Developing Third-Generation Learning Organizations [1 ed.] 1527594491, 9781527594494

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Developing ThirdGeneration Learning Organizations

Developing ThirdGeneration Learning Organizations: A Heuristic Discovery Process By

Kazimierz Gozdz and Ruth-Ellen L. Miller

Developing Third-Generation Learning Organizations: A Heuristic Discovery Process By Kazimierz Gozdz and Ruth-Ellen L. Miller This book first published 2023 Cambridge Scholars Publishing Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © 2023 by Kazimierz Gozdz and Ruth-Ellen L. Miller All rights for this book reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. ISBN (10): 1-5275-9449-1 ISBN (13): 978-1-5275-9449-4

CONTENTS Illustrations ................................................................................................. x Abbreviations ........................................................................................... xii Preface ..................................................................................................... xiii Acknowledgements .................................................................................. xv Foreword: Kaz’s Journey of Discovery ................................................... xvi Maturing into Western Orthodox Business Culture ......................... xviii Community Building .......................................................................... xx Transpersonal Psychology and Worldview ....................................... xxii New Paradigm in Business ............................................................... xxv Learning Organizations .................................................................. xxviii Facilitating Dual Bottom-Line Development.................................... xxx PART ONE. THEORETICAL FRAMEWORK Chapter 1 .................................................................................................... 2 Whole Systems – A Worldview & A Toolset The Worldview ..................................................................................... 2 Systems Thinking – The Toolset .......................................................... 8 Chapter 2 .................................................................................................. 11 An Underlying Metaphysics Absolute and Relative – A Fundamental Understanding .................... 14 Co-Creating in Alignment with the Absolute ..................................... 14 Heuristic Passion ........................................................................... 15 Adequatio ...................................................................................... 16 Chapter 3 .................................................................................................. 18 Learning: Heuristic Discovery in Community Multiple Learning Processes ............................................................... 19 Horizontal and Vertical Developmental Growth ................................ 21 Action Inquiry ..................................................................................... 23 An Ongoing Praxis.............................................................................. 23

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Chapter 4 .................................................................................................. 24 Cultures Within Cultures Societal Culture: The Context ............................................................. 25 A Simplified Framework for Understanding Culture ......................... 26 Two Very Different Values Sets ......................................................... 27 Corporate Cultures Reflect Larger Cultures ....................................... 30 Organizational Culture: The Medium ................................................. 31 Habituation and Institutions .......................................................... 32 Liminality, Communitas, Structure, and Anti-structure ...................... 33 Changing Leadership Roles in an Ongoing Process ........................... 36 From Institution to Community .......................................................... 38 Chapter 5 .................................................................................................. 40 Leadership Development & Community Development Leadership Challenges Require Development .................................... 44 Responses to Challenges ..................................................................... 45 Leadership Levels and Psychological Frameworks ............................ 46 Stage I Leaders and Organizations...................................................... 47 Stage II Leaders and Organizations .................................................... 47 Stage III Leaders and Organizations ................................................... 48 Stage IV Leaders and Organizations ................................................... 50 Chapter 6 .................................................................................................. 52 Discovery & Knowledge Creation Knowledge-Creating Communities..................................................... 54 Knowledge Creation and Communitas ............................................... 56 Fostering Hyper-Learning – A New Heuristic Passion ....................... 57 PART TWO. METHODOLOGICAL FRAMEWORK: BUILDING THE DUAL BOTTOM LINE Chapter 7 .................................................................................................. 60 Not A Linear Formula, But an Organic, Non-Linear Framework Chapter 8 .................................................................................................. 63 Applying the Framework Generative Interviews Set the Field .................................................... 64 Building Community and Capacity..................................................... 65 Principles of Community .............................................................. 65 Capacity Building through Community Building ......................... 65 Clarifying the Enterprise Operating Philosophy ................................. 66

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Discovering a Business/Mission Value Proposition that Inspires Excellence ..................................................................................... 67 Designing Learning Infrastructure and Scaffolding ............................ 68 Progressing a Governance Model ....................................................... 69 Balancing Education and Alignment with Devolution of Power ........ 71 Chapter 9 .................................................................................................. 72 Stages of Development Transforming Views and Habits ......................................................... 72 PART THREE. PRACTICES: BUILDING DUAL BOTTOM-LINE LEARNING ORGANIZATIONS Chapter 10 ................................................................................................ 76 A Consistent Process of Development Chapter 11 ................................................................................................ 78 Field-Setting Practices Chapter 12 ................................................................................................ 80 Community Building As A Practice Skills and Competencies for Community-Building ............................ 81 Guidelines and Behaviors for Community Building ........................... 83 Chapter 13 ................................................................................................ 85 Dialogues for Development Chapter 14 ................................................................................................ 87 Scaffolding Practices in the Zone of Proximal Development Chapter 15 ................................................................................................ 90 Nothing Extra – Learning as a Function of Daily Work Tasks and Outcomes ........................................................................... 92 Chapter 16 ................................................................................................ 95 Dual Bottom Line Performance Management Chapter 17 ................................................................................................ 97 Horizontal and Vertical Development: The Core of it All Stage I Leaders.................................................................................. 100 Stage II Leaders ................................................................................ 101

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Stage III Leaders ............................................................................... 104 Stage IV Leaders ............................................................................... 108 PART FOUR. CASE EXAMPLES Chapter 18 .............................................................................................. 118 Case Examples as Heuristic Portraits Chapter 19 .............................................................................................. 120 The U.S. Branch of an International Energy Resources Corporation Vertical and Horizontal Learning, Field Setting ............................... 121 Maturing CEO; Maturing Cultural Context ...................................... 123 Enabling Hierarchical and Communal Governance through Horizontal Development ............................................................................... 125 A Networked Learning Community ................................................. 127 Alignment ......................................................................................... 127 Chapter 20 .............................................................................................. 129 A Family-held Corporation in Transition: Premier Holdings Setting the Field for Profound Institutional Change ......................... 132 Crossing the River While Searching for Stones .......................... 133 Building an Operating Philosophy .................................................... 133 A Nothing Extra Approach ............................................................... 135 Community Building Became Culture Building, and Everyone Was Included ................................................................................. 137 Chapter 21 .............................................................................................. 139 An International Manufacturing Conglomerate: Industrial Engineering Technologies (IET) Catalyzing a Heuristic Journey toward Stage IV Leaderand Organization-Development .................................................. 139 Setting a Field to Uncover the Organization’s Operating Philosophy ................................................................................... 141 Building a Transformation Roadmap: Cultural Context, Practices, and Initiatives .............................................................................. 141 Community Building ........................................................................ 143 Chapter 22 .............................................................................................. 145 A Small, Privately-Owned Hi-Tech Company: Global Inorganics Leading Cultural Transformation – Uncovering and Transforming Cultural Bias................................................................................ 147

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Community Building and Organizational Knowledge-Creating Community .................................................................................. 149 Endings and New Beginnings ........................................................... 152 Chapter 23 .............................................................................................. 153 Military Learning Organizations (MLO) Chapter 24 .............................................................................................. 158 Nonprofit Service Organizations PART FIVE. SUMMARY & FINDINGS Chapter 25 .............................................................................................. 162 Forming Dual Bottom-Line Learning Organizations: A Heuristic Discovery Process Chapter 26 .............................................................................................. 164 Findings & Guiding Principles Guiding Heuristic Principles ............................................................. 170 Bibliography ........................................................................................... 173 Afterword ............................................................................................... 181 Index ....................................................................................................... 184

ILLUSTRATIONS

Figure 1. Developing people leads to increased value for the organization as a whole Figure 1-1. Wiener’s simple, single-feedback loop diagram with input, controller, energy/material processor, output with feedback to an information processor, leading to potential modification of the target by the controller. Figure 1-2. An early multiple feedback system model showing how increases in some elements lead to increases or decreases in other elements (source: Maruyama 1963). Figure 1-3. A simple model of a system with two loops that describe the movement of increasing or decreasing activity affecting the elements that make up the system (source: Senge, 1990). Figure 3-1. Summary of Wilber’s (1986) Integral Development model applied to the Stages of leader development. Figure 3-2. Wilber’s (1986) model of relationships. Figure 3-3. Domains of knowledge and heuristic discovery. Figure 4-1. One model of the system of elements in a culture (source: World Resources SIM Center 2022). Figure 4-2. Description of the STEEPV Framework, as applied in Futures Research and Impact Assessment (source: Ozcan et al. 2015). Figure 4-3. Ruth Miller’s comparison of fundamental values, beliefs, and assumptions of the two major cultural systems in the world, today. Figure 5-1. Scott Peck’s and Kegan & Lahey’s Stages of Development. Figure 5-2. Stages of Development as Leadership Qualities. Figure 5-3. The Dynamic Relationship Between Stage IV Leaders and Their Organizations. Figure 6-1. The Dynamic Movement Between Individual and Collective Tac-it and Explicit Knowledge. Figure 6-2. Elements of the Communal Knowledge-Creation Process: Heuristic Discovery in a Living System. Figure 7-1. Learning Organization Development Model.

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Figure 7-2. Levels at which the formation model is applied. Figure 8-1. Elements of the DBLLO Framework and Their Relationships. Figure 8-2. Learning Communities Interacting with Learning Organization Structures. Figure 8-3. Developmental Progression of Governance Structures, Stage I through Stage IV. Figure 9-1. Stages of Leadership and Community Development. Figure 10-1. The Interrelated Elements of the DBLLO Creation Process. Figure 12-1. The Competencies Required for Community Building. Figure 12-2. Guidelines for Operating in Authentic Community. Figure 17-1. Leader Development Stages. Figure 17-2. Behaviors Fundamental to High-Engagement Learning (adapted from Hess 2014; p. 48). Figure 17-3. The SECI Knowledge Creation Process (adapted from: Nonaka & Takeuchi 1995). Figure 18-1. Overview of Case Examples. Figure 20-1. The DBLLO Methodological Framework. Figure 21-1. Dual Bottom Line Learning Community Framework at IET. Figure 22-1. The SECI knowledge-creation process (source: Nonaka and Takeuchi 1995). Figure 23-1. Overview of Military DBLLO Methodology.

ABBREVIATIONS

CEO: Chief Executive Officer CFO: Chief Financial Officer CLG: Corporate Leadership Group COO: Chief Operations Officer DBLLO: Dual Bottom-Line Learning Organization ELC: Executive Leadership Council FCE: Foundation for Community Encouragement GI: Global Inorganics (pseudonym) IET: International Engineering Technologies (pseudonym) LC: Leadership Council MKO: More Knowledgeable Other (used in scaffolding learning) MLO: Military Learning Organization PH: Premier Holdings (pseudonym) SECI: Socialization-Externalization-Communication-Internalization of tacit-to-explicit-to-tacit knowledge STEEPV: Society, Technology, Economy, Environment, Politics, Values (framework for trends monitoring) WOS: Western Orthodox Science ZPD: Zone of Proximal Development (used in scaffolding learning)

PREFACE

The book you have in your hands provides a framework for leaders in organizations to develop themselves and their workforce to new levels of productivity and profitability—through their daily work. It’s based on the work of researchers over a hundred-year period, in fields ranging from biology to sociology, from physics to psychology, and from cybernetics to metaphysics. From these, and from years of heuristic discovery processes, it derives a method that catalyzes the development of leaders beyond the cultural and metaphysical assumptions tacitly embedded in traditional organizational and societal cultures, freeing them to deal effectively with an unstable, rapidly changing environment. This book is based on decades of research and application. As you’ll read in the Foreword, Kazimierz “Kaz” Gozdz began to explore these ideas in the 1980s, was really able to pull them together in the mid-1990s, and has been applying them in a variety of organizational settings around the world through the 2000s. Over those same years, Ruth-Ellen “Ruth” Miller was developing a remarkably similar approach and applying it in small business, religious, and nonprofit organizations across the Pacific Northwest states of the U.S. Both approaches encourage the development of the people who make up the organization as essential to the productivity of the organization: they are “dual bottom-line.” Both approaches rely on the work of M. Scott Peck in facilitating the development of authentic communities as effective environments for individual and organizational development. Both approaches are based in systems theory and methodology, as well as the theory, methods, and metaphysics of transpersonal psychology. But Kaz and Ruth did not meet until 2014, when a colleague familiar with their work introduced them. At that time, Ruth’s work in applied metaphysics provided a space for Kaz to address some of the psychospiritual issues that come up in this work. Since then, they have collaborated on a number of projects, of which the book you are holding is the culmination. The title, Heuristic Discovery, refers to a process of learning that is not problem-focused, but is, rather, based on evolving understanding through application of principles. Within that framework, and in the spirit of the method outlined here, Kaz and Ruth have used producing this book to

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scaffold each other in developing skill and understanding. Ruth supported Kaz by creating conditions for him to codify the theory and practice foundation of the Dual Bottom-Line Learning Organization method, as well as providing a framework for conceptualizing his work in book format. Kaz supported Ruth by providing opportunities for her to explore the heuristic learning approach and encouraging her to share her own research in culture systems dynamics. Through the process, they have documented the results of several decades of principle-based action-research, applying tested theories and processes in new contexts and assessing their effectiveness. The book, then, is a collaboration organized around the theories that support their work and the elements of the framework that Kaz uses to help organizations transform themselves from hierarchical, authoritarian structures based on a single bottom line, into developmental learning organizations where production and profits are maximized through human systems, principles, and processes that lead to everybody’s growth and development. As such, this book intentionally challenges the prevailing beliefs about “what works” in organizational settings. In fact, we’re suggesting that those very beliefs—and the actions based on them—are what brought us all to the global crisis that is the hallmark of this point in history. Indeed, our experience has demonstrated over and over again that, while the old assumptions and behaviors create more problems, the ideas and methods presented here are not only effective, but they also make it possible for both individuals and organizations of any size to thrive in a world of development and disruption.

ACKNOWLEDGEMENTS

The authors are most appreciative of all the discoverers and researchers who have helped us on our journeys of heuristic discovery, most of whom are mentioned in the text. We also want to acknowledge the many people who were willing to let us use their descriptions of their experience as part of our Case Examples. Not only have they made a difference in their own organizations, they are, through this book, helping others see the possibilities and potentials of applying the Dual Bottom-Line Learning Organization Framework. We cannot say enough thanks for the efforts and patience of those “behind the scenes”, contributors to our own, personal journeys: the tireless efforts of Wenden Gozdz, in particular, who is Kaz’s partner in his firm and helped catch many of the details that needed attention in putting this book together; Jack, Dawn, and Aurora Miller, who put up with Ruth’s erratic parenting as she pursued her own path of heuristic discovery; Sean and Ian, who have learned to adapt to Kaz’s constant journeys away from home. The people at Cambridge Scholars Press, who provided the opportunity to integrate the understandings and results of this journey, are greatly appreciated, as well. Kaz would also like to express thanks to Robert Frager for his guidance in developing a transpersonal approach to organization development, to Michael Ray for his mentorship, and to Sandi McCall for three decades of working side by side in partnership to put these concepts into practice. Additionally, Kaz extends his deep gratitude to Ruth for scaffolding him through this writing project with loving kindness and grace. Many thanks go to all, and to the infinite, implicate Absolute, with which we are co-creating the emerging potential of development in organizations toward a true dual bottom-line.

FOREWORD: KAZ’S JOURNEY OF DISCOVERY

It’s been a journey of several decades to discover the theory and methods by which traditional organizations can progress from being highly structured hierarchies with acceptable financial performance into authentic hyperlearning communities operating at the highest levels of financial and human performance. As it’s unfolded, it’s been a journey of creativity, a path of heuristic discovery, rather than an algorithmic, step-by-step, logical, sequential process of investigation. Stanford Professor Michael Ray, one of my mentors on this journey, made the distinction clear: A heuristic is an incomplete guideline or rule of thumb that can lead to learning and discovery. An algorithm is a complete mechanical rule for solving a problem or dealing with a situation. (Ray and Myers, 1986; 4)

He explained that creativity is a way of life, not an event. It’s an ongoing process of eureka moments, not an isolated incident. The word “heuristic” has the same Greek root as the exclamation, “Eureka!” The Eureka! Phenomenon has been part of the discussions on creativity ever since the day Archimedes reportedly ran naked through the streets shouting “Eureka!” (I have found it!) – having discovered, as he sat in a bath, his principle for identifying a metal’s composition by the water it displaces (Ray and Myers, 1986; 5).

My journey toward building a Dual Bottom-Line Learning Organization (DBLLO) transformation methodology included several “Eureka!” moments that amounted to paradigm shifts in my understanding of business and organizational theory, of individual, organizational, and social psychologies, all leading to questioning the validity of empiricism, the foundational paradigm of the Western Orthodox Science (WOS) worldview. Over several decades I followed what philosopher Michael Polanyi described as a “heuristic passion,” an inquiry that changed my interpretive framework multiple times. Polanyi is clear:

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The irreversible character of discovery suggests that no solution of a problem can be accredited as a discovery if it is achieved by a procedure following definite rules. For such a procedure would be reversible in the sense that it could be tracked back stepwise to its beginning and repeated at will a number of times, like an arithmetical computation. It follows that true discovery is not a strictly logical performance, and accordingly, we may describe the obstacle to be overcome in solving a problem as a ‘logical gap’, so to speak of the width of the logical gap as the measure of the ingenuity required for solving the problem. ‘Illumination’ is then the leap by which the logical gap is crossed. It is the plunge by which we gain a foothold at another shore of reality. On such plunges, the scientist has to stake bit by bit his entire professional life (Polanyi, 1969; 123).

He went on to describe how the process of knowledge creation changes the world as we know it. Heuristic discovery does not merely entail adding more knowledge to our existing frameworks; discovery transforms our interpretive frameworks: Scientists—that is, creative scientists—spend their lives in trying to guess right. They are sustained and guided therein by heuristic passion. We call their work creative because it changes the world as we see it, by deepening our understanding of it. The change is irrevocable. A problem that I have once solved can no longer puzzle me; I cannot guess what I already know. Having made a discovery, I shall never see the world again as before. My eyes have become different. I have crossed a gap, the heuristic gap which lies between problem and discovery (Polanyi, 1969; 143).

Decades before I could learn to teach the principles and practices of heuristic discovery and knowledge creation to business executives, I needed to go through the process of translating discoveries into workable solutions on my own. I learned to translate discoveries into working prototypes by using a process that Nonaka and Zhu (2012) called a “pragmatic strategy” of implementation. We posit that pragmatic strategy, in what we say, believe, have, do and live with, is about envisioning a valued future for the common good and creatively realizing it, often with non-ideal resources, imperfect solutions and unproven maneuvers, which is based on historically informed understanding of situated particulars, and thus has better chances of surviving evolutionary selection. In the ambiguous, fast-moving business world, strategy is a messy, risky enterprise (Nonaka and Zhu, 201, 125-126).

The working prototypes I came up with turned out to be very different from what I had been trained to expect.

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Maturing into Western Orthodox Business Culture I am a first-generation American. As one of seven children of blue-collar Polish Catholic immigrants, I learned the value and meaning of work. I was raised with a philosophy that work was not only a means of economic prosperity, but also a process of self-definition, and ongoing developmental growth. I needed to outgrow the Stage I childhood tendencies of selfcenteredness and ego immaturity by embracing the rules and norms of Christianity and the American norms of social conformity. I grew up working in various trades, put myself through college working as a welder assembling tow trucks, and was anxious to learn more about the scientific and business paradigms of the day. So, in 1979, I entered my early 20s with a newly acquired B.S. Degree in Chemistry and Business Administration. As a beginning chemist and new businessperson entering the workforce, my worldview was based on Christian values, the American Dream, and science: the WOS worldview that is based on logical positivism, empiricism, reductionism, rationalism, objectivity, the NewtonianCartesian mechanical lawful universe, and the quantification of reality. I had fully bought into mastering the culture I had been trained to believe was normal, what I later learned from M. Scott Peck to call Formal and Institutional Stage II culture. By the early 1980s, I was working as a plant manager for an industrial seasonings manufacturer, serving the East Coast of the U.S. There, I applied everything I learned in college science and business classes, including tacitly applying the fundamental assumptions of Fredrick Taylor’s theory of management as found in his The Principles of Scientific Management (Taylor, 1911). I also learned and adopted W. Edwards Deming’s (1982) statistical process and practices of Total Quality Management (TQM), and applied them on the shop floor with a diverse, unionized workforce. While I embraced TQM and the early forms of the Toyota Production System, I found them inadequate to inform me on how to lead and manage the workforce; they taught me how to make the workforce more efficient, not how to grow and develop them. I was learning budgeting, scheduling, and financial management, but my attention was increasingly drawn to how to relate with, motivate, and develop my workforce as a high-performing team. I began to pay deeper attention to learning about building effective teams and applying humanistic management theories that enabled excellent performance in the on the shop floor. I adopted McGregor’s Theory Y (McGregor, 1960) management

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principles by attending more deeply to the intrinsic motivations of our workforce. Abraham Maslow’s (1965) Hierarchy of Needs became a constant companion. I found my attention shifting away from focusing on financial management, process improvement, and efficiency metrics toward a focus on my own self-actualization and that of my workforce. Maslow’s concept of Theory Z management (Maslow, 1971) catalyzed my interest in the possibility that organizations could be designed to enable the human drive for selftranscendence. Studying Maslow also solidified my interest in my own personal development, and I began to study the works of Carl Rogers, Alfred Adler, Virginia Satir, and other humanistic psychologists. In the mid-1980s, after reading extensively on psychological and spiritual growth, including, for example, Aldous Huxley’s The Perennial Philosophy, I became interested in Will and Ariel Durant’s books on the history of Eastern and Western civilization, and in topics related to quantum physics and human understanding. I became more interested in the mysteries and paradoxes of life than the areas for which I had clear answers. When I came across The Road Less Traveled by psychiatrist and theologian M. Scott Peck (1978), I was beginning to seriously doubt the WOS worldview. As Peck (1987) explained, human developmental growth can be understood as a process of moving into and out of increasingly more inclusive cultural contexts that simultaneously define and limit our growth. Psychological, social, and spiritual health, he taught, is a never-ending process of maturation. For Peck, there are four stages of human psychological, social and spiritual (psycho-social-spiritual) development: (I) Chaotic, antisocial; (II) Formal, institutional; (III) Skeptic, individual; and (IV) Mystic, communal. Through these studies and experiences, I had transitioned out of Stage II Formal, institutional culture, in Peck’s terms, and had entered into Stage III’s Skeptic, individual culture without realizing it. At that point, I left the traditional business world to join my brother and sister in their family businesses, where I could work part-time and more formally study the process of individual and communal development. I also more formally and fully focused on my own psychological and spiritual development, beginning, for example to practice a form of Zen meditation on a daily basis. I was determined to learn how to lead in Stage III culture and organizations.

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Community Building While working part time in our family businesses, I studied community building with Scott Peck and the Foundation for Community Encouragement (FCE). I had discovered that I had a yearning for authentic community, and a need to connect with others as I questioned my own enculturation into the Western Orthodox worldview. Scott Peck had started FCE as a tax-exempt public foundation: to encourage the development of community, wherever it does not exist, and to assist existing communities, whether secular or religious, to strengthen themselves and their relationships with other communities, ultimately thereby fostering the movement toward world understanding (Peck, 1987; 331).

FCE taught the principles of community in public and private workshop settings. These principles are: x Communicate with authenticity x Deal with difficult issues x Bridge differences with integrity x Relate with love and respect x Tolerate ambiguity and the experience of discovery x Balance the tension between holding on and letting go Peck’s method of community building is designed to help groups of 50100 or more transcend their enculturation by learning to communicate more effectively and work together to build a sense of authentic community experientially. For FCE, authentic community is defined as a group of two or more people who, regardless of the diversity of their backgrounds, have been able to accept and transcend their differences. They are able to communicate openly and effectively; and to work together toward common goals, while having a sense of unusual safety with one another.

The FCE community-building process was designed as a three-day workshop format wherein a pair of facilitators would lead groups of 50 or more through the four stages of community making: pseudo-community, chaos, emptiness, and authentic community. I was certified as an FCE facilitator and, over the course of the following decade, I co-facilitated community-building experiences in a variety of organizational and workshop settings, primarily with two of my colleagues, Sandi McCall and Rusty Myers. Sandi and I went on to spend nearly three decades practicing building community in organizations.

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We began by facilitating community-building sessions in churches, government agencies, schools, businesses, and non-profit organizations of all kinds. These organizations reached out for assistance because they sensed a lack of authentic community or civility in their organizations. We conducted these sessions not only in the United States, but in other countries around the world, as well. I became a master practitioner of Peck’s community-building practices, helping design and deliver FCE’s Leader Development and Train the Trainer programs. And Peck became a mentor and spiritual guide as I sought to extend his theoretical and practice foundations into organizations. I also started my own consulting group to build and sustain community in organizations. I have now facilitated hundreds of public and private community-building sessions, including in multiple languages with live translation. Through these experiences, I became aware of how building authentic communities using Peck’s methods encouraged people to not only communicate more openly, vulnerably, and authentically, but also to encourage groups to conduct themselves with collective intelligence. It became clear that repeated immersions in the community building process advances both individual and collective developmental maturation. Over time, I began to use community building as a “personal practice,” a way to develop myself socially, psychologically, and spiritually. The community-building process opened my heart and my perspective on life, and I began to be drawn toward what Peck called Stage IV Mystic, communal culture, human development, and leadership. As I did so, however, I discovered that Peck’s methods lack a means to build and sustain organizations as ongoing communities. I learned that introducing community-building practices into organizations had a positive effect on the individuals and groups who learned to communicate and interact more authentically, but it lacked the theoretical and practice foundation necessary to design, lead, and govern organizations as communities over time. I also had a need to understand, more formally and rigorously, the remarkable effectiveness, creativity, and collective intelligence of authentic communities. While I could experience these phenomena, I lacked the theoretical basis to explain them. I realized that learning how to do this could not be done with a mere Western Orthodox degree. These studies, and my dissertation project (Gozdz, 1999), would entail learning to develop Stage III and Stage IV organizations, leaders, and cultures, and to do so would require me to engage in my own Stage IV development more fully, and to deepen my understanding of Peck’s Stage IV, Mystic-Communal culture. Therefore,

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with Peck’s support and encouragement, I entered a PhD program in transpersonal psychology in the San Francisco Bay area in California.

Transpersonal Psychology and Worldview Selecting the study of transpersonal psychology was one of the more difficult and illogical life decisions I have made. I wanted to investigate a new business and organization paradigm, one based in community. The rational choices included PhD programs in business, organizational development, leadership, or human resource management. This was one of my very real encounters with the heuristic discovery process. I needed to follow my Calling, my heart and intuition, rather than just my head, to do so. I felt a heuristic passion to discover what lie in the direction of the transpersonal. I had no evidential criteria to evaluate whether the transpersonal psychology paradigm would lead me in the direction of Stage IV leadership and communal organizations, so I went with my internal guidance system. I was fortunate to be mentored by Dr. Robert Frager. He is a Harvardtrained social psychologist, and one of the co-founders of the transpersonal field of psychology, and of the Institute of Transpersonal Psychology (now called Sofia University), along with James Fadiman. Together, they published seven editions of Personality and Personal Growth, a psychology textbook that introduces the four forces in Western psychology: Psychoanalytic (based on Freud’s (1940/1989) and Jung’s (1952/2014) methods of analysis), Behavioral (based on Skinner’s (1974) behaviorist methods), Humanistic (based on Maslow’s (1968) human potential methods), and Transpersonal (founded by Maslow, Fadiman, and others in the 1970s to explore further dimensions of human experience (Sutich, 1980)). The first two of these approaches focus primarily on addressing human limitations and pathologies, while the latter two deal not only with treating pathologies, but also emphasize enabling the full release of human possibility. According to Frager and Fadiman (1998), transpersonal psychology is simultaneously a scientific paradigm describing humanity in its most complete and exhaustive sense, a worldview inclusive of the highest reaches of human performance, and a school of psychology that holds an integrated view of body, mind, and spirit. Abraham Maslow was drawn to consider human potential and contributed uniquely to the field of psychology by helping establish the humanistic school, and later in life, the transpersonal.

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I should say also that I consider Humanistic, Third Force Psychology to be transitional, a preparation for a still “higher” Fourth Psychology, transpersonal, transhuman, centered in the cosmos rather than in human needs and interests, going beyond humanness, identity, self-actualization and the like … We need something “bigger than we are” to be to be awed by and to commit ourselves to in a new naturalistic, empirical, non-churchy sense, perhaps as Thoreau and Whitman, William James and John Dewey did (Maslow, 1968, iii-iv).

The study of the transpersonal paradigm informed my understanding of the stages of individual, communal, organizational, and societal development far beyond my initial introduction through Scott Peck’s four stages of psychosocial, spiritual, and cultural development. My studies of horizontal and vertical development included, but were not limited to, the work of Ken Wilber (2001), Robert Kegan (1994), Bill Torbert (2004), Bill Joiner and Stephen Josephs (2007), Don Beck and Chris Cowen, (1996), among others. The term transpersonal captures the notion that human consciousness, awareness, knowing, identity, ego, and sense of self extends beyond (trans) our physical bodies and minds. According to several scientists, including Robert Jahn, Dean Emeritus of Princeton’s School of Engineering and Applied Science, we have access to transpersonal realities. Robert Jahn and Brenda Dunne (Jahn and Dunne, 2004) conducted extensive research on the transpersonal dimensions of human capability at the Princeton Engineering Anomalies Research Lab, exploring how we have access to a deeper transpersonal source of reality: … there exists a much deeper and more extensive source of reality, which is largely insulated from direct human experience, representation, or even comprehension. It is a domain that has long been posited and contemplated by metaphysicians and theologians, Jungian and Jamesian psychologists, philosophers of science, and a few contemporary progressive theoretical physicists, all struggling to grasp and to represent its essence and its function. A variety of provincial labels have been applied, such as “Tao,” “Qi,” “prana,” “void,” “Akashic record,” “Unis Mundi,” “unknowable substratum,” “terra incognita,” “archetypal field,” “hidden order,” “ontic (or ontological) level,” “undivided timeless primordial reality,” among many others, none of which fully captures the sublimely elusive nature of this domain. In earlier papers we called it the “subliminal seed regime,” but for our present purposes we shall henceforth refer to it simply as the “Source” (Jahn and Dunne, 2004; 548-549).

This domain of transpersonal experience is implicated in the worldview, mindset, mental models, methods, and ways of knowing common to the world’s most advanced leaders in all types of organizations. Traditional

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WOS empirical scientists, engineers, Newtonian physicists, and behavioral, psychoanalytic, and humanistic psychologists do not work with the transpersonal dimensions of leadership. They fail to account for a Source greater than the self. According to Jahn and Dunne (2004): The failure of contemporary scientific theory to correlate and explicate anomalous consciousness-related physical phenomena may trace to inadequate comprehension of the process of information exchange between the mind and its ultimate source (Jahn and Dunne, 2004; 547).

