From the Founding Editor

Leadership and the role of the leader in managing change appear to be endlessly fascinating topics. There are ‘‘servant leaders,’’ ‘‘seducers,’’ ‘‘humanists,’’ ‘‘brilliant designers of experiences that produce learning,’’ ‘‘re ective
leaders,’’ and ‘‘stewards’’—take your pick. In this issue, we do not have a single‘‘deep’’ theme but rather a variety of what we hope are challenging articles tomake you reect and a wonderful, insightful article on how to increase yourown reective potential. Instead of commenting further here, I found myself
reecting on some of the articles and have shared some of my re ections following the articles.

Ed Schein

In This Issue
Edgar H. Schein and Karen AyasWe bring forth a diverse collection of articles that entertain the concepts of leadership,community, and culture. We hope this will make you reect on fundamental choices
you make in shaping the organizations you lead or belong to.
We begin the issue with a classic from Warren Bennis. First published in 1962, thisseminal piece introduces the concept of ‘‘organizational health’’ while exploring the viablemeasures of health and the true essence of ‘‘scientic attitude.’’ Drawing a parallel between organizational behavior and the mental health eld, Bennis concludes that the‘‘spirit of inquiry’’—much needed to perceive external or internal reality and to act intelligently—implies a confrontation of truth that may not be satisfying or efcient in the
short term. Creating an environment where the spirit of inquiry can ourish still remainsa challenge for organizations today, as Bennis comments 40 years later. Do not miss thisarticle that Bennis describes as ‘‘an outline of my intellectual preoccupation of the past
four decades.’’
Next is a paper that can be classi ed as a ‘‘future classic’’ from Russell Ackoff. In
an article that revisits the evolution of the concept of a corporation, Ackoff’s wisdom andclarity shine through. He recognizes and explores the implications of viewing the corporation as a community—a social system that exists primarily to serve its members. Peter
Senge provides his own perspective on Ackoff’s view of the rm.
Greg Merten, general manager and vice president at Hewlett-Packard, embodies theleadership principles that arise from viewing the corporation as a community. In his talkto a fellow SoL member organization, the National Security Agency (NSA), he shares his
perspectives on leadership and leadership development. His personal story and choices
he has made at HP vividly demonstrate what it takes to become a leader. Dennis Sandow

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SCHEIN AND AYASw
In This Issue

2(a researcher) and Nick Zeniuk (a consultant) both comment on the uniqueness of Merten’s leadership perspective and practice. Ed Schein also makes a brief remark.
Karl Weick points to ways in which one can lead in times of chaos and adversity. In
his concise essay, Weick offers crucial resources for leaders facing the inexplicable andmaking sense of events that don’t make any sense.
Next is a vivid account of how one company develops its future leaders. Karen Ayas
and Philip Mirvis describe a leadership forum that exempli es a learning community andmemorable experiences designed to produce learning at a personal and collective level.
Tex Gunning, the president of Unilever Asia Pacic, who sees the personal and professional growth of the young leaders as his personal mission, comments on the impact of
the forum and what it might take to build and lead organizations as communities. Ed
Schein adds a thought-provoking comment.
Another powerful case study is the description of the processes of learning and change
at Nuovo Pignone (NP), an Italian company acquired by GE. Cristiano Busco, Angelo
Riccaboni, and Robert Scapens tell a fascinating story that illustrates successful culturechange. Davide Nicolini comments on the importance of accounting practices for effective
and enduring changes in such a case of ‘‘invasion.’’ Ed Schein reframes this case as oneof ‘‘genetic manipulation’’ by GE, underscores the changes in the ‘‘cultural DNA’’ of NP,
and raises an important question: What if  nancial survival requires compromising of
cultural values? Ranieri de Marchis, a chief nancial ofcer at NP, shares his perspective.
Jay Bragdon and Richard Karash address the question of corporate decision making
at a deeper level, challenge the idea of stock price as the key indicator of corporate credibility, and bring forth the concept of ‘‘living-asset stewardship.’’ The Global LAMP Index
they have developed includes values that constitute cultural DNA and offers a measureof success viable for the long term. Bettye Pruitt, a historian, raises a number of provocative questions that make us ponder what it would take for this concept to be widely
accepted and practiced.
We close the issue with Joseph Raelin’s insightful article on reective practice inorganizations. Raelin calls us to think about why we don’t have time to think anymore.
If you haven’t found yourself reecting on any of the above, this article is a must. And if
you have, read on, as this article and thoughtful commentaries that follow offer yet more
to re ect on. Phillip DiChiara’s and Philip McArthur’s comments and Raelin’s response
highlight the importance of reective practice at all levels— individual or interorganizational—for leadership development, cultural change, and community building. Also,
Ed Schein brie y comments.
The photographs in this issue were contributed by:Gene Beyt, a photographer and teacher of leadership and organizational learning at
Tulane University. ^ gbphoto@earthlink.net&
Jonathan Liffgens, a freelance photographer and architect in Chicago. ^ jliffgens@
ixpres.com&
Lior Sabag, a student at Newton South High School in Newton, MA. ^ ls88@attbi.com&
Emily Sper, a photographer, graphic designer, and author-illustrator in Boston, MA.
Her photographs have been exhibited in the US and abroad. ^ www.sperphoto.com&
We welcome your reactions and comments. Please e-mail us at pubs@solonline.org.

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Towards a ‘‘Truly’’
Scientic Management:
The Concept ofOrganization Health
Warren G. Bennis

T4

Warren G. Bennis
University Professor andDistinguished Professor of Business
Administration
Marshall School of Business
University of Southern California
wbennis@aol.com

he main challenge confronting today’s organization, whether it is a hospital or a business enterprise, is that of responding to changing conditions and adapting to external
stress. The salience of change is forced on organizations because of the growing interdependence between their changing boundary conditions and society (a point that will
be elaborated later) and the increasing reliance on scienti c knowledge. The traditional
ways that are employed to measure organizational effectiveness do not adequately re ect
the true determinants of organizational health and success. Rather, these criteria yieldstatic time-slices of performance and satisfaction, which may be irrelevant or misleading.
These static, discrete measurements do not provide viable measures of health, for theytell us nothing about the processes by which the organization copes with its problems.
Therefore, different effectiveness criteria have to be identi ed, criteria that reveal theprocesses of problem-solving. This point is corroborated by some recent works on organizational theory. Consider, for example, these remarks by Wilfred Brown, Chairman andManaging Director of the Glacier Metal Company:
Effective organization is a function of the work to be done and the resources and techniques
available to do it. The changes in methods of production bring about changes in the numberof work roles, in the distribution of work between roles and in their relationship to one another. Failure to make explicit acknowledgement of this relationship between work and organization gives rise to non-valid assumptions (e.g., that optimum organization is a function of
the personalities involved, that it is a matter connected with the personal style and arbitrary
decision of the chief executive, that there are choices between centralized and decentralized
types of organization, etc.). Our observations lead us to accept that optimum organizationmust be derived from an analysis of the work to be done and the techniques and resources
available (1960).

The work of Emery and Trist, which has in uenced the thinking of Brown, stressedthe ‘‘socio-technical system,’’ based on Bertalanffy’s ‘‘open system’’ theorizing (1950).
They conclude that:. . . the primary task of managing an enterprise as a whole is to relate the total system to its
environment, and not internal regulation per se (Emery and Trist, 1959).

And further that:Ó

A similar version of this paper appeared in General Systems Yearbook 7(1962): 269–282.
2002 by Warren G. Bennis.

If management is to control internal growth and development it must in the rst instancecontrol the ‘‘boundary conditions’’— the forms of exchange between the enterprise and theenvironment . . . The strategic objective should be to place the enterprise in a position in its
environment where it has some assured conditions for growth —unlike war the best position

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Management development programs need, I submit, to be oriented much more toward thefuture, toward change, toward differences from current forms of practice and behavior . . .
We ought to allocate more of the effort of our programs to making our student a more competent analyst. We ought, in other words, to try to teach them to think a little more like scientists, and indeed to know a good deal more about the culture and methods of scientists(1961).

What relevance have these quotations to the main theme of this essay? Note,  rst ofall, that these theorists all view the organization (or institution) as an adaptive structure
actively encountering many different environments, both internal and external, in theirproductive efforts. Note also the key terms: change, uncertainty, future, task, mission,
work to be done, available resources, exchanges between the enterprise and environment.
There is no dialogue here on the relation between ‘‘productivity’’ and ‘‘satisfaction,’’ nofruitless arguments between the ‘‘human relationists’’ and scientic management advocates. Indeed, it seems that it is no longer adequate to perceive organization as an analogue
to the machine as Max Weber indicated: ‘‘. . . (bureaucracy is like) a modern judge who
is a vending machine into which the pleadings are inserted together with the fee andwhich then disgorges the judgement together with its reasons mechanically derived fromthe code (Bendix, 1960). Nor is it reasonable to view the organization solely in terms of
the socio-psychological characteristics of the persons involved at work, a viewpoint thathas been so fashionable of late (Bennis, 1959). Rather, the approach that should be taken
is that of these quoted writers: organizations are to be viewed as ‘‘open systems’’ de nedby their primary task or mission and encountering boundary conditions that are rapidlychanging their characteristics. Given this rough de nition, we must locate some effectiveness criteria and the institutional prerequisites that provide the conditions for theattainment of this criteria.

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And H.J. Leavitt said on the same subject:

Towards a ”Truly” Scientic Management

is not necessarily that of unchallenged monopoly. Achieving this position would be the primary task or overriding mission of the enterprise (Ibid).

The Spirit of Inquiry as a Model for Organization
Findings are science’s short-range benets, but the method of inquiry is its long-range
value. I have said that the invention of organization was Man’s rst most importantachievement; I now add that the development of inquiry will be his second. Both ofthese inventions change the species and are necessary for its survival. But both must
become a part of the nature of Man himself, not just given house room in certain
groups. Organization is by now a part of every man, but inquiry is not. The signi cantproduct of science and education will be the incorporation within the human animal of
the capability and habit of inquiry.— H. Thelen (1960)
Whether our work is art or science or the daily work of society, it is only the form inwhich we explore our experience which is different; the need to explore remains thesame. This is why, at bottom, the society of scientists is more important than their discoveries. What science has to teach us here is not its techniques but its spirit; the irresistible need to explore.— J. Bronowski (1959)

It has been asserted here that organizations must be viewed as adaptive, problem-solving
systems operating and embedded in complicated and rapidly changing environments. If
this view is valid, then it is fair to postulate that the methodological rules by which theorganization approaches its task and ‘‘exchanges with its environments’’ are the critical
determinants of organizational effectiveness. These methodological rules or operating procedures bear a close resemblance to the rules of inquiry, or scienti c investigation. Therefore, the rules and norms of science may provide a valuable, possibly necessary modelfor organizational behavior.
First, it should be stated what is meant and what is not meant by ‘‘science’’ in thiscontext. It is not the ndings of science, the vast array of data that scientists produce. Nor
is it a barren operationalism—what some people refer to as ‘‘scientism’’—or the gadgetry

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utilized for routine laboratory work. Rather it is what may be called the scientic ‘‘temper’’or ‘‘spirit.’’ It is this ‘‘spirit of inquiry,’’ which stems from the value position of science,that such authors as Dewey have emphasized must be considered if our world is to survive. This position says essentially that the roles of scientist and citizen cannot be sharply
separated. As Waddington put it:
The true in uence of science is an attitude of mind, a general method of thinking about andinvestigating problems. It can, and I think it will, spread gradually throughout the social consciousness without any very sharp break with the attitudes of the past. But the problems forwhich it is wanted face us already; and the sooner the scienti c method of handling them
becomes more generally understood and adopted, the better it will be (1941).

Now it is necessary to look a bit more closely at what is meant by this ‘‘scienti cattitude.’’ This complex includes many elements, only two of which are considered here.
The rst may be called the hypothetical spirit, the feeling for tentativeness and caution,
the respect for probable error. As Geiger says: ‘‘. . . the hypothetical spirit is the uniquecontribution scienti c method can offer to human culture; it certainly is the only prophylactic against the authoritarian mystique so symptomatic of modern nerve failure’’ (1950).
The second ingredient is experimentalism, the willingness to expose ideas to empiricaltesting, to procedures, to action. The hypothetical stance without experimentalism would
soon develop into a rather arid scholasticism. Experimentalism without the corrective of
the hypothetical imagination would bring about a radical, ‘‘dustbowl’’ empiricism lacking
signi cant insight and underlying structures capable of generalization. These two features,plus the corrective of criticism, is what is meant by the methodological rules of science;
it is the spirit of inquiry, a love of truth relentlessly pursued, that ultimately creates theobjectivity and intelligent action associated with science.
But the scientic attitude of which I speak can most easily ourish under speci cconditions usually associated with the social organization of the scientic enterprise.
As Parson states:
Science is intimately integrated with the whole social structure and cultural tradition. Theymutually support one another—only in certain types of society can science ourish and conversely without a continuous and healthy development and application of science such a society cannot function properly (1951).

6

What are the conditions that comprise the ethos of science? Barber identies ve thatare appropriate to this discussion: rationality, universalism, individualism, communality,and disinterestedness (1952). A brief word about each of these is in order. The goal ofscience is understanding, understanding in as abstract and general a fashion as possible.
Universalism, as used here, means that all men have morally equal claims to discoverand to understand. Individualism, according to Barber, expresses itself in science as antiauthoritarianism; no authority but the authority of science need be accepted or trusted.
Communality is close to the utopian communist slogan: ‘‘From each according to his
abilities, to each according to his needs.’’ This simply means that all scientic peers havethe right to share in existing knowledge; withholding knowledge and secrecy are cardinal
sins. The last element, disinterestedness, is to be contrasted with the self-interest usuallyassociated with organizational and economic life. Disinterestedness in science requiresthat role incumbents serve others and gain gratication from the pursuit of truth itself.
These  ve conditions comprise the moral imperatives of the social organization of science.
They are, of course, derived from an ‘‘ideal type’’ of system, an empirically imaginable
possibility but a rare phenomenon. Nevertheless, insofar as they are imperatives, they doin fact determine signi cantly the behavior of scienti c organization.
There are two points to be made in connection with this model of organization. The
rst was made earlier but may require reiteration: the spirit of inquiry can ourish onlyin an environment where there is a commitment toward the ve institutional imperatives.
The second point is that what is now called the ‘‘human relations school’’ (Bennis, 1959)
has been preoccupied primarily with the study of those factors that this paper has identi ed as the institutional imperatives of the science organization. In fact, only if we lookat the human-relations approach with this perspective do we obtain a valid view of theirwork. For example, a great deal of work in human relations has focused on ‘‘communi-

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cation’’ (Berkowitz and Bennis, 1961), ‘‘participation’’ (McGregor, 1960), and ‘‘decisionmaking.’’ Overgeneralizing a bit, we can say that most of the studies have been (from amoral point of view) predicated on and lean toward the social organization of science as
has been outlined here. Note, for instance, that many studies have shown that increased
participation, better communication (keeping worker ‘‘informed’’), more ‘‘self-control,’’and decreased authoritarianism are desirable ends. Because of their emphasis on thesefactors, the researchers and theoreticians associated with human-relations research havesometimes been perceived as ‘‘soft-headed,’’ unrealistic, too academic, and even utopian.
In some cases, the social scientists themselves have invited these criticisms by being
mainly interested in demonstrating that these participative beliefs would lead to heightened morale and, on occasion, to increased efciency. So they have been accused bymany writers as advocates of ‘‘happiness’’ or a moo-cow psychology (Baritz, 1960).
These are invalid criticisms, mainly because the issue is being fought on the wrong
grounds. One of the troubles is that the social scientists have not foreseen the full implications of their studies. Rather than debating the viabilityof socio-psychological variables in terms of the traditional
effectiveness variables, which at this point is highly problematical, they should be saying that the only way in whichorganizations can develop a scientic attitude is by providing conditions where it can ourish. In short, the norms ofscience are both compatible and remarkably homogeneouswith those of a liberal democracy. We argue, then, that theway in which organizations can master their dilemmas andsolve their problems is by developing a spirit of inquiry. This can ourish only under thesocial conditions associated with the scienti c enterprise (i.e., democratic ideals). Thus itis necessary to emphasize the ‘‘human side of enterprise,’’ that is, institutional conditionsof science, if organizations are expected to maintain mastery over their environment.
Now, assuming that the social conditions of science have been met, let us return tothe designated task of identifying those organizational criteria that are associated with thescientic attitude.

The way in which organizations canmaster their dilemmas and solve
their problems is by developing a
spirit of inquiry.

The Criteria of Science and Mental Health Applied to Organizations
Perhaps no other area of human functioning has more frequently been selected as a criterion for mental health than the individual’s reality orientation and his efforts at mastering the environment. —M. Jahoda (1958)
I now propose that we gather the various kinds of behavior just mentioned, all of whichhave to do with effective interaction with the environment, under the general heading ofcompetence.— Robert White (1959)
All aspects of the enterprise must be subordinated to . . . its primary task. It is not only
industrial enterprises, however, which must remain loyal to their primary tasks. This is
so of all human groups, for these are all compelled, in order to maintain themselves inexistence, to undertake some form of appropriate action in relation to theirenvironment. . . . An organism, whether individual or social, must do work in order tokeep itself related to its external environment, that is, to meet reality.—Eric Trist(Brown, 1960)

These quotations provide the framework for the following analysis. They express what
has been the major concern throughout this paper: that, when organizations are considered as ‘‘open systems,’’ adaptive structures coping with various environments, the mostsigni cant characteristic for understanding effectiveness is competence, mastery, or as theterm has been used in this essay, problem-solving. It has been shown that competence
can be gained only through certain adaptations of science: its attitude and social conditions. It is now possible to go a step further by underlining what the above quotations
reveal, that the criteria of science bear a close kinship to the characteristics of what mentalhealth specialists and psychiatrists call ‘‘health.’’There is an interesting historical parallel between the development of criteria for theevaluation of mental health and the evolution of standards for evaluating organizational

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health. Mastery, competence, and adaptive, problem-solving abilities are words relatively
new to both elds. In the area of organizational behavior these words are replacing theold terms ‘‘satisfaction’’ and ‘‘work competence.’’ Similarly, an important change hastaken place in the mental-health  eld, which has had some of the same problems indetermining adequate criteria. Rather than viewing health exclusively in terms of somehighly inferential intra-psychic reconstitutions, these specialists are stressing ‘‘adaptive
mechanisms’’ and ‘‘con ict-free,’’ relatively autonomous ego-functioning, independent of
id energies.
The main reason for the conuence of organizational behavior and mental health isbasically quite simple. Both the norms of science and the methodology of psychotherapeutic work have the same goal and methodology: to perceive reality, both internaland external; to examine uninchingly the positions of these realities in order to act intelligently. It is the belief here that what a patient takes away and can employ after treatment is the methodology of science, the ability to look facts in the face, to use thehypothetical and experimental methods—the spirit of inquiry—in understanding experience.
Sanford has said in this connection:. . . most notably in Freud’s psychoanalytic method of investigation and treatment. (Thismethod is in my view, Freud’s greatest, and it will be his most lasting contribution.) By themethod I mean the whole contractual arrangement according to which both the therapist andpatient become investigators, and both objects of careful observation and study; in which thetherapist can ask the patient to face the truth because he, the therapist, is willing to try to
face it in himself; in which investigation and treatment are inseparable aspects of the same
humanistic enterprise (1958).

And in Freud’s words:
Finally, we must not forget that the relationship between analyst and patient is based on alove of truth, that is, on the acknowledgement of reality, and that it precludes any kind ofsham or deception (1959).

It is now possible to postulate the criteria for organizational health. These are basedon a de nition by Marie Jahoda, according to which a healthy personality ‘‘. . . actively
masters his environment, shows a certain unit of personality, and is able to perceive theworld and himself correctly (1958). Let us take each of these elements and extrapolate it
into organizational criteria.

1. ‘‘Actively Masters His Environment’’: Adaptability
8

In terms of this paper, this characteristic coincides with problem-solving ability, which inturn depends upon the organization’s exibility. Earlier it was pointed out that  exibility
is the freedom to learn through experience, to change with changing internal and external
circumstances. Another way of putting it, in terms of organizational functioning, is to saythat it is ‘‘learning how to learn.’’ This is equivalent to Bateson’s notion of ‘‘deuterolearning,’’ the progressive change in rate of simple learning (1947).

2. ‘‘Certain Unit of Personality’’: The Problem of Identity
In order for an organization to develop adaptability, it needs to know who it is and what
it is to do; that is, it has to have some clearly de ned identity. The problem of identity,
which is central to much of the contemporary literature in the mental-health  eld, can inorganizations be examined in at least two ways: (a) determining to what extent the organizational goals are understood and accepted by the personnel, and (b) ascertaining towhat extent the organization is perceived veridically by the personnel.
As to the problem of goals, Selznick pointed out:
The aims of large organizations are often very broad. A certain vagueness must be accepted
because it is difcult to foresee whether more specic goals will be realistic or wise. Thissituation presents the leader with one of his most difcult but indispensable tasks. He must

Volume 4, Number 1, REFLECTIONSThe same point is made by Simon, Smithburg, and Thompson: ‘‘No knowledge ofadministrative techniques, then, can relieve the administrator from the task of moral
choice—choice as to organizational goals and methods and choice as to his treatment of
the other human beings in his organization (1950).
In addition to the other clear de nition of mission, which is the responsibility of theleader to communicate, there also has to be a working consensus on the organization ofwork. Wilfred Brown’s work is extremely useful in this connection. He enumerates fourconcepts of organization: the manifest organization, the one that is seen on the ‘‘organization chart’’ and is formally displayed; the assumed organization, the one that individuals
perceive as the organization (were they asked to draw their phenomenological view ofthe way that things work); the extant organization, the situation as revealed throughsystematic investigation, say by a student of organizations;and the requisite organization, or the situation as it would
be if it were ‘‘in accord with the real properties of the eldin which it exists.’’‘‘The ideal situation,’’ Brown goes on to say, ‘‘is thatin which the manifest, the assumed, the extant, and therequisite are as closely as possible in line with each other(1960). Wherever these four organizational concepts are incontradiction, we nd a case of what Erikson calls ‘‘identity
diffusion’’ (1959). Certainly this phenomenon is a familiar one to students and executivesof organizations. Indeed, the great attention paid to the ‘‘informal group’’ and its discrepancy with the formal (difference between the manifest and the assumed organizations or
between the manifest and the extant) testies to this.
Another useful analogy to the mental-health eld shows up in this discussion. Many
psychotherapeutic schools base their notions of health on the degree to which the individual brings into harmony the various ‘‘selves’’ that make up his personality. According
to Fromm-Reichmann, ‘‘. . . the successfully treated mental patient, as he then knows
himself, will be much the same person as he is known to others (1950).
Virtually the same criterion is used here for organizational health, i.e., the degree towhich the organization maintains harmony—and knowledge —about and among the
manifest, assumed, extant, and requisite situations. This point should be claried. It is
not necessary to organizational health that all four concepts of organization be identical.
Rather, all four types should be recognized and allowance made for all the tensions attendant upon their imbalance. It is doubtful that there will always be total congruence inorganizations. The important factor is recognition; the executive function is to strive toward congruence insofar as it is possible.

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Towards a ”Truly” Scientic Management

specify and recast the general aims of his organization so as to adapt them, without serious
corruption, to the requirements of institutional survival. This is what we mean by the denition of institutional mission and role (1957).

Flexibility is the freedom to learn
through experience, to change withchanging internal and external
circumstances.

3. ‘‘Is Able to Perceive the World and Himself Correctly’’: Reality-Testing
If the conditions for requisite organizations are to be met, the organization must develop
adequate techniques for determining the ‘‘real properties’’ of the eld in which it exists.
The eld contains two main boundaries, the internal organization and the boundaries
relevant to the organization. March and Simon, in their cognitive view of organization,
place great emphasis on adequate ‘‘search behavior.’’ Ineffective search behavior—
cycling and stereotypy—are regarded as ‘‘neurotic’’ (1958).
However, it is preferable here to think about inadequate search behavior in terms ofperception that is free from need-distortion. Abraham Maslow places this in perspective:
Recently Money-Kyrle, an English psychoanalyst, has indicated that he believes it possible tocall a neurotic person not only relatively inef cient, simply because he does not perceive thereal world as accurately or as ef ciently as does the healthy person. The neurotic is not only
emotionally sick—he is cognitively wrong! (Jahoda, 1958). The requisite organization requires reality-testing, within the limits of rationality, for successful mastery over the relevant
environments (March and Simon, 1958).

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In summary, then, I am saying that the basic features of organization rely on adequate
methods for solving problems. These methods stem from the elements of what has beencalled the scienti c attitude. From these ingredients havebeen fashioned three criteria or organizational mechanisms,
which fulll the prerequisites of health. These criteria arein accord with what mental-health specialists call health in
the individual.
Undeniably, some qualications have to be made. The
mensuration problem has not been faced, nor have the concrete details for organizational practice been fully developed. Nonetheless, it has beenasserted that the processes of problem-solving —of adaptability—stand out as the single
most important determinant of organizational health and that this adaptability depends
on a valid identity and valid reality-testing.

The basic features of organization
rely on adequate methods forsolving problems.

Some Implications of the Science Model for Organizational Behavior
There is one human characteristic which today can nd a mode of expression in nationalism and war, and which, it may seem would have to be completely denied in a scienti c society. That is the tendency to nd some dogma to which can be attachedcomplete belief, forthright and unquestioning. That men do experience a need for certainty of such a kind can scarcely be doubted . . . Is science, for all its logical consistency, in a position to satisfy this primary need of man?—C.H. Waddington (1941)
We are not yet emotionally an adaptive society, though we try systematically to develop
forces that tend to make us one. We encourage the search for new inventions; we keep
the mind stimulated, bright, and free to seek out fresh means of transport, communication, and energy; yet we remain, in part, appalled by the consequences of our ingenuity
and, too frequently, try to nd security through the shoring up of ancient and irrelevant
conventions, the extension of purely physical safeguards, or the delivery of decisions weourselves should make into the keeping of superior authority like the state. These solutions are not necessarily unnatural or wrong, but historically they have not beenenough, and I suspect they will never be enough to give us the serenity and competence
we seek . . . we may nd at least part of our salvation in identifying ourselves with theadaptive process and thus share . . . some of the joy, exuberance, satisfaction and security . . . to meet the changing time.—E. Morison (1950)

10

The use of the model of science as a form for the modern organization implies some
profound reforms in current practice, reforms that may appear to some as too adventurous
or utopian. This criticism is dif cult to deny, particularly since not all the consequences
can be clearly seen at this time. However, let us examine a few consequences that do
stand out rather sharply.

1. The Problem of Commitment and Loyalty
Although the viewpoint does have its critics, such as William H. Whyte, Jr., most administrators desire to develop high commitment and loyalty to the organization (1956). Can
the scientic attitude, with its ascetic simplicity and acceptance of risk and uncertainty,
substitute for loyalty to the organization and its purpose? Can science, as Waddington
wonders, provide the belief in an illusion that organizational loyalty is thought to provide?
The answer to this is a tentative ‘‘yes and no.’’ Substituting the scientic attitude forloyalty would be dif cult for those people to whom the commitment to truth, to the pursuitof knowledge, is both far too abstract and far too threatening. For some, the ‘‘escape fromfreedom’’ is a necessity, and the uncertain nature of the scienti c attitude would be difcult to accept. However, it is likely that even these individuals would be inuenced by
the adoption of the science model by the organization. Loyalty to the organization per sewould be transformed into loyalty and commitment directed to the spirit of inquiry. Whateffect would this have on commitment?
Gouldner, in another context, has supplied an important clue. He pointed to a difference between individuals in terms of two organizational roles, ‘‘locals and cosmopolitans’’

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Towards a ”Truly” Scientic Managementw(1957). The cosmopolitan derives his rewards from inward
standards of excellence, internalized and reinforced
through professional (usually scienti c) identi cation. On
the other hand, the local derives his rewards from manipulating power within the hierarchy. The locals are considered to be better organization men than the cosmopolitans.
Loyalty within the scienti c organizational conditions
speci ed here would be directed not to particular ends or
products or to work groups but to identi cation with theadaptive process of the organization.

2. Recruitment and Training for the Spirit of Inquiry
There are some indications that the problems of recruitment and training for the social organization of science are
not as difcult as has been expected. For one thing, as Bruner has shown (1961), today’s school children are getting
more and better science teaching. It is to be hoped that they
will learn as much about the attitude of science as they will
about its glamour and techniques. In addition, more andmore research-trained individuals are entering organizations. As McGregor points out: ‘‘Creative intellectual effort
by a wide range of professional specialists will be as essential to tomorrow’s manager as instruments and an elaborate air trafc control system are to today’s jet pilot (1961).
Individuals trained in scientic methodology can easily
adapt to, in fact will probably demand, more and more
freedom for intellectual inquiry. If McGregor’s and Leavitt
and Whisler’s (1958) prognostications are correct, as theypresently seem to be, then there is practically no choice but
to prepare a social milieu in which the adaptive, problemsolving processes can ourish.

© Emily Sper

3. Intergroup Competition
Blake and Mouton, guided partly by the work of the Sherifs (1953), have disclosed for
examination one of organization’s most troublesome problems, intergroup conict andcollaboration. These chronic con icts probably dissipate more energy and money thanany other single organizational disease. Intergroup con ict, with its ‘‘win-lose’’ orientation, its dysfunctional loyalty (to the group or product, not to the truth), its cognitive
distortions of the outsider (the ‘‘enemy’’), and its inability to reach what has been called‘‘reactive synthesis’’ effectively disrupts the commitment to truth. By means of a laboratory approach Blake and Mouton have managed to break. . . the mental assumptions underlying win-lose conict. Factually based mutual problem
identi cation,  uidity in initial stages of solution, proposing rather than xed position taking,free and frequent interchange between representatives and their constituent groups and focussing on communalities as well as differences as the basis for achieving agreement and soon, are but a few of the ways which have been experimentally demonstrated to increase thelikelihood of arriving at mutually acceptable solutions under conditions of collaboration between groups (1961).

What the authors do not explicitly say but only imply is that the structure of theirexperimental laboratory approach is based on the methods of inquiry that have been
advocated in this paper. Theirs is an action-research model, in which the subjects are theinquirers who learn to collect, use and generalize from data in order to understand organizational con ict. Rational problem-solving is the only prophylaxis presently known
to rid organizations of persistent intergroup con ict.
Loyalty, recruitment and training, and intergroup hostility are by no means all theorganizational consequences that this paper suggests. The distribution of power, the

REFLECTIONS, Volume 4, Number 1

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BENNIS
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Towards a ”Truly” Scientic Management

problems of group cohesiveness, the required organizational  uidity for arranging task
groups on a rational basis, and the change in organizational roles and status all have to
be considered. More time and energy than are now available are needed before these
problems can be met squarely.
However, one thing is certain: whatever energy, competence, and time are required,it will be necessary to think generally along the directions outlined here. Truth is a cruelmaster, and the reforms that have been mentioned or implied may not be altogether
pleasant to behold. The light of truth has a corrosive effect on vested interests, outmoded
technologies, and rigid, stereotypic patterns of behavior. Moreover, if this scientic ethos
is ever realized, the remnants of what is now known as morale and efciency may beburied. For the spirit of inquiry implies a confrontation of truth that may not be ‘‘satisfying’’ and a deferral of grati cation that may not, in the short run, be ‘‘efcient.’’ However, this is the challenge that must be met if organizations are to cope more successfully
within their increasingly complicated environments.

