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Mark Youngblood,
President, Quay Alliance
Author: Life at the Edge of Chaos: Creating the Quantum Organization

Posted: June 12, 1998

Leadership at the Edge Of Chaos
Originally published in Strategy & Leadership Magazine, Sept. 1997

Introduction

Though we still await the arrival of the new millennium, most of us have already entered a new age, one that is fundamentally different from the world in which we developed our business skills and experience. Ours has become a quantum world—fast paced, complex, and chaotic—with unique challenges that require unique approaches.

The desperate call-to-arms, "Change or Die"—which can be heard echoing down the corridors of businesses everywhere—is ample evidence that leaders have recognized the need to change. Executives know that companies must be fast, flexible, responsive, resilient, and creative to survive. Most also know that our Industrial Era mind-sets, techniques, and tools are ineffective for creating such an organization. Yet the vast majority of companies are reluctant to give up these most sacred of sacred cows, and so continue to languish even as forward-thinking competitors are passing them by.

Quantum Organizations

A new breed of companies is emerging that seem to thrive on chaos. These companies—which I call Quantum Organizations—operate on an organic model that closely mirrors the functioning of natural systems. Although most are emerging in the high-tech arena, they can be found in almost any industry. Microsoft, Cisco Systems, Intel, Marshall Industries, Whole Foods Markets, Starbucks, Wainwright Industries, and Harley Davidson are all examples of Quantum Organizations. The success of these nimble giants is nothing short of astonishing. Each are breaking the traditional rules of management and organizational design, and as a result are defining new paths to success.

The notion that organizations are machines for producing profit, which was first formulated over a 100 years ago, is no longer effective. The machine model emphasizes control, predictability, and efficiency—techniques that do not work as they once did. Quantum Organizations have found that the organic model, with its emphasis on responsiveness and creativity, is much better suited for this quantum world.

One basic difference between machines and organic (living) systems is in their openness to the environment. Machines are closed systems, that is, they have no way of renewing themselves and so wind down and stop (the law of entropy). Living systems, however, are open to their environment. Although they expend a great deal of energy and resources, they also take in an equivalent amount. Living systems creatively evolve—machines break down.

A completely closed system is at equilibrium—complete stasis—where there is no change, just stillness. This is the equivalent of death. A completely open system is in complete chaos. Here, there is so much change that systems cannot sustain themselves and so slip over into chaos. This too is the equivalent of death.

Systems that are either too open or too closed will perish. Between these to extremes is an area where systems can continue to function. "Control" is the boundary at the "edge of equilibrium." This is where companies that function based on the machine model attempt to operate. Here, disturbances, variations, and change are minimized—a central tenet of the traditional management model.

"Creativity" is the boundary at the "edge of chaos." Scientists who have studied the functioning of organic systems tell us that it is here, at the edge of chaos, that living systems are most flexible and have the greatest potential for novelty and creativity. When organic systems reach critical levels of stability—that is when they operate far from equilibrium but have not slipped over into chaos—they creatively self-organize into higher levels of order that are both more complex and more stable.

Traditional organizations operate at the edge of equilibrium, while Quantum Organizations, in direct contrast, operate at the edge of chaos. The control-orientation was suited for much of the 20^th century, but beginning in the early 1970’s its effectiveness began to erode. As George Washington University professor Peter Vaill explains, today’s environment is comparable to "white water rafting." The techniques that worked in calm water simply do not work in white water. In order to survive in the 21^st century, companies will be forced by the ever-evolving marketplace to shift to a creativity-orientation. They must transform themselves to operate at the edge of chaos.

This poses a significant challenge for many leaders. Most people in positions of leadership today gained their success through their mastery of traditional management techniques and approaches. The transformation of their companies to Quantum Organizations will carry with it profound changes in how they will lead.

