Volume 12, Number 1

Reflections
The SoL Journal

on Knowledge, Learning, and Change

FEATURE ARTICLES

Changing Culture Change
Diana McLain Smith

Commentary
Robert Hanig

Learning Lean:
Don’t Implement Lean,
Become Lean
Michael Ballé and Peter Handlinger

Commentary
Jeffrey Liker

Leadership for Our Times:
The Leadership System ModelDavid Kantor

Commentary
Lisa Stefanac

BOOK EXCERPT

Renewing Leaders:Beyond Servant Leadership
Joseph Jaworski© iStockphoto.com

Published by The Society for Organizational Learningreflections.solonline.org
ISSN 1524-1734

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R E F L E C T I O N S | V O LU M E 12, N U M B E R 1

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PUBLISHER’S NOTE 12.1

T

his issue marks a transition for Reflections. As you
know, Sherry Immediato
ended her tenure as publisher
of Reflections with volume 11.4.
Having worked with Sherry
over the last decade, I havealways been inspired by her
Frank Schneider
unwavering dedication to making Reflections a purposeful, relevant, and high-quality
publication. It is with that experience in mind that I am
taking up the baton of publisher with this new volume.
For me, Reflections has always been an important
expression of what SoL – as a learning community –stands for and the impact we have in the world. It has
been a strong voice for sharing emerging and leadingedge work, a tradition I plan to carry forward. As we areplanning for future issues, I am particularly committed
to encouraging more contributions from members
around the world. I am thrilled to work in joint stewardship with Janice Molloy and Deborah Wallace as senior
editors of Reflections.
Our decision to devote this issue to emerging modelsof leadership came after much consideration. We areaware that endless books and articles have been written on the topic, yet as a society we are eternally dissatisfied with existing definitions. In this issue, we arepeeling away another layer of the “onion” to get us
closer to the heart of leadership, including a deeper
look at leading oneself. To do so, It seemed only fitting
to tap into the wisdom of the larger SoL communityand contribute the latest work on leadership from a
few of our colleagues. Each article in this issue offers
a distinct and emerging model of leadership.
In “Changing Culture Change,” Diana McLain Smith describes efforts to transform a firm’s culture in order tominimize an increasing gap among its senior leadersand others. Recognizing that tacit assumptions are difficult to shift, Diana and her colleagues identified threeaxes along which they could surface, observe, andeventually alter damaging shared assumptions thatwere at the core of the organization’s culture. Theirresearch boldly challenges existing theories that culturechange is either a top-down or a bottom-up effort. In“Learning Lean,” Michael Ballé and Peter Handlinger
explain why CEOs’ efforts to implement lean in theircompanies have often been disappointing. They argue
that too often leaders try to helicopter in a set of lean
practices without giving adequate attention to the criticalrole that building teamwork and individual competence
plays in achieving successful outcomes. The authors
present a case study of a construction company whereleaders ensure that employees are given ample opportunity to practice “becoming leaner” together.
In “Leadership for Our Times: The Leadership System
Model,” David Kantor concludes that the failure of leadership in this era of perpetual performance crises stems
from our reliance on the CEO-as-savior model. He saysthat this approach places an impossible burden on any
leader, no matter how well equipped to meet the challenges of the position. Kantor proposes a new model,
the “Leadership System,” in which the focus of responsibility and accountability shifts from an individual to ateam of leaders who have equivalent but widely varying sets of capabilities. The final piece is an excerpt
from Joseph Jaworski’s newly published book, Source:
The Inner Path of Knowledge Creation. In it, Jaworski shareselements of his personal quest to redefine transformational leadership. He suggests that we need “renewing
leaders” who possess not only a keen cognitive understanding of the world, but who are also guided by anunderlying intelligence that he refers to as the “Source.”
As we work on upcoming issues of Reflections, wewelcome your contributions – a story from the field,
podcast, interview, book excerpt – something that has
inspired you and that you are interested in sharing.

Frank Schneider
Publisher

EXECUTIVE DIGESTEXECUTIVE DIGEST 12.1

Changing Culture Change
Diana McLain Smith
A common belief exists that leaders can manipulateorganizational culture, like a sculptor shapes clay. But
whereas the expression of culture, such as written mission statements and office arrangements, can easily
be changed, people’s implicit assumptions often prove
more difficult to shift. Based on insights from culture
experts, Diana McLain Smith and others at a small
professional services firm sought to change the firm’s
culture to close the growing distance among seniorleaders and others. They found that by observing andtransforming relationships along three axes, they wereable to surface, examine, and alter the shared assumptions that lie at the core of a firm’s culture. Equallyimportant, they learned that culture isn’t a top-down
or bottom-up creation: it is a joint venture created byfollowers and leaders in relation to each other andtheir external constituents.

Learning Lean:
Don’t Implement Lean, Become Lean
Michael Ballé and Peter Handlinger
Many leaders have tried to apply the “Toyota approach”
to improve performance and financial results, yet few
have succeeded. Those who do have learned that they
can never implement lean per se but rather must strive
to become leaner every day. According to Michael Balléand Peter Handlinger, the “system” in “Toyota Production
System” is not a cut-and-paste set of practices, but aseries of related learning activities aimed at developing
individual competence and teamwork. The authors use
the example of a “lean” construction company to illustrate the positive outcomes that can occur when people
observe worksite problems for themselves and struggle
to find solutions together. Based on these principles,
the authors identify four general lessons for any CEO
who hopes to achieve lasting results from lean efforts.

Leadership for Our Times:
The Leadership System ModelDavid Kantor
In the face of a performance crisis, organizations meetwith an essential decision: delve deep into their own
workings to uncover the complex web of forces driving
their decline or place their hopes and fears in the handsof a heroic savior. As the rash of CEO turnovers in thelast five years powerfully demonstrates, the whiteknight approach is the prevailing panacea. Perhaps the
hangover of those childhood fairytales compels us toso stubbornly cling to the myth of the hero who charges
in to save the day. Yet, as experience has demonstrated
time and again, savior CEOs rarely live up to expectations.
In this article, David Kantor offers an original argument
for replacing the CEO-as-savior model of leadershipwith one that comprises a system of interconnectedleaders with equivalent but widely varying setsof capabilities.

Renewing Leaders:Beyond Servant Leadership
Joseph Jaworski
The notion of transformational, or servant, leadershiphas been around for thousands of years. It has been
the standard against which we have judged our mostrevered leaders – until now. In his new book, Source: The
Inner Path of Knowledge Creation, Joseph Jaworski suggests that servant leadership is no longer adequate tomeet today’s challenges. He calls for a more advanced
generation of leaders, which he refers to as “Renewing
Leaders“ or "Stage IV Leaders.” Jaworski explains thatwhat sets these individuals apart is their unique capacity
for combining their cognitive understanding of theworld with their ability to connect with the “Source,”
an underlying intelligence that provides them with thepower to create the kinds of organizations and society
we desire. In this excerpt, Jaworski paints a compelling
profile of one such leader whom he believes exemplifies
and embodies this most advanced stage of leadership.

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F E AT U R E 12.1

Changing Culture Change
DIANA McLAIN SMITH
A common belief exists that leaders can manipulate organizational culture, like a sculptor shapes clay. But
whereas the expression of culture, such as written mission statements and office arrangements, can easily
be changed, people’s implicit assumptions often prove more difficult to shift. Based on insights from culture
experts, Diana McLain Smith and others at a small professional services firm sought to change the firm’s culture
to close the growing distance among senior leaders and others. They found that by observing and transforming relationships along three axes, they were able to surface, examine, and alter the shared assumptions that lie
learned that culture isn’t a top-down or bottom-up cre-“Before I built a wall I’d ask to know
What I was walling in or walling out.”

ation: it is a joint venture created by followers and leaders– Robert Frost, “The Mending Wall”

at the core of a firm’s culture. Equally important, theyin relation to each other and their external constituents.

F
Diana McLain Smithew organizations build cultures adaptive enough to sustain a firm’s
competitiveness over time. By 2006, only six of the 18 companies showcased in the 1994 bestselling book Built to Last still outperformed the
Dow Jones Industrial Average. “The other twelve,” strategy experts Gary
Hamel and Liisa Välikangas wryly observed in the Harvard Business Review, “haveapparently gone from great to merely OK.” The road to merely OK may or may
not be paved with good intentions, but it is most surely paved with outdated
cultural assumptions, and these cultural roads are proving very hard to repave.

That’s why so many leaders now say what design experts David Nadler andMichael Tushman concluded in Competing by Design: “Culture . . . is the single most difficult aspect oforganizational architecture to reshape in a lasting way.” The soft stuff of culture, it seems, is the hardest
stuff to get right. Yet it is also the most important, determining how firms – or more aptly, the people
in them – actually behave.
Perhaps no one knows this better than Allan Kennedy, coauthor of one of the first books written on
corporate cultures. His efforts to put his ideas into practice at a small firm called Selkirk Associates in the
1980s still have much to teach us about how not to shape the culture of a firm. More recently, with thebenefit of Kennedy’s experience, and with insights from culture experts before and after Kennedy’s time,1
I set out with folks at another small firm to see what kind of cultural change we could create. The two
experiments together suggest that:t 3FMBUJPOTIJQT OPUJOEJWJEVBMMFBEFSTBMPOF TIBQFBOESFTIBQFUIFJOWJTJCMFBTTVNQUJPOT
that lie at the core of a firm’s culture.
t Relationships hold the power to reinforce or transform the cultural assumptions that give rise
to outdated hierarchical, functional cultures disconnected from the marketplace.

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R E F L E C T I O N S | V O LU M E 12, N U M B E R 1

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For Kennedy, this was not a long-term goal,
something that would evolve naturally in the
fullness of time. On the contrary, it was a pressing, immediate concern. Accordingly, he focused
all his attention on creating such a culture fromthe start. “I spent lots of time,” he says, “trying tothink about what kind of values the company
ought to stand for and therefore what kind of
behavior I expected from people.” These thoughts
eventually went into a detailed statement of“core assumptions,” which he reviewed andamplified with each new employee. In thesame vein, Kennedy and his colleagues chosea “guiding principle,” namely, a commitment
to “making people more productive.” They
would pursue this ambition, everyone agreed,“through the products and services we offer”
and “in the way we conduct our own affairs.”© Thinkstockphotos.comt Only by transforming key relationships will
culture change go deep enough to last.
This article tells the tale of these two culture
experiments and reflects on what they together
have to teach us about culture and culture change.

By all accounts, they acted likeone big happy family in a large
room with no offices and a lot ofcamaraderie – that is, until the
day the walls went up.
At first, everything went according to plan. Bound
together by the firm’s espoused assumptions andvalues, the group scurried to develop exceptional
software products for sales and marketing management. By all accounts, they acted like one big
happy family in a large room with no offices and a
lot of camaraderie – that is, until the day the walls
went up. The Inc. article continues:

EXPERIMENT 1

Designer Cultures
In the early 1980s, just as ideas about corporate
culture were taking off, Allan Kennedy launched asoftware company as a kind of culture laboratory.
As the firm’s CEO and cofounder, Kennedy wanted
to see if he could use the ideas from his book tobuild a highly flexible, entrepreneurial culture
based on collaboration, decentralization, openness, democratic decisions, respect, and trust.
An article in Inc. magazine recounts:

The problem stemmed from the situation in the
big room, where the technical people were laboring feverishly to develop Selkirk’s first product,
while the salespeople were busy preselling it.
The former desperately needed peace andquiet to concentrate on their work; the latter
were a boisterous lot, fond of crowing whenever a prospect looked encouraging. In fact,
the salespeople crowed so often and so loudlythat the technicians complained that they wereF E AT U R E | S M I T H

being driven to distraction. Finally, they confronted Kennedy with the problem. Their solution, which Kennedy agreed to, was to erectfive-foot-high movable partitions, separatingeach functional grouping from the others.
In the memory of Selkirk veterans, the day thewall went up lives on as a day of infamy: a symbolof divisiveness that undid all their best-laidcultural plans.
Indeed, the erection of the walls touched off afeud between engineering and marketing thateventually grew into “open organizational warfare,” according to Kennedy. “I let the wall stand,and a competitive attitude developed where engineering started sniping at marketing. We had
two armed camps that didn’t trust each other.”That, however, wasn’t the worst of it. Once they
released their first product, they discovered thatthe market didn’t value customer service quite
as much as their culture did:
Not that there was anything wrong with the
product. It was, in fact, a fine piece of software,and it premiered to glowing reviews. . . . The
problem had to do with the price tag, a whopping $12,000 per unit. The Selkirk team hadcome up with this rarefied figure, not out of
greed, but out of a commitment to customer
service – a goal to which they had pledged
themselves as a part of their cultural mission.
In order to provide such a service, they figured,a Selkirk representative might have to spend
two or three weeks with each customer helping
to install and customize the product. Trouble
was, customers weren’t willing to pay for that
service, not at $12,000 per unit anyway. After aflurry of interest, sales dropped off. . . . “We justblew it,” says Kennedy. “We were arrogant about
the market. We were trying to tell the market
something it wasn’t interested in hearing.”
By the time the team figured this out:
Selkirk’s entire sales effort was in shambles,
a victim of its commitment to employee auton-omy. Sales targets were seldom realized.
Indeed, they were scarcely even set. At weekly
meetings, salespeople would do little morethan review account activity. In the end [Kennedy] was forced to fire more than half of his
staff, slash prices by 87%, and start over again.

Many firms today, most of themolder and wiser than Selkirk,
have made worse mistakes ona grander scale.
What Happened at Selkirk?
Many firms today, most of them older and wiser
than Selkirk, have made worse mistakes on a
grander scale. Over the past 20 years, I’ve watchedcountless culture change efforts fail to dismantle
functional fiefdoms or transform sluggish hierarchical behavior, and I’ve seen just as many strategy
efforts fail because the assumptions upon which
they were based were out of touch with themarket. So how do leaders make such mistakes,
especially those like Kennedy, who are committed
to collaboration, learning, and trust? Are they justisolated lapses of judgment, or do they reflect
something more fundamental?
I believe they reflect something more fundamental: the largely shared, implicit belief that leaders
are like sculptors and that culture is like clay, susceptible to direct manipulation. I suspect it was
this belief that led Kennedy to confuse the expression of culture – written documents like values or
mission statements, espoused beliefs or assumptions, office arrangements, rituals, and rites – witha culture’s less visible but more powerful core: theimplicit assumptions people carry in their heads.
Because Kennedy was so focused on the former,
he overlooked the assumptions people broughtwith them to Selkirk. It was those assumptions
that governed how the people at Selkirk interpreted events and how they behaved, individuallyand collectively. To see what I mean, let’s look moreclosely at how the sequence of events unfolded

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R E F L E C T I O N S | V O LU M E 12, N U M B E R 1

at Selkirk and at the assumptions informing
each step:t 'JSTU BGJHIUCSFBLTPVUCFUXFFOTBMFTBOEFOHJneering over the groups’ conflicting needs: thetechnical group needs silence to concentrate;
the sales group needs to celebrate its victories
to stay pumped up. At play in how this fight
unfolds is the implicit assumption that one
group’s needs must prevail over the other’s.
This zero-sum, adversarial assumption madetheir conflict intractable, requiring intercession
from above.
t /FYU UIFUXPHSPVQTEPOUUSZUPXPSLUIJOHT
out between themselves; instead, they each go
to Kennedy to complain about the other. Herea second shared assumption comes into play:

Embedded in these choices is
an implicit assumption about
his role as leader: his job is to fix
problems, not help the team workthrough any conflicts amonggroups or between values.
if you can’t settle a dispute among yourselves,
send it up the hierarchy. This second assumption reinforces the first one about the intractable nature of conflict. After all, if you assume
you can send your conflict up the hierarchy,
why bother settling it among yourselves?
t *OUIFJSNFFUJOHXJUI,FOOFEZ UIFUFDIOJDBM
folks “confront” Kennedy. Interesting word. One
can only imagine what they said – “Hey, buster,
you created this great big office space with noprivate offices. You go fix it!” – at which point,
they suggest a five-foot-high movable partition
to separate the two functional groups. Embedded in this move is the assumption that theirrole as followers is to say what’s wrong andneeds fixing, and that the participatory leader’srole is to do what they say – or run the risk ofbeing viewed as undemocratic, a clear violationof their espoused values.

reflections.solonline.orgt ,FOOFEZSFTQPOETCZEPJOHXIBUUIFUFDIOJDBM
group demands, telling himself that he’s simply
adhering to the firm’s democratic values. What
he doesn’t see is that he isn’t adhering to thatsame democratic value with the sales group(he never consults them), nor is he adhering to
the firm’s espoused value of collaboration (hedoesn’t ask the groups to collaborate on a solution with his help). Embedded in these choices
is an implicit assumption about his role as
leader: his job is to fix problems, not help theteam work through any conflicts among groups(in this case, sales and engineering) or between
values (in this case, openness to the technicians’
needs and collaboration among groups).
t 5IFOFYUUIJOHZPVLOPX BGJWFGPPUXBMMHPFT
up, confirming everyone’s assumptions about
the intractable nature of conflict. With the wall
creating greater distance between sales and engineering, an even more competitive attitudedevelops between the groups, turning theminto armed camps that don’t trust each other.
t *OUIFFOE 4FMLJSLTFOUJSFTBMFTUFBNJTJO
shambles, making it late to discover that customers aren’t willing to pay $12,000 per unit
for a service the folks at Selkirk assumed
customers would value.

