although Gates suggests that ‘‘legislators andexecutives are the systems architects,’’ in too many cases, legislators and politicians follow the leadof corporate executives and lobbyists. Forward-looking executives willing to embrace the need forsustainable nancial and social institutions are likely to have more leverage in today’s world thananyone else.
However, it is also important to mobilize the rank and le of corporate ownership to promotethese reforms. According to recent reports, more than half the households in the US own equities.
The recent recession has become a crash course in capitalist economics for many. But much of the
discussion has focused on the narrow band of issues that Gates correctly identies as ‘‘simplistic,’’
primarily problems of providing better information about accounting practices and nancial returns. The crash course middle-class investors need would focus on the broader issues of nancial,social, and ecological sustainability.
An important lesson is that speculative bubbles of the dot.com type can generate rapid
growth on paper, but not in real economic terms, an inevitable conclusion to be drawn from theenormous growth over the past quarter century of what Robert Reich called ‘‘paper entrepreneurialism’’ (Reich, 1983). The successes of paper entrepreneurialism for today’s upper middle-class elites
have obscured the fact that nancial management and services may be exceptionally ripe candidates for enormous productivity gains. These gains could be realized if our nancial institutions
were managed fairly, honestly, and with the direct connection to the dynamics of real wealth creation and distribution that information technology makes possible. The hard lesson that owners ofnancial capital must learn—whether they are wealthy individuals, corporations and nancial institutions, or workers saving for retirement —is that a return on capital—whether as interest, dividends, or more exotic forms of nancial return—is justiable only when it is tied to the creation of
new tangible or intangible wealth.

Thread 2—The Design of Money
The most important system-design issue on which we must focus to get globalization back on
track is the design of money, a task undertaken by Bernard Lietaer. Lietaer’s denition of money issimple: ‘‘Money is an agreement, within a community, to use something as a means of payment’’(Lietaer, 2001: 41). This denition describes the function of money at all times and places. Its value
comes not from the fact that it is a thing, but rather that it is an agreement to use something as ameasure of value.
All contemporary national currencies are bank debt-created at money. Although governments print bills and mint coins, most of the money supply exists as bank accounts and othernancial instruments. Modern governments create money by authorizing banks to create new accounts, based on interest-bearing loans.
The obvious problem with this system is the need to manage the money supply in order toavoid ination, a task that is assigned in the US to the Federal Reserve Bank. Too much money incirculation leads to inated prices, with their obvious disruptive effects; too little means recession.
However, there are additional, less obvious problems inherent in the design of this system based on

REFLECTIONS, Volume 3, Number 4

Arthur Warmoth
Professor of Psychology
Sonoma State University

35

GATES
Globalization’s Challengeinterest-bearing loans. First, because the money required to repay the interest on the bank loans isnever created, conventional money is necessarily scarce (participants in the economy must compete
for both prots and credit); therefore, the system promotes competition over cooperation. Second,the unmonetized interest requirement promotes the concentration of wealth and the inevitabilityof a certain amount of bankruptcies. Third, guaranteed compound interest also creates an impossible expectation or assumption of endless (innite) economic growth. Fourth, because interest has
the effect of discounting future real economic returns, the system favors short-term time horizons
over the long-term planning horizons required for environmental sustainability. And fth, because
the system is primarily under the control of national governments, it encourages national consciousness and discourages global identity.
This system evolved primarily in pre-Victorian England. Because the system is primarily under
the control of national governments, it encourages national consciousness and discourages global
identity (Lietaer, 2001: 242–248). Its characteristics seem ideally suited to promote capitalism andthe industrial revolution. Can the current system adequately serve a postindustrial globalizing
world? While virtually all contemporary money is designed according to one systems model, there
are alternative, or complementary, forms of monetary system design, some of which are succeedingin the real world, that can solve these problems. For example, according to Lietaer, there are morethan 2,500 community currency systems now in operation worldwide.

Thread 3—Public-Sector Economics

36

There is limited understanding of the systems dynamics involved in the economics of the public
good and, therefore, little clarity about systems redesign. In fact, we do not even have a good label
to cover all the various sectors that contribute to our collective wealth and well-being. Economists
speak of ‘‘public goods’’ (which includes public services), but we need a concept that includes public assets and nongovernmental public productivity. Many aspects of our collective well-being areattended to by philanthropy and the nonprot or nongovernmental sector, and they involve ourenvironmental and social welfare. These sources of wealth and well-being, essential to our qualityof our life, are ‘‘owned’’ by the public in general and thus suffer from the same poorly designed
incentives for responsible ownership that Gates analyzes in the corporate sector.
In the public sector, there is no mechanism comparable to the elegant efciency of markets
for making economic decisions. In fact, individuals tend to want to obtain the benets of a healthy‘‘commons,’’ while shifting the burdens of caring for it to others. (Garrett Hardin identied thisproblem; perhaps the ‘‘commons’’ is an appropriate term to embrace all the sectors that produce
public goods [Hardin, 1968].)
The scope of the commons can be dened as all activities and ecological processes essential or
useful for human wealth and well-being that cannot be produced by and distributed to individuals
operating in price auction markets. This includes government services such as public safety, education, transportation infrastructure, public health, and environmental protection.
The debate continues as to the most efcient method of including these costs in the cycle ofeconomic activity: regulation versus taxation/public subsidy versus direct assessment of the actual
costs. However, all these goods and services represent real contributions to human wealth andwell-being; that is, they involve real productivity. The cliché that the private sector produces wealthand the public sector consumes it is simply not true!
Once we come to grips with the actual size of the commons, we are faced with the problem
of how to nance it.
First, we should ask certain basic policy questions: How do we nd the right balance between
public and private spending? What is the right amount or proportion of collective economic activity? In other words, what allocation of society’s resources will help fulll the broad spectrum of
human needs across the population?
Second, how can we provide public goods and services more efciently? One major virtue ofthe free market is its economic efciency. There is no comparable feedback mechanism for thecommons. Part of the solution probably lies in providing adequate professional and ethical education for public servants. Another approach, advocated by David Osborne and Ted Gaebler (1992), isto promote competition in the provision of public services, while the legislative function determines the desirable quantity and quality of the services to be provided. The neoliberal privatization
movement appropriately understands the value of competition in increasing the efciency and pro-Volume 3, Number 4, REFLECTIONSGATES
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ductivity of services, but it misses the fact that the allocation of resources to public purposes isnecessarily a collective, or political, decision.
Third, how can we appropriately balance compulsory (taxation) with voluntary (charitable orphilanthropic) spending in support of the commons? Philanthropy allows for the direct expressionof priorities and encourages a personal sense of responsibility for and participation in civic life. For
the very wealthy, it provides the rewards associated with noblesse oblige and, perhaps to someextent, counterbalances the regressive structure of taxes, such as those on sales and Social Security. However, for reasons well understood by Hardin, voluntary individual spending will always be
insufcient. What is needed is a comprehensive, sophisticated model of nancing the commonsthat includes a mix of philanthropy, user fees, and progressive taxation on both income and assets.
The challenge of redesigning emerging global institutions to account for the needs of communities and bioregions is indeed a daunting task. Challenging our leaders to rethink ownership, alongwith the design of money and the economics of the commons, can move us in the right direction.

References
Hardin, G. ‘‘The Tragedy of the Commons.’’ Science 162 (1968): 1243 –1248.
Lietaer, B. The Future of Money (London: Century, 2001).
Osborne, D. and T. Gaebler. Reinventing Government (Reading, MA: Addison-Wesley, 1992).
Reich, R.B. The Next American Frontier (New York: New York Times Books, 1983).

37

REFLECTIONS, Volume 3, Number 4

Capitalism’s ‘‘Genius’’?
Saving the Market
from Itself
Frances Moore Lappé and Anna Lappé

TFrances Moore Lappé
Author, Diet for a Small Planet
Coauthor, Hope’s Edge: The Next
Diet for a Small Planet
Cofounder, Small Planet Fund
info@dietforasmallplanet.com
Anna Lappé
Coauthor, Hope’s Edge: The Next
Diet for a Small Planet
Cofounder, Small Planet Fundalappe@hotmail.com

38Ó

2002 by Frances Moore Lappé andAnna Lappé.

he crash of Enron is all over the newspapers. We’re awed by the magnitude of its
executives’ deceptions —from grossly in ating assets to hiding huge debts in fancy
accounting footwork. Treasury Secretary Paul H. O’Neill comments on the biggest bankruptcy in US history: ‘‘Companies come and go. It’s part of the genius of capitalism.’’
Meanwhile, Enron employees have lost not only their jobs but their life savings.
Enron’s fall is a jolting alert to what happens when the market is cut loose fromdemocracy, when it operates without being grounded in deeper, nonmarket, social values.
What might we retrieve from the implosion of America’s seventh largest company? Surprisingly, perhaps, it’s a lesson that came home to us as we journeyed on ve continents
and talked with some of the world’s poorest people.
We searched for answers to a most fundamental question: How is it that we as societies are creating the very inequalities and environmental devastation that we as individuals abhor? As individuals, none of us would have wished for an Enron, for a growing
hole in the ozone layer, or for the deaths each day of 32,000 children from preventablediseases and hunger. In our explorations, we probed what role the market plays in creatinga world so painfully out of whack with our most basic sensibilities.
Throughout most of human evolution, economic life was embedded in community—in family and religion, in nature and culture. In only a blink of time, economic life has
been ripped out of the fabric of community and made to stand apart and above all otheraspects of life.
O’Neill sees the genius of capitalism in its dog-eat-dog, some win/some lose nature.
But the market destroys itself if not operating within a set of public rules and behavioral
norms that have nothing to do with what sells and what doesn’t—values such as honesty,
trust, and mutuality. Certainly Adam Smith understood this. He wouldn’t have been surprised by the Enron debacle, since the values underpinning a functioning market havebeen rapidly disappearing, along with the guardians of those values—public institutions
free from corporate control.
Perhaps there’s no better place to look for an example of the disappearing market
than in the arena of food. Those at the pinnacle of market power over that which provides
most of the world’s calories—grain—acknowledge that the free market has become little
more than myth. The chairman of global agricultural giant Archer Daniels Midland,
Dwayne Andreas, has said: ‘‘There is not one grain of anything in the world that is soldin the free market. Not one. The only place you see a free market is in the speeches ofpoliticians’’ (Carney, 1995).
The disappearance of a functioning market is hard to see, though, because the dominant belief system, now spreading globally, is that the public sphere is the enemy of themarket. Therefore, the more we reduce government’s role, this mental map tells us, thefreer and more effective the market. In fact, the opposite is true: there can be no functioning market without the guardianship of accountable, democratic government. Democratic government is essential to creating and maintaining an effective market.

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Capitalism’s ”Genius”?

So how do we reclaim the market from the dogma of market fundamentalism that is
actually killing it? Media pundits would have us believe there is no alternative to corporate
globalization—the current buzzword for giving corporations a free hand. Unfortunately,
this mental map is blind to the alternatives that we saw emerging in every corner of the
globe —alternatives that don’t embrace a new ism, but suggest practical, ingenious strategies for reembedding the market in democratic values. Adam Smith would be proud.
Early in our research on food and farming, we sat with Paul Rice, the executive
director of TransFair USA, a US leader in the fair trade movement, in his Oakland, California, ofce. He held up a graph showing world coffee prices over the past several decades. The graph’s peaks and spikes were so extreme that it looked like Pinocchio taking
a lie detector test. Rice explained to us how fair trade
works. The graph, he explained, represents the typical  uctuation of any commodity, with speculation determining
prices— speculation in supply, demand, even weather. But
why should the lives of small Guatemalan farmers be torn
apart by guesses about the weather in Brazil? And by middlemen who cheat them out of money? Fair trade, Rice
explained further, puts a oor under coffee prices, no matter what the world price, and eliminates the unscrupulous
middlemen.
Today, the average Third World farmer sells to a middleman for 38 cents a pound(check a local Starbucks and you’ll see that same pound selling for $8, $9, or as much as$13). With fair trade, coffee farmers can count on a  oor price of $1.26. ‘‘That still might
not sound like much,’’ Rice said, ‘‘but the difference in the lives of coffee growers is huge.
In practical terms, for many farmers, it means being able to stay on the land, keep theirfarm, and feed their kids.’’
The fair trade movement isn’t about restricting the market. It’s about facilitating it,
ensuring that it works toward the end that true believers in the market themselves proclaim: allowing all who participate to live better lives. As Rice told us, ‘‘It’s not a  xed
pie, it’s about growing the pie.’’ And how do you do that? Through facilitation, not intervention. Fair trade is helping millions of small farmers, from Guatemala to Ghana, stayon the land, grow coffee and other products sustainably, and build strong communities.
Far from Oakland in a village near Nairobi, Kenya, we sat with village women who
taught us another lesson about moving beyond a form of capitalism that allows only afew players to dominate and puts those vulnerable to its uctuations at intolerable risk.
We met Mumo Musyoka, a longtime member of the Green Belt Movement, a 25-year effort
to combat the encroaching desert by planting trees. The movement has grown to becomea food-security and prodemocracy organization as well.
Standing next to the garden she shares with a dozen other
women in her Green Belt group, Musyoka tells us what shelearned during her weekend at the movement’s Nairobi
training center. Along with techniques in organic farming,
Musyoka became recommitted to planting the root crops
indigenous to the area. ‘‘These are the crops,’’ Musyoka
explains, ‘‘that have always helped us bridge the rainy seasons. In a drought like this one [Kenya was facing one ofits driest seasons in history] the corn might be ruined, but
we still have the sweet potatoes protected underground.’’
Green Belt’s food-security efforts reminded us of another essential element of a functioning market: participants must not be desperate for survival. Desperate people
lack bargaining power. And without bargaining power,
trade is not trade; it’s coercion. By ensuring that all theirmembers grow food to provide for their family’s security
before growing food and cash crops for export, the Green
Belt Movement helps ensure that Musyoka and her neighbors have the kind of stability necessary to at least have achance to be effective players in the market.

So how do we reclaim the market
from the dogma of market
fundamentalism that is actuallykilling it?

REFLECTIONS, Volume 3, Number 4© Emily Sper

39

LAPPÉ AND LAPPÉ
Capitalism’s ”Genius”?

40

We should add that although the Green Belt Movement is the good news, Kenya also
embodies a quickening of the dominant global trend of market fundamentalism. We
learned that Kenya nears Holland as one of the world’s largest cut-ower exporters. Apparently, cheap agricultural chemicals and weak trade unions make the country an ideal place for such operations
to set up shop.
In Bangladesh, we saw another innovation in the market. On our  rst day in Dhaka, the country’s packed capital,
we wound our way past rickshaws, pushcarts, and cars
hidden by plumes of smoke, to the 20-some-story tower of
the Grameen Bank’s of ces. Since the early eighties, thebank has done what no bank had ever done before: built an institution by loaning to thepoor.
The bank’s charismatic leader, Muhammad Yunus, explained to us how Grameencame to be. After Bangladesh’s war of independence in the early seventies, ‘‘Bangladesh
was in terrible shape,’’ he said, ‘‘a lot of deaths, a lot of killings. I started teaching exactly
the same thing I had taught at a university in Tennessee —economics. Instead of getting
better, things were getting worse. Then in 1974, a terrible famine hit. People were dyingin the streets. That was a rude shock,’’ he continued.
‘‘I lived in a beautiful bungalow near the university and would walk by people dying.
Then I would come back to the classroom and give my big lecture, and I said: ‘What isthis?’ I felt completely empty. I came to the conclusion that these economic theories wereuseless. I realized I could help people as a human being, not as an economist. So I decided
to become a basic human being. I no longer carried any preconceived notions.’’
For Yunus, an admission of ‘‘not knowing’’ was the beginning of real learning. Dropping his preconceptions and leaving his theories in the classroom, Yunus traveled into
the villages near Chittagong University to understand poverty and hunger—to learn a
new economics—by listening to poor people themselves.
What Yunus observed seems, in one sense, utterly obvious. Those most hungry arethose with no land. But instead of accepting what he saw, Yunus asked, ‘‘Why is it thisway?’’ He found that many of the landless struggled for income by making things to sell.
But to buy the raw materials, they had to borrow from a moneylender. By the time they
repaid the loan, plus interest (as much as 10% per day) what was left was never enoughto live on.
Yunus’s  rst ‘‘aha’’ moment was meeting Suya Begum, a 21-year-old mother who
fed her family by making bamboo stools. She bought the cane, her raw material, withloans from moneylenders who made her sell back to them at the end of each day. Her
prot? Two cents a day.
Soon Yunus and his students had compiled a list of 42 people in similar straits, andYunus provided them a loan out of his own pocket. ‘‘My loan of only $27, spread among
42 people, was enough,’’ he told us.
Where others looked and saw pathetic, hungry people who needed food, Yunus
looked and saw resourceful people deprived of resources. To him, it was clear that, morethan food handouts, they needed money to invest in tools of production. They needed a
way to free themselves from dependency on the moneylender, free themselves from vulnerability to hunger. Yunus saw credit as the liberator.
Grameen Bank has grown to be a model internationally for microcredit banks that
lend to those with no collateral, like Begum and her neighbors. By lending to groups ofwomen, the bank has helped people help themselves, building new homes, starting small
businesses, and rethinking social norms governing the role of women in society. The bankis an example of not taking the givens of capitalism as immutable, but looking at thesystem’s failures and daring to ask: Why is it this way? Why can’t it be different? (AtGrameen, not only are the borrowers poor, but it is they, not the bankers, who decide onloans, and it is they, the borrowers, who own most of the bank.)
At the end of our interviews with him, in his sunny ofce with a fan whirring overhead, Yunus shared one of his favorite Bengali expressions: ‘‘You can’t grow a mango
from a jackfruit tree.’’ It’s a no-brainer: if you want the market to work, you’ve got toplant new rules that will grow it well.