The New Leader

In the mechanistic command-and-control architecture, hierarchy and clear lines of authority are the "load-bearing structures" that keep the company intact. As a result, the fate of the organization rests on the shoulders of a few key leaders. These leaders are expected to select a winning strategy, develop detailed operating plans, direct the activities of subordinates, be smarter than anyone else, know more than anyone else, and leap tall buildings in a single bound. Not only is it impossible for companies to succeed this way, these expectations are an impossible burden for leaders to carry. In Quantum Organizations, the load-bearing structure is the system’s ability to self-organize. The role of leaders, then, shifts to activities that promote the richest possible environment for this self-organization to occur.

There are three broad categories of activities for which the "new leader" is chiefly responsible. These are: (1) establishing context, (2) disturbing the system, and (3) cultivating the organization.

Establishing Context

Creativity and self-organization in living systems are contingent on having a clear identity—a context for taking action. In organizations, identity is established through purpose, principles, strategy and culture, all of which come together in a "shared vision."

By now, many companies have defined their shared vision. They will have committed a lot of time, resources, and money carefully crafting every word in their vision statements. It will have been printed, framed, and hung in offices and hallways throughout the organization. Miniature versions will lie tucked away in wallets and desk drawers. But ask any employee what the company’s vision is, and how it affects his or her everyday job, and 99 out of 100 won’t be able to tell you—and this includes the executives! This must change.

A strong, well-understood core ideology is vital to a Quantum Organization. It is through shared beliefs and intentions that people are able to act autonomously and remain in accord with the whole—thus drastically reducing the need for external controls. This is an area that bureaucratic organizations typically ignore.

Bureaucracies establish order through external controls and rigid structures, so they perceive little need for and have little interest in the organizing power of shared purpose and principles. Quantum Organizations, however, rely heavily on core ideology and shared vision for creating order and make little use of external controls. The new leaders have several responsibilities in this regard:

• Clarifying shared vision. The new leaders bring into focus the shared vision that the organization is trying to manifest and connect the people in the organization to it through active participation and extensive dialogue. Employees are encouraged to develop and maintain "20/20 vision"; that is, a focus on both the long-term and short-term organizational goals.
• Enriching the culture. Organic systems rely on the self-directed actions of its agents in support of the whole. One way that employees are able to operate with few rules and still create productive, purposeful results is through the organizing power of a strong culture. A culture is an organization’s collective mind-set: its beliefs, intentions, and memories. The new leaders actively nurture and expand the organization’s culture, becoming living examples of the desired behaviors.
• Developing alignment. Even the best-intentioned employees cannot create organizational performance if all of the elements of the organization are not aligned. A highly aligned organization has the focus and power of a laser beam. Lasers are little more than normal light in which the light rays are aligned in the same direction. In organizations, coherence occurs when people and organizational design align around a universally shared purpose, strategy, and guiding principles. The new leaders use their global perspective to create this alignment around the achievement of the shared vision.
• Promoting understanding. The new leaders assist the organization in understanding and interpreting information and events in the context of the organization’s shared vision. The data that people are inundated with is often ambiguous, contradictory, and confusing—the new leaders clarify this "noise" and transform it into meaningful information. People in organizations work in many different contexts, and leaders need to find the language that speaks to people where they are, both physically and psychologically. The message to engineers cannot be delivered in the same manner as the message to manufacturing plant workers. Their realities, cares and concerns are totally different.

Disturbing the System

Seen through the lens of classical management, the messiness that comes with changes and variations in the work environment has been an indication that things were going wrong—that the organizational machine was breaking down. One of the most surprising conclusions to come out of the new science is that living systems have the most vitality and creativity when they are experiencing a great deal of disturbance.

