Featured Guest Speaker
Posted: June 12, 1998
at the Edge Of Chaos
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 worldfast paced, complex, and chaoticwith unique challenges that require unique approaches.
The desperate call-to-arms, "Change or Die"which can be heard echoing down the corridors of businesses everywhereis 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.
A new breed of companies is emerging that seem to thrive on chaos. These companieswhich I call Quantum Organizationsoperate 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 efficiencytechniques 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 evolvemachines break down.
A completely closed system is at equilibriumcomplete stasiswhere 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 minimizeda 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 stabilitythat is when they operate far from equilibrium but have not slipped over into chaosthey 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 20th century, but beginning in the early 1970s its effectiveness began to erode. As George Washington University professor Peter Vaill explains, todays 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 21st 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 systems 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.
Creativity and self-organization in living systems are contingent on having a clear identitya 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 companys vision is, and how it affects his or her everyday job, and 99 out of 100 wont be able to tell youand 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 wholethus 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:
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 wrongthat 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 oppositeensures that the organization is sufficiently de-stabilized. Some of the actions that new leaders take are:
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.
In Quantum Organizations, leadership is not a position, it is a process. It isnt 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 CEOwho doesnt do any of it.
What we have, at their essence, are powerless organizations. The CEOwho has all of the authoritycannot do the work; the peoplewho 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 behaviorswhich are inherently counter-productive and destructivecan 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 powerisnt 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 companys 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 ownto 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 humanitys 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 leaderthese 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 organizationwith all its power and gloryis 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 hadthe entire timebeen wrapped just as tight about themselves. Liberation, they have learned, is exhilarating!
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