Wednesday, August 22, 2012

THE FIFTH DISCIPLINEThe Art & Practice ofThe Learning Organization

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Peter Senge is a Director of Systems Thinking, an organizational learning program at MIT, and is also a private business consultant. Senge and some of his colleagues for a long time have discussed what they call a learning organization. This book is a presentation of some of the lessons they have learned.

Relating it to the QPI Virtual Management System, the first three are probably the most mysterious of the QPI Principles. The first Principle, An organization should strive constantly to improve and advance the interest of all its stakeholders, comes from deep understandings in mathematics. A book that explains that to some extent is The Goal by Goldratt.

The second and third Principles are particularly mysterious. The second Principle says, Everything effects everything. All parts of an organization are interconnected in both known and unknown ways. The third Principle says, All actions are important. Even very small ones can have very large, sometimes unpredictable effects. While one must be aware of those two Principles, it isnt clear, -------, what can follow from them.

Senges book actually addresses the consequences of the second and third Principles and gives us some tools for learning to manage a QPI organization. You might suspect if there is a Fifth Discipline, there must be four preceding it and indeed there are. Peter Senge discusses those, but he does it in reverse order.

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He begins in Part One of his five part book simply giving a background explaining to us why we need to have a learning organization. I might think of it myself in terms of having a QPI organization. In Part Two he discusses The Fifth Discipline and in Part Three, the first Four Disciplines. In Part Five he discusses prototypes and his approach to managing a learning organization. Part Five is the summary of the book. I will give the review in the order of Parts One, Three, and then Two.

In Part One Senge discusses that there is such a thing as leverage in operations. He quotes the old Archimedes statement, Give me a lever long enough...and single-handed I can move the world. The idea behind that is that if you engage in the proper ------ with enough leverage, then you can achieve tremendous accomplishments beyond what you might have originally thought. The Fifth Discipline will particularly look at this concept of leverage, but it certainly goes beyond that.

In Chapter Two of Part One he discusses the concept of whether or not your organization has a learning disability. The idea of this chapter is to essentially open up your mind.

He first wants to get across the idea that you cannot only assume a local viewpoint, but you must also look at a global viewpoint. In other words, if you think only of your own job in your own department without looking at the global perspective, you will really not be able to do your job very well. That is consistent with Principle One and also Principle Three. To think of the enemy out there is Senges second observation and the bottom line is that we tend to blame external forces for things that happen when in fact these are things we have actually done ourselves.

He then discusses the concept of pro-activity and points out that being pro-active without understanding the total system is not going to be productive. If you are reacting to things that you dont fully understand even though you may think youre pro-active, you will probably be doing things that hurt the organization.

An example that would be the QPI Principle Six that says do not tamper. Often tampering is considered to be pro-active. One might think they were improving a process, when in fact they were hurting a process. To be pro-active in a truly efficient way you must understand the total system.

The next topic Senge discusses in this chapter is fixation on events. I interpret this to mean reacting to things without looking at the total underlying process. Again that is tampering which we try to preclude. Very often we look at the symptoms of a problem without seeing through to the core. That is we have the tendency to fixate on outcomes and not look at the underlying process.

In Section Five of this chapter, Senge talks about the parable of the boiled frog which is that if things get worse gradually, you will not notice them. In fact you will continue to tolerate things that you would not have had they not happened all of a sudden.

The idea is that if you put a frog in hot water, it will jump right out. If you put a frog in cold water and gradually heat it up, it will not try to get out and will stay in the water until it dies of overheating.

Often as our own organizations evolve situations will worsen and worse without our really noticing until it is too late.

In Section Six Senge talks about the delusion of learning from experience. He says the problem we have with this is that very often we do not understand the causes of the things we are experiencing. Therefore we are only learning from the symptoms and not from the core. It can particularly be a problem if you are looking only at just the localness of an organization.

