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| C H A P T E R 4 |

Diagnose the System

TH E F I R S T S T E P in tackling any adaptive challenge is to get onthe balcony so you can see how your organizational system is responding to it. Informed by this perspective, you will gain a clearer view of your company’s structures, culture, and defaults (its habitual ways of responding to problems). You will grasp the nature of the adap- tive challenges at hand. You will map the networks of political relation- ships that will be relevant to how effectively you mobilize people to deal with that challenge. And you will assess your enterprise’s overall capacity for adaptation, by considering distinguishing characteristics of an adaptive organization.

The Elegance and Tenacity of the Status Quo

We start with the assumption that the status quo functions elegantly to solve a stream of problems and opportunities for which it has already evolved. Yesterday’s adaptive pressures, problems, and opportunities generated creative and successful responses in the organization that evolved through trial and error into new and refined structures, cultural norms, and default processes and mind-sets. In other words, yesterday’s adaptations are today’s routines. Yesterday’s adaptive challenges are today’s technical problems.

Of course, organizations, like all human systems, are highly complex. And the structures, culture, and defaults that define and maintain them

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prove tenacious. But they are tenacious for a reason. It took a long time for them to develop into self-reinforcing systems. They would have perished already if they were not fit to thrive in at least yesterday’s world. That they may be at risk today, lingering more than thriving, does not diminish the extraordinary functionality of the adaptations they achieved to the challenges they faced in previous decades.

Systems become tenacious quickly. From the first day in the life of an organization, the elements begin taking shape: the structures, culture, and default responses. People make decisions about how to interact with each other, which ideas will be shared and which will not, what jokes are appropriate and funny, who gets the floor during debates and meetings, and what kinds of performance will be rewarded. Founders, CEOs, and senior vice presidents may strive to transform the organiza- tion’s structures, culture, and defaults, but they often fail. An organiza- tional system takes on a life of its own, selecting, rewarding, and absorbing members into it who then perpetuate the system.

Have you ever started a new job, gone to your first staff meeting, and asked yourself, “What have I signed up for? How will I ever fit in here?” And then, after several weeks pass and you’ve attended more staff meetings, you begin acting more like the other people around you? If so, you’ve experienced the power of an organizational system to sustain itself.

As early as the second gathering of any group of individuals, the structures, cultural elements, and defaults that make up the organiza- tion’s system begin to take root. Behaviors begin to transform into pat- terns, and the patterns over time become entrenched. Everyone present contributes to the creation and maintenance of the system with every action they take.

Six months into a new job, you are probably no longer even aware of your organization’s unique systemic characteristics. You have begun dressing like everyone around you, exchanging the right kind of jokes, using the appropriate tone of voice when speaking to your boss, and doing what it takes to get what you want from those around you, be they superiors, subordinates, or peers. You have learned how to suc- ceed in the organization.

Every organization defines “success” in terms of different desired outcomes, whether it is improving profitability, saving the world from the scourge of AIDS, enhancing market share, improving public

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Diagnose the System 3

education, or creating breakthrough offerings. And the behaviors that help generate those desired outcomes get rewarded and celebrated, while those that do not get devalued.

Appropriate behaviors are reinforced in explicit ways, such as in the criteria for annual reviews, promotions, awards, bonuses, and reten- tion. But they also get reinforced implicitly, such as whom the boss acknowledges and ignores in staff meetings, which stories get told and retold about the organization’s best and worst moments, and what people tell one another about how to get ahead in the organization.

When Marty first started teaching at the Kennedy School, he had a conversation about his opportunities at the school with one of his men- tors on the faculty. During the discussion, the mentor suddenly broke off in midsentence and said, “You know, Marty, I’m willing to have this conversation with you anytime, but only in private; you should never discuss this with more than one other person in the room.” The mes- sage was clear: in this organizational system, it was considered inap- propriate to be explicitly ambitious. If you discussed your normal human career ambitions openly, you could be seen as grasping for power and status. And your peers and superiors would likely interpret your behavior to mean that you cared more about your own future than about your scholarship responsibilities.

Over time, the structures, culture, and defaults that make up an orga- nizational system become deeply ingrained, self-reinforcing, and very difficult to reshape. That makes sense when things are going well. But when something important changes—as with the economic and finan- cial crises that began in 2008, or in more normal times when a new competitor enters the industry, the organization’s founder leaves, cus- tomers’ preferences shift, or new laws are passed—the system’s tenac- ity can prevent it from adapting, from learning to thrive in the new context.