References

12

Barber, B.: ‘‘Science and the Social Order,’’ Free Press, Glencoe, Ill.:, 1952.
Baritz, L.: ‘‘The Servants of Power,’’ Wesleyan University Press, Middletown, Conn., 1960.
Bateson, G.: Social Planning and the Concept of Deutero-Learning, in ‘‘Reading in Social Psychology,’’ ed. T. M. Newcomb and E. L. Hartley, 1st ed., pp. 121–128, Henry Holt and Co., Inc.,New York, 1947.
Bendix, R.: ‘‘Max Weber: An Intellectual Portrait,’’ Doubleday & Company, Inc., Garden City, N.Y.,
1960.
Bennis, W. G.: Leadership Theory and Administrative Behavior: The Problem of Authority, Adm.
Sci. Quart., vol. 4, no. 3, pp. 259–301, December, 1959.
Berkowitz, N., and W. Bennis: Interaction in Formal Service-Oriented Organizations, Adm. Sci.
Quart., vol. 6., no. 1, pp. 25–50, June, 1961.
Bertalanffy, L. V.: The Theory of Open Systems in Physics and Biology, Science, vol. 111, pp. 23–
29, 1950.
Blake, R. R., and J. S. Mouton: From Industrial Warfare to Collaboration: A Behavioral Science
Approach, Korzybski Memorial Address, April 20, 1961.
Bronowski, J.: ‘‘Science and Human Values,’’ Harper and Brothers, New York, 1959.
Brown, W.: ‘‘Exploration in Management,’’ John Wiley & Sons, Inc., New York, 1960.
Bruner, J.: ‘‘The Process of Education,’’ Harvard University Press, Cambridge, Mass., 1961.
Emery, F. E., and E. L. Trist: Socio-Technical Systems, paper presented at the 6th Annual International Meeting of the Institute of Management Sciences, Paris, France, September, 1959.
Erikson, E.: Identity and the Life Cycle, Psychol. Issues, vol. I, no. 1, Monograph 1, 1959.
Freud, S.: Analysis Terminable and Interminable, in ‘‘Collected Papers,’’ ed. E. Jones, vol. 5, Basic
Books, Inc., New York, 1959.
Fromm-Reichmann, F.: ‘‘Principles of Intensive Psychotherapy,’’ University of Chicago Press, Chicago, 1950.
Geiger, G.: Values and Social Science, J. Soc. Issues, vol. VI, no. 4, pp. 8–16, 1950.
Gouldner, A.: Locals and Cosmopolitans: Towards an Analysis of Latent Social Roles, I, Adm. Sci.
Quart., Vol. 2, pp. 281–306, 1957.
Jahoda, M.: ‘‘Current Concepts of Positive Mental Health,’’ Basic Books, New York, 1958.
Leavitt, H. J.: Unhuman Organizations, address presented at the Centennial Symposium on Executive
Development, School of Industrial Management, Massachusetts Institute of Technology, Cambridge, Mass., April 27, 1961.
Leavitt, H. J., and T. L. Whisler: Management in the 1980’s, Harv. Busin. Rev., vol. 36, pp. 41–48,
November-December, 1958.
McGregor, D.: ‘‘The Human Side of Enterprise,’’ McGraw-Hill Book Company, New York, 1960.
McGregor, D.: New Concepts of Management, Technol. Rev., vol. 63, no. 4, pp. 25–27, February,
1961.
March, J., and H. Simon: ‘‘Organizations,’’ John Wiley and Sons, Inc., New York, 1958.
Morison, E.: A Case Study of Innovation, Engng. Sci. Mon., vol. 13, pp. 5–11, April, 1950.
Parson, T.: ‘‘The Social System,’’ chap. VIII, Free Press, Glencoe, Ill., 1951.
Sanford, N.: Social Science and Social Reform, presidential address for SPSSI at the Annual Meetingof the American Psychological Association, Washington, D.C., August 28, 1958.
Selznick, P.: ‘‘Leadership in Administration,’’ Row, Peterson & Company, Evanston, Ill., 1957.
Sherif, M., and C. Sherif: ‘‘Groups in Harmony and Tension,’’ Harper and Brothers, New York, 1953.

Volume 4, Number 1, REFLECTIONSCommentary
by Warren G. Bennis
I reread my 1962 paper at my own peril. The concerns were obvious. What if time had transformed
the voice that seemed so authoritative into something that seemed downright naõ¨ve? What if theideas no longer did credit to the person I’ve become? What if time had simply proven me wrong.
Well, it was like anticipating an old friend you hadn’t seen in 40 years and hoping he looked justlike you remembered him.
Although I sat down with some trepidation, rereading the article turned out to be a delightful
surprise, although I have to confess, its voice, so to speak, is not quite the one I have now. The
younger Bennis was more tolerant of and uent in academic language, more taken with charts andtables and those elegant 2 × 2 diagrams, than the present one is. But then again, he had spent
most of his time in classrooms and libraries. Another thing: the article’s repeated use of male pronouns when describing leaders was obviously written before the contemporary women’s movement
reminded us that the best and the brightest sometimes wear skirts instead of trousers. (The Feminine Mystique was published one year after this article appeared.) But the ideas, the essence of thepaper, have held up and perhaps are more relevant today than any author has the right to expect.
One of the pleasures and surprises of reviewing this piece was the discovery that it is essentially an outline of my intellectual preoccupations of the past four decades. I continue to be fascinated by the tension in organizations between personal actualization—freedom, if you will —andthe achievement of institutional goals. I continue to have faith in science, with its respect for dissent and its commitment to experimentation, as a model for organizational health and vitality. And
I am more interested than ever in creative collaboration, the process whereby a group pools its
talents and creates something that transcends the contributions of individuals.
I would like to think, also, that this paper limns the fallacy of the new ‘‘numbers game,’’ thosemisleading metrics and so-called criterion variables that are in common use today to pad earnings.
The ‘‘bottom line,’’ as now conceived, is a tragic folly, trapping too many innocents in a false
dream. The idea that the stock price alone is the key indicator of organizational viability is ludicrous; for that matter, so is any single nancial result. The effect of this ‘‘off-balance sheet’’ hocuspocus as well as other accounting gimmicks has still not seen its day. Unless this chicanery is
checked, corporate credibility will lead and already has led to disillusionment. But enough damage
has been done, and more will be reported—big time— in a newspaper near you. The nancial irregularities and other ‘‘neat’’ devices have led to egregious short-termism, which has in turn led to
the recent Tyco International, Enron, and Arthur Andersen debacles. We can expect to see thedownfall of many other respected corporations that were also taken in not only by these shadymetrics but by the fallacy of concreteness; to wit: if it is easily counted and measured, that’s reality. It reminds me of that old saw about the man searching for his car keys under the lamplightwhen they fell yards away from the light, further down the darkened driveway.
I have to confess that I’m very proud my 40-year-old article is reprinted in Reections, a journal I respect for its intellectual range and unobvious essays. Most of all, I’m proud to be publishedin the journal founded and edited by my former MIT colleague, Ed Schein.

REFLECTIONS, Volume 4, Number 1

BENNISw
Towards a ”Truly” Scientic Management

Simon, H. A., D. W. Smithburg, and V. A. Thompson: ‘‘Public Administration,’’ Alfred A. Knopf,
Inc., New York, 1950.
Thelen, H.: ‘‘Education and the Human Quest,’’ Harper and Brothers, New York, 1960.
Waddington, C. H.: ‘‘The Scienti c Attitude,’’ Penguin Books, Inc., Baltimore, Md., 1941.
White, R. W.: Motivation Reconsidered: The Concept of Competence, Psychol. Rev., vol. 66, no. 5,
pp. 297–333, September, 1959.
Whyte, W. H., Jr.: ‘‘The Organization Man,’’ Simon & Schuster, New York, 1956.

13

The Corporation as aCommunity, Not as
a Corpus
Russell L. AckoffT

he concept of a corporation has evolved from a purposeless mechanism created by its
god (the owner) to do his work, to a purposeful, animate system (an organism) witha head and distributed owners but with parts whose purposes are irrelevant to both, to asocial system that is obliged to serve the purposes of its parts and its containing systems
and their parts. As a social system, the corporation has begun to be viewed as a community, an organization with no owners but which exists primarily to serve the needs of
its stakeholders, particularly its members.
Charles Handy has argued convincingly that corporations should be viewed as communities, not as organisms (1999). I have reached the same conclusion by a different
route, and I present it here along with some consequences to management and organizations.
Russell L. Ackoff
Professor Emeritus
The Wharton School
University of Pennsylvania
RLAckoff@aol.com

14Ó

2002 by Russell L. Ackoff.

The Mechanistic View
Industrial enterprises, as we know them today, began with the Industrial Revolution,
normally dated to the mid-1700s in Europe and the mid-1800s in the US. While England
was industrializing and urbanizing, the US was displacing the American Indians, developing agriculture, and constructing a communication and transportation infrastructurethat yielded markets large enough to sustain enterprises that could extend beyond thesmall, dispersed communities in which they were located.
Although the Industrial Revolution came late to the US, it was responsible for one
major innovation—establishment of the  rst school of business, The Wharton School,
created by Joseph Wharton, a blacksmith, at the University of Pennsylvania in 1881. It
was quickly followed by others.
The advent of an academic approach to management and organization required aconcept of an economic enterprise, a description of its nature. It is not surprising that theone adopted re ected the way the universe was conceptualized. Sir Isaac Newton, following the French philosopher Descartes, saw the universe as a mechanical system —a hermetically sealed clock. This system cannot display choice, nor can its parts. Its behavior
is determined by its internal structure and the causal laws of nature, which Newton
thought he had formulated. A system is a whole that is de ned by its function in one ormore larger systems of which it is a part. How can the universe, a system that contains
everything, be given a function in a larger system? Newton escaped this dilemma by sayingthat the universe is a system that God created to do His work. Every religion in the West
accepted this belief, regardless of sectarian differences.
It is not surprising that early enterprises were also conceptualized as mechanismsthat their gods, the owners, created to do their work. Like God in the universe, the ownersof an enterprise had virtually unlimited ability to use it and its parts as they saw t. The
work of enterprises was to provide the owners returns on their investments by making

Volume 4, Number 1, REFLECTIONSACKOFFw
The Corporation as a Community, Not as a Corpus© Emily Spera pro t. The owners saw prot as the raison d’être of a business enterprise, and many
still do.
The owners viewed employees as machine parts easily replaced when they no longer
functioned well or were no longer needed. Such treatment was possible and accepted aslong as (1) members of the work force had very low skills, (2) there was a plentiful supplyof people who wanted to work (especially immigrants) with little education and low levelsof aspiration, and (3) there was no form of social security. Therefore, the unemployedeither had to depend on others for support or starved. Under these conditions, employees
tolerated abusive jobs and conditions, very low compensation, and a miserable quality ofwork life. Charles Dickens’s writings reect these conditions.
Of course, workers were people with purposes of their own. However, the owner as
employer was not under any obligation to treat them as such. As a result, workers were
the object of dehumanizing mechanistic treatment, a process cast in concrete by Frederick
W. Taylor, who viewed workers as surrogate machines or machine parts.
An owner was treated as a god within the mini-universe he had created. He waspresent and all powerful in it; there were no laws or regulations to constrain his treatmentof others in or out of the enterprise. Government had not yet intervened, and unions had
not yet formed. Environmental protection agencies and advocacy groups were yet to come.
The environment was a passive supplier of the needs of the enterprise and a passive
receiver of its output, including its waste. It was assumed to have an innite capacity for
both.
Once the US embraced the Industrial Revolution, it rushed successfully to catch up
with Europe. Ironically, the success yielded by the mechanistic view of economic enterprises was its undoing. Industry mechanized increasingly in the early twentieth century,
which required increased education and workers’ skills. As these increased, the cost of
their replacement also increased; workers became less disposable. Aware of this, they
became less pliant than their predecessors. At the same time, government regulation andunions began to appear, both primarily directed at protecting workers’ health and safety.
Meanwhile, the economy thrived.

The Organismic View
The major change in the prevailing concept of an economic enterprise occurred because,even if most enterprises reinvested all their pro t in growth, they could not grow as fast
as possible. In order to realize all possible growth, the owners had to give up some control

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The Corporation as a Community, Not as a Corpus

by sharing ownership to raise the additional capital required. Most of the enterprises thatsurvived and grew chose equity nancing, a way to raise capital by sharing ownership.
Ownership became diffuse, no longer concentrated in a powerful presence but dispersed
among absentee owners, an abstract spirit.
Enterprises recapitulated what had happened to deity in the West 1,900 years earlier:
God himself had disappeared and become an abstraction. An institution, the church, hadbeen created to facilitate communication between man and God, and a profession, theclergy, was established to manage that institution. The same thing occurred in industry;
the institution of management was created. Managers, like their counterparts the clergy,
claimed to know the will of the owners by revelation. But, as James Burnham pointed
out in his provocative book, The Managerial Revolution, corporations were no longer
controlled by their owners, but by managers (Burnham, 1941). The church, of course, issimilarly managed—by the clergy, not God.
As ownership of an enterprise dispersed, its managers became preoccupied with survival and growth; return on the investment of its owners became a requirement for survival, not an objective. This led to a change in the way enterprises were conceptualized—
from a mechanistic to an animate system, an organism. Unlike mechanisms, animate
organisms are considered to have purposes of their own, but their parts do not; behaviorof their parts was believed to remain determined.
In the eyes of the law and the public, enterprises were biological entities or persons.
Publicly owned enterprises were called corporations, a word derived from corpus, a body.
The chief executive was and is still called the head of the  rm (mechanisms have nohead). Stafford Beer carried the analogy further in his two
well-known books, The Brain of the Firm (its management)
and The Heart of the Enterprise (its value system) (Beer,
1972; 1981). Many other biological concepts were applied
to corporations, for example, sickness, health, birth, maturity, and death. The employees of an enterprise—who
were required to have increasing skills, hence, training, because of the advances in the mechanization of work—were then viewed as difcult-toreplace organs of a body, rather than as easily replaceable machine parts. Their healthand safety became management’s major preoccupation; the work environment and conditions were increasingly regulated by government and protected by emerging unions.
Sweatshops and abusive use of women and children in the workplace were signi cantly
reduced.

In the eyes of the law and the
public, enterprises were biologicalentities or persons.

The Social-Systemic View
16

World War II initiated another major change in the conceptualization of enterprises. The
military drafted many workers, who had to be replaced due to the great demands on
industrial productivity. Spurred by patriotism, women became part of the work force—for example, Rosie the Riveter and Tillie the Toiler. Many women were dependent on
men who had entered the service and, therefore, were provided with a living allowanceby the US government. Thus, their principal reason for working was not economic, but
to support the war effort. To get the most out of them, managers had to treat them aspeople with interests and purposes of their own. If they were unsatised, the quality andquantity of their output was negatively affected. Managers did not treat them as organsof a corpus or replaceable machine parts.
The men returning from World War II were fed up with military discipline, with being
deprived of self-control, and with being treated as less than human. They too wanted theiremployers to pay more attention to their humanity. These increasingly liberated and demanding men and women were molded by World War II into the parents of the ‘‘Spockgeneration’’—children who were raised more permissively than any of their predecessors.
Later, when these products of permissive upbringing entered the workforce or higher
education, they were less tolerant of autocratic rule than even their parents. They expecteda great deal more from work than compensation. More and more, they wanted work to
be ful lling as well as rewarding.

Volume 4, Number 1, REFLECTIONSCorporations are now in the earlystages of conceptualization associal systems, which have purposesof their own, whose parts havetheir own purposes.

ACKOFFw
The Corporation as a Community, Not as a Corpus

The increasing focus on the purposefulness of the parts of systems was re ected in
the groups forming within systems that protested the way in which their members weretreated by the containing system. Examples include the race movement, women’s liberation, the generation gap, alienation from work, and the poverty in third-world countries.
Increasing attention to such demands yielded what might be called the humanization
movement. Society and corporations were pressured to become more humane.
At the same time, individuals and organizations increasingly protested the way corporations of which they were not a part were affecting them and their environments,
reducing their quality of life. The environmental and consumer movements were conspicuous examples of external demands placed on corporations.
Management had to take into account the needs and desires of all the corporate
stakeholders (that is, all those directly affected by corporate behavior). These included
not only the employees at all levels (including management),
but also the shareholders, customers, consumers, suppliers,
government, creditors, debtors, and so on. Management was
gradually inundated in a sea of purposes: those of the corporation, its parts, the larger systems of which it was a part,and parts of its containing systems. Furthermore, objectives
were inconsistent both within each level and between levels.
Such concerns are not those of the brain or head of abiological entity, an animate organism. Consequently, corporations are now in the early stages of conceptualization associal systems, which have purposes of their own, whoseparts have their own purposes, and as parts of larger purposeful systems that also have
purposeful parts.
Increasingly, from the viewpoint of society, the function of corporations is to produce
and distribute wealth. The productive employment they provide is the only way society
can simultaneously produce and distribute wealth. Every other way of distributing wealthconsumes it. When enterprises graduated from being seen as mechanisms to being seenas organisms, growth was deemed necessary for survival, because its opposite, contraction, ended in death. Furthermore, the production of prot came to be not an end, but arequirement for survival. Peter Drucker once pointed out that prot is to an enterprise
what oxygen is to a human being: necessary for its existence, not the reason for it. Protitself has no value; what it can be used for does.

Development versus Growth
A similar transformation is occurring as corporations are conceptualized as social systems:
survival and growth are a means to a different corporate objective —development, its own
development and that of its stakeholders, large and small. Development is not the samething as growth. Neither is necessary for the other. Cemeteries and rubbish heaps grow;they do not develop. Einstein continued to develop long after he had stopped growing.
Development is an increase in the desire and ability to satisfy one’s own needs andlegitimate desires, and those of others. (The ful llment of a legitimate desire does notdeprive others of their ability to pursue their needs and legitimate desires.) Development
is an increase in competence. Quality of life is an appropriate index of development; standard of living is an appropriate index of growth. These indexes can increase independentlyof each other, and either may increase when the other decreases. It is for this reason thatthe focus on quality—of work life, of life itself, and of products and services— became so
prominent in the post-World War II era. We have been willing to sacrice standard ofliving to improve the quality of life.

The Need for Democracy
The corporation viewed as a social system differs fundamentally from one viewed as anorganism. In an organism, the parts exist to serve the whole; in a social system, the whole
exists to serve its parts. Animate organisms all have a centralized control center: the brain.

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The Corporation as a Community, Not as a Corpus

Autocratic control, which characterizes most organically conceptualized corporations, isdysfunctional in organizations whose well-educated parts know better than their superiors
how to perform their functions. The greater the educational level of the nonmanagerial
members of a work force, the less effective is command-and-control management. Democracy becomes essential for an organization that has a highly educated work force andis conceptualized as a social system.
A social system is democratic to the extent that the following conditions hold:
1. All those who can be affected by a decision made in the system can participate inmaking the decision either directly or indirectly through representatives they select.
2. There is no ultimate authority in the system; all those who have authority over others
individually are subject to their collective authority. Therefore, no one can hold aposition of authority without approval of those over whom they exercise it.
3. Every member of a social system is free to do whatever he or she wants to do, provided it has no effect on others. If it does affect others, and the others approve, it canbe done; otherwise, it cannot be done.
This last condition eliminates the issue of centralization versus decentralization. All decisions are made at the lowest organizational level that includes all those affected, neverat a higher level.
A democratic social system cannot be seen as either a machine or an organism; itmust be conceptualized as a community. As Charles Handy put it:[In a community] the individual is a member, not an employee, a resource, not a cost, and is
not easily to be expelled. Those who provide the investment needed get their fair return andtheir security, but they do not own it. No one owns a community, any more than one owns afamily (Handy, 1999: 51).

18

Corporate shareholders are viewed as investors, not owners. Ownership has traditionally been associated with the investment of money in the form of stock purchases.
This concept was initiated at a time when investment capital was a relatively scarce resource. It no longer is. As economies have grown, the principal hurdle involved in startingan enterprise, or growing one that exists, is no longer the acquisition of capital, but theacquisition of knowledgeable, intelligent, and competent people’s time.
Time, unlike money, is limited and not renewable. Time invested in an enterprisecannot be withdrawn as money can, and it cannot be increased by investment. Therefore,
in a real sense, employees make the largest investment in an enterprise. When an enterprise ceases to exist, the employees suffer the most. Most stockholders can continue theirlives with only minimal disruption, if any. They can hedge their nancial investments inways an employee usually cannot hedge his or her investment of time.
The point is not that employees should be seen as owners of an enterprise, but thatownership is no longer a relevant concept. In a rm treated as a community, employees
are treated as residents. Stockholders are investors who are entitled to a  nancial return on their investment, as a community’s bondholders. The obligations of a rm-ascommunity to its residents (employees) are more varied andmore important than its  nancial obligations to those who
invest money in it.
A community provides the facilities, processes, andinfrastructure that enable its members to pursue their objectives and enable the community to serve its other stakeholders. Those who manage a community are subject to control by and are accountable
to those who are managed. This is why those who govern communities are referred to as‘‘public servants.’’ Democratic communities are ‘‘lowerarchical,’’ not hierarchical.
The corporation as a community is itself part of one or more larger communities andtherefore has a function in them, particularly in the smallest containing community. As
noted above, the principal corporate function in containing communities is the production
and distribution of wealth. Productive employment is the one known way of simultaneously producing and distributing wealth. All other ways of distributing wealth consume
it. In addition, every community has a responsibility for contributing to the development

In a rm treated as a community,
employees are treated as residents.

Volume 4, Number 1, REFLECTIONSACKOFFw© Jonathon Liffgens

The Corporation as a Community, Not as a Corpus

of its containing communities. The more the parts of a community contribute to that community’s development, themore it can contribute to theirs.
Corporations operating outside their national homes
have the same obligation to the nations in which they operate as they do in their home country. They can and should
serve as an important instrument for national development, particularly in less developed countries. Without
an equitable (not an equal) distribution of wealth and development among and within nations, there can be no
lasting global peace. It appears that foreign corporations
can collectively contribute more to the development ofmany less developed countries than can their governments. Arie de Geus argues that the corporation of the
future must display ‘‘civic behavior’’ and ‘‘good citizenship’’ in all the countries in which it operates (1997: 202). If wealth, development, anddemocracy were more equitably distributed among and within nations, it is doubtful thatthe world would be experiencing as much conict as it is currently.

Internal Market Economies
Communities that have employed a centrally controlled and planned economy (for example, the Soviet Union) have had dif culty surviving, and none have thrived. They havenever attained a high level of economic development because, however well they have
solved the distribution-of-wealth problem, they have failed to solve the production-ofwealth problem. As a result, they end up distributing poverty. Their failure derives fromthe fact that their economies breed internal bureaucratic monopolies that are neither ef cient nor responsive to the parts of the community they are supposed to serve. Therefore,
another requirement for continuous development of a community, and a corporation
treated as such, is that it employ a market economy internally. Most, if not all, community
purchases should be subject to competitive alternative sources. An effective community
is a social system that permits internal monopolies only when they are essential for systemic development or are required for security purposes.

Conclusion
A community is a system of parts whose properties are derived from the properties designed into the whole. The whole is not a mere aggregation of separately designed andcontrolled parts; it is a ‘‘coming together’’ of the parts into a whole. This means that a
corporate plan should not be an aggregation of plans separately prepared by its parts, butthat the plans of the parts should be derived from and coordinated with a plan for thewhole.
The corporation as a community has an obligation to contribute to the developmentof all the countries in which it operates primarily, but not exclusively, by the production
and distribution of wealth.
I have identi ed only a few implications of conceptualizing a corporation as a community (for additional consequences, see de Geus, 1997). Such implications have only
begun to be recognized and explored. The corporations exploring them are likely to leadthe way and dominate the future.

References
Beer, S. The Brain of the Firm, 2nd ed. (Chichester, UK: Wiley, originally published 1972).
Beer, S. The Heart of the Enterprise (Chichester, UK: Wiley, 1981).
Burnham, J. The Managerial Revolution (Westport, CT: Greenwood Publishing Group, 1941).
de Geus, A.P. The Living Company (Boston: Harvard Business School Press, 1997).
Handy, C. Waiting for the Mountain to Move (San Francisco: Jossey-Bass, 1999).

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ACKOFF

Commentary

The Corporation as a Community, Not as a Corpus

w

by Peter M. Senge

20

Peter M. Senge
Senior Lecturer, MIT
Founding Chair, Council of Trustees
Society for Organizational Learning
psenge@mit.edu

Russell Ackoff, one of the pioneers of systems thinking applied to management, argues that theconcept of the corporation has evolved: from a purposeless mechanism to serve its owner to anorganism to a human community, a social system. I rmly believe Ackoff’s insights are crucial. Pondering the implications of shifting from the mechanistic view to seeing organizations as living human communities has been enormously insightful for me over the past few years. Moreover, I
believe such a shift in thinking on a large scale holds great promise for the long-term well-beingof organizations and their members, as well as the larger social and natural systems within which
we all live.
Yet, of all Ackoff’s comments, the one that most sticks with me is the simple statement: ‘‘We
are in the early stages of conceptualizing corporations as social systems.’’ It leads me to wonder,‘‘How early is ‘early’?’’ And, ‘‘What assures us that this evolution in thinking is inevitable?’’In the Summer 2002 issue of Reections, Lotte Bailyn commented on the differences between
American executives and their counterparts from Asia and Europe. Listening to their comments to
MIT Sloan Fellows students over the course of a year, she was struck by how often the Europeans
and Asians spoke of the responsibilities of their rms to their employees and to society, while theAmericans spoke almost exclusively of their responsibility to shareholders.
Applying Ackoff’s characterizations of the stages in corporate evolution, this would suggestthat the Asian and European business communities have evolved toward the human community
conceptualization, while their American counterparts remain entrenched in an earlier stage. Ackoffsays that when the company is conceptualized as machine, its purpose is simple: to make a protfor its owners. Or, as Arie de Geus has said, from the machine worldview, ‘‘a company is a machinefor producing money’’ (1997). Seen as a human community, according to Ackoff, it must take into
account all its stakeholders, including its members (obligations to whom are ‘‘more important thanits obligations’’ to investors) and the larger systems of which it is a part—exactly what Bailyn observed the American managers not doing.
These views are not limited to American businesspeople. Not too long ago, in a seminar withmany management experts at Harvard, I was asked to debate a leading economist, Michael Jensenof Harvard, on the purpose of organization change. Jensen’s main point was that it does businesses
and society a disservice when we allow the purpose of the business to be construed as anythingother than ‘‘the maximization of rm value,’’ and that increasing economic value of the rmshould in turn guide all change efforts. In particular, Jensen is a passionate critic of the ‘‘stakeholder’’ theory of the rm because he believes that people are not capable of maximizing a ‘‘multivalued objective function.’’ In other words, if you ask a rm’s managers to maximize several
objectives —such as prot, employee well-being, positive social and environmental impact —this issimply not possible, and the consequent loss of focus will compromise business performance. Jensen’s passion on the subject was fueled by what he saw as the squandering of resources and ‘‘politicization’’ that comes when management is distracted by trying to satisfy too many purposes,
and often ends up putting its own interests rst. Not surprisingly, Jensen was one of the intellectual leaders of the ‘‘shareholder revolt’’ that swept through American enterprise in the 1990s. 1
Where does the shareholder revolt t on Ackoff’s evolutionary path? Indeed, it is not an isolated datum. There are many other signs that the mechanistic and organismic views are alive andwell. As far as I can see, referring to investors as the owners of the rm is still commonplace,another of Ackoff’s characteristics of the pre-community view of the rm. So too are ‘‘human resource’’ departments. It seems to me that seeing people as resource inputs to a rm’s production isvery different from seeing them as members of a community.
All of this would not be quite so disquieting if we believed the American model of capitalism
was declining in inuence. But, if anything, the opposite seems to be happening worldwide. The
shareholder revolt that started in the US spread to Europe in the mid-1990s. Tough CEO ‘‘drivers ofshareholder value’’ (how’s that for a mechanical metaphor!) were widely sought and much publicized as ‘‘heads’’ of many European rms, just as happened in the US. Today, by and large, the Jack
Welch model of the shareholder value CEO still seems to be the paragon for most business journalists, although there are a few signs that the hero CEO myth is cracking, as suggested by a coverstory of The Economist titled ‘‘Fallen Idols: The Overthrow of Celebrity CEOs’’ (May 4–10 2002).
Executive malfeasance toward investors has commanded news headlines for months. It is hard to

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The Corporation as a Community, Not as a Corpus

imagine similar public outrage arising for systematically violating employees’ rights or for destroying local communities or ecosystems. Overall, it is hard to be sanguine that the evolution of which
Ackoff speaks is indeed occurring.
My own feeling is that the shift from the mechanistic to the living system view is far more
profound and challenging than we realize. As Visa’s founding CEO Dee Hock says, ‘‘We are all closet
Newtonians,’’ deep down convinced that someone is in control, or ought to be. Mechanistic thinking dominates our most formative institution, school: ‘‘right (versus wrong) answers’’ to articial
problems, fragmentation of interconnectedness into largely arbitrary academic disciplines, andavoidance of making mistakes, which is the only way any living system learns. By the time weenter our adult, professional lives, we are master reductionists.
Moreover, things tend to get worse rather than better in times of crisis. As neuro-physiologists
say, ‘‘The brain downshifts under stress.’’ The greater the perceived threat, the more likely are
deeply conditioned instincts to determine behavior. They express themselves in simplistic reactions
to get things ‘‘back in control,’’ ranging from the shareholder revolt and search for the hero CEO inbusiness to the ‘‘standardized testing’’ movement to save public education.
I doubt that Ackoff would disagree with any of this—indeed it is in line with being in theearly stages of seeing corporations as social systems. Yet, business organizations and all large institutions are likely to be facing more stress, not less, in the future. So, it becomes crucial for all of us
to ask, ‘‘What will it take to continue to support the evolution Ackoff predicts, given the types ofpressures likely to prevail on real people and real institutions?’’
Lotte Bailyn concluded her comment in the last issue by asking whether or not the SoL community could ‘‘provide the venue for such a conversation’’ about the purpose and role of companies in the whole society. Indeed, it has started to do just that, through the ‘‘Global SoL Network’’(see, for example, the ‘‘Marblehead Letter’’ on the SoL website ^ www.solonline.org& , written by agroup of member company executives convened in June 2001). A similar meeting occurred at the
SoL Annual Meeting in June 2002. There is an expanding array of change projects attempting tofoster ongoing collaboration and mutual support —among companies, NGOs, and governmental organizations—in diverse social and environmental arenas (for example, see updates on the SoL Sustainability Consortium on the SoL website).
But, we must all keep asking what will support this evolution. The birth of a new species, likeany birth, is perilous.

Note
1. Jensen’s and my ‘‘debate’’ is published in M. Beer and N. Nohria, eds., Breaking the Code of Change (Boston:
Harvard Business School Press, 2000).

Referencede Geus, A.P. The Living Company (Boston: Harvard Business School Press, 1997).