Desperate people lack bargaining
power. And without bargaining
power, trade is not trade; it’s
coercion.

Volume 3, Number 4, REFLECTIONSLAPPÉ AND LAPPÉ
Capitalism’s ”Genius”?

George Soros, the billionaire nancier, has said, ‘‘The development of a global economy has not been matched by the development of a global society.’’ In our research, we
saw the beginnings of this global society emerging. From the fair trade movement, to local
food-security initiatives, to banks by and for the poor, in the corners of the globe thatneed it most, people are planting mango trees, and some may very well bear fruit. Such
breakthroughs are not destroying the market; rather, they are reembedding the market
with human values.
Their lessons may come a bit late for former Enron employees, but let us hope thattoday’s spectacular show of market failure and the human misery in its wake will reveal
a silver lining: Might the shock awaken more of us to recognize that the market cannot
function ‘‘on its own.’’ It can be sustained only within a noneconomic value system thatwe— civil society and democratic government—establish.

References
Carney, D. ‘‘Dwayne’s World.’’ Mother Jones (January 1995).

41

REFLECTIONS, Volume 3, Number 4

Learning beyond Fear: New
Events Seeking New Habits
Karin Eyben, Libby Keys, Duncan Morrow,and Derick WilsonT

wo of us attended the Society for Organizational Learning Greenhouse, one week after
September 11, 2001. As visitors, we experienced the overwhelming sense of loss anddisconnection from all that had been secure and previously known. The physical gap
created by the destruction of the World Trade Center towers seemed to expose gaps inother relationships, for example, between:

Karin Eyben
Research Ofcer, Future Ways
University of Ulster
k.eyben@ulst.ac.uk

 The US and the rest of the world Older and younger generations
 Established and recently arrived immigrants
 Parent and child Islam and Christianity
 Wealth and poverty
In times of uncertainty, gaps are often  lled with fear and terror. A dilemma thatemerged for us during that week was whether these gaps could become generative spaces,lled with something different—spaces that offer opportunities to grow new relationships
and understanding. We left feeling deeply privileged at being part of that experience. We
also left feeling that the questions and dilemmas Northern Ireland has faced are now
perhaps more relevant to those the US faces: How do we grow a culture of interdependence in which we become sensitive to thequality of relationships between and within different communities, between citizens
and the state, between different political parties, and between different states?
 How can states and the whole world become a learning community, able to tune into
voices from outside the mainstream? What structures are required to do this?
 How do we create settings that allow us to remember our own pasts, reect throughnew dialogue and meetings, and reconnect to a wider whole?
 How do we learn in a context in which people’s fear prevents them from even meeting? How do we generate new habits of meeting?

42

Libby Keys
Coordinator, Future Ways
University of Ulster
Western Routes Civic Leadership
Program
Western Region Councils
libby.keys@btinternet.com

The challenges of interdependence are universal. These challenges are sharpened andexposed in a place like Northern Ireland, where the costs of ignoring division and separation have been all too apparent. However, following September 11, we are now allembarked on a journey dependent in part on our willingness to trust and learn acrosstraditional identity and sectoral lines. We wrote this article to share some our learnings
and thoughts about our work in Northern Ireland in the hope that it will connect todilemmas you may be facing.

Ó

Old Habits
2002 by the Society for Organizational Learning and the Massachusetts
Institute of Technology.

Political and religious tensions have a long pedigree in Ireland, especially in the north.
Indeed, division affects the whole structure of society and people in the most intimate
details of their lives, including whom they marry and are friends with, where they worship

Volume 3, Number 4, REFLECTIONSBoth personally, and as a whole society, we have learned how to survive and negotiate present realities through more than 30 years of open hostility and conict:

Duncan Morrow
Lecturer in Politics
Codirector, Future Ways
University of Ulster
dj.morrow@ulst.ac.uk

 We learned to call for change, but never to change.
 We learned how to protect the core by being exible about less important things.
 We all learned to be for peace, but somehow produce conict without ever feeling

EYBEN, KEYS, MORROW, AND WILSON

and be honest only when the door is safely shut on the threat.

 Live among ‘‘your own’’ for safety.
 Make sure ‘‘they’’ have no say in the education of ‘‘your’’ children.
 Don’t marry one of ‘‘them’’; it is too difcult.
 Be neighborly, but stay close to the cultural core of ‘‘your own people.’’ Leave politics to politicians, but never forget who you are and what your identity is.

 Never give offense, and stay clear of anything that might muddy the water.
 Scout out your environment, stay silent in mixed (Catholic and Protestant) company,

Learning beyond Fearand go to school, where they live, and what they dare say to one another (White, 1991).
For years, decades, even centuries, Northern Irish people have adapted to their ambivalentpredicament of nationhood with considerable ingenuity. These rules of public conduct
have served people well over the years:

responsible.

Context of Fear
The political problem in Northern Ireland is not, or at least has not been, violence. The
problem is, rather, fear—the deadly fear that arises when small acts of violence are directed at large targets and everyone in the target group adjusts his or her behavior, attitudes, and expectations. This is not to deny the multiple deaths, injuries, and social andeconomic devastation that have fueled and de ned our relationships. But the justication
for political fundamentalism and violent resistance that comes from these injuries and thepotential that such violence will ensnare people on the basis of their perceived association
traps everyone in its web.
If people are killed because they are Catholic, then one death creates fear for many.
As a result, all ‘‘Catholics’’ fear some Protestants, but without further knowledge, they
can’t tell which. If people are killed because they are British in Ireland, all the British in
Ireland react with hostility. Who is the Catholic you fear? If you can’t tell, common sense
tells you to assume ‘‘any or all of them.’’ Common sense tells you to lock the door.
Relationships across these kinds of fear are not relaxed and are shaded with memory andincitement. To trust appears illogical, naõ¨ve, and even criminal.
In the midst of these relationships, every abstract concept becomes a tool to secure
the safety of one group against another’s. ‘‘Peace’’ is universally desired, but usuallymeans that ‘‘they’’ must stop before ‘‘we’’ can do anything. ‘‘Justice’’ becomes understood as the successful criminalization of the unjustiable acts of others. ‘‘Democracy’’is an arrangement of the chairs, which justies ‘‘my’’ majority. Northern Ireland is anation of innocents in which no one owns guilt and everyone is for peace, justice, anddemocracy. It’s just that ‘‘the others’’ keep blocking progress.

Trying out New Habits
Learning in a context such as Northern Ireland requires moving beyond fear to meet in
new ways. The learning experience must be an existential interruption, a contradictoryor contrasting experience to existing habits and patterns of behavior. First steps will inevitably be clumsy and run against the grain of deeply learned behavior.

‘‘Healthy Center, Sick Periphery’’
The Future Ways Program at the University of Ulster emerged from work with voluntary,
youth, and interfaith groups since 1965.1 Our work creates spaces where people from

REFLECTIONS, Volume 3, Number 4

Derick Wilson
Senior Lecturer in Community
Relations
Codirector, Future Ways
University of Ulster
da.wilson@ulst.ac.uk

43

EYBEN, KEYS, MORROW, AND WILSON

Learning beyond Fear44

different traditions and experiences can develop new understandings, relationships, andstructures. With hindsight, the focus of our work at the beginning was mainly on politically marginal groups, such as young people or children, or groups with no real engagement in the structures of politics, such as churches or those on the periphery, theeconomically deprived or vulnerable.
In 1997, we published a research report, which argued that working toward betterintercommunity relationships in Northern Ireland should cease to be a peripheral interestand low-level policy objective and become a core organizational task for public and civic
institutions (Eyben et al., 1997). We found that, although different sectors in Northern
Ireland widely agreed that greater interdependence was of central importance, there wasless evidence of mainstream understanding and practical programs beyond the voluntary
and youth sectors.
We embarked on an experimental program with core public and voluntary organizations—the civil service, local government, churches, community organizations, politicians, and the police —as employers, civic leaders, and deliverers of services. Our purpose
was to discover what it would mean for those at the center of public and private life totake the building of trust seriously. This meant ‘‘translating’’ models of learning andpractice developed within the community sector into core institutions.
The greatest possibilities for change lie in those sectors where people may choose to
be together. However, the places where major social policy decisions are made, whereservices are planned and delivered, and where the lives and identities of a vast numberof citizens are shaped and directed cannot ignore the long-term reconciliation process thatfaces Northern Ireland.
There has always been a strong tendency to focus responsibility for repairing community relations on areas where the experience of violence has been deepest. Violenceon the margins of society is presumed to be rooted in problems in those areas alone,whereas areas and organizations at the core of Northern Ireland’s society and economy
are deemed to be healthy, based on a lack of visible violence. By presuming that violence
is a problem of relationships in the areas where it breaks out physically, the policy response is overwhelmingly driven by events, focused on emergencies, and similar to ourapproach to social exclusion or the professional/medical model of intervention in whichknowledgeable experts ‘‘help’’ sick patients.
We wished to engage critically with this ‘‘healthy center, sick periphery’’ mental
model, but we needed partner organizations that would be willing to work with us in an
open-ended manner. We knew a little about community relations work but almost nothing
about organizations’ function and development. Conversely, our partner organizations
knew about the culture and dynamics of their systems but avoided such difcult issues
as identity, politics, and con ict. By combining these two elds of knowledge and practice,
we hoped to show that organizations do not function in isolation from their social andpolitical environment and, in partnership, develop ways of engaging with this reality.

Learning to Serve: A Case Study
Legitimacy in politics implies a right to make and carry out the fundamental rules of asociety: its laws. In Northern Ireland, the legitimacy of the state has been under permanent
challenge. Any agency, such as the police, that draws its authority from the law is automatically contaminated by the crisis confronting the lawgiver. For generations, its opponents treated the police service in Northern Ireland as an illegitimate entity. Some,
especially the IRA, regarded individual police of cers as legitimate targets for attack.
In 1994, negotiations about the future of Northern Ireland involving most politicalparties began. Although there was no consensus about policing, it was clear that there
could be no overall resolution with a new legitimacy for policing Northern Ireland. A newdebate about policing was therefore inevitable, which meant engaging with an overwhelmingly male, Protestant organizational culture.
Policing in Northern Ireland has been so controversial that direct contact between
the community and the police (until 2001, known as the Royal Ulster Constabulary [RUC])

Volume 3, Number 4, REFLECTIONSEYBEN, KEYS, MORROW, AND WILSON
© Emily Sper

Learning beyond Fears

was generally avoided. Instead, peace building tended tofocus on interpersonal and intergroup contact between
Catholics and Protestants, rather than on politics and organizations.
In 1992, the Mediation Network for Northern Ireland(MNNI), with support from Future Ways and others, engaged directly with the RUC when it was invited to design
and pilot a program for new police recruits. The aim of
the program was to improve the quality of policing by enhancing the self-awareness and community awareness of
new entrants. Despite satisfaction at the development of aserious program for recruits, the RUC clearly remained
focused on counterterrorism, not learning. Among the
nonpolice partners was a growing frustration with the limitations and a wish that future work should focus on thewhole organization.
The long-term practical commitment of MNNI and Future Ways to building peace
was critical to the credibility of new development. Both groups understood their visionof reconciliation as a commitment to a future shaped by and for all those with a stake inNorthern Ireland. An inclusive stake in the process and in the shape of the outcome
preceded any particular political outcome. All were convinced that reconciliation requires
new relationships for policing, reecting the stake of all society in the structures, culture,and ethos of the police.
The project offered access to the police at a senior level, presenting the unique opportunity to build capacity. The challenge of establishing a model in which new experiences bring new relationships that, in turn, change a large organization was both daunting
and a privilege.

Setting the Vision
Through contact with of cers, we became aware of a continuing paradox: RUC of cers
were often the direct victims of con ict, while also being part of a system that generated
continuing violence. Our vision of the engagement had less to do with speci c models ofpolicing than with a wish to generate a new, open relationship between the communityand police that would encourage reconciliation in a divided society. The fundamental task
was to put esh on that vision by exploring the possibilities and obstacles presented by
the changing political environment and the needs of both police and the divided communities they serve. A more concrete vision was impossible until we met with each otherto nd one.
The signi cance of the project was its location at the center of the organization andits program content. Senior ofcers and others reected and learned about policing culture, ethos, and relationships with external critical partners who were neither clients nor
consultants. Given the lack of previous community-police dialogue models, the aim of the
project was widely focused: ‘‘Assisting the evolution of policing and community relations.’’ Evolution refers to a process of change in which organisms adapt to their environment during continuous change and development. It presupposes the necessity of change
as part of stability, differing from revolution less in the scale of change than in the mechanisms by which change occurs and in understanding the relationship of the future to thepast. The commitment to policing rather than the police was equally signi cant; our primary commitment was to the activity (verb) rather than the organization (noun).

Designing a Process in a Context of Fear
Following discussions with the chief constable, we agreed that the police needed to engage
in critical dialogue with the community about reconciliation, policing, and the overall
ethos of the force. A prerequisite for meaningful dialogue was the development of mutually respectful relationships between our team and ofcers from a range of backgrounds

REFLECTIONS, Volume 3, Number 445

EYBEN, KEYS, MORROW, AND WILSON

Learning beyond Fearin the RUC. The project needed both serious commitment from RUC leadership and demonstrable independence from that same leadership to guarantee integrity. The commitment of the chief constable was always regarded as critical, and the ability to liaise directlywith him increased our leverage.
A degree of risk for everyone was inherent. Political and  nancial independence wascrucial for us in maintaining critical distance. We received the endorsement of the secretary of state for Northern Ireland. The project was funded by the Northern Ireland Ofce,
the Ireland Funds, and the US Information Agency (USIA—now within the State Department). Even with clear independence, the conspiratorial nature of Northern Ireland politics implies constant suspicion that any small organization is being ‘‘used’’ by apropaganda-wise partner like the police. Independent partners are, however, also a risk
for the police, who have grown used to expecting open attack and have developed strong
protective defenses.
The project was conceived as a three-year plan, in one-year segments. This was necessary because: Policing is central to political conict in Northern Ireland. A project that did not makea three-year commitment was likely to underestimate the task. At the same time,political conditions in 1997 were so uid that the past was no longer an adequate
predictor of the future.
 Given the uncertain nature of public funding, nobody could commit beyond agreedon funding periods.
 In dealing with the most controversial issues in policing in Northern Ireland, theproject had to elicit real dialogue. In the long absence of any dialogue between policeand community, the chance to renew commitments was a question of safety for bothpartners. (Each party would be able to opt out of the project at an annual decision
point with no loss of face. The police also had xed review points.)