Many years later, long after adopting the transpersonal paradigm in leadership, I was working with Joseph Jaworski and described Stage IV leaders as relying upon a transpersonal dimension of human awareness: Stage IV leaders hold the conviction that there is an underlying intelligence within the universe that is capable of guiding us and preparing us for the futures we must create. They combine their cognitive understanding of the world around them with a strong interior knowledge of the hidden potentials lying dormant in the universe—a view that carries the power to change the world as we know it (Jaworski, 2012; 55).

It became clear that, when leaders apply Michael Polanyi’s (1997) heuristic discovery process, they enter into the transpersonal dimension of human experience, because true discovery, according to Polanyi (1958), is a gift of grace, from outside of, beyond, our normal human capacity. It took me nearly a decade to complete my studies and internship, and to write my dissertation (Gozdz, 1999). Retrospectively, I can see now that it was the transpersonal metaphysics, the worldview and philosophy underlying transpersonal psychology, that has informed my concept of Stage IV Leaders and organizations and made it possible for me to develop a framework for guiding leaders into that stage of development. Dr. Frager introduced me to a number of transpersonal practices: as an 8th Dan Aikido master, he helped me experience the subtle energies in Aikido and other bodily practices, leading me eventually attain a black belt in Aikido. And, in later years, he worked with me to teach these same practices to executives in a corporate setting. He also helped me understand the transpersonal paradigm underlying Peck’s Stage IV and later deepened my understanding of the transpersonal dimension significantly when he became my doctoral advisor. He helped me formulate a transpersonal approach to the field of learning organizations and spiritual guidance for organizations. And it was through his stewardship that I was able to complete my doctoral internship with Peter Senge, which we shall discuss shortly.

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New Paradigm in Business The popular management guide, Taylor’s The Principles of Scientific Management (1911), exemplifies the WOS paradigm’s assumptions, describing management with the formality of scientific laws. Using these assumptions, WOS proved adequate to build the industrial era, but it was inadequate to build a society in which people may be fully actualized. Tren Griffin sees that such applications of science have served to drive spirit out of the world—hence out of human experience and expectation (Griffin, 1988). Nevertheless, the historical acceptance of this paradigm in psychology has been a pivotal cornerstone of business and organizational management and thought. My work, though, and, I was learning, that of many others, was suggesting that a new paradigm was needed for business to function effectively. In the early 1990s, while attending classes at the Institute of Transpersonal Psychology, I began working with several scientists, scholars, and business leaders who were members of The World Business Academy, a group dedicated to shifting the WOS scientific and business paradigm toward the emerging transpersonal paradigm in business. Among them were Willis Harman, then President of the Institute of Noetic Sciences, John Renesch, Managing Director of the World Business Academy, and Michael Ray, Professor of Creativity and Innovation and Marketing at Stanford University’s Graduate School of Business. Willis Harman’s (1988) book, Global Mind Change, was highly influential in my understanding that a transpersonal worldview had the potential to reshape society by revising our understanding of causality itself. Later, along with John Hormann, he identified four pathogenic economic assumptions that underlie WOS as it relates to management (Harman and Hormann, 1990). These are: x Assuming that economic rationality and values sufficiently inform social decision making; x Assuming that it is unlikely to expect a change in the trend toward human activity being monetized and included in the mainstream economy; x Assuming that our economic problem is scarcity caused by our infinite wants contrasted to limited resources of labor, land, natural resources, and machines; x Assuming that people inherently will avoid work because they experience it only as a means to achieve more leisure time and to fulfill their consumption needs (Harman and Hormann, 1990).

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Harman felt strongly that a transpersonal science and psychology would be needed to guide a new paradigm in business (1988). Shifting people’s beliefs would be necessary to enable a new paradigm in society and in business: Throughout history, the really fundamental changes in societies have come about not from dictates of governments and the results of battles, but through vast numbers of people changing their minds – sometimes only a little bit. Some of these changes have amounted to profound transformations – for instance, the transition from the Roman empire to medieval Europe, or from the Middle Ages to modern times … it is largely a matter of people recalling that no matter how powerful the economic or political or even military institution, it persists because it has legitimacy, and that legitimacy comes from the perceptions of people. People give legitimacy, and they can take it away. A challenge to legitimacy is probably the most powerful force for change to be found in history (Harman, 1988; 155—emphasis in original text).

He felt strongly that a community-building approach was necessary for individuals and groups to shift away from their underlying WOS paradigm, as individuals and as a scientific community. I facilitated several communitybuilding events with Harman in which we sought to encourage collective intelligence and group heuristic discovery. Notably, in 1992, we conducted a three-day community-building session in Monterey, California for fourteen contributors to the anthology The New Metaphysical Foundations of Modern Science (Harman and Clark, 1994). The contributors, from the fields of physics, biology, psychology, the cognitive and neurosciences, anthropology, and engineering, worked in community to elaborate an emerging set of metaphysical principles of science. I met Professor Michael Ray when he attended a community-building event I was co-facilitating with Scott Peck and several of my other colleagues. Having become aware of Peck’s community building process, Ray was convinced that Peck’s model of community building was central to the emerging new paradigm in business, and that Peck’s four stages of community building (pseudo-community, chaos, emptiness, and community) were processes essential to a paradigm shift in business. He felt that new paradigm businesses would operate as authentic rather than pseudocommunities (Ray, 1995). Ray was also immersed in the transpersonal paradigm, as he demonstrated in his “Creativity in Business” course. He taught a range of heuristic discovery practices, transpersonal theories, methods, and tools to these future business leaders that included meditation, yoga, and guided imagery, to name a few.

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Ray became a mentor for me on the emerging business paradigm. For three years we worked together to build his “A New Paradigm in Business” classes (later called “Dialogues on a World in Transition”) into authentic learning communities, so his students could learn community-building leadership principles and practices. He was convinced that his students needed if they were to lead and learn in community, and he helped me refine my understanding of community as a leadership discipline. With Alan Rinzler, Ray co-edited The New Paradigm in Business anthology, in which they and their co-authors described the business world’s shift away from the WOS worldview, and the enormous effects the new paradigm was having on all the institutions of the day. I contributed a chapter on “Building Community as Leadership Discipline” (Ray and Rinzler, 1993; 107-119). Through this work, I formed the belief that learning communities were part of an emerging new paradigm in business that cultivated higher-order development in the workplace. While higher levels of individual and group functioning are common in business, performance at this level is not well understood. I also worked closely during this period with John Renesch, in his role as managing Director of the World Business Academy (WBA). John was the founder of Sterling and Stone, Inc. which published the New Leaders business newsletter and books on the emerging new paradigm. Along with Willis Harman and Michael Ray, I would facilitate various WBA meetings as community-building sessions. As a result of these sessions, Renesch suggested that I survey current community-building theoreticians and practitioners at the edge of this emerging new business paradigm and compose an anthology on the topic. Eventually, forty-four authors contributed their voices to the book, which was eventually titled Community Building: Renewing Spirit and Learning in Business (Gozdz, 1995). In my conclusion to the book, I summarized the essence of our collaboration: To build a sense of authentic community within organizations that is both sustainable and imbued with spirit, we need to articulate a whole-system understanding. We also need a comprehensive technology of community making composed of skills, methodologies, practices, and theory that will inform and guide an organization toward long-term success. The authors of this anthology will create a compelling vision for what successful community can be, informing the world as to its benefits, potential complexities, and pitfalls within organizational settings (Gozdz, 1995; 471).

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Learning Organizations I began my doctoral internship with Dr. Peter Senge at the MIT Center for Organizational Learning in 1994 to learn more about how to apply the transpersonal paradigm to the workplace. Senge became a member of my doctoral committee at the Institute for Transpersonal Psychology, and his approach to learning organizations proved fundamental in my quest to build organizations into learning communities on a large scale. For Senge, learning organizations create their future in a proactive, generative learning posture—in continually expanding the capacity to create its future. To them, survival learning or adaptive learning is important but not sufficient: Generative learning that enhances the capacity to create is essential. He believes that learning organizations see in terms of wholes rather than fragmented parts and that they recognize the inherent interconnectedness of the world. Furthermore, he believes that only when individuals destroy the illusion that the world is created of separate, unrelated forces do learning organizations become possible. In The Fifth Discipline, Senge quotes Bill O’Brien, claiming that a small number of people focused on “learningful” relationships can create microlearning organizations that can be models for others. (Senge, 1990) Senge’s concept of the “learning” as applied to “learning organizations” is based on experiences related to undergoing a shift of mind: a metanoia (meta means above or beyond; noia comes from the root nous, or mind). To Senge, metanoia grasps the deeper meaning of learning as a fundamental shift or movement of mind (Senge, 1990). While studying with Senge, I had the opportunity to watch and learn from him and Edgar Schein as they taught CEOs and senior executives about building learning cultures. As I assisted them in various seminars where they taught executives to build the theory and practice of learning cultures into the organizational learning strategies, I began to understand how the culture of a learning organization, and that in which the organization is embedded, affect the ways individuals and communities function. While Senge’s book, The Fifth Discipline (1990), addressed building learning organizations, by 1993 he had begun experimenting with learning communities. His courses in “Personal Mastery and Leadership” included practices in the transpersonal dimension. His article, “Communities of Commitment: The Heart of Learning Organizations,” coauthored with Fred Kofman (Kofman and Senge, 1993), began to describe some of the unique features and attributes of learning communities in transpersonal psychological

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terms. With this community-building aspect, his first-generation learning organizations evolved into a 2nd generation. With the assistance of all these mentors—Senge, Peck, Harman, Ray, Brown, and Frager—I began to shape the theory and set of practices for transforming learning organizations into learning communities that is outlined in this book, which Robert Kegan (Kegan and Lacey, 2016) calls “deliberately developmental”, and I now think of as 3rd-generation learning organizations. I ultimately selected my dissertation topic, A Transpersonal Heuristic Inquiry into A Learning Organization Undergoing Transformation (Gozdz, 1999), so that I could study the application of heuristic research methods and the multi-dimensional pacing of individual and organization transformation more closely. During my internship with Senge, I had the opportunity to conduct indepth interviews with hundreds of senior executives from several major companies, including the CEOs and senior executives of Harley-Davidson, Shell US, the Army War College, and Philips Display Components, as they reported their personal and organizational transformation through the process of becoming a learning organization and community. Some of the insights gleaned from this process are: x Learning organizations become learning communities when the company’s operating philosophy promotes a balance of support (what Scott Peck (1993) calls love, or the will to nurture another’s development) and challenge (what Scott Peck (1993) calls discipline). x An organization’s developmental level can be consciously shaped using a series of learning infrastructures and corporate governance to establish challenge and support for developmental growth. x A CEO’s perspective lends itself to view the enterprise as a single community, where collective intelligence, inclusivity, and knowledge creation are important artifacts of growth. x Individuals and organizations are hard-wired for development. x A company’s CEO sets the cap on development for the organization’s leadership team and culture. x No matter how successful, each CEO and each company faces serious challenges for which there were no known solutions. Learning, development, and knowledge creation are competitive necessities. x Transpersonal dimensions of human experience offer competitive advantage at the individual and collective levels. x The human beings that make up a workforce are more than a means to an end; they are an end unto themselves.

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x Individual and communal transformation need to be paced and balanced for fundamental transformation to take lasting hold in an enterprise. The result was a reasonably coherent model of the process and practices necessary for higher levels of development in organizational settings. Years later, working with Joseph Jaworski, I used this model to contribute to the transpersonal, developmental, and heuristic ideas presented in his book, Source (2012).

Facilitating Dual Bottom-Line Development I completed my doctoral studies with a sound theoretical foundation and some practice experience for building learning organizations that went beyond both Senge’s original concept, as described in The Fifth Discipline, and his later formulation of learning communities (in “Communities of Commitment”; Senge, 1993), as second-generation learning organizations. I formulated the methods and practices for building what I consider third-generation learning organizations, Dual Bottom-Line Learning Organizations (DBLLOs) that operate with authentic hyper-learning cultures. These organizations value human development co-equally with profit generation or mission accomplishment, and their workforce is scaffolded for learning and development through their daily work. I was influenced in my conceptualization of third-generation hyperlearning cultures by Edward Hess’s view that learning organizations have entered an era where the “New Smart” centers on individual and communal humility and hyper-learning. In Humility is the New Smart, Hess and his coauthor, Katherine Ludwig (2017), define humility as, a mindset about oneself that is open-minded, self-accurate, and “not all about me,” and that enables one to embrace the world as it “is” in the pursuit of human excellence” (Hess and Ludwig, 2017; 8).

They go on to suggest that the next generation learning organizations will embrace a “New Smart” where humans will grow beyond the limiting aspects of what it means to be human by partnering with and finding a new role with technologies that augment and outperform humans on some workplace tasks (Hess and Ludwig, 2017). In such a world, in an accelerating manner, workforces will need to engage in hyper-learning: learning, unlearning, and relearning to counterbalance unprecedented levels of accelerating disruption (Hess, 2020). In my view, not only do third-generation learning organizations encourage the individual and collective humility requisite to Stage III and

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IV leadership, they also encourage hyper-learning. They are places where learning, un-learning and re-learning happens in authentic communities, and where the highest orders of human consciousness and development are encouraged, indeed necessary. Now, at my consulting firm, the Helix Group, LLC., we offer the methods and practices that have emerged from this heuristic discovery process. We teach and facilitate ways for business enterprises of all sizes to transform into communities where delivering a profit or accomplishing the mission is co-equal with the development of the people who comprise the enterprise; where the training curriculum for employee development is the daily operation of the company—no longer “merely” a human resource function. Empowering the growth and development of their workforce on a daily basis, these companies use the pursuit of an excellent financial return as the curriculum for the developmental growth of their workforce. They not only learn, they develop.

Figure 1. Developing people leads to increased value for the organization as a whole.

The leadership skills required to build and run these organizations as communities that consistently develop are advanced beyond the typical business school training. Leaders of these organizations practice selfreflection, communal self-reflection, and organizational self-awareness in equal measure with financial rigor and operational excellence. The result is a Dual Bottom Line Learning Organization (DBLLO), in which operational excellence is fueled by and reinforces personal growth and development at all levels, and the company becomes agile—achieving a dynamic stability and able to thrive in the current environment of development and disruption.

PART ONE. THEORETICAL FRAMEWORK

CHAPTER 1 WHOLE SYSTEMS – A WORLDVIEW & A TOOLSET

Over the past three hundred years, following the Industrial Revolution, the dominant metaphor for considering how things work has been the machine. Whether the focus has been a body, the solar system, an organization, or an atom, the fundamental assumption was that it could be reduced to individual components that were brought together by some outside force and could each be replaced, behaving in linear sequences, powered by some outside source of energy and control. Like the classical physics on which that framework is based, this mechanistic thinking, the WOS that Kaz described in the Foreword to this book, has produced phenomenal results, but it also, as was discovered early in the twentieth century for classical physics, is limited in its application; it has led too often to results with disastrous unintended consequences. By the mid-twentieth century, therefore, it was clear to many that organizations, people, and nature don’t work like machines, and a different model was needed. Two major understandings propelled the emergence of that model: the complexities of a world war, and the complexities of living organisms.

The Worldview Ludwig von Bertalanffy introduced the foundation for a different way of thinking to English-speaking scholars when he presented his idea for a “system theory” with his book, General System Theory, written in German in the 1920s, but not translated into English until the 1960s (Bertalanffy, 1968). In that book, Bertalanffy offered a mathematical and philosophical approach to studying life sciences. His approach eventually developed into the modern field of ecology—and, at the same time, began to revolutionize all the sciences. Bertalanffy held that nothing could be understood by isolating merely one part of the whole. He demonstrated that the mechanistic model of scientific reductionism could not accurately explain a living being because, in order to properly explain and gain a better understanding of any

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living thing, it had to be studied as a whole, with the emergent properties of the whole (Bertalanffy, 1968). His book was nearly lost when World War II erupted, but another, related idea emerged over those same years. During that war, the allied nations’ resources were being allocated on several fronts, all over the world. Different operations required different support and supplies. Different fields of operations had different fundamental requirements—and they were all going on at the same time. The result was a new approach to getting things done called operations analysis, which evolved over the years into operations research (Morse and Kimball, 1954). Then, shortly after World War II, Norbert Wiener, a mathematician who’d worked as a “human computer” in England during the war, developed a set of equations explaining how it is that different, apparently unrelated, goal-oriented activities (i.e., an anti-aircraft gun following a plane and a sunflower following the sun) can be described by the same set of equations. His ideas were published in two books Cybernetics (1947) and The Human Use of Human Beings (1948). His main thesis was that people and organisms tend to align their behavior on specific goals, using information from their output to change their behaviors in what he called “feedback loops” (Wiener, 1948).

Figure 1-1. Wiener’s simple, single-feedback loop diagram with input, controller, energy/material processor, output with feedback to an information processor, leading to potential modification of the target by the controller.

A series of conferences sponsored by the Macy foundation ensued, in which scholars from all disciplines came together to explore the implications and applications of these revolutionary ideas. Anthropologists and neuroscientists, physicists and economists, engineers and philosophers, all found powerful tools and insights in this new way of thinking (Pias, 2004).

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While a few classical theorists focused on the ways that similarities across different kinds of systems could be described (Capra and Luisi, 2014), most others applied the concepts in their own disciplines. Kenneth Boulding, an economist, formed a group that went on to found the Society for General System Research (now the International Society for the Systems Sciences) to continue this interdisciplinary work. The concept of systems was brought into organization design and management by two men who had studied together before the war: Wharton School professor and organizational theorist Russell Ackoff and University of California/Berkeley management professor, C. West Churchman, in several articles and books (Churchman, 1968; Ackoff, 1972). Later, writing with British management professor Fred Emery, Ackoff described the shift in thinking and its impact: … before the revolution in thought that made possible the use of teleological concepts as a methodological key to open doors previously closed to science, scientists tended to derive their understanding of the functioning of the whole from the structure of the parts and the structural relationships between them. Today we increasingly tend to derive our understanding of the structure of the parts of a system from an understanding of the functioning of the whole (Ackoff and Emery, 1972; 23).

The structure of the parts derives from the function of the whole. This fundamental shift in perspective underlies much of the Whole Systems worldview. While a system is, by definition, a set of interconnected elements, the relationship between and dynamics of those elements is derived from their combined function, or purpose. For example, a circulatory system is structured the way it is because of its function; a machine shop is structured the way it is because of its function. Also in the 1960s, a Japanese anthropologist, Magoroh Maruyama, applied the concept of feedback loops to the population of a community, calling the tendency of feedback loops to increase a behavior “mutual deviation amplification causal loops” (Maruyama, 1963). His first, classic, multiple-feedback loop system related the growth of a given population to disease, pests, and trash, as in the diagram on the following page. This way of looking at systems became the basis for numerous computer modeling techniques, perhaps the most famous of which is Jay Forrester’s DYNAMO, which was used to create the World Model in the Club of Rome study Limits to Growth (Meadows et al., 1972), and is now the basis for the modeling program STELLA. During the 1970s, another understanding was added to the systems framework: the concept of “holism” or “whole systems”. Originally coined by a Jan Smuts (1926), a Prime Minister of South Africa, to refer to the

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tendency in nature to produce wholes from the ordered grouping of unit structures, the term “holism” has come to mean “seeing in wholes rather than parts” or “recognizing that there are emergent properties of the whole” (OED online, 2019).

Figure 1-2. An early multiple feedback system model showing how increases in some elements lead to increases or decreases in other elements (source: Maruyama 1963).

This use of the term has inspired much debate over whether the better term would be “wholism” (Pribram 2006). The term “holism,” however, derives from a Greek word, holon, which also forms the root of the words hologram and holography. Breaking a hologram into pieces reveals, not individual elements of the image, but less-detailed versions of the whole image. In the same way, a holistic view of a system recognizes that there are no individual, separable parts, but that any aspect of the system has all the properties of the whole. Through the 1970s and 80s, half a dozen universities across the U.S. had established degree programs studying systems theory and developing

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systems methods, among them the Wharton School and SUNY Binghamton on the east coast, and Portland State University and San Jose State University on the west coast; Antioch University, located in Ohio, but with campuses in several other places, offered a Whole Systems Design program. (Ruth earned degrees at two of those programs, helped design one of them, and served a term as director of one of them.) Peter Checkland created a similar program at Manchester, England, teaching “soft systems” methodologies, and programs in “Informatics” were established in several European countries. These programs, founded and taught by people who were just discovering the possibilities of Systems Thinking, turned out a generation of professionals who used various kinds of modeling and management processes in their work, but whose fundamental worldview was based in the new paradigm of “thinking in wholes” and “seeing systems” (Oshry, 1995). Whole Systems Thinking, then, sees every aspect of the organization, or human body, or ecosystem, as exhibiting the properties of, as well as being totally interconnected with, all other aspects of that system. Various analytical tools may be applied to understand the dynamics of one aspect of the whole, but, from a whole-systems perspective, they cannot be treated in isolation; characteristics of any part apply as well to the entire organization, body, or natural system. To address issues within a part, then, requires addressing them at the level of the whole system. It is possible to take a subset of the whole, a subsystem, and analyze it— even optimize its behavior. In fact, given that the universe is one whole system of which we are all part, any analysis of any identified system is just that. But Whole Systems Thinking says that one does so effectively only in the context of all the other subsystems and their interactions—and in the context of the dynamics of the whole. For example, a company is a system that may be composed of sub-systems such as production centers, marketing centers, finance offices, and so on, but while they may seem to work apart from one another, these various sub-systems must be studied in their interrelationships with each other and the surrounding environment, as well as the organization’s overall functioning, rather than in isolation from each other, if any useful information is to be acquired or significant change is to result. The worldview called Systems Thinking can therefore be said to be based on a handful of key concepts: 1) Systems Thinking entails seeing things whole while recognizing the internal structure and dynamics within the whole. 2) All systems are composed of interconnected parts and the connections cause the behavior of any one part to affect the others.

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3) Because all parts are connected, a change to any part or connection changes the entire system. 4) To understand a system’s gross behavior, understand its structure, the pattern of connections that is how the system is organized, which determines its behavior, making systems behavior much more dependent on connections than on the nature of its parts; to change a system’s gross behavior, change its structure. 5) Feedback loops control a system’s dynamic behavior; the series of connections causing output from one part to influence input to other parts, and eventually the originating part create a circular flow that results in large amplification, delay, and dampening effects in the gross behavior of the system. 6) The behavior of a whole system is an emergent phenomenon; it cannot be determined by inspection of its parts and structure, because parts are tightly coupled, the parts and structure are constantly changing, feedback loops are present, nonlinear relationships exist, behavior paths are history-dependent, and the system is selforganizing and adaptive. 7) Because complex systems exhibit nonlinear, or what are called “counter-intuitive” behaviors; they don’t obey our normal mental models, so the problems of such systems therefore cannot be solved using predefined rules or our everyday problem-solving methods. 8) Systems Thinking requires a disciplined language and approach to discover and map the behaviors and structures of the interconnected network of elements that make up a system. Stepping back to look at the whole helps, but does not lead to the major insights that emerge when the feedback loop structure of the system becomes visible. Defining a system, then, involves identifying: x A set of elements (some combination of matter, energy, and information) interacting to accomplish a function; x A form that is determined largely by that function; x The set of connections that make it so that changing any part of a system changes the whole; x Nonlinear internal dynamics leading to emergent behaviors; x Operation of the whole system as a holon. These understandings help us to explain many otherwise inexplicable characteristics of our experience, including the facts that: x Feedback loops among interactions may lead to unexpected behaviors and outcomes; x Highly structured systems respond slowly to changes in the environment;

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x Critical fluctuations in a highly structured system or its environment lead to chaotic behaviors and then either destruction or restructuring/transformation of the system (e.g. the effects of hierarchical restructuring, panarchy, and dissipative structures processes within the system). When used as part of the operating philosophy or guiding ideas of an organization, awareness of such principles can lead to profound improvements in the way people—and the organization as a whole—function.

Systems Thinking – The Toolset Peter Senge, of the MIT Organizational Learning Center, is perhaps best known for demonstrating the need for managers to think in terms of systems (Senge, 1990). Underlying Senge’s practices is a fundamental understanding of how individual elements of matter, information, and energy interact in the world. Senge’s “Systems Thinking” describes the world as nested feedback loops in which various elements within the organization and its environment interact and affect each other over time, often leading to unexpected and so-called “counter-intuitive” results. He demonstrated how time delays and short-term reactions often exacerbate these results and their effects far beyond management’s expectations, or its ability to respond effectively (Senge, 1990). As soon as one considers things as interconnected, one tends to shift from the linear thinking of text to the multidimensional thinking of diagrams. The flow diagrams that described the relationships between parts of a machine were adopted and modified in the field of operations research during and after World War II, and applied to the field of system theory during the next several decades—as Wiener’s and Maruyama’s diagrams, above, illustrate. Understanding the nature of the relationships involved in a given system or subsystem became the primary work of mathematicians and engineers, leading to generation-upon-generation of modeling approaches, languages, and techniques. These ranged from simple descriptive models and diagrams to complex computer-based models that required hours of mainframe computer operation to implement (Miller, 1982). When we see the flows and relationships between the elements of a system, we’re in a position to begin to analyze, and therefore understand and, if necessary, repair the dynamics of that system. For example, an increase in sales leads to an increase in service problems leads to an increase in service calls leads to an increase in errors in the service department, which then leads to the usually unforeseen consequence of a decrease in

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customer satisfaction, which, in turn, too often leads to a decrease in sales— a surprising result for far too many companies.

Figure 1-3. A simple model of a system with two loops that describe the movement of increasing or decreasing activity affecting the elements that make up the system (source: Senge, 1990).

So, if there is a sequence of reinforcing loops that are leading to growth or decline, it usually helps to introduce a new element into the system, a new kind of activity, represented by a (–) arrow, feeding into the reinforcing loop. A single such balancing loop can undo a “runaway” system dynamic. In the sales issue just described, introducing a balancing loop in the form of quality-control in the service department can undo the effects of all the other reinforcing loops. Another consideration in understanding a system is that there may be delays in the feedback. Are there delays between a given input and a given output? Are there limits imposed from the outside or from within? Such delays can lead to unforeseen, and sometimes disastrous, outcomes. For example: orders coming into a retail store for an item may not keep pace with the actual demand, or shipments may be delayed past the wave of demand, so the items may not be sold after they’ve been received. Or, in another example, the material that a wing of a plane is made of limits its wingspan. Likewise, a plant or animal body can only grow to a given size before the material it’s made of gives out and the being dies. Many mathematical and computer models are in use today to manage transportation, communications, and logistical supply systems. When used in an organizational setting, they can be powerful tools for enhancing production, marketing, and distribution processes, and are typically used in those arenas. But in an organization, the mathematics- and computer-based models are not nearly as important as the mental models held by the leaders and members of the organization—usually tacit models that become explicit as a community-building heuristic discovery process is implemented.

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Recognizing that multiple feedback loops of matter, information, and energy are in place provides a way to understand the dynamics of a situation, but seeing that those loops are functioning as part of a whole system, and that each human system includes the thoughts, actions, and expectations of the individuals that make up the current organization, is essential.

CHAPTER 2 AN UNDERLYING METAPHYSICS

It has long been understood that organizations grow and decay through predictable life cycles (Boulding, 1950; Miller and Friesen, 1984). We can understand how this may be so when we realize that organizations are what Bela Banathy (1986) called “human activity systems,” which is to say, living systems designed by and composed of human beings. As such, they follow the life patterns of all living systems: birth, growth, stability, decay, death. This observable pattern can be understood as the shape, or in philosophical terms, the ontology, of organizations. There is another way to view human activities, however, and that is in terms of what is not visible—beyond-the-physical—the underlying structure of human experience, the thoughts, feelings, and mental models of the humans involved. At their core, each person carries a set of mental models and assumptions that orient the way they experience the world, and all leaders in organizations construct a perception of the organization in the world and their ability to shape it. In the Industrial Era, the common metaphysics in Western culture, the WOS, was built on the metaphor of a machine, a clockwork. During the 20th century, that basic metaphysical view shifted toward relativity (“everything is relative”) and then to a quantum view, in which consciousness pervades the universe and brings forth form, as described by Dana Zohar in Quantum Self (1990), Fred Alan Wolf in The Spiritual Universe (1996), Amit Goswami in The Self-Aware Universe, how consciousness creates the material world (1993), and others. Edgar Schein (1992) taught that organizational culture is a shared pattern of tacit assumptions that have worked well enough to be taught as the correct way to perceive, think, and feel in relation to solving our own or our organization’s problems. This is the metaphysics of the organization. The online Oxford Languages Dictionary defines metaphysics as: the branch of philosophy that deals with the first principles of things, including abstract concepts such as being, knowing, substance, cause, identity, time, and space (Oxford Languages, 2022).

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According to Joseph Jaworski, “Metaphysics formats and enables experience, and, in turn, molds scientific, social, and individual reality” (Jaworski, 2012; 2). Thus, as we consider the nature of being, of knowing, and of cause, we are entering the realm of metaphysics. And, as we begin to act in alignment with those understandings, to apply them in the world around us, we are practicing what can only be called “applied metaphysics.” In that realm and practice, the fundamental assumption is that what we experience in the world around us is a function of our mental processes. ... human understanding of objects – and therefore how we know objects – conforms to the peculiar processes of the phenomenon of mind in H. sapiens. What we know, or think we know, of an object is fully contextualized by the process of how the representation of that object has been carried out by the individual human being who thinks about the object (Wells, 2012; 34).

In short, the mental model we hold of ourselves or any object we perceive, determines what we observe and remember—and therefore how we act. This is not at all what most of us have been taught, and so takes some getting used to. The way that Ruth usually expresses it is that we all have a mental framework, developed from our experiences and the beliefs and expectations derived from those experiences, and that framework is like a filter that determines what we can see and hear—the perceptual functions of the brain. In other words, we see what we believe must be. (Or, as the psychologist Wayne Dyer used to say “you’ll see it when you believe it.” (Dyer 1989).) More, applied metaphysics tells us, as Dean Brown, author of Cosmic Law (2002), said to Kaz in one of a series of interviews: “We become what we behold” (H. Dean Brown, in a series of conversations with Kazimierz Gozdz, 1996-2000). When we begin to operate in the world from this perspective—in the awareness that what we are experiencing is, to some significant degree, a function of what we have believed and expected, a deep longing within us begins to be satisfied. We are no longer subject to the world around us, no longer victims of our experience. We are empowered; we can change our internal state, change what we think and feel about things, and so can change our experience. As Willis Harman put it in Global Mind Change: By deliberately changing the internal images of reality, people can change the world. Indeed, the real fundamental changes in society have come about not from dictates of governments and the results of battles, but through vast numbers of people changing their minds (Harman, 1988; 8).