Many organizations get trapped by their current ways of doing things, simply because these ways worked in the past. And as tried- and-true patterns of thinking and acting produced success for the orga- nization, they also produced success for the individuals who embraced those patterns. The people who rose to the top of the organization because of their ability to work with the system as is will have little interest in challenging its structures, culture, or defaults. Moving away from what has worked in the past is especially difficult for people in

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midcareer who have enjoyed considerable professional success. We knew a stockbroker on the East Coast, for example, whose huge firm dismissed the technology boom as a fad throughout the 1990s. The bro- ker was still encouraging clients to buy AT&T as an anchor stock well into the company’s downward spiral. We did some leadership develop- ment work at AT&T during those years and saw firsthand how difficult it was for many managers to see the warning signs that so many of those outside the organization recognized. In this case (as in many others across an array of industries), people were so immersed in their organization’s system that they couldn’t see the adaptive challenge staring them in the face. And as long as they were blind to that chal- lenge, they could not make the changes needed to remain competitive in a shifting landscape.

As John Gardner, former U.S. cabinet secretary and founder of Com- mon Cause and Independent Sector, put it: “All too often, on the long road up, young leaders become ‘servants of what is’ rather than ‘shapers of what might be.’ In the long process of learning how the sys- tem works, they are rewarded within the intricate structure of existing rules. By the time they reach the top, they are very likely to be trained prisoners of the structure. This is not all bad; every vital system re- affirms itself. But no system can remain vital for long unless some of its leaders remain sufficiently independent to help it change and grow.”1

Adaptive challenges have unique characteristics. For example, take the challenge of trying to keep your best people from leaving for another organization.

1. Input and output are not linear. Your strategy produces unin- tended consequences. (You have increased salespeople’s bonuses, but even more of them have defected because they look more successful to competitors.)

2. Formal authority is insufficient. The formal authority of your position is not enough to effect change. (You tell sales managers to spend more time mentoring high-potential associates, but they do not comply.)

3. Different factions each want different outcomes. A change you propose is praised by one group of employees but protested by another. (When you suggest that managers begin to hand off their most profitable clients to top associates so they can

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Diagnose the System 5

develop new business, the managers grumble about losing long-standing relationships and easy reorders and giving their subordinates greater opportunities to replace them.)

4. Previously highly successful protocols seem antiquated. The tried-and-true techniques that worked for you in the past seem antiquated, not adequate for the new challenge. (Paying Gen Xers more money does not seem to buy their loyalty.)

Clearly, adaptive challenges comprise a tangle of interdependent threads. One of those threads is that your organization (as a system) reflects characteristics of the larger system (the industry or sector) in which it is embedded.

Take the main sectors operating in many economies: not-for-profit, private, and public. Each has distinctive characteristics that make them less able to adapt to new realities. For example:

• In the not-for-profit sector, organizations are typically mission driven. They tend to value consensus decision making, with everyone having a voice in tough decision making. That also gives everyone a veto.

• In the private sector, organizations are typically driven primarily by profit and operate in a highly competitive environment. They tend to protect historically but diminishingly profitable business lines even as the competitive marketplace changes around them.

• In the public sector, organizations tend to be risk averse, security oriented, and insulated from the pressure to adapt from market- place competition.

Understanding that you are operating in multiple systems at the same time is an essential component of identifying and addressing adaptive challenges.

O N T H E B A L C O N Y

• Think about the sector in which your organization sits: not-for-profit,

private, or public. How does that sector’s distinctive culture affect the

way your organization operates? What is the impact of this reality on

your organization’s ability to deal with adaptive challenges?

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• List several of your organization’s or family’s distinguishing norms.

What is their impact on your group’s ability to deal with adaptive

challenges?

O N T H E P R A C T I C E F I E L D

• Gather your direct reports. Ask them to describe what they see as the

most difficult part of their transition into their current job and what

strategies they used to ease the transition. Discuss whether these

strategies have enabled them to cope better with the distinctive

adaptive challenges of transitioning into a new role.

• Think about a recent crisis or challenge your team experienced. With

your team, trace the events leading up to the challenge, as far back as

you can. Identify the different outcomes people desired and the roles

people played outside of their formal job to generate those out-

comes. Ask what valuable new behaviors, attitudes, and ways of

doing things emerged during this process of generating the desired

outcomes. How might these new strengths be used to deal with

adaptive challenges that arise in the future?

Every organization is not only one overall system but also a set of subsystems. We encourage you to look at three components to start with as a way into a multidimensional look at what is happening around you. The components are structures (for example, incentive programs), culture (including norms and meeting protocols), and defaults (routine processes of problem solving and ways of thinking and acting). These subsystems powerfully shape how people respond to and try to deal with adaptive pressures.

Discover Structural Implications

An organization’s formal structures create the playing field and rules for all activities that take place in the overarching system. For example, structures may reward certain behaviors or attitudes (such as not mak- ing mistakes or bringing in new business or customer satisfaction) and

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Diagnose the System 7

implicitly discourage other behaviors and attitudes (risk taking or increasing business from existing clients or focusing on improving employee morale). Organization charts, reporting and communication protocols, laws and bylaws, employment contracts, hiring practices, and compensation plans are examples of such structures. Each structure can enhance, or constrain, an organization’s ability to adapt to changes in the business landscape. “Merrill Lynch’s Story” shows an example.