Structures

46

MNNI and Future Ways established a group to meet weekly and work together on policing.
Throughout the project, the working group was the main vehicle for planning and delivering the program, for discussing policy issues, and for resolving disputes. The primarytask of the working group was program development. Although the timetable of the program for each year was broadly outlined in advance, the content evolved. This enabled
the group to make dynamic judgments about appropriate issues, about relationships
within the group, and about relevant techniques.
A senior of cer overseen by an assistant chief constable was directly responsible
for the management of the project within the police. This structure did not preclude
direct liaison between the project and the chief constable. The RUC and the working
group together selected of cers for the police group, known as the development group.
Whereas the RUC was responsible for selecting individuals, the working group agreed
on selection criteria and proposed names. The criteria were designed to ensure four core
principles: Sufcient diversity to ensure breadth of discussion
 Sufcient representation to ensure credibility
 Sufcient safety in numbers to ensure that minority voices could be raised without
fear of isolation or career cost

 A legacy of of cers who could carry their learning into the upper ranks
What Was Different about the Project?
The project was a departure from previous efforts in many ways. Until 1994, the police
had not engaged community elements in any aspect of peace building. The project was
not focused on training but on learning about the culture of the RUC, engaging of cersfrom across the organization with outsiders. The project was not intended to enforce
speci c plans. Initial success was to be measured in a growing capacity to wrestle with

Volume 3, Number 4, REFLECTIONSEYBEN, KEYS, MORROW, AND WILSON

Learning beyond Fearcomplex issues of historical, organizational, and personal relationships and propose newanswers. It was a partnership and dialogue project, owned by two independent partners,
each able to maintain its own independence.
Policing in Northern Ireland has traditionally been approached as a managerial matter(dominated by consultants) or as a political matter (dominated by politicians). We aimed
to supplement these methods with open dialogue between inuential ofcers, practitioners in the peace-building eld, and members of the public. Through changing the traditional model of relationship inside a hierarchical organization, new learning became
possible.
The project aimed to build the capacity of both the police and community to thinkholistically and innovatively about each group’s issues. It takes considerable time to develop a possible, desirable vision, while establishing less defensiveness about the dif culties of current reality.
We aimed to break the cycle that categorizes all dialogue with the police either as
destructive criticism (the traditional view of police) or as collusion with the enemy (thetraditional view of many police critics), developing instead a practice of engaged critical
dialogue. We hoped to create a context in which deeply held differences could be expressed and explored, allowing trust to grow. By seeking an environment of trust withdifference, difference can become a means of growth, not antagonism.
Policing is traditionally an issue of ‘‘command and control’’ where pleasing those inhigher rank is rewarded. Our project was a forum where of cers of different ranks sharedviews openly, allowing the recognition of the lower ranks’ knowledge and experience,the creation of teams, and the recognition of the commanders’ difculties. The presenceof civilians was essential to create this atmosphere. The goal was to raise all issues ofimportance related to policing a divided society, especially those of greatest controversy,
in public debate.

What Did We Learn?
Although it is dif cult to describe all that we learned, we can make some core points.
First, insecure conditions incur enormous costs in terms of ef ciency. For police inNorthern Ireland and outsiders to work together, lengthy subpolitical negotiations wererequired. Furthermore, a small development group of 15 to 20 of cers needed major
external political support to survive. In the midst of conict, those committed to collaborative problem solving found themselves torn by a variety of competing demands. Thisis particularly true when small external groups meet with large organizations. At times,
the working group agreed on the agenda only when we sat
down together. Unless there is deep trust among all members, exibility can easily descend into bickering andchaos. The imponderable element of trust was essential in
keeping this potential problem at bay.
Second, the level of a group’s fear depends on factors
beyond the control of any member. External partners must
be able to address fears as they emerge and not assume
that fear is a constant or given reality. Before the signing of the Good Friday Agreement,
the working group had to work hard to establish the relevance and legitimacy of the
dialogue with some police members.2 After the signing, and the publication of the Patten
Review of Policing in Northern Ireland, the need for internal dialogue was accepted byeveryone within the development group.3
Third, there is an important difference between consultancy and partnership in pursuit of public goals. The task was to journey together into unknown territory about which
there were many fears, in which all participants—police and nonpolice—had a stake as
citizens and participants in events in Northern Ireland. The process involved change inthe citizens and in the police. The task was to create the conditions of critical dialogue
under which any product could be meaningful. Meetings where people talk with eachother in a safe space allow them to see the issues with new eyes. New knowledge andpresuppositions surface in unexpected ways. Although ‘‘ideas’’ can be dismissed, people

Unless there is deep trust among
all members, exibility can easily
descend into bickering and chaos.

REFLECTIONS, Volume 3, Number 447

EYBEN, KEYS, MORROW, AND WILSON
Learning beyond Fear

honestly expressing difcult things give rise to a different
question: Why do you hold this to be true, while I holdother things to be true?
Finally, there is a huge difference between knowing
about something and knowing something. The value of thisproject depended on the authenticity of the members andtheir freedom to express those things closest to their hearts,
a true measure of the presence or absence of fear. The taskof external facilitators was to help all the members, not only
some, by protecting the right of each to tell his or her story.

Civic Leadership and Political Party Politics:
A Case Study© Emily Sper48

Civic leadership in a divided society involves sensitivity
and innovation in addressing the needs of different, often
separate, communities. It also involves the development ofproblem-solving practices that recognize these divisions
and identify sustainable ways of moving beyond them.
During the past 30 years, many local politicians inNorthern Ireland have worked together for the bene t of
the whole community, despite their limited powers, andhave provided a safety valve for the wider frustrations,pain, and anger. The difcult task of building trust andrelationships across political or religious lines was often
inimical to the way politics was conducted at a local andregional level.
The task facing local politicians as civic leaders inNorthern Ireland is that of building a more accommodating, fair, and stable society—a society in which citizenship and its rights and responsibilities are decoupled from an allegiance to a particularpolitical and cultural identity. How politicians manage the tension between the cut andthrust of politics and the principles of reconciliation is critical, in other words, how they
manage the tension between the political party and the civic leadership tasks.
Four years ago, we invited  ve local government councils in the west of Northern
Ireland to each nominate ve local politicians on a cross-party basis to participate in a
civic leadership program. Because of Libby Keys’s work as both a citizen and community
worker in the area, Future Ways had built credibility that allowed us to extend this invitation. In addition, the university afliation of Future Ways gave us a certain legitimacy.
We decided on a regional model—across the ve council areas—as a way to createa space for the politicians to speak and listen. They were not on their home turf and so
could stand back a little from local battles and interests. We met bimonthly and had a
midweek study trip dealing with themes that the participants identi ed: Policing and the new district policing partnerships
 Political differences Cultural traditions
 Governance issues about the new political structures
 Violence and fear
 The political context of politicians Old wounds
 History and its effects
We tested agenda items for discussion in the workshops by asking: Is the theme contentious, and would it bene t from a private discussion?
 Is it a theme that would help councillors develop their civic-leadership understanding
and practice?

Volume 3, Number 4, REFLECTIONSWhat Did We Learn?
We learned that local politicians have little opportunity to sit down together to discuss
politics. The politicians wanted the space we created in these workshops. The challenge
for local councillors is to move between the reality of party politics and the potential for
civic politics. Learning to live within and between these two different worlds is the central
political task. They may be elected on traditional lines of loyalty yet, while in ofce, mustgrapple with the issues and needs of a whole borough.
The participants needed support in moving between these two worlds. In practice,
this meant that we performed a social, facilitative function at each workshop. The politicalparty groups often sat together during the break and overlunch, and we had to welcome, engage with, and cajole
each. During the workshop sessions, we had to be sensitive
to the different fears and choices of each politician about
where to sit. We had to be continuously aware of different
dynamics and tensions, using humor to bind people together.
Being an elected councillor in a contested society is often thankless. We now understand that people who volunteer their time need afrmation and support. Elected
politicians merely re ect the fears of their electors; yet theyalso have a civic task, which electors often do not demandof them.
This regional structure became the start of a learning community for local politicians.
The way they meet and refer to one another is qualitatively different from the more formal,
adversarial manner they often adopt in council. We learned to respect the value of thisprivate and public space. The public space for politicians has a long, communally fearful
history that can be readily replicated and imitated (Girard, 1977). The more recent development of a private space for a diverse group of politicians to meet together as people
with all their differing histories and human complexities is a fragile project. Such a spaceis also needed, yet only gradually built and replicated.
The tension between the politics and the principles of civic leadership was often
clearly evident. Until relationships of trust and mutuality become acceptable in the publicarena, politicians will continue to behave in ways that maintain or increase sectarianism.
Until they believe that playing the sectarian card will lose them votes, ‘‘playing to thegallery’’ will involve tugging at the deep fears and mistrust of most people in Northern
Ireland. As one person put it, councillors ‘‘couldn’t conduct day-to-day politics with these
civic leadership principles’’ because they would lose votes; public opinion is not ready,or at least the councillors do not believe it is. People often elect politicians to express theirfears or to defend them, not to  nd common ground.

EYBEN, KEYS, MORROW, AND WILSON

Learning beyond Fear

After more than a year, the workshops developed into a private space where local
politicians could engage in a way that went beyond their public pro les. People began to
speak about their early personal histories, how they entered politics, and experiences ofdifference, of being accepted or rejected and of being valued. They spoke about issues
within their parties, with electors, and with each other, such as the timing and locationof  ag displays associated with different traditions and people’s comfort level with their
British or Irish identities. They spoke frankly about how they feel they are being used as
partisan voices in sectarian incidents. They agreed to try to speak together after such
incidents—on a civic platform rather than on a political party platform.
Our purpose was to create spaces where all politicians could describe the difculties
of contested politics. We took their political roles seriously and sought to underpin theirwork by increasing their understanding of politics in a wider European context.

Until relationships of trust andmutuality become acceptable in the
public arena, politicians willcontinue to behave in ways thatmaintain or increase sectarianism.

Emerging Dilemmas
We have learned a lot during the past four years about the dif culties and possibilities
that people in organizations experience in going beyond fear to try out new habits. We
had underestimated the amount of time and effort organizations need to move even one
step forward and how easily familiar patterns and old habits resurface. An external

REFLECTIONS, Volume 3, Number 449

EYBEN, KEYS, MORROW, AND WILSON

partner, such as us, is vital to legitimize and protect a different kind of dialogue within the organization.
We have isolated some key dilemmas in four contexts:
the public sector, political parties, nonprots, and forprots.

Learning beyond Fear

Public Sector© Emily Sper

A core dilemma for the public sector is whether its task is
to cement loyalty to a particular state or to grow loyalty
between citizens. Those who were loyal to the British state
formed many public-sector institutions such as the civil service and the police. However, in a politically contested society, loyalty to either the British or Irish states immediately
creates groups of loyal and disloyal citizens. The questionis whether the public task will move from supporting loyalty to a state to supporting greater loyalty between people, eventually leading to theprivatization of nationalism.

Political Parties
The process of building sustainable relationships between the citizens of Northern Ireland
will undermine politicians’ current political base. Voting patterns are predicated on exclusive political or national allegiances; greater interdependence between citizens will blurthese lines and challenge the political party base. The dilemma for politicians is that, on
the one hand, the process could lead to less predictable voting patterns, and on the other,
it is the only long-term possibility for Northern Ireland.

Nonprots
Most nonprot organizations were founded on principles of justice, interdependence, andthe valuing of differences. However, in Northern Ireland, many became trapped withinwider community divisions and ended up servicing mainly one community or the other.
An additional dilemma during the past 10 years has been increased government funding,creating a culture of dependency by which the voluntary sector is tied to public-sector
legislation and funding criteria. Many struggle in this climate to remain true to their original values and to offer new relationships to those they serve.

50

For-Prots
Ultimately,  awed relationships and mistrust affect overall business results. However,many businesses have silently factored in these costs during the past 30 years in Northern
Ireland. Some have limited their business to one side of the community or the other.
Others have pro ted from substantial government grants. Others have managed to service
the whole community.
For-prots have been the most difcult to convince that investing in long-term relationship building will add value to their own operations and long-term sustainability. Most businesses have either responded to legislative pressures, such as fair employment, or reacted tocrises, such as sectarian incidents in the workplace. However, legislation by its nature setsminimum frameworks and cannot produce the best results. There are countless examples of
local businesses tackling a crisis and, once it is resolved, forgetting about it until the nextcrisis. Short-termism undermines any attempts at a long-term learning approach.
The core dilemma is the cost-bene t analysis that a company must undertake before
committing itself to a long-term approach. When skeptical organizations ask us to provethe costs of not addressing community divisions, we often do not have the evidence. The
evidence exists, but in order to quantify these costs, an organization must acknowledge
the issues and allow a process of assessment and change. Many organizations prefer toavoid these issues by saying, ‘‘There is no evidence.’’Volume 3, Number 4, REFLECTIONSEYBEN, KEYS, MORROW, AND WILSON

Any notions that we were individual members of a global community before September
11 have now been questioned. When belonging has no costs and all is well within ourworld, it feels good to belong to groups that are like us, with people with whom we feelat ease, who have similar tastes or interesting, nonthreatening degrees of difference.
To work toward an interdependent society and more sustainable society, as we do in
Northern Ireland, is not easy. Interdependence involves acknowledging that people fromdifferent political, religious, and cultural traditions share our space. To live in a part ofWestern society where conict and violence are often real experiences in our lives is torealize the thin veneer of order that often covers the daily transactions in which trust is
assumed.
As businesses, consultants, and researchers, we work in many different contexts inwhich building new relationships is shaped by histories and memories of hurt, exploitation, and division. Building meaningful relationships must occur in the awareness andacknowledgment of these memories and not hold those responsible who have been historically vulnerable.
As a Northern Ireland clergyman has commented, engaging with difference must
involve negotiating in the present, rather than subjecting each negotiation to the veto of
our ancestors:

Learning beyond Fear

Conclusion

New histories will only take root . . . if they grow out of new relationships which give them
meaning. If we explore our histories together with people whose experience is of the opposite
side of the deterrence relationships, then new history may eventually ourish (Wright,
1990).4

Notes
1. The Future Ways Program, established in 1989, is a charitably funded initiative supported by the
Joseph Rowntree Charitable Trust, Atlantic Philanthropies, and the Understanding Con ict Trust.
Based at the University of Ulster, it seeks to bridge the gap between the long history of conicthandling work in the community and voluntary sectors and the absence of any practical developments within a large number of institutions and organizations in Northern Ireland. The origins
of Future Ways were within the ecumenical movement in the 1960s and, specically, in thedevelopment of a reconciliation center in Northern Ireland, the Corrymeela Center, Ballycastle,
in 1965.
2. The participants of the multiparty negotiations, the government of Great Britain and Northern
Ireland, and the government of Ireland agreed to the Belfast/Good Friday Agreement, or peaceagreement, in April 1998.
3. The Independent Commission on Policing in Northern Ireland was established as part of the Good
Friday Agreement led by Chris Patten. Its task was to review the role of the police in Northern
Ireland, including general questions of policing policy and practice.
4. The late Professor Frank Wright was the rst professor of Peace Studies in Ireland (University ofLimerick) and a founding member of the group that led to the Future Ways Program.

References
Eyben, K., D.J. Morrow, and D.A. Wilson. ‘‘A Worthwhile Venture? Practically Investing in Equity,
Diversity and Interdependence in Northern Ireland’’ (Coleraine, Ireland: University of Ulster,1997). Text available at ^ http://cain.ulst.ac.uk/issues/reconcil/venture.htm& .
Girard, R. Violence and the Sacred (Baltimore, MD: Johns Hopkins, 1977).
White, J. Interpreting Northern Ireland (Oxford, England: Clarendon Press, 1991).
Wright, F. ‘‘Some Problems of Education for Mutual Understanding,’’ in Finding Ways to Go, eds. R.
Kaptein, D.J. Morrow, D.A. Wilson, and F. Wright (Belfast, Ireland: Corrymeela Press, 1990): 30.

REFLECTIONS, Volume 3, Number 451

Why Do They Hate Us
So Much?
John ChildW

John Child
Professor of Commerce
University of Birmingham, UK
J.Child@bham.ac.uk

52

Ó2002 by the Society for Organizational Learning and the Massachusetts
Institute of Technology.

estern governments and corporations have been making a massive economic contribution toward assisting the development of poorer countries,
yet so often they attract the huge resentment on which terrorist violence feeds.
Is this simply ingratitude, or does it signify something much more fundamental?
If something more fundamental is in play, we cannot spare any time oreffort in trying to understand it. I believe that one of the root causes lies in social
identity. Identity is precious to us, providing the sense of belonging and meaning without which most of us would nd it impossible to retain our sanity.
Paradoxically, it is actually more fundamental than even the basic material
provision necessary for physical survival because it de nes what we are surviving for. Without appreciating this point, we cannot hope to understand thementality of the suicide bomber or hijacker.
How does this bear on the tragedy of September 11, and what we might do
to remove the root causes? The distinctive feature of the awful events of thatday was not that the terrorism was a new phenomenon, but rather that it expressed a signi cant change in both the level and the focus of savagery. The
September 11 terrorists concentrated their efforts massively on prime symbols
of commercial and military America.
American multinational corporations lead the world in pumping direct investment and expertise into the developing economies, which so desperately
need this help. It does not take long, however, before they and other multinationals come to assume dominant positions in those economies as the result of
the considerable resources and know-how they put into them. Even in a hugeeconomy like China’s, rms based on foreign investment now account for almost half the country’s overseas trade and approach one-quarter of its industrial
output value. Companies normally seek to exercise control over the investments
they make in other countries and, if possible, to dominate their markets throughtheir powerful international brands. Not only that, there are many instances inwhich multinationals have used their muscle to push through sensitive policies
and gain preferential bene ts in ways that the people of these countries have
deeply resented.
Multinational corporations, as much as Western governments, are therefore often seen to re ect alien cultures and interests, which become a threat tothe identity of people in the countries where they operate. That this sense of
threat is not always expressed openly does not mean that it is not keenly anddeeply felt. In many cases, nondemocratic rulers suppress such expression,
believing that the bene ts to their country’s interests, and sometimes to theirown pockets, outweigh consideration of what their citizens think.
Given this context, we have to consider carefully what drives most extremists. They are far from being just mindless anarchists. Most are succored bypopular support within their own communities. While their deeds are evil, theirmotives may not be. For instance, the Taliban—literally, students of Islam—

Volume 3, Number 4, REFLECTIONS

Reference
Business Week (December 3, 2001): 21.