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Ruth worked with Harman while he was putting together the ideas for that book. She understood, as he did, that changing minds means changing the world. More, she understood that what needed to change was the fundamental belief system, the metaphysics, by which people shaped their lives. For that reason, much of Ruth’s work for the past couple decades has been exploring and applying this principle. Her books As We Think So We Are (2012), and The Creative Power of Thought (2021), are explanations of these ideas and their applications, with exercises to develop the essential skills. Peter Senge was also exploring these ideas, in the years prior to establishing the learning organization approach. In their 1981, groundbreaking paper, “Metanoic Organizations in the Transition to a Sustainable Society,” Charles Kiefer and Peter Senge described “metanoic” organizations as moving from an “instrumental” to a “sacred,” worldview: This term is based on the Greek word metanoia, meaning a fundamental shift of mind (meta: transcending; noia: of mind). In particular, the Greek term was used extensively in early Christian times to describe a reawakening of intuition and personal vision associated with a profound revisioning of reality … the essence of this new organization is its functioning as a higher form of organism. The individuals within the metanoic organization tend to assume an expanded sense of personal identification. They do not “give up” their personal identity for an organizational identity, they transcend their personal identity. Who they are, in a very meaningful sense, becomes inextricably linked to a higher purpose towards which their organizational self is committed. It is our working hypothesis than an organization fused with this level of commitment and participation operates with a fundamentally altered point of view about itself and its relationship to the environment (Kiefer & Senge; 1981; 3-4).

Harvard psychologist Robert Kegan (1994) described how adult human development is a shift in worldview brought about by undergoing a subjectobject transformation of one’s fundamental mindset. … mental organization has an inner logic, or more properly speaking, an “epistemologic.” The root or “deep structure” of any principle of mental organization is the subject-object relationship. “Object” refers to those elements of our knowing or organizing that we can reflect on, handle, look at, be responsible for, relate to each other, take control of, internalize assimilate, or otherwise operate upon. All these expressions suggest that the element of knowing is not the whole of us; it is distinct enough from us that we can do something with it.

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Chapter 2 “Subject” refers to those elements of our knowing or organizing that we are identified with, tied to, fused with, or embedded in. We have object; we are subject. We cannot accept, be responsible for, in control of, or reflect upon that which is subject. Subject is immediate; object is mediate. Subject is ultimate or absolute; object is relative (Kegan, 1994; 32).

When an individual, group, or organization undergoes the metanoic learning and developmental process, they have the potential to transcend the WOS worldview and therefore to “re-perceive” the challenges and opportunities within which they are embedded. Operating from a new metaphysics, they experience a new world.

Absolute and Relative – A Fundamental Understanding In most philosophical systems, there are two aspects of cosmos. In his book Cosmic Law, Dean Brown (2002), one of the philosophers Kaz interviewed in his search, called one of those aspects the Absolute or, in Sanskrit, the Ritam Bhara Pragyam. This is the static, underlying element of the cosmos, unchanging, timeless, un-manifest, and eternal. This is what Joseph Jaworski calls Source, in his book by that title (Jaworski, 2012). It is the realm of Essence. Plato called it the “Field of Ideals.” The physicist David Bohm called it the Implicate Order (Bohm, 1980). The second aspect of the cosmos relates to the Relative. In dialogue with Kaz, Dean Brown referred to this aspect as the Dharma or Fundamental Nature (H. Dean Brown, in conversations with Kazimierz Gozdz, 19962003). Bohm called this the Explicate Order (Bohm, 1980). It’s the realm of evolution, becoming, and unfoldment. Within this framework, the realm of the Absolute is a realm of ideal forms or templates that are more perfect than any manifestation of them can be. In fact, any evolutionary expression in material form is an imperfection— a becoming, a movement closer to the perfect Essence, which already exists in the implicate, the realm of the Absolute. Within this framework, any form of development is a process of such becoming.

Co-Creating in Alignment with the Absolute This framework also allows that, through our intention, we can bring ourselves into alignment with, and participate with, the Absolute to bring the evolution of our experience closer to the ideal form. Evolution can be thought of as a process of becoming—a process that is going to happen with or without our awareness and participation. As Dean Brown described it,

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“you can become a partner in conditioned co-production by allowing the evolutionary process to work through you” (Brown, 1996-2003). If we consider the process carefully, we can see that every major scientific discovery, personal leap in transformation, and epiphany works like this. As we shall discuss more thoroughly in the next section, what Joseph Jaworski calls Source (2012) manifests a gift, which the prepared mind and heart receives. What Michael Polanyi (1958) calls grace is the means. The process of co-creating with the Absolute, or Nature (as Ralph Waldo Emerson (1832) called it), or the Universe, as many people refer to it today, starts by honoring one’s place in the world, recognizing that each of us as individuals matter, and that we all are gifted to express a unique greatness in the world. The British magistrate Thomas Troward described this new understanding over a hundred years ago: My individuality is one of the modes in which the Infinite expresses itself, and therefore I am myself that very power which I find to be the innermost within of all things. ...in my own special world, of which I am the center, it will move forward to produce new conditions, always in advance of any that have gone before (Troward, 1909).

It’s essential that a person choose some daily life practice to stay in touch with that center in each person that is always connected with the infinite Absolute, the greater Reality. Through study of spiritual literature, attending some metaphysical or spiritual training, and meditation or contemplation, it’s possible to develop a daily practice of listening, a daily practice of relating with the Absolute, that centers one’s thoughts and emotions in the potentiality of the implicate, rather than in reactions to the appearance in the explicate.

Heuristic Passion When someone centers themselves this way, they can stay true to their life purpose and nurture their personal destiny as a force pulling them to the ideal, a force that the Hindus and Buddhists call Dharma. Then they apply themselves in the world to the worthwhile questions that come to them. And, through daily contact with the world from this state of being, they ignite what Polanyi (1958) called a “heuristic passion.” It starts with an intuition, a “knowing” about what needs to be done in the world. The seeker makes a “guess;” they get what Charles Peirce (1992) called “an abduction” about what needs evolution or transformation in their

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life. They then set the intent that they will use every tool they have to discover the essence of what has become their heuristic passion. (For Kaz, this was the need, a powerful call, to discover the means by which peoples’ work can be meaningful while the enterprise thrives. For Ruth, it was the drive to discover how one can transform their own and their community’s experience for the better.) They go about a systematic, rigorous, data-driven drilling-down to what needs to be done, using their very best scholarship. They study the events, patterns, and systemic structures emanating in the universe: the explicate forms and their implicate ideals. This means they must observe, observe, observe. Generative interviews help discover the brute reality of present experience. Ultimately, through an innate capacity for deduction and induction, the seeker grasps the situation with the greatest brute force at their disposal. Throughout, they keep looking through and beyond this systematic inquiry to a fundamental Truth, the implicate Reality (through what Charles Peirce calls “abduction” (1992) that can be felt in the seeker’s bones, but cannot be fully expressed. Thus, they nurture the question and the passion for discovering. And in doing so, it’s possible to rest in the knowledge that whatever is being co-created with the Absolute must be for the greater good, for the welfare of all beings. Knowing that the invariances in law, like gravity, quantum wave functions, field forces, etc. apply to these subtle laws (the laws that are “beyond the physical”), as well, the seeker knows that what drives them cannot cause harm, because to do so would be to invoke the reciprocal of their desire to become, or evolve into, the ideal form that is calling them.

Adequatio The term Adequatio describes the match between our desire to be in harmony with the Absolute and our own readiness to experiencing that state. The path to achieving Adequatio is the same path in life that systematically matures ourselves. Scott Peck reduced the process of self-preparation for experiencing this kind of heuristic passion to 4 practices: 1) Dedication to the Truth, the greater Reality; 2) Assumption of responsibility; 3) Delaying of gratification, and 4) Balancing love (of self, others, and the work) with discipline (Peck, 1993).

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In these 4 practices lies the key to experiencing what Michael Polanyi (1958) called grace in the discovery process, and also to co-creating new forms that evolve an individual’s or organization’s manifest experience into something closer to the ideal form in the Absolute. Peck’s “greater Reality” is referring to Plato’s realm of the ideal, Bohm’s Implicate Order; it’s the essential Isness of potential. To practice dedication to that Reality is to acknowledge in all things the illusory nature of the material experience and the possibility of something even more ideally good for all becoming evident in its place. His “assumption of responsibility” means accepting one’s role in bringing forth one’s experience from that greater Reality, rather than blaming one’s experience on others. The delay of gratification is consistent with virtually all guides to mature living. Recognizing that what we desire may not be attainable in the moment but that the desires of our heart will be fulfilled at the perfect moment is a mark of achieving adulthood. Being willing to delay gratification allows one to, for example, listen while another completes their say, even when one has a very pertinent response or question to interject. The balance of love (affection, appreciation, empathy, caring for) with the disciplines of inclusion, accepting responsibility and the possibility of delayed gratification, and reaching always for the greater Reality, could be called the hallmark of Peck’s guideline for facilitating and, when held collectively, experiencing authentic community. These practices, therefore, are the key to becoming the kind of leader that can transform an organization from a mechanistic, industrial-era structure to an eco-systemic, quantum-era learning community.

CHAPTER 3 LEARNING: HEURISTIC DISCOVERY IN COMMUNITY

Because traditional hierarchical institutions concentrate power “at the top,” it is inevitable that those in the most senior positions are seen as having the greatest responsibility for change. The burden for leading profound change, therefore, lands hardest on the shoulders of senior management. But the people at the top got there by mastering the old system. Even those who sincerely believe fundamental changes are needed may have great difficulty imagining viable alternatives to the world in which they were trained. To deal with today’s environment, then, business leaders need a new kind of approach; they need a new scientific method. Charles Peirce, whose best-known theories, pragmatism and the account of inquiry (Peirce, 1992), are based in careful experimentation, described three categories of knowledge acquisition: x Deduction derives specific facts from a general principle; one deduces from evidence in a linear fashion. x Induction derives a general principle from specific instances; one proves a theorem from specific cases. x Abduction is knowledge gained without a material base; one simply “knows” or “understands” without a linear process; it is a gift, what Polanyi (1958) referred to as a leap across a heuristic gap (Peirce, 1992). Deduction and induction are the domains of scientific approaches to management. What becomes difficult in organizations, however, is that the complexity of the world in which business is embedded becomes larger than its existing developmental level can cope with. As a result, businesses start to falter because induction and deduction from their existing developmental level is inadequate to meet the challenges of an inconstant, disruptive environment. Peirce’s third form of knowledge, abduction, is a discovery (1992). It entails the creation of a new hypothesis, the emergence of a new level of development. Every developmental leap an individual makes is an

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abduction to them and requires a discovery. This is the territory of discontinuous knowledge creation. Michael Polanyi (1997) provides a powerful framework for applying Peirce’s understanding. Polanyi said that knowledge creation is a dynamic force of comprehension. Each step of the discovery process uncovers a new hidden meaning, and scientific discovery entails the hard work of inquiry along with acts of faith, as a result of which a discovery will be revealed as a gift of grace by the universe, rather than solely through personal diligent effort: It is a passionate pursuit of a hidden meaning, guided by an intensely personal foreknowledge of this hidden reality. The intrinsic hazards of such efforts are its essence; discovery is defined as an advancement of knowledge that cannot be achieved by an application of explicit modes of inference, however diligent. Yet the discoverer must labor night and day. For though no labor can make a discovery, no discovery can be made without intense, absorbing, devoted labor. Here we have, in paradigm, the Pauline scheme of faith, works, and grace. The discoverer works in the belief that his labors will prepare his mind for receiving a truth from sources over which he has no control. I regard the Pauline scheme, therefore, as the only adequate conception of scientific discovery. Such is, in bold outline, my programme for reconsidering the conception of knowledge and restoring thereby the harmony between faith and reason (Polanyi, 1997; 343).

In this way, Polanyi distinguishes discovery from just solving hard problems.

Multiple Learning Processes The learning process consists not simply in taking on new concepts or new tasks, however. Real learning involves a shift in the structure of one’s mental maps. Drawing on the work of Gregory Bateson (1967), Argyris and Schon have developed a learning-in-action framework that they call Model I and Model II learning (Argyris and Schon, 1974). Their two-level hierarchy forms the core of their theory of organizational learning; they see behavioral learning as a process in which behavioral hypotheses are formed, tested, and modified. They then distinguish two kinds of behavioral learning: x the adoption of new action strategies to achieve our governing variables, and x the changing of our governing variables

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The latter is a framework which resembles Ross Ashby’s (1952) singleloop and double-loop learning. Their single-loop, or Model I, learning is defined by four governing variables with corresponding action strategies: x define goals, try to achieve them, and design and manage the environment unilaterally; x maximize winning, minimize losing, and own and control the task; x minimize generating or expressing negative feelings and unilaterally protect yourself; and x be rational and unilaterally protect others (Argyris and Schon, 1974). Through these strategies, single-loop learning creates a self-sealing system that leads to a closed and defensive orientation in the learner. Single-loop learning prevents public reflection on a learner’s explicitly espoused theories, which may well differ from tacit theories, that then become evident in their use. This kind of learning occurs, therefore, as an isolated, non-communal process. Double-loop, or Model II, learning, on the other hand, operates on three governing variables and four action strategies: x valid information: make designing and managing environment a bilateral task; x free and informed choice: make protection of self or other a joint operation; and x internal commitment to decisions made: protection of self is a joint enterprise and oriented toward growth with bilateral protection of others (Argyris and Schon, 1974). This creates behavioral action-based strategies whereby valid and sensitive information can be publicly shared and the public testing of espoused theories can occur, uncovering “undiscussables.” Community therefore becomes essential to the organizational learning process. Moving beyond Argyris and Schon, Nielsen (1993) includes embedded assumptions of shared tradition systems into his learning hierarchy. Drawing on and extending the very early work of Woolman (1774, 1818), and the more recent descriptions offered by Greenleaf (1977), Nielson suggests a triple-loop action-learning in which the embedded social tradition system is both criticized and treated as a partner in mutual action-learning … The agent considers changes in actions, governing values, and the embedded social tradition system within which governing values are nested (Nielsen, 1993; 121).

An openness to learning about the context in which the learning is happening (e.g., talking about controversial issues and identifying positive

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and/or negative biases in the embedded social tradition) facilitates this triple-loop action-learning. Triple-loop learning, therefore, often calls for social “undiscussables” to surface in non-confrontive ways within social systems. Furthermore, it calls for critical reflection from a culturally embedded, rather than culturally critical, position; for example, it requires a researcher (or manager) to put himself or herself in an equal position with those persons being researched (or managed). It then calls for action to adjust socially normative beliefs; the researcher or manager is expected to adjust beliefs and behavior in such situations.

Horizontal and Vertical Developmental Growth In effect, then, becoming a learning organization calls for a shift in consciousness at the individual level in order to change the socially normative behaviors of collectives. Shifting consciousness is a term we use to describe the change in worldview and approach that happens when an old set of beliefs and assumptions is replaced with a new one—sometimes also called a “paradigm shift” (Harman, 1988; 1993; Kuhn, 1962). We call that Vertical Learning—as opposed to Horizontal Learning, which involves developing a new skill or ability within one’s current stage of maturity or paradigm. Ken Wilber’s Integral Theory model (1986) provides a useful framework for understanding the domains of development in any set of relationships. The following diagram illustrates the essential elements of that model.

Figure 3-1. Adaptation of Wilber’s (1986) Integral Development model applied to the Stages of leader development.

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Within that more comprehensive model he uses a simple framework to describe how people relate to the world around them:

Figure 3-2. Wilber’s (1986) model of relationships.

A horizontal shift within a vertical level/stage of development broadens that stage/level within each of the quadrants. Extending the model, individual and collective learning in an organization can be thought of as involving the domains illustrated in the chart below:

Figure 3-3. Domains of knowledge and heuristic discovery.

Filling in the four quadrants within an individual or organization’s existing stage/level of vertical development is what we’re calling horizontal development and entails single and double-loop learning. Vertical

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development entails using triple-loop learning to address any of the quadrants from the next higher stage of development.

Action Inquiry Torbert (1999) holds that developmental action inquiry can provide a forum within which triple-loop feedback can occur in real-time communities of inquiry. Such communities, he suggests elsewhere, are a developmental stage in organizations from which a learning organization, with its capacity to address constantly changing environments, emerges (Fisher and Torbert, 1995). Integrating a transpersonal perspective to triple-loop learning and learning organizations, Hawkins refers to Stage III learning as “the spiritual dimension of the learning organization” (Hawkins, 1991; 172). For him, triple-loop learning involves transcendence of the ego-world, whereby previous concepts of self no longer punctuate experience (Hawkins, 1991; 172). Lave and Wenger (1991) add to this idea, suggesting that, whereas social learning more effectively covers the domain of single-loop and double-loop learning and is acknowledged to occur spontaneously and naturally in community learning, sustained triple-loop learning requires a discipline and praxis. Thus, the heuristic discovery process becomes embedded as a triple-loop learning praxis in the daily work of the individual.

An Ongoing Praxis Developmental learning communities are, therefore, organizations that integrate expanded consciousness and operational performance through an ongoing praxis of personal and organizational self-awareness. They work together continuously to expand their individual and collective capacity and skills, while their members work daily to develop their own ability to see, understand, and effectively address their own limitations and potentials in the context of the whole.

CHAPTER 4 CULTURES WITHIN CULTURES

MIT’s Edgar Schein introduced the notion of a corporate culture with his book Organizational Culture and Leadership in 1992. The idea connected with managers, instructors, and journalists, and the concept has become a widely accepted meme in Western countries. It’s a powerful idea that has helped people to frame both their experience and their intentions over the past several decades. It’s so powerful, in fact, that for many people the word “culture” has become synonymous with what is experienced in the workplace. This is, perhaps, a more accurate use of the word than the idea that “culture” consists only of fine arts and literature, and that people who do not participate in those arenas are not “cultured.” It is, though, a diminution of what the term culture means, and how it can be useful in our lives and work experience. Cultural scientists—anthropologists, geographers, ethnologists, etc.— understand culture to be the broadest description of the context in which people are born, raised, work, play, practice their philosophies and spirituality, die, and are remembered. Culture is the matrix within which our lives are lived. It’s all the structures, actions, expectations, assumptions, material objects, processes, and languages that surround us and determine what we do, say, and experience every day. To be raised in a culture is to be “enculturated.” To move into and be absorbed into a culture is to be “acculturated” (Guest, 2013). Early ethnologists would live in a specific cultural group for months at a time over several years, learning the language and participating in daily activities, in order to be able to document the various characteristics that made that particular culture unique (see for example, Colin Turnbull’s works, The Forest People, The Desert People, The Mountain People; or the Bureau of American Ethnography reports to the Smithsonian). Over time, anthropologists were able to observe patterns among and between different ethnological studies and begin to draw inferences about the nature of culture. Julian Steward, Director of the Smithsonian’s Bureau of American Ethnology, was influential in this process. His “Area Research: Theory and Practice” (1950) was foundational to the field.

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Societal Culture: The Context In his book, The Ritual Process, Victor Turner (1969) gave a succinct definition of society: I was reared in the orthodox social-structuralist tradition of British anthropology, which, to put a complex argument with crude simplicity, regards a “society” as a system of social positions. Such a system may have a segmentary or a hierarchical structure or both … the unit of social structures are relationships between statuses, roles, and offices (Turner, 1969; 178—emphasis added).

Each nation, and many regions within nations, may be considered a society with its own culture. Then there is the overarching culture, the global economic culture, dominated by American media and consumption habits. All of these have distinct cultural norms and expectations that affect the organizations within them. Today, there are very few cultures that have not been explored in some detail, and even fewer that have not been influenced by the culture of Western Europeans and Americans. Anthropologists and other culture scientists are therefore much more involved in studying the interactions between cultures or the environmental impacts of human activities than in trying to assess the specific characteristics of a given cultural group (see, for example, Livermore (2009); Cushner (1995); Bochner (1982)). One area of study that requires an understanding of the components and interactions of a given culture is forecasting and impact assessment. Futurists talk about what is emerging within a culture and impact assessments describe the potential future impacts of what is emerging now. While there are as many approaches to forecasting as there are futurists (see, for example, Booth (2006); Castle, et al (2015); Gilliland, (2020)), there are fairly strict guidelines for assessments. Some of them are legal (National Environmental Policy Act (1970)). Some of them focus on content and methods used (e.g., Porter (1980); Therivel and Wood, (2017)). These guidelines have led to the creation of standardized frameworks for considering culture, an example of which is illustrated below:

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Figure 4-1. One model of the system of elements in a culture (source: World Resources SIM Center, 2022).

A Simplified Framework for Understanding Culture Recognizing that attempting to describe all the aspects of everyone’s life, individually and collectively, is virtually impossible in today’s world, futurists have tended to work with a simplified formula: Social Systems, Technologies, Economics, Environment (natural and human), and Politics, or STEEP (originally presented as STEP or PEST in Fahey and Narayanan, 1986). The framework was expanded over the years to include Environmental factors, such as air, soil, and water quality, natural cycles, and the like, and Values factors—those human attitudes, expectations, and assumptions that might affect the outcome of a forecast. This framework can be subdivided as needed for a particular cultural context, and data can be collected and analyzed in each of the categories to assess potential impacts. While it by no means addresses all the varieties of cultural differences (e.g., rituals for planting, marital structures, or

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assumptions about space travel), it does meet the essential need for the usual business- or policy-oriented forecast or impact assessment. The following chart provides one approach, used to assess water projects in Russia.

Figure 4-2. Description of the STEEPV framework, as applied in Futures Research and Impact Assessment (source: Ozcan, et al, 2015).

In applying the STEEPV framework, however, the tendency is to minimize, or even leave out the V (values), because such factors aren’t easily quantifiable (Miller, 1984). A group’s underlying assumptions about what is important, who is important, what is acceptable, and what is to be avoided may be inferred, or polls may be taken, but the data isn’t as readily available as for the other factors. Values factors, however, are often the driving factors in any given cultural framework.

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Two Very Different Values Sets Looking more closely at the Values components of a culture, Ruth has found that there are, at present, two main sets of values systems at work in the world, one of which is associated with Western industrial culture, the currently dominant global, culture, and the other of which is associated with traditional, earth-centered, or what are more commonly known as “indigenous” cultures. These two values systems are very different, and tend to lead to very different activities within the other STEEP categories. In her classes and seminars, she generally introduces these differences with the chart on the following page. Ruth derived the other set of values, associated with “earth-centered” or “indigenous” cultures, from her studies of hundreds of ethnographies and interviews with dozens of members of such cultures over decades of research, documented in a series of online seminars on the Gaia Living Systems Institute website: www.gaialivingsystem.org. While there are certainly variations across cultures and culture-regions, these basic beliefs, values, and assumptions tend to underly the systems, activities, decisions, and preferences of most of those peoples whose lives are closely tied to the land on which they live (see Markewitz & Miller, 2021, for more specific detail). They may also be derived from the Indigenous Peoples’ Statement on the Environment, presented to the 1992 UN Conference on Environment and Development (Indigenous Peoples’, 1992; see also Yakaona, 1992). The implications of the differences are profound. One set of values leads to competitive exploitation of resources and people, while the other leads to cooperative development in a dynamic balance. This framework suggests that our global culture, built on the traditions and values of six millennia of empire-overtaking-empire (also known as western civilization), has a value system that drives all the other STEEP functions toward systemic breakdown, with rule by a handful of people focused on acquiring, accumulating, and controlling everything (and by extension, everyone) around them. By contrast, the other set of values, that of the currently disempowered and marginalized earth-centered populations, encourages long-term sustainability in a democratic system of governance. As with all categorizations, these characterizations are a generalization, but they provide a framework for understanding many of the dynamics of nations, regions, communities, and organizations in the world today.

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Figure 4-3. Ruth-Ellen Miller’s comparison of fundamental values, beliefs, and assumptions of the two major cultural systems in the world, today.

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Corporate Cultures Reflect Larger Cultures It’s impossible to talk about corporate culture outside of this larger context. Ours is an Empire Culture, the product “western civilization,” with all the assumptions, expectations, beliefs, and values that have been handed down from generation to generation for 6,000 years. Our families reflect this. Our schools. Our churches, synagogues, and temples. Clearly our military and para-military organizations reflect this, as does our whole system of dealing with law-breakers. And so do most of our businesses. The Industrial Revolution is integral to the current structure and function of Empire Culture, which means that virtually all industrial-age companies have fit within this cultural norm. Therefore, most people in most companies today buy into what was described above as the acquire-accumulate-control values of Empire Culture, with a mechanistic, machine-based framework for making sense of the world around them. To the extent that the members of a company operate in these terms then, hierarchy, competition, power struggles, and scarcity are the primary characteristics of their culture. Not only are they present, they’re “wired in” to the structures, systems, traditions, and norms of behavior throughout the company. If, on the other hand, the members of company are uncomfortable with competition and power struggles, and actually prefer to work in egalitarian, democratically-run groups, then the culture will reflect that. Informal gatherings, both during and outside of work hours, will be normal; questions about what works will be heard more often than rules or even guidelines. Even the physical structure will be different, as boxes dividing work and play may not be seen as useful. These kinds of corporate cultures began to emerge with the shift from the Industrial Age to the Digital Age (see, for example, Danielewicz-Betz, 2016). And though there were many elements of Empire Culture values still woven into the fabric of these companies, they were a major revolution in corporate culture (see, for example, González, 2015). Such a great difference in underlying assumptions and values associated with these differences means that, if a company wants to shift its leadership structure, say, from a single-leader structure to a team leadership structure, a whole set of behaviors—and underlying values—that support that structure must be examined and altered to make it happen. And changing values is a time-consuming, emotion-laden process, for which a communitybuilding method is key.

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Organizational Culture: The Medium Edgar Schein’s definition of organizational culture is a useful one: A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (Schein, 1992; 12, 17).

Schein’s thoughts on basic assumptions about underlying organizational culture add depth to this idea: Basic assumptions … have become so taken for granted that one finds little variation within a cultural unit. In fact, if a basic assumption is strongly held in a group, members will find behavior based on any other premise inconceivable … Basic assumptions, in this sense, are similar to what Argyris has identified as “theories-in-use,” the implicit assumptions that actually guide behavior, that tell group members how to perceive, think about, and feel about things. Basic assumptions, like theories-in-use, tend to be those we neither confront nor debate and hence are extremely difficult to change. To learn something new in this realm requires us to resurrect, reexamine, and possibly change some of the more stable portions of our cognitive structure, a process that Argyris and others have called double-loop learning or frame breaking … (Schein, 1992; 21-22).

Changing basic assumptions, he suggests, is somewhat akin to the concept of “rite of passage,” including the several stages defined by Victor Turner (1969) and Arthur van Gennep (1960). Schein goes further, describing the assumptions, themselves, as responses to anxiety: Such learning is intrinsically difficult because the reexamination of basic assumptions temporarily destabilizes our cognitive and interpersonal world, releasing large quantities of basic anxiety. Rather than tolerating such anxiety levels we tend to want to perceive the events around us as congruent with our assumptions, even if that means distorting, denying, projecting, or in other ways falsifying to ourselves what may be going on around us … The human mind needs cognitive stability. Therefore, any challenge to or questioning of a basic assumption will release anxiety and defensiveness. In this sense, the shared basic assumptions that make up the culture of a group can be thought of at both the individual and group levels as psychological cognitive defense mechanisms that permit the group to continue to function (Schein, 1992; 22-23).

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The basic assumptions underlying our social and cultural habits also shape the way we pay attention to the world around us. They act as filters and sensors for our perceptions and expressions of reality. In their paper “Sensors, Filters, and the Source of Reality”, Jahn and Dunne describe the social reality that shapes our consciousness: The primary objectives of most socialization and educational processes are the encouragement of individual beliefs and behavior that are consistent with the values and purposes of the collective, so that our personal worldviews align with the perspectives of the particular socio-cultural milieux, peer groups, or professional hierarchies in which we are immersed. Each of these dispenses its own conceptual vocabulary and priorities to bias the weighting factors in our unconscious mental calculations toward those representations of experience that are most consistent with the established beliefs and goals of that system, thereby reinforcing the coherence of its collective structure (Jahn and Dunne, 2007; 326).

They point out that consistency of beliefs and assumptions is so important to a culture or organization that corrective measures are usually built in to the system: Any “thinking outside the box” undermines the system’s control over individual experience and action and is discouraged via stern social sanctions of rejection or exclusion from group membership. For humans, as well as for other social animals, such treatment is usually sufficiently painful to enforce conformity to the “appropriate” information processing strategies and consequent behavior. Eventually, these constraints become so internalized and automated that most alternative perspectives, and their associated reactions, are not even recognized. In extreme cases, they can engender a variety of physical and emotional pathologies, including neurosis, psychosis, or muscular armoring that can further limit or distort responses to stimuli (Jahn and Dunne, 2007; 326).

Jahn and Dunne’s description of the effects of sensors and filters on our capacity to perceive and act on reality is not a statement of pathology. It is a perfect description of how metaphysics affects outcomes: an alternative description of the rules and practices governing our societal interactions. These same rules are incorporated into business organizations and the practices of leadership and management.

Habituation and Institutions Organizations become institutions as the structure becomes more important than the function (Scott, 1995). In their 1966 book, The Social

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Construction of Reality, Berger and Luckman describe the role of habituation (which they call habitualization) in building institutions. All human activity is subject to habitualization. Any action that is repeated frequently becomes cast into a pattern, which can then be reproduced with an economy of effort and which ipso facto, is apprehended by its performer as that pattern. Habitualization further implies that the action in question may be performed again in the future in the same manner and with the same economical effort. Habitualized actions, of course, retain their meaningful character for the individual although the meanings involved become embedded as routines in his general stock of knowledge, taken for granted by him and at hand for his projects into the future. Habitualization carries with it the important psychological gain that choices are narrowed (Berger and Luckmann, 1966; 52).

The social construction of reality therefore plays a central role in defining and shaping the way institutions are built and run. Indeed, the central factor defining institutions is their enactment of habituation. Institutionalization occurs whenever there is a reciprocal typification of habitualized actions by types of actors. Put differently, any such typification is an institution. What must be stressed is the reciprocity of institutional typifications and the typicality of not only the actions but also the actors in institutions. The typifications of habitualized actions that constitute institutions are always shared ones (Berger and Luckman, 1966; 54).