This turns one of the basic tenets of management on its head: instead of creating stability, the new leader does the opposite—ensures that the organization is sufficiently de-stabilized. Some of the actions that new leaders take are:

• Creating compelling goals. In their book Built to Last, Collins and Porras described what they called "Big Hairy Audacious Goals" (abbreviated BHAGs). In change management terminology, these are called "super-ordinate goals." BHAGs are important for stimulating progress in organizations and can be powerful motivators during times of organizational transformation. Examples of BHAGs are NASA’s 1962 goal to "put a man on the moon and return him home safely by the end of the decade," Motorola’s goal of six sigma quality, and Microsoft’s vision of a computer on every desk and all of them running Microsoft software. Effective BHAGs have three characteristics, they are: (1) audacious—they stretch the limits of credibility; (2) inspiring—they enflame the imagination and inspire the human spirit; and (3) unifying—they cannot be achieved without the collaboration and cooperation of the entire organization.
• Ensuring the rich flow of information. The new leaders are essential in helping the organization to obtain accurate and useful information and feedback from the ecosystem in which they are operating. They reflect the performance of the organization so individuals and groups can self-correct to bring their efforts into accord with the company’s goals. In particular, the new leaders help the organization see important information that is being ignored, denied, or distorted.
• Promoting diversity of opinion. Diversity is essential for change and growth. Interactions that are homogenous in content and outlook are the equivalent of "empty calories"—lots of sugar and no nutritional value. Systems thrive on diversity. Consider, for instance, the importance of the exchange of diverse DNA materials to the health of a species. In-breeding ideas has the same potential for "genetic" deformity as does in-breeding physical species. Although many organizations have initiated diversity programs, these are generally oriented toward cultivating social tolerances between different ethnic and gender groups. This is an essential first step, but the issue for the new leader is to develop organizations that truly value rather than fear different viewpoints. Conflict, which is a natural outcome of diversity, should be seen as an opportunity for enriching the understanding of an issue. Leaders need to promote the understanding that the cross-fertilization of opinion is the catalyst for generating novel ideas and approaches—the wellspring of creativity.
• Holding anxiety. Change and disturbance evokes anxiety in people. Being able to hold this anxiety and still function effectively is the mark of both mature people and mature organizations. Leaders in Quantum Organizations help people to hold and use this anxiety by putting it into its proper perspective as the energizing spark for creative action.

Cultivating the Organization

Creativity and self-organization in living systems is contingent on having a clear identity (shared vision), a high degree of autonomy among the systems agents (personal leadership), and openness (the free flow of information, interactions between agents, and diverse viewpoints). The new leaders understand that the organization does not need to be controlled, that it will generate its own order and respond creatively to the environment once these conditions are met. The new leaders’ responsibility is to assist the organization in creating these conditions.

• Promoting ownership. The new leaders are constantly promoting employees’ ownership of the company’s success, as well as employees’ self-reliance in doing whatever is necessary to achieve the goals. They communicate the importance of commitment and self-reliance and strive to create the conditions where people can feel ownership for both their work and the company.
• Nurturing relationships. In the web-like structure of the Quantum Organization, strong relationships are essential to individual’s and group’s effectiveness. The new leaders look for opportunities to help people and groups connect with each other. This includes relationships with key external stakeholders as well as those among the constituents of the organization. Leaders reinforce the vital importance of the long-term health of relationships, actively promoting collaboration, cooperation, and mutual enrichment.
• Encouraging learning. The new leaders promote the diffusion of learning within the company. They seek out innovations throughout the firm and introduce them to others who might benefit. They advise the organization on skills and competencies that may need to be added to its repertoire. The new leaders recognize that learning is a process of trial and error, and promote risk taking and tolerance for failures and mistakes. Learning is also a process of expanding people’s awareness, of broadening their worldview. The new leaders encourage diverse ideas and viewpoints.
• Nourishing the human spirit. Organizations are about people. They are the gardens in which the collective hopes, aspirations, and beliefs of the people within them are planted, grown, and harvested. It is people who breathe life into organizations through their commitment and positive energy. Given the right environment, people will self-organize to create a dynamic, thriving, successful organization, and will do so in good times and in bad. However, this sort of vitality requires conditions that are deliberately avoided in the traditional, mechanistic organization. People are inspired by participating in something important, something from which they can derive personal meaning and satisfaction. People need personal meaning in their work— not to be some faceless cog in the corporate machine. They also need to bring their whole selves to work: body, mind, and spirit. The impoverished caricature of employees as unemotional androids must give way to the reality that humans are emotional creatures. Emotions carry power, vitality, creativity. The new leaders know this and instead of repressing emotions, seek to channel them into positive and productive directions.