21

REFLECTIONS, Volume 4, Number 1

Leadership Is Sourced
by a Commitment to
Personal Development
Greg Merten

I

Greg Merten
General Manager
Vice President
Hewlett-Packard
Greg_Merten@HP.com

22Ó

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

n today’s world, organizations must continually evolve to stay relevant to customer,
shareholder, or constituent’s needs and remain competitive. If this evolution has notoccurred, something more drastic—reinvention—is called for. An organization reinventing itself goes through a crisis in leadership from top to bottom. Because leadership isabout causing change, we all need to be leaders, especially when signi cant change isrequired. Key questions for each of us are these: What changes are needed? What choices
am I making in relationship to those changes? How competent am I in perceiving anddelivering on those choices?
My premise is that a continuing ability to lead is sourced by an ongoing commitment
to personal development. Change is too prevalent for anyone to believe that his or her
position grants a license to avoid learning and developing. Learning needs to be part ofthe culture of all organizations at all levels; otherwise, we become mis ts.
The most effective leaders have a synergistic balance of analytical skills related to IQ
and to emotional skills referred to in the literature as EQ, or emotional intelligence, ameasure of how capable we are in creating value in relationships with others. Peter Senge
once told me that a former CEO of Royal Dutch Shell said that he considered his greatest
attribute as CEO was his willingness to be vulnerable. That is an example of the value ofemotional intelligence. IQ is more straightforward and measurable than EQ, which often
gets a bad rap as ‘‘touchie-feelie’’ or some other pejorative moniker. In our complex world,
no one can see everything. The most accurate picture emerges from a variety of people andsources. Productive relationships with others, that is, high EQ, give access to thosesources.
Dave Packard, one of the founders of Hewlett-Packard, had ‘‘11 Simple Rules,’’ a setof personal relationship rules that he used to become a more effective leader. They are
an indication of his EQ. The rules were found in HP archives a few years ago, unfortunately, after Dave had written The HP Way. 1 In the late fties, Dave recommended theserules to his newly appointed division managers, when the company created its  rst divisions, as a way they could continue their personal learning. In this masterful stroke, hecommunicated to the new managers that not only was it okay to keep learning about
yourself on the job, but also it was critical. Even he, as the head of the company, wasvery deliberate about being a ‘‘work in progress.’’
Our ability to learn and to adapt ourselves to changing conditions lies largely in EQ
attributes. All too often, organizations focus on analytical skills while excluding EQ, which
creates leaders who can analyze problems but who are ineffective at forming powerful
teams to lead change. At HP, if general managers fail, it is not because they aren’t smart
enough, but because they can’t lead a team effectively. In HP’s case, we have moved froma very distributed, autonomous set of businesses to one company, acting as an integrated
whole. This requires a powerful blend of both analytical and emotional intelligence tocreate customer value in a complex organizational environment.
I have been with HP for almost 30 years, all that time in management and, more
recently, in senior management. For the past 20 years, I have been involved in the explo-

Volume 4, Number 1, REFLECTIONSMERTEN
Leadership Is Sourced by a Commitment to Personal Developmentw

sive growth of the inkjet business, probably HP’s most successful technology invention.
I have spent the past 17 years in an environment of constant change, growing an organization from about 75 people in 1984 to about 10,000 people by 2000, with annual
revenues growing from about $3 million in the  rst year to several billion dollars currently.
We produce hundreds of millions of ink cartridges annually at sites we have createdaround the world. To maximize productivity, we have chosen to operate these sites as asingle, integrated whole in a high-change, high-growth environment. The transition froma collection of silos to a ‘‘single factory’’ was an immense organizational challenge thattook years to realize, but it has brought huge value to the bottom line.

Genesis of the Need for Change

REFLECTIONS, Volume 4, Number 1

23© Jonathon Liffgens

Arie de Geus, in The Living Company, documented a study of the characteristics of a longlived company.2 One is that the company is aware and responsive to the greater environment in which it operates. The digital age will break down many old structures and willfunction by principles more related to biology and living systems than to mechanistic
principles predicated on the illusion of command and control. These changes are not justfundamental; the rate at which they occur is accelerating, rendering old methods of dealing with change inadequate, hence, HP’s need to reinvent itself from a ‘‘ercely loyal
collection of tribes’’ to a single integrated company.
Let me tell you a story that explains HP’s need for transformation and shows theinadequacies of old methods and organizational responses. We have sold thousands of
600 series DeskJet printers to a customer who uses them in a connected environment for
which they were not designed. This caused many problems that eventually led to a meeting between HP and the customer. Eight customer representatives and 56 HP employees
showed up—everyone who thought they had something to say about the matter!
The way we need to operate in order to bring value to our customers requires newlevels of trust and new skill not only in relationships, but also in effective communication,in system value, and in collaboration. It also requires a new level of ‘‘it isn’t about me or
my career, or my organization; it’s about the customer, the shareholder, and our fellow
employees.’’ At HP, we relate to each other and accomplish
work based on the ‘‘HP way,’’ a set of values and practices.
I have been a serious student of the HP way for the past
10 years. When I reected on the ‘‘11 Simple Rules’’ that
Dave recommended to his new division managers, I realized that Dave Packard and Bill Hewlett’s relationship toeach other and to personal learning is what created the HP
way. If we are to preserve it, each of us needs to develop
the same relationship to personal learning that Bill andDave exempli ed. We must continually recreate the HP
way. When we treat the HP way as the source, as opposedto the consequence, of something more fundamental, thatis, personal learning, then it devolves into a set of entitlements or empty phrases, because we don’t consider our accountability in preserving the values by practicing the
behaviors. I believe this is true in any organization; capability to operate effectively must be continually recreatedby employees learning about themselves, their environment, and others. This is at the heart of leadership. Relationships generate value. That is so obvious, we often misstheir importance. Bill’s nephew once asked him if he andDave ever fought. Bill answered, ‘‘No, never!’’ I once calculated HP’s size if it had grown at a 20% lower rate because Bill and Dave lacked a working relationship. It would
have been about $12 billion, not $50 billion. If it had grownat half the historical rate, it would be about $200 million,
roughly the size of Tektronix, which started about thesame time!

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24

My Development as a Leader
I would like to talk about my leadership development —my story. My goal is to change
your life, not because I say anything particularly brilliant, but rather because something
I say, coupled with your engagement, will change your perspective, which will change
your behavior, which will change your life. Remember, we see the world not as it is, but
as we are. So I ask you not to accept or reject what I say merely on the basis of what you
already know, but to be open to the possibility that what you know should be discarded
for something better.
During the past 20 years in HP’s inkjet business, my responsibilities have grown manytimes. It is unusual for someone to stay at the top of an organization in a business that is
doubling roughly every two years. I credit my role as oneof the vice presidents of this multibillion dollar business to
my willingness to develop personally.
About 10 years ago, three events or circumstances
jolted me out of avoiding personal change. The rst wasthat my boss was going to retire in a year or two and I
wanted his job. He told me I was far from a shoo-in. The
business was growing rapidly, and there was concern as towhether I could provide the necessary leadership. Whoever replaced him had to be able
to lead what the organization would become, not what it was at that time. Although I
appreciated his candid assessment, I was intimidated by the challenge.
The second event was the loss of our third son, Scott, in a car crash in 1990. Scott,at 16, was more naturally self-condent, and therefore contributed more to others, thanI was, despite my successful life. I had entered adulthood with a legacy of inaccurate selfimages that did not serve me well. Like many of us, I was too insecure to take the personalrisk to achieve the growth necessary for being a leader of this business. I was standing
still and not reinventing who I was in relationship to other people. Scott was the kind of
person who inspired me to challenge that.
Third, I could see that I was not smart enough and did not have enough time to
manage, as in ‘‘control,’’ an organization that would grow to 10,000 people. They would
be people of European, Asian, Latin American, and US cultures who had to work closely
together in a high-tech, high-change environment to achieve the required growth. Sites
like these often become destructively competitive, as a matter of local survival. HP could
not prosper in that kind of environment. I understood I could be successful only if I became
more a leader and less a manager. We lead out of who we are, and I needed to become
what the organization needed. I needed to lead an organization as a system in which thecomponent parts act locally in an empowered way that is coherent with the larger organization’s primary objectives. Having all information and decisions come back to the top
in a large, distributed, changing environment would cripple our effectiveness.
In On Becoming a Leader, Warren Bennis, after shadowing leaders in many different
venues, found a common trait—leaders learn from the experiences life brings them.3 How
simple! It sounds like EQ again. Arie de Geus describes the research of Wilhelm Stern, a
psychologist, who coined the word introception, which conveys a similar idea.4 The Chilean biologist, Humberto Maturana, says that reection is the biological way of learning;that is, we learn capability only through experience that we become aware of.5 In The
Inner Work of Leaders, Barbara Mackoff and Gary Wenet state, ‘‘Leadership is not a role;
it is a habit of mind—a point of view developed by creating meaning from experiencesof a lifetime.’’6 My favorite de nition of leadership is Peter Senge’s:

Be open to the possibility thatwhat you know should bediscarded for something better.

Leadership is about creating a domain in which human beings continually deepen their understanding of reality and become more capable of participating in the unfolding of theworld. Ultimately, leadership is about creating new realities.7

This de nition implies discovery rather than adopting the hubris of ‘‘ordaining’’ what
is reality. While this is clear in the physical world (we cannot make inkjet cartridges while
violating the laws of Mother Nature), we often act as if we can decide what works in thesocial world, rather than discovering and abiding by laws in that arena as well. We gain
new perspectives by continually learning about ourselves at the intersection of others’
intentions, life principles, and circumstances.

Volume 4, Number 1, REFLECTIONSI personally needed to take morerisk so I could contribute to theorganization and to others.

REFLECTIONS, Volume 4, Number 1

MERTENw

So how did I need to change?
I needed to be vulnerable in order to create trusting relationships. If you reect on it,
you realize your most powerful relationships are those in which you are the most exposed.
For example, I took a risk once to compliment one of my boss’s peers on something I
respected him for. After an embarrassed thanks, he then surprised me by launching intoa several-minute discussion on how much he had learned about my operations function
in his new role as a general manager, what a challenging job it was, and how much herespected what I was accomplishing. We created a relationship in that brief interchangethat lasts to this day.
I needed to quit competing with people. That kind of competition arises from insecurity and says that your gain is my loss. For example, we got a new comptroller years
ago who took me off the nancial-report distribution. I chose to take offense, perceiving
this as a snub. He had no such intention.
I needed to learn how to collaborate more effectively. In an earlier role, I had done
little to create collaborative value. I had a competitive win-lose view of the world. A peer
told our boss he would not work with me anymore. He was surprised when the boss told
him he could leave, instead of me. But I was part of the problem as well. Being right, andalienating, destroys rather than creates value.
I needed to become a more effective communicator to solve problems. I could tellmany stories about communications breakdowns. I remember once listening so well that
I was nishing a peer’s sentences for him, only to discover that I was really listening forcon rmation of what I already knew, rather than for what he might contribute. Anothertime, we had an issue that took too long to address, partly because people at different
sites were taking offense as they accused each other and defended their positions. This
experience prompted me to take the management team through training in a communication model that accelerates resolution, which has had a huge impact on results.
I needed to learn how to build more powerful relationships that would withstand thechallenges of failure and problems and not break down when they were needed. For
example, I have successfully solved dif cult personnel situations with my direct reports
because I have a strong relationship with each. They are rmly convinced I am committed
to their success and to the success of the organization.
I needed to learn how to create an environment in which people would take a risk toaccomplish the seemingly impossible. I needed to help them believe in themselves more
fully so they would take on such risk, while knowing they were not yet competent! In
the early nineties, we deliberately chose to create an organization that encouraged andsponsored personal development as a critical ingredient in our ability to meet increasing
demands of growth. Among other things, we offered an
introspective course in leadership to all employees. I introduced most of the courses so the participants could see theexplicit connection I was making between operational results and personal development.
I personally needed to take more risk so I could contribute to the organization and to others. In short, I needed
to become the change I wanted to see in the organization,
to paraphrase Gandhi. My talk here is an outgrowth of my taking personal risk and sharing
some lessons I have learned in the advanced development training groups at HP. I invitedmyself to speak to high-potential middle managers about leadership.
I needed to change myself to change things ‘‘out there.’’ I’ve realized that if something
is not working, I need to change the way I look at it —my paradigm or structure of interpretation—in order to have a different impact. For example, from a manufacturing standpoint, my organization is pretty unique in HP. Contract manufacturing strategies that wereapplied in other parts of the company were not as applicable to my operations, although
there was little acknowledgment of those differences. So I appeared defensive by notsupporting those strategies. I had to change from feeling as if ‘‘they just don’t get it’’ to nding a way they could see the differences, while also seeing something new myself. In
that willingness to take a different view, we realized that we had insufcient credibility

Leadership Is Sourced by a Commitment to Personal Development

Changes I Needed to Make

25

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Leadership Is Sourced by a Commitment to Personal Developmentw

as a management team for others to accept our strategies, but that we could establish
credibility if we had a consultant conrm the distinctions of our strategy. I had to bewilling to acquire a different viewpoint in order to progress.

How to Change
The question in front of me, and you, is how am I going to learn? How am I going tobecome a leader who is continually reinventing myself so that my best days are ahead ofme? How can I become a leader who gets consistently great results? I will share with youwhat I have been doing, but you must  nd your own way, what works for you. At aminimum, I believe you must gain access to new distinctions that you don’t currently
possess, and you must relate those distinctions to your circumstances and behaviors
through reection.
My journey started with a leadership seminar I attended with coworkers shortly after
our son’s death. It gave me insight into how my self-image was not serving me well. I
thought a lot less of myself than others thought of me. Do any of you perhaps struggle
with that? It became clear that I needed to stop protecting my insecurities and contribute
more effectively to others. In short, I had a lot of talent I was not using.
We formed a developmental group, which consisted primarily of my staff and me,that met one day every month or so with two coaches to address personal growth, teameffectiveness, and leadership. We used current issues in the business as examples andworked on how we could change to have more impact on the business. This was a great
learning experience.
I started reading a lot more. I’ve read more than 80 books (I travel frequently) in thepast several years on philosophy, biography, culture, business, economics, religion, history, and so on. Each book has contributed to my life and to my job. If we are not gaining
access to new ideas, especially outside our disciplines, we are likely to be stale thinkers,
and our creativity will be greatly limited.
Finally, I spend more time learning from my experiences. I reect on most of myconversations to learn what went well, what didn’t, and how I could listen and speak
differently the next time. I look both for things I might have said and didn’t, and for ways
I could have said something more effectively. I have never failed to learn something fromthese reections. Don’t we all do this? No! Think, for example, of Archie Bunker, thequintessential nonreective person who knows everything and therefore learns nothing.
The more we reect, the more we increase our ability to act rather than to react.

What Am I Learning?
26

I am learning that a willingness to be vulnerable arises out of strength, not weakness. We
protect ourselves out of fear, not con dence. And if we want those around us to learn,then we must be learning as well. A second-level manager told me that he saw me asvulnerable enough to be willing to be changed by him. That’s very powerful.
I am learning that conversations, which accelerate resolution, follow certain principles. When we don’t observe them, we make decisions slowly or not at all.
I am learning that trust based on mutual commitment and performance, not the expectations of others, determines both the size of the shared endeavor and its likely outcome. It is a mistaken notion that the highest performance arises from the boss’s demands
or expectations. People who are allowed to contribute to planning become more committed, and the solutions are more creative. The commitment of our selves is far more
powerful than the expectations of others.
I am learning that forgiveness —letting go—is essential to personal and organizational
health and effectiveness. If we don’t forgive, we become tied to the past in a way thatprevents us from being coherent with the present, which greatly limits our future. Renewing relationships, which often takes forgiveness, is critical to achieving and sustaining
results.
I am learning that as a leader my vision of the organization is critical, but insufcient,that my perspective is both my greatest leadership asset and my greatest limiter, and that
I’m always on stage, with an ever-present opportunity to contribute. One of my metaphors

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Leadership Is Sourced by a Commitment to Personal Development

for leadership is what I call the wagon wheel. The boss is the hub, the spokes are the staff
or direct reports, and the rim is the quality of relationship and conversation among the staff
members. If all decisions have to go through the hub because the peers cannot solve problems among themselves, then the organization’s capacity to create value is limited by thebrilliance, or lack thereof, of the boss and his or her availability. This does not result in thehighest performing team. To create a ‘‘rim’’ conversation, the boss must be intentional
about what comes to the hub and what gets solved by peers. Relationships must be cultivated and reinforced. For example, my staff from around the world recently met in
London without me—the boss —to solve a thorny, controversial problem. They could do
so because we have created the rim conversation. They also didn’t want to come home
without accomplishing the task, and the meeting was a success.
I am learning that people don’t resist change; they resist being put at risk unilaterally.
I must involve people and help them see their future in the change if I want it to occur
effectively and quickly. And I must change myself or ossify.
I am learning that creating mutual conversations of possibility and integration ismuch more likely to lead to success than conversations of no possibility and disintegration. We often destroy what someone just said in order to make room for what we wantto say. That destroys integration or synergy.
I am learning to learn from my experiences. It’s easier to see the foibles of others thanmy own. Years ago, my boss Gary Egan wanted to reorganize in anticipation of the next
wave of growth by trisecting my organization and giving me one of the three parts. I
resisted this change because I thought it threatened my selection as Gary’s replacement
when he retired. Gary and I talked about this, but reached no shared understanding. He
told me that it was important that I have my career inside the company and not vice versa.
I replied, ‘‘Right, I agree,’’ not understanding what he was trying to tell me. My concerns
were about my career, not what was best for the company. After the second discussion,
which still didn’t accomplish much, Gary summarized his position in a letter, which I
took with me as I left for Singapore the next day. On that long ight, as I was re ecting
on my response, I had an epiphany that illuminated how obtuse I was being. I had restructured organizations several times and expected others to understand and sign up,
yet when it happened to me, I resisted it. I was embarrassed and chagrined. I wrote Garya letter apologizing for my behavior and offering my unconditional support for what he
was doing. Owning my misbehavior and giving support allowed me the condence I
needed to improve my effectiveness with his boss, which resulted in my being chosen to
succeed Gary when he retired.

Conclusion
These past several years have been thrilling and rewarding. My career and contributions
far exceeded my anticipations. I left a high-level job in the San Francisco Bay area so ourfamily could move back to Oregon. I took on the management of a much smaller manufacturing organization than I had had in California, but it was in the area in which theinkjet product would be manufactured if it were successful. So, I was fortunate to hookup with a winner, but I also was willing to take a lot of risk and to change personally so
I could keep pace with the growth of the business. We have had extraordinary results inmany different areas, including growth, margin improvement, change management, system solutions, employee satisfaction, and productivity. We could not have done it without
focusing on sharpening the saw, even when it seemed we didn’t have the time. It has
been a rare, incredible experience for which I am deeply grateful.
Finally, I am learning very profoundly that life is about growth and change. Stasis is
an illusory, ultimately disappointing hope. If you are to lead the change required, rst
change yourselves. A favorite quote of mine is from W.H. Murray of the Scottish Himalayan Expedition:
Until one is committed there is always hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation), there is one elementary truth, theignorance of which kills countless ideas and splendid plans; that the moment one denitely
commits oneself, then providence moves too.

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Leadership Is Sourced by a Commitment to Personal Developmentw

All sorts of things occur to help one that would never otherwise have occurred. A wholestream of events issues from the decision, raising in one’s favor all manner of unforeseen
incidents and meetings and material assistance, which no man could have dreamt would
have come his way. I have learned a great respect for one of Goethe’s couplets: ‘‘Whatever
you can do, or dream you can, begin it. Boldness has genius, power and magic in it.’’8

Another favorite quotation, by Marianne Williamson, was used by Nelson Mandela in his
inaugural speech:
Our deepest fear is not that we are inadequate; our deepest fear is that we are powerful beyond measure. It is our light, not our darkness, that most frightens us.
We ask ourselves, who am I to be brilliant, gorgeous, talented, and fabulous?
Actually, who are you not to be? You are a child of God. Your playing small doesn’t
serve the world. There’s nothing enlightened about shrinking so that other people won’t
feel insecure around you.
We are born to make manifest the glory of God that is within us. It is not just in someof us; it’s in everyone. And as we let our own light shine, we unconsciously give others
permission to do the same. As we are liberated from our own fear, our presence automatically liberates others.9

Remember, we see the world not as it is, but as we are.

Acknowledgment
This article is derived from a speech Greg Merten gave at the National Security Agency
on June 12, 2001, in Baltimore.

Notes
1. D. Packard. The HP Way (New York: HarperCollins, 1995).
2. A.P. de Geus. The Living Company (Boston: Harvard Business School Press, 1997).
3. W. Bennis. On Becoming a Leader (Cambridge, MA: Perseus, 1989).
4. de Geus, op. cit.
5. H.R. Maturana. ‘‘Biology of Cognition.’’ in Autopoiesis and Cognition: Realization of the Living,
Boston Studies in Philosophy of Science, eds. R.S. Cohen and M.W. Wartofsky (Boston: D. Reidel
Publishing Company, 1970).
6. B. Mackoff and G. Wenet. The Inner Work of Leaders (New York: Amacom, 2000): 186.
7. P. Senge. Introduction. Synchronicity, J. Jaworski (San Francisco: Berrett-Koehler, 1996): 5.
8. W.H. Murray of the Scottish Himalayan Expedition, 1951.
9. M. Williamson. A Return to Love: Re ections on the Principles of a Course in Miracles (New York:
HarperCollins, 1992): chap. 7, sec. 3.

28

Commentary
by Dennis Sandow

Dennis Sandow
Professor
University of Oregondenniss@oregon.uoregon.edu

We use the term leadership in many ways. Mostly, we use it to refer to the position of senior
executives. This positional denition implies that only those close to the top of the organizational
chart have leadership potential. Merten redenes leadership from a position to a distributed function so ‘‘all of us need to be leaders, especially when large-scale change is required.’’Chilean biologist Humberto Maturana has written that love (the legitimacy of one by another)is the only emotion that leads to intelligent action and expansion of vision. We are emotional beings following the path of our desires (Maturana and Bunnell, 1999). Intertwining EQ with leadership, Merten points out the necessity of positional leaders to demonstrate their vulnerabilities. Thismight conict with our image of the leader as strong and invincible, but are we not ready to discard the Marlboro Man as our icon of leadership? It is precisely Merten’s willingness to express his
vulnerability that allows others in his organization to lead.
Merten reminds us that Packard’s ‘‘11 Simple Rules’’ are not about electronics, manufacturing,
technology, or nance but about the quality of relationships. We live our lives through social rela-

Volume 4, Number 1, REFLECTIONSMERTEN
Leadership Is Sourced by a Commitment to Personal Developmentw

tions, and Merten has renewed the relational imperative. Social, biological, and nancial well-being
cannot be improved without rst attending to the quality of relationships in organizations. In thislies a powerful rule that Merten exempli es—the quality of relations cannot be taught or trained;
it can only be accepted or denied by each of us in our personal development.
Merten gives tremendous insights into social capital or the potential productivity of a groupor social network. This productivity can be augmented or diminished. The inkjet business is a granddemonstration of social capital improvement, or as Merten says, ‘‘Relationships generate value.’’ His
basic principles of organization come from biology and living systems, not mechanical engineering.
He reminds us that our organizations are composed of dynamic and self-organizing social networks
that adapt to a continuously changing environment in order to generate value.
These are but a few of the rich insights in this article. Perhaps the most signicant breakthrough is the speech itself. Merten does not write about ‘‘steps,’’ ‘‘models,’’ or other transcendent
conceptions. His brilliant insight is that living systems cannot be decomposed into a xed set of
attributes. Instead, he writes about the experiences of daily life. I nd this scientically congruent
with the history of learning organizations and an important reminder.

Reference
Maturana, H. and P. Bunnell. ‘‘The Biology of Business: Transformation through Conservation.’’ Reections 1(1999): 82–85.

Commentaryby Nick Zeniuk
Merten reects on a ‘‘different kind of leadership’’ that is rooted in ‘‘living systems rather thanmechanistic principles,’’ that nds its strength in ‘‘willingness to be vulnerable,’’ and that is willingto ‘‘listen to the others.’’ For Merten, it was a personal journey of learning from the ‘‘experiences
life brings us’’ and learning about the choices we continually make in our careers, family, and community. To become that leader, we each need to change our ‘‘structure of interpretation . . . togain access to new distinctions’’ by learning ‘‘about ourselves at the intersection with others’ intentions.’’ Merten’s words ow like poetry from Humberto Maturana’s inspiration. He realizes that ‘‘relationships generate value’’ and ‘‘meaning from the experience of life.’’
Merten has demonstrated his leadership perspective by growing the most protable division at
Hewlett-Packard. He has engaged with the work force in collaborative reection on the work andcreated an enabling environment for performance improvement.
We can reect on this as concepts of a different kind of leadership or, as Merten suggests, we
can live it in our life’s work. Is there a choice?

Nick Zeniuk
Organizational Consultant
Former Executive
Ford Motor Company
Council Member, SoL
SoL Global Network
Nzeniuk2@aol.com

Commentaryby Edgar H. ScheinAmong change theory principles, one that always is ‘‘discovered’’ to be universally true is that, if
you want to inuence someone else, you must be willing to be inuenced yourself. How many
leaders, consultants, salespeople, teachers, and others who purport to be change agents have failed
utterly because they were not willing to be inuenced, even to the extent of slightly modifying
their perceptions of who their followers, clients, customers, or students were and what their needs
were? One way to capture this is to assert that ‘‘you will never change someone until he or she
becomes your client and seeks something from you.’’ Great leaders understand this; hence, making
themselves vulnerable is not a choice but a necessity.
Edgar H. Schein
Sloan Fellows Professor ofManagement Emeritus
MIT Sloan School of Management

REFLECTIONS, Volume 4, Number 1

29

Leadership When Events
Don’t Play by the Rules
Karl E. WeickW

e are all struggling with events that don’t make sense. They don’t make sense forat least two reasons, and those reasons are leverage points where leaders can makea difference. Two reasons why these are such trying times are signaled in the following
quotations:w We tolerate the unexplained but not the inexplicable (Goffman, 1974).

w Our ability to deal with chaos depends on structures that have been developed before
the chaos arrives. When the chaos arrives, it serves as ‘‘an abrupt and brutal audit:
at a moment’s notice, everything that was left unprepared becomes a complex problem, and every weakness comes rushing to the forefront. The breech in the defences
opened by crisis creates a sort of vacuum’’ (Lagadec, 1993).

Karl E. Weick
Rensis Likert Collegiate Professorof Organizational Behavior
and Psychology
University of Michigan
karlw@bus.umich.edu

30Ó2002 by Karl E. Weick.

Things seem inexplicable. And to make it worse, many of our ways of making sensefrom the inexplicable seem to have collapsed. Our weaknesses come rushing to the forefront. The rst impulse is to grasp any old explanation. And what we hold are the automatic explanations we have lived with longest and invoked most often. We often nd theinitial meaning of events by drawing inferences from how we feel. Since many of us feelfrightened and out of control, then this must ‘‘mean’’ that whatever we face is something
we need to ee or  ght. Neither explanation is profound. But either explanation is better
than nothing. Either explanation, oddly enough, is soothing, since the prospects of having
no explanations at all and no ways to cope are even more frightening.
The combination of inexplicable events and weakened resources for sense making
are part of the scenario that leaders face right now. If we pose the challenge in thatmanner, then there are things a leader can do.
First, it’s important to emphasize that the leader is just as susceptible to the tendencies
outlined as anyone else. Part of leading is to accept what has happened so that it is possible
to take a small next step in the direction of recovery. And part of acceptance is the realization that people often go through at least three stages when they deal with the inexplicable: supercial simplicity, confused complexity, and profound simplicity (Schutz,1979). The tendency to see inexplicable events as a time to  ee corresponds to supercial
simplicity. People soon realize that ‘‘it’s not quite that simple.’’ But the moment they
admit that, and the moment they start to build a more nuanced explanation, then confusedcomplexity oods in. That’s what makes it tough to lead. Leaders know they need tolisten, tell, structure, and trust, but in what sequence? With what blend? What is really
tough is that when things are inexplicable, super cial simplicities feel like solid explanations, at least for a short while. But as these supercialities begin to unravel, and ascomplexities and nuances begin to surface, the specter of an unwelcome return to theinexplicable resurfaces. That is the moment of truth for leaders dedicated to the repair ofwhat has been brutally audited. The ‘‘attack on America’’ is complex in its origins, complex in its effects. The leader who struggles with those complexities, and who helps others
struggle with those complexities, is helping people with the process of sense making.
On the far side of complexity lies profound simplicity. These simplicities may sounda lot like the near-side supercial simplicities that you and others started with. But thatapparent similarity is deceiving. Profound simplicities mean something very different.

Volume 4, Number 1, REFLECTIONSSocial —People don’t discover sense; they create it, which means they need conversations with others to move toward some shared idea of what meanings are possible. As a leader, encourage conversations; don’t treat them as malingering.
Identity—The rst identities that surface in an inexplicable event, identities such as‘‘victim’’ or ‘‘ghter,’’ lock people in to overly limited options. As a leader, help
people solidify other identities such as sounding board, witness, source of resilience, information hub, storyteller, companion, caregiver, and historian, all roles
that help people build a context that aids explanation.
Retrospect—Faced with the inexplicable, people often act their way out of their puzzlement by talking and looking at what they have said in order to discover what
they may be thinking. How can I know what I think until I see what I say? As aleader, make it possible for people to talk their way from the supercial, throughthe complex, and on to the profound. Listen to the words people are saying; help
them nd other words that connect with human strengths rather than with darkness and evil. Help them talk their way into resilience.
Cues—People deal with the inexplicable by paying attention to a handful of cues thatenable them to construct a larger story. They look for cues that conrm their analysis, and in doing so, they ignore a great deal. As a leader, help people expand therange and variety of cues they include in their stories. You know this will heighten
confused complexity. But you also know that confusion can provide a transition
between the supercial and the profound if people struggle with a wider range ofissues and complexities before they settle for their ‘‘answer.’’
Ongoing— Sense making is dynamic and requires continuous updating and reaccomplishment. As a leader, don’t let people languish in the feeling, ‘‘Now we have it gured out.’’ They don’t have it gured out. Why? It’s not that kind of an issue.
Recovery is about workable, plausible stories of what we face and what we cando. But these are not  nal stories. They are stories that should be modied, basedon new inputs and new opportunities and new setbacks.
Plausibility —What is unsettling when people face the inexplicable is that they tend
to treat any old explanation as better than nothing. There’s something healthy
about that tendency because it provides a kernel around which people can organize
a story. The initial story may be a stretch. But it makes some sense of the senseless.
As a leader, don’t let the  rst plausible account be the last possible story. The rst
plausible account is assembled to help people make meaning. It is not assembled

REFLECTIONS, Volume 4, Number 1

WEICKw© Emily Sper

Leadership When Events Don’t Play by the Rules

They are seasoned simplicities that have been tested bymentally simulating their consequences, simplicities thatreafrm what it means to be a human being.
What I have just described is part of what a leader
needs to have in mind to lead in trying times. If the leader
moves from the supercial to the profound, and does sopublicly, so much the better. Public sense making demonstrates that the struggle for sense is shared, that there
are no experts, and that there are no easy answers (Weick,
1995, 2001). But if public sense making is too much to ask,
then before you tackle the tough task of helping others
make sense, be sure privately that you’re at least moving
away from the supercial. Like all of us, you’re probably
struggling in the midst of confused complexity. But when
you face the inexplicable, confusion is normal, natural
trouble. The presence of confusion can be a sign of active sense making that is moving
toward more profound simplicities. The skill of the leader involves not being paralyzed
by confused complexity, not allowing others to give up when their confusions are complex, and providing resources that enable the recovery to keep moving.
And what resources can help? Crucial resources for sense making are summarized by
the acronym SIR COPE: social, identity, retrospect, cues, ongoing, plausible, enactment(Weick and Sutcliffe, 2001). Those seven words point to ways in which one can leadwhen events don’t play by the rules and people face the inexplicable.

31

WEICKw
Leadership When Events Don’t Play by the Rulesin the interest of accuracy. We seek swift plausibility rather than slow accuracy ininexplicable times simply because we need an explanation, not the explanation.
Help people get that  rst story. But then help them revise it, enrich it, replace it.
Enactment—Most of all, in inexplicable times, people have to keep moving. Recovery
lies not in thinking then doing, but in thinking while doing and in thinking by
doing. No one has the answers. Instead, all we have going for us is the tactic of
stumbling into explanations that work and talking with others to see whether what
we have stumbled into is, in fact, part of an answer. As a leader, help people keep
moving and keep paying attention. When people are animated, their actions are
small experiments that help make sense of perilous times. Wise leaders protect thatprocess and that truth.