In their presentations of these ideas, these researchers—Turner, Jahn and Dunne, Schein, Harman, and Berger and Luckman—are among the many modern academics and practitioners who support our understanding that we can change organizations if we can change our fundamental assumptions about them. We can insert new habits of thought and action if we can distance ourselves from the socialization, enculturation, and habit formation that is endemic to the institutional life of most organizations.

Liminality, Communitas, Structure, and Anti-structure Victor Turner, one of the world’s foremost symbolic anthropologists, described two forms of social engagement, which he called “structure” and “anti-structure” (Turner, 1969). Peck’s term “pseudo-community” (Peck, 1987) is introduced here as synonymous with Turner’s concept of “structured” society. “In my book The Ritual Process …,” Turner writes,

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Chapter 4 … by structure I meant, roughly, social structure as most British and many American anthropologists and sociologists have defined the term, that is, as a more or less distinctive arrangement of mutually dependent institutions and the institutional organization of social positions and/or actors which they imply. Class structures are only one species of structures so defined, and a measure of alienation adheres to all, including so-called tribal structures, insofar as all tend to produce distance and inequality, often leading to exploitation between man and man, man and woman, and old and young. … I have used the term ‘anti-structure,” but I would like to make clear that the “anti” is here only used strategically and does not imply a radical negativity … When I speak of anti-structure, therefore, I really mean something positive, a generative center (Turner, 1969; 273).

Victor Turner’s concepts of liminality and of communitas are derived from components of the “rites of passage” process used in most cultures to assist people through shifts in age and stage, and between associated roles in the culture. Building his ideas on the work of Arnold van Gennep (1960), Turner summarizes three phases in the process: Van Gennep has shown that all rites of passage or “transition” are marked by three phases: separation, margin (or limen, signifying “threshold” in Latin), and aggregation. The first phase (of separation) comprises symbolic behavior signifying the detachment of the individual or group either from an earlier fixed point in the social structure, from a set of cultural conditions (a “state”), or from both. During the intervening “liminal” period, the characteristics of the ritual subject (the “passenger”) are ambiguous; he passes through a cultural realm that has few or none of the attributes of the past or coming state. In the third phase (reaggregation or reincorporation), the passage is consummated. The ritual subject, individual or corporate, is in a relatively stable state once more and, by virtue of this, has rights and obligations vis-à-vis others of a clearly defined and “structural” type; he is expected to behave in accordance with certain customary norms and ethical standards binding on incumbents of a social position in a system of such positions (Turner, 1969; 94-95).

Turner goes further, placing emphasis on Van Gennep’s “marginal” phase, using the term “liminality” to describe it (Turner, 1969). As he uses the term, liminality is a temporary state-specific experience with definitive attributes. The attributes of liminality or of liminal personae (“threshold people”) are necessarily ambiguous, since this condition and these persons elude or slip through the network of classifications that normally locate states and positions in cultural space. Liminal entities are neither here nor there; they

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are betwixt and between the positions assigned and arrayed by law, custom, convention, and ceremonial. As such, their ambiguous and indeterminate attributes are expressed by a rich variety of symbols in the many societies that ritualize social or cultural transitions. Thus, liminality is frequently linked to death, to being in the womb, to invisibility, to darkness, to bisexuality, to the wilderness, and to an eclipse of the sun or moon (Turner, 1969; 95).

He states that there’s a connection between what he is calling antistructure and that liminal stage in a rite of passage where the individual is “on the threshold” (Turner, 1969), in neither one state nor the other: This aspect … is reflected in the paradox that in liminality extreme authority of elders over juniors often coexists with scenes and episodes indicative of the utmost behavioral freedom and speculative license. Liminality is usually a sacred condition protected against secularity by taboos and in turn prevented by them from disrupting secular order, since liminality is a movement between fixed points and is essentially ambiguous, unsettled and unsettling (Turner, 1969; 94-95).

Turner’s anti-structure, then, is that state of being where previous norms no longer apply and new ones have not yet been formed. He points out that it is in this transition phase, this experience of anti-structure, that the deep sense of connection that he calls communitas, and Scott Peck calls authentic community, occurs. In liminality, communitas tends to characterize relationships between those jointly undergoing ritual transition. The bonds of communitas are antistructural in the sense that they are undifferentiated, egalitarian, direct, extant, nonrational, existential, I-Thou (in Feuerbach’s and Buber’s sense) relationships (Turner, 1969; 273).

He goes on to state that this is not something we can plan for: Communitas is spontaneous, immediate, concrete—it is not shaped by norms, it is not institutionalized, it is not abstract. Communitas differs from the camaraderie found in everyday life, which, though informal and egalitarian, still falls within the general domain of structure, which may include interaction rituals … It tends to ignore, reverse, cut across, or occur outside of structural relationships (Turner, 1969; 273).

He then expands the concept beyond the individual rite of passage to the larger sweep of humanity’s experience. In human history, I see a continuous tension between structure and communitas, at all levels of scale and complexity. Structure, or all that which

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Chapter 4 holds people apart, defines their differences, and constrains their actions, is one pole in a charged field, for which the opposite pole is communitas, or anti-structure, the egalitarian “sentiment for humanity” of which David Hume speaks, representing the desire for total, unmediated relationship between person and person, a relationship which nevertheless does not submerge one in the other but safeguards their uniqueness in the very act of realizing their commonness. Communitas does not merge identities; it liberates them from conformity to general norms, though this is necessarily a transient condition if society is to continue to operate in an orderly fashion (Turner, 1969; 274).

Changing Leadership Roles in an Ongoing Process As an anthropologist studying ritual in many cultures, Victor Turner (1969) felt that people move across these transitional boundaries naturally, in accordance with life cycles. He postulated that there is a natural, dialectic developmental cycle in our lives, and that some societies ritualize these in order to facilitate maturity (Turner, 1969). Moving back and forth between structure (conventional society) and anti-structure (communitas) through these processes, he suggests, leads to healthy developmental growth: … for individuals and groups, social life is a type of dialectical process that involves successive experience of high and low, communitas and structure, homogeneity and differentiation, equality and inequality. The passage from lower to higher status is through a limbo of statuslessness. In such a process, the opposites, as it were, constitute one another and are mutually indispensable. Furthermore, since any concrete tribal society is made up of multiple personae, groups, and categories, each of which has its own developmental cycle, at a given moment many incumbencies of fixed positions coexist with many passages between positions. In other words, each individual’s life experience contains alternating exposure to structure and communitas, and to states and transitions (Turner, 1969; 97).

During this movement in and out of the liminality of communitas, leaders and followers often switch roles, usually temporarily. This process helps leaders in society understand how to hold social roles with subjectobject distance and teaches them that the people they use instrumentally to get things done are also ends unto themselves. Leaders get reminded that they are governing people equal to them at the level of their humanity. Leaders may also learn to apply communitas values to the social systems within which they have power and authority. “It is rather a matter of giving recognition to an essential and generic human bond, without which there could be no society,” Turner says. “Liminality implies that the high could

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not be high unless the low existed, and he who is high must experience what it is like to be low” (Turner, 1969; 97). The implications for leadership in structured organizations are significant. Shifting roles remind us that our subordinates and our followers are our equals in our shared humanity. The humility that comes from governing our subordinates as human equals then leads to the wise use of power and authority. In short, we become servant leaders when we integrate the experience of communitas in our hearts and minds. As Turner expresses it: All human societies implicitly or explicitly refer to two contrasting social models. One, as we have seen, is of society as a structure of jural, political, and economic positions, offices, statuses, and roles, in which the individual is only ambiguously grasped behind the social persona. The other is of society as a communitas of concrete idiosyncratic individuals, who, though differing in physical and mental endowment, are nevertheless regarded as equal in terms of shared humanity. The first model is of a differentiated, culturally structured, segmented, and often hierarchical system of institutionalized positions. The second presents society as an undifferentiated, homogeneous whole, in which individuals confront one another integrally, and not as “segmentalized” into statuses and roles (Turner, 1969; 177).

He goes on to say that such states are not automatically enduring in and of themselves; that a form of discipline is required to maintain a sense of communitas: But the spontaneity and immediacy of communitas—as opposed to the juralpolitical character of structure—can seldom be maintained for very long. Communitas itself soon develops a structure, in which free relationships between individuals becomes converted into norm-governed relationships between social personae. Thus, it is necessary to distinguish between: x existential or spontaneous communitas—approximately what the hippies today call “a happening,” and William Blake might have called “the winged moment as it flies” or, later, “mutual forgiveness of each vice”; x normative communitas, where under the influence of time, the need to mobilize and organize resources, and the necessity for social control among the members of the group in pursuance of these goals, the existential communitas is organized into an enduring social system; and x ideological communitas, which is a label one can apply to a variety of utopian models of societies based on existential communitas (Turner, 1969;131-2).

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These three forms of communitas, then, are a function of the requirements of the current situation, more than any particular action. Ideological communitas is at once an attempt to describe the external and visible effects – the outward form, it might be said – of an inward experience of existential communitas, and to spell out the optimal social conditions under which such experiences might be expected to flourish and multiply. Both normative and ideological communitas are already within the domain of structure, and it is the fate of all spontaneous communitas in history to undergo what most people see as a “decline and fall” into structure and law (Turner, 1969; 132). … The ultimate desideratum, however, is to act in terms of communitas values even while playing structural roles, where what one culturally does is conceived of as merely instrumental to the aim of attaining and maintaining communitas (Turner, 1969; 178).

From Victor Turner we learn, therefore, that communities and organizations can invent communitas rituals to access liminality and other dimensions of social experience that are beneficial for developmental growth, but these experiences are not an enduring form of social relationship; they are, in fact, part of a dialectic swing from structure to anti-structure, the management of which requires a conscious, informed effort and practice.

From Institution to Community Victor Turner’s research informs us that community cannot be forced or coerced. While we can set the conditions for it to emerge, it cannot be controlled or commanded to occur. It is a gift, granted to those who have adequately prepared themselves for responsiveness and emotional maturity. It is an archetypal condition that occurs automatically in an infinite variety of emergency situations. Now, however, through the work of Scott Peck (1987; 1993) and others, it can, more and more often, be intentionally developed. Organizational structure, that which holds people apart, defines their differences, and constrains their actions, is one pole in a charged field, for which the opposite pole is what we saw above that Turner defines as an alternative to structured social systems: communitas (Turner, 1969). Communitas is spontaneous, immediate, concrete – it is not shaped by norms; it is not institutionalized; it is not abstract. Further, Communitas differs from the camaraderie found in everyday life, which is often based on Peck’s (1993) pseudo-community structures—the artificial courtesies that define most organizational interactions.

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The formation of the deep bonds of communitas is not easy for individuals who have succeeded in their careers by burying their emotions, especially difficult emotions like despair, sadness, and fear. As a result, fear and the suffering that comes from not facing fear openly, permeate virtually all large organizations. As a result, acknowledging the fear and suffering that is present but unspoken is the first step in opening the capacity for deep change. Facing fear and other sources of suffering takes great courage. Yet shifting the organizational norm always starts with the courage to tell the truth, to explore dimensions of our experience that are difficult, obscure, and even troubling. Ultimately, it requires that we open ourselves to reflect and speak about matters that are painful and that we would rather avoid. Communities and organizations can invent rituals, regularly repeated experiences, to address this issue, and so access the dimensions of liminality and communitas that are essential for individual and collective developmental growth. To do so, however, requires a level of mastery on the part of the person facilitating the process. As described by Edgar Schein: … cultures begin with leaders who impose their own values and assumptions on a group. If that group is successful and the assumptions come to be taken for granted, we have then a culture that will define for later generations of members what kinds of leadership are acceptable. The culture now defines leadership (Schein, 1992; 1-2).

This requires two skills. The first is the skill to lead groups and communities through the dynamics of interpersonal growth. Sometimes this is referred to as the mastery of group process and involves building temporary states of maturity in which heuristic discovery, collective intelligence, and authentic communication are practiced. The second skill that such leaders require is a systematic approach to development that is hard-wired into everything the organization does. The level of ability of these skills typically takes more than one tenure of leadership to achieve. It has been our experience that leaders can develop through the necessary stages of growth in three to five years if they are steadfast and disciplined. We’ve also seen that it takes at least twice that length of time to develop an organization to the requisite stage of maturity. Yet, if the leadership is willing to develop their own capacities, breakthroughs into communitas can and do happen on a regular basis.

CHAPTER 5 LEADERSHIP DEVELOPMENT & COMMUNITY DEVELOPMENT

M. Scott Peck and Victor Turner had a great deal in common. In particular, they were both interested in the psycho-social-spiritual, feltsense experience of community. Turner (1969) used the term “structure” to depict the consensus culture, or society of rules and roles, as we ordinarily encounter it. He was interested in the ritual passages outside of the consensus culture whereby the ordinary social rules and legitimacy of the social order were temporarily suspended. He observed that cultures all over the world created rites of passage in which leaders and followers move out of their conforming social roles to discover new ways of developing and dealing with important issues and crises (Turner, 1969). As described above, Turner’s liminality is perhaps the best description for the state in which management leaders find themselves as they facilitate and participate in the formation of authentic community within the organization. The result of the dialectic movement in and out of communitas that occurs in that process is that leaders and followers sometimes switch roles. It helps leaders in society understand how the people they use instrumentally to get things done are also ends unto themselves, as it helps them develop their own capacities as individuals and as leaders. Both Peck, in his community development work, and Turner, in his ethnological studies, viewed regular immersion in communitas, antistructure, or authentic community, as an important part of developmental growth for leaders and followers. And Turner and Peck shared the belief that such necessary alternative social realities could be enacted by design. Peck became acutely interested in communitas. He called it simply community or, more often, “authentic community.” He felt there was a great need on the planet to invent a social process that could serve as practice for peacemaking and as a forum for authentic and vulnerable communication. He felt that learning to build authentic community is an absolute necessity if we are to transform our institutions into civil and developmental places to enact our lives (Scott Peck in conversation with Kaz Gozdz, 1994).

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Peck found a useful framework in Gennep’s rites of passage model. Gennep (1960) noted three phases in rites of passage rituals: separation, margin/limen, and aggregation. Peck was interested, as was Turner, in the capacity to develop individuals and societies by systematically leading them through a community-building process. Peck theorized that if an individual had the direct experience of community (communitas in Turner’s model), they would then come to see how embedded they are in the habits and conformity of the social world around them (Peck, 1993). He felt that through direct experience of community, a person would acquire the subject-object distance necessary to mature themselves beyond their existing developmental level and dishabituate themselves of no-longer useful cultural norms (Peck, 1993). Peck created a process by which any group of individuals could work together to become an authentic community (Peck, 1993). He used the term “pseudo-community” (which can be thought of as comparable to Turner’s “structure”) and developed a process by which the group could, by design, arrive at the social relationship which is equivalent to that which Turner, above, named “anti-structure.” (Peck, 1993). He wrote two books, The Different Drum (1987) and A World Waiting to Be Born (1993), in which he encouraged people to learn to enact the transition from pseudo-community to authentic community on their own. He went on to establish the Foundation for Community Encouragement, a non-profit organization whose purpose was to teach these rules to anyone interested in learning to build their own authentic community. Peck’s simplified rite of passage into what he called “authentic community” (equivalent to Turner’s communitas) entailed attending to four stages of community formation. He called these stages: 1) pseudo-community, 2) chaos, 3) emptiness, 4) community (Peck, 1987). As they moved through these stages with enough regularity, Peck felt that individuals and groups would develop their capacity as leaders. He used a four-stage model to describe this developmental growth pattern: 1) Stage I: Chaotic, Antisocial 2) Stage II: Formal, Institutional 3) Stage III Skeptic, Individual 4) Stage IV: Mystic, Communal (Peck, 1993). Although he did not reference Turner, Peck drew the same conclusion: that authentic community/communitas could be created deliberately by design. Both Turner and Peck believed that cycling through the group

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experience of authentic community would be healing and developmental in that it would teach people experientially about the social conditioning within which they are embedded. An individual and a group could learn to explore the territory of authentic community, thereby outgrowing the social, cultural and habituated social constraints restricting their openness to one another. Community building, they saw, can become a life practice (Peck, 1987; 1993; 1997). In short, Peck and Turner established that individuals and groups can move through a rite of passage whereby a liminal space is created and individuals and groups can empty themselves of their preconditions and their habitual obstacles to genuine human encounter. Through a suspension of existing social rules, alternative rules of engagement can emerge that lead to authentic and vulnerable personal disarmament, vulnerability, openness, and engagement. In this way we can temporarily experience authentic communitas and carry it back with us into our groups and institutions to promote more effective, wiser, and compassionate leadership and followership. To review Scott Peck’s stages of community formation: 1) pseudo-community, in which people generally get along but without much depth in their interactions; 2) chaos, when the underlying issues emerge and previous assumptions, expectations, and norms no longer apply; 3) emptiness, when the participants realize they have to accept one another’s differences and that there is nothing they can do or say within what has been acceptable to address the current situation; 4) authentic community, when they begin to share what’s really going on for them and express what they feel as well as what they know that may be useful or relevant to the group as a whole (Peck, 1993). These four stages occur in all kinds of contexts and situations, from churches and families to towns and corporations. Applying them within organizations, it has become evident that there are parallels between the stage of community and level of development among the leaders. Observing this, Peck formulated a four-stage theory of adult psychological, spiritual and social development (Peck, 1993). Both Peck and Harvard psychologists Robert Kegan and Lisa Lahey (2016) proposed that the first step in adult development is to internalize and act from norms drawn from institutions of various types. According to Kegan and Lahey, two large-scale studies of mental complexity have shown that 58% of adults operate at this first, Socialized Mind, level of development (Kegan and Lahey, 2016).

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These theorists then characterize several higher stages of human development, through which people transcend the cultural rules in which they were embedded, as illustrated in the chart below:

Figure 5-1. A comparison of Scott Peck’s and Kegan & Lahey’s Stages of Development.

Their models can be further integrated into four Stages of Leadership, each with its own internal and external development processes. In general, it may be said that Stage I and II Leadership is based on the assumption that the leader has to acquire power and resources, accumulate them, and control the people around them to drive organizational performance. And, as a result, it often “goes against the grain” for Stage I or Stage II leaders to give up hierarchical control. Stage III leaders are aware of the need to empower others and so provide opportunities for individuals to move forward in power and responsibility. Stage IV leaders, however, understand the need to distribute power according to skill and willingness, and, tapping into a higher source of wisdom, they have the ability to discern what’s appropriate in a given situation. The process of moving through these stages of development is illustrated in the following chart.

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Figure 5-2. Stages of Development as Leadership Qualities.

Effectively moving through these stages requires more than simply learning new skills, but new kinds of heuristic discovery processes on the part of the leadership. In fact, what’s needed is a shift in fundamental worldview, a new metaphysics, based on a different psychological framework.

Leadership Challenges Require Development Since the early 1990s, with Peter Senge’s publication of The Fifth Discipline (1990), institutions of all sizes and types in the public and private sectors have endeavored to become learning organizations. These organizations have included businesses large and small, public and private schools; government agencies, militaries, churches, and not-for profits. Characteristically, these organizations seek to become learning organizations in order to solve their problems more effectively and to capitalize on their opportunities with greater speed and agility. Learning organizations are valued because they enhance the workforce’s capability to learn, adapt, and develop as they face anything from continuous improvement challenges, to updating the organization’s strategy, to addressing existential threats to the organization’s survival.

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Responses to Challenges For learning organization theorists and practitioners alike, the need to respond to organizational disruption is not a new idea or phenomenon. For example, Edward Hess (2019), a leading organizational learning theorist, points to the massive disruption impacting society and business: We’re on the leading edge of a tsunami of technological and scientific advances in the areas of artificial intelligence (AI); the Internet of Things; virtual reality; advances in robotics; nanotechnology; deep learning; and biomedical, genetic, and cyborg engineering. Along with quantum computing power and global connectivity, these advances will fundamentally change how most of us live and work (Hess, 2019; 1).

He cautions that facing this level of social and organizational disruption would require humility (Hess and Ludwig, 2017) and hyper-learning (Hess, 2020) as the new organizational learning norm. Senge (1990) anticipated that genuine organizational learning was best categorized as metanoia, or a fundamental shift of mind—what we have referred to in this book as a shift in worldview. The Harvard psychologist Robert Kegan (1994) characterized circumstances of this type as creating demands on our mental complexity that we are simply unable to meet within our existing stage of developmental growth. He called it “being in over our heads,” where individuals and workforces as a whole reach a point at which they are no longer adequately prepared (adequatio) to address the problem as it is being presented (Kegan, 1994). What do senior leaders do when they are in over their heads? That is, when their developmental level, that of their executive team, workforce, or organization is not adequate to capitalize on a risky opportunity or to face a serious existential threat to their business? Kegan (1994) and other researchers have reported that a common response by executives to problems beyond their existing level of development is to avoid facing the pain of reality by reducing such problems to alternatives they can solve at their existing developmental level, even if it’s the wrong problem. An aphorism generally attributed to the American journalist H. L. Mencken’s says it best for this group: “For every complex problem, there is a solution that is simple, neat, and wrong.” Instead of facing the pain of reality, and having the humility and vulnerability required to develop to the level of dealing with the challenges, these executives retreat into pseudo-community, and wait for these same problems to reappear as a crisis. Crisis can temporarily catalyze instant developmental growth; the organization temporarily galvanizes as an authentic community in which hyper-learning is practiced. But this is only

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temporary; when the crisis passes, the organization and its people return to their underdeveloped selves and capacities. The crisis provides only pseudodevelopment. While using crisis as a stop-gap measure to temporarily enable collective intelligence, authentic hyper-learning, and higher levels of human development—these leaders do not permanently and enduringly progress their organizations into the next level of development. They, and their organizations, remain in over their heads, until the next unplanned and unwanted crisis compels them into another round of pseudo-development, and temporary adequacy. There are executives who respond developmentally to being in over their heads. These leaders can face the reality that they and their organizations are in over their heads, and they want to do something about it. They have the humility to seek help. They are easily recognized when interactions start with a dialog about what problems and opportunities keep them up at night, and those for which they have no answers. These are the leaders who find resonance with a process that develops themselves and their organizations.

Leadership Levels and Psychological Frameworks Over the past hundred years, there has been an evolution through “Four Forces” of psychology (Valle, 1989). As described in the Foreword to this text, these are the Psychoanalytic, Behavioral-Experiential, Humanistic, and Transpersonal Psychologies. In his article, “Toward Transpersonal Learning Communities in Business” (Gozdz, 2000), Kaz described the co-evolution of these schools with three worldviews that underlie a given view of organizational culture and leadership. Based on that framework, the levels we’re calling Stage I and II Leadership are a product of the Psychoanalytic and Behavioral-Experimental schools of psychology. They correspond with a Western-Orthodox, empire culture, worldview. Stage III leaders and organizations were shaped by the Humanistic school of psychology. Douglas McGregor’s The Human Side of Enterprise (1960) introduced the distinction between theory X and Theory Y leaders and organizations, which became the basis for a shift in thinking for many managers over the decades since. Abraham Maslow’s (1965) hierarchy of needs has also been a strong grounding force for Stage III Leaders and Organizations. This period of development in psychology corresponds with a Postmodern and Constructivist worldview paralleling the emergence of the systems and ecological views that saw the interconnection of things and people.

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In order to support the development of Stage IV Leaders, a Transpersonal Psychology is necessary, with a worldview built on the concepts of interconnection and a common, perennial philosophy (Huxley, 1944). Peck (1978) described the fundamental assumption underlying transpersonal psychology and its corresponding worldview in The Road Less Traveled: … I make no distinction between mind and the spirit, and therefore no distinction between the process of achieving spiritual growth and achieving mental growth. They are one and the same (Peck, 1978; 11).

What follows is a brief description of each of the stages. Their developmental process is described in detail in the Practices section.

Stage I Leaders and Organizations Stage I, Self-Centric leaders are governed by ego and self-interest. They are unprincipled yet they exert a great deal of effort managing the image they project. What they do in public and private varies greatly. They have one way for people to do things, and their relationships tend to be selfserving and manipulative. This way of being has led to a style of management based on authoritarian, one-directional communication. Stage I managers tend to believe that their employees are less competent, lazier, and that they work solely for income, or their own self-interest. Under these assumptions, management involves authoritative and coercive hands-on direction and supervision, with systematic oversight. Stage I teams and organizations/institutions are governed by a unidirectional mindset and behavior pattern. They act in an egocentric, self-interested, and ad hoc manner. Team bonding is routinely based in fear. These leaders, teams, and organizations typically lack diversity of thought, take unprincipled actions, are manipulative with facts, data, and reality, and are self-serving. They routinely have toxic and controlling cultures that are persondependent, and lack a systemic, procedural, or metrics-based approach to productivity.

Stage II Leaders and Organizations Stage II, Achieving-Expert leaders support conformity to clear organizational rules and norms. Achieving-Expert leaders and managers tend to view employees as means to an end. They lead by mastering expert knowledge and technical solutions, their communication is characterized by debates about who is right and wrong, and they expect deference to

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hierarchical chains of command and high conformity with established rules and norms: “we can co-exist as long as you accept that you are not right; I am.” Achieving-Expert leaders build teams and organizations that have highly structured cultures with clear rules, where conformity, along with deference to hierarchical authority, is expected. Individuals contribute to team solutions from isolated parts-to-whole, as functional experts, with a technical mindset. For teams led by Stage II managers, the rules of communication and conduct are tacitly socialized to the structured culture, and workers are explicitly taught to function in clearly defined roles as team and group members. Communication and behavior tend to occur at a surface level only, constrained by unexamined social norms that typically inhibit openness, vulnerability, and authenticity. Workers’ expectations are nested within the paradigms, cultures, and social norms of the organization, and for Stage II groups and teams, these are typically assumed, unexamined, and a function of the leader’s developmental level. With time, these team norms become the basis for bonding among team members as they work together to accomplish the objectives set by their Stage II, Achieving-Expert leader. An organization at this stage of development expects unambiguous leadership by all in positions of higher authority. Communication is characterized by discussions of right and wrong, winning and losing. These organizations build systems that manage people and processes. They have quantified procedural measures of production that promote efficiency and continuous improvement.

Stage III Leaders and Organizations Stage III, Servant leaders use their power to develop self and others. They treat workers not only as means to an end, but also as end unto themselves. People under their supervision grow more autonomous and selfauthoring, and are more likely to help others become servant leaders. They are systems thinkers with a whole-to-parts perspective. They acknowledge uncertainty, deal with ambiguity, and seek dialog when problem-solving. They also recognize their unconscious biases and embrace diversity. Abraham Maslow’s description of self-actualizers applies to Stage III leaders (Maslow, 1970). He identified fifteen characteristics of these “good” but not “perfect” human beings: x more efficient perception of reality and more comfortable relations with it x acceptance (of self, others, nature)

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spontaneity; simplicity; naturalness problem centering the quality of detachment; the need for privacy autonomy; independence of culture and environment continued freshness of appreciation mystic and peak experiences Geminschaftsgefühl (broadly, a sense of community, of mutually interdependent relationships) x deep and more profound interpersonal relations x a democratic character structure (placing no importance on superficial differences between people, such as differences of gender, race, social class, or age) x discrimination between means and ends, between good and evil x philosophical, unhostile sense of humor x self-actualizing creativeness x resistance to enculturation/acculturation; the transcendence of any particular culture (Maslow, 1970; 153-172) These self-actualizing Stage III, Servant Leaders can indeed be flawed in many ways, but they aspire more routinely to improve themselves and to make it possible for those around them to thrive. The teams and organizations Servant leaders support are inclusive and use organizational influence and power to include and develop others. The workforce is therefore empowered and self-directed, with collaborative governance, operating most effectively in data- and experience-based learning communities. Stage III, authentic-community groups monitor group health by paying attention to the quality of: x group communication, x routines of governance, x problem solving, and x decision-making. Such groups routinely move into and out of conditions of healthy communication and group dynamics. Group norms and behaviors regularly adapt and realign to sustain a strong spirit of community. In traditional, hierarchical organizational structures within which the leader is functioning as a Stage III, Servant Leader, such management approaches tend to lead to one of three outcomes: x the team or group isolates, becomes a “bubble,” or what some people call “cultural islands” within the organizational structure, buffered x x x x x x x

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by the group’s Stage III leader and dependent on that leader’s ongoing presence to maintain the “bubble;” x the team or group is short-lived, allowed to exist only for a specific project, and then disbanded or dissolved; x the team or group becomes the core of a new paradigm for the organization, forming a model for other groups, and, ultimately, the organization as a whole.

Stage IV Leaders and Organizations Stage IV, Self-Renewing leaders are aware of and depend upon a source greater than themselves and their ego to help them grasp their situation. Also called “wise” or “phronetic” (from the Greek term meaning “wisdom applied to practical purposes”) leaders, they are … leaders that have the ability to recognize the constantly changing situation correctly, and quickly sense what lies behind phenomena to envision the future and decide on the action to be taken … [phronetic leadership is] the ability to determine and undertake the best action in a specific situation to sense the common good (Nonaka and Takeuchi, 2019; 53).

They pursue excellence as a disciplined way of life and embrace their own imperfections. They encourage development and self-renewal in themselves and others, as lifelong learners, seeking innovation, acknowledging paradox, embracing the reality of their experience, and pursuing scientific discovery with a heuristic, passionate, and disciplined approach. As Nonako and Takeuchi put it, Our research shows that the use of explicit knowledge and tacit knowledge isn’t enough. Leaders must also draw on a third, often forgotten kind of knowledge, called practical wisdom. Practical wisdom is tacit knowledge acquired from experience that enables people to make prudent judgements and to take actions based on the actual situation, guided by values and morals. When leaders cultivate such knowledge throughout their organizations, they will be able not only to create fresh knowledge, but also to make enlightened decisions (Nonaka and Takeuchi, 2019; 21).

Such leaders take their current knowledge and authority as true but partial; they recognize that employees’ ability to handle the necessary deconstruction and reconstruction of assumptions is a foundation of knowledge-creation, and they encourage learning processes in an environment of authentic community that makes it easier for employees to do so.

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Figure 5-3. The Dynamic Relationship Between Stage IV Leaders and Their Organizations.

Stage IV teams and groups therefore apply constant development and adaptation to the requirements of the moment. They not only track what is happening in and around the organization, but they also come up with novel solutions, based on shared information across organizational boundaries. They recognize that workers’ ability to handle the necessary deconstruction and reconstruction of assumptions is a foundation of knowledge-creation, and they encourage learning processes in an environment of authentic community that makes it easy for employees to do so. Such teams and groups are rarely found in conventional organizations, because they require a level of freedom and support that top-down, hierarchical leadership cannot usually sustain. Stage IV teams require Stage IV wise, or phronetic, leaders, and authentic community structures to sustain the hyper-learning, knowledge-creating activity that defines them.