In Section Seven Senge describes the myth of a management team. Again his point is that it does not do any good to have team management if it is not done appropriately. If people are just reaching a compromise and really are not communicating properly, worse decisions may result if it were done otherwise. The implication is that the team management may not be inherently bad, but that we simply often do not implement it properly.

He then talks about disabilities of organizations and disciplines. The problem is that if you suffer from any of the things he has already talked about this could be considered a learning disability.

In Chapter Three Senge gives a very interesting example of a simulated study that comes all too close to things that happen in real life behavior. He analyzes the problems involved in it and basically talks about an idealized distribution system that has three stages of distribution.

The simulated study is of a brewery that brews a certain brand of beer and sells its beer to wholesalers. The wholesalers in turn sell it to retailers. There is an interconnection between these three phases.

The retailers order beer once a week, but the order they place at a given time is for delivery several weeks hence. So, there is a built-in delay time in their ordering of the beer. It is the same for the wholesalers when they order to the brewery.

Retailers look at their backlog of inventory, compare it to their demand and try to control their inventory level by adjusting the order level. Wholesalers do the same. They look at their inventory and backlog, and try to balance that by placing orders that keep them in balance. Of course, the brewer has to balance their inventory and backlog with their capacity.

In the beginning this system is stable. The retailers are selling a certain average volume, per month, the wholesalers are selling a certain monthly volume and so is the brewery. The whole system is in control and it is capable, that is each part of the system is doing what it needs to in order to meet the needs of the ultimate customers.

We might say that the fourth stage of this system is the customers. Something happened that caused the customers to respond differently and that caused the change in demand. Senge does not recall exactly what happened in the beginning, but only that people started buying more of a particular brand of beer at the retail level. When the retailers noticed and their inventories started to deplete they began increasing their orders.

Because of the lag period from the time the retailers placed their orders until they received it, the retailers inventories were depleted. They then began missing sales. In an effort to correct that problem they stepped up their level of orders.

The wholesalers of course noticed the surge in demand somewhat later because there was a lag from the time the retailer noticed an increase in demand until they started increasing their orders. At a later date the wholesalers noticed the orders had gone up substantially and that their inventory was being deplete so they increased their orders to the brewery.

Of course when the retailers started increasing their orders in an effort to obtain more beer to sell as they were losing sales, they actually increased their order level beyond what they really needed. It was a case of wanting the beer now and since they could not get it now they increased their order level hoping that it would decrease the time it would take to be delivered.

At a later point in time the wholesalers did the same thing. As the brewery noticed an increase in demand they finally started increasing their capacity.

The point that Senge makes is that at each stage the system was behaving in a rational manner and doing what was in its own best interests. But, the result was that eventually the brewers started delivering more to the wholesalers and the wholesalers delivered more to the retailers. Soon the system was over-saturated. In fact they all had great inventories built up beyond their normal needs so they then quit ordering.

The bottom line was that the system was basically out of control and became incapable. When the orders finally collapsed then the brewery, which had built-up their manufacturing capacity, had a saturated inventory and had no place to send the production.

Senge describes all of this in a very interesting story. When it is all said and done the whole system basically was destroyed. Senge then stands back and asks, What happened?

First of all what actually happened was that there was a doubling of demand from the consumers in response to some advertising. It was an inadvertent advertising that came from a music video that featured this beer.

None of the three levels of distribution understood what was happening so they did not react in a way to deal with the situation from global perspective. Each one tried to do what was in their own local best interests. Because they were ignorant of the effects their actions were having on the total system and they all were trying to do what they thought was in their best interests they ended up destroying the system.

They were all blaming each other and felt the consumers were quite fickle. Actually the consumer demand had simply risen from one level to another and the system had not responded to that increase in demand. It is a classic case of a situation in which there are feedback loops and delays. The system simply did not react properly to the change in input and sent the system out of control.

This sort of lays the groundwork for Senges concept of the Fifth Discipline that well talk about later. I will be discussing the book out of sequence and Im going to skip ahead to Part Three and then come back later to Part Two which is the Fifth Discipline.