Acknowledgment
An earlier version of this article appeared on the web site of the University of Michigan
Business School as part of a set of essays titled ‘‘Leading in Trying Times.’’ The full setof essays can be accessed at http://www.bus.umich.edu/leading/index.html.

References
Goffman, E. Frame Analysis (Cambridge, MA: Harvard University Press, 1974): 30.
Lagadec, P. Preventing Chaos in a Crisis (New York: McGraw-Hill, 1993): 54.
Schutz, W. Profound Simplicity (New York: Bantam, 1979).
Weick, K.E. Sensemaking in Organizations (Thousand Oaks, CA: Sage, 1995).
Weick, K.E. Making Sense of the Organization (Malden, MA: Blackwell, 2001).
Weick, K.E. and K. Sutcliffe. Managing the Unexpected (San Francisco: Jossey-Bass, 2001).

32

Volume 4, Number 1, REFLECTIONSYoung Leaders’ Forum in
Asia: Learning about
Leadership, Abundance,
and Growth
Karen Ayas and Philip H. Mirvis

L

eadership is a choice. A spirit of abundance opens up new possibilities. To grow abusiness, you must grow the humanity of its leaders. These are some of the themes
from biannual meetings of the Young Leaders’ Forum (YLF) of Unilever Asia Pacic.
In early April 2001, some 25 young leaders, from different backgrounds and functions
and based in Unilever country organizations throughout Asia, traveled from the meetingsite (a comfortable resort along the South China Sea) to a small, impoverished hamlet
near Danang, Vietnam, to visit an orphanage. The tour to the Village of Hope concluded
a three-day meeting at which the young leaders had reected on their personal development, reviewed the state of their businesses, and visited local markets and homes. Together, the participants, along with the authors and other facilitators, had seen how
villagers live, cook, clean, and care for themselves and their children, what products theyuse currently, and what else they might need, want, and afford in the future. During thislast day of the meeting, we planned to visit the home of 180 displaced and disabledchildren, play with them, meet their teachers, and talk about leadership with Van Tan
Hoc, founder of the Village of Hope.

Karen Ayas
Associate Editor, Reections
Research Fellow, Erasmus University
Partner, The Ripples Group
Kayas@attbi.com

A Moment of Truth
As our troupe entered the village, young children dressed in white shirts and red ribbons
greeted us with bouquets of colorful owers. They ran to pair up with us, show us their
lodging and environs, and introduce their friends and teachers. There was a lot of patting,smiling, and pointing— all nonverbal communication because we didn’t speak a common
language yet had so much to say. We were ushered into an assembly room fronted by asmall stage where older children illustrated Vietnamese folklore and traditional dancesand led the younger ones in song.
Next we heard from the village leader. Sitting on tiny chairs, we formed circles aroundTan Hoc. One young Vietnamese leader offered to translate. We learned how the orphanage had formed after the ravages of war. It grew rst through local initiative and thenwith modest international support. Tan Hoc had been a primary school teacher who hada ‘‘big dream’’ to build the village with few resources but ‘‘an abundance of hope.’’ He
ran the village as a family. ‘‘I am very grateful to the children because they have given
so much to me,’’ he said. ‘‘It is from them that I learn every day.’’
And as we asked questions, we all noted his humility. We asked what drove him.
‘‘Faith and love,’’ he answered. ‘‘I have a dream that keeps me going, where I see eachchild is happy.’’ When we asked how he could see that, with 180 children to watch over,he explained: ‘‘I look in their eyes every day when they come back from school, and thoseeyes tell me who I should spend time with, to give more hope, and to give more love.’’

REFLECTIONS, Volume 4, Number 1

33

ÓPhilip H. Mirvis
Organizational Psychologist
Consultant
Senior Fellow
Center for Corporate Citizenship
Boston College
pmirv@aol.com
2002 by the Society for Organizational Learning and the Massachusetts
Institute of Technology.

AYAS AND MIRVISw
Young Leaders’ Forum in Asia

Young leaders and the childrenof the Village of Hope
© Karen Ayas

He also told us that he was reaching out to others to extend
this work beyond his village, explaining: ‘‘When you are
50 years old, you feel there is not much time left to dosomething worthwhile; one needs to share all he has.’’With every exchange, our listening intensi ed. Another translator took over. After an hour, it was the young
leaders’ turn to share what they had learned from Tan Hocand their  rst glimpse of the village. After a moment ofsilence to reect on our lessons, we noticed the children
had quietly come back to join us. One by one, the young
leaders spoke of their lessons: how passion can make theimpossible possible, how one person can change the livesof so many, how one can get so much in return for solittle, how giving can be rewarding, and so on.
The pace of the reporting escalated; the secrets of Tan
Hoc’s leadership seemed profound yet still elusive. One
leader exclaimed in wonder about the unassuming, soft-spoken village leader: ‘‘You are
not someone special, yet you make such a big difference in the lives of these children.’’
Then another questioned him: ‘‘What would happen to the children if something were tohappen to you?’’ There was a moment of silence. Then we saw his inscrutable face overcome with emotion. He trembled and could not stop his tears. Seven or 70 years old, every
person in the room cried with him. This was a moment of truth none of us would forget—a moment that we could characterize as ‘‘looking humanity in the face.’’

The Leadership Forum as a Learning Community

34

This moment of truth would be one of several soul-moving experiences intended to open
the hearts and stretch the humanity of Unilever’s young Asian leaders. The village wasselected as a venue to help them widen their visions of leadership and calibrate their own
developmental journeys. To learn more about the spirit of abundance, they listened to
the village founder, a role model whom they would not encounter in their usual professional circles. Thoughts and feelings about the encounter would, in turn, be grist for
personal re ection and collective sense making (see the sidebar, ‘‘Re ections on a
Leader’s Tears’’).
The president of the Unilever Asia Pacic region, Tex Gunning, had organized theforum to enable young leaders to ‘‘move on to a higher level of consciousness . . . andmake it part of your life.’’ The 25 young leaders meeting in Danang—some in nance,others in production, marketing, or human resource management—had been chosen for
their leadership potential. Gunning had asked each of his country chairmen to select up
to three young candidates for a leadership development forum that would gather twice ayear for a few days and operate as a network and support group. Gunning undertook theirpersonal and professional growth as his mission. Having been a marketing manager inThailand and business head in Australia earlier in his career, he had worked mostly for
and with executives of European descent. His promised legacy as a regional president
would be to create a cadre of Asian executives.
In November 2000, shortly after his appointment, he had convened the  rst YLF in
Singapore. There he presented the idea that leadership is a choice. He challenged theparticipants to take full responsibility for their choice because, in his experience, noteveryone is willing to make the sacrices needed to be a leader. In February 2001, as afollow-up, he invited the group to join the top 200 of his Asian business leaders in a retreat
to Sarawak, Malaysia. There they hiked in the rain forest, shared personal histories andvisions, and participated in  shbowl discussions with top leaders from their own country
and others in Asia. After the retreat, the young leaders spent a week together in training
based on Stephen Covey’s The 7 Habits of Highly Effective People. The YLF meeting in
Danang in April 2001 was their third time together.
What is this leadership forum? In a sociological sense, it creates a cohort of young
leaders within Unilever across Asia who would otherwise be separated by function andcountry organization. They read the same books, study the same business situations, andVolume 4, Number 1, REFLECTIONS

share common experiences in their periodic meetings and training. They are active, visible
participants in strategic meetings and projects heretofore limited to more senior managers.
All this has helped to create a strong sense of identity among them as future leaders. They
see themselves, and others see them, as a distinct and identiable group in the company.
Many large companies identify their ‘‘high-potential’’ young people and host programs for their continued development. But most rms groom their future leaders throughmore individualized curricula and experiences. Furthermore, the elite status of highpotential candidates in these companies is often kept secret, and there is ongoing gradingof their individual progress. This often produces an undercurrent of competition among
them in their separate drives to get ahead.
By comparison, membership in the YLF is wholly transparent, and the emphasis ison promoting cooperation among peers and their collective improvement. At once, thisis a culturally appropriate ‘‘Asian’’ model of personal development and, at the same time,
an intentional effort to develop a cadre of recognizably Asian leaders. The personal impact
and recognition is notable. ‘‘To be told that you are seen to be a high-potential manager
is very inspiring. It really set me up to dream of what changes I could create in thecompany,’’ reports one participant. He adds, ‘‘Being introduced as a young leader in thepresence of the top executives and senior management team was a de nite morale booster.
It makes working with them much easier.’’
In our view, the YLF exempli es a learning community. Personal inquiry, small-groupdialogue, and communal re ection continuously broaden the curricula and deepen sharedexperiences. Participants are expected to re ect on and share deeply from their life histories and personal philosophies and to speak about the current state of their businesslives and themselves. In addition, they are expected to teach one another about theirrespective markets and cultures, about their functions and disciplines, and about current
business strategies and results— warts and all.
Other companies are creating their own brand of learning community to develop thetalents of their managers and professionals. As an example, programs such as those run
by Noel Tichy and his associates put teams of up-and-coming executives into temporary
learning systems where they tackle real-time business problems, learn experientially aboutgroup processes and project management, and get constant feedback on their teamwork
and interaction style. The programs by Peter Senge and his colleagues at the Society for
Organizational Learning provide more in-depth exposure to the latest learning technologies and sustain community feeling through dialogues, seminars, and collective reection.
More broadly, the range of learning communities includes peer networks that connect,say, women or people of color in companies and offer coaching, mentoring, and peer
support. And myriad ‘‘communities of practice’’ are forming within companies and acrossthem where professionals can share knowledge and often address business needs.
The YLF incorporates elements of each of these kinds of learning communities: itapplies the pedagogy and tools of action learning, it uses the principles and practices ofcommunity building, and it stresses peer development and networking. Furthermore, theforum has gained the institutionalized identity of an ongoing community of practice. But
the strategic intent behind the YLF extends beyond knowledge sharing, networking, andthe transfer of learning to practice.

REFLECTIONS, Volume 4, Number 1

AYAS AND MIRVIS
w‘‘We heard a passionate leader talk about the orphanage. We witnessed a moment of truth. We
learned that we have to be who we are, that we have to share all we have, and that we have tofollow our hearts. The major lesson was to have the courage to lead what you believe in, share yourgifts, and lead in abundance.
‘‘This was a turning point. We truly fell into community, we truly felt responsible for reaching out
to the orphanage, and suddenly we all felt we belonged to a group and grew very close to eachother.
‘‘We saw the founder of the village cry because we cannot be here forever; we will all have to leavethis world some day. We realized that it is our responsibility to grow a new generation to carry out
our legacy as leaders. Some of us were crying because we, supposedly the young generation of brightleaders, felt so helpless. We hadn’t done enough. Compared to this leader who had given his whole
life for such a wonderful cause, we fell so short.’’—Young leader, Philippines

Young Leaders’ Forum in Asia

Reections on a Leader’s Tears

35

AYAS AND MIRVISw
Young Leaders’ Forum in Asia

Until now, Unilever, like many multinationals, has relied on an expatriate model todevelop its next generation of leaders. Typically, high-potential candidates, in this instancemostly English or Dutch, attend university programs andtake a series of ‘‘foreign’’ and home of ce assignments on
their way to senior management posts. The process is run
by corporate staff who more or less manage the expatriates’
careers. At Unilever, as in other companies, those who getto the top are often similar to their predecessors —a process
likened to managerial ‘‘cloning.’’
The intent of the YLF in the Asia Pacic region is tochange the mind-set and makeup of Unilever’s leadership.
The pedagogy, for instance, emphasizes emotional intelligence as much as rational thinking and celebrates a more free-spirited style of operating than has been characteristic in
the home ofce. The longer range intent is to ll the country management teams with
Asian, rather than European, leadership. On this count, it is also notable that the forumin Asia has many more women in its ranks than the current prole of executives in theregion.
There is nothing secretive or subterranean about these aims. At the meeting of current
regional leaders in Sarawak, Asian women led a shbowl discussion of their prospects
and roles in the company, witnessed by the leaders attending. The young leaders led a
discussion as well; one recalled: ‘‘The  shbowl experience—with some of the young
leaders at the center and all the board members outside looking in and listening to the
dialogue on issues like women in the organization and expatriates—elevated our stature
as young leaders and displayed our level of maturity.’’

The strategic intent behind the YLF
extends beyond knowledge sharing,
networking, and the transfer oflearning to practice.

Design of the Forum Meetings: Pedagogy and Methods

36

The pedagogy of the forum involves a mix of business discussion and experiential learning, cognitive and emotional work, and physical movement and silent re ection. Activities
at forum meetings are sequenced to promote individual, small-group, and collective engagement. Gunning, who acts as the host and master of ceremonies, designs the sessions
with input from facilitators, including local staff, former Unilever executive Jan Peelen,
and the authors.
Although each meeting has an initial design, the agenda is  exible, with space for
improvisation and serendipity. Mirvis has worked with Gunning for several years andemphasizes the importance of setting the scene, storytelling, staging, sequencing, andother performative aspects, along with the usual process facilitation. The program for the
YLF meetings in Danang shows the ow of activities (see the sidebars, ‘‘Young Leaders’
Forum in Danang’’ and ‘‘Young Asian Leaders Meet Again’’).
Embedded in the program, and in the overall YLF agenda, are the following learning
experiences.

Self-Assessment and Reection
Young leaders complete a variety of self-assessment instruments about their emotional
make-up, inuence style, Myers-Briggs type, and competencies to grow a business. They
also prepare and share their life stories with one another. At forum meetings, they discussthese observations and insights with peers in small groups. ‘‘It’s like a surgery of the soul.
You begin to see the roots and patterns,’’ says one young leader about her self-reection,‘‘and you understand what truly moves you.’’ Deep, intimate sharing in small groups
empowers all to move beyond their comfort zone and opens up the introverts as well. As
they  nd comfort and courage in each other’s stories, the participants confront their own
humanity—at its best and worst.

Readings, Cases, and Coursework
To deepen self-reection, the participants read and discuss the existential writings ofFrankl and Fromm, as well as the spiritual views of M. Scott Peck. Most have participated

Volume 4, Number 1, REFLECTIONSAYAS AND MIRVISw

April 4, 2001—Leadership Is a Choice. We meet at 5:30 AM on the beach in front of a Danang
resort. There are 35 of us, including the facilitators and coaches. After hiking for an hour, we reachMarble Mountain. Another half-hour climb brings us to the top. Here we reect on the subject,‘‘Leadership Is a Choice.’’ While we eat breakfast, we listen to the story of a monk who climbs arounda mountain and realizes that, with every level he has climbed, his view and understanding of theworld enlarge.
The descent is a bigger challenge. Half-sliding, half-crawling, we nd ourselves at a crevice. Passing
through it requires a person at both ends to help. The passage leads to a small chamber, then to alarger one underground. This holy cave, a sanctuary lled with carvings and altars, has served for
meditation and prayer for centuries.
For the next hour and a half, we break into groups to reect on the past six months of the leadership journey. The young leaders share their promises from the rst gathering and their accomplishments. We then reect on learnings and common challenges. As we walk out of the cave toward the
adjoining village, we pass through another chamber where some pay their respect to Buddha andothers make wishes.
Back at the resort, a Covey exercise, a session on transformational leadership, a lecture on learning
styles and effective coaching, and a presentation by the local chairman on the vision and challengesof his company ll the rest of the day. We end at 11:30 PM after an excursion and dinner in theneighboring port, Hoi Ann.
April 5—Growth Is a Choice. We start at 5:30 AM with a workout on the beach, followed bybreakfast. By 7:30, we are in the bus heading to a local market that we visit to understand the current state of local commerce and consumption and to experience the culture. We smell and taste thefoods, hear the talk and music, and get a feel for the place, but at the same time, we imagine how it
could look in 10 years. We head to a small village in the midst of rice elds, separate into small
groups (with a Vietnamese young leader in each group), and spend an hour at the house of a Vietnamese family to learn about daily living and lifestyles.
Back at the resort, we spend a brief time on visioning. First in small groups, then as a whole group,
we reect on vision 2010 for the company in Asia. After lunch, there is a session on strategy development, followed by a learning history session that highlights the lessons learned in the transformation of a Dutch food company’s business—Gunning’s previous assignment.* Discussions continue overa cookout on the beach, which later turns into a beach party.
April 6—Abundance Is a Choice. Again, a 5:30 AM wake-up call is followed by a workout andswimming, then breakfast. We leave for the orphanage described at the beginning of the article. Backat the hotel by 4:00 PM , we have time for closure before some of us leave for the airport.

Young Leaders’ Forum in Asia

Young Leaders’ Forum in Danang*See P.H. Mirvis et al. ‘‘Learning in Performance: How a Dutch Company Transformed Itself.’’ Reections 2 (Summer 2001):
21– 37.

in the Covey ‘‘7 Habits’’ course. Business reading and presentations on strategy, growth,and competitiveness counterbalance the introspection.
At YLF meetings, academic and business experts present concepts and case studies
on leadership, best practices in product innovation and marketing, and trends in branding.
There are several case studies on growing a business. In addition, the participants regularly report on their home-country markets and present case studies from their own businesses. These are not always best practices, as one young leader notes: ‘‘She showed usthat ‘bad leadership is a crime.’ Some leaders in her business could not work together
and took the organization in different directions.’’

Physical Activity
Every day of the forum, there is time for physical activity in the outdoors—an earlymorning walk or tai-chi exercises, hiking, boating, or biking. Often this is followed by amore contemplative experience, linking mind and body with the soul. One young leaderreects on his lessons from a strenuous hike: ‘‘There was a seven kilometer trek uphillwith very little rest or shade, and we had to climb over rocks under the scorching sun.
We were organized as functional teams to climb the mountain, and we realized that wewere only going to get through this as a team.’’

Mentoring
Mentoring by senior gures is an explicit part of the young leaders’ development
agenda. Mentors include the president, Jan Peelen (Dutch), Felipe Alfonso (professor of

REFLECTIONS, Volume 4, Number 1

37

AYAS AND MIRVISw
Young Leaders’ Forum in Asia

38

Young Asian Leaders Meet Again
November 20–22, 2001. We are back in Danang, Vietnam. We have a day and a half before theyoung leaders arrive. We are going through the details of the program design that Gunning has put
together. There are ve of us including the authors, a veteran board member, and the human resource manager for Asia. As always, the purpose of the tentative schedule is to make sure that the
program’s intent is clear and that the parts relate to each other. We each have different roles toplay; the rest is improvisation. We will change and adapt what is in the program depending on thegroup and the moment.
We face a greater challenge this time, however. Ten participants who have been part of the forum
since the beginning will not be here. Instead, there are 14 new young leaders joining the forum. The
company has gone through global restructuring, and some of the young leaders who had been in theforum now work in divisions for which the regional president is no longer responsible. They havebeen invited to the meeting nevertheless. As a result of the restructuring, Gunning now has additional responsibility for operations in central Asia; hence, there are now new participants from China,
Taiwan, and Pakistan.
The program we offer this time has to be equally challenging for the ‘‘old’’ young leaders and the‘‘new’’ young leaders. The strong community feeling that developed during the past year could bethreatened, or there could be a strong divide between old-timers and newcomers that prevents
building the forum into a learning community. We are very aware of the challenge as we discuss the
specics of the program. At the end of the rst day, we are restless and not condent that the threedays ahead will be as effective as the past program. The fact that some former participants are notthere makes us question the purpose and the reality of what’s truly possible to achieve.
And we are proven wrong. The magic happens again. The shift begins to occur the next morning. In
the hour and a half we have before beginning the program, we are able to pull to the whole thing
together. There is coherence, clarity, and alignment among us. Meanwhile, as if planned, the windfrom last week’s typhoon has calmed and it has stopped raining. The sun is shining, and we areabout to begin.
A solo walk on the beach sets the tone. All are asked to reect once again on whether they choose
to be top business leaders and on the consequences of that choice. The issue is not simple, and forthe majority, it will be very present in the days to follow.

management at the Asian Management Institute and a Filipino), and the authors (Turkish
and American). We present our research and experiences in various organizations, facilitate small-group work, and informally coach.
Clearly, our work has had an impact on the young Asian leaders who, perhaps morethan their European and American counterparts, are more respectful of elders and theirknowledge. For example, one remarked on the presence of Jan Peelen: ‘‘What is striking
is the fact that he is like a big, deeply rooted tree—old and wise after a long, successfulcareer in the company, but also very passionate about young leaders. Trees can go throughstorms and lots of hardship when they are deeply rooted and strong. Trees plant the seeds
for growth and enable other trees to grow. We were very inspired by him. And the seeds
for this forum were planted.’’Service Learning
Service learning is an interesting and vital element of the programs. One example is thevisit to the orphanage in Danang. At the regional meeting in Sarawak, an in-depth reviewof the state of the natural environment in Asia was followed by a clean-up of a refusestrewn beach. Later, a visit to the indigenous Panan peoples and a hike through theirincreasingly deforested lands opened hearts and led to an earnest discussion of the culturaland environmental ‘‘costs’’ of economic growth in Asia. This, in turn, informed the debate
about Unilever’s ‘‘vision 2010’’ in Asia. One participant commented:
We began the event by talking about the global impact of industries on the environment andwhat humanity has caused. Then we cleaned the beach with 200 other managers. This
clearly sent the message that we as individuals can make a difference, and together we arevery powerful. We continued the self-re ection process, and the beauty of nature and majesty of the place helped deepen our insights about our roles as leaders and individuals on thisearth. To be in the jungles of Borneo helped us feel and see the potential in this region —almost feel and touch the vision. In short, this was a perfect setting to start creating vision2010 for Asia. We were able to move from discovering self to building a mental picture about

Volume 4, Number 1, REFLECTIONSAYAS AND MIRVIS
Young Leaders’ Forum in Asiaw

the future with a clear direction of where to go and where tobe. You can move toward your vision when you can see it
clearly, are passionate about it, and want to share it. And it
is extremely powerful when a lot of people share the same
picture.

Collective Reection
Finally, there is periodic cataloguing of experiences and lessons learned by the young leaders and whole-group re ections on the work of the learning community. This was an
explicit part of the agenda at the November 2001 meeting.

Telling Our Story
As at the former meetings, the rst part of the program in the November 2001 YLF in
Danang was dedicated to connecting to self and others. There were solo, group, andplenary sessions, but we mostly worked in small groups (four or ve participants). We
stayed with our groups for deeper sharing.
Late into the night on the rst day, we shared personal life stories. The emphasis wason ‘‘what has shaped me as a person and as a leader, and what you need to know about
me to understand me better.’’ We concluded the evening with a discussion on the powerof storytelling as a process and what we have learned from the stories we heard. ‘‘The
more you tell your story, the more you are peeling the onion,’’ said a previous participant.
To make sense of our collective experiences, reect, and learn from them, we designed a session as an action-learning effort, with the intent to cocreate a ‘‘living’’ learning
history for the young leaders. We told the story of the YLF, inviting newcomers to theforum into the story and developing ownership of it. This built commitment and enhanced
the sense of belonging to the community. As the story continues to unfold, everyone will
be in the same chapter, regardless of when they entered the story. The intent of thelearning history was to look at the key events since the inception of the YLF and codify
the signi cant learnings. Assessing what has happened and reecting on lessons learned
also inform its overall direction and future.
Before the meeting, we asked the ‘‘old’’ participants (those who had been with theforum since the beginning) to re ect on positive and negative experiences in the past year
and what they’ve learned. In the session, they each posted their ‘‘highs’’ and ‘‘lows’’ andlearnings on a timeline marked by key events. The ‘‘new’’ participants, briefed and guided
to assume the role of researchers and learning historians, paired with the ‘‘old’’ andinterviewed them. After the old-new pairs walked through the chapters of their history,
groups formed to develop the title, theme, and script for one chapter of the story. We thensat in a circle as if around a campre and told our collective story, chapter by chapter.
The formal part of the November meeting closed with an evening of communityreection. After some time for self (writing in journals, if desired) and sharing key learning
points with one partner, the participants sat in a circle marked by torches on the beach.
Following a minute in silence with the sounds of the waves in the background, the young
leaders shared what they learned.
‘‘With your help, not only I was able to get to know a great number of enlightenedsouls, but I also discovered myself,’’ said one young leader. ‘‘I think we paved the way
to create a humane business community. Living the values we learned from each othertogether, we can lead the sharing of love in this company.’’
Remarked another: ‘‘We started this session knowing that it was about business, butsomewhere along the way, we forgot about that and instead learned about humanity. It’s
all about realizing that you want to make something out of your life and knowing what
you want to make out of your life and that you want to touch other people’s lives. When
you connect with others here and share amazing experiences and you learn about humanity, you become a better person. That remains with you.’’ (See also the sidebar ‘‘Leadership as a Choice.’’)REFLECTIONS, Volume 4, Number 1

Visiting the Panan people© Philip Mirvis

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AYAS AND MIRVIS
Young Leaders’ Forum in Asiaw

Gunning concluded the gathering with his re ections:‘‘I have reected a great deal on my own life and on mystruggles in the past. I get great strength to be here and tohelp you to have a better life than I have had. I’ve seen
many of your struggles these past few days. And I’ve also
seen your courage. It gives me tremendous energy to see
how brave you are and to see your aspirations and ambitions. And it gives me huge hope. I have no doubt that you
will get there. Ultimately, I know that if the will is there,
you can overcome anything. I see that in you. In a year’stime, so much has happened to you. I am very hopeful andgrateful to be confronted with humanity in such a deep andprofound way with you.’’Ofcial opening ceremony,
Village of Hope
© Karen Ayas

Revisiting the Village of Hope
The follow-up meeting of the forum, originally scheduled for China, returned to Danang
to recognize the Village of Hope and the tragic death in an auto accident of one young
Vietnamese leader, Harry Nguyen. After the formal part of the meeting, we were to revisit
the Village of Hope. This day was planned not by Gunning and the facilitators, but by theyoung leaders themselves. Many had kept in touch with the children they had spent timewith six months earlier. The young Vietnamese leaders had done much more than that:

Leadership as a Choice40‘‘The rst day, as we walked on the beach, we had to reect once again if we wanted to be top
leaders or not. Until then, I hadn’t thought we really needed to make that choice. I also realized thischoice means commitment, and that I am making a decision that can affect my future.’’—Youngleader, Thailand‘‘When we were asked to identify three words that describe best our mission, my choices were love,inspire, and explore. I came to realize how much these words capture my mission. When you love life,
it allows you to do anything you want. When you inspire and explore, you bring excitement to all
your relationships. The same applies to business: loving your consumers, inspiring your team, exploring new opportunities. And I am really condent that I can succeed in my mission.’’—Young leader,
Philippines‘‘I also had two big revelations. I have noticed that it doesn’t take me as long to answer the leadership question anymore. I know that I can do it and that I want to take the lead. And I know thiscompany is very serious about bringing change and it feels good. On the personal side, I found thecourage to look back and say that I made a mistake and dealt with it the best way I could and thatit has made me a better person. Having the courage to admit that gave me a very powerful feeling,almost like being liberated. I am a stronger person now.’’—Young leader, Indonesia‘‘The experience we are having right now as we are sitting on this beach is something I have neverhad. Had I not come here, I would have missed a great opportunity in my life. This is a difcultjourney, but I have to be a successful leader, I have to build on my strengths, and I have to leave alegacy.’’—Young leader, Pakistan‘‘I am the youngest of you all. At rst, I was afraid to confront myself. But I realize that you cannot
escape yourself. I sit here with a strange feeling that I have been reborn with all of you coming into
my life. It’s really like I have unlocked part of myself that I didn’t know I had. I used to think thatleadership was completely intellectual, brainy stuff. And initially I said yes to the question because ofthat. But after these few days of connecting with people like you, I know I have to go a long way,
because it has so much to do with humanity. In the past, I have been so selsh. I have been so
focused on how to make my business plan successful regardless of its consequences, and now I am
so ashamed of this. I know it’s all because of the pain I have gone through in my past. To travel on
the road less traveled, you have to go through pain, and you have to connect with your true self.
When you deeply connect, you will live with not only your own pain but also the pain of others. But
this is my choice, I decided to go for it, no matter how painful. And at the end, I know I will have
lived true to my beliefs.’’—Young leader, Vietnam‘‘I will always remember that leadership is a choice. My mind-set was that leadership is a task. After
this meeting, I have so much power, like a fully charged battery, in my mind and heart to achieve
what I want. I can sit in front of anyone in the company. I can challenge anyone, even the president.
And I know how to unlock myself. So many don’t have the opportunity to attend meetings likethis.’’—Young leader, Korea

Volume 4, Number 1, REFLECTIONSAYAS AND MIRVIS
Young Leaders’ Forum in Asiaw

they took on a community service project to create a better home for all the children andsuccessfully completed an upgrading of the village.
The local subsidiary of Unilever contributed US$40,000 to the upgrade project, completed at a total cost of US$120,000. The president of the global group, Niall FitzGerald,
donated another US$50,000; other donations came from subsidiaries across Australia,
Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Singapore, and Thailand.
This day was the reopening of the village, a huge celebration with the aim of creatinga memorable experience for the children and a memorial for Nguyen. After an of cialceremony, a memorial service, and planting trees, we headed out with everyone from thevillage for a bus ride, stroll in the nearby town, and three-hour boat ride. We ended at arestaurant for a small feast and a crazy party that brought out the child in everyone:
dancing between tables and around a huge campre, singing with the children, and starting a ght with a giant creamy birthday cake for the 180 children.
What was meant to be a memorable experience for the children turned out to be more
so for the young leaders. And the lessons learned would not be forgotten. One said: ‘‘I’ve
learned that when a young child from the Village of Hope holds your little nger in his st, you’re hooked for life.’’ Said another: ‘‘Normally one would think that it’s church or
whichever religion you embrace that would teach you about humanity or about love andcare. I never thought that an organization could care for you. I thought they give you asalary. It’s a simple business transaction; you work and get money. Well, after one year,
I am proud to say that’s not how it works. Ten years from now, we will not just havebecome business leaders, but we will have had an impact on a lot of other people’s lives.’’Commentaryby Tex Gunning
Facing humanity has a profound effect on you as a person. We all have an enormous need forhumanity. That includes love, recognition, ability to grow, friendship, fun, affection, and so on. Increasingly, we seek and choose our social and business environments with these human factors inmind.
Why is being confronted with your own humanity such a profound, moving experience? And
why do we need a ‘‘reminder’’ to feel our own humanity? If this is so human, so innate, why did
we lose this capability?
When faced with our own humanity, we become aware of all the love and pain we carry. We
reconnect to our souls, and we meet again our true selves. Love, pain, birth, death, and beauty(human and artistic) make us face humanity. When we see authenticity or indigenous peoples,when we connect with nature, observe animals, play with children, and talk to the elderly, we canhave such experiences. But how do you make such experiences meaningful? How do you capture
those feelings and move on to a higher level of consciousness and make it part of your life? Do
you start to feel your own need for love, the need to give love, and the need for a safe and meaningful environment and create a better life for yourself and those around you?
A business should be able to create a community that appeals to innate human needs. An
environment that true communities characterize is one in which we nd safety, caring, and compassion. In the ‘‘humane’’ organization, people connect more deeply to themselves (and others) andintegrate their intellectual and emotional competencies in a very profound way. They can experiment and explore both competencies (as it is safe to do) and, in this exploration, nd the opportunity for growth and self-realization. When they relate to others in an explorative and safe
environment, people build on each other’s talents. The resulting synergies create the ‘‘miracle’’ energies that characterize winning companies and teams.
Reection is one of the most powerful tools for learning and, therefore, for growth. In thehumane organization, because it is safe, people may share feelings and thoughts for compassionate
reasons, or may test their intuitive feelings with others. Reection, both individually and collectively, nds a fertile environment if people truly live in community.