REFLECTIONS, Volume 3, Number 4

CHILD

Why Do They Hate Us So Much?

was founded in 1994 in order to ght the crime and corruption then rampant
in Afghanistan and so restore that Islamic society to a purer way of life. Their rst acts were certainly violent, but at the same time expressed a sense of righteous anger. They killed local warlords and commanders who had raped or
sodomized young girls and boys. Similarly, in destroying TV sets, they wereattempting to banish what they saw as the immoral expressions of modern
Western-inspired commercialism. People like the Taliban are driven by a senseof mission that, in their eyes, is in nitely more justi ed than the materialistic
corruption of God-given values that they perceive in the lifestyles of Westerners
and the policies of their corporations. Their identity is far from ours, but wehave to recognize that it is an extremely powerful, driving force.
Several implications follow. If identity is at or near the heart of the problem,
then it is incumbent on multinationals to make themselves just that, as a matterof priority. The more they become truly multinational in their ownership, management, and cultures, the less they are likely to be seen as a threat to thebeliefs of people who work for and with them in various countries. In thisrespect, ‘‘the ugly American’’ needs to become ‘‘the invisible American’’ (Business Week, 2001). While not to be taken too literally, I think that this is a mostimportant point with respect to the manifestations of American power and control around the world. More immediately, we could all make strenuous efforts
to learn about the core values and beliefs that constitute the social identities ofdifferent countries and ethnic groups. If we do not understand these identities,
we cannot adjust our behaviors and policies in ways that appear to respectthem.
None of what I have said is meant in any way to justify terrorism. Norshould it be interpreted as giving in to the threat of terrorism—‘‘do this or else.’’It is to urge, rather, that in keeping with the title of this journal, we reect on
the roots of terrorism. We cannot hope to eradicate terrorism unless we learn
how to deal with those roots. If we simply beat terrorists into (or under) the
ground, that soil will become hallowed in the eyes of their followers from which
the shoots of future violence will be nurtured. We all aspire to foster idealism
in our young people as they learn and mature. People in other countries share
this aspiration, but their deeply held beliefs happen to re ect very different
values and so express themselves in very different behavioral and role models.
It is when idealism turns into fanaticism that it becomes deadly dangerous andultimately destructive. This fateful transition is easily made by people who feel
morally obliged to turn against and hate the countries whose business andmilitary institutions threaten their identities and what they stand for.

Lotte Bailyn
T Wilson (Class of 1953) Professor of Management
MIT Sloan School of Management
Lbailyn@mit.edu

Commentaryby Lotte Bailyn
John Child makes a wonderful argumentthat we need to understand national identity and build it into the fabric of American
multinational corporations. It’s exactly rightand so obvious—so why is it not being
done? I got a clue from listening this year toa number of American as well as Europeanand Asian business leaders talking to the
Sloan Fellows Class at MIT. I can speak only
for their rhetoric; I do not know what actually happens in their companies. But the European and Asian leaders talk about the
responsibility of their rms to their employees and to their societies. The Americans
talk about their responsibility to their stockholders.
As long as American business leaders areconvinced that their only responsibility is toincrease their share price, they will not beable to follow Child’s extremely importantand sensible advice. So we need to consider
what lies behind this single-minded belief. Is
it the structure of our nancial systems? Is
it the education we provide in our businessschools? Are there actually laws—for example, covering pension funds—that reinforce
this belief? And what does it say about ourvalues?
There is some anecdotal evidence that theevents of September 11 have made people
rethink what’s important to them. If true,
this may represent an opportunity to ask
basic questions about the purpose and roleof our companies in the whole society. It
seems unlikely that we will have this conversation on the national level, but perhaps
one could nd a few leading business leaders who would be willing publicly to engage
these issues. Could SoL provide the venue
for such a conversation?

53

Dialogue as a Tool for
Peaceful Conict
Transformation
Bettye H. Pruitt and Katrin Käufer

A member of the political action committee (PAC) and a member of the National Party weredebating. It was like water and oil between those two. And, of course, the PAC never spoke
about the South African government at the time; it referred to the Racist Pretoria Regime. The
PAC member was trying to say ‘‘the Racist Regime’’ but because of the bonding that hadgone on, he could not say that. He was caught between loyalty to a member of a team whom
he had come to like personally and the political imperative of not talking about the South
African government but rather the Racist Pretoria Regime. When he needed to say, ‘‘theSouth African government’’ or ‘‘the Racist Pretoria Regime’’ at one point, he stammered forquite a while. It was clear he was facing a moral trauma. Then the member of the National
Party said to him, ‘‘Do you mean the Racist Pretoria Regime?’’ We all could see an obvious
turning point in their relationship.—Participant, civic scenario workshop

Bettye H. Pruitt
President, Pruitt & Company, Inc.
bhpruitt@nh.ultranet.com

54

T

his quotation illustrates Gandhi’s principle that every conict resolution starts with achange in how we think about the other person. It also illustrates a critical dynamic
in dialogue processes— the formation of human connections—that helps to explain theireffectiveness in con ict situations. In the next quote, a dialogue participant describes what
he learned. Although this is a very personal statement, it illustrates what transforms conict into peaceful cooperation. It takes more than a ‘‘solution.’’ The participant describes
a process of distancing himself from his own behavior and re ecting on the impact thisbehavior has on others. It implies getting out from behind excuses and facing reality. And
it implies a move to action:
I suppose that subconsciously we were all aware that what was being done to our brothers
and sisters in this country was wrong. That people were not being treated with dignity, but. . . somebody else was doing it. I was treating people with dignity. But I was not doing anything to get my brothers to treat their brothers with dignity. So it was like the Germans inWorld War II. They saw nothing. Heard nothing. It was the Gestapo doing it, not me.
— Participant, civic scenario workshop

Ó

Katrin Käufer
Visiting Scholar, MIT, SoL

2002 by Bettye H. Pruitt and Katrin
Käufer.

These powerful insights into the human experience of dialogue in postcon ict situations come from three learning histories of civic scenario projects: Mont Fleur in South
Africa, Destino Colombia in Colombia, and Visión Guatemala in Guatemala (Gillespie,
2001; de León and Dõ´ez Pinto, 2001; Dõ´ez Pinto, 2001). Commissioned by the United
Nations Development Program (UNDP) Regional Bureau for Latin America and the Caribbean, the histories are part of an initiative to develop multistakeholder dialogue as a tool
for strengthening democratic institutions in the region. The impetus for this project camefrom UNDP’s involvement in Visión Guatemala, which was facilitated by Adam Kahaneof Generon (Kahane, 2001). In partnership with Kahane—the pioneer and leading practitioner of the civic scenario process— and with the authors, representing the Society for
Organizational Learning (SoL) and the Massachusetts Institute of Technology (MIT),
UNDP has both promoted and assisted new civic dialogue initiatives and, concurrently,

Volume 3, Number 4, REFLECTIONSLinking Theory to Practice
The main objective of the current UNDP initiative is to create knowledge that will makeit possible to understand successful dialogue processes more fully and to replicate them.
What is missing is a theory to provide a language of competence that will illuminate theoften invisible preconditions and underlying processes of dialogue (Fletcher, 1999). This
language would enable us, for example, to name and capture the dynamics revealed in the quotations with which
we began this article.
In all three civic-scenario learning histories, the participants described the inner changes that the process brought
about. Why do some processes alter people’s thinking so
thoroughly that their behavior changes and they become
committed to acting differently? Research on change processes in groups can help us address this question. The
classical model, developed by Kurt Lewin and Edgar
Schein, emphasizes three phases: unfreezing, change, andrefreezing (Schein, 1987, 1999). The most important phase
is unfreezing, which makes change possible. The art of facilitation is to design a process that includes spaces and time to allow and encourage theunfreezing. The nal phase is action. The change occurs in between (see gure 1).
Problems cause reaction, level zero (Scharmer, 2001a). One group violates rules; theopposite group reacts. One act leads to another. As one civic scenario participant stated,‘‘War produces something very complicated: the absence of tolerance. War as such is a
drastic solution for everything—it is the maximum solution—so that when you breakyour word, you have to take up arms, which makes it dif cult to be tolerant of the ideasof others’’ (de León and Dõ´ez Pinto, 2001).
Action and reaction are determined at different underlying levels. One is the structureor the policies in place that inuence individual action. But at another level, structure andpolicies are based on people’s mental models. To use an example from Singapore, thepolice changed their mission statement from, ‘‘Being a police force for Singapore’’ to‘‘Being a force for Singapore.’’ With the second statement, the police hoped to express
that their mission was to help instead of to control. The framing of this new mission
marked a breakthrough in their change process because it helped them to think differently
about themselves and their purpose (Cory and Kim, 2000).
We know from personal experience how hard it is to sustain a change effort. In
organizations and corporations, most change efforts fail. For reengineering efforts, the

PRUITT AND KÄUFER
Dialogue as a Tool for Peaceful Conict Transformation

developed the knowledge for making dialogue a more effective tool in the arena of democratic governance (Kahane, 2001).
Our joint efforts began with the development of the three learning histories—analytical narratives jointly told by rst-person participants and outsider observers—of Mont
Fleur, Destino Colombia, and Visión Guatemala. In November 2000 at a workshop in
Antigua, Guatemala, UNDP and its partners presented the learning histories as the basis
for discussion of civic scenario building and other civic dialogue processes. The Antigua
workshop laid the foundation for a broader effort to create knowledge that will have three
critical dimensions: collective learning, a learning network, and a tight linkage to practice.
Signicantly, the Antigua meeting also gave impetus to new civic dialogue projects in
Latin America and the Caribbean that will be an invaluable ‘‘learning laboratory’’ as the
projects and workshops move forward.
What we share here are some rich experiences with dialogue from the Antigua workshop, a brief overview of the continuing effort to create knowledge, and some new understanding of how dialogue works. In particular, we show how the concrete examples
derived from practice in the eld, illustrated in the quotations above, give meaning totheory on dialogue and change. And, conversely, the theory makes it possible to create alanguage that can help practitioners discern and express the invisible, relational dynamics
in civic dialogue processes— dynamics critical both to conict resolution and to longerterm transformation in democratic societies.

Why do some processes alter
people’s thinking so thoroughlythat their behavior changes andthey become committed to acting
differently?

REFLECTIONS, Volume 3, Number 4

55

PRUITT AND KÄUFER
Dialogue as a Tool for Peaceful Conict Transformation

Figure 1 Four levels of change

success rate falls between 20% and 50% (Strebel, 1996).
Change efforts that involve larger entities, nations, ortransnational units are even more complex. Constituencies with contradictory goals, shadows from the past thatreach out to the present, lack of a communication system,
and many other factors make the large-scale change effort
a highly complex problem. This complexity requires achange process that accesses the deeper levels ofchange—levels three and four in the  gure.
The deepest level of change touches the participants’
will or intent and answers the question: ‘‘Where does ourcommitment come from?’’ The uncovering of will or intent
is necessary to ensure that change is sustainable and thatthe purpose is being put into practice. Not every change© 1997 K. Käufer/C.O. Scharmer
process needs to involve all levels of change or access thedeepest level, but a methodology that aims at socialchange has to take the participants through the deeper
levels where they become aware of and reect on theirown thinking, and where they can build commitment for social change.
Civic-scenario participants recalled how the level of trust increased throughout the
scenario work, how they learned to listen, and how their perspectives changed. According
to one participant in the Guatemala project: ‘‘When I  nally decided to open my mind
and forsake my prejudices, I learned from people whom I would never have approached.
I learned from them as persons, at a personal level, but also about some aspects that
represented their ideologies. Several businessmen spoke of their experiences with kidnapping. It is then that one begins to understand why these people became hardened andare full of hate and resentment’’ (Dõ´ez Pinto, 2001).
Participants talked about the different levels of communication they observed(Scharmer and Käufer, 2002; Scharmer, 2001b; Scharmer, 2002) and participated inthroughout the process (see gure 2).

Talking Nice

56

Participants described their interactions at the beginning as playing according to the rules:‘‘In the rst session, the project facilitator informed us that it was necessary to establish
the rules of the game, a series of principles that would serve as a basis for our work anddiscussions. He said that we had to gure them out, so we came up with a list of eightrules; for instance, punctuality, respect for the ideas of others, listening, and so on. Afterall of us expressed our agreement with the rules, these were written on a board and kept
before us all the time. . . . These rules helped us to keep our discussions on a low key. . . .
They also helped us to feel free to talk and to expect respect’’ (Gillespie, 2001). Communicating according to rules implies that people don’t speak up when the conversation
contradicts their own thinking.

Talking Tough
Participants told how the group moved from being nice and engaging on only a supercial
level toward speaking up: ‘‘At the beginning, it was a little hard. There was much mistrustin the rst meetings. No one wanted to talk, everyone limited him- or herself and said theminimum of what he had to say, but little by little, that environment started breaking
down, and we were able to have all sorts of things come out—obviously, things that must
be worked on’’ (de León and Dõ´ez Pinto, 2001). That process moves the group to a newlevel of communicating.
At one moment, the mode of conversation was changed by one participant’s introduction of a different perspective: ‘‘The rst round in the rst session was extremely
negative because we were all looking back to the events of recent years, which had left
a deep imprint on us. Thus, a  rst moment full of pessimism was generated. Suddenly, ayoung man stood up and questioned our pessimism in a very direct manner. This moment

Volume 3, Number 4, REFLECTIONSPRUITT AND KÄUFER

Reective Dialogue
In a next phase, participants discussed a form of listening
based on mutual understanding: ‘‘We were capable of understanding each other, of talking to each other; we werecapable of respecting each other. This is something that I
am certain has impressed many people in the country. And
one conversation was: Were the people of the guerrillas
there? And if so, were they listening? Yes. This is something Figure 2 Four eld structures
so simple, but I believe that what might be happening in in conversation
the country may be inuenced by one of these processes’’(Dõ´ez Pinto, 2001).
In the reective dialogue phase, participants individually and as a group develop an
inner voice that helps them focus on what they are doing. They listen more carefully andmove away from debate. A lot of interviewees from the civic scenario processes described
this new form of communication; for example: ‘‘I think that the greatest impact was todiscover to what degree you always engage in conversation without listening to what theother person says. And it is something that was so evident that one begins to put it inpractice almost immediately. This is something . . . that I took with me’’ (Dõ´ez Pinto,2001).
One interviewee described the exact difference between mode two, debate, and mode
three, reective dialogue: ‘‘So I try to make an effort not to answer but to actually listen,
not to be thinking mentally of how am I going to respond but rather, ‘What is this guy
trying to tell me?’ To think beyond what this guy is trying to tell me, to go even deeper
and say, ‘Why is he saying it the way he is saying it?’ . . . Just the exercise of saying, ‘Is
this what you are trying to say? Am I understanding it correctly?’ . . . So this is somethingthat was very powerful and something that is part of my baggage. I take it with me, I gowith it, I exercise it, I engage it, and it is good’’ (Dõ´ez Pinto, 2001).
The difference between re ective dialogue and the debate mode of conversation isthat the listener becomes aware of the perspective of the person talking and tries to understand it. Participants described the bonding that evolved from the common effort to
get to this level of understanding.