Merrill Lynch’s Story

In the late 1990s, financial services giant Merrill Lynch began developing

a division focused on providing 401(k) services, a field where robust

competitors had a considerable head start. The pay structures for the

401(k) sales force were based on the company’s existing corporate

model. Specifically, the company determined bonus pay for the sales

force (which typically made up a significant portion of salespeople’s

annual income) by how people within the institution regarded each of

them and how well he did against sales targets. The formula made sense

for the firm’s established divisions. But it fell flat in the fledgling 401(k)

division, where big growth would not occur until managers and sales

reps had learned the business. Hampered by the traditional pay struc-

ture, the new 401(k) division could not attract the best and the brightest

from within the bank. Worse, some of the most promising folks left for

more lucrative opportunities at other companies.

To succeed in the 401(k) business, employees had to build external

networks and sell unfamiliar new products. But that all-important bonus

was still based on exceeding sales targets, so salespeople (understand-

ably) focused their efforts on selling established products to existing

clients. The compensation structure was nurturing behavior that gener-

ated success in other parts of the organization, but that same behavior

undermined the new division’s efforts.

The company eventually changed the bonus criteria for 401(k) divi-

sion sales. Of course, this move sparked some tension in other divisions

that continued to operate under the old system. But the 401(k) business

soon began generating a substantial new revenue stream, and the firm

became a significant player in the 401(k) field.

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Take some time to get on the balcony and consider your own organization’s structures and their impact.

O N T H E B A L C O N Y

• What behaviors do your organization’s compensation and recogni-

tion systems encourage? Discourage? How well do the encouraged

behaviors support the organization’s strategic goals?

• What does your company’s organization chart say about which func-

tions and roles are valued most? Valued least? Looking at who has

direct access to whom, what might this imply about who is designed

to work together and who in isolation?

• How are departments or teams organized in your enterprise? Who

reports to whom? What does this suggest about who has input into

decision making?

• Recall the last senior manager or executive hired by your organiza-

tion. How did the process work? Who did this person formally meet

inside the organization? What does all this imply about how the new

person is supposed to interact with the organization?

• What do the size, criteria for membership, election system, and pay-

ment of the board of directors tell you about how decisions are made

and what and how value is recognized by the organization?

O N T H E P R A C T I C E F I E L D

• With your team, write the organization’s mission on a whiteboard or flip

chart. Draw two columns underneath. In the left column, list all of the

organization’s structures that support the mission. In the right column,

list the structures that impede the mission. Here’s a quick example:

Our mission: Improve quality of life for people in need

Structures supporting the mission Structures impeding the mission

• Hiring practices emphasize • Awards and other forms of recognition go primarily recruiting people with a not-for-profit to those who get the biggest financial gifts from background and long track records donors. Employees who find nonfinancial ways of of public service. serving our clients (such as establishing community

mentoring programs) receive little recognition.

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Diagnose the System 9

Surface Cultural Norms and Forces

An organization’s culture is made up of its folklore (the stories that people frequently tell that indicate what is most important), its rituals (such as how new employees are welcomed into the company), its group norms (including styles of deference and dress codes), and its meeting protocols (like modes of problem solving and decision making). All of these cultural ingredients influence the organization’s adaptability.

Unlike structures, the culture of an organization is not usually writ- ten down or formally documented, so it may be hard to describe in pre- cise terms. But like structures, culture still powerfully determines what is considered acceptable and unacceptable behavior.

Think about your family as an organization you know well. What are the cultural rules about displaying emotion? Are emotional responses an appropriate element of robust interaction or frowned upon as a sign of weakness? Which emotions are OK to express? Under what circum- stances? For example, in many families it is inappropriate to exhibit anger. Sometimes it is sadness or negativity that is forbidden, and, con- versely, we even know families where the culture says that life is very difficult and displaying happiness means that you are not taking life seriously enough or not struggling hard enough or are naive. How does your family do on that score? (Most families we know are doing well if they are good at displaying any anger, negativity, or happiness, never mind all three.) Marty remembers being told when he was very young that if he did not have something good to say about someone, then say nothing. When Michael Dukakis ran for president in 1988 and was crit- icized for his analytical response to being asked what he would do if his wife were a rape victim, he responded by saying that he was taught at a very early age not to display his emotions. How long does it take after the norm of not displaying anger is established before members of the family are so out of practice that they have lost the capacity to do so?

Adaptive leadership requires understanding the group’s culture and assessing which aspects of it facilitate change and which stand in the way. Too often, people taking on tough issues in organizational life do not devote enough time to this diagnosis, perhaps because an organiza- tional culture feels less personal than community, ethnic, or family cul- tures do. But in organizations, each person both shapes and is shaped by the enterprise’s culture, just as in their family.

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How do you get on the balcony to diagnose your organization’s culture? Begin by looking for four cultural flags: folklore, rituals, norms, and meeting protocols.

