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“Virtually every stumble by a major corporation has occurred in the face of rising product demand. While they stumbled, others thrived. What happened is quite simple and profound – they were out-thought. They were victims of only one thing — their own thought patterns.“ Stuart Wells
“All Organizations are perfectly designed to get the results they get.” Bill Veltrop
Almost every book I read on organization principles and practices seems to open with a characterization of the business environment as becoming increasingly demanding on all sides -- with customers, shareholders, employees, suppliers, partners and government wanting more and more. They also describe an increasingly dynamic, turbulent environment – with ongoing technological, social, financial, and now we are realizing, ecological upheavals. In addition, we could say that change itself has changed -- in terms of faster pace, greater degree, and greater novelty.
The number of huge companies that have disappeared from the Fortune 500 in the past few decades is astonishing, and the number that have recently needed government help to survive is even more astonishing to me.
Given the challenges organizations and nations face in the new global economy, and the challenges that we all face, like global warming, as stewards of this planet, it seems clear that the highest organization performance possible is needed. If these weren’t enough to deal with, I understand that widespread poverty, world hunger and disease are still with us, and now we have terrorism and the spreading capability of mass destruction to deal with as well.
Surviving, and certainly, thriving, in this environment will require new levels of organization agility and innovation. These, in turn, will require people with autonomy, who can respond quickly, intelligently, creatively and purposefully (in the best interests of the whole), align with others and act in unison. People like this need what is called an internal locus of control or self-control -- they are proactive, independent, unique and committed (versus passive, dependent and conforming). They can self-organize around business needs as soon as the needs emerge.
Self-organizing systems require people who understand the business -- its core ideology, its goals and strategy, its competitive position and business situation, its value chain, their place in it. They also need people who can address novel situations with disciplined thinking, and can, through the use of disciplined interaction processes, join with others who have different perspectives, align thinking and act in unified ways.
Novel challenges and aspirations require continuous individual and organizational learning, or the development of individual and organizational capability. So, ideally, all social processes should be designed with the end of learning in mind. For example, every meeting should be designed to result in task accomplishment, capability development and strengthened relationships. Every task and every plan should have feedback mechanisms for assessing progress and testing basic premises for adaptation. Learning and innovation should be part of the job, every job, while doing the job. In addition, time at work should be dedicated to learning and innovation, away from the job, in independent study, team meetings, task forces, entity governance groups and the like. Some ultra-high performance organizations allocate about 10% of people’s time to this kind of off-the-job learning.
Entities made up of people like this, in my experience, are found in, and only in, something called a Thinking Organization. The vast majority of organizations that I am aware of do not have many, if any, of these characteristics. They are based on, and stuck in old paradigms of command and control and behavior management. They are, basically continuing to do the same things and expecting different results, -- attempting to squeeze diminishing returns out of the same old strategies. The few great and lasting organizations have paved the way for us, and have put in place many of these characteristics, but they too, need to continue to evolve or they will, sooner or later, find themselves to be obsolete.
What is a Thinking Organization?
Definition and Distinctive Features
Like other organizations, a Thinking Organization is a complex living system -- an indivisible whole made up of interdependent parts, whose performance depends on the interaction of its parts, and whose viability depends on a process of mutual nourishment with all its stakeholders. What is distinctive about a Thinking Organization is that it has evolved to the most advanced level of design, and highest level of performance, primarily as a result of developing higher order thinking and interaction capabilities in its members.
Higher Order Thinking Capability in Members
In a Thinking Organization, the thinking capabilities of all members are highly developed -- in applying critical, creative, logical, systemic, strategic, conscious thinking processes to business issues and opportunities. Guided by common disciplines such as those for meeting, planning, role clarification, problem-solving, reconciling differences, purposing, visioning, engaging, enrolling and aligning thinking, the members are able to rapidly draw on the collective intelligence and unified effort of the whole. As a result, high quality thinking drives increasingly effective actions, which drive competitive advantage and market-leading results. (See http://sites.google.com/site/yostassociates/self-assessment-tools for the Survey on Higher Order Thinking Processes for further clarification/definition of thinking distinctions.)