Generative Dialogue
Two interviewees described the next level of dialogue: ‘‘[One participant had] witnessed
an exhumation. It was in a large  eld, and he was suddenly called to see what they had
found. [There was] evidence of the skeleton of an unborn baby who had been buried,
perhaps alive or still in its mother’s womb, and the mother had probably been buried
alive. That is the history. . . . But we were aware of it. I was. I was a politician. . . . It is
one thing to know about something and know it as statistical data, and another to actually
feel it. . . . And I think that all of us had to go through this process. . . . I think that, after
understanding this, everyone is committed to preventing it from happening again. In
giving this testimony, he was sincere, calm, and serene, without a trace of hate in his
voice. This gave way to silence that, I would say, lasted at least one minute. It was
horrible. . . . If you ask any of us, we would say that this moment was like a large
communion. No one dared to break the silence’’ (Dõ´ez Pinto, 2001).
When communication reaches this point, the participants recognize their common
ground. Their interactions can then occur at a level of connection that transcends

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Dialogue as a Tool for Peaceful Conict Transformation

marked the beginning of a very important change, and wecontinually referred to it afterward’’ (Dõ´ez Pinto, 2001).
When people speak their minds, con icts show up. Participants described how their common work on the scenarios
helped them to examine their disagreements and work together to resolve them. In this phase of communicating,conversation includes voicing and listening to different
opinions.

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Dialogue as a Tool for Peaceful Conict Transformationindividual interests. We call this communication ‘‘generative dialogue,’’ which allows theparticipants to experience the whole. Another example of generative dialogue is whena new idea comes up in a conversation and no one canidentify which participant had the idea because the idea
emerged from the ow of the conversation. Musicians often describe a similar experience when they play together
and start listening to the whole, not to their individual contributions.
Before reaching this phase of dialogue, the group mustmove through the other levels of communication. But once
the group has reached a generative dialogue, it has newopportunities, such as preventing a horrible event from recurring. As one Visión Guatemala participant stated at the
Antigua workshop: ‘‘The  re y image [in the scenarios]
and the idea of weaving a multicultural entity in Guatemala helped me to focus on healing
and reconciliation and made me feel more obliged to participate in the process.’’ This
commitment is necessary for profound change. Thus we see dialogue as a tool for changethat allows individuals and groups to move to yet a deeper level of behavior where intent,
will, and commitment are strong.
Relational theory proposes a model of human development —‘‘growth in connection’’—that emphasizes the critically important role of social, relational interactions in
the growth process (Miller and Stiver, 1997). Table 1 suggests how this theory illuminates
the dynamics underlying the four phases of conversation, matching the dominant logic
of conversation in each phase with the invisible relational dimension underlying it.
The anecdote about the South African PAC representative and the Nationalist Party
member in our opening quotation illustrates growth-in-connection. The story describes
how, through interactions, each person had expanded his or her world view and capacity
for empathy, providing evidence that the conversations of the Mont Fleur group hadreached a generative state. The second quote describes clearly an awakened sense of selfin-relation emerging from re ections prompted by dialogue.
This language for both the logic underlying conversation and the relational dimension
in which it is embedded provides tools for understanding and improving dialogue processes. An important part of UNDP’s ongoing effort to create knowledge will be to apply
these tools to analyze other civic dialogue experiences, including but not limited to civic
scenario projects. At the same time, we must address the challenges of using dialogue tostrengthen democratic institutions and create the conditions for human development incountries struggling to overcome violence and authoritarian rule (UNDP, 1999). The initial
workshop in Antigua, Guatemala, brought many of these questions into focus.

Another example of generative
dialogue is when a new idea comesup in a conversation and no one
can identify which participant had
the idea because the idea emerged
from the ow of the conversation.

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The Antigua Workshop
Unfortunately, we still haven’t invented a sort of ‘‘pill’’ for transformation of the culture of
the country which you could buy at the pharmacies. [This work] is very difcult; the results
are not guaranteed, not easy to see, and not short-term. But like an old saying in China,‘‘Any road, no matter how long it is, starts with the rst step.’’ And there is no other option.’’—Workshop participant

The Antigua workshop (November 8–19, 2000) brought together 100 participants from17 countries—people committed to social development and involved in a wide array ofcivic dialogue initiatives—to re ect on common issues and challenges and on the future
direction of civic dialogue. In contrast to the established workshop format organizedaround formal presentations, this was both a conference about civic scenarios and othercivic dialogue methods and a rsthand experience, facilitated by a team from Generon,of some dialogue tools used in the civic scenario process. 1 From it came the rst steps
toward a broad methodological platform for civic dialogue work, as well as the foundationof a global community of people committed to this approach to social change and increasingly skilled in using it. Said one participant: ‘‘We are a group trying to reconstruct what

Volume 3, Number 4, REFLECTIONSRe ective Dialogue Dominant logic: inquiry, listening to your inner voice Relational dimension: at least one person adopts a self-in-relation stance; there is potential for mutual learning among some members that might move collectively to next
phase
Generative Dialogue Dominant logic: self-transcending, cocreating
 Relational dimension: collective growth-in-connection; mutuality

has been destroyed, to make the world better. There are groups like this all over the world.
This gives hope to the human spirit.’’

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Talking Tough Dominant logic: debate, clash, conict
 Relational dimension: focus on advocacy and self; it is a ght for power and legitimacyTalking Nice
 Dominant logic: rule repeating, politeness Relational dimension: focus is on self as perceived by other

Dialogue as a Tool for Peaceful Conict Transformation

Table 1 Dynamics underlying four phases of conversation

What Is This Work About?
The workshop participants formed country teams to discuss and share the most important
challenges facing their nations—mostly Latin American and Caribbean countries, but alsoSouth Africa, Bulgaria, India, and Pakistan. With the help of simultaneous Spanish-English
translation, the teams shared their stories. Although each national story was in many
ways unique, collectively they conveyed an overwhelming sense of broadly shared socialand political problems. In many countries, historic patterns of class and ethnic divisions
and racial discrimination contribute to a lack of trust, an absence of shared vision, anduncertain national identity. Three countries—Colombia, India, and Pakistan—have ongoing armed con ict; others struggle with the legacy of authoritarian regimes, militaryrule, and violence, even genocide.
Faced with democratic institutions undermined by corruption and political leaders
who do not rise to the challenges inherent in these problems, many countries are experiencing widespread public frustration and even disillusionment with democracy. The
common characteristic is that the solution requires engagement across the sectors andlevels of society, because many people must change in order to break the deep-seated,complex patterns of behavior that maintain the current reality. An underlying assumption
in the workshop was that any solution to such complex problems must be grounded indialogue across boundaries, in part to provide a viable alternative to authoritarianism andthe solution of conict through violence. In the words of workshop participant RubénZamora, a leader of popular movements in El Salvador and a participant in the Geneva
dialogues that brought peace to his country: ‘‘In societies like ours that have been characterized by authoritarian, vertical, nonparticipatory ways of making decisions and implementing decisions, which has led to a state of war, internal civil war, these sorts ofexercises become even more necessary because they are not just an exercise, they are thebricks for building a new political culture. [Yet] participatory or dialogue consensus building is not natural. It is something that has to be learned and developed as part of the civic
culture of society.’’

What Are the Process Options?
A thorough, systematic comparison of civic dialogue processes was beyond the scope of
the Antigua workshop, though the workshop helped to identify the need for it. The participants brought a broad range of experience with different methods and projects, whichconveyed a strong sense of process options, even as the discussion focused on issues and

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challenges common to all approaches. Indeed, one strong message from the workshop
was that a single project or process cannot be expected to carry the whole weight of theneeded changes.

Civic Scenarios
The Antigua workshop conveyed information about the civic scenario process in various
ways: through the learning histories of projects in South Africa, Colombia, and Guatemala,offered as preconference reading; through a panel discussion by participants in those threeprojects; and through the workshop facilitation by the Generon team, which replicatedmany aspects of its approach to civic dialogue. For example, the intellectual content of
the meeting built gradually through layers of small group and large group conversation(breakout groups and plenary sessions), suggesting how scenarios emerge and become
increasingly clear and compelling through dialogue. The facilitators also demonstrated anumber of tools—including ground rules supporting mutual respect and listening, checkin and check-out exercises that invited personal statements, one-on-one conversations,storytelling, and the support of a graphic recorder—for helping people connect on a personal and emotional level, as well as cognitively. These dialogue-promoting techniques
created discomfort for some participants who were accustomed to more formal and impersonal workshops. In contrast, one participant commented, ‘‘I like the civic scenario
approach because it is not only intellectual but also emotional. People can express fears
and frustrations, and this is important in countries with a legacy of armed conict.’’
In the panel session, participants in the South African, Colombian, and Guatemalan civic-scenario projects shared some of their experiences and re ections on this approach. Members of the Mont Fleur group, for example, reected that there was agood deal of serendipity, as well as foresight, involved in
the project conveners’ selection of participants, many ofwhom went on to become very inuential in Nelson Mandela’s government and as civic and business leaders inpostapartheid South Africa. A small-group exercise on therst evening, in which each group had to brainstorm 10
stories of possible futures in South Africa, helped people
set aside the divisions they had brought into the sessions.
Ultimately, the messages the scenarios conveyed had legitimacy because of the diversity of the group that was themessenger.
When Mont Fleur convened, South Africa was, in the words of one participant, inthe grip of ‘‘an incurable cancer, and it looked as though there was no solution.’’ This
group felt strongly that its work had made a positive contribution to the ‘‘political miracle’’of South Africa’s successful transition from that apparent impasse to pluralistic democracy. Yet, in retrospect, the group also reected that there had been some weaknesses in
the process; for example, some important voices had not been at the table—an issue thatrecurred throughout the workshop discussions (Gillespie, 2001). Moreover, the group had
not anticipated problems that now loom large: the impact of the conservative economic
policies of the Mandela government, the problem of crime, and, in particular, the threatof AIDS. As the workshop progressed, there was serious consideration of undertaking
Mont Fleur II.
The presentation by the Destino Colombia panelists addressed directly one of themost problematic issues identi ed in the workshop—that of connection to existing institutions. Confronting a situation of active warfare, to which the government was a party,
the conveners of this civic scenario process took great pains to make it ‘‘antiseptic’’ inpolitical terms. They included people who had in uence in the government but did not
directly represent it. And in the scenario process, they took care to avoid connection to
any particular political agenda. The outcome of this effort was mixed. On the one hand,the feeling that the process did not require making a commitment beyond participatingin three meetings was highly conducive to ‘‘free thought’’ and creativity. The scenariosthat resulted were compelling and, in hindsight, valid. Yet their impact was limited, bothin the government and in civil society. Noted one panelist: ‘‘The great challenge that
Destino Colombia still faces is to convert this into a day-by-day tool of the citizens. There

These dialogue-promoting
techniques created discomfort forsome participants who wereaccustomed to more formal andimpersonal workshops.

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Volume 3, Number 4, REFLECTIONSEl Salvador Peace Process
Two workshop participants, Victor Valle and Rubén Zamora, brought experience from El
Salvador. Valle had been active in popular movements in El Salvador and was a founding
member of the Salvadoran Conciliation for Peace Commission. The Salvadoran factions
met in Geneva in 1991 and agreed to develop political agreements based on three key
elements: respect for human rights, democratization of government and society, and reconciliation of ‘‘the Salvadoran family.’’ Valle pointed out that the discussions took place
within the context of the Peace Commission, the purpose of which was to develop principles for creating a new government and methods for monitoring compliance to agreements. These were very concrete goals derived from the immediate experience of civilwar.
At the same time, Valle made clear that the dialogue among enemies engendered—and required—personal transformation, a central and explicit aspect of the civic scenario
methodology. In Geneva, he said, ‘‘Many of us who had been on one side of the war had
the opportunity to sit around with our former adversaries, many of whom would probably
have laughed to hear that we had been downed by bullets in El Salvador. But at that time,
we were able to deploy personal resources that had to do with courage and love and hope,and [we were] able to accept ourselves as we were and able to discover that we had
certain commonalities.’’
University of Peace
Valle also attended the workshop as a representative of the University of Peace (UPEACE),
an organization afliated with the UN and based in Costa Rica. He described his current
work as part of the dialogue initiatives ‘‘going on all over Latin America.’’ UPEACE has
convened a group of 100 Colombians to talk about issues underlying the war. They use
a less facilitative approach than the civic scenario method, Valle said, simply putting
people around tables to discuss ve concrete questions. The participants talk and try toreach some agreement, and the sessions are captured by a university recorder. In anotherinitiative, UPEACE has created ‘‘peace zones’’ on the borders between Ecuador and Peru.
War-Torn Societies ProjectZamora participated in the workshop as the director of the War-Torn Societies Project(WSP). WSP uses the methodology of participatory action research, associated in particular with the Brazilian social scientist Paolo Freire and widely used in developing countries
as a tool for social change. Zamora described the steps for launching a WSP project:
The rst step is to scope out conditions in the country for possible dialogue among
the parties and for balancing both government and civil society in the process. Next is tochoose a local project director and subdirector with the stature and social science skills
to carry out the process. For example, the project director of the WSP project in Guatemala
was Edelberto Torres Rivas, a sociologist with an international reputation who had been
living outside Guatemala for most of the war, so had an aura of impartiality. The director

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Dialogue as a Tool for Peaceful Conict Transformation

is no doubt that [its politically antiseptic character] makes this into something that belongs
exclusively to those who participated. This is not right, because, in the end, societies live
their daily and common matters in politics.’’
In Visión Guatemala, the greatest challenge was to  nd a way to overcome the legacyof racism and genocide against the indigenous majority. In the context of that terrible
legacy, one panelist noted, it was clear ‘‘that the road to consensus is a long road, andit’s not necessarily consensus that we need. Perhaps transparency would be more desirable.’’ Another provocative question that arose in this panel was, in the context of globalization, what power does ‘‘dialogue, persuasion, and hope’’ have to make a difference
in a small country such as Guatemala? These thoughts echoed the concerns of others at
the workshop about the danger that civic dialogue processes might raise false hopes forthe possibility for change. Finally, one panelist brought up the important issue of how tobring about the desired scenario—to make the dialogue count for more than just the‘‘empathy and friendship’’ achieved by direct participants: ‘‘In the end, that is the challenge we have now: how to go from thought to action.’’ This concern was widely sharedin the workshop.

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Dialogue as a Tool for Peaceful Conict Transformation

62© Emily Sperand subdirector then create a ‘‘country note,’’ or ‘‘diagnosis’’ of the causes of conict, built up through separate discussions with key institutions in the society, forexample, political parties, NGOs, universities, unions, andwomen’s organizations. They identify both the problems
and potential solutions, with the social scientists serving
as facilitators. The country note in effect ‘‘extracts’’ consensus from these individual discussions and presents it asa starting point for the dialogue. If the institutions thenagree to engage in the process, they send representatives
to the dialogue.
When the group is assembled, people participate asindividuals, not as representatives of their institutions. The
method does not emphasize personal change, said Zamora,
but it occurs in the dialogue process. The whole group sets
the agenda and then splits up into subgroups that focus on speci c issues, conceived as‘‘entry points’’ for dealing with national problems. A social scientist supports each groupand is responsible for writing the group’s report. Zamora noted, ‘‘This is a discussion
between actors and people who have scienti c knowledge —very difcult to attain.’’ The
results are policy-oriented proposals, for example, a policy paper or a suggestion for legislation, presumed to be broadly acceptable to the society because of how they have beendeveloped.
WSP offers a method that involves the government and civil society together, butthere are dif cult issues to resolve with this approach. Zamora suggested that the main
problem is that a government minister in a dialogue process doesn’t like to be on equalterms with other organizations—the trade union, the universities, the political parties. So
the method forces the government to be in a position that it doesn’t like, and as a result,its participation is sometimes quite limited. For example, it may only participate in general
meetings. But the government provides a sort of validation of the process whenever itdoes choose to participate. Noted Zamora, ‘‘These projects are profoundly political, butthey cannot risk being partisan.’’Dialogue Processes in Panama
Raul Leis, a sociologist, president of the Centre for Studies and Social Action of Panama(CEASPA) and a popular writer, described his experience with dialogue processes in Panama. In 1994, the Catholic Church proposed a national dialogue as part of an ethical accord
among political parties, following a difcult period of transition to democracy after the
US invasion and ouster of Manuel Noriega in 1989. The resulting civic dialogue involved
three successive projects. The rst, Bambito, in 1994, was a ‘‘learning experience,’’ bothfor the organizers and for the UNDP, which provided technical, logistical, and  nancial
support. Several factors limited Bambito’s impact, said Leis. National elections runningconcurrently were a distraction, and there were questions about whether the dialogue
included the right participants—the conveners had invited the leaders of the various civic
groups rather than asking the groups themselves to decide whom to send. Finally, said
Leis, Bambito was organized around a less than compelling topic: the general question ofnational development.
The second effort at civic dialogue focused instead on the subject of the Panama
canal—a topic vital to all Panamanians. Said Leis, ‘‘General Torrijos said that the only
religion of Panamanians is the canal, the only thing that has kept us together for years.
So [we took] the canal as the topic.’’ Coronado 2000 Panama Encounters was a yearlong
process including four ‘‘encounters’’ with workshops in between. The conveners in thisinstance used a reference-group methodology for selection—that is, as in WSP, the groups
were selected and asked to choose whom to send. Participants represented political parties, civil society, churches, indigenous people, and the press. Respected outsiders, forexample, Belisario Betancur, ex-president of Colombia, facilitated the dialogues. The Coronado project resulted in two major decisions on Panamanian sovereignty over the canaland the territory the US was returning to Panama. Those decisions, made through the
civic-dialogue process, became policy when the legislative assembly approved two proj-

