Discussion 1 Week One

Praise  from  Influential  Executives,     Thought  Leaders  and  Writers  for    

The  Living  Organization®     “The Living Organization® is blazing a trail to a new world. You will never again see your organization, or relate to your employees, customers, and investors in the same old way. Norman Wolfe’s insightful reframing of how business operates frees us from the shackles of the "great machine" and opens us to the possibility of realizing the fullest of our human potential, individually and collectively.”

Chip Conley, Executive Chairman, Joie de Vivre and author of "Peak: How Great Companies Get Their Mojo from Maslow"

“I’ve always believed that people are central to the success of any organization. Norman Wolfe gets that. In his new book The Living Organization®, he guides readers through the concept of organizations as living energy. People are energy, and The Living Organization® is created by people’s activities, relationships, and context regarding what they do and why they do it. This is an intriguing book.”

Ken Blanchard, coauthor of The One Minute Manager® and Lead with LUV

“For successful leaders who want to get even better this book is a must read. The Living Organization® is a powerful and penetrating exploration of what really creates great companies. It completely reframes how to understand your organization while also providing a simple and pragmatic approach to achieve your loftiest dreams.”

Marshall Goldsmith - million-selling author of the New York Times bestsellers, MOJO and

What Got You Here Won't Get You There “This is an inspiring reframing of how we understand business creates bottom- line result. I couldn't put it down. The Living Organization® reinforces so much of what I know to be true about the power of culture and inspiration to move organizations. Every leader will find dozens of powerful insights in this book to help engage their teams in new patterns of healthy growth and long- term success.”

Casey Sheehan, CEO, Patagonia

“Norman Wolfe so brilliantly reveals the magic needed to sustain today’s businesses – the true essence of the human spirit. The Living Organization® is a practical guide on what it takes to leverage that human spirit and build a sustainable, conscious and profitable organization.”

Kip Tindell, Chairman and CEO, The Container Store “At Trader Joe's, I worked with a great team to build a remarkable company with a deep sense of purpose and truly cared for all the stakeholders we served. I enjoyed success only through the painfully slow process of trial and error. The Living Organization® would have made my journey a lot easier, and quicker. Do yourself a favor and read this book now. It will transform the way you think about your organization, and your role as a leader!

Doug Rauch, Former President, Trader Joe's “Imagine a world in which soulful purpose is the guiding force in individual and organizational life. Norman Wolfe is a prophet of this new world. Filled with incisive observations and captivating stories from the front lines of commerce, The Living Organization® is a powerful manifesto for the new paradigm of conscious business.”

Michael J. Gelb, Author of How to Think Like Leonardo Da Vinci and BRAIN POWER: Improve Your Mind As You Age

“Norman Wolfe explores indisputable truths from a new perspective beyond business; we are all connected, it's all energy, love is just a particular frequency and positive relationship energy inside and outside the organization is the key to all successes. Simply contemplating Norman's process enhances awareness and one's ability to pay attention to what really matters, a purposeful bottom line. I am convinced that there is a relationship between meaning and purpose, happiness and performance.”

Don Piper, Entrepreneurship Discipline Lead, Bainbridge Graduate Institute “The Living Organization® will transform the way business leaders understand and manage their organizations. With keen insights, Norman Wolfe takes us on a journey in creating an organization that is alive with energy and passion, and adaptability and innovations in response to a dynamically changing environment.”

Sam Yau, Former CEO, National Education Corporation, Director of 2 public companies & Chairman, The Esalen Inst.

“In today’s global business world the traditional business models which rely largely on left brain quantitative thinking and actions, while still necessary are no longer sufficient. The Living organization insightfully provides many of the missing pieces. With clarity borne from years of real life experiences, Norman Wolfe reframes and broadens our understanding of how organizations can create better results. Every CEO, board member and senior executive will benefit from the practical guidance this book provides.”

John Rehfeld, former GM/ CEO of Toshiba America, Seiko Instruments and Proxima corporation, currently a director of two public

companies, Executive MBA professor at Pepperdine and USD, and author, Alchemy of a Leader

“Drawing on his deep and extensive experience building successful teams and organizations as a corporate manager and consultant, Norman Wolfe reveals the vibrant structure and magical process of The Living Organization® and provides a map for traversing the terrain to create an extraordinary business.”

Jeff Klein, author, Working for Good: Making a Difference While Making a Living

“Have you ever wondered why some groups seem so full of energy and vitality bubbling with enthusiasm, creating results while others barely progress even with substantial prompting and pushing? In "The Living Organization" we are granted access to that hidden dynamic that controls the energy--and results--of any group. In this new insightful book, Norman Wolfe reveals a model that strengthens our ability to harness the often unconscious energetics that determine outstanding results and greatness in a company. The practical tool this book offers will allow you to enlist your group's deeper energies to drive uncommon success.”

Rick Ferris, President Sequoia Realty Corp. “We have lived for too long believing that we have to check our emotional and spiritual self at the door when we enter the world of work. No More! Norman Wolfe will expand your current thinking and reveal the very act of creating financial success requires we bring our entire self into our work. In this groundbreaking book he provides practical tools to combine the forces of our Activity, Relationship and Context to create results beyond what we thought possible.”

Tom Zender, Former CEO, Unity Worldwide, Author of “God Goes to Work”, Evolutionary Leader, Corporate Executive

“In today's world it is critical that businesses all across our globe act and behave from an ethical stance. In this thought provoking and insightful book, Norman Wolfe teaches that as a living being, organizations are governed by the same forces that govern all living entities. Morals and ethics no longer are an afterthought, but are shown to be at the core of creating results. This is a must read guidebook for every leader doing business in the 21st Century.”

Russell Williams, CEO, Passkeys Foundation and The Ethical Edge

“To lead today requires leveraging the power of the whole - and that requires the use of multiple intelligences. Leaders must access and draw from the living energy of organizational systems. In The Living Organization®, Norman Wolfe offers the clarity and depth of insight that comes from experience. He teaches leaders how to develop and use their cognitive, emotional and spiritual intelligences to tap the organization's intelligence. This "intelligence of the collective" is what creates extraordinary success.”

Cindy Wigglesworth, President, Deep Change, Inc., Creator of the SQi Spiritual Intelligence assessment

“The Living Organization® offers an innovative and exciting new perspective on managing organizations. This book takes the purpose of the firm from a dry afterthought to the central management issue. Managers who take its message seriously will find themselves reframing their understandings of both their organizations and their roles for the better.”

Dr. Philip Bromiley, Dean's Professor of Strategic Management, Merage School of Business, University of California, Irvine

“The world is hungry for a new paradigm of business. We can see all around us that the old ways don’t work, but so many in leadership positions don’t know what to do or where to turn. The Living Organization® provides a model to work with, practical steps to implement, and inspiration to keep you going. Join the movement of conscious capitalists who are making a difference in the world. This book provides you the support and guidance you need.”

Judi Neal, Ph.D. Director, Tyson Center for Faith and Spirituality in the Workplace, Author of Edgewalkers: People and Organizations that Take

Risks, Build Bridges, and Break New Ground, and co-author with Alan Harpham of Spirituality and Project Management

THE

LIVING ORGANIZATION

TRANSFORMING BUSINESS TO CREATE EXTRAORDINARY RESULTS  

Book 1: Encounter

Norman Wolfe

ii

The Living Organization® Published by Quantum Leaders Publishing © 2011 Norman Wolfe All rights reserved First edition printed July 2011 All rights reserved. Except as permitted by applicable copyright laws, no part of this book may be reproduced, duplicated, sold or distributed in any form or by any means, either mechanical, by photocopy, electronic, or by computer, or stored in a database or retrieval system, without the express written permission of the publisher, except for brief quotations by reviewers. ISBN: 978-0-9835310-1-2 Printed in the United States of America This is a work of non-fiction. The ideas presented are those of the author alone. All references to possible income to be gained from the techniques discussed in this book relate to specific past examples and are not necessarily representative of any future results specific individuals may achieve.

Illustrations by Lauren Card Cover design by Michael Glock, PhD The Living Organization, ARC Framework, Strategic Compass, Soulful Purpose, Real Time Execution, and RTE-S are trademarks or registered trademarks of Quantum Leader, Inc. The Living Organization is available at a discount when purchased in quantity by corporations, associations and other organizations. For information, contact Quantum Leaders Publishing at 7 Shasta, Irvine, CA 92612

iii

The  Living  Organization®  Trilogy  

Book 1 – Encounter

Book 2 – The Journey

Book 3 – A New World

Dedication  

To Gregg Gallagher

His friendship and critical thinking helped midwife this work into life.

May he bring these same qualities to his Eternal Life.

iv

Acknowledgments  

How does one begin to acknowledge all the people who have

contributed to and supported my journey? There are those who have

directly contributed to the writing effort, there are those who have

contributed to the evolution of the models and methods presented in this

book, and there are those who provided loving support and

encouragement along the way.

This book, however, represents more than just the ideas, models, and

methods. It is a reflection of my personal journey with creating results,

both on an organizational basis and on a personal basis. My journey of

development as a person is deeply entwined with the book’s underlying

philosophy. It is with profound gratitude that I acknowledge all the

people who have contributed, consciously and unconsciously, directly and

indirectly, positively and negatively, to my life, my growth and my

development as a person.

I want to specifically acknowledge my three editors. Peter Gerraro was

my initial writing consultant who helped get the seeds of my ideas onto

paper. Through his guided interviewing he managed to convert my ideas

into written form and provide the initial structure to convert a concept

into a book. Paul Roberts, a master storyteller, challenged me each step of

the way until I understood the story I wanted to tell. He helped me

understand the fullness of the story and how it paralleled other great

trilogies. Lee Pound took what was already a good story and refined it. He

guided me to bring more of my life into the story, making it and the whole

book more fully alive.

v

This book is designed to address the needs of Leadership Teams

(Boards, CEOs and Executive teams) to overcome their challenges in

creating desired results. Many of the theories and methods come from my

work with the many clients I have been honored to serve. I want to serve

them better, to make them more effective, which drives me to deepen my

understanding of the dynamic forces that create or block their dreams.

This would not have been possible without the support of my many

clients who allowed me to test these ideas, concepts and methods. I want

to specifically acknowledge two of them.

I was first introduced to National Technical Systems in 1990 when I

met one of its founders and then CEO and Chairman, Dr. Jack Lin. Jack

understood the power of the unconscious forces that define success and

continuously explored how best to work with these forces. This led to a

culture that was open to exploring new and often non-traditional ways of

creating collective results. Bill McGinnis, who replaced Jack as CEO,

continued the exploration, opening himself and his executive team to

work with the energies of Context and Relationship. The lessons I learned

working with these two great CEOs and their teams greatly influenced

what is presented in the book.

From the time Jim Summers took over as President of SafeNet

Mykotronx division, he had a deep connection to the organization’s

Soulful Purpose™. It was this connection that has guided Jim to establish

the vision of what was possible for this organization. I have had the honor

of working with Jim and his team for over 8 years, taking the organization

through a number of growth transitions as it doubled its size. I am deeply

grateful for the opportunity to work with and learn how viewing an

organization as a living entity enhances its ability to continuously improve

and increases its ability to grow.

Because my life had been an exploration into improving myself to

improve my personal as well as business results, it has become a tapestry of

many roads exploring many disciplines. One particular path I have

traveled for the past 8 years is working with my teacher, guide, and

mentor Brugh Joy. I will be forever in his debt, and those who have

traveled the path of Joys Jubilation with me. This journey provided me an

understanding of and direct experience working with the deeper energies

of what many call a Divine Mystery.

vi

I want to also acknowledge the many consultants who have been part

of Quantum Leaders since its founding in 2002 and those friends who

were gracious enough to mentor and advise me on this journey. Each has

left their mark on The Living Organization® and me. I specifically

acknowledge three of them. Kevin McGourty was the first consultant to

join Quantum Leaders and showed me that others would be willing to

bring my vision to reality. Don Hicks has supported our efforts for over 5

years in defining what it takes to sell our services. This book is dedicated

to Gregg Gallagher who challenged my thinking every step of the way,

leading to a more robust and detailed product. Gregg passed on

unexpectedly and his presence and contributions are sorely missed. Of the

advisors I acknowledge Mike Kucha and David Kinnear, who brought

different perspectives and helped, refine the model.

Finally I want to acknowledge two people that are closest and most

dear to me. My daughter Lindsay taught me what it really means to be a

parent, a custodian of another living being’s spirit. She taught me how to

help prepare that being to give that spirit full expression. It is this

experience of guiding another being towards maturity that is the basis for

how to develop an organization to fully express its spirit.

My wife Jane has taught me most of all. Not only did I learn the

beauty of seeing the world through the eyes of an artist, I have also come

to understand and live life as an unfolding improvisational play. She

showed me the meaning and power of acceptance and gratitude. Her

ability to see me as what I can be, her support through all the challenges

that life can bring, and the love she openly and graciously shares, has

given me the strength and confidence to pursue my dreams.

And to all of you who have chosen to read this book – Thank You!

vii

Table  of  Contents  

Dedication iii

Acknowledgements iv

Foreword 1

Introduction 4

Chapter 1 - A Shock to Our System 11 A New Paradigm for Capitalism 14 The Forces of Creation 16 Evolve or Die 19

Chapter 2 - The Living Organization® - The Secret of Life 21

More than the Physical 23 The Magic of Living Organizations 24 More than a call for Social Good 25 Wisdom of manifestation 29

Chapter 3 - It’s all about Energy 31 Results are energies transformed 32 Forms of Energy 32 The patterns of our lives 34 People Are Energy Too 35 Choice lets energy flow 36 The Dance of energy 38 Energy patterns that create are alive 39 The Evolutionary Flow of Energy 41

Chapter 4 - The Energy of Business 45 The Flow 46 The Source of All Energy: Our People 50

viii

Chapter 5 - Profit: The Good, Bad and Ugly 54 The Need for Feedback 54 The Nature of Profit 56

Chapter 6 - The Rainbow Within 63 Activity - the Energy of Doing 64 Relationship - the Energy of Interactions 65

Chapter 7 - Synergy - The Multiplier Effect 68 Synergy Explained 71

Chapter 8 - Experience: The Driver of Perceived Value 76 Perception produces margin 79

Chapter 9 - Where the Magic Hides 81 Context - the Energy of Meaning and Purpose 81 The Soul of the Organization 84 Access the Wisdom 87 What gets measured gets improved 91 Explaining the Unexplainable 92 All Results Start In the Context Field 93 The Dance of Energy 94 It’s All a Story 96

Chapter 10 - The True Nature of Business 100 Business in 3-D 100 A Success Story 103 The Model Applied 103 Activity 105 Relationship 106 Context 107

Chapter 11 - Putting it all Together 110 A New field – Strategy Execution 111 Strategy Execution 3.0 112 Strategic Planning is Dead – Long Live Strategy Execution 117 Start with a Compass! 120 Soulful PurposeTM 121 The Mission 122 Future Vision 123 Core Values 124 Alignment is the key 125 The title, the lyrics and the music 128

Chapter 12 - Executing in Real Time 130 Real Time Execution System™ (RTE-S™) 130 It’s about time 131 Alignment 133

ix

Know your Place 135 What to do, what to do? 135 Get ready the future is coming 138 Incrementing or Innovating – It makes a difference 139 Who’s changing what 141 What’s your horizon? 142 Put your money where your mouth is 144 Who dreamed this up anyway? 145 What did you assume? 146 Lights, Cameras, Action 146 Well, how did you do? 147 Who’s leading the show? 150 Speaking of Boards 152 The Journey of Development 153

Chapter 13 - The Journey Continues 155

Appendix 159 Business as the Driving Force of Society 159 How Capitalism’s Reputation Changed 160 The Evolution of Business 162 The Limitations of Worldviews 162 The Organization as Machine 163 The Impact of World War II 165 Our Changing Worldview 166 The Emergence of the Humanistic View 168 Humanism Isn’t Enough 174 The Leadership Challenge 179

Book References 181

Endnotes 187

Index 190

About the Author 195

1

Foreword   By John Mackey, Co-CEO, Whole Foods Market

Do we need a new way to think about business, corporations, and

capitalism for the 21st Century? Do we need to create a new business

paradigm? Corporations are probably the most influential institutions in

the world today and yet many people do not believe that they can be

trusted. Instead corporations are widely perceived as greedy, selfish,

exploitative, uncaring – and interested only in maximizing profits. In the

early years of the 21st century, major ethical lapses on the part of big

business contributed to a growing distrust of business. Increasingly, many

people believe there must be something wrong with both corporations and

capitalism.

The problem does not lie in the system of capitalism but rather in the

theories we use to guide our decisions. Although economic theory has

evolved since Adam Smith wrote The Wealth of Nations in 1776, many

economists continue using industrial and machine metaphors to explain

how the economy works. According to this model, business operates like a

machine—business owners input various amounts of capital, labor, and

land at the start. Profits then spit out on the other side of the metaphorical

machine.

Today’s real challenge for the corporation and the economy overall, is

that most modern economists and business leaders’ thinking is still

grounded in a theoretical model that does not acknowledge the complex

interdependencies of all the various constituencies and all the dynamics

that impact success. The existing model simply fails to provide sufficient

guidance for success in the 21st Century.

2 The Living Organization  

For business to reach its fullest potential in the 21st Century, we need

a new business paradigm that moves beyond simplistic machine/industrial

models to one that embraces the complexity and interdependencies, in

which corporations exist today. Complexity and interdependency is our

reality and our economic and business theories need to evolve to reflect

this truth.

The Living Organization® is that evolutionary perspective. It presents

a fresh new way to understand what an organization is and how it

operates. It directs us to understand how organizations draw from

complexity and interdependence to develop, grow and evolve. We begin

to see businesses as living entities in relationship with all its stakeholders,

which is all part of an evolutionary journey for advancing society. This is

the same fascinating discovery I made over the last 30 years as CEO of

Whole Foods Market.

When Whole Foods Market’s co-founders created the company in

1980 we infused it with a few simple ideals and core values and then

created very simple business structures to help fulfill those ideals.

However, as the company grew a process of dynamic self-organization

took place to fulfill the original purpose. The business and even the

purpose evolved over time through the dynamic interaction of the various

interdependent stakeholders with each other and with the business itself.

This interactive relationship of an organization with all its stakeholders

(customers, employees, investors, suppliers, and the community) is what is

so richly expressed in The Living Organization®. It provides a deeper

understanding into why Whole Foods Market consistently created success

for all the stakeholders and why our purpose has become deeper, richer,

and more complex over the years.

Through the lens of The Living Organization®, we can see the

solutions to many of our challenges as a business and within society. A

business as a machine does not, and cannot, have any social consciousness

or social responsibility. A business viewed as a living entity is, like all

people within a society, a citizen with a social and moral responsibility to

both itself and society. A machine does not learn and adapt to its

environment, but adaptation is the very essence of all living entities.

Machines merely produce, they cannot innovate, while living entities can

actually dream of and create a healthier future.

Foreword 3

Every successful CEO and organization leader will find within the

pages of The Living Organization® the same secrets of success they have

learned over the course of their careers, only it will look very different. It

does not read like a traditional business book providing a rehashing of the

same old management theories. It does not reject the traditional theories;

rather it adds to and expands them. It provides a fresh new perspective

that can deepen our understanding of the things that successful CEOs

have stumbled on through trial and error.

Because it is a new paradigm that draws from many disciplines, it will

challenge us. It will challenge the way we think, it will challenge how we

interact with our employees, our suppliers, our customers, our investors

and our communities. It will challenge us to grow up, become more

conscious and like all living entities, evolve.

When we are small children we are egocentric, concerned only about

our own needs and desires. As we mature, we expand our consciousness

and grow beyond this egocentrism; we begin to care about others – our

families, friends, communities, and countries. Our capacity to love can

expand even further, to loving people from different races, religions, and

countries – potentially to unlimited love for all people and even for other

sentient creatures. This is the potential of human beings, expanding

consciousness and taking joy in the flourishing of people and other living

beings everywhere.

Living Organizations® also have the potential to evolve in

consciousness, and the collection of all businesses can evolve towards a

conscious capitalism. Let each organization leader, whether for-profit,

non-profit or government, learn the art of leading a Living Organization®;

of guiding its growth and development towards greater consciousness to

better serve its customers and in turn further the advancement of a

healthy society.

4

Introduction  

As a professional magician I am sworn, on the graves of Houdini,

Blackstone, and all the other great magicians, to never reveal the secrets

behind the magic. Today I am about to break that vow. I am going to

reveal the secret behind the magic. Not the magic behind creating the

illusion we see on the stage, but the magic behind creating the results we

get in business and in life.

Every CEO Executive, team leader and even every individual

contributor wants to create the results they set as their goals. This is

certainly true for me. This desire led me on a continual journey of

exploration and discovery to answer the questions, “How are results

created, what is the trick to improving my success rate, and why does the

same effort sometimes produce results and sometimes not?”

This journey has two parallel paths, my business career and my

personal growth and development. These two paths are not separate and

distinct paths but are an interwoven journey of reaching and seeking,

attempts and failures, and the eventual success that follows. Mostly it is a

journey of discovery, a journey that has revealed to me much about the

secrets that lie behind the results we create, of how and why we get the

results we get.

Two days stand out in my mind, two days that marked the beginning

of two distinct journeys. Two journeys that would over time merge into a

single journey.

March 4, 1969 was a beautiful sunny day in New York, the first day of

spring-like weather after a long cold winter. I was a senior at NYU and a

Introduction 5

group of us spent the day in Bear Mountain State Park enjoying the

coming of spring. It was also the beginning of Purim; the Jewish holiday

that celebrates the end of the dark of winter and the coming light of

spring.

I had spent the evening with a group of Jewish students who were

celebrating with music and songs that brought me back to my youth and

family gatherings.

When I returned to my room, I felt the sweetness of the day mixed

with longing for days past, the interplay of joy and sadness. My roommate

was there and as we talked he pulled out a book by Alan Watts. He read a

passage, “To know white you must know black, to know up, down must

exist.” In a flash I was transformed.

I didn’t know what an epiphany meant until years later but in that

moment I experienced what would certainly be an epiphany: a

spontaneous understanding, what some might call a spontaneous

awakening. In that moment my world flashed in front of me. People

formed a circle before my eyes and as each person’s face appeared a sense

of deep understanding and pure love filled me.

This deep loving feeling stayed with me for months and it seemed my

relationship with everything in life was vivid, peaceful and loving. I began

reading Alan Watts, Herman Hesse, Joseph Campbell and others. My

whole world began to re-form and I was filled with a purpose to journey

into a deeper understanding of life, a journey of spiritual discovery that to

this day is a significant part of my life.

I took this newfound awareness with me upon graduation as I

entered the world of work. I started my career as a system analyst for Pratt

& Whitney Aircraft designing applications and writing code for fuel cell

testing. It was a very different world from the open exploration into the

deeper mysteries that dominated my previous six months.

Where the one tapped into the mystical, curious, discovery side of me,

the world of computers engaged the logical, analytical rational parts of my

being. I found that the two worlds, while very distinct, seemed to draw on

each other. My analytical side made sense of the mystical discoveries I

would have and the mystical creative side brought innovative approaches

to the challenges of logic and program design.

6 The Living Organization  

I entered on the second path of my journey on July 19, 1976. I

remember this day so vividly because like my day of awakening, the events

of that day marked what might be called a second awakening, but of a

different kind.

My wife and I just returned from two weeks visiting the UK during

the bi-centennial anniversary of the United States. We were visiting the

very place from which our country was born, born not out of intention but

out of conflict. We were visiting the culture that rejected our forefathers

and now embraced us as friends.

I was returning to work this day, renewed, rejuvenated and filled

with a new sense of beginning. I was just completing my first year as

manager of a Service District for Hewlett Packard. It was not an easy year

for me, struggling with the role of management and the challenges it

brought forth. I knew I had a lot to learn, but was eager to jump in and

conquer this like I did everything else in my life.

The first person I saw was my boss, who called me into his office to

give me my performance review. As I sat and read his comments and his

ranking I was devastated. It seems in his opinion I did not do one thing

right. The ratings were unacceptable in every category. I was a complete

and utter failure.

How could this be? I knew I had some struggles, I knew I had a lot to

learn, but completely unacceptable?

I began questioning whether I was really cut out for management. My

whole career I had always received outstanding reviews. It was the

innovative work I did at Pratt & Whitney using HP’s computers that

landed me the job as Systems Engineer for HP in Southern California.

The outstanding work I was doing as System Engineer, with both the sales

people and customers, caused my current boss to offer me the position of

District Service Manager.

I was excited when I was given the opportunity to move into

management for I was convinced I could really help the people who

worked for me to be as successful in their careers as I was. Still filled with

the earlier discoveries of how life worked, of love and caring for others, I

knew I could help others become successful.

But now after this review I wasn’t sure. Perhaps I should return to the

world of computers where I was safe and successful. Computers, after all,

Introduction 7

were logical, results definable and predictable. Not so with people. And

though I was very successful in dealing with customers there seemed to be

something more when it came to leading an organization.

But a number of other managers, my peers and superiors, individuals

who would become mentors and coaches, saw something in me I did not

yet see. They encouraged me to stick with management believing I had all

the attributes to become a great leader. It was good they believed in me

for at that time I had great doubts. But I chose to heed their advice and I

am really glad I did.

For this started my second journey, the one of discovering what it

took to successfully lead an organization. Out of conflict was born a new

determination, a determination to discover the secrets of business and

organization success.

And so I set out to become an expert at managing organizations and

the people who comprised them. And like every manager, I hungered for

one thing – to always achieve the goals I set for my organization. Many of

these goals were mine, a sense of purpose I wanted my organizations to

achieve, which of course were merged with goals given me by my boss, or

later when I was COO or CEO, the ones established by the boards of

directors or investors. Regardless of who established the goals, all that

mattered to me was exceeding them.

I have spent the last 40 years of my life traveling these two paths. The

first is a spiritual path delving ever deeper into the mysteries of why I do

what I do, how do I create what I want and why life unfolds the way it

does. The second path is that of achieving business results, growth, profits,

and improved performance. These two paths continually intersect, cross

over, circle around and intermingle with each other. There always seemed

to be parallels I could draw on from one path that provided insights into

the challenges of the other.

It wasn’t until the early part of this century, as I was working on

defining the purpose and mission of Quantum Leaders that I began to get

a sense that what for many years seemed to me to be two very different

paths were in fact the same path. They were both complementary sides of

the same coin, the same journey; a journey to find the secret formula for

success in all endeavors of life – a philosopher’s stone that will guarantee

the success of any organization and the people within it.

8 The Living Organization  

This journey led to the development of The Living Organization®

model – the subject of this book.

I have written this book because I sense there is a major change

happening in the ranks of corporate leadership, a generational shift in the

ranks of CEOs and other corporate level executives. It is a shift from those

who were raised during World War II and moved into leadership roles

during the 70s and 80s, to those who were raised in the post Vietnam era

and came into the leadership roles in the 90s and turn of the century.

The previous generation relied on military, hierarchical organization,

command and control leadership. The new generation was schooled in

the power of teams, global collaboration and empowerment of employees.

But the old paradigm still has a hold on the system and prevents these

ideas from taking hold.

This generational shift in leadership coincides with the recognition

that what worked in the past is not working any more. “What got us here

won’t get us there,” the title of Marshal Goldsmith’s latest book declares.

There is a breakdown of our existing business models and the new leaders

sense it. If the recent economic crisis has taught us anything, it is that the

future will not look like the past. The framework, the very paradigm we

have used to guide our efforts in creating results no longer produces the

same level of results. Some even question whether it works at all. The

magic has left us, or so it seems. In reality the magic is still there. It is

simply that we never understood the whole picture of how we did what we

did. We simply lack the insight, the details of how the magic of creating

results actually works.

This book is for those new leaders who are seeking to better

understand how to navigate the multiplicity of dynamics impacting their

organizations. It presents the foundation of a new business model,

keeping what is valid from its predecessor models, adding new concepts to

create a consolidated framework that brings it all together. This book

provides today’s leaders a new, more detailed map to navigate the

complex business world of this century.

We start by explaining the need for a new business model, revealing

the limitations of the existing paradigm, while also recognizing what

elements are still important going forward. We then lay the foundation of

the new paradigm, The Living Organization® model. By shifting the lens

Introduction 9

from the organization as a machine of production to a living creator of

results we can begin to get a glimpse of how this will reveal many

heretofore secrets of success, Chapters 1 & 2.

Key to every living entity, key to life itself is the understanding that

everything is energy. In Chapter 3 we present an overview of the nature

of energy and its role in creating results. With this understanding we will

take you through the process of how energy flows through an

organization on its journey of transformation into creating the desired

results. It describes the role each of the domains of business – people,

process, customers and financial – plays in the transformation process. We

show where the old paradigm fits in the new model, keeping what is valid

from the former approaches while adding new concepts to create a more

robust holistic organic framework for today’s leaders, Chapters 4 - 10.

While having a model that is robust enough to describe the forces

impacting success in today’s fast shifting environment, it is not sufficient.

In Chapters 11 & 12 we delineate a management process that allows the

organization leaders, the CEO and executive team, a department head, a

team leader or even an individual, to manage the execution, the process of

activity needed to achieve the results. This new approach, The Real Time

Execution System™, builds on many of the tools and processes that have

been developed over the last 3 – 4 decades to improve an organization’s

success in achieving its goals. But The Real Time Execution System™ is

not constrained by trying to fit itself into a machine, a paradigm that

inherently limits the release of the creative forces needed for successful

execution. Instead it is rooted in The Living Organization® model

providing access and the ability to work with the very forces that breed

creativity, passion, engagement, commitment, synergy, unparalleled

customer experience and all the other drivers of success.

You are likely to find many of the concepts presented familiar though

not necessarily through the lens of business. I draw on many fields of

study including physics, psychology, perennial wisdoms, philosophy, and

of course business. In some cases I have left untouched the work of others,

merely merging it in where I believe it fits best. In other cases I have

taken previous work and modified it, either adding concepts or simply

reframing them. I have also drawn on work not normally associated with

business, recognizing the business is also part of the totality of life.

10 The Living Organization  

Like all new discoveries we have the distinct advantage of having

available to us the many contributions that have come before. I have built

on the work of others and my own “eureka moments,” assembling the

puzzle pieces to form a more complete picture of how modern

corporations function, and how their resources can better be harnessed to

achieve the goals of management and the communities they serve – their

“marketplace of customers.” This model is part of an emerging paradigm

– the next rung on the evolutionary ladder of organizational theory.

Like all journeys, we are served by having an effective map to guide

us. In many regards I felt like an explorer on a journey wandering though

many uncharted regions. It is my hope that this book will serve as an

effective map guiding the next generation of leaders as they navigate the

challenges of our current and ever changing business environment.

11

  CChhaapptteerr 11

“The  dogmas  of  the  quiet  past  are  inadequate  to   the  stormy  present.  The  occasion  is  piled  high  

with  difficulty,  and  we  must  rise  with  the   occasion.  As  our  case  is  new,  so  we  must  think   anew  and  act  anew.”            Abraham  Lincoln  

A  Shock  to  Our  System  

It’s April 3, 2010. At Apple Stores all across the United States,

hundreds of people are lined up eager to grab their very own iPad, finally

available after two months of unending promotion. When the doors finally

opened, people piled in to be one of the first to own an iPad. Within the

first month Apple sold over a million iPads and by March 2011 was up to

over 15 million units and climbing.

This was more than just another successful launch of a new Apple

product. It was another record breaking launch in a string that started

with the iPhone in June 2007, the iPhone 3G in 2008, and the iPhone 3GS

in 2009. Each launch drew thousands of buyers waiting in lines at Apple

stores and sold millions of products, including 33.75 million iPhones.

Apple achieved the highest volume of sales for any product launch

and they did it in the middle of the worst recession since the 1930s; in a

market where companies like Bear Stearns and Lehman Brothers were

collapsing, banks needed huge bailouts to stay in business, and the once

great General Motors (“what’s good for GM is good for the United States”)

became the property of the United States government.

Every executive, every leader, no matter the size of their organization

or their position within it, has the same overriding objective - to create

their desired results. And what leader does not set out to go beyond just

12 The Living Organization  

creating average results? Every leader has visions of leading their

organizations to stand out from the pack, to manifest results that would be

considered magical, results like those Steve Jobs, and his team at Apple,

consistently repeats with each new product launch.

“Apple sold 15 million iPads in nine months, created a mammoth new

product category and started an industry of copycats. Apparently, it

doesn’t pay to bet against Jobs’ gut instinct1.” Is Apple’s repeated success a fluke that is unique to them, is it Steve

Jobs’ unique “gut instinct” that creates Apple’s magic, or is there a set of

principles that can truly explain Apple’s success?

This book will explain what truly underlies Apple’s success by looking

at the world of creating results from a completely different vantage point.

It will provide insights and practices that will allow any company to

achieve the magical results of Apple and others. Yes, Apple is not alone in

consistently creating results that go beyond great; there are many other

companies who have demonstrated similar success during these difficult

times that follow a similar pattern.

In his book Firms of Endearment, Raj Sisodia has identified a number of

companies who march to a different drummer. These Firms of

Endearment (FoE) companies not only embrace the traditional business

paradigm, they add to it a set of principles that transcend merely

improving the effectiveness of the machine of production. Like all

companies, they pay attention to increasing efficiency, cutting costs and

maximizing shareholder value, but go beyond these traditional objectives.

They add a sense of higher purpose, of caring for and being in service to

employees, customers, partners, investors, and the greater society.

Who are these companies and what results do they produce? We all

know them and most people aspire to be like them in one form or

another. The 30 companies Sisodia studied, all highly admired and often

loved by their customers, are Amazon, BMW, CarMax, Caterpillar,

Commerce Bank, The Container Store, Costco, eBay, Google, Harley-

Davidson, Honda, IDEO, IKEA, JetBlue, Johnson & Johnson, Jordan’s

Furniture, L.L.Bean, New Balance, Patagonia, REI, Southwest, Starbucks,

Timberland, Toyota, Trader Joe’s, UPS, Wegmans, and Whole Foods.

As for results, over the ten years ending June 30, 2006 they produced

a return on investment of 1,026% compared to the S&P’s return of 128%.

A Shock to Our System 13

And during the last five years they have produced a return of 240%

compared with the S&P’s return of -13%.

Apple is no fluke, nor is the performance of the FoE companies.

These companies perform well and often have a loyal following usually

reserved for rock stars and sports teams for a reason. These companies

don’t simply produce results, they consistently create magic.

But is it magic? I want to tell you something about magic. At one point

in my life I was a professional magician, performing every week for three

months at a local nightclub. For everyone in the audience, what I did

amazed them, wowed them and stupefied them. They couldn’t figure out

how the coins could possibly disappear and reappear right in front of

their eyes. To them it was simply magic. To me, however, it was not magic.

I knew the secrets that lie below the surface. I knew how to create the

illusion.

Arthur C. Clark said, “Any sufficiently advanced technology is

indistinguishable from magic.”2 I believe the corollary is also true. What

appears to be magic is in reality an advanced technology that is not yet

fully understood.

The magical results of Apple, the FoE companies and others only

appear to be magic. In reality it is the combination of certain forces,

certain energies that logically and rationally produce their results. It

appears to be magic because we do not have a good model that explains

these forces and how to work with them.

What we need is a new model for business that more fully explains the

forces that underlie the creation of magical results, a new model that

explains how to manifest the same magical results created by Apple, the

FoE companies and many other companies that consistently perform at

these levels even if they do not make it to the public limelight.

This book will provide such a model, an evolutionary model that

builds on our current models for business success and expands them to

explain what they miss or ignore. It will provide a deep understanding of

how to work with the forces that mix together to produce the results we

create. It will provide the map that will allow you to lead your

organization to create the desired outcomes, which to others will appear

magical.

14 The Living Organization  

But it will not be easy. While the principles may be easy to

understand, they will not be easy to adopt and implement. It will call on

you to rethink how you believe results are created. You may find yourself

standing alone against other advisors, your staff, even your board and

your investors.

Our world is undergoing tectonic changes, major shifts in the rules of

engagement, the way things get done. No matter where we look, politics,

education, the environment, and business are in turmoil. Nothing is stable

any more. The maps we’ve used to navigate our world no longer give us

the proper guidance they once did.

When our world seems turned upside down, when everything seems

uncertain and unpredictable, the natural response is to return to the

comfort of what used to work. There is a natural tendency to call for a

reinvigoration of what we used to do, to fall back on the old rules of

engagement, even in the face of mounting data that the old ways don’t

work. Everywhere you turn people will be suggesting a return to

fundamentals, to the rules of the “good old days.” This is why it will be

challenging to move to a new way of thinking and why it will take courage

to adopt a new model for business success.

But as difficult as it will be, do we have a choice? Can we continue to

rely on what has worked in the past but is now failing? To paraphrase

Einstein’s famous observation, “The significant problems we have cannot

be solved by the same type of thinking that created them.” Or as a dear

friend and client, Bill McGinnis, CEO of National Technical Systems, is

fond of quoting Mark Twain, “If you always do what you have always

done, then you will always get the same results you have always gotten.”

I believe that it is at these very times, when the old rules of

engagement are failing and our world feels in chaos, that we need the

courage to explore and be open to taking steps we have never taken

before. This is the very time when we should consider what we rejected in

the past. That is what creating magic is about: doing what others do not

expect is possible.

A  New  Paradigm  for  Capitalism   The world of commerce has evolved over hundreds of years. Society

has evolved from a purely agrarian society to an industrial society. Our

A Shock to Our System 15

world has been on a journey that has taken us from a society of hunters

and farmers to craftsman to the modern corporation of efficient

production. The rules of commerce have evolved during this journey to

the system we call capitalism and the capitalist system has been the engine

of progress in every society that has adopted it.

Progress, innovation, and improving the standard of living is what

business used to be all about from the early days of mercantilism through

the industrial revolution; that is until business turned from being the

engine of creation, the source of progress, to the machine of destruction3.

Can this system, which created widespread success for over 300 years,

function in today’s society? Can we still depend on the model that

advanced society for so many centuries? Is the very foundation upon

which our society is built, free market capitalism, failing us as a system?