Folklore

In organizations, just as in any community, people make sense of the events and circumstances around them by developing enduring folk- lore, such as stories, jokes, and legends. Folklore has staying power because it embodies images and ideas that symbolize what matters most to people in the enterprise. These stories are told over and over again, at the coffee machine, in the cafeteria, during orientation pro- grams, and at good-bye parties for departing staff. They endure because they contain truths about how the organization functions and what its members consider important.

But because folklore is so resonant and powerful, it can also obscure other important information. To get the full story about how your orga- nization operates, you need to unpack each story and read between the lines, looking for clues about what is allowed as well as what is off- limits. Your findings will tell you something about how risk accepting, determined, value anchored and flexible the organization is, and there- fore how well positioned it is to adapt to change.

Here are some characteristic themes that often show up in organiza- tions’ folklore:

• What happened when someone disagreed openly with the boss

• Why someone (especially a senior manager or executive) was fired or resigned from the company

• How the person with the longest tenure in the organization managed to achieve such longevity

• Why the founders created the organization, and why they left (or stayed)

• What happened at last year’s holiday party that people are still talking about

• What happened at the last off-site for senior managers

• Who wields the real power on the board

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Diagnose the System 11

• Who the CEO confides in and listens to

• How the organization scored a big success or recovered from a big failure

O N T H E B A L C O N Y

• Think about two or three people who were fired, who left your

organization voluntarily, or who were given big promotions. What

was the official company story about what happened to each of

them? Was the story told in the hallways any different? If so, how?

What do the various stories suggest about how the organization

defines appropriate and inappropriate behavior? What do they

suggest about the adaptability of your organization?

O N T H E P R A C T I C E F I E L D

• Ask each member of your team to write a brief, anonymous story

about an incident or event in the organization that they think reveals

the enterprise’s values. Collect the stories and share them at the next

retreat. (In our consulting practice, after each piece of client work, we

do an after-action review where we describe and analyze our contri-

bution to the outcome by focusing on both successful interventions

and failed ones. Frequently in these meetings when we begin to ana-

lyze what went wrong, the lead consultants cannot see their own

contribution to it. When these meetings are effective, they represent

the value we place on being on the leading edge of our own practice

in working to affirm our strengths, discover our blind spots, and

develop new diagnostic and action options.)

• Ask members of your team to sit with you one-on-one and share a two-

minute story about the organization’s biggest success in the last six

months. Videotape each account. Then gather your staff together to col-

lectively watch all the stories in one sitting. Discuss what the stories, as a

group, suggest about the organization’s culture. For example, perhaps a

theme of determination, or of inflexibility, crops up in most or all of the

stories. Talk about what the stories suggest about your firm’s adaptability.

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Rituals

Every organization has rituals, practices that people repeat time and again under similar circumstances. Rituals can range from birthday parties, regular meetings, and holiday parties to support of charitable efforts and celebrations of special occasions and professional successes (such as winning a new client, finishing a big project, or retiring after many years of service). By determining which rituals your organization has established and which it does not have, you can tell a lot about the enterprise’s adaptability. That, in turn, can help you figure out how to frame an adaptive challenge so that people are motivated to take it on. For example, if your company routinely celebrates big, collective suc- cesses, then build in events to acknowledge milestones of progress long before it is possible to reach completion. If your company likes cele- brating individual success, then build in acknowledgment programs that honor new and smart risk-taking behaviors.

O N T H E B A L C O N Y

• List your organization’s rituals. What do the rituals celebrate or

acknowledge? Professional accomplishments? Making time for family

life? Interaction across the organization? What do the rituals suggest

about your firm’s adaptability?

O N T H E P R A C T I C E F I E L D

• Identify a behavior that would make the enterprise more adaptable,

and design a ritual that you think would encourage that behavior.

For example, to foster an environment where people felt safer taking

risks and making mistakes, Marta, a manager in a large sales organiza-

tion, created a “best failure” ritual. At every Monday-morning staff

meeting, the employee who learned the most from a mistake during

the previous week shared what they learned, and then received a

funny prize and a round of applause for contributing to the team’s

education.

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Diagnose the System 13

Group Norms

Group norms govern how people relate to one another in an organization and can further illuminate the adaptability of an organization. Early in his career, Alexander interviewed for a job at Microsoft. He wore jeans because his friends at the company had told him that everyone wore jeans at work. He did not get the job, and later learned that no one was expected to wear jeans until after they had been hired. In addition to matters of attire, group norms can govern behaviors such as:

• Who gets to call whom by their first name

• What’s appropriate gift giving in the organization

• Whether, how, and where people socialize

• Whose doors remain open, or closed

• What jokes are OK to tell, and which are bad form

• Who sits with whom in the cafeteria

Together, these norms can give you data and clues about how adap- tive the organization is. In a basic frame, you can look at whether the norms create opportunities for learning or reinforce the status quo. If the same people always sit with the same people at lunch, this rein- forces the old norms of the organization. If people are always sitting in new combinations, there may be a higher chance of cross-fertilization and new ideas happening.

O N T H E B A L C O N Y

• What behaviors are considered inappropriate in your organization?