In order to engage in the Fifth Discipline, which is what the book is about, Senge says you really must have four core disciplines in your organization. They are

Personal Mastery

An Understanding of Mental Models

A Shared Vision

Team Learning

I will discuss each of these and that is Part Three of the book. Then Ill come back to discuss the Fifth Discipline which is Part Two.

The First Discipline is Personal Mastery. The basic idea is that if an organization is going to be a learning organization or what I would call a QPI organization, it is important that individual components, that is the individuals within the organization, have a Personal Mastery.

I think that this can best be achieved by reading Steven Coveys book, The Seven Habits of Effective People which is reviewed in another QPI Book Review. However, it is consistent and it is compatible with what Senge allows and I will briefly outline his views on Personal Mastery.

First Senge says it is important to develop a systemic view. That means you have to look at the entire system in which you are embedded. This is quite important if you hope to do things that actually improve the total system.

Secondly you need to look upon your own tacit beliefs or your own core principles. Of course Covey talks about developing the principles you live by. The principles you live by and the beliefs you have are going to be a strong determinant in what you actually do.

The third step in Personal Mastery is to develop a vision or mission for yourself and also to become involved in developing shared missions and visions with the people with whom you associate. This is true whether your organization is a family you are trying to achieve objectives with or it is the business you work for or whether it is some other type of organization you may be a member of.

The fourth thing you need to do in Personal Mastery is commit to seeking truth and knowledge and really understand things as they are.

The fifth step is to integrate yourself into the whole. This implies that you need to achieve an interdependence with the people with whom you are dealing be it family, a social group or a business organization. Again we come back to Coveys idea that first you have to be independent and then you need to be interdependent in a healthy way.

Step number six is that you need to recognize creative tension. Senge says that the first thing you need is a vision of what you want to go toward. Think of a rubber band as attaching you to that vision. That will help you go toward the vision however the reality that you are currently emerged in and your core beliefs are going to restrain you from going toward that vision. Think of those as rubber bands in the opposite direction so as you go toward your vision. You sometimes are held back by your basic beliefs and by the reality of your current situation.

The tension created is what Senge calls creative tension and you need to exploit the gap between where you want to go and where you are with some action. My recommendation would be that you create intermediate visions that is you move to each new vision and re-examine and change your core beliefs as appropriate and your current reality will change.

You will also find that it is possible to change your beliefs very quickly if you do it properly. If you study neuro-linguistic programming, you will certainly see that there are techniques for doing that.

We feel that when you change your management from its current structure from whatever it currently is to QPI that will be a very sudden change. It may take a long time to perfect and fully exploit it, but you can actually make the change very quickly.

For example the adoption of the Adizes PAEI Management Team Decision Making Techniques can have an overnight effect on your organization. If you adopt QPI Marketing as exposed by such people as Jay Abraham, that will also have an overnight impact on your organization. You are all probably familiar with the born-again concepts of Christianity in which you can suddenly change your core beliefs. Beliefs can change suddenly.

In any event the first step in Personal Mastery is to set up your visions, recognize your core beliefs, create the creative tension and then begin to move toward your vision. I might add that I feel your core beliefs are directly related to your principles that Covey exposes.

The Second Discipline is to recognize that there are things called Mental Models. These are the paradigms that Covey talks about whereby you view the world and your Mental Models will determine how you see the world. They will determine how you interpret facts and even how the kind of facts that you see.

History is replete in both science and non-scientific subjects with Mental Models very much determining how people view the world and, of course, we all have Mental Models. Thats part of being a human being. It is important to understand what your Mental Models are because they determine how you interpret facts and what facts you see.

Senge points out a Case Study in which the Royal Dutch/Shell Oil Company changed their Mental Models in the late 160s and it enabled the company to deal with the vicissitudes of the oil industry in the 170s and 180s. It helped them to move from a last place position to a tie for the number one position.