REFLECTIONS, Volume 4, Number 1

Tex Gunning
President
Unilever, Asia Private Limited

41

AYAS AND MIRVIS

Commentary

Young Leaders’ Forum in Asiaw

by Edgar H. Schein

42

Edgar H. Schein
Sloan Fellows Professor ofManagement Emeritus
MIT Sloan School of Management
scheine@mit.edu

The story of how Tex Gunning has chosen to provide a set of deep learning experiences for his
future leaders is a remarkable example of ‘‘coercive persuasion’’ used to benign ends and should
remind us all that it is pointless to condemn ‘‘manipulation’’ or even ‘‘brainwashing’’ until we havetruly understood just exactly what happened and for what purposes. By coercive persuasion, I
mean simply that many efforts to educate or indoctrinate occur in a context in which it is physically, socially, or psychologically difcult to leave. In other words, the education or persuasion is
directed at a basically captive audience. When we take groups into remote environments, we are de
facto creating such a situation; all institutions engage in this form of education all the time. The
learning that occurred in training groups in two- or three-week workshops at Bethel, Maine, tted
this concept, just as well as the formal indoctrination that takes place in a variety of companysponsored ‘‘training’’ programs. All society is a complex mix of coercion and freedom. Coercion is
not in and of itself ‘‘bad,’’ just as ‘‘manipulation’’ is not in and of itself ‘‘bad.’’ It all depends on who
is doing it, for what ends, and how free are the participants to leave the situation (see Schein,1999). Hence we must always ask the tough questions: (1) coercive persuasion for what ends? and(2) coercive persuasion at what price?
The price one should not be willing to pay is physical, social, or psychological coercion in thesense that if the learner does not want to learn what the teacher is teaching, he or she must be
free to leave, to exit the situation. And in order to have the necessary information on whether or
not to exit, the learner must have access to valid information about what is being done, why, andwhat alternatives exist. The question to the future leaders of ‘‘do you really want to do this?’’ andthe nonpunitive offer of ‘‘leave without penalty if this is not for you,’’ become the crucial elements
in making this kind of process ‘‘legitimate’’ and useful.
A nal point concerns whether the leadership learning is for the benet of the corporation,
the benet of the individual, or, as is reality, for the benet of both. If some young leaders want tobuild their careers in this corporation and if they have a free and informed choice to do that, more
power to them. If some want no part of such an intense and personal program, and, therefore
choose to exit, that is good for them and also for the corporation that would not want potential
dissidents. Many will not be sure, so future choice points have to be made available, and the program as described clearly has that kind of contingency built into it.
I think readers should study carefully what is being done here and examine their own feelings
about it before making any glib judgments as to whether this is admirable or appalling. As I have
tried to indicate in my comment, the answer to this question is in the goals of the program andthe details of how it works. In any event, this is an absolutely fascinating account of a fascinating
program.

Reference
Schein, E.H. ‘‘Empowerment, Coercive Persuasion and Organizational Learning: Do They Connect?’’ The Learning
Organization 6 (1999): 163– 172.

Volume 4, Number 1, REFLECTIONSWhen Culture Matters:
Processes of Organizational
Learning andTransformation
Cristiano Busco, Angelo Riccaboni,and Robert W. ScapensH

ow do systems of accountability evolve across time and space and thereby contributeto the ongoing creation and rede nition of shared organizational knowledge? Bydrawing on insights from a case study, we combine empirical evidence and theoreticalanalysis to explore the interactions between performance measurement systems and theprocesses through which organizational cultures change. We focus on the underlying
nature and processes of learning and change.
In a longitudinal study, we combined the roles of researcher and helper-consultant
to achieve what Schein (1992) calls a clinical perspective. Our contacts with the company, Nuovo Pignone, which was acquired by General Electric, began in 1995. Since
September 1996, we made site visits almost monthly until 2000. Our activities ranged
from research interviews and observations to internal training. This dual role provided
wide-ranging access to the organizational setting and allowed us to participate actively
in the process of organizational transformation, taking part in workshops, seminars,
and courses; collecting a large quantity of internal material; and conducting more than
70 interviews by the end of 1999 (for further details, see Busco, Riccaboni, and Scapens,
2000).
Established in 1842 in Florence, Italy, Pignone was originally a cast-iron foundry thatdeveloped the world’s rst gas-powered internal combustion engine, along with otherproducts. In 1954, it was incorporated into ENI, the Italian agency for hydrocarbons, andrenamed Nuovo (new) Pignone (hereafter, NP). As NP, it began designing and manufacturing electrical turbines and rapidly achieved a reputation as a high-quality manufacturerof specialized equipment for process-based and energy-related industries. NP compressors, pumps, and turbines are now world-class product leaders. Although, over the years,
NP has had a ‘‘fairly relaxed management style’’ (according to a senior manager at NP
for more than 20 years), it has continued to be very pro table because of its excellent
products and production systems. For example, it secured a major contract to supply 19
compression stations and 57 centrifugal compressors, driven by gas turbines, for theTrans-Siberian pipeline. Nobody was surprised when GE was attracted by the market
share and technical abilities of NP—a major competitor in the oil and gas market. As partof the Italian government’s wide-scale program of privatization in the early 1990s, GE
acquired more than 80% of NP equity shares in 1994. This percentage eventually increased to 91% in 1998, when a second major contract was signed for the Trans-Siberianpipeline.

REFLECTIONS, Volume 4, Number 1ÓCristiano Busco
Lecturer
Manchester School of Accounting
and Finance
University of Manchester, UK
cristiano.busco@man.ac.uk

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

43

BUSCO, RICCABONI, AND SCAPENSThe Role of Accountability Systems

When Culture Mattersw

Our case study focuses on the integration of NP into the global GE organization. Following
the GE acquisition, NP implemented various restructuring programs.1 However, the majorchange involved the concept of measurement. Whereas NP had had no tradition of widespread performance measurement, GE’s management and organizational style relies extensively on measurement systems.
We do not suggest that NP had no measurement systems before the GE acquisition.
Previously, NP had been a stated-owned and largely bureaucratic company. It had had to
produce budgets and various reports for both the head of ce and the state. But the systems
it used were not integrated into its management processes. NP was quite protable, duelargely to excellent products and production systems rather than to management andaccounting controls. As an accounting manager pointed out, using a naval metaphor: ‘‘To
be a bureaucratic state ship, we were adequately equipped and armed. We didn’t need toshoot, nobody asked us to  nd our limits, and there were no wars to ght.’’

44

Angelo Riccaboni
Professor of Accounting
University of Siena, Italyriccaboni@unisi.it

Robert W. Scapens
Professor of Accounting
Director, Centre for Interdisciplinary
Research in Accounting
University of Manchester, UK
Visiting Professor
University of Groningen,
The Netherlands
r.scapens@man.ac.uk

Changing NP
The situation did not last long, however. A project engineer explained, ‘‘When, in 1994,
GE’s integration team started to arrive in Florence . . . one thing was clear to everybody:a revolution was going to happen.’’ A nance manager sitting next to him added, ‘‘We
knew the world was going to change. And the world has changed totally!’’ It was immediately clear to everybody at NP that the company was undergoing a twofold culturalchange: not only from an Italian to an American company, which was itself a big step,
but also from a bureaucratic state-owned company to one of the most intense, businessoriented corporations in the world. It was also clear that, although the process was described to the Italian staff as integrating NP within GE—introducing GE’s values while
respecting NP’s capabilities and promoting change rather than forcing it—it was GE thatwas ultimately the new boss.2 Although a former ENI director remained as NP’s chairman,
it is not surprising that a ‘‘GE man’’ was installed in the powerful position as NP’s CEO.
‘‘GE is a language—it is a word—and at the beginning, it is difcult,’’ admitted NP’schairman.3 GE is a global company that is integrated and managed through a common
organizational language. To integrate its diverse businesses, GE is constantly seeking toshare knowledge worldwide. For this reason, there were two major components to theorganizational change that took place within NP, both supplemented by intensive andextensive training programs. The rst component was the redesign of the company’ssystems of accountability, and the second was the subsequent implementation of a newmeasurement-based quality program—the six-sigma program.

The Accountability Revolution
Redesigning NP’s systems of accountability involved both major extensions of the company’s nancial systems and a restructuring of the accounting and nance function. This
restructuring, which was essential for enabling the nancial systems to be extended, comprised a reorganization of the department traditionally responsible for cost accounting,setting up a new department of nancial planning and analysis for NP as a whole, andcreating a new cadre of  nance managers. These managers were placed in the individual
divisions and were responsible for the supervision of budgeting and reporting at the operating level, as well as providing nancial support to the operating managers. As such,they were able to help managers cope with the new systems of accountability and performance measurement. In addition, managers at all levels were intensively trained in the
new systems to ensure that both the accountants and managers understood them thoroughly.
‘‘Nuovo Pignone is a very strong company, but it made its success more on people
than on processes,’’ explained an NP procurement manager. In this respect, a huge culturalchange was about to occur. A nance manager who joined NP at the time of the acquisition explained:

Volume 4, Number 1, REFLECTIONSBy empowering engineers with  nancial systems of accountability, they [NP management]
didn’t create new  gures; they didn’t reproduce accountants. On the contrary, they have infused operating roles with a broader view of the business. They created a minimum commonbase of knowledge to talk about contents, without losing any time arguing about meanings.

Wearing the Finance Hat
To facilitate communication between accountants and engineers, and between nanceand project managers, the organization implemented a massive training program. Thus,
it trained all NP engineers and skilled operatives in the fundamentals of nancial measurement.5 In addition, it persuaded sales managers and other sales personnel to think in nancial terms and to consider their customers as ‘‘ nancial entities.’’
Communication and training were essential  rst to challenge and then to change theold ways of thinking about the business by infusing NP with a new measurement-driven
organizational culture. An internal training booklet declares:
Financial solution selling will be a strategic weapon in our sales arsenal. . . . [As] sales andsales support professionals, you ‘‘wear many hats’’ and possess many skills that keep our
corporation at the sales and support forefront. . . . Now, you’re being asked to wear one
more hat—probably the most important and powerful one in your career—that of a ‘‘nancial consultant.’’. . . You will be increasingly challenged to know and assist your accounts
better than ever— to look for every opportunity to improve their nancial condition by selling

REFLECTIONS, Volume 4, Number 1

BUSCO, RICCABONI, AND SCAPENSWhen Culture Matters

Despite statements from GE’s CEO, such as: ‘‘Don’t
focus on the numbers. . . . Numbers aren’t the vision; numbers are the product. . . . I never talk about numbers,’’4 it
was immediately clear within NP that nancial measuresand metrics of accountability had become crucial. ‘‘Numbers became the core of our organizational life. . . . You
need to achieve the targets, you need to show the numbers,
and you must do it on a quarterly basis,’’ explained a nancial analyst. Now, reports, data, information, charts,and so on  ow continuously around the company, largely
in response to the pressure to produce numbers, and goodnumbers, every three months. As a business analyst remarked, while nervously consulting his calendar, ‘‘GE’s
headquarters need numbers to show to Wall Street. Consequently, we need to be fast, reliable, and pro table. If
not, the week after, tough inquirers start to cross the Atlantic.’’
The importance of producing the numbers has increased the status of the personnel
directly or indirectly involved in nance and accounting. Furthermore, the need to incorporate operating processes into the accounting systems has prompted an extension of
those systems. For example, a recent innovation has enabled these systems to permeate
to the shop  oor, which has allowed nance managers, who are physically located in the
production sections, to monitor their operations daily. A project manager commented:

w

There had been no culture of measurement; at least, the attention towards those aspects was very poor. It wasn’t amere tools problem. Of course, several instruments were
not adequate to the new requirements, but that didn’t look
like the key problem. . . . There was no emphasis on performance control mechanisms. . . . If no one asks you tomake proper numbers, if no one checks your performance,
you don’t do it. You know you should achieve the targets,
you try, but you are fairly relaxed. . . . It was a question ofmanagement, a question of leadership. Ultimately, it was aquestion of culture.

© Emily Sper

45

BUSCO, RICCABONI, AND SCAPENSw
When Culture Matters

General Electric solutions that truly affect their ‘‘bottom line.’’. . . Financial selling . . . is auniversal language that decision makers around the world speak and understand.6

An expressed concern for measurement and customer satisfaction were at the forefront of NP’s cultural transformation. Management and control systems, comprising specic metrics of accountability and performance indicators,
were essential tools for making the business measurable.
‘‘Such an approach was . . . very different from the past,
but it was convincing. . . . At the end, it enhanced feelingsof trust and respect,’’ explained a salesman, who thenpointed to the relevant sections of an internal training manual on ‘‘how to master nancial selling.’’ ‘‘If you’re relatively new to  nance, relax—it’s not that difcult orcomplicated to get started. No, you don’t have to be a CPA
or nancial wizard to use some of the fundamentals of nance in selling,’’ reassures theintroduction. The booklet emphasizes the importance of showing customers how GE solutions can affect the  nancial results of major segments of their business, and how GE
solutions can realize the customers’ visions, directions, and goals. The objective is toillustrate that nance is crucial to adding value, cost savings, and  nancial bene ts, whichcustomers really care about:

Communication and training were
essential rst to challenge andthen to change the old ways ofthinking.

Force yourself to continually think of your account as a ‘‘nancial entity’’ whose only goal ismaking greater prots, and your only goal is to help them do that via implementing GE
solutions. . . . Stress GE’s unique or powerful features as part of the nancial selling process,then translate them into competitive nancial reasons to buy. . . . We need to show our customers how these features translate into operational benets— how they perform faster, moreaccurately, are less costly, and more ef cient. Then, we can translate these features intoquantiable  nancial bene ts with the help of our customers.

46

An emerging sense of security was rooted in and supported by the new organizational
language that, by empowering individuals, stimulated feelings of trust in the change process. Grounded in practice, such cognitive experiences are important for overcoming thelearning anxieties that people experience when departing from existing routines. By‘‘wearing the hat of nance,’’ people were able to cope successfully with their anxieties.
As an NP salesman argued, ‘‘Such an approach . . . implied a new mentality, a new seriesof attitudes. . . . . Again, it was challenging, but the direction to follow and the objectives
to achieve were always clear, as well as the means and tools to be employed.’’Following the massive training program, a new  nancial awareness emerged acrossthe company. Describing NP’s control systems before GE’s acquisition, a management
accountant emphasized, ‘‘There were no pressures for  nancial improvements. . . . The
tools were there, the data were there, but they didn’t look so interesting or ‘‘burning’’ as
now. I still have doubts that anyone bothered to read those documents carefully,’’ hecontinued. But now, there are no such doubts.

The Six-Sigma Program
The six-sigma program played a major role in bringing about cultural change at NP. Sixsigma is a business philosophy, grounded in a quality improvement initiative, that has
had a major impact on many large businesses during the past decade. Motorola rst
implemented it in 1987, and such companies as Texas Instruments, ABB, and Allied Signal
have since used it. Sigma is a measure of the number of mistakes per million discreet
operations, with six-sigma representing only 3.4 mistakes per million. The program comprises a vast range of tools, techniques, and processes for achieving its target. At the coreof the program is the process of de ning, measuring, analyzing, improving, and controlling
all operations of the business —support operations as well as production operations. Furthermore, there are various six-sigma ‘‘players,’’ with titles such as champions (leaders
who promote, approve, and facilitate projects within their area of responsibility), masterblack belts (full-time six-sigma experts who manage various projects and train other players), black belts (full-time quality managers who lead teams dedicated to speci c projects),

Volume 4, Number 1, REFLECTIONSWithout six-sigma, if you run a plant and I run a plant, it’s tough to understand your numbers. Then you can say, ‘‘Your ideas won’t work, because I am different.’’ Well, cry me ariver. The commonalities are what matter. If you make the metric the same, we can talk.

To implement a program of this nature requires a considerable amount of measurement, both to identify areas for improvement and to monitor progress. As such, the program reinforced the importance of measurement, and being grounded in a quality
improvement philosophy, it  t well with the culture of excellence in production and products, which had been a tradition at NP before its acquisition. However, the systems thatwere needed to successfully implement the program required the measurement of a vastarray of both  nancial and nonnancial factors, integrated into a holistic system of performance measurement and accountability, something that had not traditionally been
NP’s strength.

BUSCO, RICCABONI, AND SCAPENSw
When Culture Mattersand green belts (who work part-time on speci c projects, while continuing their normal
activities in the company).
NP implemented the six-sigma program at the end of 1996; it had an immediate impact
on the company’s organizational structure and human resources management. NP established a quality team, reporting directly to the CEO, to help the product divisions andfunctions implement their quality improvement plans and speci c six-sigma projects, andappointed a master black belt for each business process or function. In addition, there
was an extensive internal training program, with 1,500 white-collar workers (of 3,000)
becoming green belts by the end of 1999. The emphasis on six-sigma was huge. It wasconsidered the key common language to drive GE globally. As claried by GE’s vice president for the program:

Six-Sigma in the Parts and Service Division
The parts and service division pioneered the implementation of six-sigma within NP. The
response time in ITO processes (that is, the time from an initial inquiry to receipt of anorder) was identied as a major issue affecting customer satisfaction. By the end of 1996,
a team of eight people (the champion, the process leader, a master black belt, a blackbelt, and four other employees) concluded the de nition phase of the project. The team
identied the critical-to-quality (CTQ) characteristics and then developed an activitybased analysis of the various processes involved in producing an initial quotation, focusing on the metrics necessary to evaluate potential improvements. ‘‘In these phases, weemployed for the rst time those speci c six-sigma tools we learned during the intense
periods of training—instruments such as a CTQ tree, process map per product, structure
tree, shbone diagram, who-what-when chart, CTQs validation against customer survey,
 ow chart, and so on,’’ one team member proudly explained.
Such a measurement-based approach rst questioned and then modi ed traditionalviews about the way the division produces quotations. As the analysis started, it became
immediately clear that various projects—tackling speci c problems and de ciencies—
would be necessary. Consequently, during 1997, a large number of speci c projects were
set up with the aim of reaching ve-sigma in 1998. ‘‘Pretty impossible, but this was thestretching philosophy at work,’’ claimed a member of the team.
For each service and type of product, the division undertook a process and activity
analysis, de ned a time sequence of operations, and produced a process map. For example, in the case of a spare-part quotation, it broke the process down into four steps:
request for a quotation, technical analysis, pricing, and issuing the quotation. Each step
was then the subject of a speci c six-sigma project. The CTQ characteristics were identied as cycle-time reduction and customer satisfaction. But the division encountered amajor problem when trying to calculate the potential nancial bene ts from a process ofcontinuous improvement in these characteristics. An NP engineer responsible for a speci c six-sigma project remarked:
One day, we suddenly realized the strength of  nancial numbers within six-sigma. We were
nearly closing the project, all the improvements were there, expressed in technical terms, but
we were still struggling to translate them into nancial benets and cost savings. We still
missed the bloody numbers to validate and close the project. We did not want to bother the

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BUSCO, RICCABONI, AND SCAPENSw
When Culture Mattersaccountants more than necessary. Rather, we felt that we could close the project and show
our improved  nancial understanding. We took our training notes from the shelves, and we
did it ourselves. Later, during the presentation of the project results, we knew they were
waiting for the ‘‘bottom line.’’ The last page of other small projects was still blank. Well, thepresentation of those numbers excited me as much as dozens of early successful designs.
Looking at the faces of the people, I realized the importance of those numbers. I felt thepower of having them and presenting them.

The division calculated the nancial bene ts by applying the expected contribution
margin to the anticipated increase in sales. Yet, despite many process improvements andpotential cost savings, it did not achieve the targeted ve-sigma level. ‘‘But this wasn’t
the point,’’ argued a green belt involved in the project, who continued:
In a short period, six-sigma should lead NP towards a new operational and managerial methodology. Its tools, together with parallel initiatives, such as the best-practice diffusion and theworkout meetings, should enable the generation of a new, measurement-focused way to participate and live in the business. . . . This is what has truly happened: six-sigma has been
spread throughout the company, which is now strongly integrated and bound by this modus
operandi. Now, when we think, discuss, or communicate, we do it in terms of CTQs and contribution margin. It doesn’t matter if we are talking to the accountants or among engineers. It
doesn’t matter if we are ringing Talamona [a decentralized NP division] or the States.

Thus, along with improvements measured on the sigma scale, greater productivity,and customer satisfaction, there have also been important intangible outcomes of the sixsigma program. ‘‘They are cultural. . . . Indeed, they cannot
be always synthesized in impressive numbers, but they represent potential future achievements,’’ argued a human resources manager. Furthermore, in a global company such
as GE, there are potential bene ts stretching far beyond theboundaries of the division or subsidiary that implemented
them, as was the case with the ITO processes project. It was
acclaimed the best six-sigma project within GE at the 1998
Quality Rally in Atlanta, Georgia, and its bene ts have spread throughout GE. ‘‘The sharing of these measures allowed our outcomes to be understood and appreciated worldwide,’’ claimed an engineer a few months later, waving a folder containing six-sigma
training material.
The integration of  nancial and nonnancial performance indicators requires a corporatewide information system. But being grounded in a quality-based philosophy, consistent with the traditional production-based values of NP, has meant that the six-sigma
program has extended the culture of measurement, the ‘‘GE way,’’ to all parts of NP. As
a result, NP managers are now able to communicate with other GE managers, wherever
they are located, in the terms and language of six-sigma. As such, there has been a major
cultural change within NP.

The six-sigma program has
extended the culture ofmeasurement, the ‘‘GE way,’’ toall parts of NP.

48

Processes of Cultural Change
NP’s organizational transformation went very deep, involving complex processes thatcombined rationality, successful experiences, and feelings of trust. GE was so totally different from ENI that a massive cognitive rede nition was required. It was a matter of rst
unlearning the old culture and then relearning a new one. In general terms, people tend
to resist profound cultural changes because the unlearning process is uncomfortable andproduces anxiety (Schein, 1999: 115). Nevertheless, possibilities for change increase whenthree factors are balanced: the mechanisms of discon rmation, the creation of survival
anxiety (or guilt), and the subsequent creation of psychological security to overcome
learning anxiety (Schein, 1999: 117).8 These factors contribute to unfreezing the values
that inform the institutionalized organizational culture, and as a result, cultural change
becomes possible (Lewin, 1947). In particular, ‘‘change then occurs through cognitiveredenition of key concepts, and the resulting behavioral changes become refrozen in the
personalities of the individuals and in the norms and routines of the group’’ (Schein, 1992:
312, emphasis added).

Volume 4, Number 1, REFLECTIONSBUSCO, RICCABONI, AND SCAPENSw

From the outset, the GE philosophy was imposed very aggressively throughout the company. GE’s CEO, talking to a meeting of operating managers, categorized managers andemployees in the following terms: A players, who subscribe to the company’s values andwho have to be kept and rewarded; B players, who still deserve to be trusted because
they have the potential to improve their skills and productivity; and C players, who do
not subscribe to the company’s values and, without remorse, deserve to be red.
The changes at NP occurred quickly, and, despite its undoubted technical competence, speed was not a typical characteristic of the old NP. According to a B-ranked engineer, ‘‘It wasn’t a normal change; it was a shock! An earthquake in our daily way tothink and behave. Take the example of human resource management; from a rather relaxed system mainly based on egalitarian principles, we suddenly faced the A, B, C ranking
theory. I am not arguing it was right before, but this was scary.’’
Within NP, the charismatic leadership of GE’s CEO and the measurement-based training program were sources of discon rmation, to which even the unions unintentionallycontributed. As a result, all levels of the company recognized the need for change, which
represented a new organizational credo. Although union leaders regarded local management’s conduct as opportunistic and a betrayal ‘‘by someone who has suddenly lost his
memory due to being well paid!’’9 it cannot be interpreted simply as a matter of bonuses
and stock options (that is, being well paid). The reasons were more complex, and a fuller
explanation is needed.

When Culture Matters

Unfreezing the Old Culture

Combining Rationality and Trust . . .
The ‘‘GE way’’ seriously threatened the psychological security built during the era of ENI
management. Most people at NP were aware of the company’s past and present characteristics and knew its strengths and weaknesses. In viewof GE’s reputation, it was not difcult to predict the intensity of the integration process. Everyone was aware that‘‘scary’’ claims (like the A, B, C rankings) could and indeed
would become reality.
The stories and the rhetoric that contributed to creating the myth of the ‘‘GE way’’ had a powerful impact onestablished frames of meaning. The unions stated they
were ready to ght the changes, but NP was already changing. Furthermore, workers’ reactions to GE’s values werequite rational. Interviews of lower level employees, while cataloguing the usual complaints, revealed quite clearly how much they cared about being part of a world-famous
company. Thus, after initially creating survival anxiety or guilt, continuous waves ofcommunication and training promoted an emerging sense of psychological security. The
diffusion of a new business credo reinforced this feeling, which empowered people andgave them the trust needed to overcome learning anxiety.

After initially creating survival
anxiety or guilt, continuous waves
of communication and training
promoted an emerging sense ofpsychological security.

. . . With Successful Experiences
After the unfreezing of NP’s established frames of meaning, people’s perception of ‘‘newknowledge’’ was at a conscious level. Thus, possibly as a consequence of the need toalign personal and collective values, beliefs, and patterns of behavior with the newowner’s vision, a certain degree of rational awareness characterized their motivations.
‘‘We are building up the necessary kit for survival, aren’t we?’’ asked a project engineer
at the end of a  nancial training session.
Nevertheless, as organizational members gained experience in coping with the events
that stimulated these conscious reevaluations, their rational patterns of behavior tended
to transform into more tacit, routinized behavior. More speci cally, as the redesigned
cognitive schema that underpin such routines work repeatedly over time (for example, inthe six-sigma projects), they provide a sense of psychological security and are taken for
granted. Furthermore, as the routines become socially validated, they become institutionalized and part of the stock of mutual knowledge.

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BUSCO, RICCABONI, AND SCAPENS

Change through Conservation

When Culture Mattersw

The process of learning and transformation within NP was deeply rooted in the difference
between the polarities represented by the former organizational culture and GE. Certainly,
NP was urged to integrate quickly into the new business environment. However, GE’s
interest in NP’s products and production systems was driven by a signi cant respect for
NP’s technical abilities. Accordingly, although the pressure for and the magnitude ofchange made the process of transformation very intense, change did not happen without
conservation. ‘‘The story has to contain a continuity,’’ suggest Maturana and Bunnell,
who continue, ‘‘When in a collection of elements, some conguration of relations begins
to be conserved, a space is opened for everything to change around what is conserved’’(1999: 83). Remarkably, this seems to have happened even in the radical transformation
experienced at NP. As the company enters the third millennium, two major events characterize the outcome of NP’s intense change through conservation: the new, marketoriented, business-unit reorganization and the creation of the Florence Learning Center.
A major program of organizational restructuring took place in 2000 to strengthen NP’s
position of leadership in the supply of equipment and services for the oil and gas market.
NP organized its internal structures around the various segments of the oil and gas market
in which it competes: upstream (wellhead and production), midstream (transportationand storage), downstream (reneries and petrochemical), and distribution (wholesale andretail)—with a separate business unit for each segment. Now, instead of individual products, NP offers integrated solutions for each market segment—‘‘one-stop shopping.’’ In
addition, the individual business units are supported (and integrated) by a global service
division, which offers maintenance and services across all the segments to ensure thereliability and performance of the products delivered. This restructuring encompasses a
portfolio of world-class market solutions organized and managed in accordance with the
new customer-driven perspective.
NP’s rapid and successful growth, together with its extensive investment in learning,
encouraged GE to designate NP’s Florence facility as a key training center for Europe.
Whereas, in 1995, personnel development courses and learning initiatives were held inhouse or in major hotels, in 1998, NP rented space to provide a temporary training center.
Since January 2000, a new and larger Florence Learning Center has been offering a wide
range of programs in  nance, human resources, law, marketing/sales, project management, technical courses, and total quality management. These courses, given both internally and externally for suppliers, customers, and other businesses, represent the
combined outcome of the two cultures that contributed to the company’s rede nition.

© Jonathan Liffgens

50

Volume 4, Number 1, REFLECTIONSNotes
1. For an overview of GE’s programs of restructuring and change see, among others, R. Ashkenas
and T.D. Jick. ‘‘From Dialogue to Action in GE Work-out.’’ Research in Organizational Change
and Development 6 (1992): 267–287; R. Ashkenas, D. Ulrich, T. Jick, and S. Kerr. The Boundaryless Organization: Breaking the Chains of Organizational Structure (San Francisco: Jossey-Bass,
1995); R. Slater. The New GE: How Jack Welch Revived an American Institution (Homewood, IL:
Irwin, 1993); R. Slater. Jack Welch and the GE Way (New York: McGraw-Hill, 1999).
2. ‘‘If you don’t want to change, don’t be acquired,’’ argued a GE manager in T. Stewart. ‘‘See Jack.
See Jack Run Europe.’’ Fortune (September 1999).
3. Ibid.
4. C.R. Day and P. LaBarre. ‘‘GE: Just Your Everyday $60 Billion Family Grocery Store.’’ Industry
Week (May 1994).
5. Since 1996, 250 to 300 nonnance employees (especially engineers) have been trained each year
in the understanding of  nancial fundamentals.
6. Internal document.

REFLECTIONS, Volume 4, Number 1

BUSCO, RICCABONI, AND SCAPENSManaging organizational complexity is undoubtedly one of the main challenges facing
corporate leaders. In order to cope with problems of external adaptation and internal
integration, many corporations are increasingly relying on measurement-based systems
of management to align business processes with corporate strategy. In so doing, they areinfusing organizational culture with metrics of performance measurement and accountability. In this article, we have illustrated how organizational culture and measurementbased systems can evolve simultaneously.
By translating external market-driven pressures into internal nancial and nonnancial targets, linked to speci c production processes and business practices, these systems
enable organizational leaders to transform broad, abstract strategies into visible (quanti able and measurable) tasks, even at the lowest operational levels. As such, they provide
objectives that individuals and groups can understand and enhance their identication
with the organization’s cultural values expressed by its leaders. From this perspective,the emerging systems of measurement and performance accountability can be seen associally constructed, validated practices through which organizational culture is created,
stored, and transmitted across space and time.
Management accounting and other performance measurement systems cannot be regarded as objective and value-neutral tools. By carrying, diffusing, validating, and institutionalizing the taken-for-granted assumptions that constitute organizational culture,they can be seen as technologies deeply implicated in the production and reproductionof shared organizational knowledge and values. As in the NP case, implementing such
systems can improve communication and integration by giving engineers and other non nancial personnel a common language of accountability based on nancial and non nancial metrics. Furthermore, this shared vocabulary (the accounting language, thesix-sigma metrics, and so on) can overcome the communication, cultural, and operationalboundaries between subsidiaries and divisions located in different parts of the world. For
these reasons, we conclude that at NP, while the change of ownership opened the possibilities for organizational transformation, a measurement-based revolution gave it direction.
Former CEO of GE, Jack Welch, has described deals like the acquisition of NP as theseeds of GE globalization strategy that are now blooming into a garden (2001). He acknowledged that ‘‘one of our most satisfying accomplishments was taking over . . .
government-owned companies . . . and transforming them into highly energized organizations and protable companies’’ (Welch, 2001). These comments have certainly been
heard across the Atlantic, and NP-GE people in Tuscany are celebrating a successful integration, probably in front of a Fiorentina steak and a glass of Chianti. Eventually, thisis what globalization is all about!

w

Conclusion

When Culture Matters

They synthesize the historical, technical talents of NP and the rigorous, measurementdriven ‘‘GE way.’’51

BUSCO, RICCABONI, AND SCAPENS

7. T. Stewart. ‘‘See Jack. See Jack Run Europe.’’ Fortune (September 1999).
8. For further insights into such anxieties, see E.H. Schein. ‘‘How Can Organizations Learn Faster?
The Challenge of Entering the Green Room.’’ Sloan Management Review 34 (Winter 1993):
85–92.
9. Union statement that appeared on a canteen notice board.