Yelling? Heated debate? Casual attire? Long lunches? Long week-

ends? Leaving at five o’clock instead of later? What do these rules

suggest about your group’s culture and its adaptability?

• Recall your first day on the job at your organization. What group

norms initially struck you as surprising? Have you internalized those

norms? If so, how quickly did you do so? What does this imply about

the ways that your organization reinforces the status quo?

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O N T H E P R A C T I C E F I E L D

• Think of a norm that would help your organization be more adaptable.

Get two or three of your colleagues on board and start doing it when-

ever appropriate. For example, perhaps you would try out a norm that

says, “People should spend five minutes at the end of meetings to

reflect on the team performance and individual effectiveness.” Begin

to practice this norm in small ways at work and watch what happens.

Meeting Protocols

You can learn a lot about your organization’s adaptability by looking at its meeting protocols. Protocols include what kinds of meetings are held regularly, who gets invited to them, and how the agenda is estab- lished. They speak to how power is distributed in the organization and what information is exchanged.

But some additional questions can reveal even deeper aspects of an organization’s culture and thus its adaptability:

• Are meetings designed primarily for decision making or informa- tion sharing? Is there room for creative thought and learning from mistakes, or are they mostly for getting direction from the authority?

• If decisions are made at the meetings, what is the decision rule? How are decisions made? Do members discuss and then advise the chair, leaving the decision to her, or is a majority, supermajor- ity, or consensus required for decisions? How does the decision- making rule reflect the context and purpose of the decision? Are all decisions made by one rule, or are different rules used for dif- ferent problems and situations?

• Are attendees authorized to speak on subjects beyond their own areas of expertise? If so, are the new ideas integrated into think- ing or just noise? Do people value nonjudgmental brainstorming, out-of-the-box ideas, and far out possibilities?

• To what extent are attendees expected or required to share the meeting’s content with their subordinates? When the information

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Diagnose the System 15

is shared, what work is done to integrate the information into the current reality?

• What role does the most senior person in the room play during the meeting? (Facilitator? Decision maker? Inquisitor? Provocateur?) Does the person create space for conflict or marginalize it?

O N T H E B A L C O N Y

• Watch closely what happens at the next staff, team, or executive-

team meeting that you attend. Then answer the questions listed

above. What do your answers tell you about your company’s culture

and adaptability?

O N T H E P R A C T I C E F I E L D

• If you regularly convene meetings as part of your job, start every

meeting with a new practice that you have not used before that

encourages people to learn from and adapt to change. Here are

some suggestions: Have everyone meditate for one minute. Solicit

the most important lesson of the week. Ask people to spend more

time discussing an idea that demands more attention. Cite a mistake

that was made from which others can learn.

Whatever new practice you decide to try, explain to everyone that

it is an experiment. At the end of each session and at the end of the

month, ask people what they thought of the practice, what they see

as its advantages and disadvantages. Observe whether and how the

meetings change as a result of the new practice. Are there more

ideas being exchanged? Is there more participation from usually

quiet attendees? More debate?

Recognize Default Interpretations and Behavior

In addition to structures and culture, an organization’s problem-solving defaults can provide insights into the way your organization operates

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as a system—and its adaptability. Defaults are the ways of looking at situations that lead people to behave in ways that are comfortable and that have generated desirable results in the past. Organizations fall back on defaults because they are familiar and they have proved useful for explaining reality and solving problems in the past. When people in an organization find that a certain response to a particular type of situ- ation worked well previously, they will likely repeat that response whenever they encounter an apparently similar situation. After all, why tamper with success? But the more a default continues to work, the more it gets repeated. And the harder it is for the organization to change when new realities require a different response. “Defaults in the Middle East” is one example.

A default interpretation, leading to a default response, puts people on familiar ground and plays to their organization’s strengths. But in several respects, it can also be a constraint. It can blind people to a wider array of solutions and ideas that might generate even more value.

Also, a default that works in one setting, at one moment in time, may not necessarily work in another place or time. Because people tend to interpret new situations in ways that confirm the default, they fail to recognize the distinctive qualities of a new situation and thus cannot develop fresh solutions. Finally, an organization’s default responses become predictable, enabling competitors or other adversaries to use that predictability for their own purposes. For example, extremists in the Middle East can easily hijack any progress toward peace because they know that violence will predictably generate a violent response in a cycle of reinforcement that puts the moderates on the defensive. After each turn of violence, moderates within each community are attacked for even considering compromises with the enemy toward peace. Or, to take another example, in political campaigns one tech- nique for changing the content of the debate is to challenge the oppo- nent with a provocative advertisement, knowing that doing so will produce a reaction, which can then be fodder for another advertise- ment and so on, having the effect in a very short time of displacing the central conversation.

Not surprisingly, defaults can greatly constrain an enterprise’s adaptability. Have key elements in the business landscape changed?