CHAPTER 6 DISCOVERY & KNOWLEDGE CREATION

Michael Polanyi (1958; 1966) offered a set of concepts—heuristic discovery, tacit knowledge, and personal knowledge—which provided a rich explicit epistemology for several aspects of Peter Senge’s (largely tacit) learning organization theory and practice that was described above (Senge, 1996). Senge’s praxis of personal mastery and individual, as well as organizational, generative learning developed also from Fritz’s (1984) concept of structural tension, which overlaps significantly with Polanyi’s structure of personal knowledge and the development of heuristic tension (which he often experienced as passion) Polanyi (1958; 1966). As quoted in the Foreword, above (and again below), Polanyi saw the individual’s heuristic passion as a driving force in knowledge creation: Scientists—that is, creative scientists—spend their lives in trying to guess right. They are sustained and guided therein by heuristic passion. We call their work creative because it changes the world as we see it, by deepening our understanding of it … (Polanyi, 1969; 143).

Polanyi also held that there are two kinds of problem-solving: x systemic, which is an algorithmic and purely rational act; and, x heuristic, which is a combination of active research preparation and passive periods of incubation (Polanyi, 1958). He proposed to resolve the classic Meno’s paradox (“If you know what you're looking for, inquiry is unnecessary; if you don’t know what you’re looking for, inquiry is impossible; therefore, inquiry is either unnecessary or impossible”) by relying upon dynamic intuition and what he called “grace” to lead to scientific discovery without a defined problem (Polanyi, 1958). His process of heuristic discovery involved seven steps, derived here from Kaz’s doctoral dissertation (1999): 1. Preparation 2. Igniting Passion 3. Observing and Immersing 4. Letting Go

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5. Indwelling and Illumination 6. Crystalizing and Prototyping 7. Testing and Verification Joseph Jaworski, working with Kaz in preparing to write the book Source (2012), modified that into six steps: 1. Solitary intimations arise 2. Emergence of heuristic passion driven by universal intent 3. Surrender and sense of service 4. Indwelling as a dynamic force of comprehension 5. Retreat and sudden illumination: the gift of Grace 6. Testing and Verification (Jaworski, 2012). In Polanyi’s model, then, the researcher using a heuristic discovery process relies upon a deeper wisdom, a contemplative process of indwelling, to discover the essence of the experience under study more completely. Charles S. Peirce has said, “Scientific inquiry is accordingly a dynamic exercise of the imagination and is rooted in commitments and beliefs about the nature of things” (Peirce, 1992). He thus distinguishes between the application of the scientific method to prove something and the heuristic process of discovering something. Michael Ray’s studies of creativity in the management of businesses at Stanford Business School demonstrate the importance of this kind of heuristic discovery. In their book, Creativity in Business (1986), Ray and his co-author, Rochelle Myers, describe the results of the series of interviews of effective entrepreneurs in a set of guidelines for ongoing effectiveness, which include: x If at first you don’t succeed, surrender. x Destroy judgement; create curiosity. x Pay attention. x Ask dumb questions. x Do only what is easy, effortless, and enjoyable. x Don’t think about it. x Ask yourself if it’s a Yes or a No. x Be ordinary. x Be in the world but not of it (Ray and Myers, 1986). These guidelines, which they call heuristic principles, emerged from what entrepreneurs and CEOs identified as best practices, and offer a very different model of organizational leadership from the traditional norm. They encourage a focus on the human essence, an allowing of human foibles as potential opportunities, and a fundamental trust in the creative process. Such trust, these leaders have found, is a fiduciary act. It depends upon firm beliefs. It is far from any skepticism in itself; nor should it ever give

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rise to skepticism. Its ideal is the discovery of coherence and meaning in that which we believe exists, in and through and beyond our normal awareness. Implied in this understanding, and explicit in Polanyi’s work, is a transpersonal dimension of being that leaders can tap into. When leaders are part of authentic community, they can enter Turner’s liminal state and have access to a deeper wisdom and understanding. Polanyi called it grace, the source of discovery (Polanyi, 1958). Half a century later, working with Kaz, Joseph Jaworski called it “Source” (Jaworski, 2012). The heuristic discovery process in an organization, then, requires a community of learners who are willing to explore states of being and feeling that are not usual within the corporate context. It requires the personal involvement of the researcher in the topic being studied. As Moustakis (1990) put it, To understand something fully, one dwells inside the subsidiary and focal factors to draw from them every possible nuance, texture, fact, and meaning. The indwelling process is conscious and deliberate, yet it is not lineal or logical. It follows clues wherever they appear; one dwells inside them and expands their meanings and associations until a fundamental insight is achieved (Moustakis, 1990; 24).

Heuristic inquiry, then, is not a process of proving or disproving causality, but instead seeks to “discover the nature of the problem or phenomenon itself … heuristics is concerned with meanings, not measurements, with essence, not appearance …” (Douglass, 1985; 42). As such, heuristic inquiry, and its resulting discoveries, becomes a form of knowledge-creation: new knowledge about the people and the focus of their inquiry emerge in the process.

Knowledge-Creating Communities According to Michael Polanyi, “We can know more than we can tell” (Polanyi, Michael, 1966, p. 4). In his books Personal Knowledge (1958) and The Tacit Dimension (1966), he differentiated “tacit” knowledge from “explicit” knowledge. Ikujiru Nonaka (1984) adopted Polanyi’s (1969) heuristic philosophy to explain organizational knowledge creation, a concept very similar to Senge’s (1994) organizational learning. To further develop his theory, Nonaka embraced an Eastern pragmatic philosophy as well as a Western philosophical base (Nonaka, 1995). His dynamic theory of knowledge creation holds that tacit knowledge and explicit knowledge form an

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escalating spiral across increasing greater ontological dimensions (individual, group, organizational, and inter-organizational) over time. Drawing on Nonaka’s (1984) and Polanyi’s (1966) work described above, we can talk about knowledge in Ken Wilber’s (1986) four quadrants, as in the illustration below, which depicts how organizations iterate between the tacit and explicit dimensions of knowledge to promote organizational learning.

Figure 6-1. The Dynamic Movement Between Individual and Collective Tacit and Explicit Knowledge.

That which we know, or operate from, without being really aware of it may be called “tacit knowledge.” Tacit knowledge includes a person’s worldview, paradigm, and the hidden assumptions of organization’s culture that perpetuate unconscious bias. That which we know we know and can verbalize, or represent graphically easily, may be called “explicit knowledge.” Such knowledge is readily shared and understood by all involved. Stage I and II leaders over rely on explicit knowledge, and fail to acknowledge the tacit dimension of the knowledge used at work. Stage III and IV Leaders are more able to acknowledge the tacit dimension of an organization’s knowledge foundation, and in doing so can facilitate the Socialization, Externalization, Combination, and Internalization (SECI) (Nonaka, Teyama, and Noberu, 2000) as tacit-to-explicit, and explicit-to-tacit knowledge conversion processes. They can also recognize the tacit dimension of cultural assumptions and are therefore more likely to be able to surface, acknowledge, and transform them.

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Knowledge Creation and Communitas In their influential book The Knowledge-Creating Company (1995), Ikujiro Nonaka and Hirotaka Takeuchi applied this distinction between tacit and explicit knowledge to the practice of organizational learning, which they see as a knowledge-creation task. In their later work, The Wise Company (2019), they elaborated on their experience that learning and knowledge creation occurs in multiple forms of community, which in Japanese is referred to as ba (Nonaka and Takeuchi, 2019; Nonaka, Teyama, and Noberu, 2000). Such sharing of knowledge is only possible in an environment of safety and openness, and so occurs only in Stage III and IV organizations. This means that it takes Stage III and IV Leaders, what Nonaka and Takeuchi call “wise” or “phronetic” leaders (2019), to build knowledge creating communities that can promote organizational learning, knowledge creation, and innovation at scale. The illustration below offers a metaphor for explaining the process by which they do so:

Figure 6-2. Elements of the Communal Knowledge-Creation Process: Heuristic Discovery in a Living System.

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Each aspect of the process depends on clarity, understanding, and the ability to share knowledge, on the part of leadership at all levels. To a large extent then, the process of forming generative learning communities and the process of heuristic discovery are the same. They are an individual and collective movement inward and beyond to access and connect with the Absolute, and ultimately to co-create with the Absolute some form that approximates the ideal. Any time we act, we answer one or another philosophical question. When the philosophical foundations underlying an organization are made conscious and explicitly become part of managing, leading, and doing business, they become an operating philosophy. When that operating philosophy supports the authentic learning community, organizational knowledge creation is possible. Authentic learning community, the ongoing experience of communitas, is therefore the necessary social condition that fosters communal heuristic discovery, or, to use Peirce’s (1992) word, abduction, in a group. Such communities exist in stark contrast with traditional organizational structures where there are strong norms among executives to maintain an image of personal control, of being on top in every situation, of knowing the answers. For many, the ability to project such an image was instrumental in their rising to senior positions. Yet the consequences of maintaining that facade are considerable, both individually and organizationally. They result in lack of authenticity, lack of trust, and ultimately lack of collective capacity to discover, learn, or develop new possibilities. The task is not to move into permanent communitas, however. That is a stage, a part of the process of becoming. And, like all such stages, it’s necessary, but not sufficient. The task is to find and maintain a way to enhance the capacity for discovering, learning, and creating new knowledge at every level of the organization. This requires a mix of learning approaches, honoring existing sources of knowledge, both within the organization and within the individuals who comprise it.

Fostering Hyper-Learning – A New Heuristic Passion In their articles “Becoming a Hyper-learning Community” (Hess and Gozdz, 2018) and “The Digital Age Requires a New Way of Working” (Hess, and Gozdz, 2018), Ed Hess and Kaz Gozdz have described how advances in human technology are driving business organizations to become hyper-learning communities. Hyper-learning supports the fastpaced process of learning and unlearning at a scale that is required to enable

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rapid corporate transformation (Hess, 2020). Building hyper-learning communities entails identifying and deconstructing the inhibitors to the highest levels of human function, co-creating conditions where community members agree to pursue shared meaning and purpose through their work. Hyper-learning communities are workplaces where advanced technologies are delivering operational excellence in a maximally disruptive environment. The value that human beings bring to work in these environments is less their physical labor or knowledge base—two areas where robots and machines will outperform humans over time (Hess and Gozdz, 2018)—but more in their potential to learn, create, discover, innovate, work in community, generate collective intelligence, and create new knowledge. The key to authentic communication, engagement, and learning in authentic community is the key to hyper-learning. While giving and receiving feedback is an appropriate form of communication in structured organizations, in a developmental organization listening empathically and with deep concern for group members creates an environment where community members can engage with an open mindset and disarm their defense routines. This happens because, in an authentic community, human dignity is highly valued and as a result, group members are more comfortable sharing their need for personal and professional development, and their “crazy” ideas. When these barriers to learning are broken down, each person’s innate desire to learn and discover begins to show itself. Creative solutions that might have been stifled are shared and enhanced in an atmosphere of excited co-creation. Over time, this way of working together becomes normal, and each new challenge is met with innovative approaches that far exceed the capacity of the old “rule book” in their effectiveness.

PART TWO. METHODOLOGICAL FRAMEWORK: BUILDING THE DUAL BOTTOM LINE

CHAPTER 7 NOT A LINEAR FORMULA, BUT AN ORGANIC, NON-LINEAR FRAMEWORK

To transform a traditionally run hierarchical organization into a Dual Bottom-Line Learning Organization (DBLLO), one needs, not a step-bystep linear process, but rather an organic process that can be started from any of its phases and moves through numerous iterations. The method for transforming various types of institutions into DBLLOs must be agile and adaptive to be applied across a wide range of organizational types. It entails growing an organization’s capability to focus equally on developing its profitability or mission goals with a co-equal focus on its human development goals. And, to promote the growth and development of individuals and organizations, the method must meet them at their current level of development before progressing them on toward their next higher developmental stage of performance. The DBLLO method that we’re using begins with three essential elements: Goals, Culture, and Learning Practices. Specifically: x Organizational and Development Goals related to Mission and/or Profitability of the Enterprise. What does the organization need to accomplish over a specific time frame? x Cultural Context. At what stage of development are the organization and its leaders operating now, and to what level of development do they need grow in order to accomplish its goals/mission? x Organizational Learning Practices. What individual, team, communal, and organizational learning practices will be required to enable the Dual Bottom-Line Approach to profitability or mission accomplishment and human workforce development?

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Figure 7-1. Elements of the DBLLO Transformation method.

This simple model symbolizes the relationship among the three essential elements of the DBLLO formation method: Profitability or Mission Goals, Cultural Context, and Learning Practices. The method focuses on Profitability or Mission Results co-equally with developing the organization’s culture and workforce. The chevrons at the center represent Organizational Goals or, in specific cases, intended Content, while the whole of the interior space of the oval represents the Cultural Context or developmental maturity of the organization and its workforce. The six boxes at the periphery represent the individual and organizational Learning Practices necessary to developmentally transform the organization’s cultural context. Each organization requires practices specific to their level of development and need. The diagram below depicts the levels of scale at which the method is applied, and at which the shifts occur. Each oval in this diagram represents a level of the organization. Each one requires its own application of the DBLLO method, including cultural context, goals, and learning disciplines—and each one experiences a transformative shift in the process. This means that transforming individuals, communities, institutions, and society is isomorphic across the whole. A single transformation of fundamental assumptions occurs at multiple levels of scale. It is the same transformation playing out at individual, group, organizational, and enterprise levels.

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Figure 7-2. Levels at which the formation model is applied.

This isomorphic transformation occurs only when all management judgements are based on conscious and unconscious philosophical foundations. The organization’s set of goals or mission is contextualized by the developmental stage of the institution’s culture. The organization’s ability to perform is determined by the current stage of development of the individuals, teams, communities, organizations, institutions, and the enterprise as a whole. As we explored in the Systems Thinking section above, an organization, being a human system, operates as a whole, and any change in the quality or activity of a part changes the whole.

CHAPTER 8 APPLYING THE FRAMEWORK

The specific activities in the DBLLO Framework can be summarized as: x Building Community and Maturing the Cultural Context x Articulating an Organizational Operating Philosophy x Discovering Dual Bottom-Line Business/Mission Value Proposition x Progressing an Operating and Governance Model x Designing Learning Infrastructure and Scaffolding x Balancing Education and Alignment with Devolution of Power These activities are nonsequential; their relationships are mapped in the following illustration and described more fully in the next sections of this chapter.

Figure 8-1. Elements of the DBLLO Framework and Their Relationships.

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Generative Interviews Set the Field Organizational, strategic, and cultural renewal requires leadership. The executives and managers need to understand not only how to do what they’ve been hired to do, but also to understand, and encourage development of, a clear mission and set of value priorities of the company as a whole. To this end, before anything else, they are encouraged to consider: x What about the organization’s essence should not change, both now and into the future? x What are its organizational learning disabilities and cultural habits that inhibit adaptive thinking and cultural change? As these questions get answered, a “social field” begins to be set for the large-scale change to follow, which will be described in some detail in the next section, on Practices. Getting there, though, requires breaking through the norms of workplace communication. This is the function of the Generative Interview. It’s normal to start an intervention with interviews of key people, but the need here is to go beyond the usual issues: “the system,” or the organization’s problems, or their opinions on what is wrong and what should be done. What’s needed to set the field for the fundamental transformation we’re aiming for is a series of interviews that penetrate to the depth necessary to begin releasing the latent forces for change within and among the people involved. The importance of this practice cannot be overstated. It’s not just that such questions begin to build a relationship at a deeper level than the typical workforce interview; we all have personal stories and those stories affect all our perceptions and judgements, but we rarely have the opportunity to explore the ways our personal beliefs and aspirations shape our view of work-related problems and challenges. Beyond that, when we give permission for people to share their personal story, they can begin to see the connections between their personal dilemmas and how core business issues reveal themselves—which often is the key to allowing something new to be created. In time, the interviews become dialogues, using David Bohm’s (1996) definition: interactions in which, by sharing from the heart and listening from the heart, whole new possibilities can emerge. As this process is used at various levels in the organization, seeds are planted and permission is granted for the kinds of heuristic discovery that will enhance both the people and the productivity of the organization. Thus, the field is set to begin a transformative process that can move a hierarchically-structured organization, of whatever size, toward an authentic, knowledge-creating community.

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Building Community and Capacity A fundamental axiom of the DBLLO Framework is that community building is culture building. From the first generative dialogues, the community-formation process is set in place. The DBLLO method therefore entails maturing societal, organizational, and team cultural contexts through a series of community building experiences that cultivate communitas, collective intelligence, and communal heuristic discovery at every level, through every interaction.

Principles of Community The DBLLO Framework enables conditions for developmental growth by introducing community-building as outlined by Scott Peck (1987). The principles of community originally derived by Peck’s Foundation for Community Encouragement entail a mindset derived from putting the DBLLO Principles of Community Practice into action. These principles are: 1. Communicate with authenticity and integrity. 2. Deal with difficult issues. 3. Welcome and affirm diversity. 4. Relate with dignity and respect. 5. Balance holding on and letting go. 6. Tolerate ambiguity and anxiety.

Capacity Building through Community Building Capacity for the large-scale transformation from a traditional organization to a DBLLO is built by teaching the organization’s executives and other leaders to become community-building leaders using these principles. These leaders then learn to become educators who can teach transformation skills to the executives and managers in line leadership positions. In the process they must decide: x How is the renewal process scaled and led? x Who will facilitate and lead the culture change? While it will seem at first as if only a few people are involved, the answers to these questions are, ultimately, everyone, all the time, in every interaction. Ultimately, then, through every interaction, every meeting, every planning session, the process of building community becomes the daily praxis of, first, the leaders, and then the full membership, of the organization.

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Clarifying the Enterprise Operating Philosophy “Organization design is widely misconstrued as moving around boxes and lines,” said Hanover Insurance Company CEO Bill O’Brien (in Senge, 1990; 343). “The first task of organizational design concerns designing governing ideas, the purpose, vision, and core values by which people will live” (in Senge, 1990; 344). The essential task for the emerging learningcommunity based organization is, then, to define those elements. Traditional organizations are not designed for facilitating and supporting the ongoing developmental growth of executives and the workforce. To become a DBBLO, however, the organization needs to align its metaphysics with a new cultural context; DBLLO leaders lead one step ahead of the organization’s current stage of horizontal and vertical development. As Dean Brown (2003) expressed in explaining applied metaphysics in a previous chapter, “We become what we behold.” Organizational metaphysics, according to Jaworski (2012), formats and enables experience which, in turn shapes the social, scientific, and individual reality of the workforce. The process follows Harman’s (1988) dictum, quoted above and in Jaworski’s Source (2017; 147); “By deliberately changing the internal images of reality, people can change the world” (Harman, 1988; 8). Establishing an organization’s Operating Philosophy, then, is a practice of deliberately articulating an organization’s metaphysics or worldview. Doing so begins by identifying its fundamental reason for its existence, its Essence. The Essence of an organization may be codified in its stated purpose, or may be understood tacitly. The Operating Philosophy also includes the organization’s core values, which are identified as standards for behavior for all its members. Finally, the organization’s core axioms and principles are codified into the Operating Philosophy. The focus at this stage is not on what the organization produces or sells, but rather the reason it exists and how it will act over decades, possibly centuries, to come. Specifically, this phase in the process asks: x Why the organization exists, and why highly developed and motivated people will want to contribute their effort to the enterprise? x the What of the organization—its current value proposition and strategic and operational differentiation; and x the daily tasks of business that are the How the Why and the What are achieved. The resulting set of organizational Purpose, Core Values, Principles, and Axioms will be the basis for building and governing the organization across

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generations of management and the numerous transformations required in years ahead as the business environment evolves. Because the process includes everyone in the organization, from the CEO to the least-paid worker, it also provides the context for individuals in the organization to learn to conduct business uniformly, to align their actions and development with that of the organization as a whole. The company’s purpose, vision, values, and principles are clarified, and then become the underpinnings from which a “corporate curriculum,” or learning plan, is created.

Discovering a Business/Mission Value Proposition that Inspires Excellence Single Bottom-Line Organizations focus almost exclusively on profitability or mission goals. In single bottom-line organizations, the workforce is treated as means to an end, rather than as ends unto themselves. While becoming a DBLLO, though, leaders examine their mission/business Value Proposition and determine that the organization has goals and or a mission which are unattainable without developing its workforce to its full human capacity. This requires senior management to define their organizational goals or mission from a dual bottom-line perspective. They must really take a look at what they are doing as an organization— specifically the economic engine and organizational strategy of the whole. Establishing and clarifying what the mission goals are or what the company produces and sells at this moment in time provides a basis for developing procedures and curriculum. Recognizing that this value proposition will change over time, a set of criteria are established for future evolution. It involves exploring the past and the present, and the inner aspirations of the leadership, asking questions like: x What is the core activity of this organization? x What is this organization trying to create? x What does this organization want to accomplish? Excellence inspires human development. Human development, in turn, inspires innovation and the creation of new knowledge. This process helps the organization identify business objectives worthy of the full human capacity of its members.

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Designing Learning Infrastructure and Scaffolding As the cultural context of an organization is progressed, its infrastructures are re-designed for learning and development. When they’re in place, DBLLOs operate as both learning organizations and as learning communities, as the diagram below illustrates.

Figure 8-2. Learning Communities Interacting with Learning Organization Structures.

Across the organization, at every level, the discovery of knowledge is everyone’s job. Recognizing that innovation is as important in Operations as it is in Finance, or as in a Product Development group, business units learn to cultivate and lead knowledge-creating communities. For an organization to scale and absorb new knowledge quickly, everyone needs to learn the principles of discovery. To progress along these lines, therefore, an organization needs to transition from infrastructures, systems, procedures, and processes that are designed for standardization and efficiency to having these same structures be designed to scaffold learning and development. Educators are well versed in the practice of scaffolding (GCU Blog, 2022), whereby a More Knowledgeable Other (MKO), a teacher, guides a

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learner through a systematic process of learning. The person doing the scaffolding creates conditions where the learner first gets the assistance to accomplish the new task with help, and then assistance is removed gradually until the person can master the new knowledge on their own. When we look through a learning organization lens, we can see that the workplace is filled with daily tasks that are opportunities for everyone to learn and everyone to teach. In this mindset, every job or task carries with it some degree of developmental potential. Instead of leaving people who have mastered a job in place to do it repeatedly, we encourage them to pass that job onto others, while they go on to learn something new. Scaffolding thus entails a set of practices where everyone learns and everyone teaches, through a careful orchestration of organizing those who already know tasks to function as teachers and mentors for those who have yet to learn those tasks. Scaffolding involves a practice of organizing daily workflows so that tasks are not only accomplished excellently, but also these same tasks are used as the curriculum for developing the workforce. In this way, scaffolding is the practice that enables the implementation of development at scale.

Progressing a Governance Model Governance, broadly speaking, deals with how organizations allocate power and money—specifically, how power, authority, money, and decision rights flow in an organization. Dual Bottom-Line Learning Organizations (DBLLOs) reflect on and adapt their governance practices to facilitate the development of their workforce. In a DBLLO, a fundamental design criterion for governance is that, ultimately, people direct their own work at every level. As a result, organizational governance decision rights are distributed as close as possible to where the work is being conducted. In the DBLLO Framework, all stages of organizational development retain a hierarchical configuration, although the role and functionality of the hierarchy differs at each stage. Building on a foundation of authentic community at every level across the enterprise, governance practices balance hierarchical and communal governance in structured and unstructured formats. Thus, while typical Stage I and II, single-bottom line organizations are governed exclusively by traditional hierarchies, Stage III and IV DBLLOs add communal governance, often called “governance councils” to the hierarchical structures. As increased knowledge and capacity are valued at every level in the organization, assumptions of hierarchical leadership begin to weaken.

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Managers learn how to facilitate and share decision-making processes. Workers learn what their part is in the larger enterprise and how to teach others what they do. Authentic community, an essential condition for effective learning, begins to be the norm, and people begin to “own” the consequences of their actions—leading to higher quality contributions at every level, as the emerging paradigm of learning in communities with high performance standards leads to a systemic shift toward alignment and accountability. The result is that power begins to be distributed among groups and communities rather than deferred to upper management, thus enabling upper managers to focus on their own individual and organizational development tasks. The role of senior management begins to shift from controlling the organization by telling others what to do and how to do it, to serving, renewing, aligning with, and maintaining an enterprise-wide focus on the organization’s agreed-upon Operating Philosophy, continually clarifying for others the purpose, core values, axioms, and principles that define the organization. This process hinges on managers’ development as leaders. If they remain in Stage I or II, they will not be able to participate in, much less facilitate this process. Authoritarian governance is incompatible with building a learning community—except in the most extreme, high-pressure crisis situations where one voice is needed to guide the others. Through an ongoing series of dialogues, providing feedback and coaching, Stage III and IV leaders can develop to the point where they educate and scaffold their workforce and so improve performance through more competent and selfdirected workers. These organizations have come up with a hybrid: hierarchicalcommunity governance. They’re using councils, putting people into decision-making learning communities within the organization, where they ask each other “how can we lead hierarchically and communally as appropriate to each situation?” Councils are not the only possible structure, but they’re a significant advancement over the purely hierarchical rule which was previously in place in most of those companies. The following illustration shows a symbolic developmental progression of Stage I, II, III, and IV governance, from left to right.

Figure 8-3. Developmental Progression of Governance Structures, Stage I through Stage IV.

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As illustrated above, Stage I organizations are ad-hoc and person dependent, and the leaders use the hierarchical structure to wield unilateral power at their discretion across the entire organization. Stage II organizations are routinely organized in a “hub and spoke” manner where a person with greater hierarchical power over subordinates organizes them into “silos” that report and interact with them directly. Stage III and IV organizations and cultural contexts organize their governance process in service of their subordinates, utilizing parallel forms of structured and unstructured governance as the situation demands. Stage III organizations have cultural contexts in which communal based council governance parallel their traditional hierarchies. In this way, they can work communally on systems issues that transcend hierarchical boundaries. Advanced Stage IV organizations organize their leaders into networked communities that can act communally within the organization and with external partners. These hierarchical and communal governance models allow the organization to build an enterprise-wide operating model that facilitates organizational learning and knowledge creation.

Balancing Education and Alignment with Devolution of Power Corporate empowerment practices routinely fail to promote development within an organization’s cultural context because decision rights are often assigned based on hierarchical structures, without a balanced focus on educating and scaffolding the workforce so they have adequate knowledge to make knowledgeable and informed decisions. The DBLLO Framework entails practices to balance workforce education, development, and growth with the systematic enterprise-wide shifting of knowledge and power to the levels in which responsibility is maintained. Over time, fewer and fewer decisions are made by individuals and, while enterprise-wide strategic decisions may occur within seniorexecutive level councils, procedural and operational decisions are more likely to be delegated to councils and teams engaged in those operations. This gradual devolution of decision rights from Stage I and II centralized models to Stage III and IV blended decision-making structures occurs in coordination with the implementation of an advanced governance model and the implementation of a system of scaffolding development at scale. Thus, the DBLLO Framework focuses on coordinating the timing of educational and scaffolding practices with the devolution of power and decision rights closer to where the work is done.

CHAPTER 9 STAGES OF DEVELOPMENT

Moving through the stages of individual and organizational development is a significant undertaking, routinely lasting years, as each level of leadership in the enterprise learns how to scaffold their peers and subordinates. And, as they do so, the organization moves through the stages in development described in Part One of this text and illustrated in the chart on the following page. It’s important to note that an enterprise cannot skip over developmental integration. For example, a Stage II company cannot just skip through Stage III and move on to Stage IV. This is because many of the Stage III practices are essential to moving into Stage IV and, literally, everyone thinks differently in the culture of a Stage IV learning-community organization.

Transforming Views and Habits The transformation from traditional views of the organization to experiencing Enterprise-as-Community involves letting go of the organization’s typical pseudo-community habits—e.g., holding back information while appearing to be open, sharing enthusiasms but not fears, praising or criticizing without meaning it, etc.—that most people experience in traditional organizational settings. Those habits have led to a lack of safety and trust in organizational communication and collective work efforts. While such pseudo-community habits are routinely dropped in times of crisis or a push to meet an important deadline, they quickly return as normalcy is restored. For continued learning, knowledge creation, and effective knowledge transfer to happen, therefore, community cultures with new standards for interaction, based on authenticity, safety, inclusiveness, and openness must be established. This, like any transformation, means entering into the unknown, that liminal state we talked about in Part One, and as the framework illustrated above unfolds, new fears and insecurities need to be addressed—a response that takes the community-building process to a new level.

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Figure 9-1. Stages of Leadership and Community Development.

This phase requires further learning on the part of managers-asfacilitators to support new levels of individual, communal, and enterprise developmental processes. Consultants need to work intensely with management and team leaders through this process to reduce fear and

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hesitation at the manager level, which leads to an increased sense of safety among the workers, and that has the added benefit of increasing productivity across the organization. These transformed communities then enhance the performance of highfunctioning individuals and groups by promoting their capacity to validate their own and others’ differences as strengths. What had once been a fixed structure based on outdated and outmoded management assumptions and practices that limited the enterprise and its capacities, is now a dynamic, fluid, flexible, high-performance organization, ready to thrive in a constantly changing marketplace and operating environment.

PART THREE. PRACTICES: BUILDING DUAL BOTTOM-LINE LEARNING ORGANIZATIONS

CHAPTER 10 A CONSISTENT PROCESS OF DEVELOPMENT

Conventional workplaces are not typically vehicles for human development. Traditional performance management relies on the premise that people are given tasks for which they are already developmentally prepared and should be able to complete at a high level of performance. In moving toward a developmental culture, performance management becomes something else entirely: it involves everyone teaching and learning from one another, developing new abilities and understandings along the way. In this way, DBLLOs progress everyone in the organization toward their next higher developmental level. Development throughout the organization begins with the senior team’s understanding that they are the cap on the organization’s development and that organizational development requires their commitment to developing themselves. Their open mindset and behaviors will then encourage and empower their executive team to engage in a new enterprise design, which then will encourage other levels in the organization to do so. As they unite behind this initiative and pursue it as a strategic business advantage, their expectations for excellent business/mission performance become a pull for the development of everyone at every level of the organization. This movement happens through an ongoing, iterative process involving five kinds of activities on the part of the consultant and corporate leadership:

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Figure 10-1. The Interrelated Elements of the DBLLO Creation Process.

These activities are used together to build an environment where executives and employees across the workforce develop their full capacities through their daily work, and therefore enhance the productivity of the whole organization. The DBLLO practices described in this section are specific individual, team, community, and organization-wide activities that translate the DBLLO Framework into tangible and relevant actions, specific to each context and stage of development.