References

When Culture Mattersw

Busco C., A. Riccaboni, and R.W. Scapens. ‘‘Management Accounting Systems and Organizational
Culture: An Institutional Framework for Interpreting Their Linkages and Processes of Change.’’
Paper presented at the European Accounting Association–PriceWaterhouseCoopers Doctoral
Colloquium, Munich, Germany, March 26–28, 2000; and Second Workshop on Management
Accounting Change, Oslo, Norway, May 11–14, 2000.
Lewin, K. ‘‘Group Decision and Social Change,’’ in Readings in Social Psychology, eds. T.N. Newcomb and E.L. Hartley (Troy, MO: Holt, Rinehart & Winston, 1947).
Maturana, H. and P. Bunnell. ‘‘The Biology of Business: Transformation Through Conservation.’’Re ections 1 (1999): 82–86.
Schein, E.H. Organizational Culture and Leadership, 2nd ed. (San Francisco: Jossey-Bass, 1992).
Schein, E.H. The Corporate Culture Survival Guide (San Francisco: Jossey-Bass, 1999).
Welch, J., with J. Byrne. Straight from the Gut (New York: Warner Business Books, 2001).

Davide Nicolini
Research Unit on Cognition,
Organizational Learning andAesthetics
Department of Sociology andSocial Research
University of TrentoItalyd.nicolini@tavinstitute.org

52

Commentaryby Davide Nicolini
Busco, Riccaboni, and Scapens have written a very nice and clear ‘‘change’’ story. It is an interesting, inspiring, and enjoyable story. But a story of what? Stories, of course, are powerful ways tocirculate and share what we know exactly because they are inherently ambiguous and open-ended.
You can recognize a good story because it invites the reader to do some of the work, to ll in theinevitable gaps, to enter the story, and to appropriate it by relating its content to his or her experience of the world. A commentary on a story is hence necessary to creating another story. These aresome of the stories that I read into this article.
First, this is a tale of an ancient dream come true. It is the dream of numbers as a universal
language, dreamed already at the very outset of our modern era by such great thinkers as Gottfried Leibniz. It is a dream that, as the story reminds us, modern multinationals have exploited. Of
course, you’d expect me, as a continental scholar, to reiterate that establishing numbers as the ‘‘GE
language’’ is a way of establishing the conditions for extending the control of GE’s headquarters to
the Tuscany foothills. Yet, the story is a reminder that the issue is more complex than that, because
control is also communication, and exercising power always implies applying constraints and opening new possibilities, eliminating uncertainty and establishing new ways of doing things.
Second, this is a story of change as invasion and colonization. Of course, the story is told fromthe perspective of the colonizers and the winners— the blood spilled is hardly mentioned, resistanceis treated only in passing, and coercion is signicantly downplayed. Yet what makes this story soenlightening is that we are reminded how modern colonization and change often do not rely onbrute force but on seduction, on the desire of the periphery to become part of the center, and on
the pleasure to achieve this. I couldn’t refrain from thinking of the NP story in relation to thehorrible events of September 2001. Such deep hatred can stem only from the fear raised by desire
and from the dread to succumb to temptation, knowing that once you give in, there is very likely
just a different you, but one for whom there is no looking back.
Finally, this is a story about the word culture. In the US, it is customary to think of culture as
the web of meanings people live in, the sense and feeling of things and people around us. The
authors offer ammunition for a different take. Culture could also be understood rst and foremost
as a collective name for the distinctive ways we do things, if we include talking as something that
we do. Culture, in other words, is a different way to describe the total set of practices by which welive. It is because we do similar things that we understand each other.
Not all practices are the same, however. Some practices are more ‘‘equal than others.’’ These‘‘core’’ practices keep in place many others, and when we try to change them, the whole gamut
moves. After that, things are never the same again, and above all, they do not make the same

Volume 4, Number 1, REFLECTIONSBUSCO, RICCABONI, AND SCAPENS

sense. Because these core practices are so entrenched and the effect spilling from their change isso far reaching, we refer to these events as culture changes. But if you scratch the surface, what
has mainly changed is ‘‘the way we do things here’’— if you still include talking as something we
do. As the article aptly demonstrates, and as other research conrms (including some of my own),
accounting practices are unfailingly among the core organizing practices—difcult to get at, but
critical in changing things in a radical and persistent way.

w

Commentary

When Culture Mattersby Edgar H. Schein
Infusing the Money Gene into the Cultural DNA of Nuovo Pignone
Organizations are created by founders and leaders with particular values and assumptions. When
those values and assumptions produce a successful organization, they become the DNA of the organization’s culture. Individual values or assumptions can be thought of as the genes in that DNA.
But not all successful organizations have the genes necessary for commercial success, the ‘‘money
gene.’’ They can be successful because of their product quality, their monopolistic position, or theirsecure role in a government-supported industry. During rapid growth periods, organizations can bevery inefcient nancially yet succeed because the growth rate covers up the inefciency.
If the money gene is missing in the cultural DNA, the organization will experience difculty in
midlife as competition grows, patents run out, government supports are withdrawn, and technology changes. In the case of the Italian company described in this fascinating story, we do notknow whether or not NP would have run into those difculties, but when GE bought it and began
to infuse NP with the GE culture, it is evident that GE was forcefully engaging in genetic manipulation—it was introducing the money gene into the NP culture.
The manifest process was to introduce ‘‘measurement’’ and to force more attention to quarterly reporting of various numbers. The deeper assumption was clearly that unless you measure you
won’t manage the nances well enough. This assumption was clearly behind the decision by GE to
train everyone in nancial analysis. Concern about nancial results not only was relevant to measuring NP’s own performance, but was crucial as a sales strategy in ‘‘showing customers how GE
solutions can affect the nancial results of major segments of their business.’’
NP managers had to learn not only the technical side of nance and the importance of tracking relevant numbers, but a whole new way of thinking and talking among themselves and withcustomers. GE’s introduction of the six-sigma program of perpetual improvement added still another language and set of parameters to measure yet, at the same time, reinforced preoccupation
with nancial results. In a sense, what managers had learned in the nancial area made it easier tolearn the new methodologies of six-sigma.
What makes this story important is that the culture change appeared to be successful. Given
the frequency of failures of change in acquisitions, it is interesting to see how GE’s approach, inspite of the massive change it was introducing, managed to pull it off. As the authors point out,
the restructuring did not change everything but preserved some important values that served as asecurity blanket while other things changed drastically. The lesson here is that when we ‘‘change
culture,’’ we are typically only introducing one or two new genes, or destroying one or two dysfunctional genes, while the basic DNA remains intact.
There is a deeper lesson here for many organizations in how GE approached this acquisition.
Whatever might have been the basis of NP’s success over the previous 100 or so years, it was not
safe to assume that its cultural DNA contained the genes needed to survive nancially in a deregulated, open-market environment. Typically, what is required to survive in a mature, competitivemarket is an ability to make tough trade-offs among products and markets, and to become extremely cost conscious.
Many successful organizations have never had to make those trade-offs or learned how to
become cost conscious because they have had other advantages. They do not become aware thatthey are missing the money gene, and may actually deplore the kinds of actions that would be
required to survive nancially. This problem is especially acute in high-tech industries that grow on
product innovation and are run by entrepreneurial managers who do not really value money and

REFLECTIONS, Volume 4, Number 1

Edgar H. Schein
Sloan Fellows Professor ofManagement Emeritus
MIT Sloan School of Management
scheine@mit.edu

53

BUSCO, RICCABONI, AND SCAPENS

commercial success in its own right. And that leaves us with a larger question. Should every company survive? Should every organization insure that, in its cultural DNA, the money gene exists?
And if nancial survival requires the compromising of other cultural values, what then?

Commentary

When Culture Mattersw

by Ranieri de Marchis

Ranieri de Marchis
Chief Financial Ofcer
Nuovo Pignone

54

I had the privilege to participate in the early stages of the Nuovo Pignone (NP) acquisition andthen return to NP as CFO almost four years later. The rst three GE individuals to arrive at NP werethe chief nancial ofcer, the nancial planning and analysis manager, and me as a corporate
auditor.
GE knew it was buying a state-run company with good product technology, poor measurement systems, and little nancial management. Very early in the process, a signicant effort was
put into creating a measurement system aligned with the business goals capable to provide timely
and accurate information. Within the rst six months, NP went through a metrics revolution— fromclosing the books twice a year with a four-month lag to closing the books each quarter with aone-week lag. The nance organization changed its mission from just being a general accounting
operation with obsolete legacy systems, mostly concerned with complying with local laws and regulations, to being a more contemporary organization with nancial analysis skills, new accounting
systems, and mostly concerned with driving shareholder value.
The article captures the essence of what has been and still is a signicant company transformation. The focus on the objectives and the institution of pay-for-performance in lieu of theseniority-based system have been the catalysts for a massive cultural change. Originally, the focus
was to make the product work with little understanding of how and if the company was making
money. Even cash was not a measurement, with the result that working capital management wasneglected.
After the company put in place a robust measurement system, a second wave of transformation came to fruition with the launch of the six-sigma program. This initiative, sponsored at thecorporate level, is a numerical quality initiative that requires a heavy use of statistical tools. NP,with its engineering culture, was ready to embrace such a program. The management systems werealso ready to support the initiative providing the necessary data to drive the process-improvement
actions. Here again, there was a strong focus on measuring the impact of the quality initiatives by
tracing the benets up to the ‘‘general ledger.’’
These programs, coupled with the nancial rigor necessary to drive and track the impact tothe bottom line, has transformed the role of nance within NP. The nance organization, in addition to the classic controllership role, is now much more involved in the operations of the company, partnering with the operating leaders. This partnership has also facilitated the disseminationof the common nancial language throughout the company. The operating leaders are as involved
in understanding and driving the nancial performance of the company as the nance community.
This common language is also a bridge to communicate effectively across GE and thus facilitate
the integration across the different companies.
Currently, NP is involved in several acquisitions. It’s now the turn of NP management to takethe lessons learned from the original integration and drive this common nancial language to the
newly acquired companies.

Volume 4, Number 1, REFLECTIONSLiving-Asset Stewardship:
How Organizational
Learning Leads to
Exceptional Market Returns
Jay Bragdon and Richard Karash[We] found that investor loyalty was heavily dependent on customer and employee loyalty,
and we understood that we were dealing not with tactical issues but with a strategic system.
— Frederick Reichheld (1998)
The more the mind is fathomed in its own right, as an organ of survival, the greater will be
the reverence for life for purely rational reasons.
— Edward O. Wilson (1984)D

oes a corporation’s investment in learning pay off? Or are such actions, despite theirappeal, just an inef cient diversion of pro ts? We believe it is useful to examine two
opposing mental models. One is a ‘‘xed pie’’ or ‘‘zero sum’’ model— in which any increase in the returns for one group comes at the expense of other groups (management
versus labor versus shareholders, and so on). In this model, if learning bene ts the individual, how can the corporation bene t? In the opposing model, there are synergies bywhich organizational learning generates factor ef ciencies— the ability to offer more andbetter quality output with fewer demands on nature and society (Hawken et al., 1999).
We believe that thinking affects reality. If companies think ‘‘xed pie,’’ that is what they
will get —a self-fullling prophesy—because they will hold back on investments thatmight otherwise produce excellent returns.
We begin this article with a brief tour of economic history and our argument for thesynergy model. Then, we support our argument with an analysis of 60 corporations thatare global leaders in living-asset stewardship (see the sidebar). We close with surprisingevidence that investing in the companies that are exemplars in living-asset stewardshipappears to produce superior investment returns.
Our belief in synergy draws heavily on the works of two men: management consultant Frederick Reichheld, who describes the synergies inherent in loyalty, and biologist Edward O. Wilson, who describes both the spiritual and economic values of
biodiversity. Wilson gives us the analytic tools to see a strong, reinforcing cycle inwhich living-asset stewardship strengthens Reichheld’s model. ‘‘Humanity needs a vision of an expanding and unending future,’’ says Wilson (1993: 39). When that vision
is encouraged, people become inspired; when it is suppressed, they feel despair.1 We
submit that the very human quest for living-asset stewardship inspires thinking and solutions that transcend mere loyalty. We present evidence to suggest that stewardship
improves corporate results, the lives of employees and customers, shareholder returns,
and the possibilities for a better world.

REFLECTIONS, Volume 4, Number 1

Jay Bragdon
Conservest Management Co.
JHBragdon@aol.com

55Ó

Richard Karash
Independent consultant
Karash Associates, Inc.
Richard@Karash.com
2002 by the Society for Organizational Learning and the Massachusetts
Institute of Technology.

BRAGDON AND KARASHw
Living-Asset Stewardship

Living-Asset Stewardship
Living-asset stewardship (LAS) is a respect for life. It is expressed in the ways companies treat people and nature—the web of life that supports all commercial activity. The power of LAS is the powerof inspiration. Companies that practice good LAS tend to attract the best employees, the most committed strategic partners, the most loyal customers, and the most patient investors. They are moretrusted and more energetic than their peers, and more likely to succeed in the innite game of sustainability.
Until recently, analysts, lenders, and investors have been unable to describe the growing power andinuence of stewardship companies. Their analytic model sees people and nature in a mechanistic
context, as quantiable and manageable tangibles, ‘‘factors of production,’’ as consumers, waste sites,and so on, that exist mainly to serve the end of protability. This limited vision misses the larger
truth that companies are a part of nature and society and must ultimately serve life to survive.
The most successful companies see prot not as a separate end but as a means to the end ofserving, achieving a transcendent mission. Their skills are more harmonic than mechanistic. They are
more adept than their peers at listening, feeling, accepting, improvising, and thinking contextually.
The harmonies they create, like those of a good orchestra, touch our spirits and emotions—thesource of our most creative instincts, where the real leverage of LAS exists.
Edward O. Wilson says this desire to live in harmony is an expression of our biological heritage. For
thousands of generations, our ancestors lived close to the earth. Those who survived to pass on theirgenes to future generations learned to cooperate with nature and each other. Our genetic coding
therefore predisposes us toward a reverence for life. Wilson calls it ‘‘biophilia . . . the innately emotional response of human beings to other living organisms.’’ Humberto Maturana’s ‘‘biology of cognition and love’’ is yet another expression.
When companies practice good LAS, they transcend eco-efciency, TQM, six-sigma, and other measures of operating effectiveness. They engage the hearts and the minds of their employees and partners. People begin to collaborate, learn, experiment, and innovate more spontaneously. Their capacity
for organizational learning jumps. Although the nancial markets may not yet understand this process, they usually recognize the superior capacity of stewardship leaders. These companies tend tohave better credit ratings than their peers, higher margins, and better stock market returns.

From Obstructed Learning to Awakening —A Systemic Overview

56

The modern investor-owned corporation was born roughly a century ago when it gained
limited liability status.2 This legal protection accelerated an economic reinforcing cycle ofcapital investment and economic activity. (Freed from personal liability for corporate misdeeds, investors poured equity capital into industry.) However, it also created a laggedbalancing cycle of systemic resistance because it allowed rms to ignore their social andenvironmental impact, thereby reducing their capacities to learn and adapt (see  gure 1).3
After about six decades, the balancing cycle became a signi cant economic force.
Duringthis time, a critical mass of corporate and consumer waste accumulated, degrading
Figure 1 The dysfunctions
nature’s capacity. The relational equity (social capital) of corporations also degraded,of the capital investment
model
producing a social backlash that eroded the trust and loyalty of employees and customers.
As the effects of dysfunctional corporate behavior
built up in the economic system, the wall of limited legal
liability crumbled. Companies’ operating costs increased
due to rising employee turnover rates, critical bottleLong-term
Economic Activity &EquityRnecks in energy resources, regulatory friction, customer
Business Results
Investment
defections, and, eventually, weather-related calamities.4
Society demanded that rms take responsibility for theirmisdeeds and backed up the demands with boycotts andDegradation
B
shareholder lawsuits. Investors became cautious, diverting more of their capital to short-term trading andB
hedging than to long-term investment.5 As these negaCosts
Backlashtive feedbacks gained strength, companies had to ndRegulatory Friction(Nervous Investors
Delaysand Hedging)new ways of learning and adapting or risk extinction.
Most were slow to see this negative feedback because
their accounting systems treated the environment andsociety as ‘‘externalities.’’ They also devalued the corLong-term equity investment fuels a reinforcing spiral of growing
poration’s most important assets—its living assets—
economic activity. But with growth comes other issues. Environment
relative to its nonliving (capital) assets (Bragdon, 1998).
degradation brings costly backlash. Investors become nervous.

Volume 4, Number 1, REFLECTIONSBRAGDON AND KARASHw
Living-Asset Stewardship

Figure 2 The new reinforcing cycle

The living assets of a corporation are people and naof living-asset stewardshipture. These are distinct from the nonliving assets because
they can learn, adapt, reproduce, and intelligently organize
themselves. They are symbiotically connected to one anLiving Asset
Environmental
Stewardship &R–3
other through an intelligent network we call the ‘‘web of& Community
Organizational
Results
Learning
R–2
life.’’ All living assets, even single-cell organisms, instinctively monitor the web’s health because it affects their own Long-term
Economic Activity &EquityR
Business Results
health and productivity. Companies that understand these Investment
instinctive connections strive to live in harmony with theweb. Those that  nd the right balance prosper because
DegradationB
they deeply inspire their employees and customers.
B
Astute managers were quick to see these advantages.
In collaboration with employees, they evolved cultures of
Costs
Backlash
Regulatory Friction
Investors
Delaysliving-asset stewardship (LAS)6 that actively engaged the (Nervousand Hedging)
adaptive instincts of everyone along the value chain. In
doing so, they discovered that people care passionately
about learning that strengthens the web and their connecLiving-asset stewardship and organizational learning can improve businesstions to it.7 This discovery led to a new reinforcing cycle results and environmental/community results, weakening the degradation(R-2) that connects living-asset stewardship to economic loop.
activity and business results, outlined in gure 2.
This new reinforcing cycle of living-asset stewardship is a constructive response to
the balancing cycle of degradation and cost escalation. A powerful and adaptive engine,
it inspires inquiry, generates learning, energizes innovation, and attracts long-term investment. The solutions that arise from it drive a third reinforcing cycle of economic,
social, and environmental remediation (R-3).
These two new reinforcing cycles are natural adaptive responses —conceptually similar to the responses of any stressed ecosystem—and their importance will grow as thedeleterious, delayed effects of the balancing cycle accumulate in nature and society. For
this reason, LAS rst-movers cannot be complacent. At best, they have a head start on along, evolutionary path. Where are they headed? That’s a question for scenario planners,
but the best practices of exemplar companies give some clues (see table 1).

Perceptions That Drive the Balancing Cycle
How managers and society perceive corporations matters greatly because deeply held
perceptions affect corporate cultures and governance. Most people see companies in the
traditional mold described in the left column of table 1. Few, however, see its potential
as the organic entity described on the right—a community of interest that thrives on livingasset stewardship and organizational learning. Holding such limited expectations, andfailing to see the potential, society too often acquiesces to the worst behavior of corporations.
Similarly, the mental models of traditional corporations limit their choices and predispose them to poor decisions. Believing their world is governed primarily by physicalrather than by biological laws, they tend to see resource supplies as relatively  xed andtherefore scarce. Such beliefs are rooted in fear and expressed via an obsession with
control: ‘‘The faster we can control scarce resources, to the exclusion of others, the wealthier and more powerful we will become.’’This model sees mainly trade-offs, not synergy. If workers get paid more, then prots
and shareholder returns will suffer. If companies invest in social capital (community education, environment, health, and safety), they will have less to spend on ‘‘productive’’capital (plant and equipment).8 With this perspective, each stakeholder group—employees, customers, the environment, shareholders, community—assumes an adversarial relationship with the others. Because the  rm sees each decision as zero sum, resolution ofdifferences is almost always through power. This dreary view dampens the only corporate
resource that is truly innite—creativity.
So prevalent has this physical  xed-pie view of business become that few people
question it. Peer pressure and inertia keep the mechanical/industrial model of the  rm

REFLECTIONS, Volume 4, Number 1

57

BRAGDON AND KARASHw
Living-Asset Stewardship

Table 1 Two approaches to management
Traditional

Stewardship

Top-down
Focus on capital assets
Newtonian physics/predictability
Firm is a machine and is isolated
Self-centered
Resources are limited (xed pie)
Competition is primary

Bottom-up
Focus on living assets
Biology/randomness
Firm is integral to the web of life
Symbiotic/collaborative
Intelligence is unlimited
Cooperation is primary

Finite game of quick returns
Only the rm matters
Prot as the primary end
Financial success
Employees are replaceable
Employees care about paycheck
Employees are passive

MentalModel

Principles

Employees need to be directed
Learning is ordered bymanagement
Learning is best prescribed
Learning is focused
Learning is a cost
Employees are programmed
Wait until you are told
Must add value now
Don’t screw up
We’re watching you
Hoard information (power)
Defend your turf/get ahead
Minimum training
Periodic reviews
Training is focused
Measure for output
Monitor progress
Your ideas belong to us
58

Passive employees
Uncaring customers
Impatient investors/tradersInnite game of sustainability
Living relationships matterProt as means to higher end
Mission to serve
Employees are precious assets
Employees care about web of life
Employees want to make adifference
Employees can self-organize
Learning is served by management

Policies

Unwritten
Rules

Practices

Outcomes

Learning is best self-directed
Learning is contextual
Learning is an opportunity
Employees are mentoredExperiment/take initiative
Okay to think long-term
Mistakes are part of learning
We trust you
Share information (power)
Teamwork/sharing
Continuous training
Continuous feedback
Training is open-ended
Measure for learning
Inspire progress
We recognize your ideas
Inspired employees
Loyal customers/repeat sales
Patient investor-partners

Note: The framework is taken from M.W. McElroy. ‘‘Social Innovation Capital.’’ Journal ofIntellectual Capital 3 (2002): 30–39.

alive, even though its weaknesses have been exposed and new, more successful conceptual models have been tested. Entrenched beliefs, no matter how disproved, die hard.

The New Symbiotic Reinforcing Cycle
The symbiotic stewardship model described in the right column of table 1 presents therm as a tightly coupled biological system composed of humans and nature. As partners
in the web of life, we share a common biological heritage, continually exchange information, and cooperate to ensure our mutual survival. These exchanges—which occur
randomly, instinctively, and consciously in countless ways—have enabled nature to cre-Volume 4, Number 1, REFLECTIONSBRAGDON AND KARASH
Living-Asset Stewardshipwate, over 4.5 billion years, ever greater diversity, complexity, and value from a xed baseof physical matter. The LAS model is simply a human adaptation of this natural model.
The microprocessor —a symbiotic coupling of human ingenuity and silica—both is a
product of the LAS model and reinforces it. Although made from one of nature’s cheapest
and most abundant materials, it is a valuable learning tool. It enables us to produce morewith less impact on nature, to think more systemically about the feedback from commercial activity, and to remedy some of the damage done.
The reinforcing cycle of LAS is much more powerful than the predecessor cycle ofcapital ows and investment in industrial capacity (gure 1). Rather than leveraging the nite capacities of nonliving (capital) assets, living-asset stewardship leverages the innite
learning and adaptive capacities of people and other living assets. Like the microprocessor,
LAS catalyzes quantum ef ciency gains.
Evolutionary science reveals that complex systems are more adaptable and stable
than simple ones, because they are more diversi ed. The tight coupling of humans andnature via living-asset stewardship strengthens companies because it inspires both innovation and diversity. When corporations see themselves as integral parts of a larger, continually evolving biological system, they tend to become better stewards of their living
assets.

Synergies within the Firm
Consider how living-asset stewardship works within the rm. Figure 3 shows relationships
among three of its most important living assets—employees, customers, and shareholders. Each link is a causal connection, and together they explain the mutually reinforcing
nature of employee value, customer value, and shareholder value. The rationale of eachlinkage is straightforward.
The strength of the links depends on the stewardship demonstrated. Effective stewardship—respecting the lives and needs of all three stakeholder groups—strengthens
these links while increasing the value of the rm for all its participants.9 As in nature,such synergies within the rm compound to make the whole more than the sum of its
parts.

Synergies with Society and Nature
The partnership between a  rm and its living assets
strengthens as it reaches out to embrace nature and hostcommunities. Again, as gure 4 demonstrates, each link
is a causal connection; together the links explain themutually reinforcing nature of values for the  rm, for thecommunity, and for the ecosphere. In this network of relationships, the rationale for each link derives from thepremise that value for the rm can create value for thecommunity and nature (and vice versa).10 Stewardship isthe catalyst that enables this positive feedback, and thereinforcing nature of the system depends on the stewardship demonstrated.
Looking at  gure 4 from top to bottom, we see thepotentially reinforcing linkages between the rm and society.11 Firm value creates value for society. The word
health in this context broadly encompasses personal happiness, growth, and fulllment, the feeling of connection
between people’s work lives and their most deeply held
beliefs and values. This type of health enables people toopen their hearts and minds to learning, to constructive
problem solving, and to strengthening the ties between therm and its stakeholders. Such healthy, reinforcing behavior

REFLECTIONS, Volume 4, Number 1

Figure 3 Stakeholders havemutual interests thatreinforce one another

Employee Value
Customer Value
Shareholder
Value
Firms

Each link is a causal connection. Together, the links explain the mutually
reinforcing nature of employee value, customer value, and shareholder value.
Each link has a rationale. Employee values create customer value because
customers respond to happier employees. Customer value creates shareholder
value because customers buy more and are less price sensitive. Shareholder
value creates customer value because the rm with high shareholder value
has more options for investment to create additional customer value.
Customer value creates employee value because employees are more satisedwhen dealing with happy customers. Shareholder value creates employee
value because, in the modern rm, the employees are themselves
shareholders; even if they are not shareholders, they have more security andopportunity for advancement.
These links, and the mutually reinforcing nature of the system, depend on
the stewardship demonstrated. Effective stewardship makes all these links
strong and increases the success and value for all the participants at thesame time. Weak or ineffective stewardship weakens the links, and then it’smore of a ‘‘zero-sum’’ game with trade-offs.
The overall result is ‘‘rm value,’’ which accrues to all three stakeholder
groups.

59

BRAGDON AND KARASHw
Living-Asset Stewardship

60

Figure 4 Living-asset stewardshipdrives a reinforcing cycle that benets the rm, society, and nature

feeds success. It is generative because it strengthens thepartnership between humans and nature.
Increasing value to society cycles back to  rm value.
A
prosperous
rm and its employees feed the community’sSociety Value
tax base and support opportunities for better educationand health. Stewardship rms also encounter less crimeand regulatory friction. In such communities, rms bene tfrom greater trust, a stronger social-economic infrastrucFirm
FirmValue
Valueture, and a rising tide of income—the building blocks ofstrong franchises.
Firms
Firms
Moving down the gure, we see further synergies between the rm and nature. Ecologically responsible rms
Eco-Responsibility
are more aligned with the values of their stakeholders,(Actions)
generate less waste, and are usually more innovative thantheir peers. Corporations that recognize the tight coupling
Eco-Effectiveness(Large-Scale Results)of humanity and nature—that respect life and strive to
Each link is a causal connection. Together, the links explain the mutuallyemulate waste-free natural systems— tend to be more profreinforcing nature of values for the rm, for the community, and for theitable than those that continue to view themselves as disecosphere. Each link has a rationale, ‘‘Value for the rm creates value for the
associated from nature. Employees feel inspired to learn,community because . . .’’ Again, there is a question of stewardship; theseshare ideas, and innovate because their values are honlinks and the reinforcing nature of the system depend on the stewardshipored. Customers are more eager to buy because they
demonstrated. Without stewardship, the links are weak, the reinforcing
possibility is overshadowed by the ‘‘zero-sum’’ nature, and it is an
welcome solutions that are friendly to nature and the enimpossible trade-off.
vironments in which they live. Distributors and others
who add value to a rm’s offers are encouraged to collaborate and add further value
because they want to be connected with companies that are productive, respected, andtrusted. Their reputations are enhanced in doing so.
As the ecologically responsible  rm’s value grows, so does its potential for effectiveness in partnering with nature.12 It has both the  nancial resources to invest in more
evolved solutions and the innovative spirit to make those investments pay. In short, itenjoys a virtuous cycle of innovation, trust, and  nancial return that continually feeds its
effectiveness with regard to ecology.
As this cycle of effectiveness becomes a more dominant feature of corporate strategy,
and as the synergies of ecologically responsible rms become more apparent and emulated, the adverse impacts of corporations on nature should begin to diminish. It will, ofcourse, take time to restore the damage already done to the web of life due to the delayed
effects of current environmental degradation. Leadership companies understand that they
have a lot to learn about harmonious coexistence with nature. This adds urgency to theirorganizational learning programs and gives them further opportunities to assert their leadership and win public con dence.
The outer rim of gure 4 shows the mutually bene cial effects of a healthier society
and ecosphere. When the interaction between  rms and citizens becomes more aligned,
respectful, and trusting, perceptions and expectations will shift. The virtuous cycle ofinspiration, trust, innovation, and prot will grow. Companies will move beyond individual stewardship to more active collaboration, as demonstrated by Denmark’s Kalundborg
eco-industrial park (Ehrenfeld and Gertler, 1997).
The dialogue that arises from these healthier relationships between citizens and companies, between companies themselves, and among all members of society will be more
inclusive and insightful than it is today. People want to learn when they feel engaged andwhen they believe their participation counts for something.
In sum, the LAS model is a powerful tool because it produces so much positive feedback both within and outside the rm. It is synergistic because it builds strength on
strength. Employees become happier, healthier, and more productive. Customers get
better value. Corporations enjoy more sustainable pro t. Shareholders get better performance. Society and the environment become healthier and more supportive of corporations. The feedback is generative because they reinforce one another. The bene cialeffects are compounded.

Volume 4, Number 1, REFLECTIONSBRAGDON AND KARASHw

This conceptual blueprint for synergistic growth runs into two constraints: (1) limits on
how quickly the average corporation is willing and able to adapt, and (2) limits to theearth’s ability to keep up with the growing population’s demand for more resources.
The rst is a problem of inertia and lack of strategic vision. Most companies believethat stewardship costs more than it provides in bene ts, a belief we refute. The second
addresses the more intractable problem of earth’s capacity and is harder to solve. For
example, if we double the fuel efciency of cars, but triple their production, the environmental impact can only worsen.
The best we can do in such a world is to rapidly dematerialize production—to increase the amount of recycled, reusable, and renewable materials; to increase the usefulness of these materials through better design; and to eliminate the need for nonrenewableenergy to produce, market, operate, and dispose of them. This goal is well within our
intellectual and learning capacities, and it is where the corporate world is heading.
To some, the foregoing paragraph will appear speculative. Yet, such adaptation ishappening now. The impetus comes from within corporations as they learn more about
the synergy (and limits) of natural systems, and from citizens as they learn how corporations can become more harmonious with the living systems that embrace them (nature,society, free markets). Peter Senge describes the success of this colearning and coevolution
process as generative learning.
Generative learning is powerful because it continually reinforces itself. It is passionate
because it  ows from our deepest beliefs and values. It is connected and relevant because
it responds to real-world challenges. It is cumulative because we can store it and reuse it
in books and databases, and it compounds because we continually build on it. These
attributes enable us to adapt quickly.
In companies where generative learning is encouraged and allowed to ourish, it
becomes deeply insightful and innovative. It leads to quantum jumps (Zohar, 1997) inefciency and utility with decreasing material input, what Hawken et al. call ‘‘factor efciencies’’ (1999). The Internet and ber-optic cable are good examples of such efciencies.

