For the last several decades, organizations have dealt with economic shifts using change management. Based on the new science, there are two major flaws with this approach. First, the word change implies an event with an ending. Second, it implies that change can be managed. In a world of economic volatility, this approach is no longer viable. The continuous climate of uncertainty and volatility demands another view, one that supports adaptability and resilience.

An adaptable organization is one that self-organizes. Most organizations appear to have order. But order is not the same as organization. Organization involves differentiation and specialization.¹

To understand the basic reasons for the resistance to evolve, it is instructive to trace the roots of our traditional business models. The organizational model that serves as the foundation for most companies has its origins in Newtonian physics, which states that all “individual or system behavior is knowable, predictable, and controllable.”² It operates like a machine “with each part acting on the other part with precise linear laws of cause and effect.”³ This structure brings with it many aspects of mechanistic thinking, some of which are useful. But in a highly volatile economy, most aspects of this model are inefficient. For example, most companies have rigid organizational structures with centralized command and control. Their business intelligence systems are linear and unidirectional. They utilize rigorous analysis and measurement to limit variation and drive efficiency, and, in the event of an unpredicted outcome, they search for root causes. They tend to be highly mechanized companies with highly specialized workers who receive extensive instructions. This model is useful in stable environments, such as operating rooms or highly specialized factories, where systems are closed, change is slow, and variability is low.⁴

This approach is based primarily on the philosophy of Dr. W. Edwards Deming, pioneered in the 1930s and 1940s. However, he later abandoned the terminology of TQM “because he believed it had become a superficial label for tools and techniques. The real work, which he simply called the ‘transformation of the prevailing system of management,’ lay beyond the aims of managers seeking only short-term performance improvements. This transformation [. . .] required ‘profound knowledge’ largely untapped in contemporary institutions.”⁹

In a letter to Peter Senge, Dr. Deming (then almost 90) wrote:

As mentioned earlier, two fundamentally different organizational models are offered. The traditional model, based on Newtonian science, is linear, rational, and reductionist. It is based on the idea that organizations are made up of individual units that can be managed separately. Units such as people, products, tasks, and expenses can each be optimized to support the whole. Change is predictable and controllable with a final end state characterized by stability. According to Laszlo and Laugel in Large-Scale Organizational Change, “This notion is rooted in calculus with which Newton expressed his immutable laws of physics—smooth, continuous, differential equations that lead toward a fixed equilibrium.”¹²

The emergent model is on the opposite end of the spectrum. It sees organizations as emerging from complexity with their parts interconnected and relating as living systems. Behavior emerges and is experienced on an organizational level. It cannot be reduced to incremental units. Rather than implementing change, the emergent or living systems model is always adapting to stay in balance. Change, as defined by the old model, is continuous. The wisdom or intelligence of the organization does not just reside with leadership but is assumed to be distributed across a wide variety of people and systems.

By understanding the rules, principles, and behaviors of each model, organizations can select the best path based on the specific situation. For example, if a company needs to manufacture a product, a clear linear process with a predefined path and time frame is optimal. However, when pressures from outside or deep within an organization require adaptation, it is rarely predictable or controllable. The constant need to innovate, a pressure felt by many in the global economy, is a good example. The intelligence of the organization to meet this goal is far superior to that of the top management team.¹³

Exhibit 6.1 highlights the comparison between classical science and the new science.

The results of each of these paths are shown in Exhibit 6.2.

To illustrate how our traditional change methodologies and structures limit adaptability, Deehock, founder of Visa Corporation, asks us to imagine if traditional business rules and processes are applied to the neurons in the brain.

The steps originate in science but have a direct application in the corporate world. Their role and interrelation are critical to understanding adaptability in an emergent organization.

Convergence is seen across the globe as many corporations are partnering, forming alliances, merging, and diversifying into multiple lines of business. Global business standards and regulations are a result of this phenomenon.

What happens when a global company reaches its limit of complexity is unknown. Based on the new science, the next step in the sequence may be chaos.

The evolutionary trajectory can be plotted to show a graphical pattern providing a visual depiction of an attractor. There are several types of attractors. A system that evolves toward a fixed point over time is defined by stable-point attractors; a cyclically recurring state is characterized by period attractors; and an emergent system of order is defined by strange or chaotic attractors, as described in Chapter 2. As chaotic attractors are plotted, a shape emerges that has definite boundaries and patterns. The beautiful shapes of the plots prove that chaotic attractors are neither arbitrary nor disorderly.

Bifurcation occurs when a complex system changes trajectory. It is characterized by a change in pattern and a shift from one set of attractors to another. In the real world, complex systems evolve out of a specific initial state until a pattern emerges. If the evolution comes to rest, the process is ruled by static attractors. If the patterns are cyclical, the system is regulated by periodic attractors. If neither of these occurs, the system is controlled by strange or chaotic attractors.

Strange or chaotic attractors are pervasive in our global economy. The recent collapse of the world’s financial markets and its domino effect around the world demonstrates this pattern. Catastrophic bifurcations are occurring as many large financial institutions seek equilibrium amid the chaos.