CHAPTER 11 FIELD-SETTING PRACTICES

As the process of systemic change is begun, one of the essential practices is setting a field of potential for the new system to come into place. This occurs through iterative rounds of the generative interviews described in a previous chapter. We are setting the field for fundamental transformation, so explorations that penetrate to the core fundamental assumptions of the organization’s leadership and culture are necessary (Jaworski, Gozdz, and Senge, 1998). This in-depth approach begins to release the latent forces for change within and among a strategic coalition of leaders who will be the core of the transformation process. Specifically, field-setting is a practice of building a social environment where the qualities of dialog, communitas, and hyper-learning are catalyzed by a select group of organizational leaders up and down the organizational hierarchy, thus forming a strategic coalition, a microcosm with which to plant the seeds of enterprise-wide development. Developed in the 1990s at the MIT Organizational Learning Center, in collaboration with Joseph Jaworski and Peter Senge (Jaworski, Gozdz, and Senge, 1998), field-setting readies the organization and its workforce by meeting with a group of forward-thinking leaders at their current level of development and beginning to scaffold them in their zone of proximal development to a new level of leadership. Field-setting begins with the CEO and other senior executives, using a heuristic discovery process to identify the organization’s most developed leaders. Discovery is enabled through a snowball networking method whereby peers identify organizational leaders who show a propensity for learning, leadership, and open-mindedness, and who are known for their ability to change culture within the organization. After identifying a strategic coalition of leaders at multiple levels of the existing hierarchy, the field-setting practice is extended to individuals lower down in the structure. The individual sessions follow David Bohm’s (1996) guidelines for dialogue, in preparation for larger generative group dialogues in which these coalition leaders come together to reflect on the key issues raised in the oneon-one confidential dialogues. Following these sessions, they begin meeting with the organization’s most senior executives as a whole.

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The primary goal with these initial, generative dialogues is to discover zones of proximal development—opportunities to see and step into the next higher level of development—for individual leaders by establishing a quality of relationship, reflection, and thinking that rarely occurs among busy managers. Each session can easily last up to a half day—and often, after the first meeting, executives who were skeptical about taking the first scheduled three hours ask when the next session can be scheduled. Laying the groundwork for these sessions, it’s made clear that none of the material will be used for attribution and that painstaking care will be taken to preserve complete confidentiality. Also, they are informed that these dialogues are in preparation for larger dialogues in which those interviewed will come together to explore the questions and issues raised in the private sessions. What’s needed is to set the field for fundamental transformation, so interviews that penetrate to the core fundamental assumptions of the organization’s culture and leadership are necessary. To this end, some of the topics that might be explored in the initial phase include: x where they were born and raised; x something of their parents’ history; x what it was like growing up; where they went to school; x how they ended up doing the type of work they do. x how they came to hold their current position in the company. In the second phase of the one-on-one generative dialogues, participants are asked to reflect on their own development and that of the organization. They’re asked about the organization’s learning disabilities and defense routines as well its core strengths. They are also asked to consider the organization’s cultural artifacts, espoused values, and tacit fundamental assumptions. Finally, each dialogue explores issues each participant feels might be relevant to the organization’s present and future development. Throughout the process, attention is paid to how each group’s assessment of the organization varies, as this will inform other practices. The number of people and sessions varies according to an organization’s size and complexity. Over time, a qualitative thematic analysis of the interviews is conducted, and feedback on key themes is used to generate authentic and hyper-learning groups within the initial strategic coalition of leaders. Then these discoveries are shared with the groups and organizations that they bring into the process. The field-setting process catalyzes a wider organizational set of community building practices.

CHAPTER 12 COMMUNITY BUILDING AS A PRACTICE

DBLLOs are designed, governed, and sustained as organizations functioning as communities and networks of communities. This is possible only through sustained cultural contexts in which learning, development, and hyper-learning become possible. M. Scott Peck’s (1987) four stages of community-making are used to transition an organization out of their historic pseudo-community patterns, which are based on polite, but inauthentic communication and lack of trust, into authentic communities—both in working groups and at scale. Having set the field for profound transformation with a strategic coalition of leaders, those same leaders identify groups up and down the organizational hierarchy who are ready to become authentic communities, to experience communitas, in which connection, trust, and mutual support are the norm. Following Peck’s (1987) process, we lead these groups out of pseudocommunity by surfacing their differences and leading them into a stage of chaos where the many individual mental models and differences are surfaced but not resolved. We then facilitate the group through Peck’s next stage, group emptying, by asking individuals and the whole group to let go of their attachment to their own way of thinking and be open to and inclusive of other people’s mental models. When the members of a group empty themselves of their individual mental models and pre-conceptions and are inclusive of each other’s differences, the stage of authentic community emerges across the group; this happens spontaneously, unaided by the group’s facilitators. In alignment with Scott Peck’s (1987) description, we define an authentic community as a group of individuals that, regardless of the diversity of their differences, has been able to accept and transcend those differences for the sake of a common purpose. They communicate authentically, openly, vulnerably, and transparently, while solving problems through collective intelligence.

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Skills and Competencies for Community-Building The core competence in community building has three aspects, as shown in the diagram below. Within these three core competencies are ten skills to develop. These skills can be used when someone is participating in, but not leading, a group, or when that same leader is facilitating building community in teams or organizations they are supervising or managing.

Figure 12-1. The Competencies Required for Community Building.

To sustain the Community-Building practice, then, leaders learn to: 1. Facilitate Inclusivity – inclusivity of self and others is the foremost and central practice in community building. While the hallmark behavior of an authentic community is that it is inclusive, inclusivity is not an absolute in organizations, and leaders may need to struggle with the boundaries of who and what to exclude as they pursue an organization’s specific purpose and mission. 2. Facilitate Commitment – community building requires facilitating the commitment of individuals and teams to transcend their individual differences as they move through the Four Stages of Community Building. 3. Facilitate Consensus – collective intelligence is facilitated in community through the formation of consensus in appropriate circumstances. Community consensus can be encouraged by asking relevant questions, avoiding slipping into old habits of voting, and

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by disregarding roles, position power, and rank during communitybuilding sessions. 4. Facilitate Realism – leaders encourage authentic communities to discover a collective truth or reality, which is in contrast with groupthink and unconscious bias. Communities are humble in that they consider whether something may be true, or only partially true, in relation to the purpose and mission of the greater whole. 5. Facilitate Contemplation – facilitating authentic community requires that a group take the time to contemplate the whole, as well as the parts, of its situation, challenges, or concerns. Groups learn to pause and to mindfully reflect on the group’s health and effectiveness while examining individual and collective behavior. 6. Facilitate A Safe Place – community-building leaders facilitate psychological safety by modeling and therefore encouraging selfdisclosure, personal vulnerability, and listening with openness, rather than advice giving. 7. Facilitate A Laboratory for Personal Disarmament – an authentic community becomes a laboratory for personal disarmament when group members are encouraged to experiment with self-disclosure while listening to others without blame or judgment. 8. Facilitate A Group that Can Fight Gracefully – leading communities entails facilitating a civil examination of conflict and individual and group differences through collective contemplation and emptying of preconceptions and barriers to listening and learning. 9. Facilitate A Group of All Leaders – the formation of authentic community is facilitated by encouraging every group member to act as a leader and to take full responsibility for the group’s formation and performance as a community. 10. Facilitate A Spirit – a palpable, felt sense of human connection with others, an esprit de corps, arises instantly in community during times of crisis, but communal spirit is routinely lost as a group faces new challenges and higher orders of mission complexity; so, to be sustained as enduring attribute of work, community building leaders need to facilitate the spirit of community by design. Leaders in the organization learn these skills from each other, through the scaffolding process—each one teaching another, and learning from others as well. However, to implement these practices requires more than simply learning new skills; a shift in worldview and self-image is needed. This requires both humility and the courage to move through the discomfort that often emerges in the learning and in the practice. In particular, a leader must develop:

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Self-awareness o Of strengths and developmental challenges o Of tendencies to be the expert or “boss” o With openness to feedback from others x Self-discipline o To choose to ask and listen rather than tell o To encourage others rather than do it alone o To observe rather than react when confronted with a change All of which are qualities, and usually the developmental edge, of Stage III leaders (described in Part One, Theoretical Framework, and more fully in a later chapter). x

Guidelines and Behaviors for Community Building Scott Peck (1987) created the Foundation for Community Encouragement as a non-profit corporation that taught the guidelines, processes, and principles of authentic community. The DBLLO guidelines and principles used to lead groups through the four-stage community building process were adapted from Peck’s (1987) original work. These guidelines and behaviors are: 1. Focus on the task of becoming an authentic community capable of hyper-learning before engaging the group’s organizational goals. 2. Avoid generalizations while communicating; speak for yourself in “I” statements. 3. Treat everyone as a leader who is equally responsible for the community. 4. Include yourself and others equally; avoid excluding others; avoid cliques, tribes, and sub-groups. 5. Watch your air time—not too much or too little; speak when moved and say your name when you speak. 6. Commit to transcend pseudo-community; deal with difficult issues and allow the chaos that may ensue. 7. Respect silence—being authentic in community requires selfreflection and mindfulness. 8. Be honest with the whole group. 9. Respect individual and group confidentiality to build psychological safety. Communicating and behaving in accordance with these guidelines makes it possible for all participants to function effectively within the group, and in the process, develop their own character and emotional maturity. When these principles and practices are in place, the nature of the

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interactions between people shifts, the barriers that have prevented authentic communication and knowledge sharing are effectively dissolved, and the community is evolved to new levels. Members experience a sense of interconnectedness, and with it a safety that encourages their own exploration and development. Individual and communal learning and development are encouraged, and the organization-as-a-whole functions more effectively. The following table illustrates how some workgroups introduce community-building behaviors:

Figure 12-2. Guidelines for Operating in Authentic Community.

CHAPTER 13 DIALOGUES FOR DEVELOPMENT

It could be said that the community learning process across the organization is built through one-on-one and group dialogues in which participants are encouraged to listen deeply for both personal and professional learning opportunities. These dialogues create relationships (between peers or between mentors and mentees, supervisors and subordinates) that form and maintain learning communities at every level of the enterprise. They promote authentic community that builds humility, trust, vulnerability, and shared group openness, while integrating teaching and learning. We call these Dialogues for Development, and they play a pivotal role in coaching, giving feedback, holding people accountable, and building a supportive community. They have three requirements: x Create a safe environment of authentic community. x Lead from a learning mindset, so as to facilitate development. x Set clear goals, in line with business strategy and achievable through daily work. When performance management is understood through the lens of Dialogues for Development, a review becomes a teaching and learning opportunity. Participants explore questions like: x How can we help each other (manager to subordinate or peer to peer) expand our skillsets and level of development? x How can we help a person or group transform their mindsets as well as their skillsets? x What beliefs and mental models are inhibiting our development? These explorations of underlying causes and processes mean that participants in Dialogues for Development experience a shift in their fundamental assumptions about their sense of self, their identity, and their worldview—while they learn new skills and knowledge. Such learning is, in fact, development, and the Dialogues for Development process is designed to make it an organization-wide practice. Through this process, leaders don’t just give performance feedback or coaching to a person or group that is struggling with a goal or a role, nor do they step in to fix their problem. Rather, they scaffold their development by

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finding out what is missing in knowledge, resources, or mindset, and building a bridge for the people they’re working with to cross a developmental gap—a bridge between what is now known and what is needed to succeed in the future.

CHAPTER 14 SCAFFOLDING PRACTICES IN THE ZONE OF PROXIMAL DEVELOPMENT

Traditional organizations rely on the assumption that people should be given tasks for which they are already developmentally prepared. In doing so, the traditional business paradigm enterprise is unconsciously, but proactively, limiting and constraining individual and collective development. It is reducing the productivity of the worker by encouraging appearance-based achievement rather than truly enhanced performance. In contrast, DBLLOs operate on the fundamental assumption that, in addition to tasks for which they are fully capable, people should be supported to perform tasks that are just beyond the current reach of their performance. In other words, DBLLOs are designed to lead the process of human development through the practice we described in the chapter on Building Community and Capacity, called scaffolding. While this is a new concept to business organizations, it’s not new to educators. The scaffolding practices used by DBLLOs originated with the Russian educational psychologist Lev Vygotsky’s sociocultural theory (1978), that held that learning is first and foremost a social process, and that we learn best in community with the help of more knowledgeable others (MKOs). In DBLLOs, peers and community members, as well as a person’s supervisor or partner, can play the role of an MKO. There are always some tasks that other people know and can teach, regardless of their title and role. The term scaffolding is a metaphor taken from construction, where workers build a scaffolding structure to support a wall on a building that will later stand on its own, without the scaffolding. As the building structure takes shape the scaffolding is removed, having served its purpose. Similarly, workplace scaffolding entails an MKO putting in place various elements of support for a learner that will enable the learner to acquire the knowledge they need to accomplish a task, first with assistance and then, after adequate practice, the scaffolding is removed, and they are on their own. At this point, the learner is able to practice their new level of capability independently.

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Any scaffolding practice requires knowledge of the teaching practice called the zone of proximal development (ZPD). As defined by Vygotsky (1978), ZPD is the distance between the actual developmental level as determined by independent problem solving and the level of potential development as determined through problem-solving under adult guidance or in collaboration with more capable peers (Vygotsky, 1978; 86).

It’s the gap between what a learner is currently capable of doing on their own and what they can accomplish with the assistance of an MKO. And that is where the MKO’s focus needs to be. In designing a particular teaching/training strategy, the MKO needs to be aware of what the learner is ready to take on. Managers and members of the workforce are taught how, when they act as MKO for a colleague (or even their boss), they must 1. Assess the learner’s current level of capability; and 2. Design their teaching/training approach to meet that level and move it forward. Assessing the learner’s current level of capability starts with observing what is currently being done in that arena, and how. For example, if the learner is being scaffolded in an area of financial management or in setting a machine to take on a new operation, the MKO would start with what the person has already mastered before teaching them a new task. Then, as the learner progresses, the MKO can introduce new tasks that are at higher levels of capability. Becoming a DBLLO means that development is not limited to specific training, occasions, or events, but is ongoing with safe, open, authentic processes that enhance the performance of all involved. It takes, therefore, an entire organizational community to practice scaffolding on a large scale. The organization’s cultural context can be designed for ongoing learning by creating, within communities, teaching opportunities and practices, what Peter Senge called learning infrastructures (Senge, et al., 1994). Such infrastructure and governance practices channel and distribute specific work to learners and to MKOs who then act as teachers for a particular development task. This means that development at scale begins with the senior team’s commitment to their own process of learning and teaching. Senior executives accept that they need to learn and to demonstrate learning practices in equal balance with scaffolding and teaching practices. Their open mindset and behaviors will model, encourage, and empower their executive teams to practice the methods with their own teams. Then

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scaffolding, teaching, and learning, are thoroughly embedded in and integrated throughout the organization.

CHAPTER 15 NOTHING EXTRA – LEARNING AS A FUNCTION OF DAILY WORK

Nothing Extra is a large-scale organization transformation approach that uses the organization’s daily work—the problems and opportunities in the everyday flow of work—as the curriculum and means to transform the organization and develop the workforce. When implemented effectively, the Nothing Extra approach enables the organization to transform itself using Daily Work as a learning infrastructure, without adding any additional effort or cost to the operation of the company. The ongoing work of the enterprise provides the learning tasks. Formally or informally, business imperatives set the curriculum. For example, mission accomplishment, strategy formation, manufacturing excellence, product development, commercial excellence, and overall human development have all been used to deploy the Nothing Extra approach at the enterprise level. Nothing Extra applies equally to all four levels of scale in a business: x enterprise (parent company, global scale); x organizations (divisions, operating units, functions, regions, segments); x communities (executive teams, project groups, councils, work teams, cells) and x individuals (executive directors to the least paid part-timers). In Nothing Extra, a carefully structured balance of support and challenge scaffolds individual and collective development for higher accountability and increased performance standards across the enterprise. And, as with all methods, there is a learning curve. Beginners and Intermediates have to invest in learning the method, but once learned at an Advanced or Mastery level, the results are consistent and reliable—and teachable. This process scaffolds individual and collective development through an ongoing training curriculum based in the everyday operating, strategic, and business activities that sustain the organization. The learning design and architecture structures learning into the ongoing, daily work of everyone in the organization, which is then scaffolded by supportive types of learning and development events.

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The Nothing Extra approach builds a learning infrastructure that scaffolds this kind of development without additional training programs or management functions. Daily Work becomes the means to educate staff; every job or task is considered an opportunity for someone to learn and someone to teach. Everyone in the organization is considered a leader who needs higher levels of business and technical competence and gets those through the regular operation of the business. In moving toward a developmental culture, performance scaffolding involves a community where teaching and learning from one another is expected throughout daily operations. The goal in a DBLLO is to build a cultural context where managers and workers develop their full capacities through scaffolding their daily work. Daily Work is defined as work conducted at various levels of scale that creates value while facilitating the development of the individual, community, organization or enterprise completing the work. With repetition, doing one’s Daily Work leads to enhanced capacity. Development via Daily Work is recognizable by the trail it leaves: enhanced capacity to create new value-creating realities for the organization. The principles of learning and development in Daily Work can be summarized in the following points. x Learning can be challenging yet is safe. x The process of learning can be nonjudgmental and accepting while the content of one’s knowledge is subject to systematic, rigorous, and critical evaluation. x The process of development assumes we are whole and intact even as we need to grow. x Personal mastery is the cornerstone of effective leadership, collaboration, and action: know thyself. x People are hardwired for learning and development—beneficial hormones are released in the process and they are healthier and happier as a result. x Learning is developmental when a person not only knows more, but they also become more. x Shared knowledge aligns individuals and coordinates action—an alternative to control. x Power—individual and hierarchical—is therefore differentiated from knowledge. x People are treated as equals and with respect as human beings, and different and unequal in knowledge, perspective, and experience. In the Nothing Extra approach, planning for what a person or group needs to learn in order to accomplish a task based on what they currently

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know is a standard business judgment on resource allocation. This entails viewing work not only in terms of cost and productivity, but as an opportunity to teach and to learn, simultaneously including work-flow and capacity-building in the equation. As a result, Nothing Extra is a framework for designing each person’s work as organizational development, with minimal added cost or waste.

Tasks and Outcomes Integrating these methods into organizational operation encourages people to move to their full human capacity through a daily practice that is generally called “being at work.” These methods improve the economics of the organization by focusing human resources on accomplishing the organization’s goals, rather than setting aside time and resources merely to prepare people for their next-level assignment. Defining the organization’s goals is part of the developmental process. It starts with the CEO and, under that leadership, moves through the executives on to operations. The CEO begins the process of definition and then, through participation in various learning communities, shares and expands on the initial piece until everyone in the organization has helped to shape those goals, and so buys into them. Each member of the organization participates in the process of defining, clarifying, and refining what they’re here for. But how do you think about a really big complex organization in such a way as to come up with such a clear definition? Dean Brown (in personal conversations with Kazimierz Gozdz, 19962003) saw deeper realities in highly complex situations and, using his concept of metaphysics, we can define any organization in terms of: x Why – the essence or unmanifest ideal of the organization, captured in the operating philosophy; what can last over the next 100 years; x What – the capabilities and assets, both physical and intellectual that can provide a strategic differential advantage; the organization’s presence in the world; x How – what specific kinds of activities they engage in to express the organization’s operating philosophy in action. The Why defines the essence and how it’s being manifested. It’s the purpose and values which underlay the ongoing operation. As Dean Brown put it, “Essence doesn’t develop; essence just is” (in personal conversations with Kazimierz Gozdz, 1996-2003). As we explored in the chapter on metaphysics, in the implicate order which underlies our experiential, or explicate reality (Bohm, 1980), the organization is Essence, which is

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unchanging. In the explicate, it’s the imperfect expression of its Essence, so is subject to entropy and is decaying. In the vision, whether held by individuals or shared, it already has form; so, by envisioning the possible, people begin to experience the Essence. Holding that Essence then allows for the metanoia, the shift in thinking, that is necessary to slow or reverse the decay. If a company can focus on the Why, over time they’ll develop a deeper metaphysic, a clearer sense of their essential meaning and reason for being. Simplifying it, we ask, “What is it that this place is truly called to be?” The What is the domain of structure, identity, and probability. It’s the capabilities, core competencies, strategic differential advantage, knowledge, and physical assets that make a sustainable, competitive advantage for the organization. If your company or institution will be here for a hundred years, you can assume the economic engine will need to be renewed routinely. The How is the day-to-day translation of every task into expressions of the organization’s Why, its operating philosophy. One company captures this as “One Context (Operating Philosophy); 10,000 Tasks.” Now, if the organization is to maximize both its human and economic resources, we want to never waste an ordinary business task, a How, on just accomplishing something; we need to support the metaphysics, the values we stand for, by the specific actions we take. The question is, therefore, “Does this How reinforce the Why and the What?” To help make answering this easier, the How can be broken down into five types of practice, which apply across all businesses: x Business analytical practices. x Technical-skill practices. x Self-development practices. x Leadership (everybody’s a leader; some work at the level of the whole) practices. x Community-building practices. If you’re participating in some activity that supports the What and Why, that’s the How. We ask: “How is this activity contributing?” “Am I acting purposefully?” The behaviors used to complete every action either reinforce or undermine the Operating Philosophy, connecting the organization’s How to its Why. When this connection is clarified and implemented for every How, there is no wasted activity—which is the state we call Nothing Extra. One result of Nothing Extra is that we structure jobs so someone in the organization can teach it and someone can learn it. This is part of why DBLLOs use the Nothing Extra approach, wherein learning and development are cultivated within and extracted from an

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organization’s tasks. This is how development at scale is made actionable. Learning and development occur at the location of work in real time, following these principles of transformative education: x Scaffolding and teaching by a More Knowledgeable Other (MKO) occur as close to the actual site of work as possible. x Teach using experiential learning and self-discovery. x Use actual work problems and issues to teach theory and practice. Make the learning highly relevant to the learner. x Create time for critical reflection. Balance the need to reflect deeply on issues against how much content to cover. x Balance the elements of challenge versus support. x Support mindset and behavior change. Teach interior and exterior dimensions of knowing. When everyone is treated as a leader using these Nothing Extra principles, development of the workforce becomes possible on a large scale.

CHAPTER 16 DUAL BOTTOM LINE PERFORMANCE MANAGEMENT

Conventional performance reviews are typically private conversations between a supervisor and a subordinate. Those reviews can help employees know where they stand in terms of their growth needs, but administering feedback to a subordinate who struggles to meet their goals about how near or far from meeting their goals they are, is usually not enough guidance to promote healthy development. We have found that learners in Dialogues for Development experience a shift in their fundamental assumptions about their sense of self, their identity, and their worldview. This practice improves performance and spurs learning and development through daily work. It inspires growth in various modalities, such as training and development programs, on the job training, and situations where growth and development are expectations of daily work. Dialogues for Development therefore play a pivotal role in coaching, giving feedback, holding people accountable, and building supportive community. They take place in any environment where work, learning, and teaching take place. The practice of Dialogues for Development is also a communitybuilding practice. It teaches group members to recognize one another’s differences and to support each other’s development through daily work. The overarching intention is to have everyone learn and everyone teach through three core practices. Whether supporting one-on-one dialogues or teaching in groups; whether onsite or online, the following components are essential: 1. Create a Safe Environment – By following the guidelines for psychologically safe authentic communities, the group establishes a safe environment for hyper-learning, where a dialogue about each person’s developmental horizon happens with empathy and through deep listening from a state of emptiness. 2. Lead by Scaffolding – In a group, members discuss and affirm the organization’s goals, their team’s developmental horizon, and their

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own individual growth needs. The group leader starts by disclosing their personal need for development, and how they may be constraining the team’s performance. They highlight the connection between business/mission execution and human growth. Group members then agree to scaffold one another through daily work and request any outside support. 3. Set Clear Goals – The members of the group clarify and document their development goals, which are achievable through daily work and aligned with the organization’s mission. The group’s overall goals are then prioritized and measured. In the DBLLO, therefore, a performance system based on dialogue becomes a vital component in supporting learning and growth. A robust dialogue on performance builds the trust necessary to enable collective intelligence in organizations; one-on-one and group performance feedback builds trust and rapport, which stems directly from the fulfillment of operating goals. It therefore sustains the alignment between strategy, culture, governance, and organizational structure. As it progresses, a dual bottom-line enterprise invents performance metrics that reflect its commitment to both human development and financial/mission performance. In order to do so, new perspectives on the measurement of critical intangibles require both quantitative and qualitative treatment. In addition, the enterprise must create the underpinnings for individual, communal, and organizational growth and development plans. All the while, the organization remains focused on its economic goals, and being flexible enough to respond to the continually changing marketplace and operating environment, as its members create value through their learning, development, and knowledge creation and transfer. What results is a new Enterprise Operating Model, implementing the new Operating Philosophy and Value Proposition, containing the newly defined organizational Purpose, Core Values, Principles, and Axioms. As it is more fully implemented, the new model reduces the cost of running a business while maintaining an ever-higher set of performance standards, individually and collectively.

CHAPTER 17 HORIZONTAL AND VERTICAL DEVELOPMENT: THE CORE OF IT ALL

Harvard psychologist Robert Kegan (2000) distinguishes informational learning from transformative learning. Learning aimed at increasing our fund of knowledge, at increasing our repertoire of skills, at extending already established cognitive capacities into new terrain serves the absolutely crucial purpose of deepening the resources available to an existing frame of reference. Such learning is literally in-formative because it seeks to bring valuable new contents into the existing form of our way of knowing (Kegan, 2000; 49).

In contrast, there is a deeper form of learning, referred to by Jack Mezirow and his colleagues (2000) as transformative learning. It is a category of learning that, instead of just adding knowledge to our existing frame of reference or current developmental level; rather it reconstructs our developmental frame of reference itself. Kegan (2000) noted that transformative learning is: … learning aimed at changes not only in what we know, but changes in how we know have an almost opposite rhythm about it and comes closer to the epistemological meaning of education (“leading out”). “Informative” learning involves a kind of leading in, or filling of the form. Trans-formative learning puts the form itself at risk of change (and not just change but increased capacity) (Kegan, 2000; 49).

One specific form of transformative learning is to get beyond the WOS model that most of us have been enculturated into and develop the Systems worldview described earlier in this text that is an essential characteristic of leaders in DBLLOs. Based on the work Kaz did at MIT with Jaworski, Kofman, and Senge (1998), a set of guiding principles for this kind of transformative learning may be stated as follows: x An expansive view of human nature allows for genuine learning, o People have integrity, o Human beings have a deep desire to search for truth,

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o People genuinely have a commitment and drive to learn. x Organizations that can learn as a whole community will thrive ongoingly, o Build a culture of learning and knowledge creation o Understand and nurture learning communities o Legitimate change by adopting and internalizing new ideas and practices. x Genuine systemic change is emergent; it cannot be controlled, but rather invited, and is waiting to be uncovered o Establish the intent to listen and respond to the whole o Lead reality as it continually unfolds o Support enabling conditions with the power of hierarchy. x Embrace the primacy of the whole. Applying these principles in a learning-organization setting leads to a fundamental shift in metaphysical, cultural, and human developmental assumptions—a very different kind of learning than is usually practiced in organizational settings. Acknowledging this difference within and across the developmental stages, learning occurs in a continuum of informational or technical learning through both transformative and developmental learning. Our DBLLO model refers to this continuum as horizontal and vertical development. Within a stage of development, horizontal development refers to adding knowledge, skills, and capabilities to an entity’s (individual, team, community, organization, enterprise) existing stage of development; while vertical development refers to transformative developmental learning, whereby our metaphysics, worldview, and the form of our way of knowing is transformed to include more complexity. As a person progresses through the stages of horizontal and vertical development, their worldview becomes more comprehensive and inclusive. According to Wilber (2001), each progressive stage of development transcends and includes the prior stages. One of the fundamental characteristics of a learning organization is the recognition that everyone is a leader. Clearly, this perspective is helpful, but not all leaders are functioning at the same level of development. In fact, the development of the organization as a whole is limited by the developmental level of the leaders. Briefly, as we explored in the Leadership chapter, and as illustrated in the table on the following page, they may be operating in one of several stages: x Stage I, Self-Centered Leaders; x Stage II, Achieving-Expert Leaders;

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x Stage III, Servant Leaders; x Stage IV, Self-Renewing Leaders. The stages of development are defined by the progression of growth and complexity of a person’s character, worldview, identity, ego, core-values, sense of self, frame of reference and emotional, social, cognitive, and spiritual complexity as they mature. As a person progresses through the stages of vertical development, their worldview becomes more comprehensive and inclusive; they attain a more expansive stage of development that alters their perception and experience of the world around them. At each stage, their prior capabilities and skills are included but transcended by higher-order leadership capabilities.

Figure 17-1. Leader Development Stages.

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Stage I Leaders Stage I leaders are either very early in the journey of becoming leaders or pathologically stuck in this stage. Healthy individuals transitioning to first time roles with hierarchical power swiftly move beyond this stage. By contrast, leaders pathologically stuck at this stage of development tend to operate from “fear and control” throughout their careers, attempting to make up for their lack of development by dominating others. They often have experienced parenting or work situations based on authoritarian “power over” dynamics and so their development gets stunted at a remedial stage of growth, regardless of their age or life experience. Individuals given new levels of authority and power can unwittingly fall into a controlling and dominating orientation. New Stage I leaders therefore need to be taught the skills and mentored into more mature methods of holding power and authority. For leaders who are willing to learn and grow, a combination of scaffolding and role modeling suffices to advance them to higher stages of leader development. Being in an environment where more advanced stages of leadership are modeled can reduce the length of time a new leader remains in Stage I and so reduce the potential for harmful impacts within the organization.

Characteristics of Stage I Leaders Stage I Self-Centric leaders who are closed and unmotivated by development frequently have little awareness of the people around them except as means to an end. They are governed exclusively by self-interest. They focus on their façade, the pretense of “looking good,” rather than outgrowing their immaturity as a leader. They tend to be unprincipled, yet they exert a great deal of effort in managing the image they project. They have one way to do things, and to achieve that way, their relationships are self-serving and manipulative. As a result, what they do in public varies greatly from what they do in private. Stage I leaders therefore tend to create Stage I, Self-Centric Teams and Organizations/Institutions, which are governed by a unidirectional mindset and limited behaviors. They act in an egocentric, self-interested, and ad-hoc manner. These leaders, teams, and organizations routinely lack diversity of thought; they take unprincipled actions to achieve unilateral ends; they are manipulative about facts, data, or reality, and are self-serving. Over time, Stage I organizations exhibit toxic and controlling cultures that are person-dependent and lack a systemic, procedural, and metrics-

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based approach to work. Team bonding, if present in a Stage I organization, is therefore routinely fear-based.