What Can We Learn from the
Selkirk Experiment?
“We just blew it,” Kennedy said in the Inc. article.
True enough. But they didn’t “just” blow it. Selkirk’s
failure was the inevitable consequence of people’sinteractions with each other and with their customers – and the assumptions informing thoseinteractions.
Think about it. Had the relationship between engineering and sales been less adversarial and morecollaborative, their dispute would never have landedon Kennedy’s doorstep. And had Kennedy and his
direct reports forged a relationship in which theyshared responsibility for solving the problem between sales and engineering, Kennedy would never
have erected the wall. As it was, their relationships
weren’t up to the job of resolving the competingneeds and interests of different groups, or any

F E AT U R E | S M I T H

tensions that arose among espoused values once
put into practice. Instead, their relationships –and the assumptions underlying them – conspired
to sabotage the collaborative, democratic ideals
everyone held dear. As a result, they were unable
to learn from each other or their customers, andtheir firm came crashing down.
So what do we still have to learn from this 30-yearold experiment? A lot. Kennedy’s experience hastaught me four lessons I’ve never forgotten:t :PVTIPVMEOFWFSDPOGVTFUIFWJTJCMFGBDFPGB
culture with the invisible assumptions that lie
at its core. While the face of a culture may be
as malleable as clay, the core is more like glue:
quick to adhere, hard to unstick.
t :PVDBOUEJDUBUFPSNBOEBUFDVMUVSBMBTTVNQtions. People will always bring their own assumptions – forged at school, at home, and atpast organizations – to whatever firms theyjoin. Those assumptions can only be transformed through new social experiences.

t "MMTPDJBMFYQFSJFODFUBLFTQMBDFJOUIFDPOUFYU
of relationships, and so it is in the context ofrelationships that people will either change
or perpetuate their assumptions.
t 5IFRVBMJUZPGBGJSNTSFMBUJPOTIJQTEFUFSNJOFT
which outcome occurs and thus whether (andhow fast) people and their firm will learn,change, innovate, and adapt.
These lessons have helped me see that culture
isn’t a top-down creation – or even a bottom-up
one. It’s a joint venture created by followers andleaders in relation to each other and their external
constituents. After years of studying and tilling
different cultural soil, I’ve come to think of these
relationships in geometric terms along three axes
that together define a culture’s assumptive core:vertical (relationships across levels), lateral (relationships across functions), and external (relationships
with customers, suppliers, channels, investors)(Figure 1).

FI G U R E 1 The Geometry of a Firm’s Culture

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R E F L E C T I O N S | V O LU M E 12, N U M B E R 1This way of thinking led me to wonder: perhaps
if we focused as much attention on developing
adaptive, learning-oriented relationships as we
do on developing adaptive, learning-oriented
leaders, we might breathe some cultural life into
our adaptive, learning-oriented aspirations. In any
case, that’s the hypothesis we set out to explore
two years ago at a small professional services
firm only slightly larger than Selkirk.
EXPERIMENT 2

A Relational Approach to Culture
In 1979, six years before publishing his seminal
book on culture, Organizational Culture and Leadership, Ed Schein observed: “Almost any change
in behavior, assumptions, attitudes, and values
is mediated by interpersonal relationships of
one kind or another.” More recently, cognitivereflections.solonline.org

psychologists R.G. Lord and C.G. Emrich madea similar point: “Collective cognition is neither
created or housed in the mind of a single individual. Instead, it reflects a socially constructedunderstanding of the world derived from social
exchanges and interactions among multiple
individuals in a group or organization.”In the real world, matters are a bit more complicated. That’s because we face a tricky chicken-andegg problem. That is to say, our interactions not
only shape our assumptions – making them moreor less adaptive – those assumptions also shape
our relationships, making them more or lessadaptive as well (Figure 2). And here’s the rub: theless adaptive relationships are, the less likely they
are to transform the assumptions that prevent
people and firms from realizing their aspirations.

F I G U R E 2 The Cultural Chicken & Egg Problem

F E AT U R E | S M I T H

The INNOVATE Experiment
Two years ago at a small, highly successful,fast-moving professional services firm I’ll call
INNOVATE, Inc., you could see the effects of thischicken-and-egg problem every day. Despite theirsuccess and aspirations like Selkirk’s to build anentrepreneurial, collaborative, learning-oriented
culture, staff and partners at all levels had cometo feel disconnected from the firm’s most seniorleaders and from the clients whose work had
brought them to the firm. Like the people I’ve
studied in many other firms, they assumed thatthey were helpless to close the growing distanceamong them. In their minds, that distance wasan immutable by-product of INNOVATE’s highpressured, frenetic, transactional culture, something that lived “out there,” totally outside theircontrol, shaped by the most senior leaders whoheld all the power and all the decision rights.
As a result, when things got especially frenetic orpressured, as they often did, people saw no pointin saying much or in negotiating their competingneeds. They just hunkered down, did their jobs,
complained to each other, wasted precious time
waiting for decisions from above, and planned
their eventual exit from the firm. Of course, thisbehavior only reinforced their assumed helplessness and widened the distance among staff, partners, senior leaders, and the clients we served.
Worse yet, it cemented the unawareness that
helped create and maintain the problem.
To crack this chicken-and-egg problem at
INNOVATE, we decided to start with relationships.
We figured, since seeing is believing, it would
probably be easier to act our way into believing
differently than it would be to ask people tobelieve their way into acting differently.
With that hypothesis in mind, we targeted relationships along the three axes mentioned earlier– vertical (relationships across levels), lateral (relationships across functions), and external (relationships with external constituents) – attending toeach axis in that order. We thought that by changing the patterns underlying these relationships,

T A B L E 1 Stages of Culture Change

Stage 1

Mapping the Cultural Terrain

Stage 2Distrupting Current Patterns and Assumptions

Stage 3Inventing New Patterns and Assumptions

Stage 4Integrating and Building

we might be able to change the shared assumptions that were holding people back, which in turnwould make our relationships more adaptive andso on. By doing so, we hoped to jumpstart andsustain a virtuous cycle – transform relationships
to transform assumptions to transform relationships and so on – all of it breathing life into ouraspirations and creating change that would last.
When we first set out, we didn’t expect change tohappen overnight. We recognized that if we wanted
to get to the core of the firm’s culture, we’d haveto stage change over time. Now, looking back two
years later, I can see that we went through threestages of change and are about to enter a fourth(Table 1). Though very different in focus and results, each stage unfolded in the context of key
relationships along each of the three axes, informed by new data and guided by a new idea.

It’s easier to act your way into
believing differently than to believe
your way into acting differently.
Stage 1: Mapping the Cultural Terrain
This first stage was guided by a concept called
Steering Mechanisms (Figure 3, p. 8), which helps
people see the mechanisms through which organizations chart their course and create results.2
As shown in Figure 4 (p. 9), the idea highlights therole people’s relationships play in translating afirm’s formal strategies and structures into cultural
realities. Throughout the change effort, we used
this idea to focus our collective attention on relationships as a lever for culture change, so folks
could see how relationships – created and main-7

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R E F L E C T I O N S | V O LU M E 12, N U M B E R 1

F I G U R E 3 Steering Mechanisms

Formalreflections.solonline.org

As you might expect, not everyone jumped into
the culture-change pool right away. Some waited
to see what happened when others dived in, others
put only a tentative toe in the waters, while stillothers insisted that the water was shark-infested
and anyone going in was nuts.

PeopleKnowledge/Psychology/Styles

Relationships

Culturetained by them – shaped cultural phenomena thatup until then had felt totally outside their control.
To map the cultural terrain during this first stage,
we collected data – observations, tape recordings,
surveys, and interviews – that allowed us to map
the relationship patterns that were defining ourculture and affecting our ability to achieve ouraspirations, serve our customers, and grow ourimpact. We then used the results of this inquiry
to structure a series of firm-wide conversations
through which people came to see something they
had not previously noticed: that through theirrelationships, everyone was creating a cultural
reality no one especially liked. They now faced
a more conscious choice: Would they continue
to play the game or transform it (Figure 4)?

Through their relationships,
everyone was creating a cultural
reality no one especially liked.
That choice – while disconcerting and eventroubling to some – liberated people from theirassumed helplessness and empowered enoughof them to take the risk of reaching acrossdivides that had emerged over time.

Stage 2: Disrupting Current Patterns
and Assumptions
No matter. We had enough folks at each level
jumping in to move us into the second stage ofchange. At the beginning of this stage, we made anumber of formal changes to address the handfulof issues that had left staff feeling disconnected
and hopeless. Most important among them wasthe creation of a new performance system andwhat we called “functional homes.” Each home was
led by a managing partner, who was held accountable for developing staff members and ensuring
they felt a sense of connection to their work, thefirm’s leadership, and their clients’ work.
At the same time, we also held staff accountablefor ensuring this shift actually happened. That was
the new deal: “If you want greater connection,then help make it happen. It’s on you, too.” Hadstaff not also taken responsibility, leadership would
have retained total responsibility and, along withit, total control. Sharing control meant sharing
responsibility and accountability as well.
It also meant working through the cultural assumptions and formal structures that were making mutual control and responsibility for change
difficult across levels. To get at those, we continued our firm-wide conversations, focusing on thechallenges people were facing. As we talked thesethrough, we drew on another guiding idea called
Patterns of Awareness (Figure 5, p. 10). This idea,
which captures well-documented cognitive biases,shows how each person in an interaction sees only
half the picture: what the other person is doing
and how that makes them feel. What they don’t
see is what they are doing and how that makesothers feel. Nor do they see how each person in
the interaction is eliciting or reinforcing the very
behavior they find difficult, creating a vicious cycle.

F E AT U R E | S M I T H

F I G U R E 4 Reflecting on the Results of Our Inquiry

This idea helped us disrupt the highly shared
and limiting assumption that others are to blame
and we ourselves are helpless by showing thatthe fault lies not in the stars or even in individual
people, but in the patterns of interaction wetogether create.
More aware of their own behavior, people began
to entertain the notion that they might be forging– and therefore could alter – patterns of interaction
they didn’t like. Still, we knew it would take morethan insight alone to transform something so
basic. It would take repeated practice and reflection in the context of the challenges people
faced each day.
With that in mind, we offered voluntary seminars
for folks to reflect on themselves in relation toothers as they grappled with their work. Thoughsomeone well versed in these ideas facilitatedeach group, peers had the greatest impact, withpeople helping each other uncover andreexamine the implicit assumptions that had
been holding them and the firm captive.

Transformation takes repeatedpractice and reflection in thecontext of the challenges people
face each day.
As word spread about what folks were learning inthese groups, more and more people in and outside the seminars began doing things differently
to see what happened. Many of these mini-experiments generated different results, suggesting they
were on the right track: that if people acted differently, others might act differently, and together
they might be able to create a virtuous cycle thatwould eventually move them in a more adaptive,
less limiting direction.

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F I G U R E 5 Patterns of Awareness 

A ActsA Reacts 











    

B Reacts

B Acts   
Seeing truly is believing. At this point, enoughpeople were seeing enough of a difference toreconsider the cultural assumption that they were
helpless and those at the top held all the cards.

Enough people were seeing
enough of a difference toreconsider the cultural assumptionthat they were helpless and thoseat the top held all the cards.
Stage 3: Inventing New Patterns
and Assumptions
As we entered this stage of change, we could see
a new assumption begin to emerge – the assumption that through our own actions and the relationships we create, we can either perpetuate or change
the culture around us. This emergent belief is all
we needed to create patterns of interaction that
opened up the possibility for growth and learning
rather than assuming it away.



As new patterns emerged, more and more people
joined the change effort. This made it possible for
us to broaden our scope, involving more people
along all three axes and gradually shifting our
focus externally. Here, we focused on a selectnumber of clients and investors, going throughthe same steps with them we’d taken internally:
mapping patterns of interactions and uncovering
the assumptions that limited what we were able
to learn and achieve together.
During this stage, we also went deeper, unearthing other assumptions at play within the firm –assumptions about what it means to perform,
learn, and succeed as well as about who’s “in” andwho’s “out” and why. As we did this work, we could
see more learning-oriented patterns of interaction
take hold, as people more openly reflected on
their assumptions and on how they were affecting
their own and the firm’s performance, learning,and growth.
During this stage, we relied on a third guiding
idea, The Anatomy Framework (Figure 6), to better
understand why one person’s actions led anotherF E AT U R E | S M I T H

person to react and act in a particular way. By
looking at people’s interlocking frames, and at thecultural knowledge embedded in their repertoires
and in the firm’s social context, we could moreclearly see that these patterns were a productof our own making, and thus could be unmade
and remade.
Though highly productive, this peeling back of therelational onion never became (and should never
become) a widespread daily event; the demandsof a fast-growing firm would never permit it. Instead, we focused on a handful of highly symbolic
relationships – relationships that, if changed,
would have a transformative impact on people’s
assumptions about how things work. What’s more,this process unfolded in the context of doing thefirm’s work – making decisions, implementing
plans, figuring out how to solve a problem – withan eye toward improving our performance. Bytaking this targeted, goal-oriented approach, wewere able to build our cultural capabilities while
getting the work done, without sacrificing one
at the altar of the other.

Stage 4: Integrating and Building
Over the past six months, we’ve entered the fourthand final stage of culture change. I suspect that by
the end of this stage, we will return full circle tomapping new cultural terrain and changing again.
At the moment, however, our attention is devoted
F I G U R E 6 The Anatomy Framework

to integrating and building on what we’ve learned
so far, even as we recognize that this round ofchange – like all rounds – has its limits.