A part of changing your Mental Models is to adopt a global view. I maintain that QPI is a business management system model and how you interpret things that happen is very important. For example, Principle Six alone can greatly change the way you view things and they way you react to situations that arise in business.

Adopting a Mental Model can and will have a profound impact on how you view things. You need to think about your Mental Models whether you are dealing with your friends, family, or business.

The Fifth Discipline is a rather long and rich book and I highly recommend that you read it. The review I am providing of it is a brief one.

The Third Discipline is a Shared Vision and the idea here is to have a common vision and a common mission within the organization in which you are working. The point Senge makes is that you will only achieve a Shared Vision when it is combined from the combination of personal visions and they are melted together in a synergistic way to create the common vision.

If you have a mission or vision created by a few people at the top and then shared, you will have what Senge calls Compliance. That means people will go along with it, but will not have truly bought into it. If people are involved in the creation of the vision, then you will get commitment which is what is really required to get the full strength out of a Shared Vision.

Of course you need to have your vision rooted in basic principles for how you are going to run your organization. I would maintain that the QPI System, the QPI Principles, are a very significant part of a Shared Vision that one would have.

The Fourth Discipline is Team Learning. Team Learning is much more powerful than individual learning even though teams are composed of individuals. This gets back to the concept of synergy which is extremely important in Team Learning.

One of the aspects of Personal Mastery that Senge talks about is in Communication Skills.

He discusses inquiry versus advocacy.

Inquiry is a situation where you are talking with another person or a group of people and learning from each other. It implies that you are not judging each other, arguing, or trying to present your own viewpoint, but that you are really trying to learn. You do however ask the others about their Mental Models so you can try to understand where they are coming from and what they are really saying.

Covey described this as Empathetic Listening. It is very important that you learn the technique of inquiry so you can truly learn from other people, see things through their eyes and understand facts from their viewpoint.

I must say that a person who is high in I is probably good at inquiring. I think that one of the strengths I have had over the years is the ability to dialogue with people and learn from them.

A second aspect of communication after you have experienced the inquiry stage is advocacy. Advocacy is where you are then selling an idea or position or directing attention to certain facts you think are relevant to your fellow colleagues. Inquiry should come first and advocacy should come second.

At a team level that is comparable to dialogue versus discussion. A team should dialogue which means that everyone should be in an inquiry mode in which there is simply a sharing of facts, ideas, and opinions and there is no judgment being made. In fact you can share ideas without making them opinions. You do not have to defend anything you say in an inquiring mode.

One of the weakness of many team meetings is that they move prematurely into the discussion and the advocacy before they have had an adequate chance to dialogue. Dialoging is to really plowing the ground, planting the seeds, and cultivating the discussion. The resulting discussion is advocacy in which you now try to come up with an idea that is going to achieve some kind of a consensus.

If you have done the dialogue and the inquiry properly, you should know all of the facts and viewpoints and everyone involved should understand them. You can then try to see what you believe in. It is very helpful at this point to apply the QPI Principles to determine what is right, what is not, and what may or may not be optimal.

Team Learning is very powerful. It is synergism at its best. It is where the whole is definitely greater than the sum of the parts. A group of people who engage in proper Team Learning can achieve tremendous things.

You can probably think back to experiences in which you have dealt with other people that by dialoging and learning from each other. Going into a problem solving mode, you have come up with solutions to problems that no one individual in that group was likely ever to have thought of on their own.

That certainly has been the case in my own experience. Some of the best things we have ever done have been a result of good synergy between two or more individuals.

These are the first Four Disciplines Personal Mastery, Understanding Mental Models, A Shared Vision, which again is a form of synergism, and finally, Team Learning. These Four Disciplines are necessary in a Learning Organization according to Senge. I agree with that opinion and say that they are necessary to properly implement QPI.