Ideal Operating Arenas for Stage I Leaders This is a level of leadership that works well only in short-term situations, or in the early stages of promoting an individual with a particular, unique, performance, approach, or persona—as in a musician or actor. It’s often a new leader’s first approach to leadership, lasting only as long as it takes to realize that other peoples’ ideas, feelings, and contributions make a positive difference in achieving even greater results than the Stage I leader had considered possible.

Developmental Processes to become Stage I Leaders The processes for becoming Stage I leaders are embedded as standard training in the authoritarian or personality-driven management of most businesses and institutions. It’s an effective way to get something done in limited, crisis-driven environments, but comes with a cost for all involved. It’s also an essential stage of development that must be outgrown for the organization to function beyond the capacity of the individual leader.

Stage II Leaders The best Stage II, Achieving-Expert leaders have strong technical/analytical tendencies and tools, and they take great pride in being experts at their job and achieving efficient results. Organization—linear thinking, quantification, and rational and methodical analysis—is the strength, and limitation, of Stage II leaders. The teams and groups working under them tend to bond through competition and a drive to win over others. They tend to accomplish their targets by burning people out. They routinely create highly formalized work rules in exclusive, socialized teams, forming hierarchical reporting silos with standardized organizational procedures that are to be followed unilaterally. They support conformity to organizational rules and norms, and pride themselves on their own expertise rather than the expertise of their teams. When they lead with expert-technical solutions, their communication is characterized by debates about who is right, and they expect deference to hierarchy in lieu of a meritocracy.

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Individuals at the Achieving-Expert stage of development contribute to team solutions from an isolated parts-to-whole perspective, as functional experts, with a technical mindset. They tend to be siloed, limiting interactions outside of their sphere of influence. Although they may espouse McGregor’s (1960) Theory Y management approaches, their action strategies tend to be more in alignment with Theory X practices. An organization at this stage of development expects unambiguous leadership from higher authorities. Communication is characterized by discussions of right and wrong, winners and losers. These organizations build systems that manage people to standardized work practices and social conformity. They have quantified procedural ways of working that promote efficiency and continuous improvement.

Ideal Operating Arenas for Stage II Leaders Engineering, research, and other highly-procedural work settings where safety and/or replication of processes are important and encourage the development of Stage II leaders. Also, in situations in which a few people are “experts” and the rest are dependent on those peoples’ knowledge, Stage II leadership tends to become the norm.

Essential Skills for Stage II Leaders As leaders move through vertical development programs and support processes, they pull their teams and organizations with them. Moving from Stage I to Stage II levels of leadership development therefore leads to a transformation of the organization from Stage I dysfunctional teams to the bonded teams and pseudo-communities of Stage II organizations. This shift is seen among maturing leaders within many different types of organizations who have been through traditional leader development programs.

Objectives & Processes for Developing Stage II Leaders x x x x x x

Advanced technical training in a specific discipline or process Project Management Recognition of ineffectiveness of Stage I leadership approaches Recognition of potential in Stage II leadership practices Understanding of teams Communication of complex processes, objectives, and assessments

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Horizontal Development for Stage II Leadership The development of Stage II leaders involves traditional training in project management, management-by-objective, and Theory Y management practices. Through these trainings, evolving Stage II leaders learn: x Clear expertise in one or more fields related to the work at hand; x Top-down communication practices; x Understanding of and ability to communicate the nature of a project and the methodology to accomplish it; x Ability to state clearly what is intended and express clearly what is working and what is not; able to express feelings; able to see what motivates others; x Ability to explain aspects of the field of expertise so that others can follow the procedures; x Project Management methods and processes; x Use and communication of metrics of success/accomplishment.

Vertical Development for Stage II Leadership In addition to the above skill-based development, the process of developing Stage II leaders involves letting go of certain tendencies of Stage I leaders and developing new levels of confidence as leaders. This process requires: x Self-awareness o Of tendencies toward fear and control and their limitations o Of history with authoritarian leadership styles o Of potential for increased effectiveness o Learning Process ƒ Model effectiveness of Stage II Leadership approaches ƒ Reflect on past opportunities and how they might have been handled x Reduction of fear of individual failure o Learning Process ƒ Reflect on past failures and successes ƒ Reflect on actual cost of failures “What’s the worst…” ƒ Use Dialogues for Development to explore the benefits of failing x Comfort with Teams o Learning Process ƒ Team development exercises on site and off

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ƒ Use Dialogues for Development to identify strengths and areas to be further developed ƒ Study of other leaders and leadership guides.

Stage III Leaders Stage III, Servant leaders use the power of their position to develop self and others. Those under their supervision grow more autonomous, selfauthoring, and more likely to help others become servant leaders themselves. They are systems thinkers with a whole-to-parts perspective who practice McGregor’s (1960) Theory Y, humanistic management. The teams and organizations they support are inclusive, and they use their organizational influence and power to include and develop others. Under their direction, the workforce is empowered and self-directed. Servant leaders acknowledge their own unconscious bias and embrace diversity in their teams and organizations. They acknowledge uncertainty, deal with ambiguity, and seek dialog when problem solving. They govern collaboratively and operate most effectively in reality-based learning communities.

Ideal Operating Arenas for Stage III Leaders x Situations in which expectations come from outside and leaders can listen and ask for input on what’s needed from their group, team, or crew to meet those expectations. x Situations in which Systems Thinking and an understanding of the complexities of the whole is essential for effective action. x Long-term relationships in which high degrees of trust is necessary and a sense of authentic community is required to facilitate team performance.

Essential Skills for Stage III Leaders Moving from Stage II to Stage III leadership requires a profound change of worldview and attitude toward one’s peers, teams, employees, and other workers. Empathy and reflection characterize Stage III leadership practices. These are reflected in ways that tend to move organization members toward authentic community. At this point, innovation and creativity are greatly enhanced as people feel safer and try new things. So, in addition to the basic communication and clarity skills of Stage I leaders and the project

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management skills of Stage II leaders, Stage III leaders need to develop skills in the following areas: x Personal Reflection x Deep listening x Systems Thinking x Community Building

Objectives & Processes for Developing Stage III Leaders The Stage III Servant leader has developed a sense of empathy for subordinates and colleagues, has learned to listen with the heart as well as the head, to be open to other peoples’ input, and to bring wisdom from other sources into the work place. This openness and support encourage members of the organization to share at a deeper level and offer more possibilities for accomplishing agreed-upon goals—all of which encourages formation of authentic learning communities. Moving from Stage II to Stage III leadership therefore requires a profound change of worldview and attitude toward one’s peers, teams, employees, and other workers. This change is reflected in the operation of the organization in ways that tend to move it to Stage III, authentic community, where hyper-learning begins to become possible.

Horizontal Development for Stage III Leaders x Systems Thinking: o Able to “see things whole;” o Able to discern inter-connected parts; o Recognizes that a change to any part or connection affects the entire system and understands that systems behavior is an emergent phenomenon that cannot be determined by inspection of its parts and structure; o Understands that the structure of a system determines its behavior and that, to change a system’s gross behavior, one must change its structure; o Able to identify feedback loops that define a system’s major dynamic behavior; o Understands that complex social systems exhibit nonlinear, counter-intuitive behavior and identifies major patterns (Peter Senge’s Fifth Discipline Field Guide (1994) is a useful manual). o Deep Listening and Bohmian Dialogue (Bohm, 1996) processes:

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o Able to pay full attention to the speaker and reflect what has been said; o Able to discern what has not been said, including mental models in self and others; o Able to observe and express feelings; able to see what motivates self and others. x Community-building methods and processes: o Recognizes the developmental levels of community; o Understands the conditions that foster each level (Scott Peck’s The Different Drum (1996) is a useful guide); o Able to identify key intervention points to encourage movement to a higher level of community and implement them appropriately. Moving through these processes—either through a formal training structure, or using scaffolding and Nothing Extra—leads an individual to a place where their work is an act of service and the people around them are empowered.

Vertical Development for Stage III leaders The ancient Greek aphorism that the key to everything was to “Know Thy Self” is the focus of the Stage III leader’s developmental process. In particular, they’re beginning to understand their Identity, Ego, Self, and Masks, and their Hot Buttons—the trigger events that pull them off their center and out of alignment with their mission. To that end, the process of development for the Stage III leader involves the following explorations: x Self-Discovery – Who is my Self? What is my Work? What am I here to do at this stage in my life? x Constraints and Creativity – What patterns from my past have kept me stuck, or hesitant to try something new or create something that might be imperfect? x Hot Buttons – When do I blow up? When do I want to run away? What words or situations pull me off guard and off center? What childhood experiences may have contributed to that? Am I willing to let those experiences and ideas go? x Unconscious Bias – How do I undermine my own understanding of what is happening? What assumptions and expectations am I bringing to the moment that are clouding my perceptions? What experiences have led me to hold those ideas? Am I willing to let those go?

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While there is no set curriculum for accomplishing these forms of development, individuals who discover that these are areas they’re ready to work on generally find precisely the resources they need for doing so. Some of those resources will be found in their study of leaders they’d like to emulate; some will be found in self-help or spiritual texts; and some will be found in the people and activities around them. The following chart outlines specific qualities necessary for the kind of learning and development engaged in by Stage III leaders:

Figure 17-2. Behaviors Fundamental to High-Engagement Learning (adapted from Hess, 2014; 48).

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Stage IV Leaders Stage IV Leaders are self-renewing, lifelong learners for whom the ongoing development of their own consciousness and the consciousness of their organizations is embraced. They consciously co-create the emergence of their experience (Brown, 2002). To be able to do so, leading in this domain entails leadership “beyond-ego,” where individuals and organizations gain access to perspective above and beyond the personal self. In their book, The Wise Company, Nonaka and Takeuchi (2019) describe the Stage IV domain of organizations and leadership using the concept of “phronesis.” As originally described in Aristotle’s Nicomachean Ethics (VI.6), phronesis is one of the three forms of knowledge identified by Aristotle and is roughly translated as “practical wisdom.” For Nonaka and Takeuchi (2019): Phronesis, according to our studies, is experiential knowledge that enables people to make prudent judgments in a timely fashion, and to take actions guided by values, principles, and morals. It’s like the Japanese concept of toku – a virtue that leads a person to seek goodness and excellence. A person with toku is trusted and respected because he or she relentlessly pursues the common good and moral excellence as a way of life (Nonaka and Takeuchi, 2019; 32).

In their Harvard Business Review article, “The Wise Leader”, Nonaka and Takeuchi (2011) describe phronetic leaders: The world needs leaders who will make judgments knowing that everything is contextual, make decisions knowing that everything is changing, and take actions knowing that everything depends on doing so in a timely fashion. They will have to see what is good, right, and just for society while being grounded in the details of the ever-changing front line. Thus, they must pair micromanagement with big-picture aspirations about the future (Nonaka and Takeuchi, 2011; 4).

The development of Stage IV leaders is rare, at best. In part, this is because, in order to fully support the development of Stage IV organizations and leaders, practitioners need a level of comfort embracing and leading from an inner wisdom that Jaworski has called Source (Jaworski, 2012). The emergence of Stage IV leadership begins with what Hess and Ludwig (2017) define as ‘the new smart,” with its primary leadership characteristic being “humility,” which they define as:

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a mindset about oneself that is open-minded, self-accurate, and “not all about me,” and that enables one to embrace the world “as it is” in the pursuit of human excellence (Hess & Ludwig; 2017; 8).

As Stage III Servant leaders feel drawn to develop further, they are more willing and able to guide their organizations into the unknown, the territory of heuristic discovery, finding opportunities in and solutions to heretofore unsolvable problems. Learning a new skill or conceptual framework often requires accomplished individuals to acknowledge what they don’t know or haven’t been able to do well, which, in turn, encourages a new level of humility and openness to accepting feedback from others. This then motivates them to explore ways to develop new levels of freedom from the anxiety associated with performance pressure, which then encourages exploration into deeper psycho-spiritual practices. Stage IV, Self-Renewing leaders are aware of and learn to depend upon a source, or “higher power” greater than their ego to grasp reality (Jaworsky, 2012). They pursue excellence as a disciplined way of life and embrace their own imperfection. They encourage development and self-renewal in themselves and others. They embrace life’s reality, acknowledge paradox, seek innovation, and pursue abduction (in Peirce’s sense) and scientific discovery with a heuristic passion and a disciplined heuristic approach. They take their knowledge and authority as true but partial, and they focus themselves and their organization on their contribution to the general good and the evolution of society. The Dual Bottom-Line framework evolves from within their own worldview as a way that they and their workforce can earn a living with meaningful work while serving the common good. Applying these skills and qualities, Stage IV, Self-Renewing leaders, teams, and organizations build authentic hyper-learning and knowledgecreating communities that operate from a whole-to-parts perspective. They have well-developed individual and collective egos that they are capable of transcending in service to others. They seek collective intelligence in their decision making and collaboration when problem-solving through systematic deduction, induction, and abduction (as described in the above chapter on Learning). Their development of physical and knowledge assets is balanced with their commitment to human development as co-equal outcomes.

Ideal Operating Arenas for Stage IV Leaders Stage IV Self-Renewing, phronetic, leaders are ideally suited for institution building. They are found in those assignments where running the enterprise at its current level of development and in its current configuration is inadequate to sustain the organization’s long-term future. They thrive

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when building an excellent enduring institution. Whether leading a public or privately owned business, a government agency, military unit, family business, or a non-profit entity, Stage IV Leaders tend to be found in those organizations that are pushing the horizon of excellence in their field. For Stage IV leaders, excellence is defined in the Aristotelian sense: “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Such leaders shine in complex endeavors requiring a mix of advanced human consciousness and high levels of business and organizational leadership skills. They are ideally suited for environments where hyperlearning is an ongoing requirement and knowledge creation is continually needed to evolve the enterprise. These leaders have mastery in at least one area of technical excellence and thrive in situations where they surround themselves with a hyper-learning community that works from collective intelligence. Stage IV leaders are ideally suited for building Stage IV DBLLO’s because they need no convincing that the success of their enterprise is dependent on how effectively they can develop their workforce to their fullest capability. Stage IV leaders are also integral to organizations that are using their enterprise to coevolve society, as they are making it possible for their organizations to excel in their field.

Essential Skills for Stage IV Leaders The shift from Stage III to Stage IV organizations requires operating as a network of aligned communities. Leaders need a high capacity to align the organization’s governance, infrastructure, mindset, and culture into a positive self-reinforcing feedback loop. This requires advanced skills to fully align the workforce around a shared vision, a non-negotiable set of values, and an enlightened worldview of the purpose of work. Having learned to support and maintain authentic community, Stage III leaders becoming Stage IV leaders need to see themselves and the organization as constantly adapting and developing, learning to facilitate ongoing hyper-learning and knowledge-creation processes within their own life and in the activities of those around them. They need to embrace serving the common good, not only of their organizations, but also of the societies they are embedded in. At this stage, authentic hyper-learning can be achieved at a scale that is capable of addressing systemic, intense, continuous internal and external adaptive challenges without the stresses and dysfunction that appear at lower stages of development.

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Objectives & Processes for Developing Stage IV Leaders Stage III leaders, in becoming Stage IV leaders, are constantly adapting and developing, learning to facilitate ongoing hyper-learning and knowledgecreation processes in their own life and in the activities of those around them.

Horizontal Development for Stage IV Leaders Stage IV leaders need to develop skills in the following areas: x Fostering Knowledge Creation x Facilitating hyper-learning in themselves and others x Distributing Power to the Edges of the organization x Exhibiting Resilience & Robust Flexibility The Practice of Knowledge Creation (described in an earlier section) encourages leaders to enable the “spiraling” of knowledge creation at scale—that is, learning becomes progressively deeper and more comprehensive as individuals, teams, and business units expand their knowledge and deepen their understanding. This means that the knowledge-creation process relies on leaders learning to identify tacit and explicit knowledge, and then incorporating this understanding into their knowledge-creation practices. Nonaka and Takeuchi (2019) have elaborated the technical skills required to cultivate and sustain the high quality tacit and explicit knowledge conversion processes for knowledge creation at scale. Their knowledge-creation process has four organizational learning disciplines: Socialization, Externalization, Combination, and Internalization (SECI) as depicted in the chart below:

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Figure 17-3. The SECI Knowledge Creation Process (adapted from: Nonaka & Takeuchi (1995)).

The four quadrants describe the process of tacit knowledge being shared, becoming explicit, and then being internalized. x Socialization makes tacit knowledge available through communal connection, communitas, empathy, sharing experience in Nature; gaining knowledge by imitation, observation, and practice with someone who has internalized it; tacit knowledge is transferred by common activity in the organization, including community building processes. x Externalization makes tacit knowledge explicit as it is prototyped, extracted, made into metaphors, codified, and shared with others as theories, documents, data, models, and videos or visual instructions. x Combination practices occur among individuals, groups, and organizations as they further evolve explicit knowledge through simulations, prototypes, models, and products and processes. The practice of combining multiple forms of explicit knowledge is part of a leader’s responsibility. x Internalization practices involve leaders learning and using knowledge, teaching it to others, and building systems that employ that knowledge

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or innovation every day so that, through the process, it is internalized in a way that spawns the next generation of tacit knowledge. It is important to note that the transfer of tacit knowledge cannot be formalized through such mechanisms as trainings or manuals. Rather, tacit knowledge is gained through multiple forms of community-building practices and spaces, or, as Nonaka and Takeuchi call it, “ba” (Nonaka and Takeuchi, 2019; see also (Nonaka, Teyama, and Noberu, 2000)). While knowledge-creation focuses attention on the way to create and share new information and understanding, the practices of hyper-learning are grounded in an understanding of humility as Hess and Ludwig are quoted as describing above, being open-minded and self-accurate without being “all about me” (Hess and Ludwig, 2017). As they develop their own and their team’s hyper-learning abilities, leaders need to analyze the behaviors they are committing themselves or the group to by asking two questions for each: x What observable actions are evidence that the behaviors are reinforcing our Operating Philosophy and the common good? x What observable actions are evidence that the behavior is undermining our Operating Philosophy or the common good? By observing their actions in this way, leaders practice their way into the mindsets and behaviors that support the hyper-learning way of being and working. Leaders in hyper-learning organizations therefore x take ownership of their performance and have the courage to embrace mistakes as learning opportunities, and x learn to facilitate their communities through the four stages of community building (pseudo-community, chaos, emptiness, and authentic community) at an operational tempo that matches the technological innovation and competitor adaptation of their mission environment. Common practices by individuals and groups in hyper-learning mode include: x Curiosity, exploration, imagination; x Embraces uncertainty and ambiguity; x Open-mindedness; x Challenges the status quo; x Emotional and social intelligence; x Mindfulness, being fully present; x Stress-tests one’s thinking; x Empathy; x Effectively collaborates;

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x Courage and candor; x Uses data-driven decision-making; x Resilience; x Reflectively listens; x Self-management (mind, body, emotions, ego, and behaviors); x Trustworthiness and integrity. As leaders practice these behaviors, their groups, teams, and organizations begin to function as hyper-learning organizations, with the following characteristics. They: x Acknowledge human imperfections and differences, as well as the need for continual individual and collective learning, experimentation, and development. x Are characterized by trust, candor, authenticity, transparency, compassion, and integrity. x Provide a psychologically safe place that encourages members to speak up to, and even disagree with, more senior people, and vice versa, doing so civilly and respectfully. x Practice collective learning, unlearning, and re-learning at an operational tempo commensurate with the requirements of a highly disruptive environment. Thus, they become, as they are creating, Stage-IV leaders and communities, in which learning and knowledge-creation enhance the bottom line while they develop the human beings who are doing the work. Beyond knowledge-creation and fostering hyper-learning, Stage IV leaders also see the need to distribute power. Most initial forays into leadership are based on the assumption that leaders have to acquire power and resources, accumulate them, and control the people around them to accomplish anything of value. As a result, it often “goes against the grain” to think that anyone else might be able to make appropriate decisions or be trusted with power over what we’ve been taught we have to control. Stage IV leaders, however, inherently understand the need to distribute power according to skill and willingness, and they have the ability to discern what’s appropriate in a given situation. The process of shifting from personal control to distributed power and authority begins with building trust, which is one of the functions and characteristics of authentic community. As group members communicate fully and authentically, sharing their challenges as well as their strengths, they begin to realize that the people they’re working with “have their backs” and want to fulfill the same mission they do. As they go through dialogues for development with their mentors and team, they get clearer about who can be trusted with what.

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This emerging trust makes it possible to begin to release some of the control a leader may have been hanging onto. They begin to realize that their position in the hierarchy of the organization is not compromised if someone who works for them is empowered to do a task in their own way, and maybe even to direct others in the process. Seeing that experience work out successfully opens the door to more such experiences, in a reinforcing loop that is balanced only by the leader’s position in the organization chart. As an example, U.S. Navy SEAL teams train to act as authentic hyperlearning communities, without using those terms. According to Wheal and Kotler in Stealing Fire (2017), SEAL team members are trained to become capable of communal thought and action, taking responsibility for the whole as they act responsibly by and for themselves. This ability of a group of individuals to shift to one unified body that flows as a single community Wheal and Kotler refer to as the team undergoing “the switch” (2017). These warriors learn the discipline of transcending their normal base-state consciousness and entering into an altered state of collective awareness where they transcend, but include, their individual ego and identity. In this communal altered state of consciousness, collective intelligence and dynamic leadership are fluid. As a result, the individuals and the group can perform at developmental levels much higher than in their normal, base-state consciousness. Specific practices to activate “the switch” include: x Long term association with open communication; x Repetitive drill and practice of technical skills; x Regular training at the edge of individual and group abilities; x Frequent encounters with the unknown; x Use of code words and trigger phrases to bring the individual into the space of the unit-as-a-whole. These practices, though they have been developed and directed by a hierarchical authority, have melded individual team members into a unit that can function far beyond the capacity of any of them alone—in part, because each of them is trusted with authority commensurate with accomplishing the task at hand in the most effective way possible. All these practices together promote a flexibility and resilience in the individual leader that is, through socialization, soon shared with the people who work with them. So, the Stage IV leader is always developing, not only as an individual, but as part of the whole, and is facilitating the development of the whole in the process.

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Vertical Development for Stage IV Leaders Stage IV leaders have come to understand themselves and how they function. Through the practices outlined above for Stage III leaders, they know their strengths, their weaknesses, their points of power, and their emotional triggers. They have learned who they are and have been, and are ready to transcend those limitations. Stage IV leaders, then, are in a constant and continual learning process. They are seekers after a higher Truth, while remaining grounded in the material world around them. They may attend or participate in spiritual or religious services and rituals, because they are aware of a sense of connection with something greater than the surface activity. They may listen to or read spiritual texts, because those texts take them to a deeper understanding of themselves and to higher possibilities in and beyond current world circumstances. Vertical development for the Stage IV leader, then, is about transcendence. In our world, today, that usually means engaging in some form of spiritual exploration, seeking role models from the past, and developing an image of who they can become, beyond who they have been in the past. It also means learning to listen in the silence for a deeper wisdom, a fuller understanding, a source of guidance, before speaking or acting. They experience an underlying intelligence within the universe that is capable of guiding us and preparing us for the futures we must create. As a result, Stage IV leaders combine their cognitive understanding of the world around them with a strong personal sense of possibility—the possibility of actualizing hidden potentials lying dormant in the universe—an understanding that, as we described in the chapter on metaphysics, carries with it the power to change the world as we know it. Stage IV leaders have learned that what they think and say has power— in their lives and in their world. They therefore make a point of being clear in their intent when they speak, and observe carefully the consequences of their words and actions. As they work with this capacity, they begin to see the world around them align on their intentions—and the people around them develop far beyond any previously considered possibility. Ultimately, the Stage IV leader learns to transcend both the organizational and societal culture, being “in the world but not of it” and finds, while empowering others, a level of internal peace and power that is perceptible—while those around them become increasingly capable and at peace within themselves, in an organization that more than meets their personal, professional, and financial needs while performing excellently in the world.

PART FOUR. CASE EXAMPLES

CHAPTER 18 CASE EXAMPLES AS HEURISTIC PORTRAITS

The development of the concept of and framework for DBLLOs came to life through a series of organizational interventions over a couple of decades. In this section, we illustrate the journey of translating theory, method, and practice into actual organizational transformation experiences. We include several case examples to illustrate the diversity of consulting projects that illustrate the application and effectiveness of the DBLLO method and framework. These engagements range from four to twelve years in duration, and some are ongoing as this book is being written. The client engagement process centers around solving difficult and chronic strategic, operational, cultural, and human development issues related to specific business/mission challenges. (When working with government agencies and non-profits, we refer to mission-accomplishment rather than profits.) All of the organizations described here have been subject to changes in ownership and/or management such that they cannot be said to be enduring DBLLOs. In some cases, through those changes, some of the practices have been retained and built upon. In others, the learning organization design has been overturned by new management. Nonetheless, the experiences of the people involved demonstrate that the DBLLO is a viable alternative to traditional authoritarian hierarchies that advance the potential of previous generations of learning organizations. Therefore, we have structured the following descriptions to give a sense of some of the challenges and ways they were met by the leaders we’ve worked with. Facilitating the human and cultural transformation of an organization requires a deep and intimate immersion into an organization. As noted by Edgar Schein (2017), an outsider cannot understand the essence and meaning of an organization’s culture without a deep immersion into the client system. The organization’s tacit fundamental assumptions are uncovered and made explicit through a heuristic inquiry process between the consultant and client system. Throughout the process, we protect the sensitive details related to these strategic issues, so the identity of the organizations and individuals involved

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is always protected, to respect their confidentiality. To that end, the following cases are presented as heuristic portraits, without the actual names of the organization or of the people involved. They are, instead, descriptions of the things people have experienced and encountered as they worked through the process, often using direct quotes from those people, without disclosing either their names or the names of the company they’re part of. Heuristic portraits describe actual client events and situations, as clearly as possible as they occurred, without disclosing client details that violate their confidentiality. According to Moustakas, a heuristic portrait, “must depict the experience in accurate, comprehensive, rich, and vivid terms” (Moustakis, 1990; 49). Heuristic portraits offer a “thick description” (Geertz, 1973) of an organization. Kaz developed the practice of reporting on cases as heuristic portraits for his dissertation (Gozdz, 1999) and all the following quotes from clients come from Kaz’ss field notes and client records, which remain confidential. The following chart provides an overview of the cases presented here:

Figure 18-1. Overview of Case Examples.

CHAPTER 19 THE U.S. BRANCH OF AN INTERNATIONAL ENERGY RESOURCES CORPORATION

Grail Oil is the wholly-owned US subsidiary of a global energy resources firm. In the early 1990s, it had multiple divisions including Exploration and Production, Refining and Distribution, Chemicals, and Corporate Services. Grail had been performing poorly financially and, as a result, it had multiple layoffs, cutting staff from 34,000 employees to around 20,000. At that time, corporate earnings were estimated to be less than a third of what they should be, given the company’s asset base. While Grail had a worldclass engineering culture, it was underperforming financially and in developing its executives and workforce. Clearly the culture needed to be transformed. In 1993, a 35-year employee of Grail took over as its new CEO. He was determined to renew Grail’s economic engine, value proposition, and financial performance, while at the same time growing and developing the workforce. He began to make it clear that his goal was for the company to become a learning organization. He reached out to the M.I.T. Organizational Learning Center for assistance in building a learning culture and to teach the workforce learning community practices. I read Senge’s book The Fifth Discipline, and talked a bit with him about it. It became very clear to me that the meaning of a learning organization is ‘learning is a mechanism of change.’

The CEO simultaneously reached out to various consulting experts to teach the executives and workforce a higher level of business competence. They were also asked to restructure the economic engines for all its operating businesses. He entered his tenure with a quality of humility and with a desire to engage in his own development. I began to reflect on the CEO job and, more importantly, about myself. The two emotions, fear and elation, drove me to a more internal inspection of

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myself and to a critical external inspection of the organization of which I was a part. I came to the conclusion that there were a lot of things wrong with me; not wrong in the sense that I was evil or immoral, but there were an awful lot of my actions and relationships in my life that were entirely unreflective. They were instinctual and internally logical, but they were never examined in the deeper sense of why am I doing these things?

Grail had a cultural history of top-down, centrally controlled management, leadership, and governance, with an autocratic Stage I and Stage II style. The organization performed in silos and there was a “hub and spoke mentality,” where higher levels in the hierarchy required those below them to clear decisions from the top down before taking action. The new CEO, however, believed that by giving up exclusive control and releasing power, both the company and the leaders would benefit. He was concerned about the “excessive holding of power by leaders throughout the corporation.” For the most part, through ignorance, we were abusing power unconsciously. People were not aware or conscious of how they were acting and controlling things and of how that affected people. … I had a pretty good idea that I didn’t want to misuse the power of the office of CEO and, secondly, that it would help me accomplish the more physically observable things if I gave it away …

He began a process for the devolution of power, but as he brought his executive team together to explore options, he found that they communicated as a pseudo-community. They followed the pseudo-community norm, exhibiting poor group listening skills, which reflected a deep cultural pattern of dysfunctional communication and interaction across the whole of the enterprise. To mature their ability to devolve power through the organization, they also had to learn to interact and lead more effectively across their silos. They began a process of becoming a more authentic learning community—a process that took several years to cultivate.

Vertical and Horizontal Learning, Field Setting In 1993, the CEO formed a Leadership Council (LC) with about 15 of his direct reports, not so much as a decision-making group, but as a learning community tasked to share responsibility for transforming the overall corporation. While in the past executives had been given assignments to develop their technical skills (horizontal development) and perform as technical experts, now the focus changed to include their vertical

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development as leaders as well. Council governance required everyone to increase their competency to perform as learning community members and to improve their financial and business acumen. The company’s transformation explicitly emphasized vertical development by developing the character and “being” of its leaders. Peter Senge and other M.I.T Organizational Learning Center professionals led a series of learning community events to teach learning organization tools, theory, and methods. Senge’s Five Disciplines—Personal Mastery, Shared Vision, Team Learning, Mental Models, and Systems Thinking (Senge, 1990)—were taught across the Grail organization, along with increased business acumen. We went through a process of continuing personal and organizational transformation with the top 40 managers or our unit … and it got deeper and deeper with time. We started having learning circles as a top management team, dedicating ourselves to learning about our business and how to learn differently as a group.