We were able to build our cultural
capabilities while getting the work
done, without sacrificing one at
the altar of the other.
Our focus returns to the formal organizational
level, as shown in the Steering Mechanisms
Framework (Figure 3). Only now, with a good dealof cultural learning under our belts, we’re freer todesign formal strategies and structures that meet
our aspirations and the demands of our external
environment without having to work around orcompensate so much for the limits of our culture
and the relationships that define it.
In the past, for example, we might have hesitatedto pursue our deepest aspirations for fear of alienating potential investors; now we have a manifesto that captures those aspirations, and we’reengaged in an open dialogue with our investors
about how best to realize them. In the past, weviewed decision rights as a purely formal matter,with senior leaders needing to define them moreclearly; now we see that our assumptions about
our own power define the decision rights we feel

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more or less free to exercise, no matter what theformal reality says. In the past, we rarely discussed
these matters; now we discuss them with greater
competence and genuine curiosity.
Still, during this last stage, the limits of change arealso becoming more apparent. Cultural assumptions – though shared at one level – always carry amore variable, personal hue. Take two assumptionsat INNOVATE: I must perform well to succeed and
I must learn from mistakes and failures to succeed.
Though highly shared, these assumptions varyin their hold on people and in their meaning. Fora small number of folks, the two hold equal swayand their meanings peacefully coexist. These folks
believe excellence depends on learning from mistakes and failures, which leads them to take risks
and to talk about mistakes and failures openly.
But for the vast majority of people, the two assumptions don’t coexist quite so easily. While they
consciously believe it’s important to learn frommistakes and failures, they worry that these willreflect poorly on their performance. As a result,they hesitate to take risks, and they expend a lotof unnecessary energy navigating the tension
they perceive between the two assumptions.
For still others, the two assumptions are irreconcilable, leading them to avoid mistakes altogether
and to cover up their failures, making it hard forthem to learn or to improve their performance.
The problem, when it comes to culture change,is this: that last group, though small, makes itmuch harder for the middle majority to build
a culture that values performance and learningin equal measure and that has the cultural competence to constructively resolve any tensions
between the two. As a result, left to their own
devices, members of that last group will slow culture change down and ultimately define its limits.

reflections.solonline.org

Since we’re still grappling with this conundrum ourselves, we don’t yet have any good answers. In themeantime, we’re looking to the first group to encourage the middle majority to join their ranks bydemonstrating what’s possible. If that works, we’rehoping it will gradually shift the center of cultural
gravity more in the direction of high-performing
learners. But the data is not yet in on this approach,so it’s too soon to draw any conclusions – except
for one.
Culture change is a lot more complicated thanany of us would wish, yet wishing away thosecomplications only makes it more so. Given that,it’s best to engage them and see what you canmake of them.

A Brief Reflection on Selkirk and INNOVATE
A lot of time has passed since Kennedy’s Selkirk
experiment, yet few firms have learned its lessons.
Most still focus on the public face of a culture andleave its invisible core intact. Others make changes
at the formal level only to see those changes washedout by the deeply ingrained assumptions that inform
individual and collective behavior. Still others focus
on building culturally desirable capabilities in individual leaders, independent of the relationships inwhich they must exercise those capabilities, making
them difficult to use in the heat of the moment.
The experiment at INNOVATE suggests that byobserving and transforming relationships along
three axes – vertical, lateral, and external – you cansurface, examine, and alter the shared assumptions
that lie at the core of a firm’s culture. The approachat INNOVATE emphasizes the role relationships
play in translating formal designs into cultural
realities, and it puts culture change back in thehands of the people who create it. Everything I’ve
learned to date suggests that’s where culturechange belongs.3 O

F E AT U R E | S M I T H

ENDNOTES
1 For more writings on culture and culture change, see Geertz, C. (1973). The Interpretation of Cultures; Sackmann, S.
(1991). Cultural Knowledge in Organizations; Schein, E. H. (1985). Organizational Culture and Leadership; and Van
Maanen, J. (1988). Tales of the Field.
2 For more on Steering Mechanisms, see Smith, D. M. (2002). “Keeping a Strategic Dialogue Moving” in Simcic, P.,
Brown, P. & Wiig, R., eds. Corporate Communication: A Strategic Approach to Building Reputation. Gyldendal Norsk
Forlag. Also available at www.dianamclainsmith.com and www.actiondesign.com.
3 For more on how to apply the frameworks cited here, see Smith. D. M. (2011). The Elephant in the Room: How
Relationships Make or Break the Success of Leaders and Organizations. Jossey-Bass. You can also find resourcesat www.dianamclainsmith.com.

REFERENCES
Collins, J. C., & Porras, J. I. (1997). Built to Last: Successful Habits of Visionary Companies. Harperbusiness.
Hamel, G., & Välikangas, L. (2003). “The Quest for Resilience,” Harvard Business Review.
Kennedy, A., & Deal, T. (1982). Corporate Cultures: The Rites and Rituals of Corporate Life.
Lord, R.G., & Emrich, C.G. (2001). “Thinking outside the box by looking inside the box: Extending the cognitive
revolution on leadership research,” Leadership Quarterly 11, (4) pp. 551-579.
Nadler, D., & Tushman, M. (1997). Competing by Design: The Power of Organizational Architecture, Second Edition.
Oxford University Press.
Rhodes, L. (1986). “That’s Easy for You to Say,” Inc.
Schein, E. H. (1979). “Personal Change through Interpersonal Relationships” in Bennis, W., Van Maanen, J.,
Schein, E.H., and Steele, F.I., in Essays in Interpersonal Dynamics. The Dorsey Press, p. 129.

ABOUT THE AUTHOR
Diana McLain Smith is the author of T
(Jossey-Bass, 2011). She is also Chief Executive Partner

at New Profit Inc., has served as a partner and thought leader at the Monitor Group, and is cofounderof Action Design. Diana earned her master’s and doctoral degrees in consulting psychology at
Harvard University. diana@dianamclainsmith.com

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CO M M E N TA R Y 12.1

Commentary
ROBERT HANIG

In reflecting on some of my recent experiences with a number of global organizationsin the field of organizational learning, leadership, and cultural transformation, I havefound the most practical and well-informed clients are interested in improvement in
the following areas: results, capacity, and sustainability. Results constitute specific andmeasurable improvements in profitability, development impact, resource efficiencies,
etc. Capacity refers to the ability of the organization and its people to produce the results
themselves without high levels of ongoing external support. Sustainability is the ability
to not only continue and expand on initial improvements, but also to develop the insightRobert Hanig
and intelligence to discern, generate, and nurture the conditions necessary to create anenabling environment and to sustain competitive advantage.
Most, if not all, students and practitioners of organizational learning have concluded that improvement in thesethree areas requires a particular type and quality of organizational culture. At the same time, they are profoundly
frustrated as most of their attempts to define, generate, or influence this condition we call culture have
The principles, frameworks, andlanded somewhere on a scale between disastrous
illustrations in this article represent and mildly successful.

a significant contribution to ourability to understand and influence
the elusive and critical dimensionof organizations we call culture.

Diana Smith’s synopsis of Allan Kennedy’s Selkirk
experiment in “Changing Culture Change” rings true
to those of us who have been intimately involved inculture change efforts. It describes the overly familiar
experience that produces profound cynicism in all
but the most stubbornly optimistic. Through this case,Diana forwards the notion that cultural assumptions can only be changed through social experience, and that allsocial experience takes place in the context of relationships. Therefore, it is in the context of relationships thatpeople will either change or perpetuate their assumptions.
Rather than simply presenting a new and interesting theory, Diana names and explores some of the core
challenges and dilemmas of culture change. She suggests a way forward with a simple yet powerful frameworkthat shows how relationships translate formal strategies and structures into cultural realities and that outlines
the stages of culture change. The principles, frameworks, and illustrations in this article represent a significant
contribution to our ability to understand and influence the elusive and critical dimension of organizations wecall culture.
By revealing the fundamental components of personal and shared assumptions, their causal connections, andthe patterns of behavior they produce, Diana provides us with a new perspective, language, and set of practical

C O M M E N TA R Y | H A N I G

tools with which to grasp and shift the cultural realities that too often diminish our ability to realize ourpersonal and collective aspirations in our organizations, institutions, and communities.

Act Your Way into Believing Differently
One of Diana’s key observations, that it’s easier to act your way into believing differently than to believe your way into
acting differently, has proven to be particularly effective in my work and personal life. Robert Fritz, a colleague andauthor of numerous books on learning, creating, and change, expresses a similar principle in a different way:
Changes in reality precede changes in belief. Here’s a simple example of the power of this insight applied. Suppose
you were given the task of teaching someone to swim, a person who had a deep-seated belief that this skill was
impossible to learn. In this example, we have two choices – work on changing this belief or simply ask the person
to join us in the pool for a hands-on swimming lesson (practice in moving arms, kicking feet, and holding breath).
Good luck with the first choice, because for every argument we would offer explaining why it is possible for thisperson to learn to swim, he or she would respond with examples of why it is not possible. By opting for the second
choice – acting your way into believing differently – we never argue with or confront the belief but simply guide
him or her in practicing the new skills. It is difficult to maintain a belief that something is impossible once you
are actually doing it!
Examples abound of how this approach has been applied in organizational contexts, including the most extensive
leadership intervention in British Petroleum’s history.1 Despite skepticism by many BP senior executives, we wereable to produce unprecedented financial results, increase leadership capacity, and sustain effectiveness in many
parts of the business by using a radically new approach that included an in-depth relationship building/engagement process within and between key segments of the leadership population.
The success of this BP intervention also underscores some of the principles Diana explains in the INNOVATE story.
Because the intervention team was made up of leaders from all aspects of the business, the principle of “If you want
greater connection, then help make it happen” was particularly relevant.To ensure that our work was directly related
to the actual technical, organizational, and cultural challenges facing BP, we engaged leaders from many different
parts and levels of the organization in sponsoring and leading the core of the development and review process. In
this respect, another critical principle was that of “working through cultural assumptions and formal control structuresthat were making mutual control and responsibility for change difficult across levels.”“No problem can besolved from the samelevel of consciousness
that created it.”Am I Doomed?

In recent development programs that my colleagues and I have designed
and conducted for leaders engaged in organizational change initiatives, aprofound question has begun to surface frequently. In its simplest terms,
that question is, “Am I doomed?” or “Is there anything I can do to shift the
problematic social conditions of the larger system of which I am a part?”
The willingness to simply and honestly ask this question while suspending– Albert Einstein
the usual, often superficial responses can in itself produce a transformational moment. Coupled with our willingness to reconsider our commitment to our aspiration, to accept that our
implicit assumptions may be inadvertently diminishing our capacity to effect change, and to explore other approaches to our relationships, the possibility for transformational change becomes even greater. As described in

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the INNOVATE case, considering and experimenting with shared assumptions– in particular,“I must perform wellto succeed” and“I must learn from mistakes and failures to succeed” – demonstrates the profound implications that
this type of individual and collective inquiry and subsequent action can have on the quality of relationships,
on an organization’s culture, and on learning and growth in our own lives.

“In adaptive contexts, you
cannot abstract the problems
and challenges from the people
and systems that produce them.”

Beyond Abstraction

The principles, frameworks, and approaches that Diana
outlines in this article provide a coherent and accessible
explanation of the mechanisms from which seemingly
impenetrable sources of collective behavior emerge andare sustained. They also offer a language and practical2
approach for enhancing our critical relationships and creat– Ronald Heifetz
ing healthy cultures so that we are able to build our cultural
capabilities while getting the work done, without sacrificing
one at the altar of the other. Indeed, the serious application of these ideas and methods constitutes an effective
way of meeting the challenge of producing results, building capacity, and sustaining competitiveness in ourorganizations, institutions, and communities. O

ENDNOTES
1 Priestland, A., & Hanig, R. “Developing First-Level Leaders,” Harvard Business Review, June 2005.
2 This quote is from a personal communication, although similar ideas appear in all of Heifetz’s books, including
The Practice of Adaptive Leadership: Tools and Tactics for Changing Your Organization and the World.

ABOUT THE AUTHOR
Robert Hanig is director of RLH Consulting and a founding member of the Society for Organizational
Learning. He currently designs, directs, and delivers management and leadership interventions and programsfor the World Bank, the International Finance Corporation, and the International Monetary Fund.
robert@rlhconsulting.com

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F E AT U R E 12.1

Learning Lean: Don’t Implement
Lean, Become Lean
MICHAEL BALLÉ AND PETER HANDLINGER
Many leaders have tried to apply the “Toyota approach” to improve performance and financial results, yet
few have succeeded. Those who do have learned that they can never implement lean per se but rather muststrive to become leaner every day. According to Michael Ballé and Peter Handlinger, the “system” in “Toyota
Production System” is not a cut-and-paste set of practices, but a series of related learning activities aimed atdeveloping individual competence and teamwork. The authors use the example of a “lean” construction company to illustrate the positive outcomes that can occur when people observe worksite problems for themselves and struggle to find solutions together. Based on these principles, the authors identify four general
lessons for any CEO who hopes to achieve lasting results from lean efforts.

T

Michael Ballé

he CEO was amused. He was talking to a class of MBA students who
had come to visit a “lean construction company” and who appeared
disappointed by what they had seen: no value stream maps, no ubiquitous kaizen events, no lean roadmap. What was lean about this firm?
The only thing that drew their attention was the freestanding chart with a listof daily problems, causes, countermeasures, owners, due dates, and statuses.
Yes, the building site seemed moreorderly than they’d expected, but
In lean parlance, a sensei (ornothing overtly screamed “higher effimaster) is an executive coachciency.” Plenty of waste remained,
the students claimed.
tasked with teaching the leansystem to the company’s

The CEO, John Bouthillon, readily
senior managers.
agreed with them – the construction
sites were still full of waste, evenafter three years of steady improvement – but that was not the point. Lean, as
he now understood it, was not about eliminating waste to improve processes
per se, but about getting local managers to work hard at eliminating waste inPeter Handlinger
their areas in order to teach them to do the job better. This improved job performance then led to smarter processes, more satisfied customers, and an increased bottom line. To sustain
profitable growth, John needed managers who could solve immediate problems now and then learn
from their experience to improve conditions on their next project: change today to change tomorrow.

The CEO’s Work with a Sensei
During the last years of the previous CEO’s tenure, sales had skyrocketed with the housing bubble,
but because of exploding costs, the company actually lost money. With slow growth and low returns,

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the business was utterly unprepared for the market crash caused by the financial bubble’s collapse.
In taking over as CEO, John looked for a method tohandle the business differently. He read the books,
attended the conferences, and was keen to trylean in the construction world. Rather than go
down the path of least resistance and delegate
the lean initiative to his operations directors withthe support of outside consultants, though, John
decided to follow the advice common to all themain lean books: find a “sensei.”By spending time with the
management teams on site andlooking for obvious waste, theCEO had the perspective to spot
problems that the site’s management team didn’t easily see.
In lean parlance, a sensei (or master) is an executive coach tasked with teaching the lean system tothe company’s senior managers. Sensei differ fromtraditional consultants inasmuch as they teach but
do not implement. The sensei discusses current
conditions and defines the next step with theexecutives, who then have to figure out how tomake it happen. Bouthillon arranged to participate during a sensei visit to the shop floor of anindustrial company and subsequently convinced
the sensei that he was serious about doing leanin house. They eventually agreed that they would
visit a construction site in John’s company together once a month, and that John would commit to at least a site visit per week on his own.
The sensei’s first focus was “safety always.” Heasked the CEO to point out all potentially dangerous situations and then to discuss them with thelocal management team: Why hadn’t they seen
them? What would they do about them? After a
few months of this activity, the sensei then moved
on to “first-time quality.” So, when the casting isoff, can the wall be used for the next step without
rework? What would be the customer’s point ofview? John was surprised not to hear about value

reflections.solonline.org

stream mapping or kaizen events, but stuck to theprocess. The sensei also constantly badgered him
about the link between his financial results andthe physical conditions of the site: What did heneed to change physically to sell more? What were
the physical drivers to his costs? Could he see exceptional costs being accrued just by looking at
the construction site’s on-the-spot operations?