At first glance, it might seem that the evidence is heavily weighted

towards yes. What we hear in the press and the problems I have

mentioned earlier indicate that capitalism has had its day and that we

need a new system.

Let’s remember the incredible progress capitalism and the individual

businesses that follow its principles have collectively created over the last

three centuries and resist the temptation to throw out the baby with the

bath water. Much is right with our system. We must resist the impulse to

discredit and discard our economic model just because it doesn’t seem to

work right now. It could well be the system of economic exchange is

sound but its application has been limited.

Yes, Lehman Brothers and Bear Sterns are gone from the scene and

the Federal Government owns GM. Yes, housing values have plummeted

and many people have lost a significant amount of their net worth. Yes,

unemployment is currently at a painful 9% - 10%. Yet many companies

survive and even thrive.

Think again about Apple’s extremely successful launches of the

iPhone and the iPad. As Sarah Rotman Epps of Forrester Research said,

“The iPad isn’t behaving like other consumer devices. It has a steamroller

of momentum behind it that indicates incredibly strong demand for this

entirely new form factor.”4

16 The Living Organization  

If Apple, FoE companies and the companies I work with as a

consultant can create such magic, why not all companies? Why not your

company?

The system has its flaws but all human systems have their flaws. I

contend that the basic principles of Capitalism are sound. Rather than

declare it a failure, let’s see if we can discover how to enhance its positive

attributes while eliminating the negative impacts. Can we create a system

that draws on the productive, society-benefiting aspects of capitalism while

eliminating its negative side effects? Can the decisions made by our

corporate leaders to create their desired results and benefit their

organizations, also benefit society? My journey to discover an answer to

how results are created also revealed the answer to these questions, which

will be revealed in this book and the works that will follow.

I have discovered that the flaw is not the inherent nature of the

system but our limited understanding of its inner workings. The

framework by which we make decisions within the system is what is

causing the system to fail. Put another way, there is nothing wrong with

the territory that we are traveling over; our maps simply do not show the

full range of terrain. Is it any wonder that every now and then we fall into

a pit of quicksand or get caught in a raging river? What is missing from

our understanding? What does our current map, our current business

model, not reveal?

The  Forces  of  Creation   Given my background as an engineer, I first looked at business from a

scientific perspective, seeing it as a system of dynamic forces. I used Force

Field analysis to help me explain, identify, and organize the forces that

create society’s situation. Force Field analysis (FFA) is a simple tool

developed by Kurt Lewin, the founder of social psychology and one of the

first to study group dynamics and organizational development. FFA

changed social science and is regularly used for strategic planning.5

In Figure 1 I show how this technique provides a framework for

looking at the factors (forces) that influence any situation. It asks what

forces drive movement towards a goal (driving forces) or block movement

from reaching a goal (restraining forces). A similar pairing of forces drives

our Capitalist system as a whole, as well as each company within it.

A Shock to Our System 17

Figure 1

The challenge in analyzing any system is to identify all of the critical

forces operating in it. Yet, it is difficult to identify all the forces because of

the limiting nature of our worldview. Our individual and collective

worldview serves to frame how we understand our world and it also has

the characteristic of limiting the information available to us.

When we thought the world was flat, we could not imagine sailing to

an undiscovered continent. We couldn’t even imagine such land masses

existed. When we believed the earth was the center of the universe, we

had no way to truly understand the motion of the planets. Our current

worldview about how we create results will be our challenge. It will

challenge our ability to look beyond our worldview so we can understand

all the forces operating within an economic system of exchange.

Every new discovery challenges some aspect of the old paradigm. The

first response from orthodoxy is to reject the new discovery or try to

explain it within the existing framework. When the evidence becomes so

strong that it exposes the inability of the existing paradigm to fully explain

how the world works, a new paradigm evolves. Until then, the forces not

18 The Living Organization  

fully explained by the current paradigm are relegated to the mystical or

the magical.

For example, James Clerk Maxwell developed an accurate theory of

electromagnetism by showing that light was electromagnetic radiation

operating in the same field that enabled electrical and magnetic

phenomena, a field he called the ether. While this advanced the field of

classical physics and explained phenomena that could not otherwise be

explained, it never explained the forces that lie in this field or how they

impacted the world. The ether remained a mystery until the advent of

Quantum Physics began to peer under the veil of the subatomic world.

Likewise, forces operating on our economic system today are still

relegated to the ether for the same reason. For example, in his attempt to

explain the self-regulating nature of the marketplace, Adam Smith wrote,

“…and by directing his effort in such a manner as to produce the greatest

value for his own gain, he is in this, as in many other cases, led by an

invisible hand (emphasis added) to promote an end which was no part of

his intention.”6 Like the ether of Maxwell’s classical physics, Smith could only

recognize that there were impactful forces at play but couldn’t fully

explain them. To this day, most economists still accept there are forces

which we don’t fully understand or see that regulate the market.

A New York Times headline on September 2, 2010 reads, “Bernanke

Says He Failed To See Financial Flaws.” In the article Mr. Bernanke, the

Chairman of the Federal Reserve Bank, says, “What I did not recognize was the extent to which the system had flaws and weaknesses in it that were going to

amplify the initial shock from sub-prime and make it into a much bigger crisis.”

The forces acting on a system are present whether we recognize them

or not. As described by FFA some of the forces drive success while others

restrain success. And as Bernanke and others learned, some of the forces

are visible and known while others that are not visible can have a

tremendous impact.

Take the performance of two teams for example both performing the

same activities. One team is highly aligned while the other is fairly

dysfunctional. The aligned team will enhance its chances of success while

the dysfunctional team may still perform but the path to success will be

more difficult. The invisible force of alignment plays a critical role in

A Shock to Our System 19

determining which team will outperform the other. Yet, because it is in

the “ether,” alignment is not usually a force most managers actively take

into account or even know how to work with. Similarly the unconsciously

formed culture of an organization can be a force that energizes the group

or it could be a force that prevents the group from changing.

Some forces carry with them shadow forces. Microsoft’s success led it

to take on an air of arrogance, a force that is often lying in the shadow of

success. This arrogance led to many of its troubles with regulatory

agencies around the globe. Because our maps are so limited, the forces

that lurk in the shadows will often have unpredictable side effects.

Shadowy forces aren’t inherently bad. They are merely another set of

forces that affect our success. The problem arises when our maps do not

help us understand their existence. Once understood they can be the

source of our greatest development. Psychologist Carl Jung pointed out

that when a person learns to integrate their shadow side, the result is

greater maturity and wisdom. The same is true for business and our

capitalist system. Fire can warm us or burn us. Business can advance

society or destroy it. Only through a deeper understanding of the

elemental forces can we, as Jung said, reach wisdom.

The only proper response to today’s crises is to understand all the

forces impacting the results we create, the visible and the invisible, the

light and the shadow. Effective managers will find a new way to

understand and use all these forces to create magic. When we understand

how to work them, we will make the next quantum leap in improving

ourselves, our companies, and our society.

The successes of Apple, Whole Foods, Container Store and the many

other companies thriving during these troubled times provide powerful

lessons for us. In true scientific fashion, we will reveal and explore the

forces, both driving and restraining, that explain the results we observe.

We will make visible the forces that remain hidden because of the

limitations of our existing paradigm. Only then can we understand and

unleash the hidden magic that lies within all of our organizations.

Evolve  or  Die   When a system goes into chaos as capitalism is doing today, when all

the old rules no longer apply, we can experience it as a failure of the

20 The Living Organization  

system. Viewed another way, however, it becomes the natural pattern of

evolution.

Evolution, a force of nature that is at times dormant, asserts itself

when a species or a system no longer fits its current environment. It

asserts itself by creating a crisis that forces the system to adapt to the new

environment or die. A similar call to adapt and change has brought us to a

critical point in our evolutionary development. The choices we make now

will determine the future of business and society.

21

CChhaapptteerr 22      

“Life  has  its  own  hidden  forces,  which  you  can   only  discover  by  living.”   Soren  Kierkegaard  

  The  Living  Organization®  -­‐   The  Secret  of  Life  

To understand what underlies the performance of all magical

organizations, we need to remove the mental filters that prevent us from

having a more robust understanding of the world around us. Just as we

needed to build new devices to view the hidden elements that Einstein’s

theories predicted, we need to create a new mental lens to view the unseen

forces in today’s new world of business and how they manifest their

magical results.

My journey to understanding how results are actually created started

with my first management position at Hewlett Packard back in 1975

(where I spent the next 13 years rapidly moving up the ladder dealing

with ever increasing levels of complexity). I left HP in 1988 and have

spent the last 23 years working with a vast array of companies in a variety

of industries. Through these years, I continued to focus on one question

above all others: How do we manifest the results we desire? I dove deeper

and deeper to understand why some companies possess that “magic

touch” while others don’t.

22 The Living Organization  

As the head of numerous enterprises and organizations, I soon

developed the skills needed to build a smooth running and highly

effective machine. I could plan, organize and control with the best of

them. But with the development of each new organizational skill,

something seemed to be missing. While the science of management was

easy to learn, the art of leadership was much more difficult and elusive.

Yet I knew I would find most of the secrets I sought in this often-discussed

but not well-understood field.

In addition to developing my business skills, the desire to delve

deeper into the art of creating magical results led me to explore anything

that would illuminate manifestation. This journey took me into diverse

religions and deep spiritual practices along with the more practical fields

of physics, psychology and microbiology. I even explored mythology and

mystic practices to see if I couldn’t unlock the great mystery of magical

transformation.

Along the way, I discovered a common thread of wisdom that flowed

through this eclectic group of disciplines that better explained how we, as

living beings, survive, thrive and create results in our lives. I also

recognized the uncanny connection between living organizations and

living organisms and how that metaphor could open up new dimensions

in leadership and organizational thinking.

The Living Organization® model synthesizes what I have learned. It

reveals the secrets I discovered that show how your organization can

respond to the changing dynamics of today’s environment and create

magic in the process.

When a corporation organizes, it is “incorporated.” That word derives

from Latin roots and literally means, “to create a body.” I believe that

organizations are bodies in more than metaphorical terms and they are

more than just physical bodies; they are bodies that house living beings in

every sense of the word. Even American and British court systems treat

them as “persons” with the same rights as any individual.

Like all forms of life, organizations create by taking in energy and

transforming it into something else. In plants, it’s called photosynthesis.

With corporations, it’s called production. Both allow the organism to serve

something greater than itself.

The Secret of Life 23

Like people, plants and other living organisms, corporations are born,

grow old, and die. They are governed by the same laws of life as other

living beings and follow the same hierarchy of need fulfillment as people

do. They are an intrinsic part of life, particularly in our post-modern

society. They marry through mergers and give rise to offspring (or spin-

offs). When they mature, they have the choice of rebirthing, of branching

off in new directions (new markets, new products or totally new business

models), or withering away and dying (when they are sold off or go out of

business).

Each life cycle event leads The Living Organization® to the possibility

of a new, more expanded way of life. This more developed stage hopefully

contributes to the society around it and the living cells, the people, which

give life to it. Like all living beings, corporations will either adapt to a

changing environment or be driven to extinction. Yet even in dying, they

can open the way for new companies to prosper and grow as they provide

the seeds for new organizations to sprout to life.

The Living Organization® model views the organization as a complex,

adaptable, living being. It is modeled after the greatest organization alive,

an organization that manages trillions of workers as they perform their

individual and collective functions in one of the most complex yet highly

efficient and effective collaborative efforts ever imagined: the magnificent

and magical human body.

More  than  the  Physical   Every living body is affected by physical laws, by the laws of pressure,

volume and temperature. Our blood flows according to the laws of fluid

mechanics and our mental activity is measured by electro-magnetic

currents. But just because our bodily functions can be explained by the

laws of physics, does that make us a well-oiled machine?

Like human beings, organizations are governed by the same laws of

physics that define how mechanical machines operate. Therefore elements

of the traditional machine paradigm are still necessary and valuable, and

we must continue to embrace them. While necessary, the model of the

organization as a machine to be optimized is not sufficient. Like the

human body, our organizations are more than well-oiled machines.

24 The Living Organization  

Forces that transcend the explanations offered by the laws of physics

alone govern our human lives. Even our venerated western medical

profession is slowly accepting the idea that some forces that affect human

health and life are beyond present scientific understanding. For example,

we don’t fully appreciate the mind-body connection but accept it as fact.

We would love to capture and bottle the unexplainable intuitive insight

that turns out to be right, and the amazing power of “synergy.” We’d love

to emulate and master the “sixth sense” or “magic touch” that we often see

as keys to success.

There are powerful forces in our universe (and the world of business).

Many people will not try to explain or even understand these phenomena.

Some will simply accept that results happen and believe we are not meant

to know why they occur. Some will view them as miracles or blessings if

they are good or punishment for sin if they are bad. Others will view them

simply as magic (white magic for the good stuff and black magic for the

bad stuff). And who doesn’t love to believe in magic?

The  Magic  of  Living  Organizations   Most businesses that create magical results can’t explain how they do

it. Steve Jobs and his team at Apple regularly seem to pull rabbits out of

their hats, but can they teach others how the trick is done? Academics and

consultants study these companies and attempt to explain how they

achieve “greatness.” Popular books like Good to Great by Jim Collins help

us study and define what made them great. Yet not all have remained

great, as we witness one giant after another, from GM to IBM, fall from

grace. Even my alma mater, the once venerated Hewlett Packard, the icon

of Silicon Valley, has been plagued with scandal and a loss of its soul.

Clearly, there is something not yet explained at work that impacts the

results we experience, an intricate dance between the physical world and

the unseen universe. Like physics revealing the workings of Maxwell’s

“ether,” we can begin to reveal the invisible workings of the “invisible

hand” that Adam Smith first identified in the 1700’s7. It is no longer

necessary to simply think of it as unknowable invisible forces, or define it

as the power of the “hand of God” or even simply magic at play.

To do so we must recognize that what limits our ability to see these

forces and clouds our vision is the very thing that helps us succeed in life,

The Secret of Life 25

our current worldview. As discussed earlier, our worldviews organize our

world and at the same time limit our world. We need a new paradigm that

helps us understand and see these hidden forces so we can use them in

our daily decisions. We need a new, stronger, sharper lens to bring them

into focus, a lens that will allow us to zoom out and see more of the world

around us. Just as physics needs to transcend the mechanistic view of

classical Newtonian physics, we need to replace the rational, mechanistic

paradigm that currently blinds us to the all the forces impacting our

results and limiting our range of choices.

The real reason we can’t copy the success of the Good to Great

companies or understand their eventual decline is because we continue to

view the workings of the modern corporation through the lens of the old

machine paradigm. This lens is simply not wide enough or powerful

enough to reveal the forces that create success and failure in today’s

world.

More  than  a  call  for  Social  Good   This book is not the first to call for fundamental change in our

foundational paradigm. The Corporate Social Responsibility (CSR)

movement calls upon corporations to act as good corporate citizens and

put the welfare of society as a whole over their need to make individual

profit. There are calls for a shift from the “Shareholder Model” to the

“Stakeholder Model,” a shift away from focusing solely on the return only

for shareholders to a wider picture that focuses on the needs of all

stakeholders: employees, customers, suppliers, and society at large. There

is even a call towards Conscious Leadership, which asks the leaders of our

corporations to move to a higher level of consciousness, taking into

account the “bigger, even moral picture” when making key strategic

decisions.8

I do not oppose any of these movements; in fact I endorse all of them.

But I do not feel they will be very successful in bringing about the

fundamental change necessary for the 21st century. Each of these laudable

ideas fails to provide the necessary framework that will allow for wide-scale

adoption and a fundamental shift in worldviews. Within the worldview of

the Machine of Production, how can you possible achieve a Socially

Responsible corporation? Machines are not, in fact cannot be, socially or

26 The Living Organization  

morally responsible. Until we change the fundamental paradigm, we

cannot get there. And to date the dominant justification for the changes in

behavior is a call to a higher purpose. “Do Good for Good’s sake and you

will profit.”

I believe this is true and there is a fair amount of anecdotal evidence

for it. But why, why does doing good produce results? This is the question

that calls for an answer. Organization leaders deserve to know that a new

model is based on sound principles and better explains the world around

them. Leaders have a right to expect a new model will provide the

necessary tools and enable them to achieve better results than the model

they currently use to produce success.

To date challenges to the “machine of production” paradigm rely on

anecdotal evidence. While much of the anecdotal evidence does imply

positive results as in books like Good to Great and Firms of Endearment, they

do not give a roadmap for success. They explain the attributes exhibited

by successful companies but do not explain why those attributes create

success. They simply ask each manager to do what others have done and

to take a leap of faith that such a course of action will produce better

results, eventually.

While I completely agree with their premise and their promise, the

promise alone will not shift the paradigm. Yes, I have been personally

swayed and accept as true their premise. This is because over the course of

my life, I have experienced the successes created by following those

principles outlined in their books. I also recognize that for those who have

not yet experienced the positive impact of these principles, accepting them

requires a leap of faith in the absence of a reasonable and rational

explanation of why it works. For most organizational leaders trying to

address today’s ever-complex challenges, the leap of faith is too great.

To quote from an August 23, 2010 article in the Wall Street Journal,

“The Case Against Corporate Social Responsibility,” Can companies do well by doing good? Yes—sometimes.

But the idea that companies have a responsibility to act in the public interest and

will profit from doing so is fundamentally flawed.

Large companies now routinely claim that they aren't in business just for the profits,

that they're also intent on serving some larger social purpose. They trumpet their efforts

to produce healthier foods or more fuel-efficient vehicles, conserve energy and other

The Secret of Life 27

resources in their operations, or otherwise make the world a better place. Influential

institutions like the Academy of Management and the United Nations, among many

others, encourage companies to pursue such strategies.

It's not surprising that this idea has won over so many people—it's a very appealing

proposition. You can have your cake and eat it too!

But it's an illusion, and a potentially dangerous one.

Very simply, in cases where private profits and public interests are

aligned, the idea of corporate social responsibility is irrelevant: Companies

that simply do everything they can to boost profits will end up increasing

social welfare. In circumstances in which profits and social welfare are in

direct opposition, an appeal to corporate social responsibility will almost

always be ineffective because executives are unlikely to act voluntarily in

the public interest and against shareholder interests.9

Nor should they unless, as the journalist states, acting in the social

good can in fact be shown to be good for the corporation. But does it have

to be one or the other? Will corporate responsibility always run counter to

the company’s core purpose? Or is there a model of the corporation that

demonstrates, in real and practical terms, that being a caring and

cooperative member of society does in fact produce the greatest return to

the investors? Is there a model that can reveal how these two objectives

can become complimentary instead of antagonistic partners to improve

productivity, profitability and new possibilities?

To begin to explain how our current machine paradigm limits our

ability to see beyond the conflicting options let’s look at the nature of

machines. Machines have no other purpose than to produce something in

the most efficient way possible. They don’t care what the result is so long

as it achieves that result efficiently and profitably. A machine is merely

programmed to do what it is told. That’s the fundamental problem with

our current business paradigm. We’ve allowed corporations to turn into

mindless machines that only do what the shareholders, the marketplace or

the market manipulators, the speculators and government regulators, tell

them to do. Since the 1980s, the only objective for most corporations has

been to maximize shareholder value. And this they’ve done, as all

machines do, as efficiently as possible.

But in our expanded worldview, where corporations are viewed as

living beings, we can see that the best results come not from outside our

28 The Living Organization  

organizations but from deep within them. They have within them, from

their moment of creation or birth, some “purpose for being.” Like every

living being, The Living Organization® wants to see its purpose realized. It

wants to make its mark, fulfill its purpose and maximize its contributions

to the customers it serves. Living organisms, and organizations, are in a

relationship with their environment. They recognize that they depend on

their environment as much as their environment depends on them.

I was at a workshop at Esalen, a retreat center in the beautiful hills of

Big Sur CA, overlooking the Pacific Ocean. I was invited to present The

Living Organization® model to a group of Esalen managers who were

exploring the next stage for their organization. After our presentations,

they walked through their strategic visioning process using scenario

planning as a tool to help identify possible futures. I experienced a sort of

mechanical nature to the conversations as if they were going through the

motions but lacked that certain spark.

I invited them to take a look at the organization not from a mental

process but from a deep sense of connection with its long life. I invited

them to think of Esalen as a beautiful woman that had graced many

people over the years with her beauty and the magic of the location. And

this beautiful woman was now forty years old and longing for a new way to

contribute to the world. She was seeking a way to build on her gifts but

also recognized that she was moving into the next phase of her life. This

invitation changed the quality of the conversation and created new

possibilities for how they could move forward. It also brought out the

deep-felt passion of the management team and all the people associated

with Esalen. It brought the organization new life.

Viewing our organizations as living organisms frees us from the built-

in bias that arises from our limited view of corporate bodies as merely

machines of production. Viewing an organization as a living entity allows

us to draw from a broad range of disciplines, from physics, biology,

psychology, to the many diverse spiritual traditions. Therefore we can

draw on the deeper Perennial Wisdom that has guided our ability to live

effective and productive lives as human beings. These same wisdoms can

also guide our ability to lead our organizations’ actions to effectively and

productively contribute to the customers they serve and society as a whole.

The Secret of Life 29

What works for other living entities will work for The Living

Organization®.

Wisdom  of  manifestation   One of those perennial wisdoms is that life is composed of dual

opposites. For every up there must be a down, for black there is white. We

see it everywhere, left brain thinking paired with right brain thinking,

logic balanced with emotion, imagination in opposition to facts, and form

juxtaposed against spirit.

Mankind’s journey into a deeper understanding of how life works

gave birth to the Scientific Method, the reductionist approach of

Newtonian Physics. This is the societal framework on which Fredrick

Taylor based his Scientific Management, part of the foundation of our

current business paradigm. In this view, matter is separate from energy,

or said another way, the formed physical world of existence is separate

from the unformed world or the world of Spirit.

Then Einstein came along and shared his now famous equation

E=MC2 and changed everything. In this simple equation he points out

that matter and energy are not in opposition but in fact two sides of the

same coin. Matter is energy and energy is matter. He did not create the

equality of matter and energy, it was always equal. He simply expanded

our framework and opened the lens by which we viewed the world to

reveal this complimentary relationship between what until then seemed to

be polar opposites.

To understand how we can have greater impact on producing the

results we want, we must understand how the physical world and the non-

physical world are related. We must understand how the physical world

emanates from the unmanifested energy of the non-physical fields. This is

not new. It is, like Einstein, merely expanding the lens to reveal what is

already present in our world.

As we said earlier, it is the very nature of life that we are always

dealing with polarities; one cannot exist without the other. A coin is

composed of a head and a tail. Are these opposites? From a reductionist

perspective we can only see a tail or a head, one the opposite of the other.

But we all know that the coin needs both the head and the tail to exist. As

we expand our frame of reference from a mechanistic reductionist

30 The Living Organization  

perspective to an organic holistic perspective, we begin to understand that

what were once opposites are in fact complements, two sides of the same

coin.

Just like the head and tail of the coin, complementary and balancing

forces create the life we experience. Our lives are created out of these

forces and are reflections of their cause and effect. Without opposites, life

itself would not exist. Without science, we would be living in a world of

confusion and chaos. Without spirit, we would be soul-less machines,

lacking art and beauty and the creative energy needed to manifest life and

the results we desire. Up-down, black-white, good-bad, science-spirit

brings about the balancing of opposites that creates the wholeness of life

like the head and the tail create the coin.

As with Einstein’s discovery, The Living Organization® is part of an

evolutionary journey. It builds on all that has come before and serves as a

way of widening our lens to reveal the forces that are already present and

impacting our efforts to create what we want. Life itself is a process of

creation and all living entities are creative beings. Creation is the process

of bringing something into form, manifesting from that which is not

manifested; form from spirit, a specific result from the field of infinite

possibilities.

Since everything is energy, we will continue our journey by

understanding the nature of the primary material, the source of all life –

energy.

31

  CChhaapptteerr 33

“The  energy  of  the  mind  is  the  essence  of  life.”   Aristotle  

  It’s  all  about  Energy  

The transition from employee to manager was not an easy one for me.

I realized that my success depended on not just my own efforts but those

of everyone around me and, in particular, on my ability to orchestrate a

whole new set of dynamic forces swirling around me which I couldn’t see

but surely felt.

I felt it in the way people reacted to me. There were times when I

would think I communicated a certain message but what they received was

very different. What was I sending that they were picking up that I didn’t

know I was sending? And why didn’t I know it?

I felt it in the way results happened. Many times the teams I led

produced results that were magical, like the ones at HP. Many other times

the results didn’t turn out nearly as expected. Yet it seemed to me I was

doing the same things in both situations. I wondered what else was going

on besides what I or my team was doing that yielded the results I got.

To help me through this struggle, I fell back on what I knew: my

early training as a systems engineer. I found that the same principles that

worked for scientifically analyzing and understanding complex physical

systems worked for analyzing organizational systems as well. The deeper I

delved into what was impacting my ability to accomplish my goals, the

more I began to recognize that I was dealing with various forms of energy.

I began to understand that creating results was all about energy and how

it flowed through the system.

32 The Living Organization  

Results  are  energies  transformed   The earliest known discussion of energy can be traced to the concept

of “Vis Viva” or “living force” dating back to the Greek philosopher,

Thales of Miletus, c625-c545 BC. We have continued to advance our

understanding of the concept and properties of energy through the works

of scientists and philosophers such as Gottfried Leibniz, Sir Isaac Newton,

Thomas Young, William Rankin, Lord Kelvin, Albert Einstein, and many

others.

The core of our current understanding is that energy is never created

nor destroyed. Physicist and Nobel Laureate Richard Feynman described

the law of conservation of energy in a 1961 lecture by stating:

“There is a certain quantity, which we call energy, that does not

change in manifold changes which nature undergoes. That is a most

abstract idea, because it is a mathematical principle. It says that there is a

numerical quantity, which does not change when something happens. It is

not a description of a mechanism, or anything concrete; it is just a strange

fact that we can calculate some number, and when we finish watching

nature go through her tricks and calculate the number again, it is the

same.”10

The sum total of all energy within any system is constant no matter

what changes that system undergoes. As Einstein fully understood,

everything is energy transforming from one form into another. As his

predecessor Newton pointed out, energy can neither be created nor

destroyed. If everything is energy, which cannot be created or destroyed,

it stands to reason that creating results is a process of transforming energy

from one form into the form of our desired results.

Forms  of  Energy   Energy has a number of attributes which we experience in different

forms. Energy is visible to our five senses and also hidden from our senses.

Energy takes the form of potential energy (energy waiting to express) and

kinetic energy (energy expressing). Energy can take form or be in an

unformed state.

Some forms of energy are relatively easy to observe while others,

though known to exist, cannot be easily experienced through our five

senses. A flowing river, a light beam and solid forms of energy such as a

It’s All About Energy 33

table are all easily perceived. It is also easy to observe energy in motion in

the form of the actions of individuals and groups.

We can know some forms of energy because of the effect they have on

something we can observe. Electricity, magnetic fields, radiation, human

thoughts and even human motivations are examples of energy we cannot

directly detect with our physical senses but still accept them as being

present because we can witness their effects through secondary means.

Electricity and radiation can be measured through instruments. Magnetic

fields can be known by something as simple as observing patterns of

sprinkled iron filings. Human thoughts have been recorded by MRI

scanners as energy patterns and scientists can map out the regions of our

brains that are responsible for different types of thoughts.

There are also flows of energy that we cannot see or even measure but

accept, primarily because we experience their effects. Sensory perceptions,

thoughts and emotions are all forms of energy our bodies are processing.

We know energy enters our bodies through our five senses and is

processed though our nervous system and our mental faculties. We also

know there is a relationship between the energy generated by our

thoughts and the energy felt by us as emotions.

The felt senses we call experiences are also a form of energy though

they are not processed through our five physical senses. For example,

watching a sunset or a baby smile will create a sensation that is a specific

energy vibration. If we find ourselves in the presence of someone who is

angry, without seeing or hearing them our bodies still experience and are

affected by the energy they emanate. Even motivation is energy that flows

through each of us, driving and defining the behaviors that all can

observe.

Have you ever been in a group setting where there are unspoken

issues, “the elephant in the room?” It is not the issue itself that is the felt

experience but the energy that is being suppressed. Avoiding discussion of

the issue blocks the energy like water behind a dam, preventing the flow

of all energy and slowing work down. The minute the elephant in the

room is revealed and discussed, the energy is released. Independent of

the resolution of the original issue, the mere fact that the energy is again

flowing creates movement. Most people who have experienced this will say

34 The Living Organization  

they felt a certain relief that they were now discussing the issue and almost

all reported an increase in energy because of this release.

From both physics and chemistry, we know that rocks at rest at the

top of the hill or fuel in a gas tank are forms of unseen potential energy.

Push the rock down a hill or compress the fuel in an engine and that

hidden potential quickly transforms into the kinetic energy that we can

observe. The same transformation of potential energy into kinetic energy

can be seen in the runner poised in the blocks at the start of the race. He

is potential energy that explodes into kinetic energy at the sound of the

gun. Our organizations are a combination of potential energy and kinetic

energy. We have a deep source of potential energy within each individual

and work group just waiting to be released into the activities that will

ultimately produce our desired results.

The  patterns  of  our  lives   Energy, and therefore life itself, is always in a constant state of motion.

Indeed, all life is in the process of transforming from one state of energy

to another. Since energy cannot be created or destroyed, one has to ask

the question: Where is the energy before it becomes formed? It must

reside somewhere, in a non-physical state, prior to it coming into form.

Einstein’s famous equation E=MC2 points out that energy waves and

particle matter are the same. Vibrating energy waves flow into electrons,

which flow together with protons to form atoms, atoms form molecules,

molecules form cells, and so on. And from this life itself is created. All

forms of life consist of energy patterns merging and mingling to form new

patterns, not unlike the patterns of rabbits, turtles, and dragons a child

(and some adults) can see in the moving, flowing clouds.

Just as clouds form from less dense, unformed water vapor into the

denser form that allow us to discern the various patterns, all energy moves

from less dense, unformed, subtle energy to the more dense formed

energy of our physical world. All energy continuously moves and morphs

from one pattern into another and then dissipates back into the

unmanifested field of energy. Whether the energy patterns are dense

enough to be observable or not, the energy is still present and potentially

impacting us.

It’s All About Energy 35

People  Are  Energy  Too   If matter emerges from energy, then people must also be a form of

energy. We can best be understood as patterns of energy that coalesce as

DNA, cells, organs, tissue, and muscle into our unique form and body. In

addition to energy fashioning itself into the form of our bodies, energy

runs through our bodies in other forms such as thoughts, desires,

emotions, and experience. We may not always think of these aspects of

ourselves as less dense forms of energy. But that is what they are.

We speak of an individual as exhibiting certain traits or behavior

patterns. These are also patterns of energy being expressed. Thoughts

and emotions are energy patterns, less obvious perhaps, but just as real.

Though they may not be observable in the physical world, they do exist

and to a large degree contribute to the creation of our physical world.

Allow yourself for a moment to feel love for someone. Allow that

feeling to rise in intensity and fill your whole body. Do this for a moment

and then begin to pay attention to your body. How would you describe

what you are feeling at this moment? Most people will respond with

feelings of calm, peace, warmth, and settlement.

Now take another moment and allow yourself to remember a time

when you were angry at someone or some situation. Bring that situation

to mind as fully as possible. Allow the anger to rise up within you to fill

your body as fully as you can. Again reflect on how your body feels. In

these situations most people would respond that the body is wound up as

tight as a drum, fuming, and red hot.

In each case your body is vibrating to a certain energy frequency.

Love is an energy vibration whereby all the component parts of the body’s

organization, muscles, and cells attune to and create the experience of

relaxation, calm, and peace. The opposite is true of anger, which is a

specific vibration that attunes all the bodily components to a different

frequency. These emotions and the states they produce are patterns of

energy.

I have used a similar exercise with groups in management training.

The biggest challenges most managers and executives have is keeping up

with the long list of tasks they have to work through. They have reports to

get in on time, performance reviews they have to do, customers they have

36 The Living Organization  

to meet, meetings to attend, planning to finish, and the list goes on and

on. In my exercise I have them make a list of all the tasks they had to get

done within the next 5 – 10 days. The list was to start with “I have to -

__________________ by _________.” Then I have them pick a partner and

read their lists to each other. At the end I ask them to describe the feelings

they had in their bodies. Tired, heavy, burdened, and overwhelmed are

typical responses I get. Then I have them take the same list, change the

opening phrase from “I have to” to “I want to” or alternatively “I get to.” I

then have them read their list again to their partner and record the way

their bodies felt. Excited, energized, and uplifted are some of the common

responses.

The activities on both lists were the same. All that changed was two

words: “Have to” with “Want to.” Words are associated with beliefs. “Have

to” is associated with obligation, while “want to” is associated with choice.

Obligation carries a different energy frequency than the frequency of

choice and the experiences we have are directly related to these different

patterns of energy in our bodies.

Choice  lets  energy  flow   On a visit to the Santa Clara office of HP, the Area General Manager

and the Branch manager shared with me a challenge they were having

with a particular employee. Chris was part of the lease contract

administration group. He was extremely talented, very sharp, and was

creating wonderful programs that helped streamline the administrative

process. However, Chris was not carrying his load in terms of managing

the lease contracts. Every time they talked with him, he would promise to

do what was expected and did for a while but then would slack off again.

They tried everything they could to get him back on track and asked if I

would talk with Chris.

I asked Chris if he knew why we were getting together. He clearly

understood the problem. He explained to me that he really felt that what

he was doing, developing the software to make the process more efficient,

was making a great contribution to not only his department but also to the

overall region. I acknowledged the value of what he was doing and his

love for programming. I also told him that what he was doing was not the

job we hired him to do. That while he was working on developing the

It’s All About Energy 37

software, which would have a payback for the future, the day to day work

of administering the contracts was falling on the shoulders of his team

members.

“But in the long run it will reduce the workload of everyone,” he said.

“Yes, that is true,” I said, “and as with all things I have to balance the

long term against the short term. What you want to do falls into the

category of future investments.”

“But don’t you see how much of a difference I am making?”

“Yes, of course I do,” I said. “But that is not one of the choices I have

available for you. If we allow you to continue on as you are, then we will

have to hire someone else to do the work you were hired for, move you

into the IT department and adjust our priorities to pay for your efforts.

From the bigger picture, that is not an option I want to support.”

At first, I could see from his expression that he felt boxed in, trapped

and cornered. I followed up by acknowledging his love for programming.

“Chris, I can tell you really love to program and to use your talents to

improve organizational effectiveness. I think that is a real gift.

Unfortunately that is not an option I have available to you at this point.

What we have is the position we hired you to do and we all know you have

the talent to do it. What do you want to do?”

He thought for a moment and then shared how a friend of his had

offered him an opportunity to work with him in his startup, developing

software for their internal processes. As he described the position he

began to get really excited, his eyes lit up and he started to connect with

something he really loved. It was obvious there was a tremendous amount

of energy flowing.

“Chris,” I said, “you seem really excited about this opportunity. You

light up with such a sense of excitement and passion. Why don’t you take

that job?”

Again Chris was quiet for a moment and then he said, “You are right.

That is what excites me.” Chris decided to resign that day and take the

opportunity to do what he really wanted to do.

For months my managers tried hard to get Chris to do what they

needed him to do and tried all sorts of ways to motivate him to do it. What

they never did was make it Chris’s choice. A simple act of laying out the

options and offering the choice empowers employees more than any

38 The Living Organization  

attempt to motivate desired behavior. Choice allows energy to flow and as

it is flowing, it can be directed towards the desired results. As discovered

in the earlier “Have To/Want To” exercise, feeling that you have to do

something blocks the flow of energy. And wishing you had a different

option than what is available will also block the flow of energy and slow

down or even prevent the creation of desired results.

Everything is energy! As these examples demonstrate, we are

constantly responding to energy with energy. One can consider life as

nothing but a mysterious dance of interacting and exchanging energy.

The  Dance  of  energy   It is not just the energy that flows within us that creates our

experience, it is the energy that surrounds us as well. Energy flows into

patterns or energy fields that are in relationship, constantly interacting

with each other. All entities in any relationship have the characteristic of

simultaneously impacting and being impacted by the interaction of those

entities. When you interact with another person, you impact them and they

impact you, positively or negatively. As we breathe, we expel carbon

dioxide and take in oxygen. We interact with our environment, specifically

trees and plants that take in carbon dioxide and give off oxygen.

We live in a sea of different energy patterns and each pattern,

depending on the strength of the field, will have a direct impact on our

experience, especially if we are not aware of its influence.

One of my clients is a $25 million software company in Southern

California that had been struggling to better align the executive team.

While there was conflict among many of the team members, there was a

specific conflict between the VP of Marketing and the VP of Sales, which

was affecting the company’s ability to meet their growth strategies. During

one of my coaching meetings with the VP of Marketing, he shared his

most recent upset with the VP of Sales. The two of them met with the

CEO and both agreed to take on certain tasks and have them completed

by a certain date. The VP of Marketing saw signs that the VP of Sales

might miss that date and sent an email, copying the CEO, calling out the

VP of Sales for falling behind and predicting that the commitment would

not be met.

It’s All About Energy 39

The VP of Marketing had only been with the company a few months

and this behavior was not consistent with his normal style of team

interactions. I asked why he communicated that way he had. His answer

was, “We agreed to something and he was not going to come through.”

“Why did you do it in an email and copy the CEO?” I asked.

“It was a commitment we had agreed to in a meeting amongst the

three of us.”

“Are you guys on the same team?” I asked.

“Yes, of course we are,” he said.

“I don’t know about you,” I said. “But when I see a teammate getting

into trouble I don’t call him out in front of our boss in a formal medium

like an email. Instead I reach out to see if I can help. I usually pick up the

phone and call him and ask if he needs any help or if he thinks it will still

get done on time.”

The VP of Marketing stopped for a moment, reflected on his behavior

and said, “I don’t know why I did that. I know better.”