Chaotic attractors do not operate with total randomness. Scientific analysis has unveiled a subtle order that emerges. Complex systems self-organize through a natural phenomenon known as cross-catalytic cycles. Following periods of instability and chaos, these cycles allow complex systems to return to dynamic stability where they can grow and prosper.

Vision-driven energy can create change that does not result from crisis, although chaos will still occur. Dissatisfaction with the status quo drives a vision, not crisis. Dissatisfaction is the result of examining the status quo with an open mind in relation to the environment and deciding that change is necessary. The vision provides a way of getting members of the organization focused on the future. A vision should inspire and motivate. It should entice members to move out of the current state and move toward the new state while honoring the values of the organization and its members.

When an organization is in chaos, leaders typically decide they know the answers and take it upon themselves to establish the necessary structures, processes, and rules without any input from the rest of the organization. While this approach is generally easier and faster, it is antithetical to systems thinking and may impede adaptability. It actually prevents the system from rising to a higher level by way of self-organization. Systems thinking requires that the all parts of the system be involved in any major decision-making process.

When chaos is overwhelming the system, it is necessary to provide boundaries or simple rules to contain the chaos. Doing so entails helping people stay focused on the core purpose of the organization and values. By allowing employees to experience the underlying strength of the organization, everyone in it is able to understand and internalize the core purpose. However, it is critical to create dialogue opportunities that encourage tough questions regarding the purpose and its impact. It is common to assume that everyone understands the purpose; thus, often this step is skipped. Understanding the core purpose is crucial in self-organizing systems; this purpose provides the goals around which self-organization occurs. Dialoguing regarding purpose aligns individuals and helps them to claim the purpose as their own.

Values are guiding principles for how to act. They define members’ behavior in reaching their goals. An example of a value is: “We will continue to learn and evolve by examining what we do and how we do it on an individual, group, and system level.” Values act as the strange attractor that pulls the system into order during times of turbulence. They provide guidelines for how to interact with one another, particularly during chaos. Without clear standards for how to work and interact, change can be too risky.

It is futile to have values that mean nothing and do not define how people actually behave. If people hear one value and see behavior that contradicts it, they will not feel safe. For example, if an organization values self-examination and criticism to aid learning and then uses blame and punishment when something goes wrong, the self-examination will cease. In addition to consistency around behavior, it is important for leaders to model the desired organizational behavior.

It is helpful to develop a tolerance for the discomfort associated with the change process. Doing so allows natural connections to develop. But when discomfort reaches high levels, some organizations hurry the process by forcing connections, coming to premature solutions, and controlling outcomes. This control impedes the formation of natural connections.

The edge of chaos is the best place to observe the patterns of order available, patterns that then may be applied to the current situation. Getting stuck in one particular state of order is not effective because, sooner or later, that state will become obsolete. It is crucial for leaders to remain open to new experiences that the environment contains and show a willingness to adapt and change based on the information received from the environment.

Emotional distance allows participants to observe with an open mind, thereby enhancing the likelihood that they will hear other points of view and see what is occurring in the group. This is the reason why it is often suggested that facilitators not participate in the content of a discussion. They are then more able to see what is going on and make helpful interventions, dipping in when necessary to keep the group on course or help members deal with something they are avoiding.

All of this information will help to identify clues regarding the health of the group, its relationships, and its interactions in the organization. If ineffective interactions are apparent, an intervention will help move the group to greater effectiveness. For example, if people are not listening, the facilitator can ask others to repeat what was just said. If goals are not clear, the facilitator can ask the group to clarify them. If the group is moving off task, the facilitator can ask if this is what the group should be doing. If someone looks angry or confused, the facilitator can ask him or her how they are doing. Another way of observing group effectiveness is to look for patterns in the organization, which is discussed in the next section.

Fractals can be seen within the social life of an organization. Each member is autonomous while it is part of the greater whole. The organization is healthiest when members’ patterns are replicated throughout the whole through effective communication.

Leaders are fractals of others in the organization. Their behavior is often mirrored throughout the organization. If the leader is collaborative, communicates openly, and attempts to learn from past mistakes, this behavior will carry through to the members.

An example of an organizational norm is the way a group deals with conflict. For example, some organizations suppress tension by pretending it is not there. Nonverbal cues, such as frowns, crossed arms, and downward glances, are ignored while the group goes on to the next agenda item. This norm keeps the group from examining what is occurring, from sharing thoughts, feelings, and disagreements. As a result, these unresolved feelings and disagreements go underground and sabotage the group later because they have not been resolved. Avoiding conflict cuts off important sources of information that could possibly improve the team, the product, and the way things are done.

Healthy norms are patterns in the organization that can:

Each of these norms facilitates the emergence of a truly adaptable organization. All of these norms must be aligned with and support the desired values to ensure that those values permeate the organization. These values are in harmony with the principles that support living systems. As they become institutionalized, healthy norms will come to characterize the organization.¹⁹

Conflict can be dealt with in a variety of ways. The use of mediation along with the practice of effective listening skills detailed in Chapter 3 is often successful. Organizations are discovering that by inviting individuals to work through their issues in new positive constructive ways that tap into the energy of the group, these techniques deepen the connections within and across their teams.