An Evolving Strategy
At first, Bouthillon felt frustrated, wondering
where the process was going and when he would
finally learn about lean, but then he observed thatthe company’s margin was steadily improving.
Analyzing previous projects, he found a degradationof margin over the lifespan of each, owing to unforeseen costs. Over the first year that John worked
with the sensei, the margin degradation slowed
considerably, generating a year-end profit (seeFigures 1 and 2). John was pleasantly surprisedand curious to learn what had happened. Other
than investing two days a week in visiting sites(which meant seeing every site every month) andarguing about safety and quality, he didn’t feel hehad done anything special that would explain thedramatic P&L improvement.
John eventually reasoned that by spending timewith the management teams on site and looking
for obvious waste, such as rework or rescheduling,he had the perspective to spot problems that thesite’s management team didn’t easily see or thatthey chose to ignore in order to get ahead withthe work plan. By challenging site managers onthese issues, he encouraged them to deal withproblems as soon as they appeared rather thanwork around them. As a result, the company saw a
reduction in the number of real fires that showed
up as extra costs in the accounts. As John persevered with this lean “Genchi Genbutsu,” or “go andsee” approach, the CEO also recognized that someof his site managers were learning and coming up
with new ways of dealing with their issues, in particular in the realm of subcontractor relationships.
In the past, interactions with subcontractors had
centered mainly on tough price negotiations andconflict management during the course of projects.

F E AT U R E | B A L L É A N D H A N D L I N G E R

FIGURE 1

PO Construction: Turnover* and Profit

100

5Turnover
Profit80

Millions of Euros

19

4

60

3

40

2

20

1

0

0
2005

2006

2007

2008

2009

2010

* The amountof money acompany makes
annually throughsales of products
and/or services.

2011

John Bouthillon takes over as CEO and starts his journey.

FIGURE 2

Target Versus Actual Profit of Construction Sites

100
In 2010, the2011 objectives
were tightened
to createa sense ofchallenge.

80

Millions of Euros

60

40

20

0
2008
-20

2009

2010

2011

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Furthermore, Bouthillon was surprised to findout that as he continued to visit the sites and workwith the sensei (who had by now added “lead-time
control” to “safety always” and “first-time quality”),
he’d progressively changed his mind about his
entire strategy. Rather than go after every possible

The vision kept emerging andrefining itself as project directors
worked on issues and experimented with new ways ofsolving problems.
deal in the hope of maximizing volume, he wasnow careful to choose projects according to thefirm’s capacity – and to protect his margins in doing so. Rather than poach project managers fromthe competition to staff extra projects, John formulated an internal plan to develop superior project managers. Rather than treat subcontractors
as a commodity, he now had a vision of supplierintegration built on mutual resolution of prob-

lems. In hindsight, this approach seemed obvious,
but he hadn’t held this vision in taking the job. The
vision kept emerging and refining itself as his project directors worked on issues and experimented
with new ways of solving problems. The leanapproach had become transformative.
At the outset of his lean journey, John had expected to learn new lean processes, but as things
progressed, he realized that to transform the company, he first had to transform himself: he had
to radically change his assumptions about whatmade his business successful. First, rather thandesign processes from the top and then findpeople to staff them, he realized that the morecompetent people become, the better they canorganize themselves and the processes they use.
Working on site with local managers to solve increasingly difficult problems paved the way forthem to learn how to organize better, whichthen “trickled up” to the company level.
Second, John learned that professionalizing managers was his responsibility. He now recognizedthat competence had to be bootstrapped on theF E AT U R E | B A L L É A N D H A N D L I N G E R

job, every day, through problem solving andsmall-step improvements.
Finally, the CEO found out the hard way that suchdaily learning routines are difficult to sustain andrequire specific organizational support, in thiscase, regular CEO visits to the sites and thestrengthening of the central engineering office
not to solve problems, but to teach workers at
the sites to solve specific technical issues bythemselves.

Four Lessons for Leaders
Toyota, the inventor of lean, never sought to implement lean per se; rather, it strives to become
leaner every day. John’s experience of leaning his
company reflects a deep truth in Toyota’s approachto performance: people, not systems, make products. The “system” in “Toyota Production System”
is not a set of practices to be copied and pasted,
but a series of related learning activities aimed atelimination of waste to improve quality, lead time,and cost performance.1 We have identified general
lessons that any CEO needs to face if he or she
hopes to get the expected financial results fromlean efforts.

Lesson #1: Lean Is a System of Related
Learning Activities
As many know, “lean” is the generic term used todescribe efforts to capitalize from Toyota’s example and apply its management lessons. Toyota is
unique in having, over half a century, the fastest
industrial growth in a mature market. From a local,
near-bankrupt, fledging automotive manufacturer
in the 1950s, it has grown to become the world’s
number-one automaker, redefining both productand processes. Its long rise has never been smooth
but rather a series of unexpected crises and innovative responses. To a large extent, Toyota is at its
most interesting when in trouble; its ability to rise
to challenges and respond in surprising ways ispart of what makes it special.
For example, in 2008 and 2009, Toyota was pressured to recall more than 10 million vehicles forpurported quality and safety problems. In theirbook Toyota Under Fire, Jeffrey Liker and Timothy
Ogden document that these concerns were overblown, as confirmed by findings from both the
U.S. National Highway Safety Transportation
Administration and NASA. After fining Toyota fora few defects that caused no accidents, the NHTSA
closed the case.

Toyota is at its most interesting
when in trouble; its ability to rise
to challenges and respond in
surprising ways is part of whatmakes it special.
In a personal communication, Liker stated thefollowing:
Perhaps the most interesting part of the story is
how Toyota responded. First, executives decided
not to point the finger at anyone else. Second,
they let the facts emerge from outside sources
as they realized their credibility was at a low
point in the United States. Third, they used thecrisis as an opportunity to reflect, find problems
they could constructively work on, and improve
themselves. The company made massive organizational changes to respond more quickly tocustomer complaints, including a major drive
to make each region of the world more selfreliant and empowered to make recalls immediately, even before an investigation by Toyotaof the facts.
Toyota came out of the crisis stronger. By 2012
. . . Toyota was back on track for record sales . . .
[and] once again . . . dominated the quality
awards in the United States.
One thing to note is that Toyota’s growth overtime did not occur following any technologicaldisruption, as in the case of the Microsofts andthe Googles. It rose to defeat the best players ina saturated, mature market. Toyota chose to forge
its own path and create its own engineering,21

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manufacturing, and management practice, which
it termed the “Toyota Production System” and the“Toyota Way.” This approach, which at any given
time produced “twice the output, half the effort,”2
has beguiled many researchers and spurred copycat attempts. Both people outside of Toyota andnew hires within the company have difficulty
grasping Toyota’s way of working. As one Toyota
vice president describes it, “When I joined, I already had 15 years [in the] automotive industry
under my belt, and when they told me I knew
nothing about building cars, I thought ‘yeah, right.’
It took me two years to realize that they were rightand that I had to do control-alt-delete and learn
everything from scratch.”3“We don’t have a manual. We dohave one golden rule: making
people before making parts.”
For the past 20 years, since Toyota’s uniqueness
was first publicized by Womack and Jones in thelandmark Machine That Changed the World, thelean movement has been trying to accurately
describe that secret ingredient. Many companies
have attempted to apply the Toyota approach.
Few have succeeded, although those that do, likeJohn Bouthillon’s company, do so spectacularly.

Lesson #2: Performance Is Driven
by People, Not Systems
Lean is generally understood as waste elimination:
the systematic reduction of non-value-added
activities. By projecting onto Toyota the Taylorist
perspective of specialists who design processes
for frontline workers to execute, a majority of firms
have interpreted lean as creating a staff structureof lean specialists who eliminate waste from operational processes by conducting lean projects.
Such cost-cutting approaches usually deliver
some benefits (as any Taylorist initiative will) but
rapidly become disappointing in terms of bottomline results and are never transformational: they
never make the company radically more competitive in its markets.

reflections.solonline.org

The logic seems sound. Everyone agrees that
better processes lead to better performance, andToyota’s processes are recognized for their superior
effectiveness, so let’s use the lean tools to design
Toyota-like processes and implement them toreplace the ones we have.

Better PerformanceyBetter Processes
Unfortunately, it is not easy to specify exactly
what constitutes Toyota-like processes. Although
the literature abounds with high-level principles,and consultants are ever ready with cookie-cutter
solutions, the processes are often hard to apply ina specific context. What is more, implementation
tends to be a headache, as people resist change(e.g., “not invented here” or “our situation is unique”)
and claim that the redesigned processes are poorly
thought through in the first place – often rightly so.

Better Performance

x

22

Lean
DesignBetterxx
Practice
ToyotaProcesses
Like
Process
In any case, it turns out that this approach is not
how Toyota developed superior processes. Whencoauthor of this article Michael Ballé first studied
how Toyota engineers implemented lean at one of
their supplier plants for a particular part, he observed them improving the supplier’s production
cell in a steady, step-by-step manner, reaching an
impressive 30-percent total cost reduction for thepart over two to three years. He assumed that the
Toyota engineers had a rulebook of what a good
process looked like and that they replaced the
supplier’s shaky process with their own better one.
But every time he asked the Toyota engineers forthe roadmap, they invariably told him that they
didn’t have one: they helped the supplier’s engineers solve problems as they appeared. Exasperated, the lead engineer eventually responded, “WeF E AT U R E | B A L L É A N D H A N D L I N G E R

Forty Years of Lean Visions
1980s – Kaizen Events: “Quality circles” were the first full-scale wave of TPS-born concepts tohit the West. This discovery created a broad enthusiasm for “kaizen,” a term coined by MasaakiImaï (1986) to describe Toyota’s unique shop-floor and team-based continuous improvement
process based on a number of standardized tools, such as “5S,” “kanban,” “SMED,” and “pokayoke.” Overall, every tool delivered on-the-spot results, but deploying the toolbox as a whole
failed to lead to either improved financial results or sustained performance improvement. Not
surprisingly, the enthusiasm faded. However, over time, the lean tools have become entrenchedwithin most industrial activities. All in all, the one large-scale effect has been that most corporations now accept as a given that they must have some sort of continuous improvement
program in place.
1990s – Lean Thinking: In their initial research, Womack and Jones were drawn to Toyota’s
superior processes for carrying out work. In their seminal book Lean Thinking, they introduced
the notion of value streams organized to deliver value to customers. Their focus on processes
has had a lasting impact on how managers look at their organizations and triggered a wave of
reengineering efforts to streamline processes, reduce hand-offs, and emphasize flow over point
optimization. This powerful conceptual framework has certainly changed many aspects of how
people think about their businesses but fell short of triggering the expected transformation toa full lean enterprise as defined by Womack and Jones. Value stream and process thinking is as
relevant now as it was 20 years ago, but it turns out that mastery of processes is just one aspectof TPS and, by itself, does not lead to a radically different industrial model.
2000s – The Toyota Way: As the research on Toyota’s unique way of doing things continued,
a broader understanding emerged that took into account not just how the company organized
its processes, but also how it actually managed its people. In another seminal book, Jeff Liker(2003) described a corporate culture of problem solving and employee involvement at all levels.
The emerging argument was that lean processes can only be maintained by a lean culture, andthat the establishment of such a culture depended on adhering to a number of principles
defined by the Toyota Way. It became clear that lean could not be achieved by having frontline
teams conduct local improvement workshops, or by having lean experts remodel processes
for better flow, but rather by involving managers in creating a culture of people development
through systematic problem solving – something of a tall order.
2010s –Toyota Kata: At the turn of the decade, Mike Rother (2009) narrowed down the specificity of Toyota’s culture to the deliberate use of “kata”: set behavioral patterns or forms that are
repeated as one would carry out a training drill. Rother argues that such repetition in turn creates the common TPS mindset that underlies Toyota’s lean culture. The kata approach is consistent with the strong emphasis on the teaching role of Toyota managers previously describedby Jeffrey Liker. Liker mentions a visit to Japan where he had the opportunity to interview Executive Vice President Atushi (Art) Niimi, who had recently returned from a position as presidentof Toyota Motor Manufacturing North America. Asked about the hardest thing to teach American workers, he answered without hesitation, “They want to be managers, not teachers.”4

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don’t have a manual. We do have one golden rule:making people before making parts.”
The other author, Peter Handlinger, worked for
Toyota for 14 years and became general manager
of production control until retiring early to teachothers what he had learned. Outside of the Toyota
environment, he keeps being surprised by how
little practical emphasis managers give to individual competence and people development. Allquestions he gets are about improving the system, the organization, the process, etc. He finds it
hard to communicate that the main focus of leanactivities within Toyota is on developing people.
Indeed Toyota’s lean model is close to:

Better PerformanceyBetter ProcessesyIndividual Skills and Know-HowyLean Practice“Toyota believes that competent engineers makegreat cars,” concludes a senior engineer working
on a joint-venture program between a French
automaker and Toyota, “not the system itself.”5
Although it should sound obvious, this paradigm
represents a radical shift. After more than a century of Taylorism, we are all convinced that thesystem’s design, not individual workers’ talents,
explains performance. The thought is that individual talent is nice to have, but too ephemeral torely on. Furthermore, after half a century of financial management, we are also convinced thatsystems should be optimized for cost reduction,
not for overall performance. Toyota looks at it theother way around: process performance is the
key to lower costs.
Contrary to common opinion, we do not believethat Toyota’s superior processes are the result ofsuperior process design rules, but stem from thecompany’s unique system of developing individ-

reflections.solonline.org

ual competence and teamwork in order to getskilled individuals to jointly create superior processes to respond locally to specific situations.
Competent people – not systems – make outstanding products or deliver superior services.
Toyota veterans recount four sets of skills being
constantly drummed into them:t How to analyze one’s own work: A numberof standard analysis tools help all employees
analyze their own work in detail.
t How to see the waste one generates: Outof these analyses, people are trained to see thewaste inherent in the way they do their workand the waste their technical choices generate
on other functions. No blame is attached to thisnotion of “waste,” just the belief that no process
is ever perfect, and consequently one canalways find some form of waste to eliminate.
t How to solve problems at the root to further
one’s deep knowledge: When problems occur,
employees at Toyota are trained to react immediately to return conditions to a normal situation.
Beyond that, they also learn to ask “why?”
repeatedly until the root cause of the problem
emerges. The immediate aim is to solve problems so that they don’t crop up again in the
future, but, more profoundly, this practice isabout developing deep knowledge of the job.
t How to solve problems with colleagues fromother functions: Adult learning is no longer
about filling in a blank slate – the slate is alreadyfull. Adults learn by confronting their perspectives with others and seeing their beliefs fromanother’s point of view. “Teamwork” is about
accepting the individual responsibility to solve
problems by taking into account the perspectives of other stakeholders and working withthem to find the solutions generating theleast collateral waste.