Why did he behave in a way that is contrary to what he knows? The

answer again is energy, in this case the collective energy field, or pattern,

of the organization’s culture. To give you a deeper insight, it was very

common for the executives to compete for the favor of the CEO to an

excessive degree in this culture. They took every opportunity to throw

members of their team under the bus if they could blame them and shine

in the eyes of the CEO. This was one of the reasons we were brought into

to the organization, to help transform their culture and the dynamics of

the executive team. It took less than three months for this new executive,

who in all of his previous positions had never acted this way, to take on

the energy pattern of the team and begin to behave just like everyone else.

This is but one example of the power of energy, of energy forces

impacting every organization’s ability to create results, energy forces that

all too often remain under the surface of leadership’s awareness. This

book and the ones to follow are intended to help you understand these

forces and how to work with them to your advantage.

Energy  patterns  that  create  are  alive   All of life is energy but not all energy is alive. A table is energy but a

table is not alive. Water is energy that takes many forms but not many

40 The Living Organization  

people will say water is alive, though it has life-giving properties. Lava is

energy but it usually is not considered to be alive. It may change states in

relation to its environment from molten lava to solid lava but it is still lava.

Energy patterns that form living organisms not only have their own

energy transformed; they transform the energy of other energy fields.

They in essence create. Creation is what differentiates energy that is alive

from other forms of energy. Plants are alive, humans are alive and

organizations are alive.

Living energy patterns interact and co-create with their environment.

Plants take in carbon dioxide and turn that into oxygen, which they give

off for animals to breathe. They also absorb nutrients from the soil and

transform them into the sugars and fibers which animals take in to grow

muscles and fuel movement. Like plants, humans also take in many forms

of energy and transform them into other forms in continuing acts of

creation.

All living organisms create by transforming energy from one form

into another. All living organisms interact with their environment,

impacting and being impacted as the two co-create. As humans, however,

we have an additional energy field that is part of our creation process:

desire and intention. We choose what we want to create.

Energy at a rate of over 50,000 thoughts passes through our brains

every day11. We pay little attention to most of these energy patterns but a

select few catch our attention and are repeated over and over again. These

thoughts become slightly more coalesced in the form we call a belief.

When we charge the belief with the energy of emotion and continue to

flow more and more energy to it, that belief becomes our paradigm,

defining the way the world works for us. We also filter what we think is

possible to create by our belief systems, our worldviews. From this

paradigm we take action in response to our environment to manifest our

intentions and desires.

We are patterns of energy in relationship, flowing and interacting

with other patterns of energy, creating and evolving. This is how we create

our physical world experiences and the results we experience.

It’s All About Energy 41

The  Evolutionary  Flow  of  Energy   Evolution is a process in which life adds onto and expands that which

came before, where one life form joins with others to form more complex

life forms. It is from these interactions that life has evolved over many

millennia and from which a new form of life, “the organization,” continues

to evolve.

I will leave to the philosophers, scientists, theologians and others to

debate whether evolution occurs by intelligent design or by random acts of

nature. What we do know is that everywhere we look life evolves from

simple forms into more complex forms. Electrons bind with protons and

together they form atoms, the foundation of matter. Atoms come together

to form molecules, molecules form compounds, and so on.

In his book Biology of Beliefs, Bruce Lipton explains this from the point

of view of a microbiologist. It shouldn’t be surprising that cells are so smart. Single-celled organisms were the

first life forms on this planet…initially only free-living, single celled organisms –

bacteria, algae and amoeba-like protozoa – populated the world.

Before 750 million years ago, these smart cells figured out how to get smarter when

the first multi-cellular organisms (plants, fish and later animals) appeared. Multi-

cellular life forms were initially loose communities or “colonies” of single-celled

organisms. At first, cellular communities consisted of tens and hundreds of cells. But the

evolutionary advantage of living in a community led to organizations comprised of

millions, billions and even trillions of socially interactive cells… While the cellular

communities appear as single entities to the naked eye – a mouse, a dog, a human – they

are, in fact, highly organized associations of millions and trillions of cells.

The evolutionary push for ever-bigger communities is simply a reflection of the

biological imperative to survive. The more awareness an organism has of its environment

the better its chances for survival. When cells band together they increase their chances

exponentially…

To survive at such high densities, the cells created structured

environments. These communities subdivided the workload with more

precision and effectiveness than the ever-changing organizational charts

that are a fact of life in big corporations.12

42 The Living Organization  

Figure 2

It’s All About Energy 43

The nature of evolution is that fields of energy, taking the form of

living organisms, evolve to higher levels of complexity and sophistication.

All living forms are composed of energy fields that are in turn composed

of other energy fields. Organisms are composed of other organisms.

Certain organisms join together to serve a common objective, which in

turn creates a higher order and a more complex purpose and energy

pattern.

If we can accept that humans, the most advanced and complex form

of life on this planet, are comprised of countless individual organisms that

structure themselves like the organizational charts of a big corporation,

then isn’t it reasonable to also view corporations as highly evolved

complex living beings? In fact we can easily see the parallels between the

human body and the corporate body as shown in Figure 2 on the previous

page.

The individuals in an organization can be viewed as the basic cellular

building blocks of an organization, much like the cells in the human body.

Individuals of like mind join together with other individuals for a

common objective comprising another living organism we call a team.

These teams form the fundamental unit of the organization, which in

business we refer to as the “functional structure.” The functional

departments of sales, marketing, and engineering are analogous to the

various organs of the human body, such as the heart, liver, and lungs.

While the human body is a complex web of energy fields flowing and

interacting with each other, a human being is much more than just its

body. We think, feel, have experiences, pose intuitive insights and are self-

aware. We are aware of an inner self and the complex web of inner voices

that guide us through life, some of which are in opposition to each other.

We are also aware of our outer selves and our interactions with others.

The same is true for The Living Organization®. And it doesn’t stop there

If we use The Living Organization® as the starting point, we see that

markets consist of groups of such organisms – companies, competitors,

consumers - coming together to serve a common goal, all within a larger

entity or market. From there, markets form societies, societies form our

planet, and on it goes.

Like the Russian dolls that neatly fit one within the other, The Living

Organizations® carry within them other living organizations. They in fact

44 The Living Organization  

demonstrate the fractal property of self-similarity; the rules of energy that

apply to one living organization apply to all living organizations. The laws,

rules, and methods that we will describe in this book apply equally to the

results created by an individual, a group, a team, a department, and to an

organization.

For the purposes of this book, we will stick with the single entity, The

Living Organization®, and show how applying the laws of energy provides

a new, more effective framework for breathing life back into any

organization.

45

  CChhaapptteerr 44

“An  organization's  ability  to  learn,  and  translate   that  learning  into  action  rapidly,  is  the  ultimate  

competitive  advantage.”            Jack  Welch  

  The  Energy  of  Business  

All companies and organizations are composed of a multitude of

individuals who form into groups to form an even more complex system.

All complex living systems, whether an individual or an organization,

consist of energy fields beyond the obvious ones that make up the physical

“body.” These subtler energy fields are the thoughts, beliefs, emotions,

passions and deeper purpose that guide the choices and behaviors of

living systems. As a living organization, your company must also carry

within it these subtler energy fields, including the energy of its Soulful

Purpose™ (which we will discuss in greater detail later).

All living things come into existence for specific reasons, to be an

expression of this deeper purpose. Pure randomness or accident does not

bring such a diverse array of energy patterns together to form a living

entity. The Soulful Purpose™ is a powerful force attracting the right

energy patterns to engage and realize its mission. An acorn is born to

become an oak, a liver cell serves to become part of the liver, heart cells

become part of a heart, and heart and liver become part of the body. Each

living entity has a unique reason for existing, a unique contribution to

make to something greater than itself.

The same is true for The Living Organization® as it attracts people to

it to serve its Soulful Purpose™ and realize its mission. There is an

attractive force that brings certain people to certain companies. We can

46 The Living Organization  

see this most visibly in entrepreneurial start ups where the reason people

join that particular organization is because of the alignment with its

Soulful Purpose™. And like the way cells organize within the human body,

people come together to form teams, teams form departments, and

departments form companies. All come together to contribute their

individual and collective energy which is transformed into the collectively

desired results that serves something greater than itself.

Are you attracting the right people? Is your Soulful Purpose™ known

and felt? IS the reason you exist to serve something greater than yourself?

Is your organization a Living Organization®?

The  Flow   Energy flows on a defined path through every living organism. This

path is designed to maximize the transformation of energy from its source

into the form of its desired outcomes. Similarly there is a defined path of

energy flowing through an organization and the goal is to maximize the

transformation of energy from its source to its desired outcome.

The purpose of every company is to provide

products and services that are perceived as

valuable and are highly desired by the customers

they serve, as shown in Figure 3. Simply put, the

output of the business-system is the goods and

services that allow us to serve our customers.

To achieve this result, you must transform

energy from a source into the goods and services you provide to the

customer. The source of energy, the starting point for the

transformational process, is the people who make up your company and

who give form and substance to the thoughts, ideas, and ambitions of the

organization. Each person is a source of energy.

Contrary to the view that people are interchangeable, every individual

in The Living Organization® has a unique set of gifts to contribute and a

special role to play. Just as no two snowflakes are alike, no two people are

alike. We have numerous traits that are similar, we have very similar skills,

but we will never be exactly the same. Each person brings a unique

perspective, insight and expression to the work they do, work that is the

transformation of energy in a process we call creation.

Figure 3

The Energy of Business 47

Figure 4

As shown in Figure 4, through the conscious, active release of energy

from people contributing to the common objective, we derive the major

energy source for the transformative process we call production.

If we expect to transform people’s energy into our desired output, we

must direct and focus their free-flowing energy toward a common

outcome. Getting a group of people together to be “active” would produce

a lot of energy but not necessarily a useful result. The transformation of

their efforts into the goods and services customers crave and value would

not occur. Active but unfocused groups produce undirected states of

diffused energy that soon dissipate.

Think of this like a beam of light. A standard light bulb releases

energy into the room that spreads in a highly diffused manner. This is

good if you want to illuminate the entire room. If your objective were to

use the light to cut through a wall, an ordinary light bulb is of little value.

However, when we focus the light energy into a laser beam, we transform

it into a concentrated form of energy which can easily cut through walls.

48 The Living Organization  

Figure 5

Rarely do we find groups of people being active for activity’s sake, yet

almost everyone has an experience of a group of people doing things in

uncoordinated, diffused ways. For example, a multinational internet

security company asked us to help improve sales growth. We determined

that the sales team was extremely passionate and fully committed to

achieving their goals, but lacked structure to their efforts. There was a

tremendous amount of contributed energy but little in the way of

organizing their combined efforts. Territory assignments made no sense.

Sales people followed their leads as best they could. There was no well

designed sales process so each sales person created their own. Each had a

different definition of where they were in the sales process and a different

way of forecasting the likelihood of closing a sale. You can imagine the

chaos that swirled around not only the sales team, but the rest of the

organization as well. Sales people were in constant conflict over who

owned the opportunity. Engineering kept getting pulled into “critical”

sales opportunities and manufacturing could not forecast production

demands accurately their.

The Energy of Business 49

High levels of energy are critical but not sufficient. As the example

above illustrates without the structure of appropriately designed business

processes there will be a tremendous energy loss through the system.

Business processes are the energy waveguides coordinating the efforts, the

contribution energy, of our people as shown in Figure 5 on the previous

page.

In a complex system there are multiple groups of living entities whose

energy not only must be directed but integrated with each other’s energy

contribution. In our example above the sales efforts need to coordinate

with engineering and manufacturing. An organization is comprised of

individuals contributing their own energy and of individuals working

together as teams. These collaborative teams exchange energy with one

another to collectively achieve the organization’s goals.

Business processes also serve to integrate the different sources of

energy into one powerful force that can move mountains or cut through

walls. They are designed to integrate the flow of energy from the

marketing group so it is in phase with the flow of energy from sales.

Properly designed processes will mix sales energy with operations and

engineering until a total transformation takes place and the process

creates value. This is how energy flows through the system we call

business.

Though it often feels complex, you can keep everything in perspective

if you understand it simply as flows of energy that come from the efforts of

the people, guided and directed by a common purpose into a focused

source like a laser beam. The internal business processes guide the energy

flow of The Living Organization®, directing, aligning, integrating and

transforming the “people power” into the goods and services desired by

your customers.

However, processes cut both ways. They are critical to coordinating,

integrating and focusing energy and they have a tendency to get bloated

and inefficient. We have all dealt with organizations where the rules of

interaction override the purpose of the interaction. We call this

bureaucracy. We usually associate it with government agencies but our

companies can get bogged down in bureaucratic malaise as well. We have

rules for rules sake. Instead of people making decisions based on

situational conditions, they must follow the policy.

50 The Living Organization  

Think of the last time you called customer support for help that

required some deviation from the standard procedure. All too often you

can forget getting any resolution. Even if you go up the chain to the

supervisor, the typical response is, “Sorry sir that is all we can do for you.”

If they are honest they will sometimes say, ‘Sorry sir, this is our policy and

we do not have the authority to do anything else.”

Sometimes our business process is adjusted to incorporate new

situations that have come up from time to time. New rules are laid on top

of existing rules and over time we end up with a series of workflow

processes and rules that makes no sense. We do what we do because that is

how it has always been done. This bloat generates a lot of friction and loss

of energy. Over the last three decades, many companies have attempted to

systematically reduce the loss of energy through the transformation

process. Programs such as Total Quality Management, Six Sigma and

Process Reengineering are all designed to streamline the business

processes used to guide the flow of energy, which reduces wasted energy.

The  Source  of  All  Energy:  Our  People   Maximizing the flow of energy through the system by reducing

energy loss has been the primary focus for organizations since the 1970s.

Some might argue since the beginning of the modern corporation.

However, little was done to address increasing the energy at its source, the

people who fuel the transformation process.

As organizations grow, they add people. This increases the supply of

energy available for the company to transform into the goods and services

for their customers. However, adding people is the least effective way to

increase the amount of energy available. Not only does it add costs such as

labor and overhead, it adds additional complexity since more people

require more coordination.

A better way to increase the amount of energy flowing through the

system is to significantly increase the amount of energy at the source, the

amount of energy contributed by each employee.

The unique quality of people, unlike other sources of energy, is that

the energy people can contribute is infinitely renewable. Humans have

demonstrated that their capacity to contribute energy does not deplete but

can be recharged very quickly. As an energy source, people exhibit

The Energy of Business 51

another unique quality: their ability to contribute energy can actually

expand. Individuals can grow their capacity to contribute increasing

amounts of energy.

This is a fascinating part of this new model – the primary source of

energy, the people within The Living Organization®, can increase their

capacity to draw on a nearly inexhaustible reserve of potential energy.

They are a conduit to an almost endless storehouse of energy, both

physical and mental, and a fountain of creative contributions to the life

and productivity of their collective, corporate body.

I have been involved with a variety of non-profits for over 20 years

and am currently the chairman of two of them. I have always been amazed

by how much energy people who volunteer for non-profits bring to their

efforts. Think about it. These are the same people who leave work drained

and exhausted, feeling the drudgery of their day-to-day efforts to eke out

a living. They leave work and head over to volunteer at their chosen non-

profit. Within the blink of an eye, they are transformed. They become

excited and filled with an energy that is enlivening. Where does that

energy come from? What magical source have they tapped into? Wouldn’t

you like to have your employees apply that same level of energy to their

work to create results for your corporation? In this book and the ones that

follow, you will learn how to create the conditions that open your

employee’s access to that deep well of energy.

We don’t know the limits of human development. We do know that

when people learn and grow, they expand their capability to access and

use energy to contribute to their success. Learning improves our skills,

which allows us to do our task more efficiently. Learning is the ability to

improve one’s effectiveness, the ability to get the desired results with the

least amount of effort. Growth is the ability to increase the amount of

energy a person has available to contribute. People as an energy source

are infinitely renewable, infinitely expandable, and can learn to apply

their energy highly efficiently.

We include “learning” as a critical component of the flow of energy in

our model in Figure 6 on the next page.

There is also, as you can observe in the model, a relationship between

contribution and learning. To learn something, we must accomplish

something we don’t already know how to do. It could be learning to do a

52 The Living Organization  

brand new task or learning new ways to do a task we already do but want

to do better. In either case putting forth an effort towards a goal

(contributing our energy) is a prerequisite for learning to happen. As we

said, when we learn we have more energy to contribute to our efforts,

which creates the contribution-learning cycle.

Figure 6

Increasing the energy contribution of each employee is the same as

increasing employee productivity, a common goal in any organization.

Most efforts at productivity improvement have been oriented around

providing energy enhancers or leverage as opposed to creating a

contribution-learning cycle. For example, tools from the simplest

machinery to more complex computers and robotics all leverage the

efforts of each employee, providing greater output for the same amount of

energy contributed.

But too often leveraging energy with tools is where we stop. Learning

and growth represent more than just leveraging existing energy: they

represent an actual increase in the energy contributed. As we said earlier,

growth increases the amount of energy available to a person while

The Energy of Business 53

learning provides the improved skills to use that energy more effectively.

This combination of learning and growth has the multiplier effect of

making more energy available and using it more effectively. And if you

then add the leverage of tools you further multiply the increase of energy

flowing through the system. The end result: more gets done with less.

54

  CChhaapptteerr 55

“Prosperity  should  never  be  an  end  in  itself,  but   merely  a  means  to  some  wholesome  purpose.”        

Buddha  

  Profit:  The  Good,  Bad  and   Ugly    

The  Need  for  Feedback   Every engineer knows that all systems require feedback to ensure that

they are operating properly. Every working system is designed with a

“feedback loop” to measure actual output, comparing that which is

created to what is desired. This allows the system, and those monitoring it,

to make necessary adjustments.

For business, this feedback loop is the financial system, shown in

Figure 7 on the next page, which we use to measure the successful

achievement of our goals. The financial system is a well-developed system

of metrics that provides insight into business performance. Using the

common, well-understood gauge of money, we have a tangible way to

measure success. If our business is out of balance and not performing in

accord with the marketplace, the gauge of our business system, our

“corporate checkbook” will get out of balance as well.

Proper use of financial metrics can provide critical feedback from the

market and insight into where corrections are needed.

Profit: The Good, Bad and Ugly 55

Figure 7

Without financial systems, companies would be rudderless: they could

not make the necessary adjustments to ensure the system is achieving the

desired outcomes.

Profit is the core metric providing feedback on the performance of the

system, the gauge we rely on to give us critical information on how well

the system is performing. But wait, you ask. We’ve been talking about the

transformation of energy from the source, our people, to the delivery of

goods and services to the market. How does money fit into energy

transformation?

Money is simply another form of energy. Think of how economists

view and work with money. They discuss the supply of money and the

velocity of money in much the same way a physicist will discuss the supply

of energy and the velocity of energy in the system they are studying. In

fact there is a school of economics known as thermoeconomics that uses

the same equations as thermodynamics to understand the economy.

56 The Living Organization  

Thermoeconomics is based on the proposition that the role of energy

in evolution should be defined and understood through the second law of

thermodynamics. And such economic criteria as productivity, efficiency,

and especially the costs and benefits (or profitability) should be

understood as various mechanisms for capturing and utilizing available

energy. Thermoeconomists claim that human economic systems can be

modeled as thermodynamic systems.13

Remember, the first law of thermodynamics says that energy cannot

be created or destroyed. In the flow of business, we convert the energy of

the people into goods and services which are purchased by a customer,

who pays for it with a unit of energy we call money. This exchange of

energy, in the form of money, is used to pay our employees and vendors,

whose energy is converted into the energy that represents the goods and

services we sell to customers. The cycle repeats and is the flow that

energizes business.

Figure 8

Profit: The Good, Bad and Ugly 57

The  Nature  of  Profit   Although some consider profit “the root of all evil,” it is anything but

that. Profit is the foundational metric and a critically important

component of the feedback loop. It provides information on the state of

the balance between two other key metrics – revenue and expenses. Let’s

look at profit in a little more detail, specifically its two main components,

revenue and expenses, shown in Figure 8 on the previous page, and see

how when used properly they provide insight and feedback on system

performance towards its goal of serving customers and society.

As we said, selling your product is simply another transformation of

energy, the exchange of the product for payment. The sum of all such

conversions is the metric we call revenue. Revenue measures the

marketplace’s perceived value of our organization’s goods and services.

The higher the perceived value and the larger number of members of the

market that perceive that value, the more energy we receive and the more

our corporate body will grow.

The second component of the profit equation is expenses. Expenses

are simply the measure of how energy (primarily labor and materials) is

used in the transformation into goods and services. Expenses are an exact

measurement of how efficiently energy is transformed on into the

products and services the market perceives as valuable.

Profit is the metric that informs The Living Organization® about the

degree to which the market perceives value in the goods and services we

collectively produce in relationship to the energy consumed to produce

them. Profit equals the sum total of the perceived value of goods and

services less the energy consumed to produce those goods and services.

Without a proper gauge to provide the necessary feedback, a system

can get “out of whack,” oscillate out of control and eventually fail.

However, as important as profit and the rest of our financial system is to

the success of our business, it is only the feedback on the goal: it is not the

goal itself. When the focus turns to money as the goal, our decisions

become oriented towards the maximization of profits without realizing

what drives profit. We lose sight of why we are in business.

Obsessing over profit or viewing it as the Soulful Purpose™ of an

organization’s existence is not only misguided but dangerous. This is

58 The Living Organization  

when profit, and dare I say capitalism itself, begins to be viewed as the

root of all our societies woes. The blind pursuit of profit, the desire to

achieve profit for its own sake, is what has caused most of the greatest

calamities we’ve experienced in business and society as a whole

(particularly the near collapse of our financial system in 2009). To achieve

profit at all costs, we employ the skills of financial engineers to adjust the

gauge rather than improve the performance of the operation, often at the

expense of the business itself and society at large.

Knowing I was a long term executive with Hewlett Packard, many

people ask me how I feel about what has happened to HP over the last few

years. I can only answer by expressing the great sadness I feel. While I

have not been involved with the company for over two decades, the

positive impact my time with HP has had on my life and many of the

lessons I learned have laid the foundation for my current success. Beyond

that, HP once stood for something and the employees felt the pride of

belonging to an organization that we considered one of the best

companies to work for. The HP Way meant something deep to all of us

who had the pleasure of working there.

The greatest sadness comes from realizing that its troubles stem from

the company losing its way. It lost connection with its soul, that which

made it the unique being that so many looked up to. How did that

happen? Since I was not with the company during those times, I can only

report from the outside. I observed that the company shifted from

standing for something deep and meaningful to defining itself purely by

profit. Carly Fiorina came in as CEO with her number one goal to grow

the company.

I remember their ad campaign featuring the old garage and the use

of the Tagline “Invent” as an attempt to reignite their original sense of

purpose and meaning, but it was all words and no meaning. The real

message was “we are going to grow for growth’s sake” and they did. Carly

put together a very large merger, which many felt was a disastrous

mistake and which led to a major boardroom battle. Carly won and the

merger happened. It wasn’t long before the company realized that she was

not getting the job done and replaced her.

In came Mark Hurd, who everyone thought would restore HP to its

original glory. At first it appeared he might actually do that. He improved

Profit: The Good, Bad and Ugly 59

the bottom line very quickly and from the outside, looking only at the

traditional metrics of profit, he appeared to be succeeding. Then the real

story emerged. From friends who were still close to the company, I

learned that Mark achieved this, in part, by cutting the R&D budget, the

very lifeblood that made HP great. Traditionally HP allocated 10% of its

annual budget to R&D, an investment that allowed it to fulfill its Soulful

Purpose™ of contributing advances in the fields it engaged in. “Making

valuable contributions to the fields we engaged in” was one of the core

principles in its stated objectives when I was with HP and the commitment

to R&D was the way we demonstrated that commitment. Under Mark, the

R&D budget was cut to less than 2%. He increased profits but what did he

sacrifice?

For me, watching the collapse of this once great icon is like watching

the fall from grace of many of our once great leaders, the lies of the

Watergate scandal leading to the resignation of President Nixon, the

steroid scandals that have brought down so many of our sports heroes,

and the many scandals we have experienced over the last decade in the

business community - Enron, Adelphia, Madoff, to name just a few. Is the

chase for profit for profit’s sake worth the price we pay as a society? I

think not.

How did we get here? If profit is the principal gauge of your firm’s

feedback loop and you as a manager don’t like the reading, you face two

alternatives. One, you can adjust the way you do things and change

course. Or you can adjust the gauge to receive the readings that make you

look good to the outside world.

The later might sound silly—indeed it is extremely silly and even

dangerous—but this is what many financial engineers have helped us do

over the past decade. It can take many forms. Off-balance-sheet financing

employed by Enron is one such manipulation that distorts the indication

shown on the profit meter. Another is the clever creation of credit default

swaps and other financial instruments that cloud our ability to obtain

accurate readings from the gauge. The many finance institutions that

created these clever financial engineering tools like Lehman Brothers,

Bear Stearns, and Goldman Sachs packaged groups of assets and

presented them as valuable. They did so by obfuscating the true

underlying value of the assets while giving a false sense of security to the

60 The Living Organization  

asset. This financial engineering improved the reading on our financial

gauge without paying attention to improving the system being measured.

I do not want to imply that all financial engineering is bad. The very

practice began in a sincere attempt to help companies gain access to the

capital they needed to grow and serve their customers. After all the

financial structure of an organization helps firms find the optimal balance

among the many forms of energy they use..

The single most debilitating blow to our corporate society came when

we elevated profit over creating value for customers. This accelerated the

emergence of the dark side of business. “Greed is Good” became the

underlying theme although it was dressed in different clothes: maximizing

shareholder value. As a result, we directed the creative energy of financial

engineering towards adjusting the gauge over organizational engineering

to improve underlying performance.

Ensuring that the investors in a corporation receive a good return for

their investment has always been an important goal for every company.

Without a reasonable return, it would not be able to attract investors to

their company, depriving it of needed growth capital. In the early

eighties, the goal of an organization to “maximize shareholder value”

elevated the bottom line to almost deity status. This is often attributed to

Jack Welch, then CEO of General Electric Corporation, and his

presentation to GE shareholders at their annual meeting. Yet nowhere in

that presentation does Mr. Welch ever say that maximizing shareholder

value is the sole or even key goal for a company. In fact, in a March 2009

interview, Mr. Welch acknowledged that this idea was carried to extremes

when he said, “On the face of it, shareholder value is the dumbest idea in

the world. Shareholder value is a result, not a strategy.”14

Perhaps it was the investment community that decided that what Jack

said meant he was going to maximize shareholder value because that is

what served their purpose the best. Or perhaps it was just the time and

mood of our society that the investor, who by that point in time became

you and me and everyone who had 401ks and mutual funds, wanted to

see our returns grow no matter what.

There are far too many examples of the consequences of this shift in

focus. In 1986 Ivan Boesky was convicted of insider trading. In 1989

Michael Milken was convicted in the junk bond scandal and Charles

Profit: The Good, Bad and Ugly 61

Keating in the savings and loan debacle. In 2001 we had the Enron

scandal, in 2002 WorldCom and Tyco, 2008 brought the revelation of

Madoff’s Ponzi scheme and the collapse of the sub-prime market burst the

housing bubble and led to the great recession. I am not saying that such

misconduct is new to the world of business or any other area of society,

but it is striking how much has occurred since the 1980s when the focus

on maximizing shareholder value elevated profit from a metric that helps

guide our decisions to the ultimate and primary reason we are in business.

Over the last 30 years our society has moved its focus gradually but

steadily away from the vision of the founders of most of our corporations.

Many company founders understand that the true purpose, power and

importance of the company reside in its potential to make valued and

transformative contributions to society. Clearly it is not the purpose and

role of corporations to simply be profit machines.

This shift to maximizing profit as the end unto itself, as opposed to

seeing it as a measure for system feedback, is the fundamental reason why

the word corporation has such a negative connotation, why businesses and

the CEOs who lead them are viewed with such disdain by the media and

government, and why our society is struggling to right the “listing ship of

commerce.”

When I was an executive with Hewlett Packard we, like every

corporation, went through an annual review of our strategy and future

development plans. This review focused on what we could do to better

serve our customers as the primary objective. Profit goals were a critical

metric which we used as a way to know we were achieving our objectives

and generating the resources to fund our growth.

But read most strategic plans today and they will invariably have as

their number one objective, “grow revenues and profits.” And why

shouldn’t they? It is the dominant societal pattern and, as the ocean’s

current pushes the iceberg, the “profit motif current pushes us. It has

become the mantra of our society, “the bottom line of business is the

bottom line,” and who is going to argue against it. It is also very tangible

and easy to measure. Trying to articulate a sense of meaning and purpose

is much more difficult. We all fall prey to the power of the metric.

When I founded Quantum Leaders, I started by developing my plan

for growing the company. When people asked me, “What is your vision

62 The Living Organization  

for Quantum Leaders?” I would invariably answer, “To see my company

become a $100 million consulting firm over the next 20 years.” Then a

dear friend asked me a frightening question, “What does it mean to

become a $100 million company?” It stopped me cold. What did it mean?

Was I looking to just have millions of dollars, more money than I

could possibly spend? Was it recognition, fame and glory that I sought?

Or was there some other underlying drive behind my desire to grow a

$100 million company?

Then I realized that the money goal was nothing more than an

indication of the degree by which we would make a difference in the

world. That’s when I understood that my company’s true goal was more

than merely becoming a $100 million company. It was to make a

difference, to articulate a new model that could transform businesses.

I knew that business was where many people spend the majority of

their time. If we could change the way business related to its role in

society, to its customers, and to its employees, we would make a very large

and very real difference. That’s what my life’s journey has revealed to me,

that is why I spent years developing and evolving this model and that is

what this first book is about.

Now when I am asked what the vision of Quantum Leaders is, I say,

“It is to transform business around the world into environments that support and enhance the dignity of the human spirit as they collectively express this

spirit in service to society.”

63

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“And  as  he  spoke  of  understanding,  I  looked  up   and  saw  the  rainbow  leap  with  flames  of  many  

colors  over  me.”        Black  Elk  

  The  Rainbow  Within  

Our new perspective for leaders views the organization as a living

system, directing the flows of energies within that body of people and

transforming their collective energy and effort into the products and

services brought to the marketplace.

Figure 9

64 The Living Organization  

It follows, then, that two key components for success are to maximize

energy (goods that become revenue) flowing through this living system

while minimizing energy loss (expenses). That is, maximize profits. We

have presented this flow of energy as a single wave, uniform in nature.

Yet it would be more accurate to think of it like the energy of light,

that when passed through a prism is revealed to consist of a number of

different colors, each with its own unique wavelength and frequency.

Like light energy, the flow of organizational energy is a rainbow of

colors. Specifically, in Figure 9 on the previous page we see three separate

waves or fields of energy: Activity, Relationship, and Context, each with its

own discernable patterns, tones and operational frequencies.

Activity  -­‐  the  Energy  of  Doing   So far we have described the

portion of the model that consists

of the flow of energy that lies

within the Activity Field. It is the

energy of action, the energy of

“what we do and how we do it.” It

is the energy that flows from

direct effort and the conversion of

potential energy into kinetic

energy or physical activity. This field is observable, quantifiable and

measurable. It follows closely the laws of cause and effect.

Activities tend to be described and executed in a linear, serial fashion

with one activity following another. The time dimension associated with

this field is close to immediate. When we take action, we see the results

immediately.

Since the results are close in time to our action, the corrective

feedback loop is also almost immediate. For example, when you place a

document in the copier and push start, you get immediate feedback about

the desired results. You will either get the desired copy or you will have to

make an adjustment such as remove a paper jam.

A more complex example is a factory line. In a canning factory, for

example, a packing machine loads all the cans onto a conveyor that boxes

The Rainbow Within 65

them for shipping. If a can gets stuck, the belt backs up and cans

eventually fall to the floor.

Observing this situation, an employee can, in a timely manner, stop

the line, remove the stuck can and make sure everything is boxed

accordingly. If you want to box more, you speed up the line or add more

belts. The relationship to what we do and the results we produce is

directly observable and measurable.

Some activities, such as creating a graphic design for someone else’s

approval, have a longer response time. Yet the feedback loop, the time

between action and result, is still close enough to allow for timely

adjustments until the desired outcome is accomplished.

The nature of information contained within the Activity field is linear

and sequenced in a straight cause and effect orientation. Accordingly, the

skills we need to receive, process and interpret this field’s information are

analytical or left brain skills. We usually measure a person’s ability to

succeed in these types of endeavors with such metrics as cognitive and

spatial intelligence or simple IQ tests.

Relationship  -­‐  the  Energy  of  Interactions     If Activity is the energy of what we

do, Relationship is the energy of

whom we do it with, the energy of

our interactions. The Relationship

field contains the energy that

emanates from one person

interacting with the energy fields

of other people.

The dominant form of energy

exchange in this field of energy is communication. It includes both what

we say and how we say it. It appears to our brain as both a verbal and

non-verbal exchange. In the verbal aspect, the energy is observable and

processed through our senses, mostly our sense of hearing. In its non-

verbal form, it is not so easily identifiable and observable. Yet the

exchange of energy is still very real and present. We simply process the

non-verbal energy through means other than our five senses. This

information carries more weight in our decisions than the information

66 The Living Organization  

processed through our senses. We discussed this in the section on

intuition and “gut feelings.”

Think about listening to a song. In every song, there are the lyrics

and music. The lyrics are the verbal communication, the energy of what

we hear that is processed by the language processing center in our brain.

The music, however, is not processed the same way. Most people

experience it through a feeling state, not the sense of touch but rather

something felt within the body, as if the vibration and rhythm of the music

resonates with and causes our bodies to vibrate at the same frequency. We

process non-verbal communication like this as something we feel in our

bodies.

As another example, think about a time when someone said

something to you that, though you heard the words, the meaning you

experienced was quite different. A common situation is when someone is

feeling upset, you ask them about it and they snap back, “I’m alright,

nothing’s wrong.” While you hear the words, you do not accept them as

true. In fact, you give preference to what you experience from the non-

verbal exchange of energy over the verbal exchange. If the words

contained within the message are in alignment with the music of the

message, then we experience the communication as authentic and

trustworthy. If they are not in tune with our expectations and experience,

however, we will always believe the non-verbal feeling state over the overt

meaning of the message.

Non-verbal communication occurs in all areas of business. In one on

one communication with your customers, employees, and suppliers as well

as in group settings, what you say and the non-verbal energy that carries

the music of your message determines whether the message is received as

authentic or dismissed as so much hype. Simply put, it is not lyrics but the

music that defines the message received.

The Relationship field is not time based. The energy flow is non-

linear in nature and does not follow discernable, cause-effect patterns.

Because it is non-linear, we must draw upon a different set of skills to

process and interpret this information. Instead of the left-brain, analytical

skills so prized in our current business models, Relationship energy is

processed by the right brain. Relationship energy requires our ability to

discern patterns of behavior, their underlying motivations, and experience

The Rainbow Within 67

empathy. We are fortunate that over the last few decades the work of

emotional intelligence experts helped define the skills and characteristics

required to process information from this type of energy.

Perhaps the most well known within the business community is the

work of Daniel Goleman. In 1995 he published the book, Emotional

Intelligence15. Goleman identified four specific skill domains: 1) the ability

to recognize and understand your own emotions, 2) the ability to manage

your emotions, 3) the ability to recognize and understand the emotions of

others, and 4) the ability to manage the emotions of others. Collectively

these four skills give us insight into and a map to improve a person’s

ability to work with their emotions and those of others. It is what

determines one’s ability to work with the energy of the Relationship field.

And as many have come to accept, success is often governed more by a

person’s EQ than their IQ. EQ assessments have become a standard part

of most organizations’ assessment and coaching toolboxes.

Relationship energy adds to the energy of effort, the energy of the

Activity field flowing through the organization. It has the ability to

multiply the sum of all the individual energy contributions.

68

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“Coming  together  is  a  beginning;  keeping   together  is  progress;  working  together  is  

success.”  Henry  Ford  

  Synergy  -­‐  Multiplier  Effect    

We have all heard the term synergy. It is often euphemistically

defined as two plus two equals five. This means we are experiencing the

dynamic increase of the energy in the Relationship field when two people

are attuned to the same energy frequency and the whole suddenly

becomes greater than the sum of the individual parts. As we all know from

our own observations and experiences, synergy is a powerful

phenomenon. It has a huge multiplier effect on the amount of energy

contributed by the collective in direct proportion to their level of

attunement. Unfortunately, it was not easy to create it in our old model of

thinking.

In our current model, we use the concepts of teamwork and

collaboration to spark synergistic energy within our organization. To

accomplish this, we stimulate better teamwork by changing processes,

which is an Activity field effort. Examples of these efforts are the

implantation of new tools such as Knowledge Systems, or through changes

in workflow to facilitate cross-functional team interactions. Both are

designed to stimulate better teamwork by changing processes. Both

however ignore the underlying nature of Relationship energy. In our

current thinking, we believe that Activity drives Relationships, when in

fact it is often the other way around.

An Orange County, California internet infrastructure client was

struggling with their lead conversion rate. They had developed a robust

Synergy – Multiplier Effect 69

marketing campaign to create greater awareness of the new offerings and

to generate additional leads, which they were getting. Yet the sales

organization was complaining that the quality of the leads they were

getting were poor and there was no mechanism to screen out the serious

leads from the “lookie-loos.” We helped create a new process for screening

the leads which included defining a set of criteria that determined a

qualified lead and integrated the communication of leads and lead follow

up with their Customer Relationship Management (CRM) system. We also

implemented a lead administration function to manage the lead

conversion and follow up process. As we tracked the expected progress of

this new set of processes, we found that after three months there was no

change in lead conversion rates. In fact, things were getting worse. The

sales force continued to complain that the leads were of no value and now

marketing was arguing that sales couldn’t close if they provided a lead that

was ready to buy.

The problem was clearly not a process issue. It was a relationship

issue. The VP of Sales did not believe in the marketing department’s

ability to attract good leads and had little respect for the VP of Marketing.

The VP of Marketing felt the VP of Sales was a terrible manager and

couldn’t organize a two-house paper route, let alone lead an international

sales organization. The beliefs each of the VPs held about each other

trickled down to their organizations. With the chaos spinning in the

Relationship field, no change in process or Activity energy would produce

positive results.