Highest Levels of Organization Evolution and Performance
With these member thinking capabilities, Thinking Organizations have been able to move beyond the designs and capabilities of the great and lasting organizations, identified in Collins’ books, Good to Great and Built to Last. The great and lasing organizations have evolved to the High Performance level of evolution, and Thinking Organizations are found at the next two levels, the Universal Principle and Regenerative levels. These levels of organization design enable them to perform at the level of an Ultra-High Performance Organization. (See sites.google.com/site/yostassociates/self-assessment-tools for the Levels of Organization Evolution scale, and Figure 2 at the end of this article for a comparison of High Performance and Ultra-High Performance Organizations.)
What are the design elements of a Thinking Organization?
Unique Governing Ideas and Management By Principle
The governing ideas that are unique to a Thinking Organization include Beliefs and Values that emphasize what people can be and do, given the opportunity, and the central role that thinking plays in organization success. For example, there is the core belief that the typical employee is not only responsible and dependable, but can be a proactive, creative, principled businessperson, and a driver of innovation and change. Another belief would be that continuous improvement depends on the continuous development of better ways to think about and do work, and is best achieved through the widest possible involvement in the creative search for better ways to think about and do work. Core values would include excellence, stewardship, wholeness, transcending the limits of the past and of self-interest, and of ingenuity and innovation.
These Beliefs and Values are blended into guiding Principles that are the standards of excellence within which people have the freedom to act. These Principles become operational in the approach to work called Management by Principle. In this approach, everyone’s actions are guided by standards established for everything important, which are written at a high level, in abstract terms that enable discretion in action (as long as it meets or exceeds the standard) and bring out the best in everyone. An example would be: “We will ensure continuous development of, and full utilization of people’s capability.” (See Figure 1 below for a scale distinguishing Management by Principle from the Management by Personality approach found in most organizations.)
Empowering Infrastructure
Thinking organizations have developed social infrastructure (social processes, systems and structures) that enable the organization to act as a unified whole, stretch its creative potential, improve its competitive position and reach its vision of the ideal. For example, their processes are designed to maximize the capability, will and energy of people. Their systems are designed to be simple, flexible vehicles making key variables in long-term revenue enhancement highly visible, and to empower everyone to act. Structures are designed to minimize levels and resources required, and provide flexibility, integrative decision-making and self-accountability. (See sites.google.com/site/yostassociates/self-assessment-tools for the survey on Organization Infrastructure Design, for scales that are used to assess these properties for clarification/definition of these types of design characteristics.)
Holographic Organization Design
One reason Thinking Organizations have been able to evolve themselves to the highest levels, is that they have solved the problem of how to provide for local autonomy without risking dispersion of effort, and sub-optimizing the whole. They have done this by creating Holographic Organizations, in which each interdependent part reflects the essence of the whole. Every part of, and individual in, a Holographic Organization is aligned toward same comprehensive set of governing ideas (including Purpose, Vision, Beliefs, Values, Principles, Goals and Strategies). In addition, in this type of organization, the unique governing ideas of any part are nested within/consistent with those of the successively larger wholes of which they are a part. (See the graphic illustration at the beginning of this article for a depiction of this nesting, for achieving alignment and unified action, from the perspective of an organization member.)
What are Thinking Organizations Capable of?
