On the first day the consultant interviews the top management (the president and the three vice presidents for production, marketing, and sales) of the computer software company, which numbers 35 employees in all. The president is a generation older than the three vice presidents, and the company is a partnership between the president and the vice president for production. Together, the two of them developed the initial product. In the three years following its founding, the company has produced a large number of high-quality products, but they are not selling well. The consultant discovers numerous problems that have remained unresolved for a long time. Neither mission nor market is well defined. Pricing is a subject of acrimonious controversy. Employee morale is fragile because it is unclear whether competence or nepotism is the basis for rewards (one partner’s daughter is the VP for sales and the other’s best friend is an employee). Decisions are not driven by any internal sense of mission; they are made only when situations deteriorate into external emergencies.

The bottleneck in decision making appears to be the relationship between the two partners. They respect one another and attempt to share responsibility as though equals. But they repeatedly fall prey to differences in age, formal role, and managerial style. The president plays the role of optimistic, appreciative, absentminded father. The vice president plays the role of pessimistic, sharp, rebellious son.

Having interviewed the senior managers individually during the first six hours of his two-day visit, the consultant is next slated to meet with the two partners to set the agenda for the next day’s senior management retreat. But based on what he has heard, the consultant fears that the agenda-setting session and the retreat may themselves fall prey to the partners’ well-intentioned wrangling and indecisiveness. In his 10-minute walk around the outside of the building prior to the session, the consultant engages in the first-person action inquiry of intentionally bringing his attention first to his breathing and then, following that, to the vividness of the outside world, then to his feelings, and, only when he has established an ongoing circulation of attention, to what he now knows about the company.135

He decides that the partners’ pattern of behavior must change before any other productive decisions are likely, and that he should invent an initiative to help this begin to happen immediately, if possible. Quickly and impressionistically, he applies developmental theory to the company as a whole, to the individual partners, and to his two-day intervention to help him generate design ideas for his meeting with the partners, only moments away.

Applying the developmental theory to the company as a whole (refer to Tables 8-1 and 8-2), the consultant sees the organization as spread-eagled across the fluid, decentralized Investments and Experiments stages, still living off venture capital on the one hand, while on the other hand experimenting with a whole line of products. At the same time, the company is failing to bite the bullet and meet the limiting, centralizing, differentiating demands of the Incorporation stage—the demand, in short, for net revenues.

Applying the developmental theory to each of the partners as individuals, the consultant wonders whether the junior partner is an Opportunist, given his seeming self-centeredness and irritability, or an Expert, given his technical creativity in designing new software products and his doctoral degree. Recognizing that he is working with scant data, the consultant chooses to err on the upside. (Erring on the downside can insult the client and hurt the relationship, whereas the client will typically not even recognize an upside error, allowing the consultant to adjust with little loss.) Thus in this case, the consultant estimates that the vice president is in transition from the Expert to the Achiever stage of development, both itching for and resisting the true executive responsibility that a person at the Achiever relishes. Similarly, he wonders whether the president is a Diplomat, given his affable, seemingly conflict-avoiding style, or an Individualist, given his appreciation of individual differences and lack of need to hoard power. The consultant estimates that the president is in transition from the Achiever stage to the Strategist stage, ready to give up day-to-day executive responsibility in favor of an elder statesman role of mentoring his junior partner and godfathering the company’s research and development function (indeed, the president has spoken wistfully of his preference for the VP R&D position).136

Applying the developmental theory to his own two-day visit, the consultant interprets the initial interviews as the Conception stage of the intervention. In this light, the agenda-setting session with the two partners may represent the Investments stage. If so, the question is how to restructure his consulting style at this point from a more passive, receptive interviewing process to a more active, intervening process that models the new investment the partners must be willing to make in decisiveness if they are to achieve the rapid major changes necessary in the organization as a whole. This reasoning convinces the consultant that he must attempt to reframe the partners’ expectations and pattern of behavior from the outset of the agenda-setting session. In particular, he decides to recommend at the agenda-setting session that only the partners and the consultant participate in the retreat and that whatever decisions the partners reach the next day be put in writing with definite implementation dates. This smaller retreat makes crisp decision making more likely, especially with regard to restructuring senior management, which the consultant now views as important. He believes the vice president for sales should be demoted, as will be explained in the following. And he believes the two partners must redefine their relationships.