In fact, in a sense the Disciplines are implied by the QPI Principles simply because they are all necessary to most effectively implement the QPI Principles. If you dont do all of these things, you will not be able to satisfy the QPI Axioms. These are very consistent with Adizes PAEI concepts and with Steven Coveys lessons on Personal Mastery.

Once again this is a long book, almost 400 pages, and it is not a quick-read or an easy-read although it is not difficult. It is quite well-written and how easily you understand it depends on what you bring to it and how compatible it is with the ideas you already have.

The Fifth Discipline is a very interesting one. It insists that you look at a system or organization from a systemic view which takes into account factors that are implied by Principles Two and Three.

The first thing that Senge starts out with is a discussion of the Laws of the Fifth Discipline. Let us remember that the Fifth Discipline is looking at total system and all of its interconnections in a way in which you can predict systemic behavior by understanding the total system. These are things we have learned that are consequences of Principles Two and Three. A review of those Principles is as follows



1. Todays problems come from yesterdays solutions.

Management in a system does things all the time. The things you do today to solve what you perceive to be problems today are the things that will create the problems of tomorrow. This is often an interesting situation. Very often the things you do today are reacting to symptoms and the actions you take then have bad results.

We certainly would believe that because of the tampering Principle. A process may be creating some outputs that you dont like that are well within natural variation, but you might go ahead with action based on the outputs. In other words, you try to solve a problem. It turns out that you are tampering and you actually hurt the process in turn creating even larger problems tomorrow.



. The harder you push, the harder the system pushes back.

In many systems certain processes are quite stable. If you try to change those process, they it does not happen easily. In fact this is because of the way processes are intermingled and sometimes there are feedback mechanisms that tend to correct or balance the situation. Senge calls this balancing feedback or compensating feedback.



. Behavior grows better before it grows worse.

Many times you will do something at the local level that will improve a situation. You will think you have actually made an improvement when in reality things worsen in the long run.

An example is that you might have someone who is not behaving properly and in order to induce them to do better you give them a raise. That may induce temporary improvement however this person later falls back into their old behavior and things are no better than they were before.

Now there is a bigger strain on the organization because you are paying them more. Then other people find out you have raised their wages and you have to raise their wages, too. Soon you are overpaying certain stakeholders in the organization and the whole organization, including other stakeholders, is suffering.

What started out as an action that was intended to improve a specific local situation ended up having a long term global effect that was quite negative. This is why it is important that you maintain consistent compensation principles in your organization and you can not allow certain stakeholders, be they customers, suppliers or employees, to blackmail you into doing something that is going to have a long-term global negative effect. Another example is that you have a customer who says, I will only buy from you if you give me a discount. In order to get the sale today you give the discount to the customer. Often it turns out that you do not get their business in the long run anyway because they can always find someone who will ultimately be less expensive or will give them some kind of an advantage.

In the meantime your other customers find out about it and you now have to give them discounts to keep their business. Before long you experience the effect of lowering your prices.

One of the principles we have always maintained in our companies is that we treat all of our customers exactly the same and we never offer anyone a special discount that we would not give to all of our other customers. We also assume that our other customers always know what we are doing so that we do not have to worry about what they may discover later.

Lying comes in a similar situation. If you tell a lie to improve a situation today at the local level. The lie spreads and gets out of control, creating tremendous problems later on.

One of the Laws is that you can make things better in the short run in a way that will cause them to be worse in the long run.



4. The easy way out usually leads back in.

The easy solution to a problem usually does not actually solve the underlying problem.



5. The cure can be worse than the disease.

There are many symptoms you may have in an organization. You might do something to cure them that may seem to help the symptom, but in the long run the organization is hurt by the action. The organization then ends up suffering.

Addictive drugs tend to be like this. You may take a drug because it temporarily makes you feel better, but then as you continue to do so all of a sudden you are addicted and begin to experience side effects. Most likely you have to take increasingly larger amounts of the drug to get the same effect from it.