Unique Organization Capabilities
When you have stretching, unifying governing ideas, empowering processes, systems and structures and capable people, the organization as a whole becomes capable of many very hard-to-duplicate things, found in the highest performing, most healthy, robust organizations. These could be described as Organizing, Functioning and Business Capability. These interdependent capabilities are made up of the six essential elements of organization health (individual capability, integration, order, freedom, improvement and invention). Here are some examples:
Organizing Capability – ability to:
- Continuously develop people’s capability at the needed rate
- Ensure accountability and responsiveness to the needs of the whole
- Align logical thought up, down and across the organization, and
generate the best collective intelligence
- Operate as a unified whole
- Operate with agility, respond to novel situations
- Continuously learn/increase organization capability by redesigning its essential elements
- Thrive on and drive change
Functioning Capability – ability to:
- Attain high levels of order and energy-effectiveness in operations through managing variances and continuous innovation and improvement
- Develop and achieve standards of conduct and self-management enabling the freedom to act
Business Capability – ability to:
- Develop and introduce new products and services at the rate needed for competitive advantage
- Continuously refine existing products and extract the potential from existing markets
What is the Work Experience in a Thinking Organization?
Life-Giving Forces
What emerges from the operation of these design elements is what some call Life-Giving Forces (otherwise known as climate, and as spirit) such as ownership, citizenship, partnership, freedom of expression, trust, respect, and risk-taking. These kinds of forces exist at the highest levels in Thinking Organizations.
Quality of Work Life
Last, but not least, when you have the characteristics described above, you will find a Quality of Work Life that appears to be off the charts as well. I once sponsored a company research project for a Ph.D. dissertation on how to define and measure QWL, which was found to be a complex outcome state depending on about 60 variables experienced in connection with work. My observation is that even the companies rated the best places to work tend to over-rely on variables in the financial and benefits/perks areas. Thinking Organizations provide for all the variables, including those that affect one’s ability to do the job (e.g., training, role clarity, feedback) that affect one’s motivation to do the job (e.g., the characteristics of the job itself like interest, challenge, variety, client relationships), and the characteristics that determine one’s mental state (e.g., interactions, relationships and leadership). As one member put it, “Your connection with the customer, focus on improving the rate of customer performance improvement, and freedom to innovate in doing that gives you an experience like running your own business.”
Which Organizations Have Become Thinking Organizations?
Examples of Thinking Organizations include businesses or groups of businesses in Procter & Gamble, Clorox, DuPont, Imperial Chemicals, Sherwin Williams, A.E. Staley, Consolidated Diesel and Tektronix. Some other companies that have adopted many of these design features, and have achieved dramatic performance improvements as a result, include Hewlett Packard, Exxon, Gulf, Digital Equipment (now HP), Pacific Bell (AT&T), Crown Zellerbach (GP) and Scott Paper.
Little has been written about these organizations and their remarkable accomplishments in creating high performance organizations, primarily because they have been considered to represent a competitive advantage, and their stories have been kept confidential. One interesting case that was described in the literature was the Kingsford Charcoal Division at Clorox.
The Kingsford Division was barely breaking even in what was seen to be a dying business, was just able to meet its production requirements with 15 plants, and had the worst safety record at Clorox. Within a few years, it was able to produce as much tonnage as before, but with just 5 plants, and it had the best safety record at Clorox. In addition, its quality had improved tenfold, it was introducing new and unique products at three times its previous rate, and with twice the rate of success. It had positioned its products as first or second in the industry in every category, and became Clorox’s second most profitable subsidiary. One other interesting statistic is that 34 Director-level managers participated in this turnaround. According to the EVP who led this effort, seven years later, seven of these managers were Presidents or CEOs of Fortune 500 companies.
For more information on the kind of culture found in, the kinds of change processes used in and the kinds of mental software or tools used in Thinking Organizations, see my articles, Your Organization’s Culture May Be Sabotaging Its Performance at www.examiner.com/examiner/x-20018-SF-Workplace-Issues-Examiner~y2009m9d4-Your-Organizations-Culture-may-be-Sabotaging-its-Performance, Change Management May Be Hazardous to Your Health at www.examiner.com/examiner/x-20018-SF-Workplace-Issues-Examiner~y2009m9d4-Change-Management-can-be-hazardous-to-your-organizations-health, and Your Organization’s Mental Software May Be Obsolete at www.examiner.com/examiner/x-20018-SF-Workplace-Issues-Examiner~y2009m8d20-Your-Organizations-Mental-Software-May-Be-Obsolete.