With regard to redefining the partners’ roles, the consultant believes the company needs a single decisive executive for the Incorporation stage. By chance, both partners have used the image of ballots to describe their relative power within the company in their initial interviews. The president, referring to their equal salaries and to his style of consulting his partner on all significant decisions, speaks of the partners as holding “ballots of the same size” in company decisions. The vice president sees the president as having the larger vote. The consultant now reasons that if the two switch their formal roles, at least as a serious role play for this one day, the president should still see their votes as equal, while the vice president should see his vote as having become larger. Thus, the twosome will become more powerful, but only if each accepts the developmental challenge inherent in the change. For the new roles will only work if they help each executive to move to a wider action-logic—the decisive presidential role helping the Expert move toward the Achiever action-logic.

More immediately, the mere fact of having the two officers reverse roles for the agenda-setting meeting and the day-long retreat should alter their usual dynamics and put them into a posture of simultaneous rehearsal and performance conducive to action inquiry. Of course, the consultant himself will be in a similar posture as he makes this unexpected suggestion.137

The consultant begins his feedback/agenda-setting session with the two partners by proposing that the vice president either resign or become president. This puts the vice president in the action role right away, rather than his usual role of reacting to the president. Although quiet, the president seems ready to play this game. On the other hand, true to his customary opposing role, the vice president objects to rehearsing as president. After considerable probing by the vice president to explore the consultant’s reasoning, the two senior officers agree to this serious game.

Now the vice president (in the role of the president) acts decisively rather than reacting combatively. He and the consultant propose various changes, with the president (in the subordinate role) making constructive suggestions and raising questions. The two partners reach written agreement on six major organizational changes the next day, including pricing and focusing on only one of their innovative products. The first of these changes is implemented at lunch that day. The vice president for sales, who is the president’s daughter, is invited to join them. The partners discuss the major changes they are considering, and ask her to accept a demotion, and work under the vice president of marketing. She agrees, expressing both her disappointment that she has not been able to help the company more and her relief that her duties will be more circumscribed. Showing that they have by no means altogether lost confidence in her, the partners ask her whether she is willing to take the lead that very afternoon in communicating the new reporting arrangement to the vice president of marketing, as well as informally communicating the other two decisions they have made that morning to other company members. The sales manager enthusiastically agrees.

The following Monday, the written agreement describing the six changes, signed by both partners, is in all company members’ mailboxes when they arrive. A company-wide meeting at the end of the following day visibly confirms the partners’ agreement and allows for questions and discussion of the implications. A month later, all the changes have been implemented. Two months later, the company completes, six months ahead of schedule, a first of its kind product for a definite and large market. The company fails to get a second round of venture financing, but sales revenues begin to exceed costs for the first time in the company’s history due to the new product.

In the meantime, the vice president decides not to become president. The president stipulates that henceforward he will draw a higher salary and exercise the managerial authority of CEO on a day-to-day basis. Another three months later, the vice presidential partner decides he wishes to become president after all and negotiates the change with the other partner.

A small, but rapidly growing company has recently become geographically dispersed because of two acquisitions of other small companies by its president. The president asks a consultant to design a two-day quarterly retreat for the 40 managers who constitute the top three layers of management of the new multisite organization. “The people equation is the most difficult, recurrent, and intractable issue,” says the president, “and we need our managers to have new core competencies that include recognizing and taking responsibility for the impact their actions have on one another, not only in the same office but at the other sites, and for the organizational values that their actions are creating.” The president proposes a lecture/discussion of the consultant’s theory of managerial and organizational development and some skill-building sessions.

The consultant doubts that just talking about transformation will make much difference. Instead, she interviews six members of the organization by phone and learns about some significant issues the president has not mentioned, probably because he’s not aware of how much they affect others. For example, one of the two new acquisitions is a predominantly minority group, and it’s currently more isolated from the other two subgroups than they are from one another. Secondly, the other managers are very uncertain whether they can trust the CEO who’s physically imposing and quite gruff. The consultant returns to the president with a plan for the two days that interweaves managerial and organizational learning in ways that, if successful, will create strong ongoing relationships across the newly merged organizations rather than just talking about transformation. Instead of pure skill-building sessions, the consultant proposes (and the president agrees after some concern about the risks) that the staff meet in four cross-functional/cross-locational groups of ten to develop new ways of organizing in the four areas that the interviews have indicated are of greatest concern: (1) budget development, (2) recruiting and training, (3) internal communications, and (4) meeting management. Senior management is asked to be prepared to make binding decisions with regard to the proposals at the end of the retreat (and such decisions are, in fact, made at the actual retreat).