Lesson #3: Learning Must Occur on
the Job, Everybody, Every Day
The underlying assumption is that the more competent people become, the better the processes – andoutcomes – they can create. Their individual competence guarantees that changes to the process

F E AT U R E | B A L L É A N D H A N D L I N G E R© iSstockphoto.com

are actual improvements, as opposed to randomchanges. Their increased competence also makes
improvement stick, as workers understand why
and how they should now work differently.
“Learning by doing” is a central piece of lean management (with “go and see” and “respect for people”).
Contrary to what usually happens in organizations,the learning by doing process is not left to chance
but is actually managed in three broad steps:t Learning from repeating standard steps
in sequence: The most basic form of learning
occurs through repetition. Jobs are definedaround “standards,” a way of doing the job that
we know from experience works best. By following the standards with care, we learn to do
the job better and better, which leads to “economies of repetition.” We also learn to identify
problems more easily, since deviations fromthe standard become visible.
t Learning from solving local problems
through kaizen: Kaizen – small-step improvement – is about solving small, local problems
that get in the way of performing to the standard.
At this stage, we don’t attempt to redesign the

The more competent people
become, the better the processes– and outcomes – they can create.
entire process. The aim is to understand theroot cause of the problems in the existing process and solve it. Doing so requires teamwork
and ingenuity, as it’s often tempting to remove
the existing approach and invent a new process. Giving in to this temptation stops thelearning and keeps us from developing a
deeper understanding of what is currently
going wrong.
t Learning from kaizen activities to radicallychange the process: As repeated kaizen activities produce local innovations, the right conclusions can now be drawn to radically change
the existing process, involving other functional
specialties. For instance, a new plant design
should incorporate all the ideas generated bykaizen in existing plants, and so on. Radical
process change is about drawing the rightconclusions from local problem solving.

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TPS as a System of Visualizing Workand Revealing Problems
As a training system, TPS has three fundamental components:(1) an ideal that serves as a “North Star” to give a direction toprogress, (2) a practice of workplace tools to sustain step-bystep improvement, and (3) a tradition of relentless learningthat happens by working with people to encourage open
minds and teamwork.
t The Ideal: Complete customer satisfaction through complete employee engagement is leveraged by three coreideas: right first time, just-in-time, and use your ideas not yourmoney. TPS defines an industrial ideal where products are
made 1x1, with 1x1 quality confirmation, and where frontline employees are developed to the fullest of their abilities
by participating in the running and improvement of theirown workspace.
t The Practice: TPS provides a toolbox to make problems
visible on the shop floor. The TPS does not offer suggestions for a “better process.” It proposes techniques to makethe process visible in order to highlight problems. Throughkaizen activities, workers themselves can contribute to
the design of their own workplace and collaborate withcolleagues from other functions.
t The Tradition: Most of the verbal anecdotes about the
TPS masters of old are not about the brilliant process solutions they came up with, but about the great challenges
they offered their students. Mr. Hayashi, currently one of
Toyota’s top TPS experts, recalls how he was trained by
Mr. Ohno: “I was really afraid of Mr. Ohno when I wasyoung. But I think he was developing thinking people. He
never gave us the answer. When he gave us an assignment,
he would just stand by and watch us fail, even if he knew
the answer. . . . Mr. Ohno scolded us after first making us
really think and struggle, and this helped us to come toa deeper understanding.”6
The fundamental assumption of the TPS is that people learn
when they see problems for themselves and struggle to findsolutions together. The “system” in TPS serves as a cognitive
scaffolding to help employees go up the learning curve bycreating space for them to “go and see” problems where theyoccur, supporting them with standard problem visualization
techniques, and spurring them to learn through the challenges driven by their sensei.

reflections.solonline.org

Learning thus occurs on the job, in the course of a
day’s work. Such a discipline of learning by doing
flies in the face of the general practice in which a
new manager comes in with preconceived ideasof how the process should run (usually basedon what she did in her previous job) and then
imposes the radical change upfront and tries tostabilize and standardize the new process. Thisstabilization and standardization seldom happens,
because workers have no logical reason to believethat the new process actually solves any real problem in the specific situation, beyond reflecting
the new manager’s prejudices and authority. Leanpractice works the other way around, with firstvisualizing processes and standards, then solving
problems through kaizen, and eventually improving company policies by getting managers towork together toward a shared vision of “ideal
conditions.”
Toyota suppliers are often surprised when theycall for help with process improvement. The firstthing Toyota engineers do is ask for the existingprocedure (if not formulated, they will write it
down on the spot) and then check whether thisprocedure is being followed. The suppliers see thisas a complete waste of time. They know their process is bad and expect that Toyota will have a better way to do things, so why should they spend
time and effort being consistent about a process
everybody knows is wrong? For their part, Toyota
engineers will claim that they don’t have a specificanswer in mind, so they will first try to make theexisting process work consistently, which will
highlight the problem areas for kaizen activities
and eventually lead people to learn how to completely redesign the process. Both sets of engineers work in radically different paradigms, andit’s hard to talk across the gap.

Lesson #4: The Organization’s Design Must
Support On-the-Job Learning
We all enjoy learning when we get to pick the
topic (usually something we already know andwant to learn more about) and the pace oflearning (when we feel ready). The experienceof working with true sensei is invariably

F E AT U R E | B A L L É A N D H A N D L I N G E R

uncomfortable because not only do they choose
the topic, but they get you to try something
before you feel ready; they control your learningpace. The sensei’s role is to be the navigator
through the world of learning.
In Japan, the responsibility for staff development
rests squarely on the manager. Consequently,
teaching by doing, in a large part, defines the
managerial role. The company is organized aroundknowledge lines in narrow functions, and managers
are expected to keep a technical edge over theirstaff members in order to teach them standards
and kaizen. Within Toyota-owned plants outsideof Japan, most managers, starting at the supervisory level, have a Japanese coordinator fromthe “mother” plant to teach them standards
and kaizen.
The new site is integrated into the Toyota Way by
predominantly using resources from the motherplant, which is in turn held accountable for the
integration process – a process that could extend
over several years or sometimes decades. Toyota

TABLE 1

Roles in Support of the Toyota Way
Rhythm

Level

Topic

SenseiMonthly

Top Management

Strategic
challenges

Executive
Coordinator

Daily

Operations management

Lead-time
reduction

Coordinator

Daily

Frontline management

Variation
reduction

Hands-onSpecialist

Work cycle

Frontline worker

Movement
training

staff members are allocated to the plant being
integrated (the “local” plant); these are “coordinators” and “hands-on specialists” (mainly from themother plant). Coordinators are essentially there
to coach local staff in the Toyota Way, whereas thehands-on specialists focus on narrow technicalaspects. Thus the coordinators, in essence, become part of the local plant’s management structure; the hands-on specialists’ tenure is more project based. The roles are broadly summarized inTable 1.

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Coordinators as Mentors in South Africa
PETER HANDLINGER
It is easy to imagine the coordinators as being infallible– these are, after all, the so-called disciples who go topropagate and nurture the Toyota Way in foreign lands.
And so it was in one of the local Toyota plants. When thecoordinators arrived, people’s first impression of them
was that they were human, and like any humans, they
had different personalities. Both positive and negative
relationships developed between the local partners
and the coordinators.
Nevertheless, little by little, all documentation started
taking on a similar appearance – Toyota’s ubiquitous
A3 Report – the plants started looking better, safety
improved through the “5 Whys,” more communication
between the plants took place, the new automobile
model introductions became less chaotic, and above
all the defects per unit (DPUs) dropped significantly
over a period of 4 or 5 years. Of course, the local plantpreviously produced high-quality items, but only ondays when all the cogs of the process magically meshed.
The realization that people – and not machines – built
cars was one of the profound insights that arose from thementoring influence of the coordinators. They achieved
this insight through a strong emphasis on process –problem solving, attention to detail, “go and see” practices – and inculcating a sense of urgency in their local
partners. The local partners were then expected to drive
this new way of thinking and behaving within theirlocal structures.
Where the relationships were good, the transfer of the
Toyota Way from coordinator to local manager to local
staff proceeded smoothly and quickly. On the other
hand, where the relationships were bad, this transfer
was inefficient and behavior changed rather slowly, but
it did change in the long run. What struck all the local
managers though was the need to grow the people –not an easy task. However, the techniques of the Toyota
Way gave structure to developing staff. Local managers,
too, had to walk the talk, probably the biggest mindset
change of all.

reflections.solonline.org

In terms of organizing themselves, the coordinators
generally focus ont QSPCMFNTPMWJOHCBTFEPOUIF5PZPUB8BZt UFBDIJOHUIFNBOBHFNFOUWBMVFTBOEBUUJUVEFT
of the Toyota Way, andt IFMQJOHUIFMPDBMTUBGGBDIJFWFTFMGSFMJBODFJO
autonomously performing to Japan’s standards.
Coordinators rigorously “teach by doing” by working with local staff to jointly identify problems andthen set targets. Debates are often heated, but theimportant issue is that the team determines thecountermeasure together. This process, in turn,reinforces the cycle of learning by doing, since
the questions asked are primarily process and notcontent driven. People have little chance of jumping to solutions and thereby missing the root cause.
In this process-driven environment, the local staff
is dragged along until, through repetition, theapproach becomes almost second nature. It canbe said that a coordinator’s real role is to turnevery employee in a thinking machine capableof constant learning.
For instance, Peter’s direct experience of working
with coordinators in one of the plants outside ofJapan showed that they repeatedly focused on
the following concerns:t -JUUMFDSPTTEFQBSUNFOUBMDPNNVOJDBUJPOt 1PPSWFSUJDBMBOEIPSJ[POUBMCVTJOFTT 
cooperationt /PUFOPVHI:PLPUFO TIBSF DPQZ BOELBJ[FO practicet -BDLPGWJTVBMJ[JOHTLJMMT DVSSFOUQSPCMFNT 
standardized operating procedures, progress/
problem-solving reporting)t *OTVGGJDJFOUDPOGJSNBUJPOMPDBMNFNCFSTUFOE
to be too optimistic and don’t confirm the work
resultst 5PPNBOZXPSLBSPVOETUBLJOHUIFFBTZXBZUP
solve problems (not enough thorough “go andsee” practices)t 6OEFSEFWFMPQFETFOTFPGVSHFODZAnybody with some corporate experience willrecognize these symptoms; they are not unique.
What is unique, however, is the manner in which

F E AT U R E | B A L L É A N D H A N D L I N G E R

the coordinators train the local staff in these aspects, which is how they develop the associatedtechnical skills – not the other way round! The
repeated “doing” of the above items (the “kata”
described by researcher Mike Rother), especiallythe final four, leads to the acquisition of more indepth technical expertise, greater teaching skills,
and more effective and quicker problem solving.

Lean principles such as just-intime and built-in quality are notanswers in themselves, but serve
to guide the company as it
improves.
Development of the Kaizen Mindset“But what if I train my people and then they up
and leave,” a CEO once blurted out to a lean sensei.
“What if you don’t and they stay,” answered thesensei. Having visited many Toyota plants acrossseveral continents, we keep being surprised by thefact that Toyota employees rarely, if ever, mention
either TPS or lean. Much like John Bouthillon’s experience, all levels of employees readily expressed
the constant challenge of being required to solve
problems and think deeply. Lean principles suchas just-in-time and built-in quality are not answers
in themselves, but serve to guide the company
as it improves.
As Toyota veterans have claimed from the start,
CEOs are wasting company funds in trying to copy
and implement Toyota-like processes. The sensei’s
consistent message is that they should instead
develop the kaizen mindset in every employee.
Sustained financial results are not the outcomeof repeated cost cutting, but of a steady focus
on process performance. Process performance,in turn, results not from smarter process design,
but from constantly teaching employees how tobetter react to adverse and unexpected events– which requires organizing to support day-today learning. More competent people working
together invent better processes and find

“Why Are They Always Asking
Me Questions?”
TRACEY RICHARDSON
I consider my time with my Japanesetrainers and coordinators to be a priceless opportunity. At the time, I wasyoung and didn’t realize the importance of the thinking process they
were conveying to me and others
daily. If you were to ask me at thetime, I would say the coordinators
could be rather annoying in asking so many questions about
how we analyzed a problem, why we viewed it as a problem,
and whether it was measurable, all the while demandingthat we follow a good process. I often asked myself, “Why are
they always asking me questions?” and “Why are they neversatisfied with the current situation?” It took me several years
to understand the answers to those questions, and by thetime I realized their importance, I was a leader in the organization. I often wish I had those opportunities that I somewhat dismissed 22 years ago played over for me again today.
What I took away from my experience with the coordinators
was that they were living the Toyota Way through their daily
actions and the questioning. Their efforts were all about
trying to enable us to eventually become mentors utilizing
the same process. I have labeled the rituals that they practiced as “tangible actions” to “bring to life” the principles.
By asking us the right questions, they were able to persistently align our thoughts with the goals of standardization(Define-Achieve-Maintain-Improve). Through these actions,
we put together the highest-quality vehicle in the market
in 1991. This achievement meant so much to us as workers,
who all started with minimal or no experience in this culture,methodology, or field. To me, it is a positive reflection on thethought processes that they were able to lead us to excellence. The experience wasn’t always pleasant, yet we learned
to look to our coordinators for guidance no matter how frustrating the language barrier may have been. Those first years
shaped my thoughts and reactions for the future as a leader
in the organization as well as my consulting role today.

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reflections.solonline.org

Process performance results not from smarter process design, butfrom constantly teaching employees how to better react to adverseand unexpected events – which requires organizing to support
day-to-day learning.
unexpected solutions to problems that competitors consider intractable. The practice of daily improvement is the key to increasing every person’scompetence, both in terms of thoughtful reactions as well as deeper understanding of their job.
To a large extent, Toyota has reinvented work bychanging:

JOB = WORKtoJOB = WORK + KAIZEN
Practicing this approach every day also opens
new areas for development. Whereas John

Bouthillon first envisaged using the lean toolbox
as a method to improve his company’s dismal
margins, he ultimately found that by coaching his
people every day, he tapped into a bottomlesswell of creativity. He realized that liberating people to improve their processes also affects the end
product. And, indeed, in a time of dire recession in
the construction industry, John’s order book is indanger of overflowing: customers have responded
to quality much faster than he had thought. As
Henry Ford once said, two of the most important
things don’t appear in a company’s books – itspeople and its reputation. Unlike machines orsystems, people add value and can learn how
to add more. O

tos.c
o

kpho

© Th
inkst
oc
m

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ENDNOTES
1 From Taiichi Ohno’s preface to the first Toyota Production System booklet. He also explicitly stated that
TPS should reflect the Scientific Mindset: on the shop floor, it’s important to start with the actual phenomenon
and search for the root cause in order to solve the problem.
2 Spear, S. (2009). The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat theCompetition. McGraw-Hill.
3 Personal communication
4 Liker, J., & Hoseus, M. (2008). Toyota Culture: The Heart and Soul of the Toyota Way. McGraw-Hill.
5 Private communication
6 Toyota’s Top Engineer on How to Develop Thinking People

REFERENCES
Imaï, M. (1986). Kaizen. McGraw-Hill.
Liker, J. (2003). The Toyota Way. McGraw-Hill.
Liker, J., & Hoseus, M. (2008). Toyota Culture: The Heart and Soul of the Toyota Way. McGraw-Hill.
Liker, J. & Ogden, T. (2011). Toyota Under Fire. Oxford University Press.
Rother, M. (2009). Toyota Kata. McGraw-Hill.
Spear, S. (2009). The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition.
McGraw-Hill.
Womack, J., & Jones, D. (1990). The Machine That Changed the World. The Free Press.
Womack, J. & Jones, D. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation(revised and updated). The Free Press.