I got caught in that myself back in the late 60s and early 70s with alcohol. I started out drinking socially and then I began using alcohol as a tranquilizer. Two things happened. One, I had to use more and more of it to achieve the same tranquilizing effect. Two, I became essentially addicted to it. If I didnt take it, then I became even more nervous.

When I finally realized that I was into this spiral and that I was having to drink more and more of the alcohol and it was less and less effective besides having negative side effects I finally had to quit. To quit was difficult, but it was necessary to save myself.

If you have ongoing bad habits, sometimes you simply have to pay the price to change them. It has been my experience that you can not change habits gradually, but usually you must change them dramatically and suddenly. And, it is not painless.



6. Faster is slower.

This Law tells us that very often when you are working harder and harder and doing things faster and faster you are actually slowing down the entire organization. Again it comes back to not taking a systemic approach.

Senge does a Case Study on Peoples Express. It is an example in which an organization started growing too fast and because of that it suffered in other areas. Ultimately the entire organization failed.

It is almost like wanting to win a mile race, then not wanting to sprint the first 100 yards. You may get a temporary lead and you may feel good during that first 100 yards, but then you will run out of gas and all of a sudden your system reacts negatively. Everyone else that was pacing themselves suddenly goes blowing by you. You end up finishing last or you may not even finish at all.

Pacing and understanding natural speed is important. Organizations that artificially set growth targets for themselves based on financial considerations are a good example of companies that grow too rapidly and fail.

One of the reasons that Hane Training has grown at the rate it has grown is because it takes a certain length of time to develop new classes, train new instructors, and to allow financial prudence in all of this. That is an internal limiting of growth.

Processes and systems are meant to grow at certain natural rates depending on what they are. Even Walmart, one of the most famous growth situations of all time, only increased the growth rate of their stores at 5% per year.

You wouldnt think that 5% per year growth rate in the number of stores would have created a Walmart chain that is as dominant as it is today, but 5% is a substantial growth rate. Managing growth at a much higher rate than that is very difficult once a system reaches a certain size.

What Walmart did is very, very clever. By improving the quality of the organization they also grew their sales per square foot at the rate of 5% per year. Once again that was almost a maximum rate. When you combine those two growth rates, the number of stores and the sales per square foot, there was a synergistic effect and the total growth rate was not 5% plus 5%, but it was actually 56 1/% total.

That has been the actual growth rate of Walmart over the years. It may that may not sound so significant, but if you consider that a $00 investment compounded for about 0 years at 56% would be over two million dollars, then it is pretty effective and impressive. The main thing is that an organization needs to grow at the right rate.



7. Cause and effect are not closely related in time and space.

This is directly Principle Three. Things are interconnected in known and unknown ways.

The facts are that the interconnections are not always obvious and they are not always known. They may not be close in either time or in space. The delays and separations in time and space are what cause tremendous problems in analyzing systems.

If you do something today and the effect is not known for twelve months then chances are when the effect is finally realized you will not even realize what caused it. In fact you will probably blame some external cause rather than look back and ask, What did we do that caused this?

Once you adopt the systemic approach to looking at things then you begin seeing these connections. It is amazing to realize how you can you can see that things you are doing now are going to have major impacts later on.

Of course it is positive and negative. Some things you do today are going to have a positive impact later on and some will have a negative impact. Tampering is an example of something that will probably have a very negative impact in the long run. Something that has a positive impact is good quality training. If you engage in good quality training for your people and grow your people, it will pay off abundantly in time.

That is one of the characteristics that comes out of Principle Seven. If you improve peoples skills and abilities to perform along with their motivation, it will improve the processes they are engaged in, but there can be substantial time delays.



8. Small changes can produce big results.

This law is really a statement of QPI Principle Two. The areas of highest leverage are often the least obvious. In other words little things you do today, like little decisions that you may make, will have a long-term effect.

If you give a secretary a fifty cent raise, it will have a long-term effect on your company. Keep in mind that it is not just fifty cents, but it is fifty cents an hour for every hour worked from now on.