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Diagnose the System 17

Defaults in the Middle East

During and immediately following the war between Israel and Hezbollah

in southern Lebanon in the summer of 2006, the American Jewish com-

munity responded to the crisis by creating the Israel Emergency Cam-

paign (IEC). In a matter of weeks, the IEC raised $300 million to help

rebuild the northern part of Israel, which had been devastated by

Hezbollah missiles, and to aid families who had been displaced. It was a

remarkable response. It was also a default response, a predictable reac-

tion based on a tried-and-true response to events. The war fit the para-

digm: Israel’s survival was at stake, and the American Jewish community

must support its defense and reconstruction.

The funds raised during the IEC undoubtedly contributed significantly

to Israel’s recovery. But this default response prevented members of

the American Jewish community from considering a broader range of

responses that might have generated an even better outcome. Was it

possible to frame the American Jewish community’s role differently—for

example, as a partner in security rather than as a rescuer? For example,

one senior authority in a major Jewish organization suggested in an

e-mail to his network of colleagues that funds could be raised to support

the rehabilitation of not only northern Israel but also southern Lebanon,

which had also been devastated. His proposal received no support and

even generated some considerable pushback. He backed off, and his

idea went nowhere. In the end, much of the Lebanese reconstruction

went by default to Hezbollah, which used the opportunity to solidify its

patron-client relationship with Lebanese in need of help.

Are new behaviors required to deal with those changes? An adaptive organization looks beyond its defaults when confronted with a new challenge. “Fresh Eyes at Global Insurance” provides an example.

Overriding your organization’s defaults often means taking on behaviors that feel uncomfortable and risky. But it is worth sticking with those behaviors if the situation warrants them. Indeed, it is a default’s very familiarity that causes organizations to cling to it long after it has stopped being so widely useful.

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Fresh Eyes at Global Insurance

A multinational company we’ll call Global Insurance (GI) demonstrated

its capacity for looking beyond its own defaults after merging with a sim-

ilarly sized firm. GI’s board and the CEO realized that the hardest aspect of

the merger was going to be talent management. So, for the first time in

GI’s long and distinguished history, a successful senior executive from

the sales side was moved laterally to serve as the corporate vice presi-

dent for human resources (HR). The intent was for HR to be managed by

someone who had a deep understanding of the business and long-

standing credibility with the company’s revenue-producing side. The

appointment raised the HR function’s visibility and status. People within

the function and leaders from other functions began taking HR more

seriously. As a result, their behavior changed. For example, the HR

function shifted its role from just providing new skills and transactional

personnel administrative services to helping cultivate and support

important new business initiatives. Other executives in the business

actually started asking HR for help. Thanks to these new behaviors, the

top team aligned around strategic business initiatives and resource allo-

cations, and two competing internal departments began working

together on an integrative marketing strategy.

O N T H E B A L C O N Y

• Identify a default interpretation that your organization regularly

makes. What view of the world is it based on? What predictable

behavior does it generate? What created the default? In what

situations has the default worked well? In what situations has it

proved less effective? What’s different about those two types of

situations?

O N T H E P R A C T I C E F I E L D

• The next time you attend a meeting, track your own energy level as if

you were operating a heart monitor. Note what causes your energy

level to increase or decrease: is it around content, or conflict, or

18 Diagnose the System

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Diagnose the System

moving to action? Where you react is a great indicator of your default

interests and where you may need to stretch beyond them.

• Study the body language of your employees during a presentation.

Notice when people perk up and pay attention, when there is an

immediate physical response to something said, and when the

energy seems to seep out of the audience. What do your observa-

tions suggest about your company’s defaults?

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| G L O S S A R Y |

The definitions in this glossary have been developed and refined over twenty-five years, primarily by Riley Sinder, Dean Williams, and the authors. They are not definitive statements. They are meant to be useful, first-approximation concepts that serve as a resource for thinking more deeply and broadly about the subject and practice of leadership.

act politically Incorporate the loyalties and values of the other parties into your mobilization strategy. Assume that no one operates solely as an individual but represents, formally or informally, a set of constituent loyalties, expectations, and pressures.

adaptation A successful adaptation enables an organism to thrive in a new or challenging environment. The adaptive process is both conservative and pro- gressive in that it enables the living system to take the best from its traditions, identity, and history into the future. See also thrive.

adaptive capacity The resilience of people and the capacity of systems to engage in problem-defining and problem-solving work in the midst of adap- tive pressures and the resulting disequilibrium.

adaptive challenge The gap between the values people stand for (that consti- tute thriving) and the reality that they face (their current lack of capacity to realize those values in their environment). See also technical problem.

adaptive culture Adaptive cultures engage in at least five practices. They (1) name the elephants in the room, (2) share responsibility for the organiza- tion’s future, (3) exercise independent judgment, (4) develop leadership capacity, and (5) institutionalize reflection and continuous learning.

adaptive leadership The activity of mobilizing adaptive work. adaptive work Holding people through a sustained period of disequilibrium

during which they identify what cultural DNA to conserve and discard, and invent or discover the new cultural DNA that will enable them to thrive anew; i.e., the learning process through which people in a system achieve a success- ful adaptation. See also technical work.

ally A member of the community in alignment on a particular issue. ancestor A family or community member from an earlier generation who

shapes a person’s identity.