ADDITIONAL RESOURCES
Blogs
Gemba Coach Column – http://www.lean.org/balle
How to Implement “Lean Thinking” in a Business Blog – http://thetoyotagal.blogspot.com
The Lean Edge Blog – http://www.Theleanedge.org
VideosLean Thinking – Respect for People – http://www.youtube.com/watch?v=XaRdCO6qHuY
Definition of Kata – http://www.youtube.com/watch?v=14ckS_vd4PU&feature=related

ABOUT THE AUTHORS
Michael Ballé, PhD, is cofounder of the Institut Lean France and associate researcher at Télécom
Paristech. He is also coauthor of 5IF-FBO.BOBHFSand 5IF(PME.JOF, for which he received the
Shingo Prize in 2006 and 2011. Michael writes the weekly Gemba Coach column for the Lean
Enterprise Institute. m.balle@orange.fr
Peter Handlinger, MSc, BSc (Eng), spent 14 years at Toyota South Africa, where he served as Group
Training Manager, head of Project Planning and Management, and finally General Manager within
the Production Control and Logistics Division. Peter currently coaches and mentors businessleaders in “leaning” their operations. peter@turnstonegroup.co.za

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CO M M E N TA R Y 12.1

Commentary
JEFFREY LIKER

T

Jeffrey Liker

he excellent article by Michael Ballé and Peter Handlinger reveals deep insights into
the nature of the Toyota Production System (TPS) and the Toyota Way that the vast
majority of the organizations with lean programs unfortunately miss. Coincidentally,
my first book for the general public was called Becoming Lean.1 In it were stories of companies that implemented the TPS by focusing on the process of learning. Ballé and Handlinger,
though, have a deeper vision of what it means to “become lean.” It goes beyond the organization as it makes progress in learning lean and penetrates to the individual process of
self-discovery, as people redefine themselves and their relationship to the organization.

I more recently came to similar conclusions when writing a book about lean leadership with Gary Convis, a
Toyota veteran.2 The first stage of our model is “self-development.” Leaders must change their mindset, shiftingfrom the view that the organization is like a machine with parts to be manipulated through programs, to thatof the organization as a collection of living beings who must
be taught and developed to continually improve and adapt
Those who have worked for
to a rapidly changing environment.

Toyota plants outside of Japan
have always seemed puzzled
by the common Western interpretation of TPS as a toolkit.

Convergence of Lean with Organization
Development

As the paradigm of lean shifts from that of a toolkit to fix
processes to that of a process of developing people to build
a learning organization, a natural convergence with the fieldof organization development occurs. Shared concepts include systems thinking, personal development, organizational learning, shared purpose, shared vision for the preferred future, experiential learning, leaders as developersof learning organizations, and groups of people taking responsibility and control of their processes to continuously improve them.
On the other hand, differences exist. Most commonly, OD consultants use small- or large-group interventions tomove individuals and the organization to new ways of thinking and working together. Lean sensei, on the other
hand, go right to the gemba (where the work is being done) to teach gradually through a process of challenging
and questioning to get people to learn by doing and thinking differently about their work processes.
Concepts such as standardized work are central to lean, but not as central to OD. In lean, standardized work is seen
as a clear and visible aspiration for all to do the job the best way we know how and then incorporate our creativeideas to improve how to do it – as a group learning together. In this context, standards are considered sharedunderstandings that are central to organizational as opposed to individual learning.

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Small Changes Can Lead to Breakthrough Changes
At Toyota, the method of teaching through a master-apprentice relationship can be traced back to its founder,
Sakiichi Toyoda, who learned carpentry from his father. He later used that skill to build revolutionary automatic
looms to simplify the labor involved in making cloth. Toyoda always preached that the purpose of his labors andcompany was to benefit society through disciplined, hard work, a strong vision of success, and daily kaizen,with small changes adding up to breakthrough changes.
As the loom company eventually spun off an automotive company, the organization built on the original corevalues and principles. The central importance of creativity and innovation that comes from developing exceptional
people was always the centerpiece. For this reason,
those who have worked for Toyota plants outside of
The reason quality circles failed
Japan have always seemed puzzled by the common
Western interpretation of TPS as a toolkit.
in many companies was that they

were not led well, people in circles

I particularly loved one sentence in this article: “Thewere not taught deeply, and‘system’ in TPS serves as a cognitive scaffolding to help
companies generally misunderemployees go up the learning curve by creating space
for them to ‘go and see’ problems where they occur,stood their purpose.
supporting them with standard problem visualization
techniques, and spurring them to learn through thechallenges driven by their sensei.” Toyota did in fact create a unique system in TPS that constantly challenges
people to grow and develop. For example, as you reduce inventory, you lower the safety net, and even small
problems can shut down production. This minuscule margin of error creates a sense of urgency to find andsolve problems, which develops people so they think more deeply.

True Quality Circles
The authors also refer to “quality circles,” a concept that represents one of the most egregious ways in which Westerners missed the entire essence of the Toyota Way. In the 1980s, in response the “Japanese challenge” of higherquality products at lower costs, numerous companies tried to learn Toyota’s methods. Quality circle programs
became a centerpiece for many, who later found that the programs failed and shut them down. The reason theyfailed was that they were not led well, people in circles were not taught deeply, and companies generally misunderstood their purpose. The misunderstood purpose was to engage employees in dramatically improving quality, with theassumption that you could get them a little problem-solving training, put them in teams, and start counting the money.
In contrast, to this day at Toyota, quality circles are still alive and well and considered one of the best training
grounds for kaizen. Team members who work in production are regularly taught kaizen by their group leaders, whohave in turn been mentored by their seniors. Toyota quality circles are one additional mechanism for learning, butthey take place outside of normal work and provide production team members with an opportunity to work on
bigger projects that go beyond their own jobs. They do in fact lead to better quality, safety, and cost reduction
but these are almost incidental. The real purpose is developing people.

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A Process of Daily Discovery
Throughout the article, Ballé and Handlinger highlight Toyota’s focus on daily kaizen – the practice of making small,quick changes. While this may seem contradictory to systems thinking, in reality, it reflects a deep part of the Toyota’ssystems paradigm. The company holds the genuinely humble view that we can never know exactly what the futureholds, even tomorrow. Any long-term vision is a broad view of what we hope to achieve, but getting there is a process of daily discovery. We must take small steps, reflect on them,learn from them, identify a next step, and gradually work our way
Any long-term vision is ain the general direction of the vision.

broad view of what we hopeto achieve, but getting there
is a process of daily
discovery.

It is a process of learning by experimentation. Small, incremental
changes lead to large systemic change tied together by a vision,
shared purpose, and measurable targets aligned toward accomplishing a single goal. This is the true essence of “becoming lean.”

ENDNOTES
1 Liker, J. (editor). (1997). Becoming Lean: Inside Stories of U.S. Manufacturers. Productivity Press.
2 Liker, J., & Convis, G. (2011). The Toyota Way to Lean Leadership, McGraw Hill.

ABOUT THE AUTHOR
Jeffrey Liker is professor of Industrial and Operations Engineering at the University of Michigan. He is authorof5IF5PZPUB8BZ and nine other books about lean thinking and Toyota’s way of developing people andculture. liker@umich.edu

F E AT U R E | K A N T O R

F E AT U R E 12.1

Leadership for Our Times:
The Leadership System Model
D AV I D K A N TO R
In the face of a performance crisis, organizations meet with an essential decision: delve deep into theirown workings to uncover the complex web of forces driving their decline or place their hopes and fears in
the hands of a heroic savior. As the rash of CEO turnovers in the last five years powerfully demonstrates,
the white knight approach is the prevailing panacea. Perhaps the hangover of those childhood fairytales
compels us to so stubbornly cling to the myth of the hero who charges in to save the day. Yet, as experiencehas demonstrated time and again, savior CEOs rarely live up to expectations. In this article, David Kantor
offers an original argument for replacing the CEO-as-savior model of leadership with one that comprises
a system of interconnected leaders with equivalent but widely varying sets of capabilities.

M

any advances have been made in recent years toward a more
inclusive understanding of what constitutes “leadership.” Despitemuch publicity and widespread propagation of the insights
developed by theorists such as Collins, Gardner, Goleman, andHeifetz, a particular kind of leader continues to dominate the attention of corporate boards and the American press – the “charismatic” leader or the “savior.”
Even as the demands and complexitiesof leadership have widened, requiring
In contrast to the traditional
David Kantor
both the analytic and the intuitive, theapproach, I believe thatscientific and the spiritual, one element has remained constant:the centrality of a heroic individual.
effective leadership forour time is a collective

What this model cannot satisfactorily address is how rapidly andphenomenon rather thandramatically situations can change, suddenly rendering yesterday’s
perfect leader obsolete. Under the current model, organizations
an individual one.
in this situation are faced with two options: (1) work through thecrisis with the current leader, although the outcomes may beless than optimal; or (2) “cast out the old and bring in the new.” Neither is truly a good option. The
former choice places a tremendous burden on leaders to step up and meet the new challenges, however
equipped their leadership is to handle them. As we have seen, this is often a recipe for disaster, plunging
both the leader and the organization into despair. The latter choice, a path more often taken, is costly,
time consuming, and sacrifices wisdom for momentary fit.
In contrast to this traditional approach, I believe that effective leadership for our time is a collective
phenomenon rather than an individual one. It is therefore to an organization’s advantage to nurture a
range of leadership and to structure authority in a way that encourages the right kinds of leaders to

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The new model changes the focus from a powerful individual, usually placed on an unrealistic pedestal, to a team of leaders who constitute a Leadership System. I argue that only a system can havethe acute sensitivity necessary to anticipate thosedreaded external forces and internal realities that,in the old model, continually catch organizations
and their leaders off guard.

The Leadership System
While the Leadership System, as I envision it, values laterality and collective authority, it does notignore the need for hierarchy. Indeed, every one of
the leaders in the system is periodically expected
to step forward as principal leader when circumstances require. Members of the Leadership System work collaboratively, share power, anticipate
and manage organizational crises, and bring theirindividual and collective strengths to bear uponorganizational issues.
A Leadership System is very different from theheroic model of leadership in at least four powerful respects.
© Thinkstockphotos.com

The new model changes the focus froma powerful individual, usually placed on an
unrealistic pedestal, to a team of leaders
who constitute a Leadership System.
step forward just as they are needed and to cede
their power just as fluidly when the moment has
passed. I call this new model of leadership a Leadership System. A Leadership System is an alternativeor adjunct to lines of authority and responsibility
based in hierarchy. In its pure form, it would haveat least five leaders who represent unique formsof leadership, what I refer to as Performance,
Vision, Wisdom, Citizen, and Exit Leaders.

1. How members see themselves and their roles
A Leadership System is not a traditional leadershipteam, with each member taking responsibility for
managing a portion of the organization. It is ateam of leaders who collectively take responsibility
for the whole organization. Team members arecommitted to this concept and see themselves
playing this systemic leadership role.
2. Its range of capabilities
The Leadership System is a team of leaders that,by training and by design, possesses capabilities
needed for almost every conceivable organizational eventuality. The leaders exhibit a range ofintelligences – rational, emotional, moral, social,and structural. They have been trained to keep
conversations on difficult issues productive andon course. They have learned to think systemicallyand become masters of systemic awareness of
their company.

F E AT U R E | K A N T O R

As their organizations evolve, Leadership Systemteam members know how all the major parts –processes, key teams, various divisions, and therank and file – are functioning within the system
to both good and ill effect. They can focus on thewhole system, see how it is working or not working, and design corrective interventions. Leadership System members must have a broad anddeep repertoire of actions, operating styles,
approaches to problems, uses of language, andways of being with their colleagues.
3. Its place in the organizational design
In its purest form, the Leadership System occupies
a different place in the organization’s architecture
than does a traditional leadership team. While a
traditional leadership team reports to the CEO, theLeadership System is designated to collectively
and systemically lead the organization.
4. Its collective intelligenceThrough all of the above – a different identity, abroader range of capabilities, a new architecturaldesignation – coupled with intensive training in
how to work effectively in a Leadership System,
team members develop an amalgam that enables
them to function at a high level. They develop acollective intelligence – a state in which the wholeis truly greater than the sum of its parts. Clearly, a
traditional executive team is one thing; a Leadership System is something quite different.
In short, a Leadership System will be much more
effective, affective, pliable, and graceful in dealing
with the myriad of complexities presented by thecurrent and future organizational environment.

Five Unique Leadership Pathways
In this vision of a Leadership System, five leader
types constitute the most whole and effective system; I call these the Five Leadership Pathways. Eachof the five leader types capitalizes on a leader’snatural propensities and orientations. Each of thepathways makes important contributions to organizational health and success. And, in this model,
for a well-functioning leadership system to exist,
all leadership types are required.
Leadership for Our Times—The eadership System

Performance Leaders
These leaders are the guardians of the company’s
profit statements. They are ever mindful of, but
not obsessed with, the short term. They lead thestruggle to sustain the organization’s economic
viability, yet value the creative tension between
short- and long-term thinking and acting.
Performance Leaders succeed not only becauseof charisma and drive, but because of superior
results in the pursuit of competitive success.
Because they deliver extraordinary performancein their chosen arenas, Performance Leaders (Jack
Welch of GE is an outstanding contemporary example) often command a passionate following.
They are seen as cultural heroes who have earned
the rights of followership.

Performance Leaders succeed not
only because of charisma and drive,
but because of superior results inthe pursuit of competitive success.
On the positive side of the ledger, Performance
Leaders:t $BSSZUIFDPNQBOZXJUIUIFJSIJHIFOFSHZt %FNPOTUSBUFDPNGPSUJOQPXFSSFBMNTBOE
high-stakes situationst $BOBDUEFDJTJWFMZ FWFOVOEFSQSFTTVSF
t %PXIBUUIFZTBZUIFZXJMMEPBOEBSFIJHIMZ
accountablet "SFXJMMJOHUPUBLFSJTLT TUBOECFIJOEEJGGJDVMU
decisions, and take full responsibility for theirconsequencest 8FMDPNFIBWJOHUPNBLFUPVHIEFDJTJPOT
and do so with ruthless honesty
At the same time, they possess certain liabilities.
Performance Leaderst "SFIJHIMZDPNQFUJUJWF QBSUJDVMBSMZXIFOJU
comes to resource allocationt $BOCFDPNFDFOUFSFEPOHSFFEBOEQFSTPOBMHBJO
t .BZEFWFMPQBiDSJTJTNFOUBMJUZwoHFUUJOH
hooked on going from crisis to crisis, someof which they create so they can fix them

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reflections.solonline.org© Thinkstockphotos.comt 3VOBIJHISJTLPGCVSOPVUt 5FOEUPSFMZPOTZNQUPNBUJDPSRVJDLGJYTPMVUJPOT
rather than intervening in the larger systemt $BOCFDPNFBVUIPSJUBSJBOXIFOUIFZEPOU
mean to be (“Just get it done!”) or lack compassion (“Don’t be a baby”) when critical work
must get done

For Citizen Leaders, the company
itself is a product; they dedicate
themselves to developing theorganization and its culture.
Almost all leaders begin their careers as Performance Leaders; it is in effect a rite of passage inthe leadership arena. Some leaders, however, will
choose, because of their natural inclinations, toultimately pursue one of the other four paths fortheir leadership identities.

Vision Leaders
Vision Leaders are the organization’s futurists.
They couple their deep faith in reason with asdeep a faith in intuition. With this “double vision,”they are able to challenge their own and their organization’s basic premises, envisioning directions
for change – economic, industrial, financial, organizational – that few others could imagine.
t 0GBMMMFBEFST 7JTJPO-FBEFSTBSFUIFPOFTNPTU
capable of shifting paradigms – their own andtheir organization’s – by perceiving that what
is could be different. They have the ability tothink about thinking and a hunger for ideas.
t *OGPSNJOHBOESFGPSNJOHUIFJSWJTJPOPGXIBUthe organization can become, these leadersinvite contributions from all quarters, within
and outside the organization, and are careful
to make themselves easily accessible.
t *OBTUSPOHWPJDF UIFTFMFBEFSTTBZ i*TFFWFSZ
clearly what direction we have to go in. This is
the road I say/believe we must take.” They thenhave the guts to go with their convictions.