Personal Leadership

In Quantum Organizations, leadership is not a position, it is a process. It isn’t limited to a few people; it is something in which everyone participates. This is a dramatic turnabout for the classical management model. In bureaucratic, command-and-control organizations, 100 percent of the power is resident in the CEO. The board of directors grants this power on behalf of the stockholders, but short of extreme malfeasance by the CEO, the board is often essentially impotent regarding corporate policy. The CEO then delegates his or her power to the next level and they to the next level and so on down the line. Eventually, authority to perform certain tasks is delegated to some front-line worker. The key point in this is that no one in this organization owns his or her work (has power over it) except for the CEO—who doesn’t do any of it.

What we have, at their essence, are powerless organizations. The CEO—who has all of the authority—cannot do the work; the people—who do the work— do not have any power over it. Powerless people struggle relentlessly to regain control of their life and circumstances, usually by taking it from someone else through psychological or physical abuse, domination and repression, or manipulation and exploitation. People also gain power by hoarding information, knowledge, and access to people or other resources. These behaviors—which are inherently counter-productive and destructive—can be seen throughout bureaucratic organizations. Regretfully, they do not remain there. Due to the indivisible connectedness of systems, these abuses are carried over and passed on to other people throughout the social system, creating an epidemic of fear, powerlessness, and abuse.

In Quantum Organizations, the goal is to restore power to the individual employees. Being "powerful" means that people are full of power—isn’t that the kind of person that every organization needs? Who really thinks an organization can survive for long with fearful, powerless people who are more intent on keeping the boss happy than in doing what is right for the customer and the company’s greater interest?

Living systems thrive when their agents are powerful, when they are able to operate independently and creatively. In organizations, this means that decision-making authority and power must be held at the closest possible point to where the work is being done. This is not the same thing as delegating authority. Delegation is an artifact of the traditional management model where authority is on loan to someone "lower" in the organization. The main product of this approach is the blurring of accountability and the stifling of creativity and initiative.

The healthy functioning of Quantum Organizations requires the transfer of both authority and accountability to the person or group who accept responsibility for producing results. With such power comes responsibility and accountability for its use and an end to the traditional caretaking activity of managers and leaders. People learn to stand on their own—to accept the risk of personal accountability and to become a whole person. Personal power and responsibility are, in fact, the essential elements of personal leadership.

The Evolution of Leadership

My study of the functioning of organic systems has left me with an indelible realization: nature will evolve relentlessly toward ever-higher levels of complexity and order, with or without humanity’s permission. What, then, would be a higher order of organization, of leadership? More extreme methods of control and manipulation, abuse and exploitation? Of course not. Classical managers are justified in feeling threatened by the emerging model of the new leader—these modern day dinosaurs face the same choice as did their ancient predecessors: evolve or face extinction.

However, for any classical manager willing to take the time to truly understand the changes that I have described, the news is certainly not all bad. Leadership in a traditional organization—with all its power and glory—is no picnic. Witness the early retirements of executives in top positions who, as with as with Jeffrey Stiegler who resigned as president of American Express in 1995, "want a life."

The role of the new leader is not only more productive for the organization, it is liberating for the leader as well. At the same time that leaders are helping to unleash the creative potential of their organizations, they are unleashing their own. For many leaders who go through this transformation there is an astonishing realization: The chains that were used to restrict and control the organization had—the entire time—been wrapped just as tight about themselves. Liberation, they have learned, is exhilarating!

Mark Youngblood, President, Quay Alliance
Author: Life at the Edge of Chaos - Creating the Quantum Organization, Perceval Publishing, 1997
email: myungblood@aol.com, web: http://www.quantumorg.com/

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