Volume 3, Number 4, REFLECTIONS

Paraguay Jaipotava
The experience in Paraguay provides an example of dialogue on a mass scale: in a countryof 5 million people, it engaged nearly 70,000 participants and 2,000 facilitators. Jorge
Talavera, who described the project for the workshop, outlined the goals of the Paraguayan Episcopal Conference, which conducted it: ‘‘Given the situation of frustration anddesperation in the country, the rst objective was to provide hope. The second objective
was that all Paraguayans could decide upon and de ne the country we want, the vision
for the future. And the third, as part of this exercise, was to reach a conviction that theParaguay we wanted was one that only we could do. Nobody was going to give thisto us.’’In Paraguay Jaipotava, roughly 8,500 groups of eight people each, in four-hour meetings, worked through prepackaged materials, published in both Spanish and Guarani, theindigenous language. Each individual used a list of 26 needs and 22 values to de ne bothcurrent reality and a future vision for their communities. Separate materials were designed
speci cally for professionals and for young people. When the results were compiled, themost frequently identied needs were health care and education; the values were honesty
and faith in God. In a subsequent phase of the project, leaders at the district level— forexample, public authorities and teachers—met to develop a common vision for the district. Then a provincial assembly pulled those local visions together into a vision for thewhole province.
Talavera reported that the bishops and provincial governors had taken note of thesevisions, but the political and economic elite of Paraguay needed to be brought into theprocess. The Paraguayan contingent at the UNDP workshop came looking for methods tohelp them accomplish that. The Paraguayan experience provides a model for sharing thevision-building exercise on a mass scale through the agency of the church. In the workshop, it was a signi cant counterpoint to the other dialogue processes discussed, which
participants described as suffering from the problem of elitism. As more than one workshop participant pointed out, most dialogue groups are composed of elites, but the needarises in the rst place because the elites are not doing what they should do for society.

Meta-Questions
The collective experience from these projects and others—in Bolivia, Chile, Peru, Nicaragua, and Bulgaria—was a rich source of data for comparing and identifying common
issues. Two signi cant ‘‘meta-questions’’ surfaced repeatedly throughout the workshop.
One was the issue of connecting civic dialogue processes to political institutions, about
which there was no consensus in the workshop group. One small discussion group asserted that civic dialogue processes have arisen precisely because weak political institutions do not re ect or respond to social needs. Another view held that national
governments and political parties have become scapegoats; people blame them for ineffectiveness and continuing poverty when, in fact, they are constrained by an uncontrollable global economic system. In Latin America, said one participant, the immediatechallenge is to strengthen political institutions, not create a parallel, separate track in civil

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Dialogue as a Tool for Peaceful Conict Transformation

ects, effectively uniting the two parts of Panama that had been so badly divided for many
years.
The third project, National Vision 2020, built on the success at Coronado. This civilsociety assembly developed a vision for Panama’s future in 20 years. As a result, candidates in the 1999 elections signed  ve pacts with civil society on decentralization,women,
youth, the environment, and participatory government. At the time of the Antigua workshop, the dialogue conveners were working on a ‘‘visionometer’’ to hold the government
accountable for the commitments made in these pacts, and municipalities were developing
their own versions of Vision 2020.
The civic dialogue process in Panama has successfully linked to political elites, withsome signi cant, concrete results. To develop dialogue methods, it will be important tounderstand the steps and context that made this possible. It may also be valuable toexamine the nature of the dialogues in Panama and in comparison with those in othercountries.

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Dialogue as a Tool for Peaceful Conict Transformationsociety. Another suggested that people in civil society must simply accept the task ofengaging with political parties, clean up the system, and get better leaders who may bebetter able to deal with the problems of globalization: ‘‘What we have to understand isthat although we might all be in agreement, none of us will solve anything unless we arein power. And the only way to power is through our political parties.’’A related question was how a dialogue group moves from thought to action. Thisissue, too, evoked different views. The small group that discussed it suggested that themain actors—civil society, government, political parties—should commit up front to comply with the outcome of the dialogue process. And they should develop a mechanism bywhich civil society can hold those in power accountable for enacting the dialogue outcomes. Others suggested that the in uence of dialogue groups must be through persuasionor through the process, rather than through some form of control. The product of the
dialogue (scenarios, proposals), they suggested, must be convincing enough to change
public perception of the issues. At the same time, the people who participate in the dialogue and who change as a result must have an impact.
Another meta-question, not formally stated by the workshop group, but clearly partof the discussion, is whether personal transformation as an explicit goal of the dialogue
process is a valuable or even essential step in multistakeholder consensus building. For
most participants in the civic scenario process, the transformative experience emerged as
the de ning aspect of the exercise. Yet Victor Valle and Rubén Zamora both suggested
that this kind of change occurs in dialogue whether or not it is an explicit objective. Neither
Raul Leis nor Jorge Talavera mentioned individual-level change as critical to success;further research needs to explore the dynamics of dialogue in the Panamanian and Paraguayan cases. In all these cases, there is a need to examine the various civic dialogue
experiences and, in particular, understand the connections between the changes that individuals experience in the dialogue process and the concrete outcomes it produces.

What Is the Way Forward?

64

Despite these unresolved questions, many participants in the Antigua workshop felt renewed commitment to starting civic dialogue projects in their own countries. At the endof 2001, Visión Paraguay was largely complete, Futuro Democratico in Guatemala wasunder way, and projects were in the planning stage in the Bahamas, Jamaica, and Argentina. And the UNDP had launched the regional project in Latin America and the Caribbean
to promote the use of ‘‘democratic dialogue.’’
From the Antigua workshop, UNDP describes the de ning characteristics of democratic dialogue. It is multistakeholder, engaging people from diverse sectors of civil society
and from governmental institutions. It includes groups not usually included, for example,
women and indigenous people. The issues it addresses are transinstitutional—too broad
to fall within the purview of a single branch of government. Finally, and critically, thedialogue is connected to action, as the participants emerge from the process with a sharedsense of purpose, commitment to a common future, and agreed-on steps to implement
the desired future.
A major piece of the regional project will be to support at least six dialogue initiatives
in Latin America and the Caribbean. There is now a UNDP service center, based in Guatemala, which is providing technical support to those efforts in collaboration with Generon. A small team, led by Elena Dõ´ez Pinto, project manager for Visión Guatemala andFuturo Democratico, will spearhead and coordinate the regional project and mobilize
resources. At its conclusion, the Guatemala ofce will function as a self-supporting service
center, assisting dialogue projects, both in the region and beyond.
Another key element is the process for creating collective knowledge about dialogue
methods. In collaboration with its Generon, SoL, and MIT partners, UNDP has designed
an infrastructure to support rapid development of both concepts and practical tools for
democratic dialogue and to disseminate the experiences, knowledge, and best practicesof people in the eld. All will build on the foundation established by the Antigua workshop.

Volume 3, Number 4, REFLECTIONSThe Knowledge-Creation Infrastructure
In the next phase, knowledge creation will proceed in parallel with a number of national
democratic dialogue initiatives. The practitioners leading those projects will form the coreof the learning group. The aim of this action research approach is to support the work
while learning with them from their experiences. Linking practitioners to each other andto a broad network of people committed to advancing dialogue methods in support ofdemocratic governance will support this project over the long term.
UNDP will convene four workshops over two years (2002–2003), bringing together
people actively building consensus among multistakeholders, in particular, the practitioners from ongoing projects meeting in parallel under the umbrella of the regional project.
This structured interaction between theory and practice is the centerpiece of the effort toproduce new understanding of dialogue processes and their use for transforming society.
A broad learning network, connected through e-mail and the UNDP website, will expand
knowledge creation beyond those people participating directly in the workshops. Buildingon the 2000 Antigua workshop, a workshop report will grow and evolve over the courseof the regional project, its form and content determined jointly by the report writer andthe workshop participants. It will help to maintain continuity and momentum from workshop to workshop and will capture key ideas— about useful tools and their application,
best practices, problem solutions—as well as the stories of practical applications.

PRUITT AND KÄUFER

A key objective of the cooperation with the UNDP is to develop a tested, proven social
technology for bringing a broad range of stakeholder voices— in particular, the voice of
civil society —to bear on resolving con ict and building consensus in the democracies of
Latin America and the Caribbean. To be useful, this technology must have a solid theoretical basis and be rmly grounded in practical understanding. And it must emerge
quickly to meet the pressing need to strengthen democratic institutions in the region. The
development process, therefore, must be intensive, bringing an international group ofacademics and practitioners together in truly collaborative knowledge creation.

Dialogue as a Tool for Peaceful Conict Transformation

Creating Collective Knowledge

Conclusion
The UNDP has recognized both a need and an opportunity for advancing the methodology
of social change. There is no simple formula or ‘‘recipe’’ for transforming societies after
periods of conict. A successful civic dialogue process takes time and is rarely a dramatic
event, except for the participants—its effects on the larger society unfold gradually. The
greatest challenge is to institutionalize dialogue. This is as important in countries such as
Panama that have achieved signi cant cumulative results through successive dialogue
processes as it is in countries such as South Africa, Paraguay, Guatemala, and Jamaicathat are experimenting with a civic dialogue process for the rst time.
Our hope and highest aspiration for this project’s future is that it will serve as aplatform for participants to reect on ongoing civic dialogue and together create knowledge on dialogue as a tool for peaceful conict transformation. There are many practicalquestions to address, but as long as we lack the language to describe the social processthat leads to solving and transforming a conict, we will not be able to replicate thisprocess or to establish it as the dominant approach to crisis intervention. We hope andbelieve the UNDP’s initiative will help to ll that need.

Acknowledgment
Elena Dõ´ez Pinto of the UNDP is an active partner with us in designing the workshops
and the knowledge-creation process. We gratefully acknowledge her contributions.

Notes
1. The Generon facilitation team included Adam Kahane, James Butcher, Manuel Manga, Reola
Phelps, and Betty Alexander.

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References

Dialogue as a Tool for Peaceful Conict Transformation

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Kahane, A. ‘‘How to Change the World: Lessons for Entrepreneurs from Activists.’’ Re ections 2(Winter 2001): 16–26.
Miller, J.B. and I.P. Stiver. The Healing Connection (Boston, MA: Beacon Press, 1997).
Scharmer, C.O. ‘‘Commentary,’’ Re ections 3 (Winter 2001a): 19.
Scharmer, C.O. ‘‘Self-Transcending Knowledge: Organizing Around Emerging Realities,’’ in Managing Industrial Knowledge: Creation, Transfer and Utilization, eds. I. Nonaka and D. Teece(Thousand Oaks, CA: Sage Publications, 2001b).
Scharmer, C.O. Presencing Emerging Futures. Illuminating the Blind Spot of Leadership (forthcoming).
Scharmer, C.O. and K. Käufer. ‘‘Dialogue: Moving Across Four Field Structures of Conversation’’(Cambridge, MA: forthcoming).
Schein, E.H. Process Consultation. Lessons for Managers and Consultants. Volume II. (Reading, MA:
Addison Wesley OD Series, 1987).
Schein, E.H. ‘‘Kurt Lewin’s Change Theory in the Field and in the Classroom: Notes Toward a Modelof Managed Learning.’’ Re ections 1 (1999): 59–72.
Strebel, P. ‘‘Why Do Employees Resist Change?’’ Harvard Business Review 74 (May-June 1996): 86.
UNDP. Human Development Report, 1999 (New York: Oxford University Press, 1999, available atwww.undp.org).

Commentary
by Manuel Manga

66

Manuel MangaInternational Consultant
MAManga@aol.com

Dialogue has been around since human beings acquired language hundreds of thousands of years
ago. What appears new and transformational is that we are placing dialogue at the heart of manyof our human relationships, as well as rening and evolving the art of dialogue.
The authors have taken dialogue several steps further in its evolution. As a result, they havegathered a signicant amount of experience and knowledge and now offer us a new model oftransformational communication. In this new model, we are taken from ‘‘nice talk’’ to ‘‘generative
dialogue.’’ However, in many war-torn societies, ‘‘hate and anger talk’’ is what fuels the conict. It
is generative dialogue that promises to become a tool for peaceful conict transformation.
Pruitt and Käufer acknowledge that they are also engaged in a process of knowledge creation.
Finding a language powerful enough to intervene or facilitate the emergence of peaceful conicttransformation holds promise. I believe that they are almost there. The version of dialogue they
propose has the possibility of facilitating human transformation.
As a longtime student and practitioner of language and conversations, I am glad to see dialogue getting more attention and support as a tool for solving our conicts and transforming society. Our Western culture, dominated by the Cartesian legacy and the rationalistic tradition, hasdevalued the role of emotions and the central role of language in our lives. Social philosophers like
Richard Rorty and Humberto Maturana challenge the rationalistic tradition and remind us to use
language and conversations as tools for shaping our human relationships. Maturana explains, ‘‘We
human beings exist in language and conversations.’’ By focusing on dialogue, Pruitt and Käufer
remind us that we are linguistic beings and that we can bring forth a peaceful future throughtransformational conversations.
The civic scenarios and the Antigua workshop demonstrate the possibility for conict transformation that dialogue can create. As a member of the facilitator team, I observed and listened toVolume 3, Number 4, REFLECTIONSPRUITT AND KÄUFER
Dialogue as a Tool for Peaceful Conict Transformation

participants from many countries express their frustration, their emotions, their solidarity, and theirhopes and visions for making their countries peaceful and humane societies. We can make a difference with these transformational tools if we choose to share our knowledge, work in partnerships,
and create knowledge together.
However, as Pruitt and Käufer acknowledge, although many types of dialogue are being usedin different countries as tools for peaceful conict resolution, a single, powerful language of dialogue seems to be missing. They also recognize that dialogue is only one tool in the process ofsocial transformation. Even the best civic scenarios, those that produce great visions of the future,
are limited in their capacity to transform a society if institutions and the population at large do
not take other actions. Beyond dialogue, what is also needed are the visionaries or evolutionary
leaders at all levels of society, those who can take the process from dialogue to action. These leaders can mobilize the people and the institutions toward the scenario of choice and build a newsocial reality.
As a result of this new model of transformational communication, I can imagine a metamodel of societal transformation that includes dialogue, civic scenarios, systems thinking, and institutional transformation. Let us be generous with our knowledge and contribute toward a morepeaceful world.

Commentary
by Elena Martinez
The UN Development Program (UNDP) in Latin America and the Caribbean has had extensive experience during the past decade with facilitating the use of dialogue as a tool for multistakeholder
consensus building in countries such as Panama, Guatemala, and Bolivia. When the time came tocodify these experiences, the principal adviser to our Guatemala project, Adam Kahane, helped toconnect us to the Society for Organizational Learning (SoL) and to Bettye Pruitt and Katrin Käufer.
Using the SoL ‘‘learning history’’ methodology, we were able to begin the process of codication by examining three of the many civic-scenario projects implemented during the 1990s— Mont
Fleur, Destino Colombia, and Visión Guatemala. Our plan is to continue this process by applying thesame methodology to other dialogue experiences, both to those in which UNDP has played a supportive role and to others where we have not been directly involved. The goal is to be able to give
UNDP’s global network of country ofces and its clients in government and civil society a menu oftools for using dialogue to resolve difcult problems and to avoid violent conict.
We consider this research to be extremely important because we do not currently understandvery well why multistakeholder dialogue often fails to bring about positive change. Conversely, on
those occasions when conict is averted or a new societal consensus is formed, it is very difcultto link these positive developments directly to the dialogue process. By learning more about how
to make this connection, we can help future practitioners to improve the quality of dialogue (toward a ‘‘generative’’ dialogue, as described in the article) both within our countries but also, we
hope, within UNDP’s own management processes.
For most countries in Latin America, the main challenge is not the creation of a modern representative democracy with universal suffrage—what Robert Dahl calls ‘‘polyarchal democracy’’(Dahl, 1971)—because most of our countries have by now obtained all the formal trappings ofdemocracy such as elections, courts, and so on. The problem instead is that none of these institutions actually work. In other words, the ‘‘rules of the game’’ for social relationships (as Douglass
North has broadly and inuentially dened institutions [North, 1990]) are not clear. And noamount of effort to strengthen individual organizations will have much impact until this broader
framework is addressed.
What is perhaps most disturbing is that the political culture in most of our countries does notunderstand the complexity of deep dialogue and its crucial role in the construction of consensus.
Argentina today is only one of the recent examples of the costs borne by Latin American society
because of the unwillingness or inability of the political class to undertake the hard work of building consensus. Politicians and civic leaders alike throughout the region continue to defend theirown narrow interests, showing little or no understanding of the nature of the ‘‘whole,’’ that is, how
the shared interests of society, the economic sectors, and minorities can come together into aworkable vision of the future.