Once we cleaned up the relationship issues between these two vice

presidents and their departments, the lead generation process we put in

place increased their lead conversion rate by 57% and improved sales by

32%.

In most companies the Relationship issues are never addressed,

rather they try to make adjustments to the various processes or the metrics

to resolve these issues. When tool and process changes don’t work in the

Activity field, many leaders revert to the fallback position of using the

carrot and stick form of motivation. They begin to play with various forms

of incentive programs with the hope that this will resolve the Relationship

issues.

70 The Living Organization  

The problem with this approach is that it is founded on the false

notion that external incentives drive behavior. This is only partially true.

Since incentives are based on metrics and metrics are part of the Activity

field, incentives can only work on activity field issues. In a corollary to the

age old phrase “you cannot legislate morality,” you cannot incentivize

relationships. When incentives are used to motivate behavior when

Relationship needs are not aligned, they are experienced as a form of

coercion. This can lead to an endless expenditure of Activity Energy (and

money) that will never deliver the desired results.

Why don’t incentives work? It’s like using a hammer to strike a deal

or forge an agreement rather than finding a way to tune into another’s

frequency and become simpatico with the other person’s inner thoughts

and feelings. Without aligning the energies of the Relationship field, you

not only lose the multiplier effect of synergy, you also consistently lose

energy through the system as conflict rides under the surface and causes

added turbulence to the flow.

Another approach that is often employed to resolve Relationship

turbulence is to simply tell those in Relationship chaos to get over it and

get the job done. Sometimes this works but not very often. What you

might get is a brief reprieve from the conflict, but it only goes

underground to resurface at a later time, and usually with more force or

with a never-ending round of low level sniping among the team. Either

way the energy flowing through the system is severely limited and the

speed of execution is significantly impacted.

Does this seem too “touchy feely” for you and your organization? Are

you convinced all that matters is the numbers and the rest will take care of

itself? Do you think it is a waste of time and money to open yourself and

the living organism that surrounds you to such flows of empathic energy?

Then consider your own experience with being part of a high performing

team.

Can you remember how it felt when everyone worked in harmony,

where conflicts among members didn’t exist, and everyone was focused on

the same goal? Remember how energized you were, how effortless the

team seemed to produce the desired outcome. It was as if something

magical was happening and the results you produced seemed to be far

above what anyone would have imagined.

Synergy – Multiplier Effect 71

What would it be like to have a whole organization operating like this?

Impossible you say. I think not. It is difficult, even challenging. But if it

can be achieved by single group, it can be achieved by every group. All we

need is the right model that allows us to replicate it. Does this mean you

have to become a touchy-feely leader? Perhaps it is time to put aside any

past prejudices and experience the world around you in ways you never

thought possible. Opening to such possibilities will produce results that go

beyond what you thought was possible for your organization. It will move

your organization to produce magical results like Apple, Whole Foods or

Trader Joes.

Synergy  Explained   No earlier model of management could explain the phenomenon we

call “synergy.” Our new model, with its deeper understanding of hidden

energy fields, solves this problem.

By understanding communications, verbal and non-verbal, as waves

of energy, then as we learned from physics, when two waves are in synch

their energies are amplified. When the waves are out of synch, they are

attenuated or diminished. It is really that simple. When two people

interact, their interactions will be either amplifying their energy or

attenuating it.

When people’s energies are in synch, this is referred to as being in

tune with each other or attunement. When two or more people are

attuned, we experience the magic of synergy. On the other hand, when

people are out of synch, their energies are attenuated. One of the

interactions that create people being out of synch is misunderstood

communication.

Misunderstandings take on many forms and have a number of root

causes. One might be as simple as miscommunication. I said one thing and

you assumed I meant something else. Or I used a certain word that had a

specific meaning to me and you heard what I said but not what I meant.

Interestingly enough, this happens to me quite often because of my

Brooklyn accent. I say “water” and many people hear it more like

“worda.” It creates some humorous times at home as my wife, who is from

Minnesota, tries to figure out just what the heck I’m saying and whether

or not we’re even speaking the same language!

72 The Living Organization  

Misunderstandings can also assume deeper, more complex forms.

For example, the listener can clearly and correctly hear what is said but

the meaning received is nothing like the meaning intended by the person

communicating.

I was approached by the CEO of an Internet Marketing company in

California. The CEO was concerned by the degree of bickering among the

executive team. While some amount of conflict was OK the CEO was

concerned that it reached a point of significantly impairing the

organization’s results. From the very first round of interviews it was very

clear that this was more than simple bickering, this was a misaligned team.

This group of executives was not on the same page about anything. The

major conflict originally showed itself as differences between the

Engineering department and the Sales organization, mostly around the

prioritization of the product development roadmap. At first I thought the

issue would be resolved by a simple implementation of a product

prioritization process but it quickly became clear that the issue ran deeper

than that. The CTO seemed to think that the core purpose of the

company was to develop a robust technology platform that would enable a

range of offerings to the SMB (Small and Medium size Business) market.

The Sales Manager, and most of the rest of the organization, felt the core

purpose of the company was to provide marketing services to the SMB

market. The difference is subtle but it goes to the very core of what the

company was about and how it would allocate resources to achieve its core

mission.

How could such a rift exist? The CEO, explaining the mission of the

company, said it was to provide marketing services for the SMB market

and that their competitive advantage was their unique technology

platform that allowed them to scale the services with lower costs than the

competition.

A simple misunderstanding? Perhaps. It is easy to see how each side

could interpret the CEOs comments to support their preferred position.

The CEO, like so many other CEOs, thought that by creating common

goals (Activity field) the team will naturally pull together. It did not.

Without clearing out this misunderstanding, the Relationship field went

into chaos. This rift, this simple misunderstanding prevented the

Synergy – Multiplier Effect 73

organization from being able to execute on anything. It polarized the

organization into camps and nearly brought it down.

In The Living Organization® model, misunderstandings are forms of

energy loss from within the Relationship field. This energy loss can easily

become multi-tiered. The first level of loss we experience is in the simple

act of expending energy to clarify and correct misunderstandings. A

second level of energy loss will arise in terms of feelings towards the other

person, often feelings of hurt, anger, distrust or some other negative or

protective emotion. This directs energy away from our focus on creating

desired results and aims it towards protecting ourselves from hurt,

expressing our anger or frustration with the situation, or simply feeling

drained by it all. Remember how draining it can be to leave a meeting

where people are bickering over what seemed like petty details and

nothing got done? Clearly energy directed to Relationship turbulence is

energy not directed towards the desired outcomes.

In addition to losing energy in the Relationship field we also will lose

energy from the Activity field due to Relationship field turbulence. We

lose Activity energy when we redirect it from the creation of results to

actions required to correct the patterns of distrust. There is also the loss of

Activity energy because of the rework effort required to fix the mistakes

that happened because of the original misunderstanding.

Misunderstandings can produce what we engineers refer to as “a

cascading event” resulting in a colossal failure on our part to conserve

energy and direct it towards the desired outcomes.

Turning the energy loss from a situation into a systemic loss of energy

can further compound the problem. When we have a misunderstanding

that is associated with a person of authority, the feelings we acquire about

that leader are transferred to the organization as a whole. This takes the

form of organizational distrust that negatively affects all our future

interactions with everyone in that organization.

Communication misunderstandings at the organization level have a

doubly disastrous impact on the total energy flow throughout the system

since much more energy must be expended to correct the situation.

We can understand the impact of blocked communication flows to our

organization by drawing an analogy to the how the human body functions.

Think of the damage to the human body when you block the flow of

74 The Living Organization  

energy between interacting organs. Parts of the body no longer function

as intended. Any blockage of energy shuts down vital systems and forces

the body to re-route the necessary flow of blood or energy, using up

precious reserves in the process of restoring order to the body. Similarly,

what starts off as a simple miscommunication can turn into major traumas

to your Living Organization®.

The good news is we can reverse the situation and go from

misunderstanding to attunement. Attunement is when the energy,

Relationship and Activity, flows effortlessly among all parts of the

organization, connecting and supporting each other. We have within us

the necessary mechanism and almost all of us have used it at one time or

another, though we may not have consciously known what we were doing.

Most people have experienced a situation where they are so attuned

to another that they can almost anticipate what the other is going to do.

We see this in married couples where one person can finish the sentences

of another or in-tune teammates where one player moves to where the

ball or puck suddenly is passed without a word passing between them.

The famous hockey player Wayne Gretsky was known for his ability to

know where the puck would be and somehow get there right before it

arrived. “Skate to where the puck will be, not where it is,” was how he

would explain it. In business, we see this when one member of the team

can anticipate the needs of the other team members. Ask them how they

knew “where the puck will be,” so they could have what was needed ready

without being asked and they will likely answer, “I just knew.”

In 1996, I joined a technology incubator as the President and General

Manager of one of their portfolio companies. I joined the firm at the same

time as Dave who headed up one of the other portfolio companies. About

six months into my tenure, I was visiting our research facility at the

University of British Columbia in Vancouver, Canada with Fred, the

Founder and CEO of the incubator. During dinner Fred reflected on the

difference between me and Dave.

“I don’t understand it,” he said.

“Understand what,” I asked?

“When I hired you and Dave, I was sure Dave would turn out the

better of the two. During the interview process you came across as a man

who knew his own points of view and I thought you would be difficult to

Synergy – Multiplier Effect 75

manage. Dave on the other hand was very clear that he understood he was

the Captain and I was the General. His role was to understand my

objectives and carry them out. Yet after just a short six months it seems

the reverse has happened. Dave leaves me nothing but nightmares. I tell

him what to do and he seems to do the opposite. It’s as if he doesn’t really

understand what I expect of him. You on the other hand seem to know

exactly what I expect. You have an uncanny ability to anticipate my every

move. You know when to bring an issue to my attention and when you

should just handle it. And it doesn’t seem to follow any pattern. You will

bring me a $200 issue and handle a $200,000 dollar issue on your own.

And the amazing thing is you are always right. It’s as if you are inside my

head and know my every thought. How do you do it?”

How did I do it? A simple answer is that for the first three months I

would watch and observe. I would ask Fred to explain why he was doing

what he was doing so I could discern the pattern of his thinking. I could

begin to see what was important to him and what wasn’t. This is the

beginning of achieving the state of attunement and it goes deeper. It goes

to the ability to allow my Relationship field to resonate with his, which

would allow me to pick up the energy pattern of his thinking.

It is clear from both these examples that some other form of

communication is occurring through a much richer and more effective

channel than mere verbal communication could explain. Heretofore this

could only be viewed as a mysterious force at work, but by recognizing it

as the transfer of energy, specifically Relationship energy, we can learn to

create it and utilize it to our advantage.

In the example above, with this level of attunement between the two

of us, we could operate much faster and much more effectively. The flow

of energy between us was such that we would energize each other. This

exchange of energy between us not only made us more effective, we found

that it also increased the energy flowing through the entire system.

Imagine what would happen to your Living Organization® if you could

create the same impact? How would that increase the effectiveness and the

value of your organization?

76

  CChhaapptteerr 88

“It  takes  20  years  to  build  a  reputation  and  five   minutes  to  ruin  it.  If  you  think  about  that,  you'll  

do  things  differently.”        Warren  Buffett  

  Experience:  The  Driver  of   Perceived  Value  

As mentioned earlier, a company’s revenue is a function of the

marketplace’s perceived value of its goods and services. And a component

of that perception is the experience they have with the products, the

people and the organization as a whole. It is the energy of experience,

another critical element of Relationship energy, which has the largest

impact on perceived value.

This is more than just your customer or client’s interaction with your

organization, though those interactions do have a significant impact on

the experience itself. The experience I’m talking about is the energy that

is actually felt by a customer. This energy takes the form of emotional and

psychic responses that gets burned into their brain as your “brand

experience.” It’s what they remember most about your product or service

and the emotional reason they seek it out or avoid it like the plague.

Experience is the energy that lies underneath the activities of

interaction with your people, processes, and products. It provides them

with an unseen but quite real jolt of energy that either repels or attracts

them to you. We can see this in a simple example of buying and enjoying a

cup of coffee.

Experience: The Driver of Perceived Value 77

When you want to buy a cup of coffee, you have many choices, which

can be simplified into two general categories. The first group includes

stores that offer other products along with the coffee like donut shops,

bagel shops, or convenience stores like 7-Eleven or AM-PM. It might even

be your neighborhood McDonalds. The second category would be the

dedicated coffee establishments like Starbucks, Peets Coffee, and the many

single store locations that focus on the coffee experience.

With both categories, you can get the same basic product, whether a

decaf mocha latte or a simple cup of black coffee. My wife and I often

frequent our local Chevron Miles on the Run Mini-Mart and make a 24 oz

cup of decaf coffee with chocolate syrup and steamed milk. What a

Starbucks “Venti decaf mocha with 2 pumps and no whip” for $4.75 costs

just $1.39 at our local Chevron station. Why would we pay over $3.35

more at Starbucks than at the local convenience store? The product,

coffee, varies little between the two locations. In fact, the value of the

coffee as a product, the commodity price, is $1.39. Why, then, is Starbucks

able to charge a higher premium for what is essentially the same product?

It is the “Starbucks Experience.” There is something seductive in what

Starbucks has created that keeps customers coming back for more. The

difference is in the feeling, the experience of being there.

The difficulty in understanding the nature of experience is that it is

not what a person or organization does that creates it, it is who they are

being as they are doing it. Yes, there is personal service when you walk

into Starbucks and order your coffee, but there is also an energy that

emanates from the baristas that serve you. They may say, “Good morning

Norman, your usual Venti decaf mocha this morning?” and it is the

energy they say it with that will create the experience. If they are truly

glad to see me, I will experience their caring. If they have learned to read

a script and their voice is bereft of any true feelings, I will experience that

I am dealing with a robotic machine and have a very different experience.

This creates the Starbucks Experience. When in Starbucks or similar

establishments, you receive much more than a cup of coffee. You are

buying the experience that Starbucks offers. The experience has the

additional value of $3.35.

Most of us make our buying choices based on criteria other than the

just the product we are buying and often are willing to pay more for that

78 The Living Organization  

something extra. The Apple experience makes products with average

technical functionality stand out by creating an experience that is more

than the product design or the user interface. It is their whole experience

universe, from the buying experience to the support after sale and their

uncanny ability to reframe the business model for delivery of content.

What about Nordstrom, which set a new standard for the shopping

experience that transcended just the act of buying clothes? Or the

experience of shopping at Trader Joe’s where people experience the

attentive customer service, limited yet quality choices and a sense of

adventure. Or the way the Whole Foods mission of making the world a

healthier place is embraced by its employees, its suppliers, and its

customers, creating an experience of belonging to something more than

just shopping for groceries? Yes, products are important and so is price,

but not nearly as impactful as the experience the customers have.

The fact is, the experience of the brand plays a critical role in most

people’s buying decisions. We said brand experience, not branding or

brand image. Image can be manufactured and promoted. Experience of

the brand is the energy that is associated with the brand, the energy felt by

the customer. It is Relationship field energy, pure and simple. Image and

the act of branding is a form of Activity Field energy that is attuned to the

logical, rational mind. It is not what you say or do that counts. It is the

energy you project in what you say or do that creates the experience that

is felt. Experience is an emotional feeling that cannot be manufactured.

What is felt is the authentic nature of the organization. It is a separate

source of energy, which The Living Organization® can capture and

cultivate through conscious choices.

Years ago my wife had confronted me about my feelings towards

something she had done. I don’t recall the specifics of the issue but what I

remember so clearly was how I tried to convince her that it wasn’t true.

While all the words and arguments I had so carefully constructed should

have convinced her that what she was experiencing wasn’t accurate, it

didn’t work. I even tried hard to convince myself it was true. In the end

what I realized was she was picking up on my true, authentic feelings,

even if I wasn’t willing to acknowledge it, either to her or even to myself.

When I was willing to admit that what she was sensing was accurate we

could then resolve the real issues.

Experience: The Driver of Perceived Value 79

It is like our earlier example of a song with its interwoven music and

lyrics. The lyrics are what we say or do, but the energy of the music carries

the truth of our authentic feelings. The same is true for your organization.

You can spin your message any way you want; however, what the

customers will experience is your authentic being. This is the power of the

Relationship energy. It is a separate source of energy that The Living

Organization® can capture and cultivate through conscious choices.

Perception  produces  margin   In every Living Organization®, your cells (people) and organs (sales,

marketing, manufacturing, etc.) interact with Living Customers and other

Living Entities in the marketplace. Whether it is during the sales process

or the initial contact with a receptionist, there is an interaction and an

exchange of energy. Similar to the discussion on Synergy in the previous

chapter, this interaction and exchange will either amplify the energy and

create a positive experience or negate the energy, creating a negative

experience. Where the Relationship field’s Synergy energy adds to or

subtracts from the contribution energy, the field’s Experience energy adds

to or subtracts from the perceived value the customers place on your

goods and services. And perceived value, in the end, determines the

revenue you receive.

In order to survive at such high densities, the cells created structured

environments. These sophisticated communities subdivided the workload

with more precision and effectiveness than the ever-changing

organizational charts that are a fact of life in big corporations.16

In order to survive at such high densities, the cells created structured

environments. These sophisticated communities subdivided the workload

with more precision and effectiveness than the ever-changing

organizational charts that are a fact of life in big corporations.17

As a simple formula this would be expressed as R = PV = FV+EV,

where R is Revenue, PV is Perceived Value, FV is Functional Value and

EV is the value associated with the experience. Returning to our previous

example of buying coffee, the functional value would be the physical

product of coffee itself. The experience value would be the amount of

value the customer assigned to the quality of all the Relationship

80 The Living Organization  

interactions. Starbucks gets an additional $3.35 per cup simply because of

the experience value.

As shown in Figure 10, adding Experience as a mutual exchange of

energy between the customer and the people of the organization expands

the model and furthers our efforts to uncover and understand the path to

creating the magical results we dream of.

Figure 10    

81

  CChhaapptteerr 99

Life  is  without  meaning.  You  bring  the  meaning   to  it.  The  meaning  of  life  is  whatever  you  ascribe  

it  to  be.  Being  alive  is  the  meaning.    Joseph  Campbell  

  Where  the  Magic  Hides  

Context  -­‐  the  Energy  of  Meaning  and  Purpose   This is the energy that flows

from doing that which we desire

- following our passion. It is the

“why” of what we do, the field of

meaning and purpose. This field

of energy is mostly un-observable

to scientists today. However, its

presence is strongly felt. It is

what influences and even

determines what happens in the other two fields of energy: Activity and

Relationship. Context makes its presence known through felt experiences,

an energy we feel in our bodies such as the “team spirit” of a highly

functioning sports team or the “esprit de corps” of the elite military

organizations.

To further understand this sensory experience, think of walking into

a room with a high degree of tension. Nothing needs to be said, nor does

anything have to happen, yet the energy of tension can be felt: it is

palpable. It is at this level of “felt sense” that Context energy travels

through individuals and organizations.

82 The Living Organization  

Within organizations, the Context field is often incorrectly referred to

as the culture of the organization. It is this but is also much more. Culture

is part of Context but not all of it. Context is certainly much more than the

“do’s and don’ts” we associate with the word culture in our society. It’s

even more than the mores and shared values we spend so much time

dissecting and diagramming.

It’s the sum total of all our shared stories, the mythology we make up

to explain our world to ourselves and to others. As such, it is not

something that we can easily observe or measure but it literally defines

“how we do things around here.” An organization and the individuals

within it cannot behave or operate in ways that are contrary to the

Context framework defining the organization.

One can visualize the power of the Context field if one thinks of it as a

container of water. The water takes the shape of the container, so in

essence the container defines the shape of the water. Similarly the Context

field serves to define the shape, the very nature of the organization. All

behaviors that occur at the Activity field and the feelings of the

Relationship field are likewise defined and limited by the Context field

container.

Ever notice how an organization takes on the personality of its leader?

I worked with a technology company whose founder and CEO had a

strong tendency to avoid conflict. In fact whenever he had to deliver

“unpleasant news” to someone, he usually had his VP of Human

Resources do it. This set the Context field energy into a certain pattern

and the culture of the organization as a collective operated with the same

conflict avoidance attributes. People would rarely be direct with one

another and the ability to effectively resolve differences and issues was

seriously diminished. To change this pattern we had to redefine the

stories that set the boundaries of this Context field container.

The Context Field contains energy associated with meaning and

purpose. It is the energy that drives what is known in today’s business

environment as engagement. When people operate with only Activity

Energy, their level of engagement is low; they are merely doing a job in

exchange for a paycheck. When what they do taps into their own personal

sense of meaning and purpose, they draw on a deeper pool of energy

from their own personal Context field.

Where the Magic Hides 83

At a management workshop I attended I heard the story of The

Three Bricklayers. A man walking down the street sees three bricklayers

building a wall. Curious how these men view their rather back-breaking

work, he approached each of them and asked, “What are you doing?” The

first bricklayer answered, “What does it look like I am doing? I am laying

bricks. I put the mortar down and then lay the brick. I do this every day,

all day long.” The second bricklayer answers, “I am laying bricks to build

the wall of this building.” The third bricklayer answers with a sense of

excitement, “Why, I am laying bricks to help build this cathedral to the

greater glory of god. It is such an honor to have such a wonderful job.”

When you give people a sense that their activities have a deep sense of

meaning and purpose, they will contribute a far greater amount of energy

to their efforts and will “come alive.” They become committed and

passionate and fully engaged in what they do. For people who are

committed and engaged by their passion, the act of doing actually gives

them energy. This is why we commonly refer to such individuals as fully

enlivened.

In an earlier chapter I referred to the energy that volunteers at non-

profits have access to and asked what it would be like if this energy was

available to your company? When I first joined HP in 1973 I joined the

Neely Sales Region as a Systems Engineer. I was with the company about

six months and I could already feel there was something unique about this

company that drew people to want to do more than just what was

expected, an attitude and energy that was in stark contrast to my previous

four years at Pratt & Whitney.

I remember attending my first region sales conference. I sat through

the regular meetings, presentations of new products, reviews of results,

and projections for the following year. I also remember a little sales

motivation game the Region Sales Manager had us partake in. He wanted

to stress the importance of keeping in contact with our customers. Of

course this was long before cell phones and pay phones were a common

tool for the road warrior. He had everyone come up and dip their hand in

a bucket of dimes and whatever you could take out you could keep.

Why did this simple exercise remain with me for all these years? For

one, I was not a salesperson. For another, I was brand new to the

organization. Yet, I was part of this team, a fully accepted member. And

84 The Living Organization  

Neely wasn’t just any sales team, our region was the best of the best and I

was accepted into that elite club, not because of anything I did to prove

myself but simply because I was part of the team. This simple act created a

sense of pride, a sense of belonging, and a desire to contribute above and

beyond. There was no way I was going to let my team down.

Was it the simple game of grabbing a handful of dimes? Was it the fact

that I was accepted? Was it that special feeling I experienced just being

part of this organization, the sense of pride, the desire to serve customers

that seemed to be everywhere? Perhaps it was all of that and more. I do

know that the energy I gave during my tenure at HP was far greater than

at Pratt & Whitney. I was not the only one who was that committed and

passionate about what we did at HP. Not everyone was that engaged, but

there were a lot more engaged employees passionate about success than

not, a condition that is often the opposite in many companies.

The  Soul  of  the  Organization   My sense of engagement came from a sense of feeling that what I did

made a difference. I felt that HP was an organization where I could more

fully express what was important to me. I was able to tap into and express

my deeper sense of meaning and purpose.

So far we have been describing the organization as flows of energy.

One can correlate this to the physics or biology of a Living Organization®,

the nature of the different forms of energy and how they flow throughout

the organization. Drawing on the parallel between the corporate body and

the human body, we know that the human body can likewise be described

in terms of its physics and biology, or physiology. But we also know that

there is more to being human than merely our physiology. Similarly, there

is more to an organization than its physiology or physical makeup.

The hidden flow of thoughts, beliefs, and passions are part of the

subtext of living systems, whether individuals or your company. It stands

to reason that, like people who have a deep purpose and reason for doing

what they do, your company also carries within it the energy of its deeper

purpose, the very thing that animates it. The Context field is where this

most critical source of energy resides – its Soulful Purpose™ as show in

Figure 11 on the next page.

Where the Magic Hides 85

Figure 11

Your Company is a Living System that Directs the Flows of Energy, Transforming

them into Desired Results, Fulfilling Its Soulful Purpose™.

All living things come into being for specific and important reasons

defined by this deeper purpose. I don’t believe it is pure randomness that

brings such a variety of energy patterns together to form a particular

living entity, whether it is a cell, a human being or a company.

I believe that energies flow into specific patterns we call life forms for

a very specific reason, a reason that somehow serves Life itself. Whether

this purpose is programmed into us by what some will call God, the forces

of DNA, or the natural flow of an evolutionary impulse, I leave to others

to ponder. What I do know is that an acorn is born to become an oak, a

liver cell serves its Soulful Purpose™ best by becoming part of the liver,

heart cells become part of a heart, and heart and liver become part of the

body. Each living entity takes on a specific pattern of energy that allows it

86 The Living Organization  

to effectively serve some purpose, giving that living entity a unique reason

for existing.

Often to accomplish this purpose a single entity draws together with

other similar “like minded” entities to form a collective that enables it to

better realize its purpose. Atoms form molecules, a collection of molecules

come together to form cells, cells form organs and collectively they form

the human body. People come together to form teams, teams come

together to form departments, and departments come together to form

your company. Each comes together based on a shared desire to serve a

common purpose and achieve a common result by pooling their genes,

efforts and energy together to transform that collective force into

collectively desired results.

The desired result we seek to accomplish emanates from the living

entity’s Soulful Purpose™. It is that Soulful Purpose™ that defines every

entity’s reason for being.

It is also an attracting and aligning force. I am attracted to become

part of an organization, a collective of other living entities, because of a

deep-felt sense, conscious or not, that this group will add to my ability to

achieve my personal Soulful Purpose™. To the degree my Soulful

Purpose™ is aligned with the Soulful Purpose™ of the organization I am

with, my actions will further the purpose of the organization as it in turn

furthers my purpose for being.

The Soulful Purpose™ is the core reason for our being and permeates

all other activities and relationships. It is our unique way of being in

service to the world and leaving behind a lasting legacy. It defines and

determines the contribution we are destined to make and how we will

make it. In the human form of energy, the Soulful Purpose™ helps define

from the beginning of our life whether we should become an engineer or

an artist, a dancer or a painter. In its business form, the organization’s

Soulful Purpose™ defines what role that particular company will play on

the stage of business, the unique contribution it will make to our

community as a whole and the market that company can best serve. The

Soulful Purpose™ expresses itself in the Activity field in the form of the

goods and services it provides to the customers it serves and in the

Relationship field in the people who are drawn to work for that company

or buy its products.

Where the Magic Hides 87

Access  the  Wisdom   Whereas Activity is linear in nature and Relationship is oriented

around patterns, the Context Field is holistic in nature. It is not something

that can easily be dissected or examined in pieces. Context most

commonly manifests itself in what may be called “the totality of

experience.” It is also the source of intuition, insights and wisdom.

It is the one field of energy that connects us to all other fields and

their associated patterns of energy. The illustration in Figure 12 will

provide a useful metaphor to help understand the nature of this

connective characteristic of the Context field.

While the iceberg is seen as a separate entity floating within the ocean,

we also know that the Iceberg comes from the ocean and is made of the

same material as the ocean, water. It is the ocean only in a different form.

Figure 12

88 The Living Organization  

Like the iceberg we also are immersed in a field of energy that is the

same material only a different form. This field of energy has many names

sometimes referred to as life energy, chi, or our inner spiritual field of

energy. But I think of it simply as the infinite field from which everything

emanates.

Like the currents within the ocean that move the icebergs around

there is a flow to the energy of the Context field. I believe this flow directs

life towards evolution, towards expansion and growth.

There is a flow of energy that guides life to evolve to ever-higher life

forms, towards merging into more complex forms with increasing levels of

awareness and consciousness.

The waves of energy emanating from the iceberg in the illustration

are the waves of Relationship energy. It is the “communication” between

one energy source and another. It is the lyrics and music being shared

between two living entities. There is always information being transmitted

between living entities. In our metaphor it is the energy between two

icebergs as well as the iceberg and the collective field of the ocean.

That is not hard to visualize. Think of the communication you have

with another. The information you are about to share is an expression of

what you are experiencing, your personal Context. This could be an

experience of joy or sadness or it could simply be an experience of some

idea or concept you have. We can return once again to our song metaphor

and understand the metaphor at a deeper level. We know that what you

will express consists of the words and the music of your communication.

The words are the obvious part. They are what you say. The music is the

part of the message that carries the words across the medium, the Context

field that lies between the two of you. You can see that what we often refer

to as non-verbal communication is a lot more than simply body language.

It carries the deeper energy of your Context field, the deeper sense of

meaning and purpose.

I took a communication workshop where one of the exercises was to

communicate a certain feeling to my partner. The feeling was whispered

to me so my partner would have no idea what I was attempting to

communicate. In addition I could only use the phrase “fish jump high and

fly.” The feelings I needed to communicate were first upset, then anger

and finally love. I was amazed at how accurately my partner could pick up

Where the Magic Hides 89

on the emotions I was communicating. It’s as if the state of experience I

was holding was what she was also experiencing. I learnt that though we

depend so much on words it is never the words that carry the real

message. And it also taught me that my inner state, whether peaceful,

calm, agitated, loving or upset, is what is received in the communication

regardless of the words I used. The good news is that I have control over

my state of being.

It is the Context field energy that is the power of the music. It is the

energy that is defined by the vibration frequency the state of being I am

experiencing at the moment. And the more I can fully connect my

awareness to this state of being and authentically project it, the more

accurately it will be received. This is the real definition of authentic

communications. The words and the music are aligned and consistent.

What I am experiencing in the moment is what I authentically share.

We also know information is a form of energy. Ideas and thoughts are

simply another form of energy. A lot of information lies within our

Personal Context field but, unless we learn how to draw on it, it remains

below the surface of the ocean in our unconscious. In addition to what lies

within our Personal Context field, one can imagine the vast amounts of

information that lay within the Universal Context Field. Since we are all

swimming in the infinite Context field then it would follow that we all

have access to the information, the wisdom that lies within it, if only we

could learn to tap into it.

Because of its connective nature, Context provides us information and

insight about our environment that we do not have access to through our

normal information processing centers. The “gut feel” or “intuitive

insight” we often experience in our organizational life is really information

coming into our consciousness from the Context Field. This information is

what we often refer to as wisdom, the ability to understand our world at

deep levels, to see the interconnectedness of all things, and the

implications of our actions.

What makes collecting information from this field of energy different

from all others is that the information does not pass directly through our

senses and is not originally processed by the right or left hemisphere of

mental processing. Rather, it is sensed via our body. It manifests itself as

90 The Living Organization  

“shivers up the spine” or “tingling in your toes” and you know you’re onto

something.

Research done by Michael Gershon, chairman of the Department of

Anatomy and Cell Biology at New York–Presbyterian Hospital/Columbia

University Medical Center,18 reveals that our digestive system contains

some 100 million neurons, more than either the spinal cord or the

peripheral nervous system. Emery Mayer, professor of physiology,

psychiatry and bio-behavioral sciences at the David Geffen School of

Medicine at the University of California, Los Angeles (UCLA), has

discovered that about 90 percent of the fibers in the primary visceral

nerve, the vagus, carry information from the gut to the brain and not the

other way around.19

The HeartMath Institute20 explored the physiological mechanisms by

which the heart, also a neurological processing center, communicates with

the brain. This path of communication significantly influences our brains

information processing. Some of the first modern psycho-physiological

researchers to examine the conversations between the heart and brain

were John and Beatrice Lacey. During 20 years of research in the 1960s

and ’70s, they observed that the heart communicates with the brain in

ways that significantly affect how we perceive and react to the world.

Further research by Dr. J. Andrew Armour, one of the early pioneers

in neurocardiology, introduced the concept of a functional "heart brain" in

1991. His work revealed that the heart has a complex intrinsic nervous

system that is sufficiently sophisticated to qualify as a "little brain" in its

own right. The heart’s brain is an intricate network of several types of

neurons, neurotransmitters, proteins, and support cells like those found

in the brain proper. Its elaborate circuitry enables it to act independently

of the cranial brain – to learn, remember, and even feel and sense21.

Whereas Activity Energy is processed by the left-brain and

Relationship Energy is processed by the right-brain, modern research

indicates that the body-brain, the heart-brain and gut-brain process

Context Energy.

In an article written by Dr. Otto Scharmer, a Senior Lecturer at MIT

and founding chair of the Presencing Institute, he states:

“I have spent the past 15 years observing, facilitating and co-leading

change projects in different sectors, systems and cultures. What strikes me

Where the Magic Hides 91

most about these experiences is that the basic problem is the same. It is

that leaders facing problems respond to them by pulling all of the usual

triggers. But more of the same will not be good enough. Leaders and

managers face issues that require them to slow down and even stop; and

then they need to start paying attention, listening, reaching out, listening

more, sensing what wants to happen and reflecting deeply and connecting

to an inner source of knowing.”22

I believe that there is a relationship between the three information-

processing centers of our body. The body-brain picks up information from

our surroundings – the “ocean” of the Context field. This information is

oriented towards a holistic sense, an experience of all that is around us.

The information is first processed by our Heart-brain as felt experiences

and is then passed to our right-brain where patterns are discerned. Those

patterns give form and meaning to our experiences. From there, the

information is presented to our left-brain, where it is sorted, catalogued

and filed away for future reference.

While further research would be needed to prove this hypothesis, it

serves as a working framework that enables us to engage all the

information processing centers of our bodies. The intent, of course, is to

give us greater access to more resources, allowing us to make even better

decisions.

What  gets  measured  gets  improved     As noted, we have learned how to assess our skills and abilities with

Activity Energy. A wide variety of tests, including cognitive skills test, IQ

tests, and motor coordination tests, help us determine our ability to use

logic and spatial orientation, the key skills for working with activity field

energy. Since the mid 90s, we have been introduced to the work of Daniel

Goleman and other researchers in the field of Emotional Intelligence.

Emotional Intelligence (EQ) assesses our ability to relate to others and

ourselves. It is one measure of our skills with Relationship energy.

The next frontier is to expand our ability to assess one’s skills with the

use of Context energy. There are already a number of attempts to

establish a tool that can assess our Spiritual Intelligence or SQ23.

Companies such as Nokia, Unilever, McKinsey, Shell, Coca-Cola, Hewlett

Packard, Merck Pharmaceuticals, Starbucks and the Co-operative Bank

92 The Living Organization  

are increasingly using models for developing and measuring spiritual

intelligence in corporate settings24. At Quantum Leaders, we have been utilizing the SQi Assessment from Deep Change25 with quite remarkable

results for organizations and their leaders in deepening their access to the

Context field wisdom.

Explaining  the  Unexplainable   We know that much of what happens in business cannot be explained

by our existing models, which are based on the machine paradigm. The

machine paradigm views everything through the lens of the Activity Field,

the field of what we do and how we do it. If it cannot be reduced to

actions, tasks and metrics, then it must be that woo-woo soft stuff. While

the soft side of business is acknowledged, it is also easily dismissed as not

as important as what we do or improving how we do it.

For the last half century, business has recognized that the machine

paradigm, which all of our current business models depend on, has had

many limitations. We have attempted to integrate into that paradigm the

ideas of psychologists to improve our overall success, but it never reached

the impact it should have.

Since the middle of the twentieth century we have introduced the

concepts of teams and collaboration, mission/vision/values, strategy

alignment, servant leadership, leadership versus management, and many

other advancements in management theory. These ideas have become

part of the management lexicon, but that seems to be as far as it has gone

in most companies. Rather than integrating and morphing the

fundamental machine paradigm, it became simply ideas bolted on top of

the machine. And the power of the existing system overshadowed any real

change. Even the newest ideas of Corporate Social Responsibility,

Conscious Capitalism and Shared Value,26 are forced to explain their

value using the machine paradigm framework. Even though there is a

large amount of evidence that these new ideas truly make a difference,

they struggle for wide scale adoption. This is because paradigms define

and frame our behaviors and decisions: any ideas outside the existing

paradigm have no ground for existence. These movements have to rely on

Where the Magic Hides 93

anecdotal evidence or “do good for goods sake and it will pay off,” as ways

to stimulate adoption and changes within the organization.

But the path of adoption of any new idea is long and difficult. And

adoption will only begin to happen when the existing paradigm can be

expanded to include new knowledge. When we cannot explain the results

we experience within our existing paradigm, it is basic human nature to

relegate it to luck, magic, the invisible hand, the ether, or the gods. Or we

dismiss it as the workings of the unconscious, something that is equally

beyond our control.

But then someone will come along and create a new model that better

explains what we are experiencing about how life works. With the aid of

these new models, we begin to understand that it is not merely the ether,

but the laws of quantum physics; it is not the wind gods, but the

interaction of physical laws. The evolving theories of psychology and

human behavior better reveal the forces of the unconscious and make

them available to us. Because of these new models, we now have more

control over our behaviors and we have expanded our awareness,

understanding and wisdom.

The Living Organization® is a new model for understanding all the

forces of business and commerce. Understanding the energy fields that

are at play, whether visible or not, helps us to make better decisions and

guide our organizations through turbulent waters churned up by the

forces under the surface of the visible Activity Field; the forces of

Relationship and Context.

What has heretofore been relegated to the unexplainable, the soft-side

of business, is now revealed to be very much part of the hard side of

business. The three energy fields interact with an interdependence that

creates the results we desire.

All  Results  Start  In  the  Context  Field   Back to basics, everything is energy and energy cannot be created or

destroyed. Therefore what we experience as the results in our lives is the

outcome of a process of transforming energy. The Context Field, the field

of infinite possibilities, is the source of all manifestation. It is within the

Context field that the journey of manifestation begins; the process of

94 The Living Organization  

moving from the unformed to the formed, from the field of infinite

possibilities to the field of physical form.

Personal and collective context sets the boundary conditions of what is

possible, of what physical formations of energy can manifest. The meaning

and purpose we ascribe to life lies within the Context field, which defines

the boundaries of our world. It defines the shape of the container of our

life, the particular iceberg so to speak.