Living-Asset Stewardship

The Limits for Any Reinforcing Loop

Testing Our Theory
To test our theories, one of us (Bragdon) has identied and examined exemplar companies
that demonstrate living-asset stewardship, which we call the global living-asset management performance (LAMP) index.Ô The index is a barometer of living-asset stewardship,
which measures the nancial performance of 60 stewardship pioneers. The index covers
a broadly based list of industries that roughly corresponds to the Morgan Stanley CapitalInternational (MSCI) World Index.13 In terms of living-asset stewardship, the 60 LAMP
companies are, in our opinion, the ‘‘best of class’’ within their industrial sectors. LAMP
companies are also industry leaders in organizational learning and systems thinking, theessential tools of good stewardship. Although some might de ne their cultures in otherterms, LAMP companies are often described as visionary because they aspire to serve
higher goals than prot alone. In fact, most behave as if prot is a means to the end of
their stated mission, their reason for being, rather than an end in itself. In each of theseways, these companies stand out from their peers.
We selected LAMP companies by using various tests and analytic techniques. To be
included, companies passed diverse screens to evaluate their respect for life and theircapacity to remain good stewards. They also had to show continual evolution toward
better stewardship practices. We included only those with the highest scores in eachindustry in the index. We measured their behavior as stewards partly by their own statedobjectives and internal accounting methods.14 However, we also used third-party evaluations from social research rms and nongovernmental organizations concerned withcorporate performance in human rights, workplace practices, environmental responsibility, product stewardship, and community service.15
As a result of this research, each LAMP company has a dossier that covers: (1) its
stated mission, vision, and values, (2) an evaluation of its commitment to and clarity on

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BRAGDON AND KARASHw
Living-Asset Stewardshipstewardship derived from the corporate website and annual reports, (3) an annotatedbibliography of third-party opinion on its stewardship practices, and (4) an annotatedbibliography of its organizational and systems thinking practices derived from leading
consultants and academics in this  eld, when available.16 This dossier not only covers
current stewardship practices, but attempts to track their evolution. It offers a broad overview of a company’s culture and performance relative to industry best practices.
We also tested each LAMP company for  nancial stewardship, an important factor
in carrying out its stated mission. These tests cover three broad areas: (1) transparency
to ensure that a company’s mission fundamentally respects life, that it regularly monitors
its nancial, social, and environmental performance, and that it clearly reports this performance to employees and the public; (2)  nancial strength to ensure it can continue its
mission and protect stakeholders, even in troubled times; and (3) commitment to employee
growth to ensure that it has the skills and motivated teamwork to carry out its mission
and to continually improve the quality of its offers. We did not give sales and earnings
growth a high priority in the selection process because LAMP companies frequently sacrice near-term sales and earnings for long-term sustainability.

Investment Performance
The conventional wisdom within most publicly owned, limited liability corporations isthat money spent on stewardship and organizational learning is either wasted or destined
to produce a low return. The LAMP index strongly challenges this view. In fact, it  nds
that stewardship and organizational learning reinforce one another to form an energetic
cycle of inspiration and innovation. That is why they produce such exceptional results.
Table 2 shows that the equity returns of the LAMP index companies were substantiallyabove those of the MSCI World Index (its closest proxy) and the popular S&P 500 Index
on a  ve-year test covering calendar years 1997 through 2001. This test is consistent withothers we have run over different periods, and its results areof roughly similar magnitude. We use the stock market as ameasure because it is the most holistic barometer available.
It represents a global consensus of informed buyers and sellers and continually arbitrages their knowledge. It is also ameasure that corporations understand and follow. By afrming so strongly the value of living-asset stewardship andorganizational learning, the global LAMP index calls attention to these evolved management practices.
The case for living-asset stewardship and organizational learning should not, however, rest on stock market performance alone because
market prices occasionally go to extremes. On our nancial stewardship screens, LAMP
companies also stood far above their peers on nancial strength tests. Their bond ratings(Moody’s) were predominantly in the A/Aa range, two or three grades above average.
Those that were unrated by Moody’s generally had no net debt and huge interest coverage
ratios. Most LAMP companies also outperformed their peer groups on free cash ow andon various measures of protability ( ve-year averages). Precise comparisons in theseareas were dif cult to make, however, because LAMP companies are, by de nition, emergent and innovative (hence, always changing). In the aggregate, these data suggest that
LAMP companies have exceptional staying power, no matter what happens to the stock
market.

The LAMP index nds thatstewardship and organizational
learning reinforce one another toform an energetic cycle ofinspiration and innovation.
62

Table 2 Global LAMP Index versus MSCI benchmark (1997–2001)

Global LAMP Indexe
MSCI World
S&P 500

CAGR

Cumulative return116.1%
21.4
50.4

16.7%
4.0
8.5

Volume 4, Number 1, REFLECTIONSBRAGDON AND KARASHw

In this article, we summarize a major shift in corporate strategic thinking—from controlling  nite resources to releasing the innite growth potential of human ingenuity. The
engine of this learning process is the reinforcing cycle of living-asset stewardship. Corporations that pioneered this strategic shift have gained nancial strength and market
share as their stewardship practices have evolved. Although they still have a long way to
go on the road to sustainability, LAMP companies now have distinct advantages. They
are the fastest learners in a world where rapid adaptation and innovation are the only
paths to survival.
We cannot overemphasize the notion of survival. Corporations and the global markets
in which they operate are at a crossroad as nature’s capacity nears its limits. The reinforcing cycle of living-asset stewardship offers a solution to the lagged balancing cycle ofenvironmental and social degradation that increasingly threatens our markets. It is a powerful solution because it leverages human potential, our only unlimited resource.

Living-Asset Stewardship

Conclusion

Notes
1. Increasingly, psychology is exploring biophilia, what Erich Fromm refers to as their ‘‘passionate
love of life and all that is alive.’’ Albert Schweitzer called it ‘‘a reverence for life.’’ Theodore
Roszak calls it ‘‘the ecological unconscious.’’ David Orr speaks of the isolation people feel when‘‘hermetically sealed’’ from the natural world, ‘‘the demented image of the mind imprisoned
within itself.’’ See D.W. Orr. ‘‘Love It or Lose It: The Coming Biophilia Revolution.’’ The Biophilia Hypotheis (Washington, DC: Island Press, 1993): 415–437.
2. Corporations evolved from unlimited liability to limited liability in the late nineteenth century
mainly through state law. In 1875, New Jersey passed the rst relatively nonrestrictive (orenabling) corporation statute. During the next two decades, the New Jersey legislature amended
its statute to carry the enabling philosophy further, with the process culminating in a revisedand full-blown enabling statute adopted in 1896. As these statutory developments progressed,
the New Jersey corporation became the vehicle of choice for large businesses. See L.D. Soderquist, ed. Corporations and Other Business Organizations, 4th ed. (Charlottesville, NC: Michie
Law Publishers, 1997): 17, 18.
3. Firms that don’t recognize their role in the web of life are less likely to learn from and adapt to
information coming from nature and society (because they are considered ‘‘external’’ to thecorporation).
4. According to SwissRe, the costs of natural calamities began to accelerate in the late 1980s.
SwissRe attributes most of this to global warming, which is caused by burning unsustainable
quantities of fossil fuels. Increasingly, companies must bear the costs of reinsurance premiums
and absorbing the damages they have done to the earth’s resources. For more on this, see
SwissRe’s 1999 annual report.
5. Frederick Reichheld has commented on the economic disadvantages of investor disloyalty andhigh common-stock turnover rates. We also believe the increasing use of equity hedging andderivative securities is consistent with this. See F. Reichheld. The Loyalty Effect (Boston: HBS
Press, 1998).
6. Lester R. Brown, chairman of World Watch Institute, supports this view: ‘‘I believe that there
are now some clear signs that the world does seem to be approaching a kind of paradigm shift
in environmental consciousness. . . . A growing number of high-pro le CEOs have begun tosound more like spokespersons for Greenpeace than for the bastions of global capitalism ofwhich they are a part.’’ See his article, ‘‘Threshold—Early Signs of an Environmental Awakening.’’ World Watch (March-April 1999).
7. The following global R&D leaders are openly committed to transcendent life-af rming goals:
ABB (EcoLab), Canon (Kyosei), Hewlett-Packard (HP Way), Johnson & Johnson (Credo), Novo
Nordisk (bio-ethics policy).
8. This line of reasoning led to the popular view that ‘‘the business of business is business’’ andnothing else. Milton Friedman, a Nobel Laureate in Economics, once said the only responsibilityof a business was to turn a prot. It was commonly believed that corporations could be responsible citizens only through charity, giving back to the community a small portion of their prots.
9. For additional background, see F. Reichheld. The Loyalty Effect (Boston: HBS Press, 1998).
Reichheld makes similar arguments, although he does not make them in the context of livingasset stewardship. The ‘‘synergy model’’ has appeared in the corporate world. The diagram in gure 4 was drawn, more or less, by an executive at AT&T/Lucent in the early nineties.
10. It is important to note here that  rms contribute to nature only as they remedy their damage toit and learn to live in harmony with the web of life. They can’t improve natural systems because

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BRAGDON AND KARASH
Living-Asset Stewardshipw

they don’t control them. Nature is the universe in which the rm (and everything else) functions.
Nature can live without companies, but companies cannot live without nature.
11. What we are describing here is a composite model based on corporate best practices. We knowof no single corporation that satises all the model’s requirements.
12. ‘‘Eco-effectiveness’’ is a condition in which a company’s products and processes have no adverse
effects on nature. ‘‘Partnering with nature’’ is a concept, introduced by Novo Nordisk, in which
the company tries to enhance nature’s carrying capacity and diversity via its products and processes.
13. LAMP companies were selected in every major industrial sector (including old economy industries such as autos, chemicals, forest products, primary metals, and steel). In major industries
where stewardship standards are in a relatively early stage of evolution (especially banking),
there is less representation than in the MSCI benchmark; and in industries where stewardshipis more evolved (especially information technology), there is stronger representation. Geographically, LAMP companies are concentrated mainly in North America, Northern Europe, and Japan,
where stewardship practices have been in place for decades. The LAMP index has a bias toward
large capitalization stocks because, in selecting companies for it, we sought the early pioneers
in living-asset stewardship.
14. Companies count what is important to them. LAMP companies, such as Toyota and Analog
Devices, have systems that measure learning and teamwork (process effectiveness), rather thansimply output. Most LAMP companies publish annual environmental reports that track ef uentand set targets for more ecologically ef cient production.
15. Some of the most useful third-party sources that we used include: KLD’s ‘‘Socrates’’ database(www.kld.com); SustainAbility’s surveys on ‘‘Engaging Stakeholders’’ and related materials(www.sustainability.com); Environmental Data Interactive Exchange Weekly www.edie.net;
sustainablebusiness.com; business-ethics.com; and wbcsd.org. When available, we also usedbusiness school case studies and books and articles by authorities on corporate stewardship forveri cation.
16. Primary sources include books and articles by members of the Society of Organizational Learning(SoL) on corporate learning practices. While these are too numerous to mention here, a good
sample can be found on SoL’s website (www.SoLonline.org).

References
Bragdon, J.H. ‘‘The Value of Living Assets,’’ in The Investment Research Guide to Socially Responsible
Investing, ed. B. Bruce (Dallas, TX: Investment Research Forums, Inc., 1998): 153–176.
Ehrenfeld, J. and N. Gertler. ‘‘Industrial Ecology in Practice: The Evolution of Interdependence at
Kalundborg.’’ Journal of Industrial Ecology 1 (Winter 1997): 67–79.
Hawken, P., A.B. Lovins, and L.H. Lovins. Natural Capitalism (New York: Little Brown, 1999).
Reichheld, F. The Loyalty Effect (Boston: HBS Press, 1998).
Wilson, E.O. Biophilia (Cambridge, MA: Harvard University Press, 1984).
Wilson, E.O. ‘‘Biophilia and the Conservation Ethic,’’ in The Biophilia Hypothesis, eds. S.R. Kellert
and E.O. Wilson (Washington, DC: Island Press, 1993): 39.
Zohar, D. Rewiring the Corporate Brain (San Francisco: Berrett-Koehler, 1997).

64

Commentaryby Bettye Pruitt

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

As a historian, I confess that I am predisposed to be skeptical of the explanatory power of a few
causal loops purporting to capture the dynamics of more than 100 years of business history. Thatsaid, I greatly value the steps Jay Bragdon and Richard Karash have taken to place the phenomenon of living-asset stewardship in historical perspective. The article raises a number of provocative
questions. Here are two that came to my mind.
First, is the looming environmental crisis somehow fundamentally different from earlier crisesthat might be seen as comparable? For example, the Great Depression of the 1930s also produced
a major backlash against corporate practices that seemed to sacrice public well-being for private
gain. Among other New Deal legislation regulating various aspects of business, the Wagner Act of1935 guaranteed the rights of unions to organize and bargain collectively, pointedly establishing acounterbalance to the uninhibited exercise of corporate control over human ‘‘assets.’’ Companies
changed the way they operated as a result. Yet neither the crisis nor the reaction produced theVolume 4, Number 1, REFLECTIONS

Reference
Calomiris, C.W. and C.D. Ramirez. ‘‘Financing the Corporation: The Changing Menu of Financial Relationships,’’in The American Corporation Today, ed. C. Kaysen (New York: Oxford University Press, 1996): 128–186.

REFLECTIONS, Volume 4, Number 1

BRAGDON AND KARASHw
Living-Asset Stewardshipkind of shift in mental models represented by the practice of living-asset stewardship. The competitive crisis of the 1980s, on the other hand, brought about some dramatic mental model shifts inthe corporate world. The change in manufacturing from thinking of quality and low cost as eitheror choices to thinking of them as complementary bears some similarity to the shift that Bragdon
and Karash describe from a zero-sum game model to a synergy model in corporate thinking about
people and the environment. In management thinking, command and control gave way, at least in
principle, to employee ‘‘empowerment’’—another momentous shift that might be seen as a precursor to living-asset stewardship.
Perhaps we should think of these prior crises and the responses to them as laying the foundation on which living-asset stewardship could arise—a gradual, cumulative rethinking of establishedways of doing things prompted by episodes of negative feedback from the outside world. But could
it be that the crisis of environmental degradation could be something truly different, something
capable of provoking more radical shifts in perspective? Maybe the prospect of large-scale climaticchange is just more sobering than anything businesses and society have faced before: a prospectthat makes people feel, as nothing else can, that we are all in this together, opening us up to thesense of connectedness that is the heart of living-asset stewardship.
Second, what will it take for living-asset stewardship to become widely accepted and widelypracticed? Certainly, Bragdon and Karash must get the message out about the global LAMP index
and what it signies, and the companies in the index must, collectively, continue to perform well.
But I believe there must also be major shifts in thinking outside the corporate community, particularly in the investment community, given the important role that capital markets play in shaping
corporate behavior. This relationship, too, has a long history worth considering. In the formative
period of large-scale enterprise in the US, from roughly 1890 to 1920, federal and state laws prohibiting bank mergers and branching kept capital markets from expanding to match industrial
growth, with the result that the cost of capital was high. In the development of mass productionindustries, this situation helped to foster a bias in technology choices favoring high-volume output,
which was resource intensive, over efciency in production, which required a greater xed-capital
investment in the form of more efcient machines. From the late nineteenth century on, the natural resource content of US-manufactured products was higher than that of goods produced incountries where the cost of capital was lower, for example, Germany, which had the model national banking system (Calomiris and Ramirez, 1996). We are more familiar with the post-WorldWar II inuence of the capital markets, especially in promoting the waves of mergers and acquisitions that have reshaped the corporate landscape since the 1960s. This example from an earlier
time points up more subtle but no less profound impacts.
All of which is simply to suggest the importance of keeping in mind the larger context inwhich corporate decision making takes place. In the current business context, given the intense
short-term pressures imposed by the market’s preoccupation with quarter-to-quarter earnings
growth, the prospects for widespread living-asset stewardship seem highly uncertain. What may
need to change is the mental model in the investment community that the unbridled pursuit ofindividual gain in the market will ultimately produce a good outcome for all. This brings me backto my rst question, to wonder if the environmental crisis that will produce that kind of shift will
awaken a much wider group of decision makers to the recognition that we are all in this together.
These are questions that future historians will have to answer.

65

‘‘I Don’t Have Time toThink!’’ versus the Art
of Reective PracticeJoseph A. Raelin‘‘Susan, you’re next. As you know, we gure the Cadlink merger is going ahead. They expect
their Wentworth localization unit to be merged with your marketing group. What do you
think?’’‘‘No problem, Charlie,’’ Susan replied. ‘‘We can integrate them, no sweat.’’‘‘Wait a second,’’ Charlie said, looking a little uneasy. ‘‘I heard they use an entirely different CRM model. Don’t you want to think about this a little?’’‘‘Charlie,’’ Susan insisted. ‘‘I’m working on a news release on the merger. I don’t havetime to think!’’

M

66

Ó

Joseph A. Raelin
The Asa Knowles Chair
Northeastern University
AuthorWork-Based Learning andCreating Leaderful Organizations(forthcoming)
www2.bc.edu/; raelin/bookpage.html

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

anagers like Susan and Charlie live in a world of frenetic activity. Re ective practiceis hardly possible or practical in this age of the busy corporate executive who issocialized to be a person of action, not of reection. Action is required. Delaying decisions
is seen as a sign of weakness, even if the delay may subsequently produce a better decision. CEOs want an answer rather than a question; they are looking for solutions rather
than problems. Yet, is it possible that the frenetic activity of the executive is a drug forthe emptiness of our organizational souls, that constant action may merely serve as a
substitute for thought?
So society gives re ection and its counterpart—listening—short shrift. We don’t seemto be interested in the whole story. We even perfect the art of interruption so that we canshow our ‘‘proactivity’’ and gain the boss’s attention. There was a time before instantreplay when humans had to get the whole message or it would be lost forever. We seemto be unwilling to perfect the art of public reection, in which we show a willingness toinquire about our own and our colleague’s assumptions and meanings.

What Is Reective Practice?
Re ective practice, as I de ne it in this article, is the practice of periodically stepping backto ponder the meaning of what has recently transpired to ourselves and to others in our
immediate environment. It illuminates what the self and others have experienced, providing a basis for future action. In particular, it privileges the process of inquiry, leading
to an understanding of experiences that may have been overlooked in practice. In its
public form, it is associated with learning dialogues. These types of discussions, rather
than constituting an exchange of statements of viewpoints, bring to the surface—in thesafe presence of trusting peers—the social, political, and emotional data that arise fromdirect experience with one another. Often these data are precisely those that might beblocking operating effectiveness. Learning dialogues also are concerned with creating mutual caring relationships.
Re ective practice tends to probe to a deeper level than trial-and-error experience. It
typically is concerned with forms of learning that seek to inquire about the most fundamental assumptions and premises behind our practices. It is thinking about our thinking.
Consider that the brain, as a sophisticated information-processing organ, can handle someVolume 4, Number 1, REFLECTIONSRAELINw
Figure 1 Our normal
problem-solving pattern”I Don’t Have Time to Think!” versus the Art of Reective Practice50,000 to 60,000 thoughts per day. Unfortunately, as we
encounter problems in our work, we tend to go no further
than consulting our ‘‘solution database’’ (depicted in gure1) to nd an answer.1 Our solution database contains all thestandard answers and assumptions we have used in ourpast to solve our problems.
In thinking about thinking, we are actually able to re ect together about our solution databases and add to themor alter them entirely. In this way, we re ect together withtrusted others in the midst of practice. Plato had relationships in mind when, in Apology, he quoted Socrates’s now
famous phrase: ‘‘The unexamined life isn’t worth living.’’ This phrase has often been
misinterpreted as a call for additional introspection. Although this might be useful, theactual meaning is that we need to include others in the examination of experience in ourlife. Plato’s idea resonated with Aristotle, who recognized that human beings are social
animals whose good is bound up with the good of the polis. Underpinned by these Greek
roots, the egalitarian tradition in Western thought has long since recognized that the
dignity of human persons is achieved only in community with others.
So, reective practice, though recognizing the value of private reection, opens up
for public scrutiny our interpretations and evaluations of our plans and actions. We subject our assumptions, be they personal or professional, to the review of others. We do
this not only before or after an event, but learn to inquire even in the heat of the moment.

Rationale for Reective PracticeRe ection must be brought out in the open for many reasons:
1. At times, we are, unfortunately, unaware of our behavior and its consequences.
To complicate matters, our unawareness occasionally does not allow us to be open to
new data or information that would help us learn from our actions. We may even be
unaware that the questions we ask might be producing defensiveness in others, closing
off the possibility of generating new information, even new questions. Often, only throughthe support of and feedback from others in an open dialogue can we become receptive toalternate ways of reasoning and behaving.
For example, Claire, a research director at a pharmaceutical rm, had advanced toher position after being mentored by the foremost biochemistry guru in the company. His
approach was to try to poke holes in every proposal on which Claire had been working.
Now in management, she saw her role as ‘‘grilling’’ her subordinates, not only privately
but in public during and after their research brie ngs. She was surprised when three ofher subordinates requested a transfer out of her group, claiming that she was too muchof a perfectionist to work with. Why couldn’t they understand that she was just trying to
be helpful and that her interrogation at the end of the day always led to a better project?
2. There is an unfortunate gap between what many of us say we will do and what
we actually do. We are simply guilty of deceiving ourselves that we can practice what we
preach, though what we preach may be very dif cult to accomplish in particular organizational cultures. How many readers have submitted to the game called ‘‘Yes, but . . .’’with a boss? ‘‘Yes, but . . .’’ bosses typically start out by proclaiming that they have an
open-door policy. ‘‘If you ever have a problem or a question for me or about our operation,
you should feel free to come to me at any time,’’ they proudly avow. A series of conversations with the boss ensue during the next several months and may go something like
this:[One month later] ‘‘Boss, I would like to propose that we adopt the balanced scorecard
approach to measuring our outcomes.’’ ‘‘Yes, good idea, but we actually tried it 14 months
ago and it didn’t work. But keep those great ideas coming!’’[Two months later] ‘‘Boss, rather than paying out so much overtime, what would you say
to hiring Tim Evans part-time to help us out. I know he’s available.’’ ‘‘Yes, that might work,
but Tim didn’t get along well with Sara, so I think we best continue as we have been.’’[Three months later] ‘‘Boss, I know the group can increase its ef ciency if we purchaseand then receive some training in the software program, PROJ-ACT. I know a great supplier;

REFLECTIONS, Volume 4, Number 1

67

RAELINw”I Don’t Have Time to Think!” versus the Art of Reective Practicethey do a great job and can convert us in under two weeks.’’ ‘‘Yes, but Marcia proposed that
we try out the exact same program, and it was voted down just before you joined us.’’[Four months later] ‘‘Boss, what would you say to all of us going out to see the latest
Spielberg  ick?’’ ‘‘Yes, he’s great, and his current movie has an important message for ourgroup, but you can’t force these social outings on people. We each have our own lives.’’[Five months later] No more ideas are forthcoming. Case closed.

3. Most of us are biased in how we obtain information that, in turn, produces cognitive‘‘errors’’ in our perceptions of reality. Errors constitute such practices as collecting data
supercially, ignoring certain pieces of information, making assumptions about datarather than investigating them, or using self-con rming reasoning. However, if we areinterested in improving our managerial practices, we have to become aware of these socalled errors. Such an awareness is extremely difcult to awaken without the involvementof peers who can detect the use of untested assumptions and raw biases.
In the game of professional baseball, some managers employ a so-called ‘‘platoon’’system in which they use certain left-handed players against right-handed pitchers, but
replace them for a right-handed batter when the pitcher happens to be left-handed. The
reason for platooning is that it is merely easier for batters to face opposite-handed pitchers.
However, this general statistical rule breaks down at the level of the speci c case, wheremore re ective practice may be called for. Some batters, for example, do just as wellagainst same-sided as opposite-sided pitchers. Others seem to bat well against particularpitchers, regardless of their throwing arm. Some situations, such as a bunt, may call fora play that may not depend on the hand dominance of the batter.
4. Although intuition and past practices can give us very cogent clues in deciphering
future situations, often the new situation presents itself in a different context. Prior solutions may not t, even if the situations appear alike. We tend to look, however, for thesimilarities between the situations rather than differences.
This type of normal cognitive processing can play tricks on
us. Even when we consult a repertoire of available responses, we may not nd one that ts the new situation.
Consider the business strategy of mergers and acquisitions(M&As). From most accounts, it appears that more often
than not M&As fail to generate the synergistic value expected from the combined entities.
Take the case of Quaker Oats, which has recently
merged with Pepsi Co. In 1994, nearly 10 years after the incredibly successful acquisitionof Gatorade, Quaker Oats completed a $1.7 billion merger with Snapple. Three years later,
it had to unload Snapple for $300 million. Given their previous success with Gatorade andtheir preconceived sense of the cultural norms within the industry, it appears that
Quaker’s principals may have critically overestimated the more particular cultural differences between the prospective partners. On one hand, Quaker was known for its highly
focused, mass-marketing operating style, whereas Snapple was considered to be quirky,
entrepreneurial, and distribution oriented. Was it possible that the principals may nothave sufciently re ected on what Robert Thomas (2000) likes to refer to as ‘‘culturaldue diligence’’?

We need managers who can inspirereection to the extent ofgenerating new ways of copingwith change.

68

The Practicality of Reective Practice
Is reective practice possible or practical in this age of the busy corporate executive who
is socialized to be the person of action, not of reection? In our turbulent global environment, it appears almost de nitional that we need managers who can inspire reection to
the extent of generating new ways of coping with change. A re ective culture makes it
possible for people to constantly challenge without fear of retaliation. Yet, a culture that
permits questioning of assumptions is dif cult to tolerate because it requires that people
in control lose their grip on the status quo.
In actuality, inspiring reective practice in an organization does not have to be an
onerous task, even for top managers. Although they are, by de nition, people of action,
they are also people who, when given a hospitable environment, like to compare expe-

Volume 4, Number 1, REFLECTIONSRAELIN”I Don’t Have Time to Think!” versus the Art of Reective Practicew

riences and, moreover, to help one another. They may also crave the opportunity to share
their insights, questions, and even failures with others, if given a climate receptive to open
discourse. Indeed, they might appreciate an opportunity to replay their plans and actionsin front of like-minded colleagues who are not assembled to take advantage politically of
their faults, but who want to help. They realize that they, too, need the understanding ofothers.
Accordingly, there are some strategies that organizations might endorse to encourage
more widespread use of reective practice even in the face of unrelenting pressure foraction (Haggerty, 2001; Raelin, 2000).

w Re ective actions—Just one person demonstrating the value of inquiry generates in-

w

w

w

w

terest in reection among members of a team or work unit. A team may be introduced
to reective activities and processes such as journals, postmeeting e-mail minutes,
re ective note taking, learning histories, and ‘‘stop and re ect’’ or debrie ng episodes
held during or at the end of meetings (Castleberg, 2001; Kleiner and Roth, 1997).
Building communities—Individuals may be encouraged to network with fellow employees who, though not necessarily in the same work unit, may have a shared interest in a craft or job. Other small groups, even dyads, could form for mentoring or
support purposes, for sharing and testing ideas, or merely for feedback and exchange
on initiatives and performance.
Process improvement—Although quality improvement approaches, such as total quality management, may not critically probe to the deeper levels of re ection alluded toearlier, they reinforce the value of learning from experience, whether before, during,or after the practice in question.
Learning teams—Whether constituted to support individuals working on their own
projects, in the form of work or of self-discovery, or to support task teams working
on meaningful action-learning projects, learning teams represent a vehicle to merge
theory and practice. Participants, with assistance from their peers and qualied facilitators, use the learning team to help them make sense of their experiences in lightof relevant theory. They discuss not only the practical dilemmas arising from actionsin their work settings but also the application or misapplication of concepts and theories to these actions.
Culture of learning—Re ective practice tends to ourish in learning and collaborativeenvironments. Senior managers have a particularly important role in modeling alearning orientation, in particular, a culture that values continuous discovery andexperimentation. Re ective practice can become a wayof life when organizational members feel free to challenge the governing values of their practice and where
structures and standards can change to accommodate
new requirements.

The Skills of Reective PracticeHaving considered some organizational strategies to orient rms in the direction of reective practice, we now drill
down to the level of skill to identify speci c practices,notwithstanding the basic skills of communication. In
particular, beyond the contribution of active listening
competencies and the value of feedback, there are  veadvanced skills that, used together, can contribute to re ective discourse.
Although trained facilitators often introduce theseskills, other facilitating members of any work or learning
team can also initiate them. The model in  gure 2 showsthe ve principal skills: being, speaking, disclosing, testing,and probing. They are also displayed in the sidebar, including their de nitions, some prompting questions alongwith associated behaviors, and an example. I examine
them here in more detail.

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Figure 2 The veskills of reective practice69

RAELINw

Being”I Don’t Have Time to Think!” versus the Art of Reective PracticeDescriptions of the Reective Skills
Denition
Creates a climate for reection in the group; asks that we experience or describe situations, even
our own involvement in them, without imputing meaning.
Ask
What can I learn here?
How am I acting to constrain what is possible?
Behavior
View with empathy and with open-hearted acceptance.
View as strange, display deep interest and curiosity.
Invite questions and comments.
Acknowledge our own and others’ vulnerability.
Consider positions as hypotheses to be tested.
Pause, reect, contemplate.
Example‘‘It looks like we have pretty much endorsed the direct marketing approach for this advertising
campaign. As you know, I have pushed for it as well, but we all remember what happened on the
Do-op project. I have to admit that it still feels right to me, but to be honest with you, I still havesome reservations. Do you think we should take one more look at this? I’m afraid I might have overlooked something.’’

SpeakingDenition
Calls for speaking with a collective voice to nd collective meaning in the group. It attempts tocharacterize the state of the group at a given time.
Ask
What can I say to help the group understand itself?
What social practices is the group engaging in right now?
What is emerging in our collective consciousness that I can articulate?
Behavior
Suggest group norms.
Articulate meaning, such as by summoning an image.
Be willing to bring out uncertainties and unfounded assumptions.
Example‘‘James, your concern left me with an image that seems to characterize our effort right now. It is
like we’re a cargo plane having to make our destination in Istanbul, but with one engine knocked
out.’’

DisclosingDenition
Asks that members nd and speak with their own voice in order to disclose their own doubts andassumptions and to voice their impatience and passion.
70

The skill of being is central and pervasive, cutting across the other skills, because it
represents our presence and vulnerability in creating a reective climate. Recalling thatreection represents a stepping back to ponder meaning, the rst re ective skill is toexperience or, even more simply, to be. In accomplishing being, we try to experience anddescribe situations, even our own involvement in them, without imputing meaning tothem or without evaluating them. We learn to explain with others.
As the most unusual yet potentially powerful of the skills, the skill of being can place
us in a vulnerable state because we do not rely on defending ourselves against experience.
The object is rather on opening up to experience and to our interpersonal environment.
We engage in such practices as suspending certainty, externalizing our thoughts, andexploring the tension of the opposites. This produces a reective response that can becharacterized by a number of attributes (from Bell, 1998) that directly contrast to thedefensive posture:w Instead of maintaining unrealistic standards, we set realistic expectations.
w Instead of expressing trepidation, we display tolerance.
w Instead of concentrating on self-expression, we listen.