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assassination The killing or neutralizing (through character assassination) of someone who embodies a perspective that another faction in the social sys- tem desperately wants to silence.

attention A critical resource for leadership. To make progress on adaptive challenges, those who lead must be able to hold people’s engagement with hard questions through a sustained period of disequilibrium.

authority Formal or informal power within a system, entrusted by one party to another in exchange for a service. The basic services, or social functions, provided by authorities are: (1) direction; (2) protection; and (3) order. See also formal authority and informal authority.

bandwidth The range of capacities within which an individual has gained comfort and skill. See also repertoire.

below the neck The nonintellectual human faculties: emotional, spiritual, instinctive, kinetic.

carrying water Doing the work of others that they should be doing for themselves.

casualty A person, competency, or role that is lost as a by-product of adaptive change.

classic error Treating an adaptive challenge as a technical problem. confidant A person invested in the success and happiness of another person,

rather than in the other person’s perspective or agenda. courageous conversation A dialogue designed to resolve competing priori-

ties and beliefs while preserving relationships. See also orchestrating the conflict.

dance floor Where the action is. Where the friction, noise, tension, and sys- temic activity are occurring. Ultimately, the place where the work gets done.

dancing on the edge of your scope of authority Taking action near or beyond the formal or informal limits of what you are expected to do.

default A routine and habitual response to recurring stimuli. See also tuning. deploying yourself Deliberately managing your roles, skills, and identity. disequilibrium The absence of a steady state, typically characterized in a

social system by increasing levels of urgency, conflict, dissonance, and tension generated by adaptive challenges.

elephant in the room A difficult issue that is commonly known to exist in an organization or community but is not discussed openly. See also naming the elephant in the room.

engaging above and below the neck Connecting with all the dimensions of the people you lead. Also, bringing all of yourself to the practice of leadership. Above the neck speaks to intellectual faculties, the home of logic and facts; below the neck speaks to emotional faculties, the home of values, beliefs, habits of behavior, and patterns of reaction. See also below the neck.

experimental mind-set An attitude that treats any approach to an adaptive issue not as a solution, but as the beginning of an iterative process of testing a hypothesis, observing what happens, learning, making midcourse correc- tions, and then, if necessary, trying something else.

Glossary 21

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faction A group with (1) a shared perspective that has been shaped by tradition, power relationships, loyalties, and interests and (2) its own grammar for ana- lyzing a situation and its own system of internal logic that defines the stakes, terms of problems, and solutions in ways that make sense to its own members.

faction map A diagram that depicts the groups relevant to an adaptive chal- lenge, and includes the loyalties, values, and losses at risk that keep each fac- tion invested in its position.

finding your voice The process of discovering how to best use yourself as an instrument to frame issues effectively, shape and tell stories purposefully, and inspire others.

formal authority Explicit power granted to meet an explicit set of service expectations, such as those in job descriptions or legislative mandates.

getting on the balcony Taking a distanced view. The mental act of disengaging from the dance floor, the current swirl of activity, in order to observe and gain perspective on yourself and on the larger system. Enables you to see patterns that are not visible from the ground. See also observation.

giving the work back The action of an authority figure in resisting the pressure to take the responsibility for solving problems off of other people’s shoulders, and instead mobilizing the responsibility of the primary stakeholders in doing their share of the adaptive work.

holding environment The cohesive properties of a relationship or social sys- tem that serve to keep people engaged with one another in spite of the divisive forces generated by adaptive work. May include, for example, bonds of affilia- tion and love; agreed-upon rules, procedures, and norms; shared purposes and common values; traditions, language, and rituals; familiarity with adaptive work; and trust in authority. Holding environments give a group identity and contain the conflict, chaos, and confusion often produced when struggling with complex problematic realities. See also pressure cooker and resilience.

holding steady Withholding your perspective, not primarily for self-protecting, but to wait for the right moment to act, or act again. Also, remaining steadfast, tolerating the heat and pushback of people who resist dealing with the issue.

hunger A normal human need that each person seeks to fulfill, such as (1) power and control, (2) affirmation and importance, and (3) intimacy and delight.

illusion of the broken system Every group of human beings is aligned to achieve the results it currently gets. The current reality is the product of the implicit and explicit decisions of people in the system, at least of the dominant stakeholders. In that sense, no system is broken, although change processes are often driven by the idea that an organization is broken. That view discounts the accumulated functionality for many people of the system’s current way of operating.

informal authority Power granted implicitly to meet a set of service expecta- tions, such as representing cultural norms like civility or being given moral authority to champion the aspirations of a movement.

interpretation Identifying patterns of behavior that help make sense of a situation. Interpretation is the process of explaining raw data through digestible under- standings and narratives. Most situations have multiple possible interpretations.