The first step in the formation process is the translation of meaning

and purpose into our values and our beliefs, which form our individual

and collective worldview, our paradigms. These in turn define the

boundaries of what is possible and what is not possible. Therefore the

boundaries we weave out of the Context field will quite literally define

what we can achieve and what we cannot. It will either propel us forward

or hold us back.

The  Dance  of  Energy   The three fields are in a constant flowing dance of interactions. For

example, we will ascribe meaning to what we observe in the physical world

of Activity which will impact our personal Context field and our Context

field will set the boundaries of what experiences will take form in the

physical world.

Eventually what we create will be the result of the activities we do, but

the activities we do are governed by the relationships we have and both

the activity and the relationships are governed by the context we hold.

If we just look at what we do, our activity, it might look something like

Figure 13.

Figure 13

Where the Magic Hides 95

But almost every activity we do involves interactions with others as in

Figure 14 below. One can view our activities as being held within a circle

of relationships. These relationships will either support our activities or

hinder our efforts.

Figure 14

Just as activity is held within a circle of relationship, both relationship

and activity is held within the container defined by the context field, as

shown in Figure 15.

Figure 15

A client in the information security industry needed to improve its

win ratio on competitive bids. This contract engineering organization had

gone through the process of redoing the proposal process and even hired

a proposal manager to oversee and mange each proposal through the

process. This however did not improve their win ratio. It was not until we

96 The Living Organization  

identified the hidden forces restraining their success were they able to

improve their performance.

The specific issue was that their cultural context was rooted in a sole-

source bidding environment. In this environment, the key to success was

their ability to develop the most elegant technical solution to the

customer’s’ problems. This became a source of pride for the engineers and

became what the company was known for.

As they advanced, their environment changed and they found

themselves in more and more competitive situations. They were not

winning because culturally, the engineers could not bring themselves to

do anything less than the most elegant technical solution. They could not

propose a plan that required a tradeoff that would diminish the technical

solution so the proposal could stay within the budget constraints of the

customer. It violated their core belief about what the company stood for.

All the costs associated with the changes to the proposal process and

the salary of the proposal manager was lost, as were millions of dollars in

lost business opportunities. It was not because these process changes were

wrong, but because they were implemented without making the necessary

changes in the Context field to realign the framework that defines what is

possible, thereby allowing the needed process changes at the Activity level

to take hold. Once we had redefined the container of the Context field

their win-ration went from zero to 60% in two years.

It’s  All  a  Story   The pattern of our individual and collective container, our boundary

conditions, is defined quite literally by the stories we tell. We believe what

we believe because of the stories we tell ourselves about how life works.

Those beliefs define the results we can and cannot create.

One simple guideline to examine life and your own successes and

challenges is to know that everything outside of yourself is a reflection of

what is happening inside. I use this framework to examine my own life

and it often helps me discover things I am not conscious of as I do

business.

The year 2010 was financially challenging for me as it was for many.

In March I concluded an engagement with a large client, which left a

serious cash flow shortfall. No matter what I did and I did everything one

Where the Magic Hides 97

would do to create new business, nothing was happening. I was unable to

create the results I wanted.

Knowing that my outside world is a reflection of my inside world and

that activities and results are reflective of the Context field, I started

looking there. I began a process of uncovering and exploring the stories

embedded deep within my own personal Context, the stories that define

my boundaries of what is and is not possible. There were many that

related to money, value and worth and they carried a similar theme, a

distinct pattern: “I am so different in the way I see things and no one

appreciates it.”

Logically, I knew I was appreciated by my many clients and could

prove that I had contributed much value to them. But deep within my

unconscious there was a different story. I felt the value of my

contributions were never really good enough. I knew I had a lot of insight

and understanding, but I also had the story that others couldn’t possibly

understand me and couldn’t appreciate what I contributed. My behaviors

were unconsciously following my inner story. I would be tentative with my

insights, even apologetic for my point of view perhaps being different. It

was the inner story I held that was governing my behaviors and what

prospective clients experienced. With this worldview, is it any wonder that

prospective clients wouldn’t be attracted to me?

At the beginning of 2011, I began to weave a new story. I began to

shift the pattern of the old story and in doing so I shifted the pattern of

energy that defined my boundaries. The process is not one of judging my

story or even trying to change it by will and determination. That would be

like trying to tame a wild horse by whipping it back into a corner. Rather

it is a process of observing and acceptance. A process of becoming friends

with my story, acknowledging what part of it is true and how it has served

me to this point in my life. From this place of compassionate acceptance,

the energy is freed from this particular story pattern, releasing it to form a

new pattern, a new story.

I continue to be attentive to my inner stories, the ones that define my

world and my results. I continue to work with the energy flowing within

my Personal Context to reweave those stories to be consistent with what

serves me best today. While there is a part of this process that is

intellectual, an Activity field process, it mostly requires the skills of

98 The Living Organization  

working with the Context field energy. Only by engaging the Context field

can we change the boundaries of what is possible.

This is a personal story and we all have them. But the same is true for

your organization. It also carries deep within the collective unconscious

the stories that define the Context boundaries of what is possible and what

is not. And the same process that has worked on the personal level also

works for the organization. It is a process of first observing and accepting

the collective stories. A process of acknowledging what part of it is true

and how it has served the organization to this point in its life. From a

place of compassionate acceptance, the energy will be released from the

old patterns and allowed to form the new patterns that will better support

what you want to create.

Once new stories redefine the boundaries of the Context field, there is

often a lag time before the results show up in the Activity field. This is why

change is often so difficult, for we are accustomed to the cause effect

relationship of the Activity field. But that often doesn’t apply to the

changes in the Context field.

Because of this it often requires a degree of courage, the courage to

follow your deeper calling and allow life to unfold in ways that are not

always predictable or within our control. I regularly explore my deeper

sense of purpose, my personal Soulful Purpose™ and I clearly hear that

the path I am on is the path I am meant to travel. This path remains my

guiding compass and without knowing what will unfold I am confident it

will yield results. I already sense my inner state of being is fundamentally

different, and it is showing up in my behaviors. I engage people with a

greater degree of confidence. I share my perspectives and insights with a

greater feeling that it really makes a difference. I have begun to have

more conversation with new prospects interested in my work.

As a lover of roses, I accept that roses bloom when the rose bush is

ready. I can prepare the soil, plant the bush, cultivate the roses, fertilize,

weed and water them, but I cannot tell the rose bush to bloom next

Tuesday at 3 PM. The same is true of life. I can weed, fertilize and water

the stories of my Context field and the roses of my life will bloom when

the roses bloom.

My client with the win ratio challenge changed its results by also

weaving a new story about the meaning and purpose of its organization.

Where the Magic Hides 99

When changing our processes does not create the results we want, we

must look at Relationship and Context field energy patterns.

The results we produce start with the stories that make up our

organization’s context boundaries. Reweaving the stories to produce the

required relationships and activities will produce the results we want. Our

next book will explore further the art of storytelling and the power of

reweaving of the boundaries of the Context Field.

100

CChhaapptteerr 1100      

“You  cannot  continuously  improve   interdependent  systems  and  processes  until  you  

progressively  perfect  interdependent,   interpersonal  relationships.”        Stephen  Covey  

  The  True  Nature  of   Business    

We can now more fully understand the true nature of business. It is

more than a machine concerned with the efficient production of goods

and services to be sold to consumers. It is more than a printing machine

for making money. It is more than the simple organization of human

effort in a beehive of activity.

It is a living entity, a multi-dimensional being brought into life to

create and fulfill its Soulful Purpose™. It is a living creative being born to

make a unique contribution to society.

Business  in  3-­‐D   For the last 150 years we have been following the Newtonian view of

business as a machine; a view systematized by the work of Frederick

Taylor and the many management theorists that have guided our

thinking. This is a simple, one-dimensional view of how we create results,

a view that directs our focus on the Activity field of process improvement,

metrics and quantifiable goals.

The True Nature of Business 101

Figure 16

Earlier we described business and the act of creating results as a three

dimensional dance of energy, as in Figure 16 above, of what we do and

how we do it, who we do it with, and the underlying sense of purpose for

why we do it: the Activity, Relationship and Context energy. It is the body,

mind, emotion, and spirit of business, of The Living Organization®.

The rules of engagement change when we see our organization as

living beings that are brought to life to create goods and services that

bring value to those they serve. Rather than the limited view of life as a

machine, we draw from the well of deeper wisdom of how life functions

and we can apply the universal understanding of man’s body and soul to

our previous, inaccurate, model of the “cold, lifeless corporation.”

In Figure 17 on the next page, we compare the attributes of The

Living Organization® with those of “a machine of production.”

Is it any wonder that organizations struggle to implement any real

changes in business? When the Context field boundaries are set to that of

the machine paradigm, no matter what we say or do, we will operate as if

we are running a machine. We might truly believe people are our most

important asset and we might say we are a learning organization, but the

action at the Activity will stay in the boundaries of the machine paradigm.

102 The Living Organization  

Figure 17

When we take on the context of a Living Organization®, suddenly our

organization springs to life. We move from life as a set of tasks to life as

creation. We move from doing what we know we can do to doing that

which creates the future we sense is possible and desire to create. We

learn to cherish and nurture our organizations, to honor their purpose

and marvel at their creation. We commit ourselves more completely and

deeply to their survival, growth and lasting legacy.

We increase our ability to guide our organizations when we learn to

work with the energies that flow throughout them and tap into the

appropriate field for each challenge we face.

Creating results like those of Apple, Whole Foods and other Firms of

Endearment companies does not have to be left to magic. This new science

gives us the framework that allows us to release and guide the energy that

creates the magic. We move from the one-dimensional space of the

machine to the three-dimensional space of life and creation.

The True Nature of Business 103

A  Success  Story   One of my professional service clients is a 50-year-old company that

grew over the years through a combination of acquisitions and organic

growth. For the first 45 years, its acquisition strategy followed standard

rules. They evaluated what the target company did, looked at the financial

benefits to the company to ensure it would be accretive, and made sure

that the business processes were integrated post acquisition. They

experienced the same average success rate of most companies when it

comes to acquisitions. Some succeed. Most fail.

In 2001, the company began to transition from the founder to the

next generation of management. By 2005, the company was under the

leadership of the new CEO and his new executive team. They continued

the strategy of growth through acquisitions with one exception; over the

last six years they did seven acquisitions and all but one was successful. Six

out of seven successful acquisitions. What was different?

While they still followed all the traditional activities of fit to strategy,

accretive, and proper due diligence, they approached the process in a

totally different way. In addition to the traditional Activity field issues,

they focused on the Relationship field and the Context field.

They spend time understanding the Soulful Purpose™ of the target

company, why it exists, what creates meaning for the employees and their

customers. They understand the nature of the relationship the target has

with all of its stakeholders, employees, suppliers, customers, and investors,

not the nature of the transaction relationships but the nature of the

relationship: the quality of the interactions it has with its stakeholders.

Under the new management, an acquisition is more like an adoption

than a purchase. They are bringing a new member into their family and

they want to make sure the new member gets as much out of the

relationship as they will. They live within The Living Organization®

model, not the machine of production model.

The  Model  Applied   In The Living Organization® model, the journey starts from the

source, the people, and is transformed into the goods and services the

organization provides its community, the customers it serves.

104 The Living Organization  

Figure 18

The people, individually and collectively, are the source and the

conduit for the energy of the Context Field. They contribute this energy

through efforts guided by the business processes, business models and

infrastructure of the organization, all to serve their customers. Financial

systems and other process metrics provide feedback on performance.

People, process, and customers are, always have been, and always will be,

three key domains of focus of every executive and CEO.

Another element that CEOs and executives focus on is – Leadership.

While not explicitly called out in this model, we must recognize that

leaders make up a distinct and important subset of the people. They

perform the critical role of stimulating, directing and coordinating the

flow of energy through the organization.

All the activities of a modern day corporation will fall into one of these

four domains, shown in Figure 18 above.

The fifth element, Financial, is the measuring system. It is the gauge

that allows us to determine the optimal balance between creating demand

for our products and services and fulfilling that demand, represented by

Revenue and Expenses.

Revenue is the measure by which the market values the goods and

services we provide. It is the gauge measuring the demand from our

customers and is associated with Customers and Products. Expenses are a

function of efficient and effective use of energy flowing through the

system and are therefore metrics associated with People and Process.

The ultimate determinant of an organization’s success is how well

these four domains – Leadership, People, Process and Customers - are

optimized and in balance with each other.

Our current paradigm, as I have stated throughout this book, is

outmoded in its ability to achieve this optimization and balance. All we can

see through the lens of our current paradigm is Activity related energy.

When a problem exists within our organization, the solutions we tend to

implement will typically be within the Activity Field alone.

The True Nature of Business 105

Figure 19

While Activity energy and the changes we make to affect it are an

important part of any solution, we must tap into the other two fields to

achieve results. To open the lens wider and view a broader, more effective

range of solutions, we must take into account how Relationship and

Context energies play into our current challenges and what they might

offer to provide a more complete and effective solution.

Let’s expand our view of these four domains of The Living

Organization® by looking at the kinds of issues each Energy Field

addresses within the four key domains of business: Leadership, People,

Process and Markets.

Activity   Figure 19 above shows the activity characteristics of each of the four

domains. In the domain of Leadership, Activity energy defines the

traditional role of management. This includes the functions of setting

goals and targets, planning what needs to be done and organizing the

work to get it done. It also includes the function of controlling the work,

which includes establishing the metrics that define success and guiding the

people’s behavior in the organization. This is the activity of making sure

that what needs to happen is happening.

Activity energy is the actual efforts of the people within the

organization. It is where all potential energy is converted into kinetic

energy, where the contribution energy is manifest. To be effective in the

conversion of potential energy into kinetic energy and to maximize the

contribution made by all, it is important to develop and improve

functional and technical skills of the individuals and the collective

organization. This is what determines how efficiently energy is converted

into performing the tasks necessary to create the results.

106 The Living Organization  

Process is where we define the way the energy will flow throughout

the system. It is where we define the tasks that need to be done and the

order in which they should be accomplished. The goal of each Process is

to make the flow of energy as frictionless as possible so there is minimum

energy loss as the energy travels along its path to be transformed into

goods and services. It is where we determine and define the underlying

business model for the organization as a whole and the metrics that

provide appropriate feedback for the amount of energy flowing through

our organization, allowing us to monitor and improve our process. Over

the years we have spent a lot of time and developed a number of methods

and tools to help in the streamlining of business processes. Business

Process Reengineering, Total Quality Management’s Continuous Process

Improvement efforts, Lean Manufacturing and Six Sigma are some of

those tools.

The customer domain is where the actual Activity of exchange

between the company and the customer takes place. It is where the

parameters of success are determined. It is where we find out how well the

organization understands and provides solutions to the needs of the

customers they serve. This is where the organization decides what

products and services to provide to serve specific communities. It is where

the successful fulfillment of its goal can be measured, where value is

transformed into revenue.

Relationship   The Relationship field, in Figure 20, adds another layer of complexity

to the challenges and opportunities for creating the balance between

demand and fulfillment, between revenue and expenses.

  Figure 20

The True Nature of Business 107

The key attribute for leaders in the Relationship Field is their ability

to build teams and foster collaboration among individuals and groups.

In the area of People, we are concerned with interpersonal skills and

each individual’s ability, as individuals and in collective groups, to

communicate effectively, listen to, and empathize with others.

To define the flow of energy through any system, we have to take into

account the interplay of energy flow from one component to another. We

not only focus on the energy flow within the various functions of sales,

marketing and operations, but we also pay attention to the way the energy

flows between and around those units. For Relationship in the Process

domain we are concerned with how the organization is designed to

facilitate effective communication and information exchange between and

among operational units.

The Relationship with the outside world focuses on our brand, our

reputation, our relationships with our customers and our suppliers and all

of the organization’s constituencies. It even includes our relationship with

our competitors, for they too play a key role in our failure or success.

Context   The Context field underlies all this as in Figure 21. It molds and

guides what happens in the other two fields of energy. It defines what is

and is not possible in the other two fields. It is one of the most critical

fields of energy to learn how to work with because it is the structure that

holds the other energy fields.

Figure 21

108 The Living Organization  

To stimulate the energy of the Context Field, leaders need the skill of

inspiring and motivating others.

This is not a process of cajoling or manipulating but rather the ability

to reach deep within others and engage what is meaningful to each. It is

the ability to raise the level of passion, commitment and engagement in

others that creates the additional energy available to The Living

Organization® as a whole. This deeper sense of connection comes when

what is meaningful to them is connected to what is meaningful to the

organization. Their personal Context field energy is attuned to and

stimulated by the flow of energy from the organization’s Context field.

Leaders stimulate this connection by the stories they tell. Stories about

why the organization exists, stories about the difference the organization

makes, and stories about what is important around here all serve to set the

boundary conditions of the Context field. You can determine what an

organization’s Context is by listening to the collective telling of their

stories within the organization.

To maximize people’s ability to contribute the greatest flow of energy

requires developing their intrapersonal skills, as well as their interpersonal

and functional skills. This enhances everyone’s ability to gain a deeper

understanding of their internal drivers: what motivates and sparks their

passion. When individuals are capable of working for reasons other than

mere survival, their level of energy contribution goes up exponentially.

This correlates with Maslow’s Hierarchy of Needs in Figure 22 on the

next page. Maslow’s first level is physical and survival needs. This

correlates to the Activity field, the work that needs to be done to ensure

the organization can create and deliver its products and services, have

enough resources and know it will survive and sustain itself.

The second level of Maslow’s hierarchy addresses the social needs.

This is supported by the Relationship field of the organization’s

interactions with its customers, it suppliers, and even its competition. It

addresses the organization’s need to know where it fits in the social order

and its sense of connectedness.

The Context field relates to Maslow’s higher order needs of Self-

Actualization. It represents the organization’s need to be and do that

which it was "born to do," to fulfill its Soulful Purpose™.

The True Nature of Business 109

The Context field is where we focus our building process to create the

culture that moves and engages people. Culture is “the way we do things

around here.” It’s reflective of the true, deeply held values of the

organization, which may be very different from the espoused values we

see hanging on the walls. This is the field from which the energy of the

Soulful Purpose™ arises to infuse and give life to the whole living body of

people we refer to as our corporation.

Communities of customers, like organizations, are also living entities

we call markets. Like all living entities the dynamic forces of the Context

field impact markets and the market’s Soulful Purposes™ drive the trends

and direction of market movements. The better organizations can

understand these dynamic Context field forces, the better they will sense

the markets’ directions and be able to provide solutions ahead of their

competition.

Figure 22

110

CChhaapptteerr 11 11

The  only  thing  we  know  about  the  future  is  that  it   will  be  different.  Trying  to  predict  the  future  is   like  trying  to  drive  down  a  country  road  at  night   with  no  lights  while  looking  out  the  back  window.   The  best  way  to  predict  the  future  is  to  create  it.                        

Peter  Drucker  

  Putting  it  all  Together  

  Here we are again, our annual strategy retreat. As we begin to file into the room,

each of us is filled with some excitement but mostly skepticism. How many of these have

we been to? At first we thought this was a great idea but after the last five years, I think

we have become somewhat jaded. They all seem to be the same. We start with a series of

exercises to create some sense that we are all a cohesive team, followed by the sharing of a

bunch of data, from which we are then led into a series of discussions to decide what our

strategy should be.

Okay, the exercises are fun and we do learn something about our teammates. The

review of the data does provide some useful insight and we do usually come up with some

good ideas about what direction will give us the maximum results. Perhaps the best of

these sessions is when the facilitator actually documents the results and produces a plan

with specific initiatives with people responsible for them. But in the end, it always ends

the same. We go back to our daily responsibilities and within the first quarter the plan is

almost forgotten, that is until a year later when we get together to plan our strategy for

the coming year. Then we realize how little we managed to get done since our last

strategy session.

This vignette illustrates a common theme we experience with clients,

independent of size or industry. In fact a number of studies show that 90%

of strategies are never implemented. Strategy planning is a lot like New

Year’s resolutions – great ideas, poor implementation.

Putting It All Together 111

The problem is that companies put most of their focus on defining the

right strategy and less attention to executing the strategy. Companies

decide which strategy will provide the most competitive advantage given

its unique strengths. They collect a lot of information about the market,

the competition, and the needs of the customer. Then they decide which

market positioning and branding to choose. They research the Voice of

the Customer to understand what their needs are and what products

would best satisfy them. They utilize strategy decision models such as

SWOT analysis, Scenario Planning, and Delphi Analysis to anticipate the

future. They use strategy-positioning tools such as Blue Ocean Strategy,

Porter’s Five Force Analysis, Environmental Scanning and War Gaming.

Missing in all of these methodologies is the need to execute the

strategy. Yes, it is critical to define the most effective strategic direction,

which when executed, will establish you as the leader in your industry.

But to state the obvious, a mediocre plan well executed will outperform an

outstanding plan poorly executed. We have seen over and over again very

brilliant plans poorly executed. In fact only 10% of companies know how

to execute well since 90% fail to execute on their stated objectives.

A  New  field  –  Strategy  Execution   I once heard David Norton share a conversation he had with Renee

Mauborgne, both giants in the field of strategy. David is co-author with

Robert Kaplan of the world-renowned book The Balanced Scorecard; and

Renee, with his co-author W. Chan Kim, wrote the international best

seller The Blue Ocean Strategy. Renee asked David why The Balanced

Scorecard is so much more popular, which took David by surprise.

“Renee,” David responded, “how can you ask that when you have sold

many more copies than we have?”

“Yes but wherever we go, The Balanced Scorecard is the most widely

used system for strategy.”

David thought a minute and then responded, “Renee, that is because

you are swimming in a red ocean of defining strategy, while we are in the

blue ocean of executing strategy.”27

Strategy is often thought of as a noun; we have a strategy, here is our

strategy, our plan. But strategy is really a verb, a set of actions to move the

organization to a new way of being. Strategy is execution; it is a process of

112 The Living Organization  

executing a set of initiatives that will get you to a desired outcome. Like

the process of growth and development of individuals, growth and

development of an organization is determined by the contribution–

learning cycle we presented earlier in the book. Execution is synonymous

with developing the organization. It is the process of taking actions

designed to help the organization grow and develop to better serve the

customers within its defined communities. It requires the holistic

development of the organization to maximize the flow of all three fields of

energy: Activity, Relationship and Context.

Execution Management is a process of managing the set of actions

that will develop the organization’s ability to perform and create its

desired outcomes. As with many other processes such as project

management, new product development and quality, execution

management will be enhanced by a formal methodology. Without it, we

are left to trust in the unique abilities of one or two leaders who have over

time developed the intuitive ability to guide the organization through its

execution process. This is like the early days of managing projects when

successful project management required the skills of an “artisan” in

project management, or the days before the quality movement where high

quality was hit or miss. Both of the disciplines recognized the value of

formal process and defined skills that would ensure the organization can

systematically improve quality and ensure projects were accomplished on

time and on budget. The same is possible for creating an Execution

Focused Organization™.

Many studies have shown that organizations with a formal strategy

execution process in place dramatically outperform organizations without

one. In one study by IDC Research28, 75% of those companies rated “most

competitive” in their industry used a formal performance management

methodology, compared to only 43% who were rated least competitive. In

a similar study done by the Balanced Scorecard Collaborative Research, of

those companies that outperformed their competition 70% followed a

formal process and only 27% operated without a formal process29.

Strategy  Execution  3.0   How and why did strategy become part of our management

processes? Strategy can be traced back to the earliest days of military

Putting It All Together 113

operations. Sun Tzu’s book, The Art of War, which dates back to the second

century BC, is still considered by many as required reading for military

and corporate leaders. But strategy did not become a formal part of

leadership’s role until early in the 20th century.

The first formal strategic planning for business was the Harvard

Policy Model introduced in the 1920s. The main purpose was to help a

firm develop the best fit between itself and its environment, to develop the

best strategy for the firm. One of the major tools that came from this

model was the well-known SWOT analysis. This could be considered first

generation execution management.

Second generation execution management entered the scene around

1970 concurrent with the recognition of the importance of involving and

aligning all the people in the organization. Policy Deployment or Hoshin

Planning is a strategy management methodology based on the work of

Professor Kaoru Ishikawa in the late 1950s. It is designed to use the

collective thinking power of all employees to make their organization the

best in its field. Hoshin planning added the importance of “cascading

goals” throughout the organization to achieve focus, involvement and

accountability in the strategic planning process.

In Figure 23 on the next page we see a second contribution to the

strategy management methodology from The Quality Movement of 70s

and 80s. Management used the Deming Cycle as a decision process for

managing strategy implementation.

I consider the breakthroughs of Norton & Kaplan in The Balanced

Scorecard as the pinnacle of second generation execution management.

I began working with The Balanced Scorecard in early 1993, shortly

after it came out. Since I believed strongly that organizations are holistic

systems and “what we measured is what we got,” it seemed a natural fit.

As I worked with it though, I felt it was not addressing all of the forces

operating in support of or in opposition to an organization’s ability to

execute. While it was a significant breakthrough, it quickly revealed its

shortcomings to me.

I discovered that it was still rooted in the traditional left-brain, cause-

effect orientation of the Activity field. It focused on what an organization

does and how it does it. It did not include metrics for improving the

Relationship field or the Context field nor did the methodology have any

114 The Living Organization  

explicit way to factor in the interdependent relationships of the three

fields.

As Sir Isaac Newton once said, “If I have seen a little further it is by

standing on the shoulders of giants.” I could only discover The Living

Organization®, The Arc Framework® and The Real Time Execution™

System (RTE-S™) because of the work that has come before. Those who

are familiar with The Balanced Scorecard (BSC) will have already noticed

similar elements in The Living Organization® model.

We kept the four major activities all businesses need to manage –

Financial, Customers, Process and People – and then advanced the body

of knowledge. By seeing an organization as a living entity driven by the

forces of Activity, Relationship and Context, we bring more of the process

of creating results under control.

For example, in the BSC model Learning & Growth lumps Human

Capital, Information Capital and Organization Capital together. In The

Living Organization® model, each element has its own place so companies

can properly evaluate and appropriately define and manage improvement

initiatives.

Figure 23

Putting It All Together 115

Management today orients itself towards one of three major schools of

thought when setting up a decision framework. These are:

Quality Management: “A management approach, centered on quality,

based on the participation of all organization members, aimed at long

term success through customer satisfaction and benefits to organization

members and society.30”

Shareholder Value: “The Shareholder’s money should be used to

earn a higher return than they could earn by investing in other assets with

the same amount of risk31.”

Performance Management: “A framework that translates an

organization’s strategy into a set of objectives and measures and aligns the

organization to them through its planning and control process32.”

(Balanced Scorecard falls into this category)

Just as the four perspectives first introduced in the Balanced

Scorecard are interdependent and one cannot take precedence over

another, these decision-making models are equally interdependent. It is a

mistake to assert that one is the dominant theme an organization should

adopt for success. All three, quality, value creation, and performance

management, are equally critical to the success of an organization. If you

choose one over the other you run the risk of focusing your efforts on

maximizing that dominant theme and potentially losing sight of the

importance of the other two. It would be like a doctor focusing only on

exercise and ignoring diet or lifestyle choices. In the long run if all three

decision frameworks are not properly managed as interdependent parts of

a whole system, the organization will sub-optimize its performance.

The Living Organization® model brings these perspectives into a

single model. By seeing all results as a process of the transformation of

energy, we integrate all activities to balance and maximize the flow of

energy. We simultaneously maximize the quality of products and service,

customer experience, employee experience, shareholder value, and our

relationship to the environment whose resources we use. No one element

can be out of balance if we are to achieve maximum results.

The final area we improved on is the inclusion of the three fields of

energy: Activity, Relationship, and Context. As we discussed in the

previous chapter, The ARC Framework® provides a way to identify the

116 The Living Organization  

forces driving success and the forces hindering success. If we return to the

force field analysis discussed in Chapter 1, we can see in Figure 24 below

the benefit of identifying an organization’s strength and weakness in each

quadrant.

Whether you use force field analysis formally or not, you inherently

always look to maximize the driving forces and minimize or eliminate the

restraining forces.

This is the foundation of how strategic initiatives are decided. But

what if you are not aware of some forces? Does that mean they are not

operating?

Of course not, it only means that you cannot take any action to utilize

them or minimize their negative impact. The result is that you will spend

time and money to implement initiatives, usually Activity field initiatives,

only to miss your schedule and waste resources as the unseen forces

impede your progress.

Figure 24

Putting It All Together 117

Of course not, it only means that you cannot take any action to utilize

them or minimize their negative impact. The result is that you will spend

time and money to implement initiatives, usually Activity field initiatives,

only to miss your schedule and waste resources as the unseen forces

impede your progress.

Strategic  Planning  is  Dead  –  Long  Live  Strategy   Execution  

We opened this chapter with the classical vignette of the traditional

strategic planning session. The current approach for defining where an

organization is going and how it will get there - the ubiquitous Strategic

Planning Offsite meeting - can no longer produce the desired result.

Figure 25

118 The Living Organization  

Why? In our dynamically changing world, the environment at the end

of our planning horizon is not likely to be the same as the environment

when we did the planning. The world that was once fairly stable, the

world that gave rise to the strategic planning process, is not the world we

live in today. The chart in Figure 25 on the previous page summarizes

and illustrates many of those changes.

Clearly we operate in a world where the level of complexity has

increased, as has the reach of our interactions. Our markets are broader

and our customers are more sophisticated and demanding.

The speed of change has increased, as has the speed of

communication. Competition can spring up from the most unlikely

sources.

Who would have thought that Apple would compete with and

threaten the record industry?

For most of the last century, the standard practice was to set a

planning horizon, illustrated in Figure 26 below, usually 3 – 5 years, and

define the desired outcome for that point in time. Under traditional

wisdom you set your time horizon, you define your strategy plan, and

hold to it so that you can focus on executing. Then 3 to 5 years later you

redo the process.

Figure 26

Putting It All Together 119

This approach was extremely viable during the first half of the 20th

century primarily because the environment at the end of the planning

horizon would be very much like it was at the beginning. A relatively

stable environment provides an illusion of predictability and the ability to

control our destiny. It looks like we can decide what we want and how to

create it. By knowing how results were created in the past, we can pretty

much plan how to create results in the future. We can set our plans and

then execute them.

This began to break down during the latter half of the 20th century for

the reasons illustrated in the table. The first decade of the 21st century has

revealed very clearly that any such time-based approach to planning is no

longer viable. We can no longer rely on that predictability and its cousin,

control, to produce success.

Instead we need an approach that creates responsive interaction of

the organization with its environment; when the environment changes,

the organization changes naturally in response. Instead of predict and

control, we must learn how to sense and respond.

This is how all organisms live and thrive and The Living

Organization® model simply reflects how natural living organisms operate.

The diagram in Figure 27 shows the shift from a time based approach

to a more fluid and responsive real time approach of integrating planning

with execution.

Figure 27

120 The Living Organization  

Start  with  a  Compass!     While I believe that Strategic Planning is dead, I do not believe that

setting a strategic direction is dead. The critical objective of all strategic

planning is to establish the direction the organization will head. Without a

clear understanding of where we are going, any path will get us there.

It is impossible in today’s world to give people a clear map of how to

get to the desired destination. For a map to work, the mapmakers need to

have a degree of certainty about the territory that will be navigated. With

the level of complexity and frequency of change happening in our world,

no one individual or even an entire executive team can be that prescient.

The only workable solution is to provide every cell in our living

system, the people of the organization, with a clear set of guidelines for

making decisions on a minute-by-minute basis. We call that framework the

Strategic CompassTM. It has three components for setting a Context: the

Soulful Purpose™, Vision of the Future and Core Values.

The original intent of Mission/Vision/Values was to achieve the very

thing we have been discussing. The idea was to have a well-defined

Mission/Vision/Value to deeply engage all employees, to energize and

motivate them and to have a force that draws them into the future like a

magnet. But most of the current efforts to achieve this have fallen far from

this goal. The major reason is that most companies develop

Mission/Vision/Values statements from an Activity perspective. Here are a

couple of representative samples of mission/vision statements. “We supply technically innovative software and hardware solutions to the OEM

computer market that provide long-term benefits to our customers and our investors.”

“To become the number one produce store by selling the highest quality, freshest

farm produce, from farm to customer in under 24 hours on 75% of our range and with

98% customer satisfaction.”

“To be the best developer of accounting software and grow our revenue by $255

million over 5 years.”

Do you feel energized by such statements? Are these going to engage

you and draw out a deep sense of passion and commitment to the

organization’s mission? My guess is that for most of you the answer is no.

Statements like the ones above will never accomplish this. The simple

reason is these speak mostly about what you do, the Activity field energy.

This will generate some focus but only the energy of the Context field has

Putting It All Together 121

that magnetic, energizing quality. Inspiration is not an activity we do; it is

a connection with a deep meaningful reason for why we do what we do.

Certain companies have developed Mission/Vision/Values statements

that are truly energizing. They have a clear sense of why they exist at their

core. Their vision is a visual picture of what their world looks like as their

Soulful Purpose™ unfolds and is more fully realized. Their Core Values

are truly used to guide their behaviors. And they are not mere plaques on

the wall but are felt deep within the whole corporate body. It is the

“music” of the organization.

Soulful  PurposeTM   Understanding an organization’s Soulful Purpose™ is not a simple

matter of defining what we do and for whom. Rather it is connecting with

the very essence of why the organization has come into being. This is

somewhat easier to do during the startup phase. After an organization has

been around for 10, 20, 40 or 100 years, it is easy to lose sight of why it

exists.

One tool we use to help organizations discover their Soulful Purpose™

is to ask the “It’s a Wonderful Life” question. Many people have seen the

classic movie traditionally shown around Christmas in the United States. It

stars Jimmy Stewart, who feels his life is useless and meaningless. He is

shown by an angel what the world would be like if he was not in it. At the

end he discovers his life does have meaning and purpose and he knows

the unique gifts he is meant to bring.

Like people, all organizations have a unique meaning and purpose

that you can discover by asking the question, “What would the world be

missing if this organization didn’t exist?” The answer will emerge as a

series of stories that you want to capture. Do not try to create a “mission

statement” and do not turn the Soulful Purpose™ into a simple plaque to

be hung in the lobby of your organization. Rather capture and

communicate the richness that lies in the story that conveys why the

organization exits.

Context field is a high-energy field that is given form by the stories we

tell. Your Soulful Purpose™ is captured by the stories you and others

within your organization tell of how you contribute to your customers and

the way those stories move people. Here are a few examples.

122 The Living Organization  

A company that developed flight control systems for the F-14 was having an all-

hands meeting. A pilot in full flight suit walks in and is introduced as a Navy pilot just

back from Iraq. The pilot shared how he was flying a mission over northern Iraq when

his plane was hit. He stood before all the employees today because of the work each one of

them did. If it wasn’t for how perfectly that company’s flight control systems worked, he

would never have made it back to the ship. He was alive today because of what they did

every day, each and every one of them.

An engineering services company that tests products to ensure they are performing

within specs does work for aerospace firms, the Department of Defense, the automotive

industry, and the telecommunications industry among others. In preparing for a

presentation to Boeing, the COO realized how many of the Boeing suppliers they have

supported. In fact he discovered that 80% of products used in the new Boeing 787

Dreamliner passed through their labs. As he visited each facility to share their strategic

direction, he shared this story. He then added, “You can rest assured that when you, your

family and friends fly on the new 787 Dreamliner, they will come home safely because of

the work each of you do.”

A friend of mine who used to work at Edwards Lifesciences shared this story with

me. Edwards sells heart stents among other medical devices. Stents are devices that are

used to keep collapsing vessels open to allow the flow of blood. To ensure that everyone in

the organization knew the real reason they existed, the CEO would periodically bring in

an individual who has one of their stents. As he toured the former heart patient through

the facility he would introduce him or her to the employees in various departments. Then

he would turn to each employee and say, “The work you do saved this person’s life. Never

think for one moment that what you do is not important or that you do not make a

difference.”

These examples are just a few among thousands out there. Every

organization exists to do more than make money, increase market share,

or be the best in their field. The do more than just sell goods or services to

customers. They make a difference. They have a Soulful Purpose™.

What’s yours?

The  Mission   Many think of the mission as the same as the purpose. Perhaps I am

splitting hairs but I think it is important to differentiate the Soulful

Purpose™ from the Mission of the organization. The Soulful Purpose™ is

Putting It All Together 123

the core reason an organization exists, this defines the unique

contribution it is meant to make and it is the foundation on which the

stories that define the meaning and purpose of organization are built.

Any particular purpose can be expressed in many different ways. For

example, I might have the sense of purpose to help green the planet. I

can choose many paths to contribute to this purpose. I can decide to join

in the efforts for reforestation of the planet’s rainforests. I can decide to

focus on the creation of urban greenbelts and parks. I can choose to build

nurseries that focus on helping people create private gardens. All of these

are viable expressions of the Soulful Purpose™ of greening our planet.

Each company not only has a particular Soulful Purpose™, it will also

choose a particular mission that allows it to express that purpose. Soulful

Purpose™ is why we are doing what we are doing and the Mission is how

we express our purpose.

Future  Vision   Once you clearly know why your organization exists and what

contribution it is meant to bring into the world, you can ask the question,

“What would the world look like in 3, 5 or 10 years if your Soulful

Purpose™ was more fully realized?” Again, this is different than the more

common vision statements that we see hanging on the walls of corporate

lobbies, the ones that say it is our vision to be the best, the biggest or the

leading company in our industry.

The future vision is a story, one that is imagined, dreamed, and

created out of a collective desire to see it become so. Remember,

everything is energy, the table is energy, the chair is energy, and your

computer is energy.

A tree is energy, you are energy, and your company is energy. The

difference between energy in the form of a living organism versus other

forms of energy is that living organisms transform energy - they create!

The difference between viewing your company as a Living Organization®

versus viewing it as a machine of production is that machines do not

create, they merely produce.