Volume 4, Number 1, REFLECTIONSTestingDenition
Makes an open-ended query to the group to attempt to uncover new ways of thinking and behaving. It asks the group to consider its own process, including its norms, roles, and past actions.
Ask
Are we helping each other right now?
What can I ask to help us all focus on our process?
Behavior
Attempt to make a ‘‘meta-inquiry,’’ to focus on where the group is right now.
Ask if the group would be willing to test some taken-for-granted assumptions.
Example‘‘I guess we’re at an impasse. In fact, it looks like we’re split right down the middle on this one. Can
we come up with some way to resolve this to everyone’s reasonable satisfaction? What do you all
think?’’RAELINw”I Don’t Have Time to Think!” versus the Art of Reective Practice

Ask
What am I holding back that needs to be aired?
What might I say to help the group know me better?
Behavior
Disclose feelings at a given moment, based on what has transpired.
Present a story to reveal the depth of experience.
Example‘‘I wasn’t planning on telling you about this. I know I have seemed distracted lately, and the way I
just dealt with Linda is a case in point. Well, frankly, I am having some marital problems. I’ve moved
into an apartment and can’t get my mind off my kids.’’

ProbingDenition
Inquires directly with a group member in order to understand the facts, reasons, assumptions, inferences, and possible consequences of a given suggestion or action. Commits to a nonjudgmental
consideration of another’s views.
Ask
What is the basis for another’s point of view and feelings?
Can I explore with others even though their position may be different from my own?
Behavior
Ask about impressions and perceptions.
Inquire about attributions of others’ behavior.
Explore the consequences of an alternative.
Example‘‘Frank, you’ve said several times that you believe that the workers in your unit should take the balland run with it. Yet, you say they are dependent and continue to check with you on every new
initiative. Is there anything you might be doing or saying that might be blocking their sense of independence? Might you be unwittingly giving them the sense that you’ll be critical if they screw up?’’71

w Instead of being self-absorbed, we convey humility.

w Instead of feeling out of depth, we feel open to learn.

w Instead of feeling out of context, we become open to experience.
Bell’s reective response suggests that, at times, we may engage our empathy with othersby viewing them and listening to them as we wish to be treated. At other times, we may
wish to view others as ‘‘strange’’ (Isaacs, 1999), people so unlike ourselves that theyrequire even deeper respect and attention so that we may learn to know them. Using
language from Buddhist insight meditation, being can also be referred to as mindfulness,
which represents knowing what is arising in the moment without losing track of theknower. Gregory Kramer (1998), through the practice of ‘‘insight dialogue,’’ has exploredthe potential of maintaining a meditative state of being while engaged in relationship withothers. Developing the discipline of folding action and re ection into one requires a gooddeal of skill and patience but can be learned, according to Kramer, using these guidelines:

w Commit to the process—We bring full presence to the group and commit not out of
obligation but out of wisdom and compassion, allowing us to connect with one another.
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”I Don’t Have Time to Think!” versus the Art of Reective Practicew

RAELINw Trust emergence; have no goals —The universe of pos-

© Gene Beyt

w
w
w

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sibilities is not limited by a precon gured agenda.
There is no goal but to rest in the moment from whichmight ensue an emotional and spiritual release or an
intellectual breakthrough. These are natural results,
not goals.
w Balance af rmation and investigation —We practicedeep listening and maintain an attitude of inquiry. We
afrm, not from a separate, limited self, but from thecircle emerging within the group. We feel at ease withourselves, con dent of the group’s ‘‘lovingkindness.’’
w Pause, reect, contemplate—We pause after hearing
a statement, reect on what has been said, and contemplate our feelings, the motivation for speaking,and the richness of the moment. By providing spacein interactions, we can begin to understand theirnature.
w Free up roles—In the group, there is no hierarchy. We
attempt to avoid the tendency to put people into pigeon holes. An open-hearted acceptance of ourselves
and of others yields freedom and spontaneity to all.
Seek out assumptions—We actively explore the moment, searching for assumptions
in our own thinking and in what others have said.
Observe judgments—We allow judgments to rise to consciousness in order to gain awindow into our reactive nature and to open the possibility of a more even-handed
way of being.
Share parallel thinking —Parallel thoughts are those that arise in the background asother things are expressed. In the safety of the group, we bring these forth, be they
judgments, feelings of inadequacy, or observations about the processes arising in thegroup.

Referring to the dimensions of the model, being itself occupies the dimension called
the frame mode. Framing refers to how we think about a situation, more speci cally, how
we select, name, and organize facts to tell a story to ourselves about what is going on andwhat to do in a particular situation. In the collective mode, we extend our contributions
and inquiry to all members of the community, whereas in the individual mode, we hear
our own voice or address one individual at a time. The cross-dimensions are ‘‘staying
with self’’ and ‘‘taking action toward others.’’ At times, we make personal contributions
to the group or focus attention on ourselves. At other times, we extend and dedicate
attention to others.
Being, as a central skill, may entail staying with oneself or taking action toward
others. It is most concerned with exploring differences and diverse experiences apart frommembers’ preconceived notions. The being skill models an inquisitive, nonjudgmental
attitude toward group phenomena. Some of its components are: inviting questions andcomments, considering one’s own positions as hypotheses to be tested, acknowledging
expressions of vulnerability by others. Consider this excerpt from a supervisor’s journal
as an example of being:
Sam began to challenge our very purpose. He questioned not only why we needed to meet so
often, but once he got going, he seemed to be questioning why we even needed to meet atall! I had formed our team and felt a spontaneous urge to counter his negativity. But I caught
myself and decided to pause and continue to listen instead. Perhaps it was good that Sam
was getting his feelings out on the table. Any knee-jerk reaction by me would likely shut him
down. Maybe he had a few good points? At that moment, Linda and then Paul began to share
their vision for our task force, yet they did it displaying profound respect for Sam’s challenge.
I found myself appreciating that Sam brought his objections to the team and said so. We began to work on some of our deciencies as a group. I think it was our best meeting.

The second re ective skill of speaking, at the upper left in  gure 2, seeks to articulate
a collective voice from within ourselves. In speaking, we attempt to characterize the state

Volume 4, Number 1, REFLECTIONSRAELINw”I Don’t Have Time to Think!” versus the Art of Reective Practiceof the group or its meaning at a given time. It may entail summoning an image to articulate
meaning, suggesting group norms, or bringing out uncertainties or unfounded assumptions. In speaking, it is not necessary to prepare words in advance. We craft our message
in the moment as the meaning unfolds. Consider an example from the world of symphonicmusic:
Michael Tilson Thomas, the famous and still relatively young American conductor,
was observed, perhaps unwittingly, using the collective speaking skill when he served asguest conductor with the Chicago Symphony. Although the role of symphonic conductor
is often interpreted as a directive practice in which members of the orchestra are asked
to follow carefully the direction of the conductor, Thomas used a more collective approachin his rehearsal with the orchestra of Tchaikovsky’s Sixth. ‘‘Of course, they had played
the Pathétique hundreds of times,’’ recounted Thomas. ‘‘[But] when we got to the second
theme, instead of beating it note by note in the typical schoolmaster way, I raised myhands into the air and gently indicated a breathing space that would precede this phrase.
At  rst they were bafed,’’ but I urged, ‘‘Let’s breathe together, hold the  rst note slightly
longer, and then let the melody gracefully fall away from it.’’ In explaining what happened
next, Thomas recalled, ‘‘I couldn’t make the music happen alone. We needed to sharethe feeling, we had to  nd that shape together, and we did. It was miraculous.’’2
In the third skill of disclosing, we stay within ourselves and, at the same time, shareour doubts or voice our passion. By disclosing, we may unveil feelings at a given moment
based on what has transpired, or we may present a story to reveal the depth of ourexperience. As people disclose more about themselves, the group learns more about its
membership. Another cue to promote disclosing is to ask myself what I might say to help
the group know me better. A story about George Washington reveals the power of disclosing.
Unknown to all but the most astute historians, there was a substantial movement
during the waning years of the American Revolutionary War for the military to take overthe civilian government and install Washington as king. At
one historic point, Washington appeared before some ofthese military ofcers to condemn this affront to democracy, the cornerstone of the entire revolutionary movement. However, his speech was falling on deaf ears. Then,at one point, as he helplessly attempted to read a missivefrom a member of Congress, he paused to reach for a pairof glasses, something only his closest aides had known that he needed. Then he quietly
confessed to his ofcers: ‘‘Gentlemen, you will permit me to put on my spectacles, for I
have not only grown gray but almost blind in the service of my country.’’ The men wept.
It was thought that his statement of vulnerability nipped this movement in the bud: How
could the men ignore this sel ess commander who reminded them that he was one ofthem?3
Testing, the fourth reective skill, is an open-ended query directed toward the groupas a whole that attempts to uncover new ways of thinking and behaving. When testing,
we may ask the group to consider its own process or may attempt to explore underlying
assumptions previously taken for granted. In testing, we are trying to promote a processof collective inquiry. As a tester, we may occasionally ask for a process check or ask if
someone might act out a scenario to explore an option. Perhaps readers are familiar withthe ‘‘Abilene Paradox,’’ an interpersonal dynamic described by Jerry Harvey (1988). Harvey coined the terms when pondering why he and some family members took an exhausting trip in a dust storm to Abilene, 53 miles away, when not one person in theirparty actually wanted to go there. Because we have an unfortunate tendency in everyday
life to communicate the very opposite of our wishes based on our assumptions of thedesires of others, the testing skill can become indispensable. We need to develop thecourage to inquire about our mutual desires and actions if we are to successfully manage
agreement.
Finally, in probing, we make a direct inquiry, typically to one member at a time, to nd out the facts, reasons, assumptions, inferences, and possible consequences of a given
suggestion or action. For example, probing might attempt to point out inconsistencies inmembers’ reasoning patterns, perhaps helping them to uncover the assumptions andAs people disclose more about
themselves, the group learns more
about its membership.

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RAELINw”I Don’t Have Time to Think!” versus the Art of Reective Practicebeliefs behind particular actions. When probing, however, we need to be careful not tointerrogate or make any member feel he or she has been put on the spot or on the defensive. On the other hand, probing may initially make some members uncomfortable if they
are asked to consider assumptions that had been hidden even from their own consciousness. As an example, consider a frank inquiry posed to a group member, Mark: ‘‘Mark,every time that I can recall when we’ve thought about broaching our plans with Lisa, you
chime in saying that she is someone whom no one can work with and a person to be
avoided at all costs. I wonder if you’ve had some experiences with her you can share thatwould help us, and perhaps you too, understand what seems to be making Lisa such an
obstacle. Maybe there is a way that would make it possible for one of us to approach
her.’’
So, how would Susan and Charlie from the initial vignette interact under re ective
practice conditions? Let’s see how the conversation might have changed. See if you candetect Susan’s interest in building a reective community and more speci cally in her useof the being skill, followed by Charlie’s use of the disclosing and probing skills:‘‘Susan, you’re next. As you know, we gure the Cadlink merger is going ahead. They expect
their Wentworth localization unit to be merged with your marketing group. What do you
think?’’‘‘Charlie, thanks for giving me your condence. Frankly, I’m concerned. Even though I had
earlier been pretty vocal about my support of the merger and had told Jeff that I believed we
could assimilate Wentworth, I have new data suggesting that their work methods might notconverge with ours. We need to get them in the room, but I’m not sure how to broach thematter. You’ve had conversations with them before. What do you suggest?’’‘‘Susan, I’m somewhat fearful that they might think we’re back-pedaling here, and myword is on the line. But I appreciate your frankness. By being up-front, I think I can show
Jeff why this matter is too important to rush. I also know their marketing VP. But before weapproach her and her group, let’s hear about the new data that you have. What operating
methods of theirs do you anticipate to be problematic?’’

Acknowledgment
The author would like to thank Ed Schein for his generous comments on this article.

Notes

74

1. I am grateful to David Hardy, of the Bank of Montreal, for demonstrating the concept of the‘‘solution database.’’
2. The Thomas account is from D. Schiff, ‘‘An Older, Wiser, Humbler Wunderkind.’’ New YorkTimes Magazine (August 20, 1995): 31.
3. This story of Washington was described in O. Guinness, ed. Character Counts: Leadership Qualities in Washington, Wilberforce, Lincoln, and Solzhenitsyn (Grand Rapids, MI: Baker Books,
1999): 37.

References
Bell, S. ‘‘Self-Re ection and Vulnerability in Action Research: Bringing Forth New Worlds in our
Learning.’’ Systemic Practice and Action Research 11 (1998): 179–191.
Castleberg, M. ‘‘Reective Note-Taking: A New Tool for Capturing Learning’’ unpublished draft
paper available on-line at http://forum.solonline.org to members of the Society for Organizational Learning, 2001.
Haggerty, D.R. ‘‘Doing by Learning: How Re ective Practice Builds Learning for Members of WorkBased Learning Teams’’ unpublished doctoral dissertation, University of Vermont, 2001.
Harvey, J.B. The Abilene Paradox and Other Meditations on Management (San Francisco: JosseyBass, 1988).
Isaacs, W. Dialogue: The Art of Thinking Together (New York: Doubleday, 1999).
Kleiner, A. and G. Roth. ‘‘How to Make Experience Your Company’s Best Teacher.’’ Harvard Business
Review 75 (1997): 172–177.
Kramer, G. ‘‘Meditating Together, Speaking from Silence: The Practice of Insight Dialogue’’ (Portland, OR: Metta Foundation, 1998).

Volume 4, Number 1, REFLECTIONSRAELIN

Commentaryby Phillip DiChiara
In the mid and late 1990s, abundant venture capital catalyzed the rapid growth of edgling organizations, many of which placed great emphasis on market share, virtuality, personal fulllment,
and overall staff satisfaction. Technology rms in particular proudly provided space for recreation
with the hope of encouraging dialogue and teamwork. Many new ventures assumed that highly
motivated employees would view work as play, play as work, and professional fulllment as essential to their continued commitment to the often-entrepreneurial task at hand. The spoken intent
was to recruit the best talent at any cost, to provide a nurturing environment for innovation, andto create teams that would succeed.
In fact, there is evidence to suggest that ‘‘safe space,’’ physical or otherwise, for individual orgroup reection was often less a reality than an optimistic promise. Joseph Raelin’s article reminds
me that, for many practitioners, the concept of reective practice is essentially unknown.
As Raelin notes, there are many reasons why reection should be brought out in the open,
and there are strategies to encourage its use. Within the efforts of The Boston Consortium forHigher Education, a young collaborative focused on addressing the shared problems faced in theadministration of member colleges, we believe reective practice has been an essential part of our
success thus far.
As our groups evolve from informal meetings within a discipline, but across several different
school organizations, community building is not left to chance. A clear sense of shared interest andvision is essential, and creates the fertile ground on which reective practice can be nurtured. Encouragement from senior staff may catalyze initial involvement, but few managers can afford, or
want, to spend time in meetings that do not provide a return on their investment of time. Additionally, they value sessions that allow them to engage their peers in settings that are relaxed but
clearly focused on how their collective knowledge can reduce workload or enhance the quality andsophistication of their respective operations.
Facilitating the correct balance between ‘‘getting down to business’’ and nurturing an environment that permits reection is not easily accomplished. It is however, necessary, as too little ofeither will discourage further involvement in a newly formed group. It is modulated differently
from group to group, within a group, and often within a topic. The skills of reective practice,detailed in the article, can be readily observed in sessions involving our more matured communities
of practice.
The consortium initially employs a coordinator, who, with solid facilitation skills, assists agroup in discovering and sharing their common concerns. As dialogue leads to relationships, time
for reection is created by simple but effective tools such as collective review of previous meeting
notes or informal updates on the seemingly unrelated problems they have had to tackle in order tomove the effort ahead.
In some cases, casual dialogue before and after meetings involves sharing of often-humorous
episodes encountered in merely nding the time to attend a group meeting. We suspect that thisis evidence that value is placed on attending the meeting. It would also appear to resonate withthe value we discover in stepping back and observing our activities, as conditioned as we may be
to doing otherwise. Public reection in a trustful environment brings attention to the urry ofactivity that often acts as a substitute for thoughtful analysis. An individual’s ability to observe hisor her approach apart from and outside of the traditional organizational setting is an importantbenet of reective practice within consortia, and we believe, very much a part of the attraction ofparticipating in a community of practice.
Unfortunately, not all communities evolve at the same pace, and some, despite able assistance,
do not achieve their full potential. What would appear to distinguish them is the degree to which
the group becomes comfortable with observing itself and others. Groups that are hell-bent onachievement often meet their objective, but seem to cycle out of productive existence. Other
groups, frequently populated with two or more personalities that are biased toward inquiry, typi-

REFLECTIONS, Volume 4, Number 1

Phillip DiChiara
Managing Director
The Boston Consortium for Higher
Education
dichiara@babson.edu”I Don’t Have Time to Think!” versus the Art of Reective Practicew

Raelin, J. Work-Based Learning: The New Frontier of Management Development (Upper Saddle River,
NJ: Prentice Hall, 2000).
Thomas, R.J. ‘‘Mergers & Acquisitions: Irreconcilable Differences.’’ Accenture’s Outlook Journal 1(2000): 28–35.

75

RAELIN”I Don’t Have Time to Think!” versus the Art of Reective Practicew

cally nd the ability to re-engage continuously. Is it that the relationships created have become sotrusting that the vulnerability often associated with reection is no longer a concern? We believethat is the case, but are not sure.
If communities of practice in collaborative environments tend to encourage reection, theninterorganizational communities of practice would appear to require it. There is rarely a clear line
of authority on joint projects. A compelling argument for project completion must be adopted andinternalized by all participants in order to achieve success. Absent facilitated reection, failure toappreciate the whole story and understand the unique perspective of several organizations will increase the likelihood of a failed effort. The creation of ‘‘safe space’’ becomes the critical element insuccessful consortia and the communities of practice they seek to produce. Without that space,reection is less likely to occur. Shared reection, even in modest quantities, is part of every successful effort within our consortium and often absent in those that do not meet our hopes andexpectations.

References
Darling, M.J. and C.S. Parry. ‘‘After-Action Reviews: Linking Reection and Planning in Learning Practice.’’ Reections 3 (Winter 2001): 64–72.
Wenger, E., R. McDermott, and W.M. Snyder. Cultivating Communities of Practice (Boston: Harvard Business
School Press, 2002).

Commentaryby Philip W. McArthur

Philip W. McArthur
Action Design
phil@actiondesign.com

76

As the title of Joseph Raelin’s article captures, reection in organizations, while so necessary forthe reasons he articulates, is often resisted because people think they don’t have time. What leads
us to think this? What are the implications for people who wish to foster more reection? As Raelin points out, we can think of reection as occurring in three distinct moments: (1) before we act,(2) after we act, and (3) in the heat of the moment. I would venture a guess that when people
think they don’t have time to reect, they are referring to the before- and after-action types ofreection. This puts a premium on understanding how to optimize reection in the heat of the
moment, or what Donald Schön (1983) in his seminal book, The Reective Practitioner, calledreection-in-action.
Schön used the term reecting-in-action to describe the process professionals implement todevelop practical knowledge in unique, surprising, and puzzling situations. As Schön explained,much of professional knowledge is tacit. Expertise leads to a dilemma. The better you get at what
you do, the less able you are to say what you know. You ‘‘just do it.’’ The process of reecting-inaction involves ‘‘turning thought back on action and the implicit knowing in the action’’ (Schön,1983), making your tacit knowledge explicit, reecting on your assumptions, so that you can entertain fundamentally new options.
Reection, in this sense, is not divorced from action. It is about applying learning to one’s
performance in the current situation. As Schön noted, we can think about what we are doing, evenas we are doing it, but this requires that we embrace uncertainty rather than see it as threatening
or a sign of weakness. The barrier to reecting-in-action is not necessarily time, but our willingness
and ability to engage each other effectively in reecting on our thoughts, feelings, and actions.
When Charlie says to Susan in the opening vignette, ‘‘Don’t you want to think more about it?’’
Susan may understandably see this as a delaying tactic. When she responds, ‘‘I don’t have time,’’what she may really mean is, ‘‘I don’t nd this conversation helpful.’’I agree with Raelin that reective practice is powerful because it is public. But, to leverage
this power, there is a dilemma with which we must contend. As we engage in reection with others, there are usually two conversations going on simultaneously: a public one and a private one(Argyris and Schön, 1974). The private conversation is a function of our ability to observe bothothers and ourselves. Unfortunately, in difcult conversations, our internal observer can become
quite reactive. We think to ourselves, ‘‘What an idiot!’’ ‘‘How can he possibly believe that!’’ ‘‘I betternot rock the boat.’’ Our reactive observer is judgmental in ways that are not useful and leads us toprotect others and ourselves rather than promote learning. Yet, our judgments may be accurate
and necessary for change. The solution to this dilemma is not to be nonjudgmental, but to beaware of our judgments and communicate them in ways that promote mutual learning.
Volume 4, Number 1, REFLECTIONS‘‘Sam [is challenging] our very purpose. He [isquestioning] not only why we need to meet so
often. . . . He [seems] to be questioning why
we even [need] to meet at all!’’‘‘What is it about Sam questioning this group thatI nd difcult?’’‘‘Perhaps it [is] good that Sam [is] getting his
feelings out on the table. Any knee-jerk reaction by me would likely shut him down.’’‘‘I understand Sam thinks we shouldn’t meet. I’m
glad he’s raised this, but I don’t yet understandhis thinking. I need to ask.’’‘‘These are my interpretations. I need to test thempublicly.’’‘‘I am assuming I would shut him down if I respond. If I just say he is wrong that won’t help. If
he doesn’t nd my inquiry helpful I need to learn
why not.’’‘‘I think it was our best meeting ever.’’‘‘That is my assessment. Feeling good can be a
trap. Did we miss any opportunities for learning?
I need to check with others.’’

Given that our reactive observer does not disappear overnight (if ever), as we learn to reectin-action in tough situations, we have to develop a reective observer that can help us make senseof and manage our reactive observer. What might this look like in action? Let me use as an example the supervisor’s journal entry from Raelin’s article (see table 1). In the left column, I haveplaced those comments of the supervisor that contain untested hypotheses and assumptions,which are characteristic of our ‘‘reactive observer.’’ We need to become aware of these reactions,and further reect on them, as we are acting. Examples of second-order reection are in the rightcolumn under the heading ‘‘reective observer.’’
In Raelin’s model of reective practice, his use of examples to illustrate the skills of reective
practice at the level of what you would actually say or do is one of the article’s particularstrengths. I have done the same in the table. Having examples at this level allows us to reect on
our causal reasoning and identify any gaps or inconsistencies in how our ideas might be put into
practice (Argyris, 1982).
Raelin’s model for reective practice is composed of ve core skills: being, disclosing, speaking,testing, and probing. I agree that the framing skill he identies (being) underlies the effective useof the other four skills. What I nd novel, but not yet convincing, is the idea that these skills apply
distinctly to either the collective or the individual level.
Regarding the skills of testing and probing, in my practice, I don’t make a distinction between
using these skills at the individual or group levels. I apply them to both. Let me use Raelin’s example of probing to illustrate. Here is a statement made by one group member to another.
Mark, every time that I can recall when we’ve thought about broaching our plans with Lisa, you chime insaying that she is someone that no one can work with and a person to be avoided at all costs. I wonder
if you’ve had some experiences with her you can share that would help us, and perhaps you too, understand what seems to be making Lisa such an obstacle. Maybe there is a way that would make it possible
for one of us to approach her.

First, the use of words such as ‘‘chime in’’ could lead Mark to feel his concerns are being
dismissed (and suggest that the speaker has work to do on his frame of Mark). That aside, from myperspective, this comment would be more effective if it included more explicit testing. The rst
place I would test with Mark is after I state my recall of his response to working with Lisa. I would
ask, ‘‘Do you see that differently?’’ or ‘‘What’s your recollection?’’ Second, when the speaker says,‘‘Maybe there is a way . . . for one of us to approach her,’’ this is, implicitly, suggesting a test. It
would be a more explicit test if the speaker were to say, ‘‘I’d like to gure out a way to test if it ispossible.’’Regarding the skill of speaking, I do not understand what it means ‘‘to articulate a collective
voice from within ourselves.’’ I understand in the example that the orchestra found the shape ofthe music together, and that Thomas, the conductor, could not make the music happen on his
REFLECTIONS, Volume 4, Number 1

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Reactive observer(from supervisor’s journal)”I Don’t Have Time to Think!” versus the Art of Reective PracticeTable 1 Developing a reective observer

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RAELINw”I Don’t Have Time to Think!” versus the Art of Reective Practiceown. But, how did the orchestra do this without hearing their own ‘‘voices’’ in the process? Schönalso distinguished between reecting-in-action at the individual level, as when a baseball pitcher
makes adjustments to his delivery, and at the collective level, as when jazz musicians improvise.
But in Schön’s description of the collective music-making process, the individual continues to bevery present (1983: 56).
As the musicians feel the direction of the music that is developing out of their interwoven contributions,they make new sense of it and adjust their performance to the new sense they have made. They arereecting-in-action on the music they are collectively making and on their individual contributions to it,
thinking what they are doing, and in the process, evolving their way of doing it.

In Schön’s example, the jazz musicians are hearing the collective voice and their own voices.
There is no blurring of the boundary between the individual and the collective. A key challenge inreecting-in-action is being able to shift one’s focus uidly between the action you observe ‘‘out
there’’ and your own internal experience and sense making. This is why it is important to combine
productive advocacy and inquiry (speaking, disclosing, probing, and testing) whether at the individual or group level.
These distinctions aside, the nal vignette between Susan and Charlie is a good illustration ofreecting-in-action. They are asking for help, making their thinking and concerns more explicit,
asking questions that lead to more informed action, rather than indirect questions that appear todelay action. Notice that this conversation is longer than their rst. But it is more helpful. People
generally invest their time where they think they will get the most return. ‘‘I don’t have time’’ may
really mean ‘‘I don’t see the value,’’ or ‘‘You aren’t being helpful.’’ The key barrier to reection-inaction is not time but skill.

References
Argyris, C. Reasoning, Learning, and Action: Individual and Organizational (San Francisco: Jossey-Bass, 1982).
Argyris, C. and D.A. Schön. Theory in Practice: Increasing Professional Effectiveness (San Francisco: Jossey-Bass,
1974).
Schön, D.A. The Reective Practitioner: How Professionals Think in Action (New York: Basic Books, 1983).

Responseby Joseph A. Raelin

78

As I prepare to write my response to DiChiara’s and McArthur’s thoughtful commentaries, I am
struck that our journalistic practice with its artifact of objectiveness may itself miss the mark on
full reective practice since the three of us and our managing editor are hardly reecting together
in action. But we are stepping back to ponder meaning and perhaps are likewise engaging ourreaders, who may in turn bring up some of these reections with others in their respective communities.
Two themes and one new thought emerge for me as I read both commentaries. The rst
theme is the sheer need to expose one’s fragile self if reection is going to occur publicly at all. It
is hard enough just to ask others to slow down, let alone question self and others in front of theassembled. We need to ask each other how we can establish a climate for being in a world of
acting. Perhaps it ultimately boils down to an existential courage, as or Paul Tillich put it, ‘‘thecourage to accept oneself, in spite of being unacceptable’’ (Tillich, 1952).
The second theme that I derive from the commentaries is how critical it is that reective
practice occur at all levels of experience. Phil McArthur is mostly concerned with the individual andteam levels of discourse. At the individual level, we need to make a discernible effort to understandour own assumptions and feelings (our ‘‘left-hand column’’) and how to communicate some ofthese constructively to others so as not to block productive personal and professional relationships.
At the team level, we need to decide how to counter centrifugal forces that lead us to protect ouridentities rather than commit to one another. Using the speaking skill, for example, one doesn’tnecessarily ‘‘speak for the group,’’ as McArthur aptly questions, but seeks to express a collective
voice that helps the team nd meaning as a working and learning unit.
Phil DiChiara is more concerned with reective practice at the organizational and interorganizational levels of experience. Organizationally, our moments of reection can help us probe beyond

Volume 4, Number 1, REFLECTIONSRAELIN”I Don’t Have Time to Think!” versus the Art of Reective Practicew

the strategic imperative of ‘‘what business are we in,’’ to questions of ‘‘what we stand for.’’ The
value dimension suggested here applies as well to our stakeholder relationships as we seek collaborative opportunities that consider not just the economic benets to be gained from other parties
but our mutual sustainability. Indeed, in Work-Based Learning, I propose that critical consciousness
through public reection might begin to lead to a better world when we recognize the connection
between our individual problems and the social context within which they are embedded.
Finally, is there a link between reective practice and the attention of the Society for Organizational Learning on leadership and personal development? If we expect people with working ties
in our organizations to reect together, it may be counterproductive to send them away individually to training programs. One alternative is to send them away together to the training. Another is
to bring learning into the community itself. How do we do this? I have coincidentally worked with
DiChiara and McArthur on this very issue. In an ongoing executive development program with DiChiara’s Boston Consortium for Higher Education, we have assembled a handful of administrative
executives from area colleges and universities. Although we started using a traditional format oflecture and discussion, we have since evolved into a reective learning team. There is now sufcient trust in this network group that at each session, members take turns disclosing to each othersome pivotal problems of leadership occurring in their respective work settings. The ensuing dialogue is dedicated toward helping individuals make sense of their leadership interventions in lightof relevant academic and practice theories, but most particularly, in light of our profound respectof each other’s courage to be.

Reference
Tillich, P. The Courage to Be, 2nd ed. (New Haven, CT: Yale University Press, 1952).

Commentaryby Edgar H. Schein
Raelin’s call for developing the skills of reection and nding the time to reect is very timely as
we get more and more frantic in this complex world. When I say to companies that learning requires ‘‘slack’’ time, I get outraged responses that not only is there no slack time anymore, but even
if there were, the stakeholders would never approve of time being used unproductively. So how dowe ‘‘nd’’ time in a world that claims there is no time to be found?
I would suggest that if we view time as a cultural invention rather than a physical abstraction, we might discover that there are all kinds of time for personal reection if we choose to use
it. The best example is ‘‘commuting time.’’ If we walk or take public transportation instead of driving, we have untold hours per week to devote to reection. A second example is ‘‘walking the dog.’’
This is an ideal time to think, either alone or with one’s signicant other. It is also an ideal time forreective conversation. A third example is ‘‘between events, meetings, and so on.’’ If I have to walk
10 minutes from one building to another to get to the next meeting, I have 10 minutes to reect
on what has just gone on and what is about to happen.
In a very provocative study, Marcie Tyre, former MIT professor, studied what we do when external circumstances force a ‘‘time out.’’ For example, on the football eld when a player is injured
and the doctor is out on the eld, what do the other players do during this time out? When the
power goes off for a few minutes or hours, what do we do if we cannot continue our normal
work? Most of us do not smoke anymore, but maybe the ‘‘smoke break’’ should be brought back as
an institution to provide 5 to 10 minutes of reection time out on the balcony. Instead of bringing
our coffee back to the desk, what about taking a coffee break to walk around the block or to sit
alone staring at the landscape and reecting?
The point is that slack time is a sociological denition, not an absolute category. What weneed to nd are adequate excuses for reection that others will accept as legitimately tting into
our busy lives. The absurdity of how we are driven by the norms of busyness is best exempli ed in
Cambridge at the outdoor teashop on Brattle Street. Many people will not stop for a relaxing tea
and pastry (and a bit of reection) because they may be seen as ‘‘wasting time’’ sitting at a café.
Let’s begin by reecting on why we don’t reect more.

REFLECTIONS, Volume 4, Number 1

Edgar H. Schein
Sloan Fellows Professor ofManagement Emeritus
MIT Sloan School of Management79