F E AT U R E | K A N T O Rt 5IFTFMFBEFSTTFFQPTTJCJMJUJFTGPSUIFGVUVSF
that others do not see, aided by their ability tomove back and forth between past and present
as a means for guiding their intuitions about
the future.
The Achilles’ heel of Vision Leaders is their attraction to the future. In focusing eyes-forward, they
can sometimes neglect inconvenient realities.
Vision Leaders, therefore, rely heavily on otherleaders to build and sustain an organization capable of achieving the future they so clearly see.

Wisdom Leaders
Wisdom Leaders are the guardians of the organization’s spiritual essence, its reason for being. They
can articulate “what this place is all about” and inspire others with their commitment and values.
t "TUIFMFBEFSTIJQSFTPVSDFNPTUDPNNJUUFEUP
spirit-led and values-driven sensibilities, they
courageously hold their ground when facedwith cynicism about the “soft issues” in personaland institutional life. Far from shying away, they
invite questions like: What is work about? Has
life any meaning? Do we really add value or isthis merely a charade?
t 8JTEPN-FBEFSTIBWFBQBTTJWFBOEBOBDUJWF
side, and can balance both stances. On the passive side, they can withhold taking action whenothers act on reflex. On the active side, they canlead others through a wilderness of ambiguity
and uncertainty. Both stances depend on their
comfort with and acceptance of paradox.
t 8JTEPN-FBEFSTIBWFBiCPUIBOEwQFSTQFDUJWFThey can hold the values of inner, subjective
experience and those of analytic scientism
without compromising the contributionsof either approach. They believe that eachperspective is anchored in inner wisdom,
authority, and resources.
t "GGJSNJOHUIFCFOJHOCFBVUZBOEQPXFSPG
human intention, they are able to tease out
the exceptional abilities that often resideunnoticed in most individuals.

Citizen Leaders
For Citizen Leaders, the company itself is a product; they dedicate themselves to developing theorganization and its culture. They view the organization’s profit goals and people goals as inextricably linked. Focusing on structures that do and do
not work, they take it upon themselves to alert
the leadership team to their observations andto design appropriate structural corrections.

Exit Leaders recognize and call out
aspects of the organization and its
performance that others lack thecourage to challenge.
t $JUJ[FO-FBEFSTEFTJHOTUSVDUVSFTBOETFFLUP
maintain, shape, and re-form the organizationsuch that the creative energies of all employees
are fully utilized.
t 5IFTFMFBEFSTGFFMJUJTUIFJSEVUZUPDVMUJWBUF
and maintain employees’ esprit de corps. Being“in touch” with them, they are sensitive to thetrials of those who feel vulnerable in organizational life, but they avoid being coopted into
conspiracies of victimhood.
t 5ISPVHIUIFJSTUSPOHSFMBUJPOBMTLJMMT UIFZDBO
foster productive communication and collaborative inquiry between managers and employees.
In their leadership role, Citizen Leaders try tohelp each employee belong to the whole community, not to any segregated part, and to lookpassionately at his or her life in the company.
t ,OPXJOHUIFNFBOJOHPGUIFPSHBOJ[BUJPOT
purpose in the world, Citizen Leaders see thatas many people as possible tangibly experiencethat purpose. They encourage the articulationof personal choice among all employees in order to assure genuine commitment to organizational purpose.

Exit Leaders
Exit Leaders are the organization’s “sanctioned
iconoclasts.” The unique contribution of these

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leaders rests in their ability to recognize and callout aspects of the organization and its performance that others lack the courage to challenge.
Their focus is not to critique but to improve byconstantly seeking higher and higher levels of
performance and by candid self and organizational reflection.

Organizations have the opportunity to take the reins of their
future rather than react to market
performance and replace theirleaders in times of trouble.
Through perfecting the practice of positive
opposition, these leaders ask the organization to:t -PPLBUJUTFMG
t 4USJWFGPSCBMBODFJOJUTMPHJD QSPDFEVSFT 
and actionst 3FDPHOJ[FUIFUZSBOOZPGTVDDFTTt 'PSTBLFBSSPHBODF
t 3FMBYJUTNFOUBMHSJQPOUSVUIt ,FFQJUTCPVOEBSJFTGMVJEt 3FDPHOJ[FUIFVOEFSTJEFTPGJUTCFTUNFOUBM
modelst 3FNBJOFWFSPQFOUPXIBUJUDBOOPU possibly
know on its ownt &ODPVSBHFUIFGSFFFYQSFTTJPOPGVOQPQVMBS
sides of every issue
Deliberately, Exit Leaders remain at the periphery,for to be drawn too closely into the organization is
to forfeit the objectivity that sets them apart fromother leaders.
Exit Leaders represent a critical but too often absent role in a well-functioning Leadership System.

reflections.solonline.org

All models need to be examined in order to develop.
Exit Leaders are given permission and encouraged
to provide this assessment. Too often, organizations
expel these leaders or force them to go underground, masking their true talents. In contrast, anorganization that is of a mind to attract, harness,
cultivate, and protect constructively iconoclastic
individuals can reach heights of performance
unattainable by those without this key leader
ship role.

Steps Toward the Future
No matter how attractive a Leadership System
may appear on paper, it is of no value if organizations and the leaders within them cannot actualize this vision. What does it take, then, to cultivatea Leadership System and put it into action?
Building a system of interconnected leaders withequivalent but widely varying sets of capabilities
is no small feat. It requires an incredible commitment: a commitment to the long-term development of leaders from within; to the essential valueof the differences between individuals; to honest
and frank dialogue about individual leader’s real
strengths and weaknesses; and to a lateral rather
than a hierarchical leadership structure. The scopeof these requirements adds up to no less than atotal reframe of how most organizations think
about leadership, power, and performance.
Given the resounding failure of current leadershipmodels, however, the way forward seems evident.
Organizations have the opportunity to take thereins of their future rather than react to market
performance and replace their leaders in times oftrouble. History has proven that those CEO saviors
are a beautiful myth that too often proves to bejust that – a fiction rather than a reality. O

ABOUT THE AUTHORDavid Kantor, Ph.D., is the founder and director of the Kantor Institute, an affiliation of researchers,
consultants, and practitioners dedicated to advancing the application of Model Building andStructural Intervention. His latest book, 3FBEJOHUIF3PPN(SPVQ%ZOBNJDTGPS$PBDIFTBOE-FBEFST,
will be published in May 2012 as part of the Jossey-Bass Business & Management Series.
%BWJE!LBOUPSJOTUJUVUFDPNC O M M E N TA R Y | S T E FA N A C

CO M M E N TA R Y 12.1

Commentary
L I S A S T E FA N A C

David Kantor’s article, “Leadership for Our Times,” presents an exciting proposal fora unique, rather utopian (for now) shift away from the traditional heroic approachto conglomerate leadership. This intriguing framework consists of two parts. First,
Kantor proposes that organizations install a Leadership System, one with a shared authority
and responsibility model, to replace the conventional hierarchical system in which one
charismatic leader presides over a company’s decision making and power structures.
Second, he posits that this Leadership System should consist of at least five individuals,
Lisa Stefanac
ideally one from each of five different leadership “pathways.” Together, these pathways
represent a set of specific qualities and behavioral patterns that no one person, however charismatic, could
possess on his or her own.
While I applaud this idea for its strong potential to create sustainable, agile, and high-integrity organizations,
I believe we need to further explore how such a Leadership System could be created and sustained, and whysuch a leadership structure does not already exist.

The Roots of Post-Heroic Leadership
The concepts of shared responsibility and post-heroic leadership in an organization are not new. First coinedby David Bradford and Allan Cohen in Managing for Excellence (1984), the post-heroic leader requires a strong,cohesive team, alignment around vision and values,
and a high level of mutual influence. Fast forward“The same qualities we have sought
roughly 10 years and Nirenburg speaks of postin one person can be foundheroic leaders who step up to lead as the need
distributed among many people who
arises and supported by a community of mutual
learning.
learn, in community, to exercise their‘leadership’ at appropriate moments.”

What Kantor now brings to this ongoing conversation is a description of the five types of leaders
whom he thinks should be present on an optimal
shared responsibility team, or Leadership System. To complement this, David has also recently developed anassessment instrument, the Leadership Pathways Preference Scale, to identify individuals who represent eachparticular leadership type.1 Certainly this instrument is a useful tool for recognizing leadership styles andultimately determining whom to place on the shared responsibility team.
– John Nirenburg (The Living Organization, 1993)

But, what then? Where do we go, once we have found our dream Leadership System team? More important, how
do we sustain this new leadership structure? More than 25 years after some of the best minds in our field haverecommended a similar model, why haven’t more organizations adopted a shared responsibility team, such as theLeadership System that Kantor suggests? What will cause a company that is used to heroic leadership to rally

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CO M M E N TA R Y 12.1

A shared leadership model
requires support by thecommunity of people – theorganization – looking tobe led.

around and support a Leadership System in which no one personis the leader indefinitely and in which responsibility is shared?

Fertile GroundTo sustain this model, we first have to look to see if the ground issufficiently fertile to plant such a framework. For an organizationthat is used to a top-down reporting structure and a system basedon a heroic leader, shifting to this new approach is a huge challenge. A shared leadership model requires support by the community of people – the organization – looking to be led. The problem is that not many organizational systems areable to integrate a new model systemically or thrive in a team leadership setting. For now, most are still firmly
rooted in the heroic leadership approach.
From recent experiments, we have learned that planting an innovative leadership model in any organization
takes time. Organizations that strive to apply the concepts that Bill Torbert articulated in Action Inquiry (2004) and“Seven Transformations of Leadership” (Harvard Business Review, April 2005) often still find themselves operatingin the Diplomat, Expert, and Achiever action logics. That is, they continue to keep to a strict reporting structure
and look to a leader to know all and direct all, maintaining the conventional mindset of a conventional organization. For an organization to adopt the Leadership System that Kantor proposes, which I would argue is a postconventional idea, not only does that system need to operate from post-conventional action logics (what Torbertcalls Individualist, Strategist, and Alchemist), but the organization itself needs to rise toward the post-conventional© Thinkstockphotos.com

C O M M E N TA R Y | S T E FA N A C

mindset. Otherwise, people will not recognize, respect, or be empowered by this change in leadership style.
This kind of developmental shift in mindset toward post-conventional practice requires an extended timetable.

Harmonious Skill Sets
In addition, the natural skill sets of the members of the Leadership System team are not likely to be immediately
in harmony once the group sets the intention to work together in a shared leadership approach. Kantor suggeststhat the members of the Leadership System be“trained” and that they possess “capabilities needed
The natural skill sets of the members
for almost every conceivable organizational eventuality.” But, how does this happen? To work togetherof the Leadership System team are
as a high-performing team and to navigate systemnot likely to be immediately inwide change in the organization and beyond, thisharmony once the group sets thecadre of leader types requires supplementaryskills and training.
intention to work together in ashared leadership approach.

Leaders could achieve this additional learning
through a year-long leadership development
program that involves coaching and working on live case studies. At the very least, the training would need toinclude the applied concepts of Adaptive Leadership (Heifetz), Cross-Model Communication and Team Dynamics(Kantor), Action Inquiry (Torbert), Giving and Receiving Feedback (National Training Laboratories), and Decision
Making Styles (Bradford and Cohen). A Leadership System would need to be adept in working with these concepts in order to thrive. Continued support through coaching and facilitation would also likely be a crucial investment in maintaining a healthy and well-functioning Leadership System. This kind of support could comeeither through internal or external consulting or from post-conventional leaders throughout all areas of theorganization.
Any person serving the Leadership System model must possess a post-conventional, post-heroic mentality.
In fact, we would all do well to further develop ourselves in building self and group awareness, with the goal of
becoming stewards-in-action of this leadership style throughout the organizations we serve. Under these conditions, shared responsibility organizations and the Leadership System that guides them could then very wellhave a chance at long-awaited growth and expanded acceptance. O

ENDNOTE
1 Jonathan Day assisted David in the development of the scale. You can find more information about the scaleand other instruments developed by Kantor at www.kantorinstitute.com.

ABOUT THE AUTHOR
Lisa Stefanac is a principal at Quoia & Company. lisa.stefanac@quoialeadership.com

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BOOK EXCERPT 12.1

Renewing Leaders: Beyond Servant LeadershipJ O S E P H J AW O R S K I
The notion of transformational, or servant, leadership has been around for thousands of years. It has been thestandard against which we have judged our most revered leaders – until now. In his new book, 4PVSDF5IF*OOFS1BUIPG,OPXMFEHF$SFBUJPO, Joseph Jaworski suggests that servant leadership is no longer adequate to meet today’s
challenges. He calls for a more advanced generation of leaders, which he refers to as “Renewing Leaders” or “StageIV Leaders.” Jaworski explains that what sets these individuals apart is their unique capacity for combining their
cognitive understanding of the world with their ability to connect with the “Source,” an underlying intelligence thatprovides them with the power to create the kinds of organizations and society we desire. In this excerpt, Jaworski
paints a compelling profile of one such leader whom he believes exemplifies and embodies this most advanced
stage of leadership.

S

ince the publication of thefirst edition of Synchronicity,
I’ve been searching for the
principles that lie at the heartof what I described there –Ann McGee-Cooper
the capacity we have to sense
and actualize emerging futures
Joseph Jaworski
and to shape the future insteadof simply responding to theforces at large. What is the source of our capacity
to access the knowledge for action we need in the
moment? How can we learn to enable that capacity,
individually and collectively? . . .
By its very nature, the Source cannot be defined. The
physicist David Bohm told me that “the reality which
is most immediate to us cannot be stated.” And Robert
Jahn and Brenda Dunne, two scientists whom I interviewed for this book, said:. . . there exists a much deeper and more extensive
source of reality, which is largely insulated fromdirect human experience, representation, or evencomprehension. It is a domain that has long been
posited and contemplated by metaphysicians andAdapted from
Source: The Inner Pathof Knowledge Creation
Joseph Jaworski
Berrett-Koehler, 2012
Reprinted with permissionof the publisher. From Source:
The Inner Path of Knowledge
Creation, copyright © 2012by Joseph Jaworski, BerrettKoehler Publishers, Inc.,San Francisco, CA. All rights
reserved. www.bkconnection.com

theologians, Jungian and Jamesian psychologists,
philosophers of science, and a few contemporary
progressive theoretical physicists, all struggling tograsp and to represent its essence and its function.
A variety of provincial labels have been applied,such as “Tao,” “Qi,” “prana,” “void,” “Akashic record,”“Unus Mundi,” “unknowable substratum,” “terra incognita,” “archetypal field,” “hidden order,” “aboriginal
sensible muchness,” “implicate order,” “zero-point
vacuum,” “ontic (or ontological) level,” “undivided

B O O K E X C E R P T | J AW O R S K I

timeless primordial reality,” among many others,
none of which fully captures the sublimely elusive
nature of this domain. In earlier papers we called it
the “subliminal seed regime,” but for our present purposes we shall henceforth refer to it as the “Source.”
While it cannot be defined, Source can be experienced.
The first time I experienced it was during a tornado I
describe in the prologue to this book. My quest sincethen has not been for a definition but for an understanding of how we can have a connection to it – how
we can engage in a deep dialogue with it. Dialogue
with the Source leads to the kind of creativity associated with the most successful entrepreneurial undertakings. Action based on such “primary knowing” canbe “shockingly effective.”
This 15-year journey [described in this book] covered along and winding path during which a colleague and I
were inspired to explore what we later developed as a
“U-process” for accessing emerging futures. The exploration of the U-theory led to our writing Presence: An
Exploration of Profound Change in People, Organizations,and Society [with Peter Senge, C. Otto Scharmer, andBetty Sue Flowers].
But the work with the U-process and our thinking about
the U-theory left me dissatisfied. Real transformation, it
seemed to me, occurred at what I began to call “the bottom of the U” and involved something beyond what wewere doing – something we didn’t really understand. I
began calling it “the Source.” A leader’s ability to accessthis Source often made the difference between successand failure. . . .
At the time Synchronicity was published, the most admired institutions were led by what Robert Greenleaf
described as “servant leaders.” Scott Peck has referred tothese as “Stage III” leaders. But I believe that a more advanced generation of institutions must be led by what I
call “Stage IV” leaders. Stage IV leaders embody the char-acteristics and values of servant leadership, but havematured to a more comprehensive and subtle level ofdevelopment. They exhibit a capacity for extraordinary
functioning and performance. At the heart of this performance is a capacity for accessing tacit knowing thatcan be used for breakthrough thinking, strategy formation, and innovation, including envisioning and creating the kind of institution or society we desire.