When organizations create as an expression of the Soulful Purpose™,

they experience a flow and ease to their efforts similar to the ease and flow

124 The Living Organization  

individuals experience when they create the results they are meant to

create. It feels as if they are effortlessly manifesting magical results.

The future vision is the story of your Soulful Purpose™ unfolding.

When defining the picture of the future, it is useful to look at the whole

corporate body. You can approach this by asking, “When our Soulful

Purpose™ is more fully realized, what will customers experience, what will

our people experience, what is the nature of our leadership team, how will

we operate, and what will be the measurable results?” In other words

define each element of The Living Organization® - Leadership, People,

Process, Customers, in each of the three fields of energy - Activity,

Relationship, and Context.

Core  Values   Core Values are those deeply held beliefs that are inviolate. Though

behaviors may not always be in accordance with them (organizations are

only human after all), the organization is fully committed to stand behind

them. It is important to establish your Aspiration Core Values. This is

likely to be different from your actual lived core values and this is

absolutely perfect. As with the development and growth of individuals, an

organization must set its sights on what it aspires to become. It is in closing

the gap between what we aspire to and what we actually are that sets in

motion the process of transforming energy.

Since there is always a gap between aspired core values and lived core

values, the real question is not why a corporation behaved out of integrity

with its core values but rather what does it do when it discovers such

behavior. Do they rationalize the behaviors or do they move quickly to

regain alignment? By honestly observing and using our actual behaviors

as a mirror of who we are truly being, we create an opportunity to go to

the next stage of organizational development.

Like a person, an organization can become conscious. It starts by

defining what it wants to stand for and works to remain conscious of when

it is living in accordance with its beliefs and its core values and when it is

not. Just as a person grows and becomes conscious when they understand

what in their unconscious is driving them to behave inconsistently with

their core values, so too will an organization move from unconsciousness

to a conscious organization.

Putting It All Together 125

Such an organization is aware of why it is here and what it is meant to

contribute. It knows its purpose and how it is to serve. It lives to be in

service to all of its constituencies. It knows what it stands for and creatively

works with its environment to create a future consistent with its deeper

purpose. A conscious organization knows when it is not operating within

integrity and quickly realigns itself, using those moments as opportunities

to learn about and integrate more of its purpose.

Living a conscious life is consistent with achieving results.

Leadership’s role is to bring themselves and the organization into

alignment with their deeper purpose and core values on the path towards

its goals. This is the path to achieving the kind of magical results we

opened the book with. The key is having a system for creating the desired

results that reveals all the forces impacting success and allows appropriate

actions to be taken for each of those forces.

Alignment  is  the  key   Setting the direction is the first step. Without a compass, the

organization will wonder from opportunity to opportunity reacting

instead of creating. And once we know where we are going, then we must

get everyone to go in that direction. The whole organization must be

aligned so that everyone has the same line of sight in the same strategic

direction.

To better understand the power of alignment, let’s continue the

analogy that the corporate body operates in a similar fashion to the

human body. We know that over 90% of our behavioral responses to our

environment occur semi-autonomously. The nervous system determines

the body’s response to thousands upon thousands of simultaneous inputs

received from our environment. The brain (our body’s central decision

making center) has very little say about how our body responds most of

the time.

The fact that much of our organization’s behavior has become

unconscious is mostly a good thing; it has been incorporated in the semi-

autonomic nervous system of the corporate body. Imagine what life would

be like if all decisions had to first go to our brains for a decision before any

action could occur. There are thousands, perhaps millions of choices

126 The Living Organization  

being made between the many functional parts of our bodies in one of the

most coordinated and collaborative team efforts one can imagine.

It’s a lot like learning to ride a bike. Eventually we become proficient

because most of the rules for riding and balancing have become part of

our unconscious, part of our semi-autonomic nervous system. This is what

allows an organization to operate with a high degree of efficiency. It is also

what makes changing the basic rules for how we operate so difficult and

why we have to make those rules conscious once again.

What we call resistance to change is really nothing more than energy

that has formed very strong flow patterns. Our organization only appears

to be resistant to change because these energy patterns usually remain

under the surface of what we pay attention to.

Think about what happens when you drive on the freeway at 65 mph.

How much of your conscious thought is focused on driving? What

percentage of your brain is coordinating your foot, which is pressing on

the pedal, or your arm which controls the steering wheel? Imagine the

vast number of data points supplied to the processor in your brain from

your eyes as they scan the environment around you. All this is going on

while our conscious thoughts are focused on everything but our driving. It

is quite amazing that we ever get to our destination, let alone get there

safely.

In the traditional approach to strategic execution, the CEO and

executive team participate in an offsite planning session where they

evaluate strengths, weaknesses, opportunities and threats, (the classic

SWOT analysis), set the future direction for the organization, and map

out specific action plans that they believe will achieve the desired results.

They then go back and communicate these well thought-out plans to the

rest of the organization with “marching orders” listing what the various

functional departments will do.

This approach puts a lot of emphasis on the executive team (the brain

of the corporate body), and forces it to remain heavily involved in decision

making. Starting with the planning process and carrying over into the

myriad day-to-day decisions, the executive team remains the dominant

decision maker. When the environment moved slower this was acceptable

but at today’s rate of change this no longer works. It is analogous to the

brain guiding every movement while driving a car. The driver would slow

Putting It All Together 127

down to the same speed as a student driver trying to get everything

coordinated.

Wouldn’t it be nice if our organizations could get us to our destination

with the same degree of semi-autonomous behavior as our bodies do while

driving a car? What if your corporate body could respond to a rapidly

changing environment with the speedy and accurate decisions that ensure

our ultimate success, much as the human body gets us to our destination?

The solution lies in understanding the nature of decision-making:

every decision is made within a specific context. When we face a choice, we

evaluate the various options against a defined set of criteria. We do this so

rapidly we are not aware of it but in fact every decision is made within a

defined context. This context holds three major pieces of information.

The first is what we came here to do (as best as we understand it at the

moment), which is the contribution we are uniquely gifted to make, our

Soulful Purpose™. The second is the values that define what we stand for,

which are the beliefs we hold so dear we could not possibly violate them.

The final component defines where we are going, the results of our

Soulful Purpose™ expressed. With these three key parameters, making a

choice is quick, easy and straightforward.

In the current approach to strategic planning, a well executed off-site

meeting will establish a Context for the organization that is strong and

powerful and will act as the compass for the executives as they move

forward. Unfortunately that is where it typically resides, with the

Executive Team. Little, if anything is ever done to infuse this core Context

throughout the organization. Instead, the executives usually communicate

only the “what and the how” of the plan (Activity), not the “where and

why (Context).”

Without the Context for sorting and evaluating input, the corporate

body will never be able to execute without continuous involvement from

the executives. Going back to our driving example, most organizations

today operate like student drivers who think about every move they make.

Or worse yet, everyone in the organization makes rapid decisions based

on a variety of contexts, none of them well aligned. Either way the

execution is slowed way down.

128 The Living Organization  

To function at the speed of today’s business environment, the

corporate body must operate in a semi-autonomous fashion, much like the

human body.

This requires a different approach to strategic planning, with most

planning focusing on establishing a strong Context that goes beyond being

merely communicated: it is deeply infused throughout the corporate

nervous system. What is communicated goes beyond the usual “what and

the how” of the plan, and includes the deeper more meaningful “where

and why.”

When every individual (the living cells of the corporate body) is

infused with the right Context for making decisions, then like our bodies

when driving the car, they will respond in appropriate alignment and

make the right decisions.

The  title,  the  lyrics  and  the  music   We have stressed that the elements of The Strategic Compass™ are

not the simple mission, vision, values statements we have all become

familiar with. Yet at some time, the work of defining the elements of

Soulful Purpose™ Mission, Core Values and Future Vision will be reduced

to a set of statements that will be passed around the organization. It will be

up to the leaders to keep the impact of the Soulful Purpose™ alive in

people’s minds.

Remember that statements hung on the wall do not generate the

energy that creates passion, engagement and alignment, only the stories

that carry the Context Energy can do that. If we think of how songs

impact us, we can recognize how to have it all.

A song title does nothing to create the emotional connection we have

with a song. Neither do the lyrics alone, although they are much more

powerful than just the title. It is the combination of the music and the

lyrics that creates our emotional attachment to a song. So much so that

many years can go by without hearing the song and the minute we hear

the first few bars, we are immediately reconnected with the experience.

We can even hear someone mention the title of the song and our minds

will begin to replay it with its full emotional impact.

The stories we tell with the full range of emotions behind them are

the combination of the lyrics and the music. When our organization fully

Putting It All Together 129

embodies the story, then the title of the song will carry the full impact of

the song itself. The statements that will eventually be passed around and

hung on the office walls will evoke the song, the lyrics and music that are

represented by the title.

130

  CChhaapptteerr 1122

“Our  experience  inside  organizations  has  taught   us  that  superior  strategy  execution  requires  a  

system,  not  a  series  of  diverse  projects  performed   in  different  parts  of  the  organization.”        Robert  S  Kaplan  and  David  P.  Norton  

  Executing  in  Real  Time  

  All execution management systems rely on the basic formulas of

knowing where you are, defining where you want to go, and deciding on a

path to get there. As you move toward your desired goal, it is also

necessary to track your progress and make adjustments if you are

trending off target.

Real  Time  Execution  System™  (RTE-­‐S™)   This is the same approach we use in the Real Time Execution

System™ (RTE-S™), the performance and execution management process

for The Living Organization®. It follows the “Plan – Do – Check – Act” of

Deming’s quality process discussed earlier.

In the RTE-S™ model shown in Figure 28 on the next page we have

six basic steps: Define, Assess, Decide, Perform, Evaluate and Align.

Unlike other systems, we place Define in the center of the action. This is

done for two reasons. First, it is not merely a step in a cyclical process but

rather it sets the direction and the context for all decisions. It is in essence

the Strategic Compass™. All other components of the system rely on this

compass as the center of all decisions and choices. Similarly Align is also

not a step in decision making as much as it is the boundary conditions

within which decisions are made.

Executing in Real Time 131

Figure 28

It’s  about  time   In our approach, we include time as a critical function of the process.

One of the beautiful aspects of business is that it is time based. When we

establish goals, we set a time frame for when the goal is to be

accomplished. When we calculate Return on Investment, time is an

important component of the equation. Time is an important component

for development as well. It sets in motion the change process that brings

about the challenges that invoke our development. Without time, there

would be no forward motion. Everything in business, and in life, is about

time.

The diagram in Figure 29 on the next page shows the six steps of the

Real Time Execution System™ along the time dimension. We see that our

circle is now represented by a wave function.

From this perspective we can further see the importance of the

Strategic Compass™. First, it sets the direction of the organization’s efforts.

132 The Living Organization  

The Strategic Compass™ is the central vector around which energy flows.

The Soulful Purpose™, along with the Future Vision, directs the flow of all

Activity and energy transformation. It acts as wave-guides for the

transformation of energy. It sets the boundaries for the behaviors of all

the cells of the corporate body.

Also notice in this diagram that the frequency of the wave defines the

speed of execution. The rise time of the Assess segment is directly

proportional to the organization’s ability to accurately assess its position

relative to its environment. The Decide phase orients the organization to

what it will do in response to its environment; the more accurate the

assessment the more accurate the response. Perform is the act of releasing

the energy, transforming it into the desired outcome. As with all physical

systems, the amount of energy that can be released is a function of the

potential energy stored in the system. The amplitude represents the

amount of potential energy derived from drawing on all the forces of the

Relationship and Context fields and applying it to the Activity of the

Perform phase. Finally, the Evaluate phase sets the stage for the necessary

midcourse correction and triggers the next cycle.

Figure 29

Executing in Real Time 133

Alignment   The second benefit of a strong Strategic CompassTM is that it sets the

boundaries for behaviors and serves as the foundation for aligning the

organization and does it in a way that opens the creative forces of the

organization rather than shuts them down.

In the traditional approach to alignment, goals are established at the

top and cascade down to the rest of the organization. This top-down

process tells the people in the organization what is to be done and at times

even tells them how to do it. This has the side effect of constraining

individual and organizational creativity.

By establishing a Strategic Compass™, ingraining it within everyone as

part of their personal context, you create room for each individual to

respond to the challenges they face with the utmost freedom for creativity

while still retaining focused execution.

I once attended a workshop where the presenter told a story about

the U.S. Constitution. He explained that after much debate over the

framing of the constitution, the real power lay in the simplicity of the Bill

of Rights, the first ten amendments. Each one of them begins with

“Congress shall not…” The comment he made that day impressed me.

“Because it set the boundaries of what we could not do, everything else

was possible.” He went on to remind us that the last five commandments

of the 10 commandments also start with “thou shall not...”

It was easy for me to see how this applied to organizations. Rather

than set up a lot of procedures to tell people what they are supposed to do

and how they should act, what if we simply told them the boundaries that

they could not cross. That leaves a lot of room for them to decide how best

to accomplish what they were hired to accomplish. In other words, a

creative environment is best achieved when the boundaries are clear and

individuals are allowed to choose whatever approach they feel best

achieves the objectives that lie within the boundary.

Alignment surrounds the activity cycle of Assess-Decide-Perform-

Evaluate. Drawing strongly on the Strategic Compass™, alignment is the

process of establishing the boundary conditions within which freedom of

action is allowed. The key elements of alignment are:

134 The Living Organization  

Goal Alignment – Goals are the metrics we use to inform us of our

progress and if we are on track to our desired results. Goal alignment

means that each business unit, functional department and individual’s

goals represent their contribution to the overall effort. This is achieved

through the alignment of each unit’s objectives, metrics and targets. Each

unit knows how their results contribute to The Living Organization® unit

it is part of starting with the individual moving up to the team(s) then to

the department and ultimately to the organization. This relates to Activity

field Alignment.

Infrastructure alignment – An organization is supported by many

systems that define how work gets done. These systems traditionally have

evolved from previous stages of the organization’s life cycle and can

become calcified. The often-heard comment “we do it this way because

that is the way it has always been done” is the symptom of an organization

whose infrastructure is now defining its behaviors rather than supporting

them. Infrastructure alignment is directly related to Relationship field

alignment.

Cultural Alignment – Perhaps the most important and often

overlooked component is the need to align the culture of the organization

with the strategy. Like infrastructure, culture evolves over time, carrying

with it the good and bad of previous stages of the company’s history.

Culture is the key element of the Context field; and as we will explain

below, all activity will be limited to only those actions supported by the

culture. This is the alignment related to the organization’s Context field.

Figure 30

Executing in Real Time 135

Commitment Alignment – The organization will execute its strategy in

direct proportion to the level of commitment the collective organization

holds. It is critical to determine the level of commitment and to keep

deepening it to accelerate the speed of execution. One of the strongest

ways to get commitment is to give people choice. Choice empowers

people. When they choose to commit to the Strategic Compass™, their

level of commitment will rise proportionately. So will their level of

engagement and passion. That is why Commitment Alignment is related

to the individual’s Context field.

Know  your  Place   All living creative organisms are in relationship with their

environment. They know their capabilities and the factors in the

environment that will impact their ability to create their desired outcome.

They operate in concert with their environment, drawing resources from

it and giving back to it to maintain balance. Organizations are no

different. The organizations that know their capabilities and their place

within the total ecosystem will, like all living beings, outperform those that

don’t. This is the purpose of the Assess phase of RTE-S™.

Using The ARC Framework® described in the previous chapter and

shown on the previous page in Figure 30 allows an organization to get a

richer picture of the capabilities they can draw on. It also allows them to

get a clearer picture of the environment they operate in and the deep

trends of the total ecosystem. It is the traditional SWOT analysis from

Execution 1.0 expanded to provide a more robust view of all the forces

impacting success.

What  to  do,  what  to  do?   Now that the organization is armed with information about its

environment and its own strengths and weaknesses, it can decide the next

course of action to move it closer to its desired outcomes. It can define a

roadmap for the next phase of Execution, how best to close the gap

between the desired state and the current state. The Decide phase

establishes strategic themes, the execution map, and strategic initiatives

and establishes the strategy investment (StratEx) budget.

136 The Living Organization  

Figure 31

Developing the execution roadmap must take into account the

relationship of Activity, Relationship and Context fields as described

earlier.

The activities an organization can perform are within, and supported

by the Relationship and Context fields. An Activity that is outside those

fields cannot be accomplished no matter how much effort is applied

without first expanding the other two fields to include the new Activity.

This is one of the critical aspects that make RTE-S™ a management system

that will save time and money.

When defining the initiatives and their sequence of execution, it is

critical to take into account the interdependencies of the energy fields.

Recall the relationships of Activity, Relationship, and Context as we

discussed in Chapter 9 and shown again in Figure 31 above. If a desired

outcome requires a change in activity that is outside the Context Field

domain, then an explicit initiative to reweave the stories that define the

context boundaries must be a precedent or least a parallel initiative.

Appropriate resources must be allocated to this initiative to ensure its

successful completion. If this is overlooked, as it all too often is, the

company will waste time and money trying to implement a change in

activity that cannot be successfully implemented.

The outcome is a roadmap and a scorecard for guiding and managing

the execution. Like any roadmap, it provides the direction for the journey

and key mileposts along the way to ensure you stay on track to the

destination. The Execution Map™ shown in Figure 32 on the next page

Executing in Real Time 137

provides a framework for tying together all of the elements of the Real

Time Execution System™ and provides a map to navigate your journey.

The Strategic Compass™ sets the direction. The objectives for each of the

key domains provide the guideposts along the way.

The Execution Scorecard™ translates the map into a set of specific

initiatives to execute and also identifies responsibilities, metrics, targets

and required investments. The scorecard initiatives are the most likely

path as can be best determined at the beginning of the journey.

The Evaluate and Assess phases will ensure that the initiatives being

performed remain appropriate to the constantly changing environment.

Figure 32

138 The Living Organization  

Get  ready  the  future  is  coming   Strategy is all about the future so strategy execution has to be more

than simply getting things done. Another way to view strategy is that it

prepares the organization to meet the demands of the future it is creating.

In other words, it is a developmental act.

Like the development of a person, we must pay attention to the skills

the organization has, which reflect its ability to perform in the Activity

field. We can also easily recognize the importance of the relationships it

has with all of its stakeholders, customers, suppliers, employees, investors,

etc. What may not be so obvious is the importance of determining the

organization’s collective Emotional Intelligence (EQ).

EQ has become a fairly common skill dimension when dealing with

individuals. It has been shown repeatedly that EQ is considerably more

important to an individual’s success then their knowledge or functional

skill set. Emotional Intelligence, described earlier in more detail, can be

summarized to cover four skill domains – Self-Awareness, Self-

Management, Social-Awareness, and Relationship-Management. You can

also evaluate the collective Emotional Intelligence of organizations along

the same four domains.

To illustrate, have you ever witnessed an organization respond to a

change in conditions in a way that resembles a childlike outburst, or go

into a collective state of depression when something significant happens?

A client in the food services industry brought me in because the

organization as a whole was not performing and there was no apparent

reason why it shouldn’t be. During the assessment phase I uncovered a

deep sense of grief pervading most of the executives and managers. Not

that anyone specifically stated this; rather it showed up in what they

weren’t saying and how they were talking. I saw the same signs an

individual exhibits when going through a death and mourning process.

It turned out that the organization had undergone significant re-

organization and everyone was experiencing the loss, the “death” of the

way things used to be. The first thing we did prior to the rest of the off-site

agenda was to conduct a mourning ceremony. It was a simple process.

Everyone lined up by his or her length of service and each one described

the way the organization was at the time the first joined the company. We

Executing in Real Time 139

went from the birth of the company to the current day. This process

allowed the collective to remember and honor what had come before, to

let it go, and then open to the creation of what was to come. Organizations

as collectives process emotions the same way an individual does.

As with emotional intelligence, which measures the skills of an

individual and an organization with Relationship energy, we need to

determine an individual’s and an organization’s ability to operate within

the Context field. Also discussed earlier, this is much interest in Spiritual

Intelligence, the ability to work with one’s sense of meaning and purpose.

Thanks to the work of Cindy Wigglesworth, we now have an assessment

instrument, the Spiritual Intelligence Inventory (SQi) that also determines

skills in four domains. For SQi those domains are – Self/Ego-Awareness,

Universal-Awareness, Self-Mastery, and Social-Mastery/Presence.

The point is clear. Like helping an individual grow, develop and

mature, preparing an organization for the future is a process of working

with all the skills associated with Activity, Relationship and Context. Like

an individual, if an organization’s development is stifled, it will limit how

much it can contribute and produce. When I coach individuals who want

to improve their lives, we define the needed functional skills that the new

desired lives would require. I also work with them to improve their

interpersonal skills so they could build the networks and relationships

they will need to support their new life. And I work with them on the

beliefs that might sabotage all of their other efforts if not properly

addressed. If this is required to significantly improve an individual’s life,

why would the same three domains of developmental effort not be

required for an organization?

Incrementing  or  Innovating  –  It  makes  a  difference   Does your strategic direction call for incremental improvement of

your current business or are you setting out on a new innovative approach

to serving your customers? There is a distinct difference between the two,

one that will significantly change the challenges of execution.

The best way to understand the difference is to think of your

organization as a simple manufacturing production line. A production line

is set up to produce a certain product and is optimized to produce that

product in the most efficient way possible. When it is time to produce a

140 The Living Organization  

different product, the production line is stopped and retooled for the new

product.

Your company, like a production line, has been fine tuned to produce

the goods and services for the customers you serve. Every aspect of your

company from engineering to finance, from operations to sales has

evolved over time to make the production of the goods and services you

produce as optimal as possible. You have developed certain norms, rules,

metrics and even a culture that has created your success. Achieving your

operating objectives is akin to meeting production goals in the

“production line” metaphor.

If your plans call for little or no change to the basic way you are

operating, your strategy will simply call for incremental improvements of

your existing “production line.” You may add a new tool such as

implementing an ERP system, or improve the training of the people in

various departments, but your basic production line, the fundamental way

you operate, is not going to change. Strategy planning in this scenario is

an Incremental Strategy, strategies to improve on the existing way we do

business.

But let’s now look at a different type of strategy, an Innovation

Strategy. Examples of an Innovation Strategic Direction would be moving

up the value chain, serving different customers in a different way, offering

a higher value-added set of products and services, or moving from a

product oriented business to a service dominated business (or vice versa).

These changes in strategic direction require a shift in how you will do

business in the future. If, for example, you are moving from selling a

technical product to engineers to selling a solution to corporate

executives, you will likely be dealing with longer sales cycles, different

approaches to determining the product roadmap and different methods

for reaching the market. You might even be facing a different revenue

model. In essence the norms, rules, structures, and business models that

you have used to create success will all have to change.

In terms of our metaphor you will be retooling the organizational

“production line.” But unlike a manufacturing operation, you cannot

shut down the existing production line to retool it. Executing an

Innovation Strategy requires retooling the organization production line

while the existing production line is still operating.

Executing in Real Time 141

Who’s  changing  what?   Strategy is about improving the way things are being done; strategy is

about change. Whether it is incremental or innovative, as shown in Figure

33 below, managing strategy execution is managing change.

As the diagram shows, even incremental strategy has a slope to it,

meaning that some change management is going to be called for. To

increase performance over time, either path requires changes in how the

organization operates. Yet clearly, the change management process for an

innovative strategy will be much more significant than for an incremental

strategy.

For many companies, strategic plans are incremental in nature and

very close to operating plans. These are mostly plans to improve operating

effectiveness and extend the current business model. When you are

setting a strategic direction that is innovative, trying to manage the

strategy execution the same way will be devastating and unlikely to

succeed.

What determines an innovation strategy is the degree by which you

are making changes to the basic business model. This model is the norms,

rules, metrics and processes of how the organization produces its results33.

Figure 33

142 The Living Organization  

Because Innovation strategy is changing the fundamental way “things

are done around here” it requires a different focus. Innovative Strategy

must take into account the forces within your organization that are

operating mostly under the surface at the unconscious level; the forces

that have established the existing boundaries that everyone has become

comfortable with. Where Incremental Strategy will likely deal with the

forces associated with the Activity Field, Innovation Strategy requires

reweaving the boundaries of the Context Field and redefining the

Relationship Field.

It is during the innovative shifts in strategy that the Context and

Relationship Fields have the most impact. If you remain unconscious to

them, they could very well work against you. However if you include

specific strategic initiatives to reframe them, they will carry you on a wave

of success.

To manage the execution of an Innovation Strategy, specific initiatives

with objective, metrics and targets must be identified. This provides the

ability to track what has heretofore been seen as the soft and mushy side of

business. It makes the soft side hard and measurable. Often slight changes

in the patterns of relationship energy and context energy, the energy that

defines our meaning and purpose, will create significant changes in

results.

What’s  your  horizon?   If strategy is a developmental process, then certain actions must be

included in this year’s efforts that will lay a foundation for what is

required in the future. A simple example is the difference between

business development and sales. We all know Sales is focused on getting

current period business, whether daily, monthly, quarterly, or annually.

Their focus is on finding opportunities and closing the business.

Business development, on the other hand, focuses on building

opportunities that will turn into sales in the future. For example, a client

in the education field wanted to establish a strong international presence

and set a strategic objective to increase their international business to

equal their domestic business. They had very little presence in

international markets nor did they have a lot of experience building

international channels. Their first strategic initiative was to hire a senior

Executing in Real Time 143

business development person who had international experience. They

gave that person a three-year charter to build relationships, develop

channels, and create a pipeline of opportunities. You can see how each

element of the charter builds on the previous.

There are three major time horizons, H1 is current activities we will

execute this year, H2 is an intermediate stage, what we will be working on

in two to three years, and H3 is the point in the future where we have

reached our desired new capability, typically three to five or more years.

To achieve the goals set for H3 (have international revenues equal

domestic revenues), we must set intermediate goals for H2 (develop the

channel and increase opportunities), and foundation laying goals for H1

(hire an international development person).

For most people this will seem obvious. I wish it were so. All too often

we experience companies that set goals for Horizon 3 and do not think

through what has to be changed to get them there. They believe too

strongly in the maxim, “Set the targets and the rest will take care of itself.”

While that is true for some people and for some organizations, it is not

true for everyone. Some people can figure it out on their own while others

cannot. Do not slip into the trap of thinking this is because of differences

in intelligence. It is a difference in developmental maturity.

Those individuals who are higher on the developmental scale tend to

operate well on their own. This might seem intuitive but what might not

be readily apparent is that a person who is higher in SQ skills and low in

functional abilities will be more capable of working with broadly defined

objectives and goals than a person with high functional skills but low SQ

skills. The same is true for an organization.

Proper preparation requires proper development and sequencing of

Activity, Relationship and Context. Remember the example above about

the desire to improve the win ratio. Before any Activity field changes can

take hold, change to the Context field was required. The Context field is

slowest of the three to change, with Relationship next and Activity the

quickest to change (assuming the other two support the change).

When developing the strategic initiatives to prepare the organization

for the future, one must assign to Horizon 1, 2 and 3 the appropriate

Activity, Relationship and Context goals and objectives and recognize their

interdependence.

144 The Living Organization  

Put  your  money  where  your  mouth  is   It is one thing to establish a set of initiatives needed to prepare the

organization for the future but are you committing to them? Anything

that is going to get done requires a commitment and commitment is

demonstrated by the allocation of resources.

Ask any Human Resource executive about the strategic development

of people. How many times have you sat through a strategic planning

session where the objective is “ensure we develop our people, they are our

most important asset?” Then when budgets are established or expenses

are cut the first thing to go is the training and development budget.

It seems there is a common virus running through most corporations,

the viral infection of urgentitis. It seems we will always respond to what is

right in front of us, the “urgent and immediate,” at the expense of what is

important to prepare us for the future. And one of the side effects of this

virus is that it erases our memories so that we can’t understand why we

aren’t accomplishing our goals.

There are four critical steps for the Decide Phase:

Determine the strategic initiatives

Sequence the initiatives

Select the metrics and set the targets

Allocate the resources.

When it comes to allocating resources it is important that strategy

initiatives, especially horizon 2 and 3 initiatives, have a clearly established

budget. A concept that has evolved with the Balanced Scorecard approach

that we carry forward into RTE-S™ is the establishment of a StratEx

budget.

StratEx can be thought of similar to CapEx budgets. Most

organizations recognize that they need to establish a separate budget for

capital expenditures. This budget typically covers expenditures to acquire

new equipment and funds for the ongoing maintenance of existing capital.

Similarly a StratEx budget ensures that resources are allocated to

appropriate investments for strategy initiative execution. Without this, the

organization will quickly recognize that there is no commitment to

strategy and will revert to growth through “crisis of the day” management.

Executing in Real Time 145

The executive team will consider strategy as nothing more than a fun

weekend off-site that will produce nothing substantial.

Who  dreamed  this  up  anyway?   As we said, strategy is the process of creating the future. We can view

the future as a continuation of the past or as a creative act of deciding

what we want the future to be. We know from life that living entities are

oriented towards creation. It is what makes living entities different from

machines. We dream of what is possible and then set out to make it so.

Setting your vision of the future is setting into motion the realization of a

dream. Ask any entrepreneur when they started; they had a dream of

something they thought was possible when no one else did. It is the

process of dreaming and then following that dream that makes life that

much richer. This is true for you and it is true for your organization.

While we strongly believe the process of defining the future is a

creative process there is a role for looking to the past as part of the

process. By understanding the patterns of the past we can gain insight

into the momentum and direction of the energy flow as it moves towards

the future.

The foundational premise that everything is energy would dictate that

current reality is the energy that has evolved from the transformation of

the energy of the past. Trends are nothing more than energy momentum,

deep patterns that reveal which way things are heading. The more

momentum a trend has the stronger the energy pattern and the more

energy it will take to change it.

Most people recognize the concept of an idea that was ahead of its

time. The proper way to view this is that an idea at an early stage is a seed

planted in the energy field of existing patterns of behavior. If the seed is

hearty, it will attract more and more energy to it. As it does so, it begins to

create new patterns of energy, which translate into new behaviors on the

part of what is commonly called the innovators. If it demonstrates value, it

will collect more and more energy and at a certain point, the tipping

point, it will seem as if a new trend has emerged.

Understanding the trends of the past will help define how much

energy is required to transform the current reality into the dream of the

future you want to create. The future is never determined by the past.

146 The Living Organization  

The past only dictates the amount of energy the dream for a better future

will require.

When deciding your strategic direction, you will choose a combination

of following existing trends and innovating new trends. The ratio of this

combination will depend on your Soulful Purpose™. If at your core you

are a technological innovator you will obviously tend to be heavier on the

side of innovating new trends. If you are a fast follower, you would be

more oriented towards existing trends.

What  did  you  assume?   Whichever role you choose, when it comes to selecting a set of

strategic initiatives you will be making decisions based on a set of

assumptions. Since strategy is about creating the future, all decisions will

be based on the assumptions you make about past trends and future

trends. It is extremely important to ensure that you capture all

assumptions. Too often we see organizations make decisions based on

assumptions that they think reflect reality.

As time goes on this reality bias will blind an organization to what is

really transpiring in their environment. This will slow down or worse yet,

eliminate the appropriate response to a changing environment. By

documenting and tracking assumptions and continually asking during the

Evaluate phase whether those assumptions are valid, an organization will

naturally become more responsive to a dynamically changing world. As

the saying goes, it is dangerous to drink one’s own Kool-Aid.

Lights,  Cameras,  Action   Now that we have determined the theme of the corporate story and

have outlined the script of the play, it is time to perform. It is time to get

on the stage of life and put into action what we have planned.

Like all good performances, the actors need to understand their roles

and how the play is intended to unfold. The process shifts to aligning the

organization for action. Rather than think of the play as a fully scripted

performance, think of it more like an improvisation performance.

Since today’s world is defined by the rapidity of changes we are

experiencing, we cannot define for our band of performers exactly what

they will face and how they should respond. Rather we want each member

Executing in Real Time 147

of our troupe to understand the role they play and to have the skill to

receive what the world offers and to respond in ways that move the play in

the right direction.

This is what improv performers do. At any point in time they have no

way of knowing what the other performers will say or do. They wait for

the story to unfold. When an action is offered, the actor will respond to it.

One of the key rules of improv is that you always accept the offer and the

action and add your piece to it. This moves the play forward and becomes

the next offer for another actor to step forward, accept, and add to.

I have had the great fortune that my wife, Jane, has spent over a

decade performing a type of improv called Playback Theater. It starts with

a member of the audience telling the outline of a story. The actors play

that story back from the outline. The improv process defines what actually

unfolds and that is almost always something magical.

I have come to see the same pattern applying to a corporation’s desire

to create its own future. The company has a story outline they want to

manifest. However, the actual path to planned result rarely follows the

expected path. Rather a natural fluid dance emerges between the

organization and the events it is called on to respond to. How it responds

makes all the difference in how the rest of the story unfolds. Learning the

skills of improv will enhance the ultimate performance of the organization

and create the same magic that emerges from a good improv

performance.

Being able to respond to whatever the environment offers frees the

creativity of the organization. Imagine if all the individual performers, the

potential thousands of individuals on the corporate stage, had these

abilities.

They would have the freedom to respond to the events that come

across their desks in their own unique and creative way. The overall

performance of the collective acting troupe will be a magical story of

fulfilling the organization’s Soulful Purpose™ in service to its customers.

Well,  how  did  you  do?   Peter Senge, in his 1990 book The Fifth Discipline brought the seminal

idea of the learning organization into the limelight. To quote from his

book, Senge says learning organizations are:

148 The Living Organization  

…organizations where people continually expand their capacity to create the results

they truly desire, where new and expansive patterns of thinking are nurtured, where

collective aspiration is set free, and where people are continually learning to see the

whole together.

Arie de Geus, a follower of Senge, in his book The Living Company,

underscores the importance of a learning organization. In his role as head

of planning for Royal Dutch Shell, he explored why most companies die

before their time and why a few seem to be able to continue on for

hundreds of years. He defines a company as a living entity for its ability to

learn and adapt and for its people to learn and grow.

All living systems must learn so they can adapt to changing

environments or they will die. People also learn to adapt and they grow

and expand from their learning. It is in the very process of putting forth

their efforts to accomplish specific goals and desired results that creates

the opportunity for learning. As people learn, they increase their capacity

to contribute more energy.

Whether for a company or an individual, we can define the learning

process as try something, determine the outcome, compare the outcome

to the desired outcome and then determine what needs to be adjusted.

If this sounds similar to the process where we defined desired

outcomes, assessed where we are today, determined the gap and then

define initiatives to close the gap - it is. The process of determining a

strategy and the process of learning are identical. All of life can be seen as

a process of learning. Learning can also be viewed as expanding our

capacity and capabilities to accomplish our goals. If you recall The Living

Organization® model, there is the “contribution – learning loop.”

The learning process starts first with having a goal and not being able

to accomplish it. Does that sound odd – have a goal that you cannot

accomplish? Well if you could accomplish it then you would have nothing

to learn, would you? Learning requires having a desired outcome that you

do not yet know how to accomplish. You try the actions you think will best

achieve your desired outcome and compare the results of those actions to

your desired outcome. The likelihood of getting it right is low at first.

However, the process gives you new information you can use to adjust

your actions. You repeat. After a while you will achieve what you set out to

achieve.

Executing in Real Time 149

Does this sound simple? Good, because it is except for the fact that

most people are not willing to approach the achievement of the desired

outcome from this perspective. They believe they must know how to

accomplish the goal before they will set a goal. They have been caught up

in the tyranny of expertise. We do not encourage learning because we

expect people to already know.

In a conversation with one of our client companies, the founder

voiced concern over some of the actions of the new CEO. The founder

had groomed this younger individual to replace him. He fully believed he

was the right person to take over the firm and that the new CEO had all

the necessary skills. That is until one day the new CEO made a choice

different than the founder would have made. The founder saw the error

of this decision and was upset that the new CEO could not. I asked the

founder how old he was.

“I am 72.”

“And how long have you been CEO,” I asked.

“40 years.”

“And the new CEO, how old is he and how long has he been CEO?”

“54 and in the position 1 year,” he answered.

“And how smart were you when you started out and when you were

54?” I asked him.

“Oh, I guess he has to go through his own learning curve, doesn’t

he?”

In our drive to achieve results, we do not tolerate the learning

process, but that is exactly what is required for continual improvement

and continued growth. Growth by its very definition means I am more

than I was. Growth is the expansion of my abilities through learning. One

of Einstein’s many quotes states that insanity is the desire to get different

results while following the same process.

The Evaluate phase of the RTE-S™ process is the “contribution-

learning loop” for the organization. It is the critical element for actual

growth to occur. There are three specific areas that we recommend be

included during the evaluate phase: performance against defined

initiatives, behaviors against aspired core values, and key assumptions

made.

150 The Living Organization  

How often should a company evaluate progress? Think of it in terms

of the discipline of program management, a methodology for managing a

large number of complex projects required to achieve an overall program

objective. Strategy execution has a similar challenge.

Each initiative will be similar to a specific project in a program. Each

initiative will have its own champion who will want to review progress

against its goals. The overall strategy will also have to be managed to

review the cross-initiative interactions, dependencies and timing. While

every company is unique, we find that regular, quarterly reviews are the

most effective. Just like a program has an identified individual, a Program

Manager, responsible for the oversight of the total program, we suggest

having an individual who is responsible for the oversight and coordination

of strategy execution. Depending on how large and complex your

organization is, you may choose to house that function internally or

choose to outsource that function to a firm that specializes in execution

management.

Who’s  leading  the  show?   In our model we specify a fifth key domain. In addition to People,

Process, Customers, and Financial, we include the domain of Leadership.

Leadership is more than just part of the people perspective. While leaders

are first and foremost people, they carry an additional set of required

skills in addition to the skills required of all people.

All people have the three skills identified in The ARC Framework® –

functional skills, interpersonal skills and intrapersonal skills; and

development of anyone requires the balanced development of all three

skills. This is true for leaders as well. In addition, there are three

requirements that are unique to leaders: management skills, team and

collaboration building, and inspiration and motivational abilities.