Each of the groups of ten is to be managed through five leadership roles, and each leadership role will be held by two members. Four of the leadership roles are “Meeting Leader,” “Decision Clarifier and Codifier,” “Process Facilitator,” and “Clown.” (The “Clown”’s express function is to make “outside the box” comments, use humor, and turn suggestions inside-out in order to see whether they are thereby improved). Members are to be assigned roles that their fellow group members judge are most developmentally provocative for them. For example, at the retreat, the president later finds himself assigned a “Clown” role, and plays it so well that several extravagant stories about his performance quickly make the rounds!) The fifth leadership role is the “Expert and Follow-Through” leadership role. The two persons with the most influence over the ultimate implementation of any changes in that area play this role.141

Without reproducing here any of the detailed supports provided, the schedule in outline calls for an initial presentation/discussion, led by the consultant, that connects the managerial and organizational development theory presented in this book to the history and dilemmas of the organization. The consultant suggests that the three independent sites have each been operating at the Incorporation action-logic, and that the new multi-site company will require a frame change to the Experiments action-logic with cross-site decision-making teams on major issues and a lot of experimenting on everyone’s part, such as this retreat as a whole involves.

Next, the conference splits into the four topic areas. In each case, one subgroup of five is to develop a set of proposals in one hour, while the other subgroup of five observes their role-mates and gives five minutes of feedback at the end of the first half hour and again at the end of the hour. After a short break, the observers and the actors switch roles, with the same feedback arrangements, and the new actors come up with a different set of proposals for the same concern (e.g., budget development). After another short break, the entire group of ten develops an agreed-upon proposal. These organizing processes provide individual managers with an unusual amount of immediate feedback about their leadership choices, while at the same time increasing the likelihood that divergent views on the organizational issues are developed, considered seriously, and resolved.

The next morning, each of the four groups makes 10-minute presentations to the other 30 managers, followed by 5 minutes of discussion and concluded with written feedback from all 30. The groups are given half an hour to digest the feedback they have received. Then the entire group reconvenes for 2-minute comments by their (senior management) “Follow-Through” leaders on how their proposals have been influenced by the feedback and what they are committing to do as of the next day in the office. The consultant next leads a discussion debriefing the entire exercise and then leaves the room while the management group develops feedback for her.142

At the end of the actual meeting, the feedback to the consultant includes suggestions such as “we needed more leadership for the group assignments at outset,” as well as positive comments such as “great to see branch participation without corporate interference,” “meetings in this organization will never be the same again,” and “the progression of program was great and the lack of structure strengthened learning.” On a scale of 1 to 7 (where 1 means “Time wasted,” 4 means “As good as an average quarterly retreat,” and 7 means “Best quarterly retreat ever”), the 40 participants rate the consultant and the retreat 6.5 on average. Major changes in all four areas of concern follow.

Eagle Energy has become quite complex in terms of legal structure during its Experiments stage, in an effort to maximize the entrepreneurial freedom and initiative of every member of its senior management. As a result, the corporate structure shows a not-for-profit parent company and an umbrella for-profit subsidiary containing seven subsidiary companies. Each of the seven vice presidents of the for-profit company serves as president of one of the subsidiary companies. Each subsidiary president has developed his own profit-sharing formula with the umbrella company, based on whatever chips he has to work with and hard bargaining. Each such bargain is viewed as relatively illegitimate by other members of the senior management “team.” The vice president and chief financial officer of the umbrella for-profit company is the only woman among the ten senior managers, the only person who is widely trusted, and the only person who is not president of a separate entity.143

This jerry-built structure reinforcing cowboy opportunism rather than developing any coordination or team spirit is outflanked. In a desperation move, the president of the umbrella for-profit negotiates the 50 percent sale of the whole company in order to raise new and absolutely necessary capital. The new 50 percent partners agree to grant the company operating freedom, but demand careful accounting of revenues and costs and a return on their investment proportionate to the net revenues of each subsidiary. This apparently minor demand, along with the new capital controlled by the president of the umbrella for-profit, gives him new forms of effective control over the presidents of the subsidiaries. But it simultaneously increases their distrust of him.