22 Glossary

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intervention Any series of actions or a particular action, including intentional inaction, aimed at mobilizing progress on adaptive challenges.

leadership with authority Mobilizing people to address an adaptive challenge from a position of authority. The authority role brings with it resources and constraints for exercising leadership.

leadership without authority Mobilizing people to address an adaptive chal- lenge by taking action beyond the formal and informal expectations that define your scope of power, such as raising unexpected questions upward from the middle of the organization, challenging the expectations of your constituents, or engaging people across boundaries from outside the organi- zation. Lacking authority also brings with it resources and constraints.

leap to action The default behavior of reacting prematurely to disequilibrium with a habituated set of responses.

lightning rod A person who is the recipient of a group’s anger or frustration, often expressed as a personal attack and typically intended to deflect atten- tion from a disturbing issue and displace responsibility for it to someone else.

living into the disequilibrium The gradual process of easing people into an uncomfortable state of uncertainty, disorder, conflict, or chaos at a pace and level that does not overwhelm them yet takes them out of their comfort zones and mobilizes them to engage in addressing an adaptive challenge.

naming the elephant in the room The act of addressing an issue that may be central to making progress on an adaptive challenge but that has been ignored in the interest of maintaining equilibrium. Discussing the undiscussable. See also elephant in the room.

observation Collection of relevant data from a detached perspective and from as many sources as possible. See also getting on the balcony.

opposition Those parties or factions that feel threatened or at risk of loss if your perspective is accepted.

orchestrating the conflict Designing and leading the process of getting parties with differences to work them through productively, as distinguished from resolving the differences for them. See also courageous conversation.

pacing the work Gauging how much disturbance the social system can with- stand and then breaking down a complex challenge into small elements, sequencing them at a rate that people can absorb.

partners Individuals or factions that are collaborators, including allies and confidants. See also ally, confidant, and the distinction between the two.

personal leadership work Learning about and managing yourself to be more effective in mobilizing adaptive work.

pressure cooker A holding environment strong enough to contain the dis- equilibrium of adaptive processes. See also holding environment and resilience.

productive zone of disequilibrium The optimal range of distress within which the urgency in the system motivates people to engage in adaptive work. If the level is too low, people will be inclined to complacently maintain their cur- rent way of working, but if it is too high, people are likely to be overwhelmed

Glossary 23

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and may start to panic or engage in severe forms of work avoidance, like scapegoating or assassination. See also work avoidance.

progress The development of new capacity that enables the social system to thrive in new and challenging environments. The process of social and polit- ical learning that leads to improvement in the condition of the group, commu- nity, organization, nation, or world. See also thrive.

purpose The overarching sense of direction and contribution that provides meaningful orientation to a set of activities in organizational and political life.

reality testing The process of comparing data and interpretations of a situation to discern which one, or which new synthesis of competing interpretations, captures the most information and best explains the situation.

regulating the heat Raising or lowering the distress in the system to stay within the productive zone of disequilibrium.

repertoire The range of capacities within which an individual has gained com- fort and skill. See also bandwidth.

resilience The capacity of individuals and the holding environment to contain disequilibrium over time. See also holding environment and pressure cooker.

ripeness of an issue The readiness of a dominant coalition of stakeholders to tackle an issue because of a generalized sense of urgency across stakeholding groups.

ritual A practice with symbolic import that helps to create a shared sense of community.

role The set of expectations in a social system that define the services individ- uals or groups are supposed to provide.

sanctuary A place or set of practices for personal renewal. scope of authority The set of services for which a person is entrusted by others

with circumscribed power. social system Any collective enterprise (small group, organization, network of

organizations, nation, or the world) with shared challenges that has interde- pendent and therefore interactive dynamics and features.

song beneath the words The underlying meaning or unspoken subtext in someone’s comment, often identified by body language, tone, intensity of voice, and the choice of language.

taking the temperature Assessing the level of disequilibrium currently in the system.

technical problem Problems that can be diagnosed and solved, generally within a short time frame, by applying established know-how and procedures. Techni- cal problems are amenable to authoritative expertise and management of routine processes.

technical work Problem defining and problem solving that effectively mobi- lizes, coordinates, and applies currently sufficient expertise, processes, and cultural norms.

thrive To live up to people’s highest values. Requires adaptive responses that distinguish what’s essential from what’s expendable, and innovates so that the social system can bring the best of its past into the future.

24 Glossary

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tuning An individual’s personal psychology, including the set of loyalties, val- ues, and perspectives that have shaped his worldview and identity, and cause the individual to resonate consciously and unconsciously, productively and unproductively, to external stimuli. See also default.

work avoidance The conscious or unconscious patterns in a social system that distract people’s attention or displace responsibility in order to restore social equilibrium at the cost of progress in meeting an adaptive challenge.

Glossary 25

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Chapter 4

1. John Gardner, “The Tasks of Leadership.” Leadership Papers/2 (Washington DC: Independent Sector, 1986).

| N O T E S |

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