Much research over the last couple of decades has focused on

differentiating leadership from management. Unfortunately this is a false

dichotomy. Every leader is a manger and every manager is a leader. Both

require the same three skills. The only difference is that as you move up

through an organization, the skills get applied in different proportions. A

first line supervisor is likely to use more manage-the-process skills while a

CEO will draw more frequently on the ability to inspire and motivate. This

Executing in Real Time 151

doesn’t mean that a first line supervisor will not have to inspire and

motivate nor does it mean the CEO won’t have to manage elements of the

process.

I believe our definition of leadership is outdated. If you look up

leader in almost any dictionary you will get definitions like: the person in

charge that guides and commands the troops. It is the man or woman at

the top of the pyramid, the ultimate decision maker, the person who

would say “the buck stops here.”

Here is a different definition: a leader is a person who marshals

resources towards accomplishing a desired outcome. These resources are

people to contribute the energy, capital to enhance and leverage energy,

organization to guide the flow of energy, and the vision of the future: all

the elements required to manifest a desired outcome. We define a leader

as a master of manifestation.

One last fallacy is that leaders are born, not made. Having worked

with dozens of CEOs and many more leaders at all levels, I can tell you

that no leader is born a leader. The best leaders are the ones who have

learned along the way, usually from their failures. I shared my own story

of my first year in management, and it has been my experience that every

great leader has similar stories. The worst part of this fallacy is that the

higher up the organization one goes the less likely they are to be offered

any development support.

When I was at Hewlett Packard, it was an organization known for

holding managers responsible for the development of their people. Yet

this organization that pioneered many leadership development programs

and tools ignored the development of its executive teams. When I was

promoted to the executive ranks, I remember wondering why I hadn’t

gotten my regular performance review. One of my mentors and my closest

friend, who had been promoted to Region Service Manager 18 months

before me, enlightened me. “Management development, the HP-Way and

MBO is for the regular folks. When you get to the executive level it is

expected that you have already figured it out and you don’t need

development.”

Later in life, I was talking with a fellow board member about the

various individuals we might select for the CEO position. His comment

was, “A CEO should already know how to do the job. If the individual

152 The Living Organization  

needs development than he is not the right person for the job.” I don’t

know about you but I don’t know of anyone that cannot improve. What

board of directors doesn’t want their CEO growing in capability with the

growth of the organization? Can the latter happen without the former?

Speaking  of  Boards   There has been much talk about boards of directors over the past

decade. The rules of governance have been changing both by legislation

and by serious self-reflection on the part of most boards. In the face of the

scandals of the early part of this century, we saw the introduction of the

Sarbanes-Oxley Act; and then as a result of the collapse of the financial

markets, board governance again came under new regulatory

requirements with the passage of the Dodd-Frank Act.

This has created a lot of conversations in governance circles, the

academic community, and among directors. We have seen new guidelines

come from the blue ribbon commissions of many governance

organizations, from investor advisory services to the various exchanges

and the SEC.

The last century has created an environment of compliance, where

directors try to keep up with new rules and regulations that have emerged

from these many agencies and work to ensure their governance practices

are in line with best practices. What has been lost in all of this is the

responsibility a board has to ensure that the company is growing and

developing.

It is well accepted that a board has a fiduciary responsibility to its

shareholders and I will not disagree. I will disagree with how this

responsibility has been interpreted.

The responsibility is to grow the value of the firm and by doing that it

will provide a return to those who invested in the firm. But what does it

mean to create value? Following the energy model, it is the creation of

goods and services perceived as valuable by customers and provided with

the least consumption of energy. A board’s role is to ensure the full

development of the organization, starting with being proper custodians of

its Soulful Purpose™, and to ensure that the organization is being true to

its purpose and that its purpose is contributing to something greater than

itself.

Executing in Real Time 153

It must oversee the selection of the mission by which the organization

will express its Soulful Purpose™. It must be vigilant that it is living by its

core values. The board should also ensure that the Future Vision is

stretching and challenging the organization to develop and grow so that is

it can continue to meet the changing demands and needs of the

communities of customers it serves.

The board should no longer rely solely on the CEO to ensure the

company is executing. The board should be actively engaged to ensure

that the journey to the future is also a journey of growth and

development, for the company and for the CEO. To accomplish this, the

board should embrace the discipline of a formal execution management

process.

Viewed this way, the board will naturally align with the spirit of many

of the regulations. Following the Strategic Compass™ will also create the

following of a moral compass. One cannot honor one’s Soulful Purpose™

without recognizing its meaning and contribution to something greater

than oneself. One cannot be part of a community and not honor the

relationships of that community.

One cannot fail to see the interdependence of all and will therefore

make decisions that benefit all stakeholders. And it will be as silly to focus

on the short-term gains as it would be to only consider the well being of

your children for the next year. When we see the organization as a living

being to nurture and develop, we will be concerned not just for this

quarter or this year but for the long term.

The board, along with the CEO and the executive team, makes up the

Leadership Team of the organization, the custodians of The Living

Organization®.

If the CEO and the executive team are the parents, the board can be

viewed as the grandparents, the wisdom council, the ones who can ensure

and guide the growth and well being of The Living Organization®.

The  Journey  of  Development   No one steps into a new set of skills simply by learning about it. It

takes time and practice to go from awareness to integrated skills. There

are well-defined stages of development. Think about any skill you have

learned, whether it is a sport like skiing or golf, an activity like learning to

154 The Living Organization  

ride a bike or driving a car, or intellectual skills like learning algebra or

science. We always follow the same process. First is the awareness stage

where we discover the value of developing the new skill and we commit to

developing it. This is followed by the awkward phase where we are

clumsy, uncomfortable, and ineffective as we struggle with the skill. Next

we transition to the refinement phase where our practice is paying off, we

have the basics down and we continue to improve the skill. This leads us

to the Expert phase where doing the new skill is effortless and automatic.

The same is true for an organization’s ability to improve its process

skills. In fact there is a vast body of knowledge applying a developmental

model to organization process skill development. This body of knowledge

has been refined from the early days of the Quality movement with Phil

Crosby’s Quality Management Maturity Grid (QMMG) to the work of

Carnegie Mellon University’s Software Engineering Institute’s (SEI)

Capability Maturity Model (CMM®)34.

To help companies better approach the process of creating an

execution focused organization, we have developed the Execution

Maturity Development Model™ (EMDM™). It defines five stages of

development across a number of dimensions. The five stages are: Chaotic,

Reactive, Structured, Proactive, and Integrative. The dimensions are The

Arc Framework’s® Leadership, People, Process, Customers combined with

the four elements of the Strategic Compass™: Soulful Purpose™, Mission,

Core Values and Future Vision.

Everything is a journey, a journey of development. The organization

must develop as a collective to further its ability to meet the challenges of

the future it desires to create. Leaders must develop their abilities to

marshal the resources needed to manifest the desired results. The

individuals within the organization must develop, learn, and grow,

allowing for the full contribution of their unique gifts. And the board must

provide the wisdom to ensure it grows in a healthy and robust fashion.

155

  CChhaapptteerr 1133

“As  human  beings,  our  greatness  lies  not  so  much   in  being  able  to  remake  the  world  -­‐  that  is  the   myth  of  the  atomic  age  -­‐  as  in  being  able  to   remake  ourselves.”          Mohandas  Gandhi  

  The  Journey  Continues  

  For over 100 years, the business world has transformed our lives. The

modern corporation has been the engine that has given us unprecedented

prosperity. We have developed as a society more in the last 150 years than

we have in the preceding 1,000 years. We have brought forth more

innovation, created greater opportunities and improved the overall

standard of living.

However, we now find the machine of production turning into a

machine of destruction. Where it once served to advance our society, it

now seems to be at the root of many of society’s ills. From Enron to the

recent collapse of our financial system, from environmental concerns to

lack of societal responsibility, the modern corporation is becoming the

center of evil in our world.

But the fault lies not in the inherent nature of the corporation but in

the development, or lack thereof, of the true nature of business.

Remember Edwin Lewis, Richard Geer’s character in the movie Pretty

Woman, who honed his business skills to win any deal no matter what it

took. He soon discovered that though he won the battle for the deal, along

the way he was losing the war for his soul.

Our businesses are living beings. They are not soulless machines that

are only concerned with maximizing production and shareholder value.

Yet that is what they have become. They have honed their ability to

156 The Living Organization  

produce but lost their ability to contribute. But like Richard Geer’s

character, the story does not have to end here. There is another way.

Organizations are holistic, organic living beings. They are born to

grow and develop to fulfill their Soulful Purpose™, a purpose that

transcends the mere goal to produce goods and services, a purpose that

calls for the organization to make a contribution to the market it serves

and to the greater society.

The Living Organization® is not so much managed as it is guided and

nurtured. The goal is to continually increase its capacity and its creativity.

When an organization refocuses its attention to the realization and

fulfillment of its Soulful Purpose™, it naturally transforms and begins to

stand out from the crowd because of the magical results it produces.

Companies like Whole Foods, Apple, and Trader Joes are but a few that

demonstrate the magic of The Living Organization®. Examples such as

Hewlett Packard, Wal-Mart and Toyota, who were once magical

companies, show us that companies, like people, can also lose their way

and like the Edwin Lewis character, find it again.

To help you understand the nature of The Living Organization®, we

have shared the science behind the magic. We have explained how

outcomes are the result of effective flow and transformation of energy.

Even more significant, we revealed the nature of the three energy fields of

Activity, Relationship and the all-important Context field.

The Context field is the source from which all energy emanates. It

holds the key to intuitive insight and creativity. It is the ability to tap into

and draw from this field that stimulates individual and organizational

passion and engagement. The Context field is the source of all the magic.

The modern corporation has been on a long evolutionary journey

from its birth in the mid 19th century as the culmination of the industrial

revolution. The journey of the organization has been mirrored by the

journey of those who have led them. At the beginning, the leaders focused

on managing the organization to create an efficient machine. They found

ways to streamline and optimize the workflow, creating metrics that

provided the means to control the machine and the people who fueled it.

Control and predictability were the key elements of success.

Around the middle of the 20th century, they recognized “people are

our most important asset.” The focus for the last 50 plus years was on

Executing in Real Time 157

teamwork and collaboration. We found ways to motivate and incentivize

people to serve the machine better. Like assets, people were still

components of the great machine of business. And like Anakin Skywalker

of Star Wars fame, who chose to go over to the dark side and became the

evil Darth Vader, business has firmly planted their feet on the path

towards the soulless, money-first organization.

This soulless machine threatens to take over our world, even our

humanity. But the journey does not have to end here. There is another

way. There is the ability to breathe life back into our organizations, to

restore its soul and the soul of all those who are part of bringing it to life.

Our leadership teams can learn to work with Context energy to

discover and express the deeper purpose and meaning of their

organizations. They can learn to create a culture and values that set the

mold within the Context field that will guide the day-to-day behaviors and

decisions of everyone toward the fulfillment of the Soulful Purpose™.

They can learn the art of developing the whole person, supporting and

enhancing the dignity of the human spirit, building a community of

relationships that are bound together by a set of common ideals,

communities of people who give to the community and in return receive

from the community.

This is the new focus of organization leadership; set the context,

develop the people, build communities and be in service. Coincidentally

this is also the same role that has been at the heart of all spiritual leaders

from time immemorial. One can extrapolate that the CEO will be the

spiritual leaders of their communities in the 21st Century, a long way from

how we have thought of the corporate CEO in the 20th Century.

This effort will lead naturally to organizations whose focus is more

than winning and more than merely making money. We will create

organizations whose focus is to be of service to its customers and society.

Corporations that are Living Organizations® will naturally be socially

responsible citizens that contribute to the welfare of their community,

whether local or global.

This journey will not be easy. The power of the existing paradigm has

a lot of energy behind it. It has been fueled by over 100 years of success.

The financial community, which once served as a resource to support the

good works of the corporation, has taken control and has bent the

158 The Living Organization  

organization to its bidding. It will not easily relinquish this control and its

demand for return on investment and quarterly profits that it sees as the

core purpose of any business.

The challenges are neither onerous nor impossible. More and more

leadership teams are stepping up and taking on these challenges. Though

learning to work with the three fields of energy, especially the Context

field, will at times feel awkward and perhaps even counter-intuitive, the

rewards will outshine the efforts.

This is a noble challenge, one that goes to the root of what our

corporations are (or should be). The modern business organization was

once the great engine that drove the growth in our society. It still holds

the promise of continuing its glorious contribution to the growth and

wellbeing of our society.

We can discover how to work with the power of the Context field and

nurture and enhance the organization’s Soulful Purpose™. We can learn

to weave the stories of creation and magically take us to a new world, a

whole new dimension of what’s possible. That’s the Holy Grail that awaits

anyone with the courage and conviction to find it.

159

“There  are  309  million  people  out  there  that  are   trying  to  improve  their  lot  in  life.  And  we've  got  a  

system  that  allows  them  to  do  it.”         Warren  Buffett  

Appendix    

Business  as  the  Driving  Force  of  Society   For many years, society saw business as the great stimulator of

progress, the engine that fueled the great advances in technology and

living standards.

For instance, between 1760 and 1860, technological progress,

education, and an increasing stock of capital transformed England into

the workshop of the world. The Industrial Revolution set off a sustained

increase in real income in England and later in the rest of the Western

world35 that has continued through to the present. With each passing year

the rate has accelerated, giving the world standards of living far greater

than anyone could have imagined just 100 years ago.

John V. C. Nye describes this progress in an article published in the

Library of Economics and Liberty: “Prior to the 17th century, most of the world not only took poverty for granted, but

also assumed that little could be done about it. Even the most optimistic early writers

could not imagine that more than a few percent of the population would ever be well off.

Growth, if it could have been measured, was at most only a percent or two per decade.

“Yet the last few centuries have seen unprecedented growth. In the most successful

countries, the average citizen now enjoys a material standard of living that would have

made the greatest king of two hundred years ago turn green with envy…

“Even for the poorer areas, the so-called Third World, we find that per capita

economic growth, improvements in life expectancy and declines in mortality from disease

and malnutrition outstripped the performance of the most advanced nations of Europe,

Britain, and France, during the Industrial Revolution of 1760–1860…

“What is unusual about the developed world since the 1700s is that… overall

improvements in material prosperity seemed so modest that even contemporaries such as

160 The Living Organization  

Adam Smith did not appear to notice that they were living through what historians

would later label the Industrial Revolution.

“Eventually, the changes were so dramatic that everyone could see that the daily

lives of even the common laborers of Britain, France, Germany, and the United States

had been greatly transformed.

“The reason for this transformation was the accumulation of capital, which

was due in turn to technological improvement and to the fact that these societies

had large doses of economic freedom [Emphasis added]. The twentieth century saw this transformation spread to a large part of the world.”36

Economic freedom allowed resources to move to where they could

produce the most good. Economic freedom created opportunities for

individuals to improve their conditions and advance their positions.

Economic freedom was, and is, the foundation of our Capitalist System.

How  Capitalism’s  Reputation  Changed   Many now see this engine of growth that advanced society, once the

cornerstone of economic development in the Western World, as the root

cause of our current problems. People blame greed and the self-serving

nature of Big Business for everything from the Great Recession to global

warming to blatant disregard for the proper use of planetary resources.

True, Capitalism has always had its faults and its detractors. From

Charles Dickens’ Cokestown to William Blake’s “satanic mills,” authors

have portrayed Capitalism as having a disturbing dark side that creates

serious social problems such as child labor, unsafe working conditions,

and abusive labor practices as a byproduct of progress. Government

agencies responded to these problems with regulations like the minimum

wage and child labor laws and the landmark Occupational Safety and

Hazards Act of 1970.

As with all evolution, Capitalism took on many of the attributes of

what came before. Though it replaced the old aristocratic society in which

a small number of people controlled power and wealth and a large

number of people had no power and little wealth, it exhibited many

similar attributes. Yes, the aristocratic societies of kings and monarchs

were overthrown and disappeared, only to be replaced by the owners and

leaders of corporations and small businesses. The powerless many became

their employees, were paid poorly, and again had little power over their

Appendix 161

lives. Many considered the corporations’ employment practices

oppressive.

This inequity created the reactive philosophies of Karl Marx and his

followers, who believed that government had to exert centralized control

as the only effective way to tame the dark-side of the free market

economy.

In the struggle that followed, the Western World rejected this solution

in favor of maximum individual freedom tempered only by certain

regulatory controls. We still struggle to find the right mix of freedom and

regulation, relying on a web of opposing forces, unions versus

management, Democratic labor versus Republican Big Business, which

seems never to agree on the proper balance.

The old model of Capitalism, while advancing society and creating

great opportunities, favored the strong, the rich, and the powerful. But

that has changed. Today, more and more, even the major beneficiaries of

the Capitalist system, the corporations and their owners, are floundering

or failing.

General Motors is a shadow of its former self, alive because the

Federal government gave it billions of dollars. Other pillars of our

financial system, such as Lehman Brothers and Bear Stearns, no longer

exist. The days of the “imperial CEO” are ending and many individuals

who invested their financial future in the Capitalist system lost 50% or

more of their wealth when the financial markets crashed.

Countries such as Greece, Iceland and the once fast growing Ireland

now face financial ruin. The United States, the most Capitalist of

countries, is experiencing the greatest recession since the Great

Depression because we continue to rely on decision-making models that

are out of date and no longer effective.

Businesses are experiencing a constant onslaught of new technologies

that change every aspect of the way we design, manufacture, sell and

distribute products and services. The frequency of change is accelerating,

adding further pressure to produce effective results and accelerating the

rate of failure.

In the last ten years, we’ve had the dot-com crash, the fall of Enron,

WorldCom, and Arthur Anderson, the collapse of the housing bubble, and

the near collapse of our financial system. Once again, the government

162 The Living Organization  

responds with governmental regulations ranging from Sarbanes-Oxley to

the recent passage of the Dodd-Frank Reform Act, the greatest financial

reform since the 1930s. This seems to paint Capitalism as the bad boy and

has led to calls to reform the practices and foundation of business itself.

The  Evolution  of  Business   The Industrial Revolution transformed the Western World. We

transitioned from agricultural communities whose beliefs and activities

revolved around the limiting cycles of nature to a society based upon logic

and reason with rationally structured organizations. We went from

dominantly individual contributions, the artisans, to collective

organizations. This transition unleashed a tremendous amount of hidden

energy that led to the rapid growth we have experienced over the last 100

years.

The original small organizations this transition produced evolved,

requiring ever greater supplies of natural resources and capital to

flourish. Eventually the first stock holding companies formed, bringing in

a growing number of shareholders who gradually replaced the company

founder and his family as the owners. Unlike the founders, who are

personally involved and emotionally invested in the success of the

enterprise, these new “owners” were distant from the company. Their

only interest was to achieve a fair return on their investment. They left the

management of the firm to a new group of players: the professional

manager.

These new organizational leaders were not owners; they were agents

of the owners whose jobs depended on the success of their enterprise.

Therefore they needed models and techniques that would increase their

chance of success. They knew that if they failed, the absentee owners

would find someone who could succeed. The professional manager’s

search for efficient operations laid the foundation for our modern

business principles and practices. It also paved the way for many of today’s

problems as well.

The  Limitations  of  Worldviews   At any point in time, the range of solutions available to us is limited by

our assumptions and worldviews. These become the lenses by which we

Appendix 163

see, interpret and understand the world around us. They help us survive

and make sense out of our world. They also handicap us, for with their

limited field of vision they invariably overlook important pieces of the

puzzle.

We have all heard the phrase “perception is reality.” The flip side is

also true: “reality is defined by our perception.” Worldviews are such an

integral part of the environment we live in that they become part of us in

ways we often don’t understand. To fully understand our current

worldview and the business model it created, we must understand the

environment from which it sprang.

The world of the early 20th century was not, relatively speaking, very

complex. Although conditions changed more rapidly than in the 19th

century, we still didn’t need sophisticated models to help us survive or

adapt. In one generation, we might encounter three or four systemic

changes such as the advent of flight, radio, and television that significantly

altered the way we lived. We believed that we could, with a fair degree of

confidence, predict the outcome of our decisions. Life appeared to follow

a linear path of cause and effect that we as individuals and corporations

could easily understand and follow. If we followed the right rules, our

decisions would produce the outcomes we desired and we could

predictably plan for the future.

The dominant scientific view of the day, laid down in the 17th century

by the father of modern science, Sir Isaac Newton, supported this belief in

predictability. In the Newtonian world, everything was linear, predictable

and controllable. Newton perceived the universe as a machine that

operated according to principles that could be dissected, explained and

repeated. We found those truths to be self-evident and soothing so we

integrated them into the design and operation of every one of our

organizations.

The  Organization  as  Machine   It logically followed, then, that when corporations appeared in the

late 19th and early 20th centuries, they would form around the dominant

scientific and mechanistic principles as those accepted by society. For

instance, Frederick Taylor used the Newtonian assumption of an “orderly

world” to create his now famous theory of Scientific Management. Like

164 The Living Organization  

Newton’s universe, Taylor viewed business as a well-oiled machine whose

only goal was to optimize the flow of activity to create maximum efficiency.

Higher efficiency meant fewer wasted resources, which translated into

higher production and profits. Precise, direct and simple.

Taylor’s paradigm became the guiding principle for corporate

organization and structure and is still used today. It viewed the

organization as a simple cause-and-effect machine in which everything

could be described, predicted, and controlled. In this model, leadership

was based on the mastery of such mechanical skills as planning, organizing

and controlling the activities of the enterprise.

In my early training as a manager it became clear that my role was all

about leading the group I was responsible for. Leading meant taking the

set of objectives given to us by those above me, who got the goals from

those above them, and organizing my team to achieve those goals as

efficiently as possible. I was the one who decided how the work would get

done and who would do it. It was also my job to monitor and control the

efforts of those that reported to me to make sure they were doing what the

company expected. Workflow analysis, measures of output and efficiency

studies to improve productivity were some of the tools I employed. While

following this path provided some degree of success, I could sense these

tools alone would not drive the level of performance I felt lay buried

within my groups.

Until the middle of the 20th century, this control-oriented model

served us well. It allowed us to tame nature and to transition from a

dominantly agrarian society to a dominantly industrial society based on

science and machines. It enabled the organization to use a predominantly

low skill work force. It worked perfectly in an environment where change

was slow enough that the world seemed orderly and predictable.

The incessant drive for efficiency ignored the various components of

the machine. People were just another cog in the wheel of production that

leaders plugged into the equation. Like other “machine parts,” they were

interchangeable. Leaders calculated cost by measuring how many men

were needed to complete an assignment based upon the average number

of widgets the average worker could produce.

We set our targeted revenue and worked backwards to determine the

number of transactions it would take to achieve it. We added up the

Appendix 165

average transactions per employee, factored in a desired productivity goal,

calculated the manpower required, and adjusted accordingly. This

provided a straightforward, simple formula for success.

This simple, effective but impersonal paradigm began to break down

in the middle of the 20th century as the environment evolved, revealing its

shortcomings.

The  Impact  of  World  War  II   As devastating as World War II was, it also had a positive impact on

our society. Prior to the war, the country was still recovering from the

Great Depression. The wartime economy achieved what all the New Deal

programs could not: full employment. In 1940, 8 million Americans were

out of work. After we entered the war, unemployment vanished. Even

women joined the new production system, performing jobs once reserved

for men. “Rosie the Riveter” became a popular American icon and image

of progress37

The demands of wartime production required changes in factory

operations that introduced new, more complex production techniques.

Suddenly companies were no longer concerned with local markets. By

1943, half of all production went overseas,38 requiring companies to

acquire new skills and capabilities to address these new global markets.

When the war ended, the transformative changes continued. To avoid

repeating the mistakes made after the First World War, when servicemen

came home to find no jobs, few educational opportunities, and a housing

crunch, Congress passed the Servicemen's Readjustment Act in 1944. The

G. I. Bill (as it was popularly known) committed billions of federal dollars

to support housing, education, health benefits, and job training for

returning soldiers.39

In addition, unions asserted themselves with a wave of strikes that

swept the nation. In 1946, for example, 400,000 miners struck not once,

but twice. In all, 4.6 million workers struck at one time or another during

that year. The power of the unions grew so strong that the Federal

Government enacted the Taft-Hartley Act of 1947 to curb them40. This changed the face of the post-war workforce and the way managers

managed it.

166 The Living Organization  

Our  Changing  Worldview   Not only did the war change our society, it also challenged our

underlying worldview. The devastation wrought by the atomic bomb

made the world aware of new scientific theories that revealed hidden

forces that challenged the limiting theories of Newton’s Classical Physics

with its linear cause and effect relationships.

We entered the strange new world of Quantum Physics, which

reframed our understanding of how the universe worked. The previous

worldview of the “clockwork universe” fell to counter-intuitive concepts

such as the Uncertainty Principle and Chaos Theory. The idea that the

world was predictable and controllable lost ground.

For example, the Non-Locality principles of Quantum Physics

stipulated that spatially separated systems could instantly influence each

other no matter how far apart they were. A system on one end of the

universe could affect one on the other side as if no time or distance

separated them. How could fundamental barriers like time and distance

no longer matter?

Another mind-bending theory of Quantum Physics was that quantum

particles existed in more than one state at the same time. This concept,

Superposition, claims that until we measure the state of the particle, it

exists in all possible states simultaneously. The measurement itself limits

the object to a single possibility. It reminds me of the question asked in my

very first philosophy class, “If a tree falls in the woods and no one is there

to hear it, how do we know it really fell?”

Changes from another field of science further altered our underlying

assumptions. Psychology shifted away from the dominant Freudian view

that followed the medical model of symptom, illness and cure. It no longer

followed that symptoms could be traced back to a single causal illness, that

psychology could be determined by the same cause and effect logic of

Taylor’s Scientific Management and the Newtonian worldview.

In contrast, the middle of the 20th century saw the emergence of

Humanistic Psychology. Psychologists like Carl Rogers and Abraham

Maslow cared less about what made us psychologically sick than what

made us psychologically stronger. They felt that humans had an innate

ability to move from a state of mere survival to a highly evolved, self-

Appendix 167

actualized state of being, a magical transformation that awaited all who

worked hard enough to achieve it. This new view of human potential had

a tremendous impact on how leaders would eventually view their

employees.

Pushed by both the fields of physics and psychology, the business

world rapidly underwent similar transformations. We witnessed changes

in production methods, the nature of the workforce, and the birth of new

corporate forms. The multi-national corporation emerged with its

increased complexity and decreased predictability. Unions became as

much a part of the power structure of the corporation as the once all-

powerful CEO. And the workforce that returned from the war was

different from the workforce that left.

Society changed. Internal organizational processes got harder to

understand. A more complex world and changing workforce dynamics

put enormous pressure on the old paradigm. As our business

environment became more complex, the need to organize and control

every aspect of operations pushed the new professional managers to their

limits.

In the early days of the 20th century, we had a relatively unskilled

work force and relatively simple production methods. It was relatively

easy for managers to decide what to do and for workers to do what they

were told. However, by the 1950’s this was no longer the case. The

increased complexity of production made it difficult, if not impossible, for

a small group of executives to make all the decisions needed to address

the many situations that could arise. In addition, the growth of multi-

national corporations made it physically impractical for corporate

executives to monitor every action of their far-flung enterprises.

Forces like these required that decisions be delegated to lower levels

of the organization. Under this new system, mid-level managers and the

workers they led suddenly had to make adjustments to work flow without

any direction from above. This created flexibility and rapid responses to

unanticipated situations, which was not possible in our old “top down”

command and control structure. Employees had to be trusted to make the

right decisions; they could no longer simply be cogs in a machine that did

what they were told.

168 The Living Organization  

Many new jobs required a new level of sophistication and technical

training that no longer made it feasible to swap out poorly performing

labor units with better performing replacements. People were no longer

interchangeable parts and individual performance could no longer be

governed by a fixed set of rules and procedures that would automatically

optimize returns and guarantee results. No longer a simple machine, our

larger more sophisticated corporations took on a life of their own.

This forced the organization to focus even more on the role of their

people and how they were developed and treated. They could no longer

ignore the human factor. Treating people as interchangeable parts

overlooked the unique set of gifts and talents each person possessed and it

overlooked the obvious fact that not everyone worked or acted the same

when plugged into the production process.

The  Emergence  of  the  Humanistic  View   With the changes in worldviews and changing dynamics within the

workforce, shouldn’t the old rules for creating success in business change

as well? Wouldn’t the models for running companies change to keep up

with the rapidly changing environment?

The sad reality was that much stayed the same. Even though

unprecedented changes impacted their world order, management still

clung to the Efficient-Machine approach of Frederick Taylor. They were

still required to identify and eliminate blockages in workflow that created

inefficiencies. They still had to determine the required amount of labor

using established labor planning methods based upon the calculation of

the average work per employee. The increasingly removed corporate level

still used all of these “old school” methods and practices. Even with added

complexity and changes in the environment, our corporate leaders

continued to see their organizations as a machine they could master,

providing them with a continued, but false, sense of comfort and control.

While viewing organizations as machines still worked on some level, it

became clear that we needed a new model. If management wanted to get

more out of their organizations, they would have to delve into the hidden

world of the human psyche.

I was fortunate to develop my leadership skills in the computer

industry during the 70s and 80s and especially at Hewlett Packard.

Appendix 169

During this time the industry was entering its heyday of accelerated

growth. To address the needs of this hyper growth many companies like

Xerox, IBM, Digital Equipment Corp and Hewlett Packard adopted

leading edge management principles to give them a competitive edge.

Management began to recognize that they could not fully explain the

new challenges and forces by the simple, cause and effect paradigm of the

“great machine of production.” They could no longer ignore the human

factor and the variations in performance it brought.

Therefore they explored what made people tick, what motivated their

behaviors and what maximized the way they meshed together as a team.

They had to identify and understand the forces that could decrease

individual performance, disrupt team effectiveness, or create a blockage in

the system, which led to a new focus on “people as our most important

asset.”

My management training programs embraced the teachings of

humanistic psychology to better motivate employees and increase

performance. Psychological theories such as Herzberg’s Motivator-

Hygiene theory, Maslow’s Hierarchy of Needs and McGregor’s Theory X /

Theory Y became part of every manager’s toolbox. I remember taking a

class along with my peers and our boss, the Region Sales Manager, from

Maxwell Maltz, author of Psycho-Cybernetics. In this class we learned

techniques of self-hypnosis to reprogram our beliefs so that we could

overcome our own limiting beliefs and hence perform at a higher level.

These new theories and frameworks served to re-orient how we

viewed organizations and organizational leadership. Douglas McGregor’s

1960 Theory X/Theory Y Management Styles model stated that two very

different attitudes to workforce motivation existed. Theory X managers

believed that employees were inherently lazy, disliked work, and would

willingly avoid it if they could. They assumed that managers had to closely

supervise employees and implement strict controls to ensure that people

did what was expected.

In contrast, McGregor offered a new model: Theory Y managers who

assumed that people were self-motivated, enjoyed work and could exercise

self-control. I found this orientation to management to be consistent with

my own experiences. The people who worked for me were not inherently

lazy; they seemed to exhibit lazy behaviors as a result of the environment

170 The Living Organization  

they were in. The so-called lazy behavior was a revolt against an

environment that prevented them from doing what they loved. There was

more to leading my team than just making them more efficient. I began

embracing the new management theories of the humanistic psychologists.

I saw a lot of similarity between McGregor’s works and those of

Maslow. Theory Y was consistent with Maslow’s view that people had a

natural impulse to move up a Needs Hierarchy, shown in Figure 34

below, from basic survival to self-actualization.

Theories like these assumed that people naturally wanted to perform

their best to reach their unrealized potential. If they did not perform well,

it was not because they were lazy but because other factors got in the way.

Accordingly, companies needed to provide the right environmental

conditions and incentives under which employees could and would

willingly work and succeed.

For McGregor, Maslow’s needs could be grouped into lower order

needs (Theory X) and higher order needs (Theory Y) and both could be

used for motivation. Further studies also indicated that if an organization

moved people up the hierarchy towards the higher order needs,

performance would greatly increase.

Figure 34

Appendix 171

One such study was Frederick Herzberg’s Motivation-Hygiene theory

which argued that people were motivated by two different sets of factors:

Motivating and Hygiene Factors. Motivating Factors would stimulate the

desire to perform better, including achievement, recognition,

responsibility, challenge, growth, and promotion. In contrast, Hygiene

Factors only motivated when Motivating Factors were absent. Their

absence could de-motivate but their presence did nothing to stimulate the

desire to perform better. Hygiene Factors included pay and benefits,

supervision, status, and working conditions.

Hygiene Factors correlated to Maslow’s lower order needs and

formed the basis for motivation by Theory X management styles, while

Motivating Factors correlated with higher order needs and became the

motivating focus for Theory Y managers.

This push for increased performance created a huge demand for

books based on the theories of the new Humanist psychologists.

Herzberg’s 1968 article One More Time, How Do You Motivate Employees? had

sold 1.2 million copies by 1987 and was the most requested article from

the Harvard Business Review.41 This demand for new approaches to

management spawned the growing field of Organizational Development

(OD) consultants who suddenly appeared to help develop methods for

improving the worker’s performance. Major companies allocated

significant amounts of time and money to team building, employee

development, pay-for-performance systems, motivation systems, and

formal management training programs, all in the hope of better

understanding and more effectively managing the key components at the

heart of their machine’s performance, those unpredictable parts we call

people.

I began to incorporate many of these practices into my management

repertoire. I took people through team building trainings where we would

learn models of communication and that we all had certain behavioral and

communication style preferences and that not everyone used the same

styles. We practiced communicating with styles different from our own.

Over the years I attended and even led many of these workshops. While

they created great experiences and even some significant “aha” moments

of insight and awareness, they didn’t make a huge impact in the long run.

We went to the offsite and returned on Monday morning to the same old

172 The Living Organization  

patterns of behavior. So we would try another team building model, this

time with different human behavior patterns. I have done the Disc

instrument, Meyers Briggs, 16PF, Herrmann’s Whole Brain model and

countless others. And those are just for personality and behavioral styles.

The same is true for the variety of sales models, interviewing models,

performance management systems, change management, and all the rest.

One would think that with all of the evidence presented by the field of

psychology, the evolving worldview offered by physicists, and the massive

number of methods, processes and models provided by the OD folks this

new focus on the “soft side of business” would change the foundational

paradigm for good. But that didn’t happen.

After years of proclaiming that, “Our people are our most important

assets,” companies still treated people as an instrument to be tuned

instead of a person to be nurtured, developed and led. While hundreds of

millions of dollars were spent on organizational development efforts and

CEOs proclaimed the importance of people, training budgets were still cut

first when times were hard. Although Herzberg developed his theory over

50 years ago and Maslow wrote his seminal work in 1943, Daniel Pink’s

latest best seller Drive42 and Chip Conley’s book Peak43 still remind us that

people are not motivated by money but by a sense of purpose and

meaning

What happened? Why so little progress over the past 50 years? Why

do managers still make critical decisions based solely on “that which can be

measured?”

Like so many of my peers, I too found that something was missing. It

was often hard to justify the expenses for such activities. I felt deeply that

my people were the key to my success, but something else was happening,

an almost invisible force that seemed to override all my efforts to truly

empower my people. Yet at times I did manage to overcome this force as

witnessed by the results I created.

In my job as Regional Administrative Manager for Hewlett Packard, I

inherited what the company considered to be the worst performing

administrative organization of the four U.S. sales regions. When I took

over the helm of this listing ship in December 1982 the organization was

just completing its five-star internal audit. This was an internal audit at the

level of investigative depth that an external audit firm would perform. I

Appendix 173

was on the job no more the 45 days when we received the audit report. It

consisted of a 39-page management letter. Being new to audit reports, my

initial reaction when I read it was, “Great. They have done the deep dive

and given me a wealth of information on areas to improve. The next

morning, when I arrived in my office, Phil, the regional General Manager,

came into my office and shared a personal note he had received from

John Young, then CEO of HP. It said,

Phil, I read with interest your region’s audit report and I am sure you will agree

with me that we do not want to see this repeated.

Respectfully,

John

Phil looked at me and said, “I do not ever want to receive another

note from John like that!” He turned and left my office, leaving me with a

clear understanding that I had inherited a nightmare. I soon learned that

most management letters are less than a page long. Two pages meant you

were not performing very well. This one contained 39 pages of concerns

that I now had to deal with.

Within three years our regional administration team was considered

the best performing organization not only in the U.S. but throughout the

world. Admin managers from Australia, the Netherlands, France,

England, and Germany visited us to see what we had accomplished. They

all wanted to know what I had done that they were missing. We all used

the same trainings, the same management tools and methods and yet

somehow my results were far superior to the rest. Why? This is a question

I couldn’t answer myself. I would like to think I was just better at leading

than they were, but I knew my peers and they were equally as talented in

many ways, and in some ways I felt they were superior to me. I came to

understand many years later that I had unconsciously broken through the

barrier of the existing paradigm. I began to use a different model.

The highly acclaimed idea that “people are our most important asset”

hints at why so many of my peers weren’t able to accomplish the same

results. Society and the dictionary generally define an asset as “as a

valuable item to be owned.” This is like thinking of employees as property,

more like “slave labor” than “free-thinking, creative individuals.” We may

174 The Living Organization  

rationally recognize that people are not parts of a machine but we are still

guided by language that emanates from a model created for a different

time and different circumstances, a world that no longer exists. For some

reason I was guided by a different model. I had broken the spell of the

corporation as a machine and created results that to my peers and bosses

looked like magic.

Humanism  Isn’t  Enough   The Humanist phase of business evolution revealed the shortcomings

of the dominant mythos, the mechanistic view of life. It altered our

perception enough for us to realize that at the heart of every great

company was a human component. It helped to explain some of the

success of companies like HP when they lived the HP WAY or Toyota

when they were committed to Total Quality with every part of their being.

However, it also opened a Pandora’s Box of unseen and seemingly

uncontrollable forces that were still at work in our corporate

organizations.

The Humanistic approach should have moved the business

community away from the mechanistic model and brought us closer to a

more organic vision of corporate structures and systems. That did not

happen.

There are two explanations for this failure to change. The first is the

enduring power of any existing paradigm. Newton’s first law of motion

reminds us of the power of momentum: An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless

acted upon by an unbalanced force. The forces that worked to maintain the

existing paradigm overwhelmed any attempt to change it.