A consultant who works with the developmental theory presented in this book is hired to assist the senior team in a retreat that is explicitly intended to restructure the company internally to fit its new ownership status and capital structure. From the first luncheon with the entire senior management to determine whether every member can accept the consultant, the consultant is aware of the high level of tension and distrust. Exhibiting a macho hostile humor typical of the Opportunist action-logic, one member recommends that the consultant pay for the opportunity to work with the group, rather than being paid, since he has not worked in this industry before and will, therefore, be learning. The consultant earns a round of laughter by parrying in kind with the comment that he thought the mark of a good consultant was how much he can charge to learn. After a slight pause, he continues by saying nonchalantly that at least he’s learned how to talk to more than one person at a time without causing instant distrust—a trick which he understands most of them haven’t picked up yet. This generates another round of laughter, the president suggests this is good evidence of the consultant’s ability to hold his own in this crowd, and with a clinking of glasses, the consultant is hired.144

The consultant proposes that he begin with a round of one-on-one interviews, followed by feedback from him to each individual. At the retreat, each member of senior management will be asked to discuss the feedback he or she has received and to set two goals for personal behavior change, before restructuring of the organization is discussed.

The interviews with, and feedback to, each individual permit the consultant to develop some trust with each member. This approach simultaneously lets the vice presidents know how others view them and where there is collective agreement about the future of the organization, while simultaneously preventing any dysfunctional group dynamics to interfere. It is during these interviews that the consultant begins to see that the chief financial officer is the person with the best relationships in the group, the one who focuses most impartially on the welfare of the organization as a whole, and the one who seems most strategic overall.

During the feedback to individuals, the consultant explores how willing each member is to acknowledge others’ issues with him and to set significant personal change goals, which they will share with the group as a whole. He also explores how willing all are to cede some of their autonomy to a more centralized organizational structure, characteristic of the Systematic Productivity stage of organizing. In particular, the consultant probes members’ reactions to the suggestion that emerged from the initial interviews that the chief financial officer be promoted to executive vice president of the umbrella for-profit corporation. This suggestion is widely agreed to, either because persons genuinely trust her and respect her competence, or because they see her as a buffer between themselves and the president of the umbrella corporation. (The consultant chooses not to make explicit that the suggested promotion emerged through his listening rather than through what anyone said.)

During the first day, the retreat is highlighted by astonishingly revealing comments by each member, along with commitments to change aspects of behavior that others would never have predicted they would acknowledge, much less change. This openness only happens, however, after the consultant is initially challenged about why the group should start with “touchy-feely” behavioral issues before dealing with the “infinitely more important” structural and financial issues. The consultant responds that the group is, of course, free to redesign the retreat as it wishes and that he himself would not usually lead with such a personal activity, but that the trust in the group is so low that he is personally convinced that no lasting progress can be made on the objective issues without a new kind of spiritual investment by each member. This challenge and response seems to bring the stakes into focus for everyone.145

During the second day, the retreat is highlighted by a series of consensual agreements. The first is to promote the chief financial officer to executive vice president. The second is to centralize accounting and budgeting. The third, which provokes the longest argument, is to do away with the separate stationery for each subsidiary highlighting its president and to substitute a single version of corporate stationery that lists all the vice presidents on the team as, first, senior vice presidents of the umbrella for-profit and only secondly as presidents of their own subsidiaries.

It is difficult to stress strongly enough how essential the new executive vice president’s overall style and specific actions are to the success of this day and the later success of the reformed company. As soon as she receives her mandate from the group, at the outset of the day, she proposes the importance of centralizing accounting and finances. Because of her past record of trustworthiness, reasonableness, and competence, the group comes to agreement on this without undue difficulty. Then, when the stationery issue becomes divisive, she adroitly highlights what an important symbolic issue it is and says that she views the decision as a vote of confidence or no-confidence in her ability to make the newly centralized organization work.

The consultant continues in an occasional coaching relationship to the new executive vice president. Six months later, the consultant meets with her and the senior vice presidents for a one-day retreat. Three months after that, the senior vice president who had been least willing to accept the leadership of the executive vice president takes a position with another company. The executive vice president, in turn, takes over the presidency of his subsidiary as well as continuing to serve as executive vice president of the umbrella for-profit.

In 24 months, the organization has generated enough net revenues to be able to buy itself back from its 50 percent partners.