Figure 2
Characteristics of High and Ultra-High Performance Organizations
I. High Performance Organizations
According to the research done to write the books Built to Last and Good to Great, the following are characteristics of Great and Lasting Organizations, or High Performance Organizations:
1. They have a clearly articulated Core Ideology, made up of:
· an Enduring Purpose
· a Vision of a desired future state
· Core Values
2. They focus on Preserving the Core, yet have a Passion for Change/Stimulating Progress.
3. They Preserve the Core by:
· pursuing ends above and beyond profit
· having a homegrown management team
· having a cult-like culture.
4. They Stimulate Progress by:
· setting Big, Hairy, Audacious Goals
· trying a lot of stuff, and keeping what works
· living by the standard, “Good enough never is”
5. In the process, they invest in building a lasting organization, versus relying on a charismatic leader, or a great product idea.
6. They have Disciplined People engaging in Disciplined Thought, taking Disciplined Action.
7. Disciplined People
· They have “Level 5 Leaders” (more like Lincoln and Socrates than Patton or Caesar) who display personal humility and professional will -- for the good of the whole, and are focused on building and contributing to the organization versus fame, fortune and power
· They seek out the right people – people who are self-motivated, self-disciplined and are driven by greatness
8. Disciplined Thought
· They maintain the conviction that they will can and will prevail in the end, no matter what it takes
· They confront the brutal facts of reality
They create a climate where the truth is heard
They lead with questions, not answers (Socratic leadership)
Engage in dialogue and debate, not coercion (have healthy conflict, heated discussions)
Conduct autopsies without blame
Build “red flag” mechanisms – that highlight information so it can’t be ignored
9. Disciplined Action
· They maintain a culture of (self-) discipline and an ethic of entrepreneurship
With these, there is no need for hierarchical and bureaucratic control
· There is freedom to act within a framework of clear purpose/identity and principle/standards of excellence
· They are relentless in sustaining a direction
· They maintain strong relationships and mutual respect
· They are rigorous, not ruthless (e.g., they don’t rely on restructuring and layoffs
II. Ultra-High Performance Organizations
Ultra-High Performance Organizations build on the organization designs of the Great and Lasting Companies/High Performance Organizations by adopting the design features of organizations at the next higher levels of organization evolution:
1. Context Design/Context of Governing Ideas
- Shifting the paradigm on people from Theory Y to Theory Super-Y: seeing people as not only responsible and dependable, but as capable of understanding the complexity of the value chain, the business and business strategy, and of high levels of expertise, commitment, creativity and autonomy
- Shifting from Management by Personality to Management by Principle: operating by standards of excellence for everything important, that bring out the best in everyone
- From having an overarching set of governing ideas for the company, to having nested sets of governing ideas at every level, resulting in complete organizational alignment, and every piece of the organization a holographic image/reflecting the essence of the whole.
2. Infrastructure Design/Social Processes, Systems and Structures
- From command and control and behavior management to strategic self-management processes, systems and structures: e.g., self-managing teams
- From different techniques to common disciplines for recurring processes like planning, problem-solving, role clarification, meetings
- From periodic to continuous learning processes: e.g., 10% of people’s time
- From periodic to continuous innovation
- From innovation by a few specialists to innovation as part of everyone’s job
- From technician roles to business people roles: understanding of the value chain, the business, the business strategy
- Involvement of employees in the business: e.g., in planning, problem-solving, decision-making, innovation
- From periodic, incremental, to continuous, idealized/breakthrough improvement
- From SMART goal-setting to Breakthrough goal-setting
- From visions of leading an industry to visions of changing the world
3. Capability Development
- Emphasis on developing thinking capability - critical, creative, logical, systemic, strategic, composed thinking
- From people having an external locus of control to having an internal locus of control – from people being reactive, dependent and conforming to being proactive, independent and unique.
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