Adding to this natural momentum is the inability of the Humanistic

perspective to fully explain all of the hidden forces that affect corporate

performance and thus provide a way to work with those forces. People are

unpredictable and inconsistent. While the Humanistic movement

convinced us that people were critical to success, it did nothing to change

the underlying paradigms.

The world is changing at an ever-increasing rate. What used to occur

in 10 - 20 years cycles now occurs in 3 – 5 year cycles. The world moved

from dominantly local and regional to increasingly national and

Appendix 175

international in reach. The simple gave way to the complex. What was

long seen as predictable and controllable now appeared random and

chaotic.

What happens when people feel out of control? For Maslow, they

return to their lower order needs of survival and psychological well-being.

They seek consistency, security and predictability, all the things promised

by our old friend Scientific Management. The simplicity of the machine

was too hard to give up, particularly when compared to the alternative

complexity of a team of freethinking individuals. With a machine,

everything could be measured, predicted and controlled. Not so with

people.

Our original corporate system was designed to conform to our

mechanistic view of the world. Business as a big machine was only

concerned with production, which is measured by revenues and profits.

This made making money the core purpose of our collective enterprise.

The world of business became a race for financial returns, taking our once

great engine of progress deep into a dark, hollow hole.

In 1981, Jack Welch, then CEO of GE, gave a speech at New York's

Pierre Hotel, “Growing Fast in a Slow-Growth Economy.” In it, Mr. Welch

outlined his belief that companies must sell underperforming businesses

and aggressively cut costs in order to deliver consistent increases in profit

that would keep ahead of global economic growth. “GE,” he told analysts,

"will be the locomotive pulling the GNP, not the caboose following it."

Though Mr. Welch says that he never said that maximizing shareholder

value was the number one goal of the corporation, (he believed strongly

that serving customers was the true focus of a corporation), this speech is

often acknowledged as the dawn of the obsession with shareholder value.44

For whatever reason, the financial world, the business community,

and society at large began chanting the mantra of “maximize shareholder

value.” This began the final transformation of Capitalism from a

contributing force in society to its darker impulses. Business was now on

its knees, bowing before the deity of the almighty dollar. Nothing else

mattered.

Everything was measured by financial return. A new breed of

engineer emerged: the financial engineer whose only purpose was the

creation of financial wealth by whatever means possible. Using clever ways

176 The Living Organization  

of reporting the numbers, they would often obfuscate the real

performance of our corporations, making the results appear better than

they truly were. They could package up a portfolio of assets and

reapportion the risk across new types of securities, making an investment

appear less risky and more valuable than it truly was. This is precisely

what led to the financial meltdown of so many home based derivatives in

2009 and the near collapse of our entire financial system.

As a consultant I worked with a new CEO who was in his position for

two years when he reached out to me for assistance. His predecessor was

the founder of the company who at the age of 92 had passed away at his

desk. This founder was admired for his passion for the products the

company produced but was also considered a capricious tyrannical leader

(the words of the employees, not mine).

The new CEO was committed to changing the culture and

empowering his employees. He was a senior executive at one of the large

beverage companies and had been through all the proper management

training programs. He believed in Management by Objectives and setting

a motivating goal that will stimulate outstanding performance. He

committed to the board that he would grow the company from $50

million in revenues to over $100 million in five years. This became the

single goal for his team and the organization. His attempts to implement a

new culture and to empower the people were rooted in the underlying

desire to improve the machine’s ability to increase the production of

profits. The result? He failed.

Like the company, our overall business community was no longer a

machine driving progress but simply a printing press for money, a

machine designed to produce more goods for more consumers in the

endless race to expand market share and profits. It was wealth for wealth’s

sake. Our whole society fell under the spell of this hypnotic vision. Where

business people once talked about improving people lives and putting a

“chicken in every pot,” money became an end in itself. This endless cycle

of consumption and growth become the obsession of every professional

manager and made us all slaves to the great money machine.

The Humanistic approach also fell prey to this addiction. If it couldn’t

be measured and reported, if it couldn’t be directly related to growth in

shareholder value, it had no merit. Managers were required to justify

Appendix 177

every decision in terms of return on investment, even the non-tangible

benefits of developing people or building a culture of innovation. But as

we now know, when everything is reduced to just dollars, it is difficult to

invest in the intangible, unscientific creative processes that ultimately drive

success.

Though the pull of the old always makes new ideas difficult to accept,

it alone does not explain why the machine view was not more widely

discarded. If the Humanistic approach truly held the value it professed, if

it had been able to fully explain the world around us and produce the

predictable results we still craved, then it would have overcome the

resistance inherent in change. But history indicates that it neither failed

nor succeeded. It shifted our focus away from an almost pure orientation

to the machine and provided us with a greater understanding of the one

part of our machine which we still couldn’t fully understand, control or

predict: people.

The Humanist model stressed the importance of people within

organizations and increased the attention we paid to employee motivation

and satisfaction. This paradigm evolved in tandem with science, which was

moving away from the certainty of Newtonian physics to Quantum Physics

and Chaos Theory. There was a growing recognition that organizations

were more than linear machines or simple sets of processes and workflows.

Instead, they were increasingly viewed as complex, non-linear, adaptive

systems. Organizations were suddenly systems that could actually learn

and grow.

For all its contributions, the Humanistic Model that emerged in the

1960’s was never able to shift the underlying paradigm by which all

decisions are made. We still believe in the dominant paradigm of the

machine and its drive for measurable results even though we knew from

the Humanist’s theories that people were inherently difficult to measure

or predict. We still do not know how to translate human benefits into

machine metrics like return on investment to aid in making decisions.

The reason for the failure of the Humanistic paradigm to significantly

shift our underlying paradigm was precisely because it could not and did

not provide a substantive platform for new decision-making. It extolled

certain benefits but couldn’t explain them. It told us that unseen forces

were at work but did not explore them. Without a deeper understanding

178 The Living Organization  

of the underlying forces that produced the results, management had to

take a leap of faith that things like “corporate culture,” “human

development” and “core values” created any real or tangible benefit to the

bottom line.

At HP I knew my results came about because of the team I had. But

there was something more than just the competence of the team. As a

collective we operated at a higher level than the mere sum of the talents of

the team. This team operated as if they were one unit. Even though they

were geographically spread throughout the sales region, they were highly

aligned and there seemed to be an energy that each member of the team

drew from as if the collective added energy to each individual.

We know that when teams are “hitting on all cylinders” there is a

sudden burst of energy we call Synergy, something almost everyone has

experienced at one time or another. That is what I unconsciously created

with my team at HP, a phenomenon in which the whole was greater than

its parts, where 2 + 2 suddenly equaled 5. Anyone interacting with my

team could feel this heightened energy and could see it in the results we

produced. But how do you explain it, much less harness its energy, for

your own purposes? Can you create synergy with the same

straightforward ease that you can realign the flow of work through the

factory? We had the words to name it but not the understanding of how it

worked that would enable us to create it. There are also many other areas

that contribute to success that the Humanistic Model left unexplained.

How about harnessing creativity? Who would not want their

employees to apply creative ideas to the challenges they faced? Yet with all

the creativity programs out there and our desire for “outside the box

thinking,” we still have not succeeded in understanding how or why this

magic takes place. Nor have we learned how to create cultures where

creative out-of-the box thinking is the norm. Why?

Intuitive insights are also a key component in manifesting magical

results. Where does this “sixth sense” come from and how can we tap into

its power on a regular basis? It appears to be an ephemeral force that can’t

be counted upon to regularly produce results. Sometimes it works and

other times it doesn’t. When an executive’s only justification for a certain

decision is, “I have a gut feel about this one,” are we more likely to listen

to his instincts or reject them in favor of a more rational approach?

Appendix 179

The Humanist paradigm failed to explain these common experiences

and the power behind them. It failed to provide us with a formula to re-

create these experiences at will. In short, it never explained the unseen

forces at work that created the magical results that some companies like

Apple, Southwest, Whole Foods and others regularly seem to attain. Nor

can we explain why companies who have broken out of the pack and

moved from good to great, fall from grace, companies like Enron, once

considered the darling of Wall Street only to be the poster child for all that

is wrong with business, and even my own beloved Hewlett-Packard, once

considered the model of a company that had it right but which has been

plagued with scandals of its own over the last decade.

Although we cannot explain or measure these magical forces, we

know that some unseen power can have an incredible impact on the

results we tangibly feel and measure. What if we could find a new model

and a better understanding of these forces that is based on sound

principles and does not require a complete leap of faith to put them into

practice?

To find that “missing link” or the next stage in our evolutionary

development, we’ve got to stop thinking of these hidden forces as

mysteries and start thinking of them in scientific terms. We must learn to

work with and release the latent energy that lies hidden and untapped

within every organization, energy that, once released, will propel our

corporations to new levels of achievement and performance. For that, we

need a new way of understanding our world, a new paradigm that goes

below our surface understanding to reveal the hidden forces at work in

our world.

The  Leadership  Challenge   With each passing year and each passing crisis, today’s new

generation of leaders are experiencing the limitations of our existing

business models and the devastating emptiness of many enterprises. They

sense the need for something more, something drastically different. But

few will change based solely on a leap of faith.

All change comes with uncertainty and a degree of risk. To embrace a

new worldview, today’s leaders need to know that the difficult changes

being called for and the uneasy experience in venturing into the unknown

180 The Living Organization  

will produce better results than they are experiencing today. They cannot

be expected to make the changes based predominantly on the moral plea

of “doing good in the world.” Corporate Social Responsibility, Stakeholder

Model, and other newly proposed models often set doing good above

making a profit. At times it can even appear to oppose making profits, a

message that invariably rings hollow to most corporate leaders and limits

the adoption of these models. Organization leaders need a new model that

better explains the world around them, one based on sound principles

and science. One that provides them the necessary tools and empowers

them to achieve better results than the model they currently use.

What would it take to create such a new model? Is there a scientific

system that can explain the unseen forces of synergy and magical results

to us in terms we can all understand and use? Such a model would

ultimately have to explain the process of manifestation. It would reveal all

the forces at work in our business and our world and how we can tap into

and harness them to manifest the results we want to create. It could even

show us how to spark our corporate creativity and breathe new life into

our soulless machines.

181

Book  References  

When I look back on what has impacted and influenced me, bringing

me to the perspectives I write about, there have been many experiences

and many books that served as guides on my journey. My interest in how

we, as humans, create brought me to explore many fields from physics to

psychology, from science to spirituality and from management theories to

Perennial Wisdoms.

There is no way I can include all of the material I think would be

appropriate reading but I have included those pieces that have served to

influence me the most and those I believe add to and enhance the

conversation I started in this book.

Some of the books on this list may seem odd to some of you as

reference for a book on business and organizations. For me practically

everything on this list has served, in some form or fashion, to deepen my

understanding of how organizations create results. They have merged and

morphed so much with each other that is difficult to compartmentalize.

Yet I have attempted to organize them so you as the reader can have a

sense of the type of books they are.

There is one individual whose work I want to call out. It is the work of

W. Brugh Joy. Brugh served as a very special guide for my personal

journey over the last seven years. He opened gateways for me to explore

and deepen my understanding into the Mystery of Life. Though he

passed away in December of 2010, it is clear that his work lives on through

me.

Browse the list and allow yourself to open to the books that call to

you. Then go read them and see what new gates will open for you. Enjoy.

182 The Living Organization  

Changing  the  Business  Paradigm   Firms Of Endearment by Raj Sisodia, David Wolfe, Jaq Sheth

The Living Organization by Lane Tracy

Be the Solution by Michael Strong and John Mackey

Managing in the Twenty-first Century by Satinder Dhima and Jerry

Biberman

Let My People Go Surfing by Yves Chouinard

Origins of Wealth by Eric Beinhocker

Stakeholder Theory by Edward Freeman

Conscious Business by Fred Kofman

Liberating the Corporate Soul by Richard Barrett

SuperCorp by Rosabeth Moss Kanter

Wired to Care by Dev Patnail

Megatrends 2010 by Patricia Auburdene

Megatrend by John Naisbitt

Global Mind Change by Willis Harman

Future Shock by Alvin Toffler

Communicating   Everyone Communicates Few Connect by John Maxwell

Fierce Conversations by Susan Scott

Appreciative Inquiry by David L. Cooperrider and Diana Whitney

Getting to Yes by Roger Fischer and Scott Brown

Leading our Loud by Terry Pearce

The Leader's Guide to Storytelling by Stephen Denning

Deepening  Our  Understanding   The Living Organization: Spirituality in the Workplace by William A.

Guillory Ph.D

Start with Why by Simon Sinek

Drive by Daniel Pink

Built to Last by Jim Collins

Good to Great by Jim Collins

Presence by Peter Senge, C. Otto Scharmer, Joseph Jaworski and Betty

Sue Flowers

Fifth Discipline by Peter Senge

Book References 183

The Living Company by Arie De Geus

The Three Laws of Performance by Zaffron and Logan

Corporate Culture and Performance by John P. Kotter and James L.

Heskett

The Seven Arts of Change by David Shaner

Working for Good by Jeff Klein

Strategy   Execution by Larry Cossidy, Ram Charan and Charles Burck

Balanced Scorecard by Robert S. Kaplan and David P. Norton

The Art of War by Sen Tzu and Ralph D. Sawyer

On Competition by Michael Porter

Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne

Lords of Strategy by Walter Kiechel

Beyond Strategic Vision by Michael Cowley and Ellen Domb

Market  Forces   Crossing the Chasm by Geoffrey A. Moore

Diffusion of Innovation by Everett M. Roger

The Innovators Dilemma by Clayton Christianson

The Experience Economy by Joseph Pine II and James Gilmore

It's Not what you Sell, It's what you Stand For by Roy Spence

Discovering the Soul of Service by Leonard L. Berry

The Myth of Excellence by Fred Crawford and Ryan Mathews

Tipping Point by Malcolm Gladwell

Leadership   Leading the Living Organization by Lane Tracey

Peak by Chip Conley

Tribal Leadership by David Logan, John King and Halee Fischer-

Wright

Passion and Purpose by John Mackey

Leading with Soul by Lee G. Bolman and Terrence E. Deal

Edgewalkers by Judi Neal

The Servant by James C. Hunter

The Corporate Mystic by Gay Hendricks

184 The Living Organization  

7 Habits of Highly Effective People by Stephen Covey

The 8th Habit by Stephen Covey

One Minute Manager by Ken Blanchard

Now Discover Your Strengths by Marcus Buckingham and Donald O.

Clifton

Leader Effectiveness Training by Dr. Thomas Gordon

As One by Michael Baghai and James Quigley

The Leadership Challenge by James M. Kouzes and Barry Z. Posner

Leadership in an Era of Economic Uncertainty by Ram Charan

Deeper  Leadership   Appreciative Leadership by Diane Whitney

Getting Naked by Patrick Lencioni

The Mindful Leader by Michael Carroll

Leadership and the New Science by Margaret Wheatley

Inspirational Leadership by Lance H. K. Secretan

Conscious Leadership by Chutisa Bowman, and Steven Bowman

Unleashing Genius by Paul Walker

Authentic Leadership by Bill George

Mojo by Marshal Goldsmith

Are You Ready to Succeed by Srikumar Rao

Better Under Pressure by Justin Menkes

The Human Side of Enterprise by Douglas McGregor

Servant Leadership by Robert K. Greenleaf and Larry C/ Spears

Psychology   Man and His Symbols by Carl G. Jung

The Undiscovered Self by Carl G. Jung

The Portable Jung by Carl G. Jung, Joseph Campbell and R. F. C. Hull

Ego and Archetype by Edward Edinger

Anatomy of the Psyche by Edward Edinger

Creation of Consciousness by Edward Edinger

Positivity by Barbara Fredrickson

The Hero with a Thousand Faces by Joseph Campbell

The Power of Myth by Joseph Campbell

Emotional Intelligence by Daniel Goleman

Book References 185

Learned Optimism by Martin P. Seligman

Religion Values and Peak Experiences by Abraham Maslow

The Farther Reaches of Human Nature by Abraham Maslow

I’m Ok – You’re OK by Thomas A. Harris

Psycho-Cybernetics by Maxwell Maltz

Flow by Mihaly Csikzentmihalyi

Please Understand Me by David Keirsey and Marilyn Bates

Lessons  from  Martial  Arts   The Book of Five Rings by Maiyamoto Musashi and Thomas Cleary

The Art of Peace by Morihei Ueshiba, Lloyd James and John Stevens

A Life in Aikido by Kisshomaru Ueshiba and Moriteru Ueshiba

Man's Search for Meaning by Viktor Frankl

Spirituality  in  Business   Appreciative Intelligence by Tojo Thatchenkery and Carol Metzker

Spiritual Intelligence by Danah Zohar

The Workplace & Spirituality by Joan Marques, Satinder Dhiman,

Richard King

God Goes to Work by Tom Zender

One by Lance H. K. Secretan

Purpose by Nikos Mourkogiannis

The Hungry Spirit by Charles Handy

Love and Profit by James Autry

Spiritual  Fiction   Siddhartha by Hermann Hesse

Steppenwolf by Hermann Hesse and Basil Creighton

Demian by Hermann Hesse

Stanger in a Strange Land by Robert Heinlein

His Dark Materials Trilogy by Philip Murrya

Star Wars Trilogy by George Lucas

The Lord of the Rings Trilogy by J.R.R. Tolkien

Conversations with God by Neale Donald Walsch

Way of the Peaceful Warrior by Dan Millman

The Celestine Prophecy by James Redfield

186 The Living Organization  

Traditional  Faith  Paths   The Teachings of the Compassionate Buddha by E.A. Burtt

The Analects of Confucius by Arthur Waley

The Four Nobel Truths and other books by HH The Dalai Lama

Tao Te Ching by Lao Tzu

The Upanishads

The Bhagavad-Gita

The Torah

The New Testament

“Metaphysical”  Physics   The Hidden Connection by Fritjof Capra

Dancing Wu Li Masters by Gary Zukav

Tao of Physics by Fritjof Capra

The Seat of the Soul by Gary Zukav

Personal  Growth   Think and Grow Rich by Napoleon Hill

The Road Less Travelled by M. Scott Peck

The Different Drum by M. Scott Peck

The Happiness Advantage by Shawn Achor

The Purpose Driven Life by Rick Warren

Illuminata by Marianne Williamson

You Can Heal Your Life by Louise Hay

Invisible Acts of Power by Caroline Myss

Be Here Now by Ram Dass

The Power of Now by Eckhart Tolle

Living in the Light by Shakti Gawain

Awakening to the Spirit World by Sandra Ingerman and Hank

Wesselman

Illumination by Alberto Villoldo

Fire in the Belly by Sam Keen

Knights Without Armor by Aaron R. Kipnis

Joy’s Way by W. Brugh Joy

Avalanche by W. Brugh Joy

187

Endnotes                                                                                                                 Chapter 1 1 “Appeal of iPad 2 Is a Matter of Emotions,” By David Pogue, New York Times, Published: March 9, 2011   2 Arthur C. Clarke, "Profiles of The Future", 1961 (Clarke's third law) 3 See the appendix for a brief history of the evolution of business and the models that have supported its growth. 4 http://blogs.forrester.com/sarah_rotman_epps/10-07-22- apple_ipad_sales_why_tablets_are_even_bigger_we_thought 5 http://en.wikipedia.org/wiki/Force_field_analysis and http://en.wikipedia.org/wiki/Kurt_Lewin 6 Adam Smith, The Wealth of Nations, Book IV, chapter II, paragraph IX Chapter 2 7 http://en.wikipedia.org/wiki/Invisible_hand 8 For more information about CSR visit www.csrwire.com. For Stakeholder vs. Shareholder visit http://www.valuebasedmanagement.net/faq_shareholder_stakeholder_persp ective.html and for Conscious Leadership and the broader movement of Conscious Capitalism visit http://www.cc-institute.com/cci/ 9 http://online.wsj.com/article_email/SB1000142405274870333800457523011266 4504890-lMyQjAxMTAwMDIwMzEyNDMyWj.html Chapter 3 10 Feynman, Richard (1964). The Feynman Lectures on Physics; Volume 1. U.S.A: Addison Wesley. 11 For more details see http://wiki.answers.com/Q/How_many_thoughts_do_people_have_each_day#i xzz1IgbkE9KT 12 Bruce H. Lipton, “The Biology of Belief,” pg 9, Published by Hay House, 2008

188 Endnotes  

                                                                                                                                                                                                                                                  Chapter 5 13 http://en.wikipedia.org/wiki/Thermoeconomics 14 “Welch condemns share price focus”, Financial Times, March 12, 2009 Chapter 6 15 “Emotional Intelligence: Why It Can Matter More Than IQ,” Daniel Goleman, Bantam Books, October 1995 16 Bruce H. Lipton, “The Biology of Belief,” pg 9, Published by Hay House, 2008 17 Bruce H. Lipton, “The Biology of Belief,” pg 9, Published by Hay House, 2008 Chapter 9 18 Michael Gershon, author of the 1998 book The Second Brain (HarperCollins). 19 Scientific America, February 12, 2010 http://www.scientificamerican.com/article.cfm?id=gut-second-brain 20 Institute of HeartMath® http://www.heartmath.org/research/science-of- the-heart.html 21 Neurocardiology, edited by Dr. Armour and Dr. Jeffrey Ardell 22 “The Blind Spot of Economic Thought: Seven Acupuncture Points for Shifting Capitalism 2.0 to 3.0, Otto Scharmer, Paper Prepared for presentation at the Roundtable on Transforming Capitalism to Create a Regenerative Society, MIT, June 8-9, 2009 23 Danah Zohar and Ian Marshall, SQ: Ultimate intelligence and Cindy Wigglesworth’s, “Spiritual intelligence Assessment” 24 http://en.wikipedia.org/wiki/Spiritual_intelligence 25 For more information on this assessment tool visit http://deepchange.com/discover_skills/index 26 For more information on these movements visit: http://en.wikipedia.org/wiki/Corporate_social_responsibility for Corporate Social Responsibility, http://www.consciouscapitalism.org/ for Conscious Capitalism and http://hbr.org/2011/01/the-big-idea-creating-shared- value/ar/1 for an article By Michael Porter on the concept of Shared Value Chapter 11 27 Excerpted from a Webinar by David Norton and Robert Kaplan, “An introduction to Execution Premium Process,” © Palladium Group 2010. 28 Improving Organization Decision-Making through Pervasive Business Intelligence, 2009) 29 BSCol Research of 243 performance management professionals drawn from BSCol Online Community, march 2006) 30 ISO 8402, 1994 31 Rappaport, Creating Shareholder Value,” 1986 32This quote came from The Balanced Scorecard Master-Class™, given by David Norton and Palladium group, October 2010. I modified it from their use

189

                                                                                                                                                                                                                                                  as a definition for Balanced Scorecard to be more inclusive of performance management systems in general. While I believe theirs to be the most advanced there are others. Hoshin Planning is but one example. Chapter 12 33 For a more detailed description of Business Model refer to Harvard Business Review Article “Reinventing Your Business Model,” by Mark W. Johnson, Clayton M. Christensen, and Henning Kagermann, Reprint R0812C   34 http://en.wikipedia.org/wiki/Capability_Maturity_Model Appendix 35 http://www.econlib.org/library/Enc/IndustrialRevolutionandtheStandardof Living.html 36 http://www.econlib.org/library/Enc/StandardsofLivingandModernEconomi cGrowth.html 37 http://us.history.wisc.edu/hist102/lectures/lecture21.html 38 http://wiki.answers.com/Q/How_did_World_War_2_affect_the_US_econom y 39 http://en.wikipedia.org/wiki/G.I._Bill 40 http://us.history.wisc.edu/hist102/lectures/lecture22.html 41 Herzberg, F.I. 1987, 'One more time: How do you motivate employees?’ Harvard Business Review, Sep/Oct87, Vol. 65 Issue 5, p109-120 (note: the reference to sales numbers is in the abstract written by the editors.) 42 “Drive: The Surprising Truth About What Motivates Us,” Daniel H. Pink, Riverhead Hardcover, December 2009 43 “Peak: How Great Companies Get Their Mojo from Maslow,” Chip Conley, Jossey-Bass, September 2007 44 http://en.wikipedia.org/wiki/Shareholder_value - and also - http://www.ft.com/cms/s/0/294ff1f2-­‐0f27-­‐11de-­‐ba10-­‐ 0000779fd2ac.html?nclick_check=1

190  

  Index     7-­‐Eleven,  77   Activity  Field,  1,  3,  viii,  9,  18,  

23,  34,  36,  48,  64,  65,  67,   68,  69,  70,  72,  73,  74,  76,   78,  81,  82,  83,  86,  87,  90,   91,  92,  93,  94,  95,  96,  97,   98,  99,  100,  101,  103,  104,   105,  106,  108,  112,  113,   114,  115,  116,  117,  120,   124,  127,  132,  133,  134,   136,  138,  139,  142,  143,   153,  156,  162,  164,  172  

Adelphia,  59   Alignment,  viii,  18,  46,  66,  92,  

124,  125,  128,  133,  134,   135  

Amazon,  12   Apple,  11,  12,  13,  15,  16,  19,  

24,  71,  78,  102,  118,  156,   179   iPad,  11,  15,  187   iPhone,  11,  15  

Arc  Framework,  114,  154   Armour,  Dr.  J.  Andrew,  90,  

188   Arthur  Anderson,  161   Balanced  Scorecard,  111,  

112,  113,  114,  115,  144,   183,  189  

Bear  Stearns,  11,  59,  161   Bernanke,  Ben,  18   Blake,  William,  160   Blue  Ocean  Strategy,  111,  183  

BMW,  12   Boeing,  122   Boesky,  Ivan,  60   Capability  Maturity  Model,  

154   Capitalism,  vii,  ix,  1,  3,  14,  15,  

16,  19,  58,  92,  160,  161,   162,  175,  187,  188  

CarMax,  12   Caterpillar,  12   Chaos  Theory,  166,  177   Clark,  Arthur  C.,  13,  187   Coca-­‐Cola,  91   Collins,  Jim,  24,  182   Commerce  Bank,  12   Commitment  Alignment,  135   Container  Store,  12,  19   Context  Field,  1,  3,  v,  viii,  64,  

81,  82,  84,  87,  88,  89,  90,   91,  93,  94,  95,  96,  97,  98,   99,  101,  102,  103,  104,   105,  107,  108,  109,  112,   113,  114,  115,  120,  121,   124,  127,  128,  130,  132,   133,  134,  135,  136,  139,   142,  143,  156,  157,  158  

Core  Values,  viii,  2,  120,  121,   124,  125,  128,  149,  153,   154,  178  

Corporate  Social   Responsibility,  25,  26,  92,   180,  188  

191

Corporation,  2,  1,  15,  22,  25,   27,  43,  50,  51,  60,  61,  101,   104,  109,  124,  147,  155,   156,  157,  167,  174,  175  

Costco,  12   Creation,  i,  iii,  vii,  13,  15,  16,  

28,  30,  35,  38,  40,  46,  59,   73,  102,  115,  123,  139,   145,  152,  158,  175,  184  

Crosby,  Phil,  154   Cultural  Alignment,  134   Customers,  1,  2,  3,  6,  7,  9,  10,  

12,  25,  28,  35,  46,  47,  49,   50,  56,  57,  60,  61,  62,  66,   77,  78,  79,  83,  84,  86,  103,   104,  106,  107,  108,  109,   112,  114,  118,  120,  121,   122,  124,  138,  139,  140,   147,  150,  152,  153,  154,   157,  175  

de  Geus,  Arie,  148   Delphi  Analysis,  111   Deming  Cycle,  113   Dickens,  Charles,  160   Disc,  172   Dodd-­‐Frank  Act,  152   eBay,  12   Economic  Freedom,  160   Edwards  Lifesciences,  122   Einstein,  Albert,  14,  21,  29,  

30,  32,  34,  149   Emotional  Intelligence,  67,  

91,  138,  184,  188   Enron,  59,  61,  155,  161,  179   Environmental  Scanning,  111   Epps,  Sarah  Rotman,  15   Esalen,  2,  28   Evolution,  3,  iv,  vii,  ix,  2,  10,  

13,  20,  30,  41,  43,  56,  85,  

88,  156,  160,  162,  174,   179,  187  

Execution  Management,  112,   113,  130,  150,  153  

Execution  Maturity   Development  Model,  154  

Execution  Scorecard,  137   Experience,  3,  4,  v,  vi,  viii,  9,  

19,  24,  30,  32,  33,  35,  38,   40,  48,  66,  70,  71,  73,  76,   77,  78,  79,  80,  81,  87,  88,   89,  91,  93,  110,  115,  123,   124,  128,  130,  142,  143,   151,  179,  183  

Federal  Reserve  Bank,  18   Feynman,  Richard,  32   Financial,  3,  9,  18,  54,  55,  57,  

58,  59,  60,  103,  104,  114,   150,  152,  155,  157,  161,   175,  188  

Fiorina,  Carly,  58   Firms  of  Endearment,  12,  26,  

102   Five  Force  Analysis,  111   Force  Field  analysis,  16   Future  Vision,  v,  vi,  viii,  24,  

61,  62,  92,  120,  121,  123,   124,  128,  132,  145,  151,   153,  154,  163,  174,  176,   183  

General  Electric  Corporation,   60  

General  Motors,  11,  15,  24,   161  

Gershon,  Michael,  90,  188   Goal  Alignment,  134   Goldman  Sachs,  59   Goleman,  Daniel,  67,  91,  184,  

188   Google,  12  

Great  Depression,  161,  165   Great  Recession,  160   Gretsky,  Wayne,  74   Harley-­‐Davidson,  12   Harvard  Policy  Model,  113   Heart-­‐brain,  90,  91   HeartMath  Institute,  90   Herzberg,  Frederick,  169,  

171,  172,  189   Hewlett  Packard,  6,  21,  24,  

31,  36,  58,  61,  83,  84,  91,   151,  156,  168,  172,  174,   178  

Honda,  12   Hoshin  Planning,  113,  189   Human  Capital,  114   Humanism,  ix,  166,  168,  169,  

170,  171,  174,  176,  177,   178,  179  

Hurd,  Mark,  58   IBM,  24,  169   IDEO,  12   IKEA,  12   Improv,  147   Industrial  Revolution,  15,  

156,  159,  160,  162   Information  Capital,  114   Innovation  Strategy,  140,  142   Invisible  hand,  18,  24,  93   JetBlue,  12   Jobs,  Steve,  12,  24   Johnson  &  Johnson,  12   Jung,  Carl,  19   Kaplan,  Robert,  111,  113,  

130,  183,  188   Keating,  Charles,  61   Knowledge  Systems,  68   Leadership,  4,  v,  ix,  8,  22,  25,  

39,  92,  103,  104,  105,  113,   124,  125,  150,  151,  153,  

154,  157,  158,  164,  168,   169,  179,  183,  184,  187  

Lehman  Brothers,  11,  15,  59,   161  

Lewin,  Kurt,  16   Living  Customers,  79   Living  Entities,  79   Living  Organization,  1,  2,  3,  4,  

i,  ii,  iii,  vi,  vii,  2,  3,  8,  9,  21,   22,  23,  24,  28,  29,  30,  43,   44,  45,  46,  49,  51,  57,  73,   74,  75,  78,  79,  84,  93,  101,   102,  103,  105,  108,  114,   115,  119,  123,  124,  130,   134,  148,  153,  156,  157,   182,  183  

Lord  Kelvin,  32   Machine,  1,  ix,  1,  2,  9,  12,  15,  

22,  23,  25,  26,  27,  64,  77,   92,  100,  101,  102,  103,   123,  155,  156,  157,  163,   164,  167,  168,  169,  171,   174,  175,  176,  177  

Madoff,  Bernard,  59,  61   Magic,  3,  vii,  viii,  4,  8,  12,  13,  

14,  16,  18,  19,  21,  22,  23,   24,  28,  31,  51,  70,  71,  80,   81,  93,  102,  124,  125,  147,   156,  167,  174,  178,  179,   180  

Maltz,  Maxwell,  169,  185   Management,  4,  3,  6,  7,  9,  10,  

21,  22,  28,  35,  71,  83,  92,   100,  103,  105,  112,  113,   115,  136,  141,  144,  150,   151,  161,  162,  168,  169,   171,  173,  176,  178,  181,   188,  189  

Maslow,  1,  108,  166,  169,   170,  171,  172,  175,  185,   189  

193

Mauborgne,  Renee,  111,  183   Maxwell,  James  Clerk,  18,  24,  

169,  182,  185   Mayer,  Emery,  90   McDonalds,  77   McGinnis,  Bill,  v,  14   McGregor,  Douglas,  169,  170,  

184   McKinsey,  91   Merck  Pharmaceuticals,  91   Meyers  Briggs,  172   Microsoft,  19   Milken,  Michael,  60   Mission,  viii,  7,  45,  72,  78,  92,  

120,  121,  122,  123,  128,   153,  154  

National  Technical  Systems,   v,  14  

New  Balance,  12   New  Deal,  165   New  York  Times,  1,  18,  187   Newton,  Isaac,  32,  114,  163,  

164,  166,  174   Physics,  25,  29,  177  

Nokia,  91   Nordstrom,  78   Norton,  David,  111,  113,  130,  

183,  188,  189   Nye,  John  V.  C.,  159   Organization  Capital,  114   Patagonia,  1,  12   Peets,  77   Performance  Management,  

115   Planning  Horizon,  118,  119   Pratt  &  Whitney,  5,  6,  83,  84   Process  Reengineering,  50,  

106  

Profit,  viii,  3,  25,  26,  51,  54,   55,  57,  58,  59,  60,  61,  175,   180,  185  

Quality  Management   Maturity  Grid,  154  

Quality  Movement,  113   Quantum  Leaders,  ii,  vi,  7,  61,  

62,  92   Quantum  Physics,  18,  93,  166,  

177   Rankin,  William,  32   Real Time Execution System,  ii,  

viii,  9,  114,  130,  131,  135,   136,  137,  144,  149   align,  130   assess,  130,  132,  133,  135,  

137   decide,  130,  132,  133,  135,  

144   define,  130   evaluate,  130,  132,  133,  

137,  146,  149   perform,  130,  132,  133  

Reductionist,  29   REI,  12   Relationship  Field,  2,  3,  v,  viii,  

2,  5,  28,  29,  33,  38,  40,  51,   57,  64,  65,  66,  67,  68,  69,   70,  72,  73,  74,  75,  76,  78,   79,  81,  82,  86,  87,  88,  90,   91,  93,  95,  98,  99,  101,  103,   105,  106,  107,  108,  112,   113,  114,  115,  124,  132,   134,  135,  136,  138,  139,   142,  143,  156  

Sarbanes-­‐Oxley,  152,  162   Scenario  Planning,  111   Scharmer,  Dr.  Otto,  90,  182,  

188  

Scientific  Management,  29,   163,  166,  175  

Scientific  Method,  29   Senge,  Peter,  147,  148,  182   Shared  Value,  92,  188   Shareholder  Value,  12,  27,  60,  

61,  115,  155,  175,  176   Shell,  91,  148   Sisodia,  Raj,  12,  182   Six  Sigma,  50,  106   Smith,  Adam,  1,  18,  24,  160,  

187   Social  Psychology,  16   Soulful  Purpose,  2,  ii,  v,  viii,  

45,  46,  57,  59,  84,  85,  86,   98,  100,  103,  108,  109,   120,  121,  122,  123,  124,   127,  128,  132,  146,  147,   152,  153,  154,  156,  157,   158  

Southwest,  12,  179   Spiritual  Intelligence,  4,  91,  

139,  185   Starbucks,  12,  77,  80,  91   Strategic  Compass,  ii,  120,  

128,  130,  131,  133,  135,   137,  153,  154  

Strategic  Planning,  viii,  16,   113,  117,  118,  120,  127,   128,  144  

Strategy,  viii,  60,  61,  92,  103,   110,  111,  112,  113,  115,  

117,  118,  130,  134,  135,   138,  140,  141,  142,  144,   145,  146,  148,  150,  183  

Strategy  Execution,  viii,  111,   112,  117,  130,  138,  141,   150  

Sun  Tzu,  113   Synergy,  viii,  9,  24,  68,  70,  71,  

79,  178,  180   Taylor,  Frederick,  100,  163,  

168   Thales  of  Miletus,  32   Timberland,  12   Total  Quality  Management,  

50,  106   Toyota,  12,  156,  174   Trader  Joe’s,  12,  78   Tyco,  61   Uncertainty  Principle,  166   Unilever,  91   UPS,  12   Wall  Street  Journal,  26   War  Gaming,  111   Watts,  Alan,  5   Wegmans,  12   Welch,  Jack,  45,  60,  175,  188   Whole  Foods  Market,  1,  2,  12,  

19,  71,  78,  102,  156,  179   Wigglesworth,  Cindy,  4,  139,  

188   Young,  Thomas,  32  

195

About  the  Author  

Throughout his professional career

as a Chief Executive Officer, Corporate

Director, and Advisor to CEOs, Norman

Wolfe has successfully guided

corporations through major transitions

leading to substantial growth, market

expansion and enhanced financial

performance. Currently, he is the

Chairman and CEO of Quantum

Leaders, a leading edge consulting

company guiding boards and CEOs to

improve strategy execution.

Norman’s lifelong passion has been

to understand how we, as individuals

and organizations, create results and

manifest our destiny. This passion is brought to life through his own

Soulful Purpose™ to transform organizations to support and enhance the

dignity of the human spirit in the process of serving their community.

The Living Organization® Trilogy is the part of that journey.

Norman travels the country speaking and training organizations and

leaders on The Living Organization® and the way to transform

organizations from machines of production to dynamic, creative living

organizations. His company, Quantum Leaders Consulting provides

tools, assessments, training and implementation support to companies

wanting to become Living Organizations®. To have Norman speak at your

next event, please visit his website www.normanwolfe.com. For training,

consulting or implementation support, visit www.quantumleaders.com.

Norman currently resides in Irvine, CA with his wife Jane and their

two Bichon dogs. He is also an Ordained Interfaith Minister offering

spiritual guidance and insightful dialogue. He welcomes feedback and

conversation and can be reached at [email protected].