Stage IV leaders believe that there
is an underlying intelligence within
the universe, which is capable ofguiding us and preparing us forthe future we must create.
Stage IV leaders believe that there is an underlying
intelligence within the universe, which is capable ofguiding us and preparing us for the future we must
create. They combine their cognitive understanding of
the world around them with a strong personal sense of
possibility – the possibility of actualizing hidden potentials lying dormant in the universe, a view that carries
with it the power to change the world as we know it.
Institutions guided by this quality of leadership, fromline leaders to the very top, will, in my view, flourish in
the decades to come. Because of their success, these
institutions will become living examples of what is possible in the face of accelerating complexity and highturbulence. Operating from this new worldview, theseliving examples can play a major role in shifting theprevailing belief system.

Four Stages of Organizational
Leadership Development
Stage I: Self-centric Leaders
Characteristic of young people and perhaps 20 perceptof adults, this is a stage of undeveloped spirituality.

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R E F L E C T I O N S | V O LU M E 12, N U M B E R 1

Members of this group are generally incapable ofloving others. They may appear to be loving (and thinkof themselves that way), but their relationships with
their fellow human beings are all essentially manipulative and self-serving. They are unprincipled, governed
by little but their own will. And since the will may shift
from moment to moment, there is a lack of integrityin their being. Some may be quite disciplined in theservice of expediency and their own ambition and so
may rise to positions of considerable prestige andpower. Some, occasionally, advance to Stage II.

Servant Leadership alone is nolonger adequate to the highchallenges prevailing today.
State II: Achieving Leaders
These are people who mature to the point of valuingothers. Their self-identity may include family, peers,organizations, faith groups, or nations. Stability is aprincipal value for people in this stage. They seek to
conform to the established rules of their faith or organization and may feel disconcerted or threatened if
someone seems to be playing the game outside theserules. Their pursuit of excellence is characterized by fairness, decency, and respect for others. They routinely
succeed in their organizational goals because theygenuinely value others. Their achievements are a reflection of their self-discipline. As they rise in organizational
power and influence in the later phases of their StageII development, they develop and strengthen others
as well. In these later phases, their achievements areaccomplished with and through others.

Stage III: Servant LeadersThis stage of development is marked by an even greater
expansion of self to embrace all people, regardless ofrace, gender, class, or creed. Stage III leaders routinely

reflections.solonline.org

use their power and influence to serve and develop
others. In Robert Greenleaf’s terms, those around them
become healthier, wiser, more autonomous, and more
independent – and more likely to become servant leaders. These leaders are routinely entrusted with leading
teams with important institutional assets and withentire organizations. This is a stage of growth thatquestions rigid belief systems and transcends
conventional rules and roles.
People at this stage of development exhibit a highneed for achievement, yet not at the cost of others intheir organization or in society at large. They have ahigh need for independence and a low need for conformity. They have a high propensity for mature risktaking, a strong sense of self-efficacy, and a toleranceof ambiguity. Accordingly, they thrive in times of turbulence and complexity. They have adopted a systems
view of the world. In the more advanced phase of thisstage, they gain stronger awareness of the interconnectedness of all life. In their organizations, theynurture understanding of and responsibility for thelarger social systems within which the individualand organization operate.
Servant Leadership alone is no longer adequate to thehigh challenges prevailing today. Our institutions mustbe lead by a more advanced generation of “Renewing
Leaders” or “Stage IV” leaders.

Stage IV: Renewing LeadersStage IV leaders embody the characteristics and valuesof servant leaders but have matured to a more comprehensive and subtle level of development. They exhibit acapacity for extraordinary functioning and performance.
At the heart of this kind of performance is a capacity fortacit knowing that can be used for breakthrough thinking, strategy formation, operational excellence, and innovation, including envisioning and creating the kindof organization or society we desire.

B O O K E X C E R P T | J AW O R S K I

Stage IV leaders hold the conviction that there is an underlying intelligence within the universe that is capableof guiding us and preparing us for the futures we must
create. They combine their cognitive understanding of
the world around them with a strong interior knowledge of the hidden potentials lying dormant in the universe – a view that carries with it the power to change
the world as we know it.

Developing Stage IV Leadership“Knowledge is a function of being.” – Aldous Huxley
I’ve thought about how to describe the values and qualities of character that form the foundation of Stage IV
Leadership and decided that the best way to do this wasto tell about a man I had the privilege to work with who
was a clear exemplar of that stage: Admiral James Bond
Stockdale. Jim Stockdale’s story also reflects the vital

47

Stage IV leaders embody thecharacteristics and values of servant
leadership, but have matured to amore comprehensive and subtle
level of development.
nature of the quality of preparation that is necessary
to make one adequate to live in and operate from theSource.
When I met Admiral Stockdale in 1980, he was recently
retired from serving as president of the Naval War College
and was teaching philosophy at Stanford University. I
invited him to join the Board of Trustees of the American
Leadership Forum, where he helped design the curriculum© Thinkstockphotos.com

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R E F L E C T I O N S | V O LU M E 12, N U M B E R 1

and taught the pilot course, serving with us for almost
nine years.
Learning from Stockdale during many intimate conversations was a great gift. His experiences as a prisoner of
war are highly relevant to my search for an understanding of the Source, particularly in relation to the essential
personal characteristics that allow one to experienceself-realization through a traumatic experience.

Jim Stockdale’s story reflects
the vital nature of the qualityof preparation that is necessary
to make one adequate to live inand operate from the Source.
Developing this kind of character is a theme of theperennial philosophy – a phrase defined by the philosopher Aldous Huxley as referring to “the metaphysic thatrecognizes a divine Reality substantial in the world ofthings and lives and minds; the psychology that finds
in the Soul something similar to, or even identical with,
divine Reality; the ethic that places man’s final end in
the knowledge of the immanent and transcendent
Ground of all being – the thing immemorial and universal.” Huxley said that “Rudiments of the Perennial
Philosophy may be found among the traditional loreof primitive peoples in every region of the world, and inits fully developed forms it has a place in every one of
the higher religions. A version of this Highest Common
Factor in all preceding and subsequent theologies was
first committed to writing more than twenty-five centuries ago, and since that time the inexhaustible theme
has been treated again and again, from the standpointof every religious tradition and in all the principal
languages of Asia and Europe.”

reflections.solonline.org

Referring to the essential prerequisites to gaining
access to primary knowing, or as he put it, “immediate
apprehension and intuitive power,” Huxley wrote:
Knowledge is a function of being. When there is achange in the being of the Knower, there is a corresponding change in the nature and amount of knowing . . . what we know depends on what, as moral
beings, we choose to make ourselves. “Practice” inthe words of William James, “may change our theoretical horizon, and this in a twofold way: it may lead
into new worlds and secure new powers. Knowledge
we could never attain, remaining what we are, may
be attainable in consequence of higher powers anda higher life which we may morally achieve.” . . . (T)henature of this one Reality is such that it cannot bedirectly and immediately apprehended except by
those who have chosen to fulfill certain conditions,making themselves loving, pure in heart, and poorin Spirit.
. . . In the ordinary circumstances of average sensual
life, those potentialities of the mind remain latentand un-manifested. If we would realize them, wemust fulfill certain conditions and obey certain rules,
which experience has shown empirically to be valid.
In September 1965, then Wing Commander Airborne
Stockdale was shot down on a combat mission over
North Vietnam, severely breaking his leg during ejection.
Stockdale was captured and taken to prison in Central
Hanoi. He spent the next seven-and-a-half years there,
four of them in solitary confinement. As the senior
officer among the prisoners, he was responsible fordefining rules of conduct and maintaining morale.
Because of his rank, he was considered to be a prime
political asset.
Because his captors believed that sooner or later his
will would be broken and that he could then be used
for propaganda purposes, they subjected him to theB O O K E X C E R P T | J AW O R S K I

most brutal torture, intimidation, and isolation. But heresponded with intelligence, courage, and exceptional
creativity. Soon after his release in the spring of 1973,
he was awarded the Congressional Medal of Honor,
America’s highest commendation for bravery, forrisking his life to protect his fellow prisoners.
Stockdale told me, reluctantly, some of what he endured over those seven-and-a-half years. He was in solitary confinement in a tiny, dark, filthy, windowless “concrete box.” Regularly, he was subjected to “being beatto a bloody pulp.” He was placed in “torture cuffs” forweeks at a time; locked in a stock for weeks on end;
bound in ropes by “tourniquet-wielding torture specialists who could make you scream like a baby.”“They can make you tell them almost anything theyknow you know,” he said. “The trick is, year in and year
out, never to level with them, never let them reallyknow what you know.” His mother was a drama coachand had taught him acting as a young child. He used
what he learned to keep his captors off balance. In theface of all of this, he devised a tap-code system andtaught it to his fellow prisoners so they could communicate even while in solitary.
Further, over the course of thesecond year in prison, Stockdale
corresponded with the Office ofNaval Intelligence through lettersto and from his wife, Sybil, using his
urine and a special invisible carbon
paper that was embedded between
a photograph Sybil sent him and its
backing. Incredibly, he transmitted
to Naval Intelligence the names ofthe forty or so American prisoners
he could positively identify throughhis tap-code system. He also sent
descriptions and statistics about the
torture that was taking place in his
prison. Stockdale said his purpose
while living in that prison was twofold: “the practical problem of daily
survival” and “to return home withhonor.”
I talked with Jim Stockdale forhours about his ordeal and how he
was able not just to survive but toperform at such an exceptional level
over a sustained period of time.
His response: self-preparation –© Thinkstockphotos.com

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he systematically prepared himself both before andduring the ordeal.
Before his imprisonment, he had developed a structured
set of values that supported a basic principle of selfreliance and self-respect. He said this was fundamental
to his performance. He pointed to a gift a professor ofphilosophy had given to him during the last day ofhis postgraduate study at Stanford. It was a copy of
The Enchiridion by Epictetus. Epictetus was the son ofa Roman slave, and this particular book was what might
be considered a manual for the combat officer of thattime. Stockdale read this book that evening and was
puzzled. “Why had the professor chosen this reading“Glib, cerebral and detached people
can get by in positions of authority
until the pressure is on. But when
the crunch develops, people cling
to those they know they can trust.”
as a parting gift? I was an organizer of men and a fighter
pilot, concerned with the technology of the age. How
could the foundations of the Aurelian Stoical School
apply to my daily life? My questions were answered in
Vietnam,” he said. “When I ejected from that airplane in
1965, I left the world of technology and entered theworld of Epictetus.”
Stockdale reduced the elements of his self-preparation
to these four:
1. Integrity – Dedication to the Truth“Above all else, keep your conscience clean. If you
don’t lose your integrity, you can’t be had and you
can’t be hurt . . . . Glib, cerebral and detached people
can get by in positions of authority until the pressure
is on. But when the crunch develops, people cling
to those they know they can trust – those who arereflections.solonline.org

not detached, but involved – and those who haveconsciences . . . .”2. Assumption of Responsibility and Dischargeof One’s Obligation and Duty
“Duty can be understood without reference toexternal law or to compulsion, divine or human. We
share this understanding whenever – having made apromise, taken an oath, contracted a debt of duty
– we feel an obligation to discharge it, even if nosuperior commands the act. Duty in this perspective
has absolute character. Duty is its own justification. It
does not have to be propped up by anything outsideitself, particularly in the line of reward or punishment.
This was the teaching of Socrates who urged men
should obey the law, pay their debts, discharge
their obligations, not to avoid the pain of censure
or punishment, but simply because they ought to.”
3. Self-Discipline and the Delay of Gratification
A principle Stockdale lived by before, during, andafter his prison ordeal was the following: “Self-discipline is vital to self-respect; self-indulgence is fatal.”
Stockdale said that undertaking daily practices isessential to mental and spiritual health. In prison,
he and his fellow prisoners found they had to builda daily ritual into their lives “to avoid becoming an
animal.” For almost all of them, he said, their daily
practices were built around prayer, meditation,
exercise, and clandestine communication. “I would
do four-hundred pushups a day, even when I had leg
irons on, and I would feel guilty when I failed to dothem.” He said, “The prayers I said were prayers ofquality with ideas of substance.”
4. Love and Community
Stockdale was utterly clear about the power of love,comradeship, and community. When he was asked,“What kept you going? What was your highest value?”
his answer always was, “The man next door.” He had
an abiding belief that there was enormous power incomradeship, bonds of mutual trust, and love for one
another. “This love, this unity, this mutual trust andconfidence is a source of power as old as man, one

B O O K E X C E R P T | J AW O R S K I

we forget in times of freedom, of affluence, of fearful pessimism,” he said. “In prison, our world literally
became our band of brothers; our personal prideand our reputation among our peers was our
total life investment.”
Stockdale wrote that, for him, Principle One is that you
are your brother’s keeper:
In an environment in which people are trying tomanipulate others – be it prison, a rigid hierarchicalorganization, or a bloated bureaucracy – there isalways the temptation to better your own positionby thinking only about yourself. Yet, sooner or later, it
becomes clear that the greater good for you and yourfellow inmates, the key to happiness, self-respectand survival, lies in submerging your individual
instincts for self-preservation to the greater common denominator of universal solidarity.
The opportunist may make significant short-term
gains by walking over his fellow workers, by taking
credit for their good work, or by selfish theatrics. But
each time he loses faith with his peers, he forfeits
some of this self-respect.
Stockdale was a supremely private man and seldom
chose to talk of his faith or the Divine. However, he said
that during his confinement, at the moment of maximum
danger to his life, suddenly the face of Christ “popped
out of nowhere” in front of him – the same face, he said,

Sooner or later, it becomes clear thatthe key to happiness, self-respect,and survival lies in submerging
your individual instincts for selfpreservation to the greater common
denominator of universal solidarity.

he saw every Sunday on the big stained-glass windowof the U.S. Naval Academy chapel just behind the altar.
“He’s looking right into me, just like he used to when
I was a plebe sitting before Him at mandatory chapel
every Sunday, praying that I could make it at Annapolis.”At the very same moment of the vision, he was able to
make split-second decisions that enabled him to avoid
detection of his secret messages by two guards who
had just entered his cell.
Connection with the Source comes in many different
forms. It seems to me that Stockdale’s religious faithallowed him to “see” that connection at a moment of
extreme crisis in the form of an image that he had
initially observed behind the altar of the Naval Academy.
In that way, his discipline, his sense of duty, and his faith
merged in that instant of connection, allowing him thekind of “knowing” that led him to make a life-saving
decision in an instant. O

ABOUT THE AUTHOR
Joseph Jaworski is a founder and the chairman of both Generon International and the Global Leadership
Initiative, as well as the founder of the American Leadership Forum. He is the author of the international
besteller 4ZODISPOJDJUZ and a coauthor of Presence.

51

Reflections
The SoL Journal

on Knowledge, Learning, and Change
Volume 12, Number 1

EDITORIAL TEAMManaging Editor
Janice Molloy
Contributing Editor
Deborah Wallace
PublisherFrank Schneider

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