If you are in a balance mode, that means you are going to have to give all other secretaries are fifty cent raise. A fifty cent raise to a category of employees can literally mean hundreds of thousands or millions of dollars a year over the life of a large organization.

Senge points out the principle of leverage using a rudder. The direction of a very large ship may be controlled by a rudder. But, the rudder on a large ship is a large thing and there is a trim tab which is just a rudder on the rudder. By adjusting the small trim tab you can influence the direction of the rudder which in turn influences the direction of the ship. There are two substantial applications occurring.

The other consideration is that there are time lags. When you change the rudder the direction doesnt just suddenly change.

One of the most dangerous things about driving a turbo charged machine is the delay from the time it is given power until the power actually kicks in. If you press on the accelerator suddenly in a turbo charged machine, there will be a second to a three second delay before the power actually kicks in. If you hit the accelerator and start around a car and then it kicks in, it can very likely cause you to lose control of the car if you are not prepared for it.

In the case of a turbine charged such as on a jet airplane there may a 15 to 0 second delay. That means that if you get into trouble and suddenly need power, it will be too late when you hit the throttle. The plane will crash before the power kicks in.

That is why when commercial jets put the power up when they are landing and then use the air breaks to slow the plane down. It is actually like driving with your foot on the accelerator and the break at the same time. If they suddenly need power they just let up on the break, the power is already there, and they immediately go. That is why it is so awkward to land a turbine airplane.

Finding these high leverage opportunities within your organization is not a trivial thing, but it is something that enlightened managers should do. You are dealing with exponential growth and positive feedback mechanisms which is a form of exponential growth.



. You can have your cake and eat it too, but not at once.

The idea is that you can enjoy the fruit of your labors today, but you must also be planting seeds for the next harvest which may be way off into the future.

Covey talks about balancing production with productivity capacity, PC Balance. The organization can always bolster its quarterly earning statement or balance sheet by simply cutting back on certain expenditures today that are not going to have an immediate affect. This is done very often in MBO organizations.

When you set objectives in an artificial manner and expect your managers to meet those objectives, sometimes the only way they can do that is by doing things that give a short term gain at a long-term expense. In fact if you have a situation in which managers are only going to be there temporarily anyway, it is to their advantage to squeeze as much out of the can in the short term and forget about the long term.

Enlightened organizations do not manage that way. You simply do not reward your managers strictly on short term activities.

What you should reward them on is the total processes of the organization and how the organization is doing globally in a time sense. In other words, is the organization stronger today, taking into account your projections, than it was a year ago?

You can have an organization that is actually worse today than it was a year ago on a short term basis. But, in terms of the whole evaluation it is off.

An example of this is how QPI learning organizations try to structure their finances so that when they have a natural slow-down due to external factors like a recession or a shift in the marketplace, they reassign their internal resources and develop internal capability. This is done by the increased R & D effort not only in terms of products but in terms of services and internal structures. They can then be healthy and able to take advantage of it later on.

This is a case of taking a long systemic view of things and it is quite important. We have begun to do this in our QPI organizations. But, you certainly do not want to tear your organization down if you can avoid it just to get a short term advantage.

If your market has changed dramatically and permanently, or something external in the environment such as a government regulation or a political situation has changed, then you may have no choice than to radically transform the QPI organization. In extreme cases you may have to pare it down dramatically or you may even have to dissolve it. Even then you try to do that in a way that takes into account all of the stakeholders interests and sees to it that everyone to at least some extent shares the pain.



10. Dividing an elephant in half does not produce two small elephants.

You can not break a total system into local units, expect to manage them independently, and still have a good global result.

This happens all the time in large organizations and political organizations. They tend to try to partition them into local segments and to work on each of the locally and you end up with a terrible global problem.

For example, on the health scene you can not work on just making your heart healthy and ignore your kidneys, brain, or other vital organs. All vital organs are necessary to life. You can not treat one of them and then hurt the other.