Eric Brunner, manager of Human Resources at Temple University, and his colleague, Marie Amey-Taylor, director of Temple’s Human Resources Department, use a variety of training techniques that provide content in visual, auditory, and kinesthetic formats. They also design their trainings to be active, using both inductive and deductive activities to transfer learning to the participants.

For over ten years, Brunner and Amey-Taylor have been practicing a combination of improvisational theater and sociodrama to demonstrate appropriate and inappropriate conflict resolution skills and ways to work through conflict and build trust. Sociodrama is a form of improvisational theater based on the “shared central needs and issues” of the audience or participant group and involves dramatic enactments of real-life situations or conflicts so that participants can observe and develop interpersonal skills. It is presented using trained actors, occasional volunteer audience members, and a highly trained facilitator. In practice, Brunner and Amey-Taylor found that participants became very engaged in the action, would dialogue with the characters in a scene, and might even jump in to take the place of actors to “correct” inappropriate or ineffective behaviors. This unique combination of improv and sociodrama is a powerful technique and has become a staple in their work with employees at all levels within a wide variety of organizations. In the next section, Brunner and Amey-Taylor share their experience with the process.

Because the group was all women, there was a content piece based on the work of Deborah Tannen, an expert in the different communication styles of men and women. Prior to the presentation of this content area, the theater troupe presented a scene designed to introduce the content and invite participants into the presentation. Because of the actors’ familiarity with the participant group and the program content, they were able to anticipate a scene that would have relevance for the group and introduce content. There were four actors on site for this session, two men and two women.

The scene started with actors playing the four people responsible for planning an event on a college campus. During the enactment, the male actors began acting in ways that were illustrative of how Tannen described men as communicators. And the women in the scene began acting in the ways that she described as typical of women. As the scene played out, the session participants were able to see the connection between cross-gender communication and the possible conflicts that could be generated. As the group saw themselves and others with whom they work in the characters, they started to react, mostly with laughter. A few exhibited a heightened desire to rectify the situation depicted by the actors. After watching the enactment for five minutes, the group participants were engaged and eager to explore the topic more fully. The use of theater also allowed the women to release some of the feelings they carried related to the topic and their own experiences. This purely experiential format for generating discussion and learning about conflict has proven to be an effective training technique and a tool for building trust and strong relationships.

In The Fifth Discipline, Peter Senge introduces five new component technologies, or disciplines, that “are gradually converging to innovate learning organizations.”²⁰ They are systems thinking, personal mastery, mental models, building shared vision, and team learning. According to Senge, organizations that practice these disciplines are adaptable, self-organizing, and have the potential to “continually enhance their capacity to realize their highest aspirations.”²¹

Traditional approaches tend to view each part in isolation, often never getting to some of the deepest issues. Senge defines systems thinking as “a conceptual framework, a body of knowledge and tools that has been developed over the past fifty years, to make the full patterns clearer, and to help us see how to change them effectively.”²²

Unfortunately, this is where many organizations fall short, leading to vast untapped potential. Most people enter business full of optimism and energy. But after a number of years, they become disenchanted and just put in their time until retirement with minimum effort. Therefore, it is critical for management to hire and inspire toward the goal of each member striving for personal mastery.

The first step in dealing with mental models is to look within oneself. Then the organization must create a safe place for members to participate in compassionate scrutiny and influence through the process of “inquiry and advocacy.”

Team learning has the power to enhance capabilities for innovation and creativity. But to maximize the benefits, the learning must be shared. Many teams of brilliant individuals have produced mediocre results due to lack of interaction and integration.

Practicing team learning is not about copying a model. Many new management innovations emerge as “best practices.” But most organizations adopt and implement the ideas in a piecemeal fashion. Toyota is a great example of a company that uses a systems approach. Many companies copy Toyota’s kanban system. But they fail to see how all the parts work together in a way that is unique for Toyota.

Based on that truth, “systems thinking is the fifth discipline.” Without a systemic approach, the coherence necessary to be adaptable is lost. “For example, vision without systems thinking ends up painting lovely pictures of the future with no deep understanding of the forces that must be mastered to move from here to there.”²⁹

Organizations that embrace systems thinking must also practice “the disciplines of building shared vision, mental models, team learning, and personal mastery to realize its potential.” Each of these disciplines plays a role in powering the system. Shared vision builds a group commitment to the future. Mental models provide the openness necessary to unveil the limitations present in the organization. Team learning improves the members’ skills to create and take action on an organizational level. And personal mastery encourages the self-reflection, healing, and personal growth necessary to fully participate in an adaptable organization.

Finally, learning organizations offer amazing potential for creating their future. Based on the new science, a learning organization is creating its future by shifting how individuals perceive themselves and their world.

A dynamic, emergent organization, however, has an organizational chart that is very nonlinear. It bears more resemblance to a network of relationships or groups of overlapping circles. This living-systems model enables an optimal flow of information leading to higher resiliency and innovation.

Chapter 7 offers some guidance for individuals taking on a leadership role in adaptable organizations.