REFLECTIONS, Volume 3, Number 4

Elena Martinez
Assistant Administrator & Regional
Director
UNDP Latin American & Caribbean
Bureauelena.martinez@undp.org

67

PRUITT AND KÄUFER
Dialogue as a Tool for Peaceful Conict Transformation

How can we help leaders in Latin America and other regions move beyond debate to real dialogue? How can we call our countries ‘‘democracies’’ until this is done? The only solution is tochange the political culture. And one way UNDP and others can help do this is to bring together
the theorists and practitioners of ‘‘transformative’’ dialogue. What we want to do is precisely what
Pruitt and Käufer have captured: we want to offer our clients in government and civil society the‘‘state of the art’’ in democratic dialogue, that is, a choice of options for addressing with precision
how dialogue can help to transform conict into positive change.
We will never, of course, be able to offer ‘‘10 Easy Steps to Transformative Dialogue,’’ because
it will never be easy and we shouldn’t try to mask this fact. But we should be able to further
develop the theory to help leaders nd their own solutions, using their own political acumen, while
getting the fundamentals right. As the authors acknowledge, the ‘‘meta-issue’’ is the hard-tomeasure link between dialogue and action. How can dialogue be channeled effectively to inuence
policy decisions, while at the same time preserving the independence and ‘‘sanctity’’ of the dialogue process? Dialogue for the sake of dialogue will never succeed in bringing change.
As we move ahead with this project, we recognize that what we are doing has no beginningor end. We are just beginning here. In the coming months, we will continue to consult many others who have chosen the difcult path of dialogue over confrontation. There are many cases, andso much still to learn.

References
Dahl, R. Polyarchy: Participation and Opposition (New Haven, CT: Yale University Press, 1971).
North, D. Institutions, Institutional Change and Economic Performance (Cambridge, England: Cambridge University Press, 1990).

68

Volume 3, Number 4, REFLECTIONSLeadership, Networks, andLarge-Scale Change: Topics
Emerging from SoL’s
Research Greenhouse IIRESEARCH

Barry SugarmanOn September 20–21, 2001, the Society for Organizational Learning (SoL) held its
second Research Greenhouse (G2). This memorable gathering offered exciting opportunities to learn about and explore current research, to germinate early-stage ideas forresearch, and to encourage more collaborative relationships among researchers, consultants, and practitioners.
Here, I highlight some signi cant ideas from G2 and their implications for the theoryof organizational learning and fundamental organizational change. My aim is to encourageothers to continue the generative conversations, to expand participation beyond those
who were present, and to facilitate further dialogue on the emerging topics.
I have selected from a rich, complex array of information and ideas and have organized my selections to suggest connections and emerging questions that may guide thedirection of future research. For a more comprehensive, detailed, even-handed survey of
all that occurred, please refer to the web archive of the SoL Greenhouse.1

Greenhouse Context and Setting

Barry Sugarman
SoL Research Coordinator
Sugarman@solonline.org

Learning from our experience with the rst Greenhouse, which attracted many researchers
but few practitioners, the G2 organizing committee, chaired by Jim Ritchie-Dunham, designed this gathering to increase opportunities for collaborative research among consultants, practitioners, and researchers.
Sixty-ve attended, with an equal number of researchers and consultants. Participantsfrom four member companies (Shell, Harley-Davidson, FedEx, and Pratt & Whitney) represented corporate SoL members, with another four from the US Department of Veterans
Affairs (a member of the SoL-federal agencies partnership). We welcomed researchers
from Northern Ireland, Japan, Israel, and China. In the immediate shadow of September
11, this large attendance was remarkable. Not only did we succeed in attracting a more
representative cross section of the three groups, but we created conditions in which thequality of conversations  ourished, especially across the boundaries between researchers,
consultants, and practitioners.
Pratt & Whitney, a member company, hosted the meeting, thanks to Michael Dreikorn. With their support, ne staff, and a facility that included a real greenhouse, we
designed the setting to facilitate more intimate conversations. In addition, we structured
the program to include relatively few formal presentations and included ‘‘germination’’sessions that helped develop new ideas for research. This quasi-open-space format indeed
seemed to support cross-pollination and nurturing of embryonic ideas for collaborative
research.

REFLECTIONS, Volume 3, Number 4Ó69

2002 by the Society for Organizational Learning and the Massachusetts
Institute of Technology.

SUGARMAN
Leadership, Networks, and Large-Scale Change

Green-house: (grenhous)—n. Informal. 1. abuilding with a glass roof
and glass sides, in whichplants are grown or kept;
hothouse; greenery —Syn. 1.
conservatory.
Germinate (jer’ me nat)—v.i. to start growing or developing; to sprout, bud:Seeds germinate in thespring.—vt. to cause to growor develop: Warmth, moisture, and oxygen germinate
seeds.

Each day, during the 90-minute germination session, our main meeting space wastransformed into a lively, buzzing village garden. At the start, half a dozen or so ‘‘topic
owners’’ set up posters and signs at various tables. Participants organized themselves into
one of the conversation groups, which ranged from 3 to around 20 people (see sidebar
for a list of topics and presenters). Some spontaneous topics were introduced, complementing the majority that had been preplanned and distributed.
Most of the cases formally presented resulted from collaborations between practitioners (line managers and networkers) and researchers. In the academic world, this connection is rare, as two G2 participants highlighted in their recent article (Rynes, Bartunek,
and Daft, 2001).2
The gathering afrmed the community character of SoL, creating a safe place to bein an unsafe time (a mere 10 days after September 11), and we set to work with a special
sense of purpose. As G2 organizers, we felt keenly aware of the absence of SoL members
who were unable to attend and made special efforts to expand the circle of participation.
We documented or videorecorded most of the activities, while publishing daily materials
and creating archives on the SoL website.

Emerging Topics
Among the many topics presented, three main areas that command interest within the
SoL community seem to stand out:
1. Leadership and leadership development
2. Grassroots knowledge communities and social networks
3. Large-scale organizational transformation

Leadership and Leadership Development

70

Four presentations that I highlight here helped us explore key concepts of leadership: twoplenary sessions, both with a strong theoretical approach, and two germination sessions,both with a more practical approach. The leadership panel, with four researchers and awealth of recent research data, emphasized the three kinds of interdependent leadershiproles essential for organizational transformation—line managers, executive champions,and internal networkers. Introducing the leadership panel, Peter Senge de ned the leadership roles and set the context for Katrin Käufer and Ellen Pruyne’s presentation of theircurrent research, which supports the hypotheses developed by Senge and colleagues(Senge et al., 1999).
They described the leadership role of the networker—carrying seeds of knowledge
and personal connections and building relationships that support trust and honesty. Specialist leaders do this, yet depend on the line manager to support them. And both relyon the protection and guidance of executive champions. The role of the line manager as
a leader in a work-and-learning process can easily be confused with the role of the networker, because the line manager also has important networking and relationshipbuilding functions. The difference lies in their ofcial responsibilities: the line manager
has accountability for results and costs, whereas the networker assigned to the latter is focused mainly on relationship building and process improvement.
Panelists noted that networkers do not respect organizational boundaries in the way that most employees do.
While this is one of the networkers’ contributions as innovators, some colleagues seem threatened by it—especially those outside the core of the change initiative.
Networking and relationship-building work are mostly invisible and undervalued. Only
the insightful colleague who works closely with a networker (and who favors innovation)
can appreciate the skill and the value of that work (see Fletcher, 1999). Panelists cited
examples in which leaders did not get promoted or otherwise rewarded for outstanding
networking and relationship-building results, even when their bosses saw their contributions. Indeed, panelists suggested that it may be the ‘‘kiss of death’’ for a manager to

Networking and relationshipbuilding work are mostly invisible
and undervalued.

Volume 3, Number 4, REFLECTIONS To conduct descriptive research among member organizations on their leadershipdevelopment practices

 To create action research to enhance leadership development initiatives within member organizations, based on the collective learnings of the SoL community

 To create a better understanding of leadership roles as SoL liaison ofcers

Two researchers volunteered to produce a research plan. Four months later, data collection began in six companies. There are rm plans for a rst review of preliminary data at
a liaison of cers’ quarterly meeting.
The central working hypotheses that emerged in Project LEAD, shaped by ideas fromthe leadership panel, were that many employees experience mixed messages about the

REFLECTIONS, Volume 3, Number 4

SUGARMAN
Leadership, Networks, and Large-Scale Change

become known as a good ‘‘people’’ person. These ndings are even more striking because
they come from organizations considered to be enlightened. Are senior executives awareof this invisibility? Should we accept it as inevitable or as a key challenge to our theoryof large-scale change?
Roger Saillant, a thoughtful senior executive (at Ford, then Visteon, and now CEO of
Plug Power) and a founder of the learning organization work at Ford, provided key insights into these questions. Saillant’s after-dinner talk brought into clear focus several
core issues about leadership and its development. He began by drawing two visual symbols to represent leadership: a circle and a triangle.
He explained that the circle (like a campre circle) represents the natural social systems in our organizations, those based on primary human connections. The triangle (orpyramid) represents the formal structure and hierarchy of the organization. The dynamics
of each and their interconnections challenge us as leaders; both are necessary for understanding organizations. The leader’s key challenge is to manage effectively the integrationof the two dynamics, as well as relate to their different demands. Saillant believes thatwhen a leader can deliver the required results at a high level, he or she earns permission
or legitimacy from the formal hierarchy (the triangle) to nurture the work of the circle,
holding dialogue-based meetings and treating his or her employees with respect and personal consideration. That attention to the circle processes leads to stronger employee
engagement and to superior performance. Saillant’s willingness to speak openly but modestly about painful experiences in his life added much impact and credibility to his words(see also, Ayas and Saillant, 2002).
In another presentation, Karen Ayas, Philip Mirvis, and George Roth gave a detailed
account of large-scale change at a Unilever company where Tex Gunning displayed aleadership philosophy and practice similar to Saillant’s. Both were willing to speak openly
with groups of employees about their personal struggles. In a video segment, an employee
told Gunning that she wished he had spoken openly to them earlier, because that would
have made them hear his message sooner. The collaborative study described an ambitious
program of leadership development with a strong emphasis on personal mastery, teamlearning, and shared vision, in which dramatic settings were used (see also, Mirvis et al.,2001).
In concluding the leadership panel, Joe Raelin noted that effective leadership is concurrent, collective, collaborative, and compassionate. Two germination sessions based onleadership involved action-research projects at an early stage of development. Raelin andcolleagues Mark Braun and Phil DiChiara from The Boston Consortium shared their plans
for a work-based executive development series, using a unique three-stage work-basedlearning model that engages executive participants in learning applications in their own
work environment (Raelin, 1999). With the help of ideas from the session and feedback,this project is currently under way, with early results to be reported within six months.
Project LEAD was developed at another germination session. The project idea hadoriginated at a meeting of liaison of cers (of SoL member companies) who identi edleadership development as a common concern and top-priority issue for their organizations. Jim Fleming (Intel) and Tim Savino (Harley Davidson) next presented a proposal
for a research project on leadership at the SoL Annual Meeting in June 2001, leading toa concept paper. When presented in their germination session, the concept paper produced some lively discussion leading to further action.
The intent of Project LEAD is:71

SUGARMAN
Leadership, Networks, and Large-Scale Change

Germination sessions
TopicsPresenters

The requisite organization theory of Elliott JaquesWork-based executive development

Alison Brause
Joe Raelin, Mark Braun, andPhil DiChiara
Bettye Pruitt

Project histories: a useful tool for collective knowledge
creation in the SoL community
Projects as catalysts for organizational learning
Knowledge transfer from universities to corporations
New (green) sustainability projects
What would be a SoL-ful response to the events of
September 11?
Organizational social capital, departmental power
structures, and the development of rm-level IT
capabilities
Developing systems thinkers: understanding people’s
baseline knowledge of the behaviors of dynamic systems
The Proteus initiative
The cognitive structures and mental processes activated in
effective organizational visioning at the individual andorganizational levels
A theory and tool based on a generalized hierarchy ofsystem needs
A theory of action organizational learning model andassessment tool; the George Washington University
research program in organizational learning

Benyamin LichtensteinGeorge RothKate Parrott and Peter Senge
Steve Waddell
Brian Butler

Linda Booth Sweeney andJohn Sterman
Steve Waddell
Ellen Pruyne

Paul Kampas
Carol Gorelick, Margaret Gorman,
and Chris Johnson

kind of leadership their employers reward and support, and that the structures in thecompanies often inhibit learning-based leadership. Should these hypotheses prove to betrue, the implications for improved leadership development would be profound. The biggest contribution to developing better leaders for such companies would then come, notfrom improving the skills and performance of individual leaders, but rather from changing
the structures that now undermine the efforts and careers of those individual managers
who strive to be better learning-oriented leaders.

72

Grassroots Knowledge Communities and Social Networks
SoL members share a core belief in the inherently social nature of learning. The Greenhouse featured some strong examples of research in this area. Nick Zeniuk, Dennis Sandow, and several colleagues from Hewlett-Packard (HP) in Corvallis (appearing via
videoconference from Oregon) described their recent work on cultivating a social network
to develop an area of critical new technology and scienti c knowledge. Their efforts involved members from multiple disciplines and sites within HP, as well as two suppliers(who compete ercely in other contexts) and some afliates. They described how thecollaboration started out formally involving eight players, and grew informally to include
50 to 60 active participants. The knowledge creation and sharing, and the inherent relationships, came to have strong, intrinsic value to the participants. Sandow and Zeniuk
credited this achievement to a strategy of facilitating growth factors and removing barriers.
Humberto Maturana’s ideas on living systems (Maturana and Varela, 1998; Maturana
and Bunnell, 1999) and J.R. Moreno’s ideas on small-group dynamics (Moreno, 1960) areseminal to the HP project and to most of Sandow’s work. As a researcher, Sandow studies
how people within social networks interact in order to coordinate collective action andlearning. As a practitioner, he works with them to facilitate this natural development. He
combines both roles in an action-science approach, which has some afnities with theVolume 3, Number 4, REFLECTIONSLarge-Scale Organizational Transformation
In moving from small- to large-scale change, we can apply all that we know about theprevious two topics of leadership and learning in social networks. The question is: Are
there new principles for change management that occurs across several divisions or business units? Change consultants share a deep concern and frustration because of the socalled organizational immune response. In this phenomenon, a change initiative succeeds

REFLECTIONS, Volume 3, Number 4

SUGARMAN© Emily Sper

Leadership, Networks, and Large-Scale Change

approach of Chris Argyris, Bob Putnam, and Diana Smith(1985), as well as Ed Schein (1999a, 1999b). Senge commented after this presentation that Sandow’s work couldn’t
be understood without understanding the special craft
he has developed, which is more than good process facilitation.
Bill Brenneman, Ed Winston, and Nick Rennie presented a second example of collaborative action researchon social networks at a unit of the Shell-Texaco Alliance.
Whereas HP set out to create new knowledge for productdesign by consciously developing a social network, ShellTexaco started with existing networks where there was a
problem, identied on the basis of differences in performance between similar petrochemical-processing units.
The questions that guided this inquiry were: How could
Shell-Texaco strengthen the weaker unit’s performance,
lower costs, and prevent serious accidents? The hypothesis was that variations in plant
performance occur at the level of the operations knowledge community. Knowledge of
operating the chemical process units exists within many fairly isolated communities, eachfocused on a particular group of units. The knowledge communities included operators,
performance specialists, and supervisors, and on-site day support, such as operations
specialists and central technical (engineering). Safe, reliable, and efcient units havemembers who communicate, reason, and learn together.
Brenneman pointed out that the prevailing approach to learning and improvement inthis case is derived from ‘‘rigorous, fact-based examination of current reality as revealedin performance failures,’’ rather than being driven by vision. Jean Bartunek called attention to the absence of an appreciative inquiry perspective and invited us all to consider
the idea that assessment need not always be based on the concept of a gap or de cit(Srivastva and Cooperrider, 1990).
This case also introduced a connection between information technology (IT) andorganizational learning, using the enhanced understanding of network processes to createa software tool to strengthen networks. Rennie illustrated the use of IT to extend the reachof (or even to replace) traditional face-to-face group conversation. He described a causal
reasoning group that has been operating in a small part of the organization for more than
two years. He also showed how scienti c dialogue focused strictly on hard data leads tolearning and improved performance. The prescribed causal questions tend to break down
the natural barriers between members of knowledge communities and enable them toreason together. A causal-reasoning software application (known as PHRED) that uses asimilar question-based approach can therefore be used to enhance learning within andbetween existing knowledge communities and offers much promise for fruitful developments. The origins of this project and collaboration can be traced to the rst Greenhouse,
where Rennie and Brenneman rst met.
Shigehisa Tsuchiya, in another study, shifted the focus from the creation and sharingof tacit knowledge to tacit coordination. In a dramatic illustration, Tsuchiya showed videotapes of operators in a nuclear power plant, scrambling to deal with a control-room
emergency, as several alarms sounded loudly and data indicators poured reports into thecontrol room. He presented training and measurement methods, viable for this context,that increased tacit coordination—a capability required in many kinds of highperformance teams that must deal instantly with complex, unexpected challenges.