One may say they can cure the liver, but the cure will destroy the kidneys. Well, that is not a solution at all. You may be able to make the liver healthy but if you destroy the kidneys, the global organization ie. the body is going to die.

You have to find solutions to problems that are able to leave the organization in tact and functioning.



11. There is no blame.

This law is very important both at the personal level as well as the organizational level.

We tend to blame outside circumstances for our problems. We blame the competitors, the government, the marketplace, etc. Systems thinking shows that this is not appropriate. The cure lies in your relationship within your own organization and that will determine your relationship with your environment.

In order to achieve this systemic approach and to satisfy these laws you have to shift the way you think about your organization. The bottom line is that you have to start analyzing as a total system and you have to start seeing feedback loops.

Positive feedback loops occur when things are feeding on themselves and growing rapidly. Negative feedback loops occur when you have something that is balancing and controlling. Senge calls them reinforcing and balancing feedback loops. You also have to be aware of the delays.

What Senge has done is that he has put together a system of archetypes that represent different organizational structures he has ran into. He goes through several of these in the book.

In Chapter Six Senge details two archetypes in particular. Throughout the rest of the book he describes more and gives references on others that might be seen.

He discusses the principle of leverage which has to do with reinforcing feedback and about limiting growth. He also talks about the art of seeing the forest and the trees. In other words, you have to see the global structures and at the same time be aware of what is going on at the local level.

In their famous Bottoms Up Marketing Book Ries and Trout say that you can not have marketing strategy without consideration of the available tactics. The greatest strategists are the ones who are also the greatest statisticians. In other words, it does not do any good to plan a strategy if you can not implement it with appropriate tactics.

You have to understand the total system. You also have to know what its components are or you will not be able to understand the total system.

I have believed in these concepts for a long time and have practiced them to some degree based upon my abilities and limitations. I think this is going to be a great opportunity for future growth within our QPI organizations.

We already look at exponential growth which is a form of leverage and we try to look for bottlenecks within the flow of our system. We try to see feedback loops that will catch us and we also try to anticipate the delays in the things we are doing. Senges book is an excellent aid in that thought process.

In Section Four, Senge talks describes various things involved in implementing team learning, openness, and localness. He also talks about a managers time which of course needs to be spent on important things, not necessarily the urgent things.

Senge is emphatic about a balance existing between your work and private life or as he calls it, between work and family. That is consistent with what we have discussed with Coveys book and also in the QPI System. MicroWorlds is an interesting concept whereby simulators are created usually with computers that simulate certain archetypes one would find within companies. You can then play what if games by playing with the simulator. I think this is a great opportunity for learning about how our organizations work.

One of the things I will be doing in the future is playing with the creation of simulators, whether I create them or others do, in an effort to better learn about different organizations. I think it is important issue in creativity.

Senge discusses the leaders new role which will be in the future basically studying the system and helping others to understand it. The leaders new role will also consist of doing systemic and strategic planning and leading by example. The great leaders of the future will be the ones who can see the total system, understand it, and help others to understand it. They will help to build the power within the organization to accomplish all of these things.

The leader will not be the great problem solver or the great salesman that he has been in the past. I still think that it is important for a leader to be involved with customers and selling because that helps in the strategic planning. But, the bottom line is the real leadership skills of the future are going to be system thinking, building shared vision, instituting team learning, helping people to achieve personal mastery, planning the system, understanding the dynamics, and being a steward that will be shepherding the various components of the system and integrating them.

Leadership qualities will be to have a clarity and persuasiveness of ideas, a depth of commitment, and an openness to continually learning more. The ability of people to be natural leaders will be a by-product of a lifetime of effort. That effort will be to develop conceptual and communication skills, to reflect on personal values, and to line personal behavior with values. Also, to learn how to listen and to appreciate others ideas. Other leadership qualities will be to master the Five Disciplines, to master the QPI Principles, and to master the PAEI Principles.



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