73

SUGARMAN
Leadership, Networks, and Large-Scale Change

just so far in making signi cant initial changes with one leadership group, but goes nofarther into the organization (see, for example, the AutoCo. case [Roth and Kleiner, 2000]).
Fred Simon (former Ford program manager, change leader, and now a consultant)
has suggested that large-scale change efforts should avoid using a pilot-demonstration
strategy, but should instead plan for widespread involvement from the outset. Many may
disagree with Simon’s view, but the learning history that Mirvis, Ayas, and Roth presented
shows the bene ts of a holistic approach and engaging the whole organization in theprocess (see Mirvis et al., 2001). Their transformation story of a Dutch food company
within Unilever entailed an account of large-scale change over ve years, marked byprogressively more engaging, memorable events. In a gathering in the Jordan desert, 200
top leaders were called to reinvent themselves, making a ve-year time line of events thatshaped their business history, and re ecting on their experiences and learnings in orderto create their future. They also wrote about and shared what was important to them
personally as leaders. Later, around a campre, they shared their learnings. This process
was carried forward at the  rm’s annual learning conference with all 1,800 employees.
The presenters emphasized the performative nature of the approach used by the company change agents. Their work raises the question of whether a large-scale change initiative needs a holistic integrator—something that enables the participants to cope withthe overwhelming complexity of any large-scale transformation. Gunning and his Unilevercompany took their campre conversations to some very dramatic sites and worked withina performative framework to stage these events in emotional ways. It seems important toassess the results of such experiments and to think through their implications for ourtheories of large-scale transformation.
In my research with Susan Hull, we looked at large-scale change issues at Detroit
Edison power-generating plants (part of DTE Energy) through the lens of ‘‘assessment,’’
focusing on the work-assessment-improvement-learning process. Our initial aim was tounderstand the role of assessment in organizational learning, de ning it to include all
situations, formal or informal, implicit or explicit, when people collectively asked, ‘‘How
are we doing?’’ We visited areas in a number of plants, plus headquarters, interviewing
and observing, seeking varied examples of indigenous assessment processes and formal,ofcial ones. Examples of special interest were integrated into daily work activities. The
network processes Brenneman and Rennie described at Shell-Texaco seemed similar to
those we found at DTE. We see the work-learning cycle as a small-scale energy source(or bio-cell) that powers change in organizations, both large and small. Managing thesecells on a large scale involves other factors, however, including: Shared vision at wider or higher levels of the organization, involving participation74

and dialogue, linking local units in nested fashion, coupled with a compelling casefor change A new approach to leadership at all organization levels, based on developing thework-learning bio-cell and supporting natural knowledge networks (Sugarman, 2001)
 Capacity-building resources to support development of the new skills needed by allleaders Alignment of the small-scale elements along the value chain and the internal power
structure in ways that offer direction and come together effectively on the large scale
We suggest that alignment is a major factor in understanding the difference between
small-scale and large-scale change. Its signi cance is easy to overlook in the simplest
systems (such as a small, single-product business, or a single-cell organism). The challenge on any scale is to align the work of the unit suf ciently with its environment toensure a supply of essential inputs, such as funds, services, or partly nished products.
Within large organizations, the component units must be aligned with many other components along the value chain and the internal power structure—at least enough to ensure
the needed inputs. During a transformation effort, the parts of the system must eachreevaluate and resolve the alignment issues created for them by the change effort. Theseoccur along two dimensions: (1) the goals of different units must be aligned with eachother along the value chains of production or service delivery, and (2) the structures mustbe aligned with those goals.

Volume 3, Number 4, REFLECTIONS

Additional Topics
Two other sessions highlighted strong theoretical models that deserve further study andreection. Paul Kampas presented a generalized ‘‘hierarchy of system needs’’ that he hasdeveloped and used to analyze the evolution of the computer industry, the rise and fallof Digital Equipment Corporation, and others. In their presentation, Carol Gorelick andChris Johnson built on David Schwandt’s theory of organizational learning, based on thesociology of Talcott Parsons (Schwandt, 1995; Schwandt and Marquardt, 1999). Gorelick
described how she has used this approach in her study of an on-line knowledge management project at British Petroleum. Johnson reported on a survey instrument that has beendeveloped from this approach at George Washington University.
Finally, our colleagues from Northern Ireland, Karin Eyben and Derick Wilson,
evoked a special response. Their professional work (through Future Ways and the University of Ulster) has been dedicated to building a new society, better than the one shattered by two groups of rival terrorists. Eyben and Wilson are attempting large-scalechange; Future Ways’s efforts involve leadership development and seek to foster social
networks to bridge the hostile communities (see Eyben et al., p. 42 in this issue). As we
individually began to consider how we would live with terrorism, we noted that they andtheir community had lived with terrorism for decades. The challenge for me while I contemplated their work was my discomfort in sensing thestruggles that may lie ahead for us as we come to termswith the new social-political-security factors that havechanged our world since September 11.
Their example helped us to be in touch with the larger
challenges we still face as a community. And they assistedus, perhaps, in remembering that, within SoL, there are
signi cant resources for addressing the bigger challenge.
Although our work may sometimes appear to be about improving ef ciency, product and service quality, and prots,that is only because such work often coincides with thebest opportunities to extend dialogue, respect, and honesty among people. Learning andgrowth in a community, and fostering people’s ability to pursue that which really mattersto them, is the real context for our three emerging research topics and for organizational
learning as we view it at SoL. This work was exciting and worthwhile before September
11. Now the challenge is much greater. I believe G2 was a great success in the old terms,
because we moved ahead and continued our work in the spirit of collaboration. It canalso move us to see how to respond as a community to the new reality, as Steve Waddell
put it, ‘‘In a SoL-ful way.’’ Then, perhaps we can aspire to be, in the words of Rita
Kowalski, ‘‘guardians of a new community,  lled with purpose and vigilant resolve.’’

As we individually began toconsider how we would live withterrorism, we noted that they andtheir community had lived withterrorism for decades.

Acknowledgments
The SoL Research Committee extends its special thanks to Pratt & Whitney, cosponsorsof Greenhouse II (especially Michael Dreikorn), for hosting this event, for providing great

REFLECTIONS, Volume 3, Number 4

SUGARMAN
Leadership, Networks, and Large-Scale Change

A change effort that involves a truly new design for basic operations and new mental
models of the business will require different supporting structures, policies, and procedures (for example, in hiring, planning, accountability, performance appraisal, rewards,
and so on). The difculty in realigning an organization occurs because these infrastructures are embedded, not discrete, and hard to disentangle. Seeing alignment as a key
leverage point, executive leaders can use their of cial authority to force changes in theinfrastructures early enough to achieve some alignment with their goals and vision. Alignment can also be improved from lower levels, as process-improvement groups and all
work-learning cycles assess their systems,  nd where their efforts are being thwarted, andcampaign for supportive changes. Once again, this leads me to the conclusion that theforces of the circle and the triangle that Saillant highlighted need to work together for
effective large-scale change.

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facilities, and for the superb staff support. Thanks to Pat Parker-Roach, along with Rick
Karash and Jaleel Carter, for making possible the videorecording. Finally, thanks to theG2 Planning Committee: Jim Ritchie-Dunham, Karen Ayas, John Carroll, Charlie Tweedly,
Lilly Evans, Carol Gorelick, Lisa Porter, Frank Schneider, Barry Sugarman, and Terri
Seever.

Notes
1. The SoL website contains extensive materials documenting Greenhouse II, including more than
10 videos recording plenary sessions, at least six sets of downloadable PowerPoint slide shows,plus dozens of abstracts and session proposals (including germination sessions). The URL is
http://forum.solonline.org/WebX?2001GreenhouseFolder. Or, if browsing manually, go to
SoLonline.org, to What’s Up, to Topics, to Greenhouse II, to G2 Sessions. You will nd, forexample, John Carroll’s overview of research at SoL; Joe Laur’s talk on the Sustainability Consortium; the transformation of a Unilever company, presented by Phil Mirvis, Karen Ayas, andGeorge Roth; Derick Wilson and Karin Eyben’s account of their community work in Northern
Ireland; the collaborative research on workplace stress and aggression at the US Department
of Veterans Affairs; and much more.
2. SoL is not quite alone in promoting such collaboration. A small, committed group within the
Academy of Management is working to encourage more action-based and collaborative research.
Dan Twomey, Joel Harmon (both from Fairleigh Dickinson University), Rita Kowalski, Daniel
Kowalski, Robert Petzel, and James Scaringi (all from the Department of Veterans Affairs), andLyle Yorks (Columbia University) joined us at G2 to report on a large collaborative research
project with academic partners from four universities and action teams at 11 pilot sites at the US
Department of Veterans Affairs.

References

76

Argyris, C., R. Putnam, and D. Smith. Action Science (San Francisco: Jossey-Bass, 1985).
Ayas, K. and R. Saillant. ‘‘Creating High-Performing Organizations: A Conversation with Roger Saillant.’’ Re ections 3 (Spring 2002): 10–18.
Fletcher, J.K. Disappearing Acts (Cambridge, MA: MIT Press, 1999).
Levina, N. ‘‘Sharing Knowledge in Heterogeneous Environments.’’ Re ections 2 (Winter 2000):
32–42.
Maturana, H. and P. Bunnell. ‘‘The Biology of Business: Love Expands Intelligence.’’ Re ections 1(1999): 58–66.
Maturana, H.R. and F. Varela. The Tree of Knowledge: The Biological Roots of Human Understanding(Boston: Shambala Press, 1998).
Mirvis, P.H., K. Ayas, and G. Roth. ‘‘Learning in Performance: How a Dutch Company Transformed
Itself.’’ Re ections 2 (Summer 2001): 21–38.
Moreno, J.L., ed. The Sociometry Reader (Glencoe, IL: Free Press, 1960).
Raelin, J.A. Work-Based Learning: The New Frontier of Management Development (Reading, MA:
Addison-Wesley, 1999).
Roth, G. and A. Kleiner. Car Launch: The Human Side of Managing Change (New York: Oxford
University Press, 2000).
Rynes, S.L., J.M. Bartunek, and R.L. Daft. ‘‘Across the Great Divide: Knowledge Creation andTransfer between Practitioners and Academics.’’ Academy of Management Journal 44 (2001):
340–355.
Schein, E.H. The Corporate Culture Survival Guide: Sense and Nonsense about Culture Change (SanFrancisco: Jossey-Bass, 1999a).
Schein, E.H. Process Consultation Revisited: Building the Helping Relationship (Reading, MA:
Addison-Wesley, 1999b).
Schwandt, D.R. ‘‘Learning As an Organization: A Journey into Chaos.’’ in Learning Organizations.
eds. S. Chawla and J. Renesch (Portland, OR: Productivity Press, 1995): 365–379.
Schwandt, D.R. and M.J. Marquardt. Organizational Learning: From World Class to Global Best
Practices (Boca Raton, FL: St. Lucie Press, 1999).
Senge, P.M., C. Roberts, R. Ross, et al. The Dance of Change (New York: Currency/Doubleday, 1999).
Srivastva, S. and A.D. Cooperrider. Appreciative Management and Leadership (San Francisco: JosseyBass, 1990).
Sugarman, B. ‘‘A Learning-Based Approach to Organizational Change: Some Results and Guidelines.’’ Organizational Dynamics 30 (2001): 62–76.

Volume 3, Number 4, REFLECTIONSSUGARMAN

Commentary
On Wednesday night, we started with a circle. I knew there would be a circle. We had to know
where each person was. The meeting almost did not happen. Some did not come. Some were coming tomorrow. The events of September 11 had touched us all. We had traveled through turbulence
to reach the Greenhouse; we knew turbulence still surrounded us.
We were told to form a circle, since we needed to check in.
Thirty chairs in an imperfect circle
surrounding a small ickering candle placed on a blue-carpeted oor.
We were told we had to acknowledge September 11 and explain where we were.
Each had a voice. Each had to speak, even if to simply say, ‘‘I have nothing to say’’ or ‘‘I justcannot speak right now.’’ Each had to share experiences and feelings, to step within thecircle.

Rita Z. Kowalski
Special Projects Manager
US Department of Veterans Affairs
PERRKOWA@vba.va.gov

Leadership, Networks, and Large-Scale Changeby Rita Z. Kowalski

Each spoke. Each listened. There was silence and respect as each took a turn. Each thought
was like a pebble tossed into a quiet pool. It sent a rippled circle across the surface that
gently touched each one of us.
We heard of grief and sorrow, of lost friends and family members. We heard of fear, of lost
innocence and safety, and of rm resolve. And even those who said they were not directly
affected talked of numbness, of a growing awareness of fundamental world change.
We were told to create a context for our meeting. We needed to build our circle, our meeting
space. We were told to build our community, and I was part of that building. And even though I
was a stranger, by joining in the building, I was able to enter the SoL community.
Yes, there was a circle.
Some of the voices talked of ying into Manhattan and seeing the two towers. Staring at thesmall candle on that blue carpet, I could still see them.
Did you ever y into Manhattan at night? Did you ever notice the dark ribbon of water surrounding the glittering island? An imperfect circle of ickering lights groundedby two towers? Were the towers beacons, lighthouse, calling you home? I rememberedtimes when I saw them glowing in the darkness through the clouds. I had imagined
then that I had tied ropes around the towers so that I could always pull myself home.
And now, voices in this circle talked of how the two towers had once called to them as well.
But now, the towers were dark. They were gone as were the people who had worked within
them.
The last voice spoke.
There was silence —respectful, acknowledging the value of all the voices we have heard.
Our speaking had cleansed us. Our speaking had created our community and our place of safety.
Turbulent waters still surrounded us, but for a few days we were in a protected harbor.

During the next two days, there were more circles. They formed, reformed, and merged, creating
new relationships and new meanings.
I heard of social networks and recognized that I was now part of a much larger web.
I learned about circles forming in the desert, on the Scottish highlands and skating across thefrozen waters of the Netherlands, energizing an organization.
I learned about life created at the germination sessions where small groups discussed new
ideas, new projects, brought in from the outer world, or born within our special place. I
watched a community treat ideas with respect so the edglings could become stronger
and grow.

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And then there was Roger.
He told us about Ford and business results—the technical triangle.
He told us stories about leadership and how he used circles. His circles tapped into the emotions and values of each organization he had led.
He talked honestly of learning and feeling and tough decisions.
He talked about meeting the bottom line so he could have freedom.
Freedom to build communities lled with people living positive values, learning to accept impossible challenges.
This was my experience at the Greenhouse, where I discovered I was part of a community. One thatheld itself accountable for inquiry, learning, and growthI left the Greenhouse. Left Connecticut. Returned home. I wrote these impressions of the meetingin my journal. As I was writing, the cover of the New York Times Magazine caught my attention.
The issue was about September 11. On the cover was a picture of the recovery site, which thephotographer had taken from the Hudson.
Dark waters met black, silhouetted forms—The World Financial Center’s remains.
Deepened azure, night skies
White oodlights bathing empty buildings
And standing behind them,steadfast,
now
immutable,
The glowing Spirit Towers
Memorials of that day, those deaths
Guardians of a new community,lled with purpose and vigilant resolve.

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