Simultaneous with the transformation of Grail’s hierarchical power structure to a council governance structure, Kaz and one of his colleagues initiated a multi-year Field-Setting Process with a strategic coalition of about 200 Grail Leaders, including members of the LC. The Field-Setting process consisted of deep individual and group dialogues that led to community-building events that expanded into ever widening circles. Over a 5-year period, along with the Leadership Council, other groups began to learn as communities, and to practice open and authentic communication. Initially, the LC met every other week for a full day, followed by dinner. They also held a three-day learning community retreat every six weeks and an annual learning organization strategy retreat. They went through diversity training, as well as training in dealing with learning disabilities and addressing corporate “undiscussables.” As a result of these sessions, individual leaders could differ on an issue and still handle it competently as a more authentic community. Participating in these councils not only provided opportunities to learn and develop technical skills organizational approaches, but they scaffolded each other in their own personal vertical development. As one LC member put it: Being a member of the LC was important for me because I started hearing feedback from a wide group of people that I needed to change. I received useful feedback from the other council members that I probably would never have gotten … People who worked for me probably wouldn’t have seen it or, if they had, wouldn’t have told me … Since I never received virtually any feedback from my boss, this was useful.

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The CEO deliberately reached out to this group to lead aspects of the strategic development of the overall organizational transformation, choosing members to participate on various Strategic Initiative Teams, each of which was coordinated by an LC member, to develop initiatives in the areas of Cost, Growth, Human Resources, Brand, Planning, and Information Technology—with further initiatives developed over time. A task force assigned to develop a new leadership model identified six personal qualities considered essential: • commitment to the truth, • courage, • compassion, • humility, • authenticity, • integrity. These “being” attributes were expected to go along with the previously emphasized “doing” attributes of developing shared vision, creating capacity to act on that vision, thinking systematically, communicating through open and honest dialogue, and engaging others as a coach, mentor, and teacher—all while producing effective business results. Sub-councils within the LC championed various strategic initiatives. One such group identified Grail’s core values: • Belief in people • Excellence • Sense of urgency • Trustworthiness • Innovation The LC worked for years to align themselves and their respective organizations with these core values. LC members began model them through personal behaviors and mindset, and went on to form councils within each of the new business units. In 1995, a Corporate Leadership Group (CLG) was formed as a learning forum for the top 200 leaders in the company—primarily direct reports of the LC members—to learn as a community.

Maturing CEO; Maturing Cultural Context Guiding the transformation process depended on the CEO adhering to a principle of, as he put it, “gaining credibility and moral authority to lead transformation commensurate with what you are trying to change.” He further explains:

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Chapter 19 When you attempt a change process, you have to bring along and enjoy the sanction, if not the support, of people in other parts of the organization who have some degree of influence or control of you. You have to do that very carefully … You can’t always bring in your boss as a full partner in a transformation process, particularly when you begin, because most of this stuff is entirely too risky for people not personally involved to a great degree. Over time, as you work the transformation through the organization, you see what seems to be working and … you begin to reveal these things by talking about the underlying principles involved … It’s a fine balancing act as to whether to inform people, obtain permission, or act given your freedom and power. It doesn’t matter where you are in the organization … It’s all about your confidence and belief in what you’re doing, while always staying within rules of delegated authority.

In his opinion, the CEO of any learning organization would need to be the author and guide of the essential changes, in what he called “the art and exercise of responsible freedom.” And, in fact, his willingness to ask questions about his own metaphysics and worldview catalyzed the maturation of Grail’s cultural context. His journey into Stage IV leadership was grounded in his own vertical, self-development process. This scientific worldview also comprised the principle set of experiences in my work years. After about 12 or 13 years of working with Grail in science applications, I began to get into positions of management and business strategy. I approached much of my business work with essentially the same scientific worldview. Instead of doing differential equations, drawing maps of oil finds and so forth, I just worried about columns of numbers that were dollars. My outlook and relationships with other people were still very individualistic. I was not uncaring of other people in the business world, but I was very separated from others.

Over time, his shift in perspective on working individually compared to working in community became increasingly important. He relentlessly promoted working collaboratively and through collective intelligence. The phenomenon of scientific work, at least the parts I studied, primarily involved individual endeavors. This seemed to have rendered me less capable of certain communal activities. I didn’t do theoretical physics in a team. That outlook had implications, not only for how I thought, but for how I related to other people, my family, and people in the workplace. I developed a mechanical—maybe mechanical is too harsh a word—but an extremely logical Aristotelian type of relationship to the world. It amounted to ‘you are this, I am that,’ and so on.

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Empowered by his own personal transformation, the CEO supported Grail to identify its vision and its core values, which was stated as “to be the premier U.S. company with world-class performance in all aspects of the business.”

Enabling Hierarchical and Communal Governance through Horizontal Development Senior management found this period of awakening exhilarating as the company established a vision to be “the premier company” in its industry, and simultaneously examined its current reality as an organization. One executive, reflecting on the process, said there was a good discovery of vision, purpose, and an idea that it could be much better if we took some steps. It was a period of more personal freedom and a lot of organizational freedom. How you were evaluated depended upon performance and adherence to values. The whole discussion about current realities and visions was very helpful. There was more honesty … People were willing to say that this position is worse than we thought it was … we realized it was going to be very difficult to reach our vision of being “the premier company.”

According to the CEO, … we had to go through a period of financial, economic, and business practice education. This went on through 1993, into most of 1994, before I could really get even the senior leadership to see and understand the governance structure … We had to teach that these rules will allow one to act independently, while at the same time causing one to be able to discipline oneself and not have to be subject to disciplining and direction from above … My central question in putting this governance process in place was: Can the corporation discover or put in place the necessary rules and measurement systems that allow its people to freely operate?

In 1995, the new governance structure came into being, based on individual business units, each competitive on its own in the marketplace. The functions of executive vice-president and general executive offices were removed, shifting the hierarchy of power to the new business units, with the largest unit having the most power. This shift was abrupt and filled with uncertainty for senior executives who had to reinvent their leadership

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roles as they moved from being advisors to a supervisory CEO, at the center of the corporation’s business activities, to becoming autonomous leaders. The new governance model required councils and boards to coordinate what had once been corporate functions and were now in independent business units. The Leadership Council and Corporate Leadership Group that had been used to develop the governance model set the precedent. Members of the new councils and boards engaged and learned with direct reports, simultaneously making decisions and taking action based on the authority of their position. An internal capital structure devolved debt and required managing shareholder return at the individual business level. This was a new system of accountability, and led to spin-offs and mergers both within and outside of the overall corporation, so Grail ultimately became a type of holding company, governed by these councils. Over months and years, each business unit within the corporation initiated their own transformation process, independently adapting aspects of the larger company’s process to their own needs. In 1995, for example, one division created a purpose for their organization which fit within the guidelines of the larger organization’s vision but read instead “to provide transformational solutions that will revolutionize the energy industry.” Out of their multiple transformation processes they identified three fundamental beliefs: • People are good; • People are capable; • Market systems work. And the five core values mentioned earlier: • belief in people, • excellence, • innovation, • a sense of urgency, • trustworthiness. Looking back on the transformation of Grail into a learning organization, the CEO says In my view, in the long run, the most profound change in our five years of corporate change was the articulation and introduction of the governance model that we set in place … Contained in my governance model was a set of governing rules that allowed for a devolution of power and a system of responsibility throughout the entire corporation.

The new rules ensured interorganizational cooperation and free operation.

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A Networked Learning Community In just under a decade, Grail became a learning organization as well as a community of networked learning organizations. For nearly five years, its internal business units learned to learn together as a whole, enterprise-wide community. After its various business units gained knowledge about how to perform as learning organizations governed with hierarchical and council governance, they extended their networked community practices to include external business partners. Over the time of its transformation, Grail went from having an intact U.S. domestic identity with clearly defined boundaries to a diffuse networked learning community with inclusive and semipermeable ownership and boundaries.

Alignment Over time, a model was developed for company-wide transformation that integrated leadership, employee engagement, and a business and value proposition model, creating a winning spirit. One surprise was how difficult it was for many leaders in the organization—and in the business units—to grasp the concept of a business value proposition model. Still, as people began to experience increased personal and professional effectiveness, the field shifted. In late 1996 and early 1997, things began to shift dramatically across the company. The early cynicism and skepticism began to evaporate as a sufficient number of people took ownership of the underlying concepts and began to conduct their affairs differently. Things were never the same after that period. As the CEO’s plan was implemented and the leadership began to learn and strategize together, not only were there significant changes in peoples’ abilities to lead, but the financial performance was enhanced as well. According to one LC member: … we increased our net income 3 times in the period from 1993 through 1995, going from $700 million to $2.2 billion. Return on investment has improved every year on its way to getting to 12%. Back in 1993, we started planning to get to 12% by 2000.

A leader in one of the business units reported, “In 1997, we increased the company’s revenue by 35% and had earnings of $22 million. People were excited about their work …” And in another business unit, the group did pull together and accomplish an amazing turnaround from $30 million to $200 million in income with about half as many people … we did

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Another member of the LC pointed out that continuing their purpose required that they do well in business; the two were inseparable.

CHAPTER 20 A FAMILY-HELD CORPORATION IN TRANSITION: PREMIER HOLDINGS

A family business with the pseudonym Premier Holdings (PH) had endured into its third generation and was being run by the founder’s grandson. Having started as a drive-in-theater company in the 1950s, it had already survived through multiple manifestations of economic engines. The first generation had not only run the business as a drive-in-theatre chain, they had also purchased the land, which had accumulated value as the company’s main business transformed from drive-ins into a chain of multiplex theatres with as many as 6 to 8 screens. The business thrived for a time in this second generation, until large public companies shifted the industry investment dynamic by innovating the megaplex 20-plus screen, slope-floor theatre concept. This new design cost as much as ten times the historical investment to build, so smaller, less financially stable, family-owned multiplexes were eventually driven out of business. While its megaplex business barely survived, the value of its well-situated properties enabled the company to become a thriving real estate developer. It launched into new businesses that have become the core of its value-creation process: real estate development and property management. The real estate business thrived, but the multi-state megaplex business continued to flounder. Having grown up in the movie theatre business, the new CEO had a personal love of movies and an appreciation for the transformational power of film on society. As a well-educated and experienced MBA, he had correctly identified that the company lacked the financial, operational, and leadership acumen to run their business with excellence; he was aware that his third-generation family movie theater business lacked the business and operational competence to remain viable in an increasingly competitive industry. The CEO had been influenced by Jim Collins and Jerry Porras’ research on excellent enduring companies, as described in Built to Last (Collins &

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Porras, 1994). He was equally impressed by Collins’ Good to Great (2001) approach to exemplary leaders and organizations. As a result, he asked Collins to lead family members and a small group of executive staff through a process of defining the company’s purpose and values. While these were identified, however, they were not incorporated into the organization’s business operations. Later, Collins also gave guidance on defining the organization’s strategy and leader development model. The CEO had the foresight to begin an R&D effort into the possibility of creating a next-generation movie theatre concept. In Michael Polanyi’s terms, he was being pulled by a heuristic passion to discover how the essence of a filmmaker’s art could be presented in a context where audiences could experience the transformational power of a film. This was his personal innovation, a personal escape from what felt like the overwhelming mediocrity with which they showed film in their existing offerings. Very few people were involved in the project, and it was deliberately kept separate from the existing family businesses. The CEO went on to identify the need to improve the organization’s ad hoc operating model by introducing what we call Stage II process improvement rigor and discipline into the organization. To that end, he qualified as a Baldridge Excellence Framework judge and he hired a Senior Vice President of Operations, along with other internal and external process improvement experts to incorporate standardized work, performance metrics, and continuous improvement disciplines into the organization’s culture. However, while process improvement was identified as an organizational priority, it was proving stubbornly difficult for the company to implement. The CEO had been personally inspired in his own self-development by Michael Ray and Rochelle Myers’ (1986) “Creativity in Business” course. Through the course’s influence, he began to study yoga, and it led him to ask Professor Ray to offer the course to the company’s employees, in hopes that it would inspire a more creative workplace. While several executives and managers found the course personally inspiring, they were unsuccessful at incorporating creativity practices into the organization’s culture and daily work routines. Kaz had been collaborating with Michael Ray in building his Stanford classes on “New Paradigms in Business” into authentic community, so when the CEO reached out for assistance with his culture-change efforts, Ray referred him to Kaz, as an expert that could help him transform Premier Holdings (PH) into an authentic community that operated with a creative learning culture.

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For over a decade, then, Kaz worked together with the CEO to guide him and the various Premier Holdings businesses through the fundamental transformation to become a DBLLO.

Figure 20-1. The DBLLO Methodological Framework.

It was through this extended client engagement with PH that Kaz first applied the DBLLO theoretical and practice methods and framework as a robust and systematic large-scale organizational and cultural transformation strategy. While the DBLLO Framework did not exist in this format at the time, all six elements were organically and pragmatically implemented over a period of about twelve years: x PH became a learning community with a Stage III/IV cultural context; x PH formalized an Operating Philosophy; x PH implemented a Dual Bottom-Line business value proposition; x PH implemented an enterprise-wide operating and governance model;

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x PH designed learning infrastructure and scaffolding to grow and develop its workforce; x PH learned to balance education, alignment, and the devolution of power. These six practices of the DBLLO Framework, with their relationships, are mapped in the following illustration, presented in the Methodology section earlier in this book.

Setting the Field for Profound Institutional Change To launch the transformation process, Kaz began a Field-Setting process with the CEO to establish a shared vision of the company’s purpose and values. He interviewed several generations of family members involved in the business, along with the organization’s most tenured advisors and employees, using the generative interview methodology for one-on-one and group interviews. Cultural and organizational patterns emerged, fundamental operating assumptions were made more explicit, and the organization’s strengths, capabilities, and learning disabilities became clear. This FieldSetting practice made the tacit cultural assumptions more explicit and moved them from the realm of “undiscussables” into an open dialog with multiple groups and businesses within the organization. Through this initial phase, it became evident that the organization would need to change nearly everything about the way it did business—from developing new investment strategies to transforming its operating and leadership models. Transforming the family owned and operated portfolio of businesses so they became capable of performing with excellence required a major organizational and cultural developmental process that would affect the entire workforce. PH had a Stage I/II leadership culture, where operating with loyalty and deference to the family came with being “taken care of” by the family in times of crisis and an implied lifetime-employment contract. Loyalty and longevity were historically rewarded over business acumen, operational competence, leadership aptitude, communication candor, Systems Thinking, or internal collaboration. So, PH had a dual bottom-line problem: it had neither the economic engine nor the value drivers in its core businesses to perform with financial excellence, nor did the set of businesses in their portfolio have a human resources strategy to recruit, hire, and retain a workforce with the competencies and skills (horizontal development), or the leadership maturity (vertical development), to perform at the cutting edge of their

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industries. They needed to develop and recruit Stage III/IV leaders to build a Stage III/IV DBLLO.

Crossing the River While Searching for Stones Genuine transformational change is emergent, and to scaffold Stage III and Stage IV leadership across the enterprise, the DBLLO Framework needs to be enabled simultaneously from the top down and from the bottom up. From its initiation, then, this whole-system transformation included front-line employees, middle managers, and senior executives from multiple business units, working as one single community of learners. Implementing the DBLLO Framework in the PH context was a process of heuristic discovery. It was not planned in advance; rather, it followed the strategic pragmatic maxim of “crossing the river by searching for stones” (Nonaka and Zhu, 2012). Each practical implementation step unfolded to the next, and required collective phronesis on the part of Kaz and the CEO to, in Nonaka’s terms, “recognize the constantly changing situation correctly, and quickly sense what lies behind phenomena to envision the future and decide on the action to be taken” (Nonaka, 2011).

Building an Operating Philosophy Early in the 12-year transformation process, the CEO worked with Kaz to begin a five-year process of discovering the Essence of the company, an Operating Philosophy that would not change as the company endured multiple rounds of transformational renewal. The CEO not only embraced the approach, but he also fully led the practice by articulating an organizational future worthy of everyone’s best efforts and full development. Kaz coached the CEO to use the challenges of transforming these business units using a Nothing Extra approach to enable the CEO’s own developmental growth. Without using the term, he accepted the challenge to become what Nonaka and Takeuchi (2011) would later identify as a “wise leader.” He embraced the ideal that Nonaka and Takeuchi (2011) encourage: The world needs leaders who will make judgements knowing that everything is contextual, make decisions knowing that everything is changing, and take actions knowing that everything depends on doing so in a timely fashion. They will have to see what is good, right, and just for society while being grounded in the details of the ever-changing front line. Thus, they must pair micromanagement with big-picture aspirations about the future (Nonaka & Takeuchi, 2011; 4).

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Working together, Kaz and the CEO began by transforming the company into a purpose and values driven organization. They built from the purpose and core values work the family had completed with Jim Collins, to which Kaz recommended adding he called Axioms, stating the company’s fundamental beliefs about people, purpose, and values that would be incorporated into an Operating Philosophy. As it emerged, the Operating Philosophy defined the Essence of the next level of development of the PH culture. The Operating Philosophy became a strategic differentiator and competitive advantage for hiring and recruiting excellent talent. It depicted a shared future worthy of full human development, and it defined Stage III/IV fundamental cultural assumptions and behaviors that the PH portfolio could grow into. Here is a composite draft of the Operating Philosophy approximately five years into the practice of refining the portfolio’s Essence: [Premier Holdings] is defined more by why it exists and how it operates than what businesses compose its portfolio. Its identity comes not from running particular businesses, but from the pursuit of its purpose and adherence to its values. [Premier Holdings’] purpose, the fundamental reason it exists, is to provide a place for people to flourish and to enhance the community. We believe that every human being has something to express (perhaps several unique things over the course of a lifetime). While building each of our businesses to world-class standards, we seek to create conditions in which that expression will emerge. Flourishing is a process of living into one’s unique contribution. It is the process of becoming oneself. We expect to do this through our work.

PH’s core values were defined as standards for action and requirements of behavior: Our values guide the way we conduct business and give us criteria for every decision we make … [Premier Holdings] does not require that employees share its values and beliefs. We do not seek to impose our beliefs on others. In fact, we encourage questioning and recognize that wisdom begins in not knowing. We do, however, require that people adhere to our purpose, and values when they act in, or on behalf of, the company. x Excellence – “On our path, one is always in the middle of a journey. And excellence applies not only to the destinations we reach but also to how we travel the path.” x Respect – “We feel a responsibility to treat people with fairness and decency.”

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Building – “[Premier Holdings] requires that each of our businesses operate excellently and then go beyond this to create excellent, enduring institutions that can last into the next century.” Servant Leadership – “We seek people who can build institutions that allow other people to be more whole, more fully themselves. We run our businesses such that we build people and not simply use them.” Learning – “We believe in providing an opportunity for individuals to develop, grow, and contribute.” Compassion – “We care about people.”

And, as Kaz encouraged, the Operating Philosophy further described three primary axioms about people: We believe x that people are not only means but also ends in themselves; x that people naturally develop; x that work is meaningful and gives meaning to people’s lives.

A Nothing Extra Approach PH’s transformation followed the Nothing Extra approach by using the organization’s business issues as a curriculum for human development. For example, the CEO had identified the need to transition from a Stage I ad hoc and person-dependent operating model into a Stage II rigorous, systematic, continuous-process-improvement operating model. The issue was that the portfolio’s Stage I/II cultural context was too immature to incorporate organizational learning and large-scale change. The executives needed to identify meaningful business problems that could only be solved from a higher level of development. One of the early problems Kaz chose for them to focus on was how to reduce overhead costs of one of the operating businesses by 20%. This was a demonstration project where a workforce of several thousand were asked to improve operations, cut costs, and to implement their Operating Philosophy for the first time. With the CEO’s go-ahead, Kaz gave the executives the choice of which method to try: downsizing or implementing the organization’s new Operating Philosophy. They chose to build a continuous improvement culture, using the DBLLO practices and their Creativity in Business training, to sustainably reduce their cost structure and improve their economic value proposition. While it took somewhat longer to implement, the overhead reductions were accomplished and were sustained over the next decade, using the DBLLO Framework to scaffold the workforce’s development. Throughout

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the years, large, complex organizational challenges provided opportunities for scaffolding that improved financial performance as well as human and organizational development. Over time, PH’s embrace of the DBLLO Stage III/IV leadership and organization practices yielded results, and with them, interest from top senior executives in competitor companies. Executives and staff began to join the enterprise for the opportunity to grow and develop themselves. They brought both expertise and the humility to grow. Having recruited a team of top-tier executives and middle managers from the megaplex industry, the organization’s cost structure and value propositions were improved, and the new people were used as means to develop the entire executive team and workforce. The COO who joined the effort in its fifth year would report years later about the rigors of becoming a Stage III/IV Leader: I joined [PH] with the zeal of a scientist starting a grand experiment. I was going to see if I could change a third generation, family-owned, traditional company into a conscious business of the future. I donned my metaphorical white lab coat and set to work on my “subjects.” I immediately discovered that I was unprepared to lead. I thought that leadership was guiding other people, making decisions, and building systems. Instead, I learned that the first, most important piece of leadership was working on my own growth. Where I thought I was the scientist in the lab coat, I discovered … that I was the experiment. To build a conscious company, the critical opening step, indeed every step, was to build my own consciousness.

Applying the Nothing Extra approach, the CEO agreed to reverse his original plan to launch the special project he had been developing—a new prototype theatre concept—as a spinoff company. Instead, its innovative operating model and cost structure were used as a model to fundamentally transform the portfolio’s other operating businesses and the corporate center. The entire corporate staff worked together to permanently change the parent company’s cost structure, and nearly half of its corporate center staff went on to find jobs in other companies. This restructuring was done in visible alignment with the Operating Philosophy, and it became a central part of driving a set of Stage III/IV employment practices.

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Community Building Became Culture Building, and Everyone Was Included Within months of initiating the PH engagement, Kaz began to facilitate community-building sessions. He began with a coalition of leaders identified through the early Field Setting practice, and shortly thereafter expanded to groups of 50 or more from the different portfolio companies. Over the next decade, the community-building process came to include working with groups that numbered in the hundreds. In the Stage I/II culture that was their traditional way of operating, there was a great deal of infighting, resistance to change, cliques, and exclusionary behavior. The culture operated as a pseudo-community, which meant that thousands of people needed to learn to communicate using the guidelines and principles of authentic community. PH needed to become a “purpose and values aligned organization,” which meant that, instead of attempting to immediately act in accordance with the organization’s newly-described purpose and values, they first worked on becoming an authentic community. Although they had as many as thirty operating locations across multiple states, the workforce was led through a process that enabled them all to communicate as authentic communities, rather than pseudo-communities. They followed the community-building guidelines and behaviors outlined earlier in this text. And, with multiple experiential immersions in the community-building process, groups would eventually learn to communicate and interact following those community-building principles. When groups had learned to communicate and interact as authentic, rather than pseudo-communities, the Operating Philosophy would be introduced—first experientially, and then more cognitively. The practice of scaffolding development was implemented across the company to enable both horizontal and vertical development, at the same time practicing authentic community with employees and customers alike. Eventually, a PH leadership curriculum was developed, and courses were offered to new and ongoing community members. The course was first taught by the CEO and later by the organization’s most senior executives who were capable of teaching and modeling the Operating Philosophy as well as Stage III/IV Leadership. Kaz reached out to Dr. Robert Frager, a cofounder of the Institute of Transpersonal Psychology and an eighth Dan in Aikido, to introduce the executive staff of PH to the martial art of Aikido. This was intended to teach Stage IV leadership through a body, mind, and spirit physical discipline. The CEO, COO, CFO and other executive staff trained alongside mid-managers to learn more about the transpersonal dimensions of reality through the martial arts discipline. This type of body-

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learning added a transpersonal component to their vertical development practices, and several senior executives went on to earn their Black Belts. Senior executives were taught to build community in every activity, and even the organization’s Holiday party was re-designed to promote community across the portfolio of companies. Kaz designed a unique community-building practice using film clips of movies with themes relevant to that year’s organizational learning challenges. Community members would get involved in identifying annual organizational learning themes and then in selecting film clips that used the power of film to bring the themes to life during the annual party. Through the years, PH’s transformation to Dual Bottom-Line was enabled by various individual, team, organization, and enterprise-wide practices, a few of which have been highlighted here. The importance of “practice” remained central in the company’s approach to learning, as the PH employee handbook describes: Our approach is aligned with that of Aristotle, who maintained that excellence is a state of character arising from habit, and that we acquire virtues of character by practicing them. According to Aristotle, excellence applies to our character, not to an individual act, to what we are, not to what we do. Our character is a composite of our habits or dispositions, and these habits or dispositions are created through numerous acts – or practices – over time.

Over the period of a decade, the CEO was well on the way in his journey toward building this portfolio of business into a DBLLO that scaffolded and developed Stage III and IV leaders across the workforce.

CHAPTER 21 AN INTERNATIONAL MANUFACTURING CONGLOMERATE: INDUSTRIAL ENGINEERING TECHNOLOGIES (IET)

A global, publicly traded corporation with the pseudonym Industrial Engineering Technologies (IET) was comprised of six business units that operated fifty manufacturing facilities in fifteen countries around the world. IET specialized in manufacturing highly engineered components for critical industrial applications. Their workforce of about 6,000 people had an outstanding safety record. Their financial performance was sound, but not exceptional. Their CEO was hired in 2008 by IET’s board to improve the company’s performance in all aspects, with the understanding that their operating businesses required strategic repositioning. Their pick for the job had several decades of prior experience as a CEO and an established track record for improving performance. The new CEO’s transformation objective for IET was to build it into a high-performance company that ethically delivered on its fundamental mission to exceptionally meet all shareholder requirements while providing an operating environment that supported the growth and development of the workforce. To that end, shortly after taking over, the CEO, with the help of an external consulting team, personally began designing and delivering a week-long Stage-III senior executive leader development program, offered twice a year to cohorts of 25 participants.

Catalyzing a Heuristic Journey toward Stage IV Leaderand Organization-Development The CEO had been committed to teaching leadership and personal growth for more than a decade before Kaz and his partners met with him in 2011 to expand on his response to a survey request to identify Stage IV Leaders.

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As was described in detail earlier in this text, Stage IV leaders embody the characteristics and values of servant leaders but have matured to a more comprehensive and subtle level of development, where they exhibit a capacity for extraordinary functioning and performance. At the heart of this kind of performance is their capacity for accessing tacit knowing for breakthrough thinking, strategy formation, operational excellence, and innovation, including envisioning and creating the kind of organization or society they desire. The CEO reached out to inquire how he could become a Stage IV leader himself and how he could build IET into a Stage III/IV organization. Thus began Kaz’s 6-year client engagement with IET. The CEO wanted the company to become a Dual Bottom-Line organization where excellence in business performance was co-equal with growing and developing Stage III/IV leaders. Kaz’s job was to manage the day-to-day implementation and execution of the Nothing Extra approach while at the same time coaching and teaching the CEO, his division presidents, and their extended management teams, on how to build authentic communities. During his engagement, Kaz led the CEO and a team of executives to codify a Dual Bottom-Line framework in five Practice areas to provide a foundation for teaching Stage III and Stage IV organizational development and leadership. They defined their Dual Bottom-Line practices as: x Operating Philosophy or Essence: Purpose, Values, and Operating Principles; x Hierarchical and Communal Governance and Organizational Structure; x Our Way of Working through Practices and Processes; x Leading Incremental Change, Renewal, and Reinvention; x Designing Value Creation. For IET, Dual Bottom-Line means that the company places equal value on financial results as human development, with no trade-off between the two, and they are used together in pursuit of company and personal growth. For the CEO of a publicly traded company with a duty to communicate with the company’s Board of Directors, shareholders, employees, and customers in a culturally effective manner that respects each sub-culture’s way of understanding, clarifying the outcomes of both Bottom-Lines was essential. It can be done in different ways, but results communicate more effectively than descriptions of method, and IET delivered results

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Setting a Field to Uncover the Organization’s Operating Philosophy Over a year, Kaz and his partners engaged in first bi-weekly, then monthly, two-day learning and development sessions with the CEO to engage him in critical thinking and dialog about Dual Bottom-Line theory and practices. They also conducted an extensive series of generative interviews with the corporate staff, division presidents, and executive staffs of the operating businesses. In addition to these generative dialogues, they met with the company’s executive team outdoors, in Nature. There, they taught various members of the team to use a new awareness of Nature to cultivate deeper levels of “personal knowing” and to access the power of Nature to cultivate their own heuristic inquiry. These leaders learned to use collective intelligence and conditions of authentic community as they cultivated IET’s Operating Philosophy, its Essence, in a statement comprised of the company’s purpose, values, and operating principles. x Purpose: To enable the full release of human possibility. x Values: Safety, Excellence, and Respect. x Operating Principles: o All IET leaders are servant leaders; everyone is a leader. o Leadership is demonstrated through behavior, constant learning, and teaching. o There is a natural creative and generative power available to everyone. o Knowledge is available through inspiration, instinct, and intuition. Decision rights are held closest to the work being decided on. o Daily work is designed to require increasingly better performance and people development. o A clearly defined value proposition paired with the capacity to execute wins. o The collective intelligence of the group always outperforms the individual.

Building a Transformation Roadmap: Cultural Context, Practices, and Initiatives Prior to this engagement, the IET holding company did not contribute value to the enterprise. IET had a minimal corporate center, divisions were decentralized, and each division had their own functional support staff. This

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led to excellent Stage III leadership, but was inadequate to cultivate a Stage IV executive leadership team. A Stage III organization needs to scaffold and develop its people by placing them into growth roles across the enterprise. Excellent performers need to be moved across divisions and functions to be given horizontal development opportunities. To accomplish this, about a year into the transformation, Kaz worked with the CEO to build his direct reports into an Executive Leadership Council (ELC). This was a means to scaffold the CEO’s growth and development through daily work by building an authentic learning community that had responsibility for the whole of IET’s enterprise-wide transformation, rather than just that of their siloed individual divisions or functions. Over time, the divisions began to learn to operate as one learning community, distributed among six organizations. Kaz developed the Dual Bottom-Line transformation framework illustrated below to help the CEO scaffold his executive team to work as an authentic community though collective intelligence. This is the governance structure that enables the scaffolding of Stage III and IV leadership in a company formerly run as a traditional Stage II hierarchy.

Figure 21-1. Dual Bottom-Line Learning Community Framework at IET.

Using this framework, the CEO identified six Strategic Initiatives (the organization’s content goals) at the IET enterprise level, addressing issues that were impeding enterprise-wide performance excellence. These were in the areas of: x Strategy Formation x Human Development x Innovation (New Product Innovation)

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x Manufacturing (World Class Manufacturing across the Enterprise) x Sales and Operations Planning x Commercial Excellence As is typical in decentralized operating businesses, each Division excelled in one or more of these critical areas, but the enterprise did not. For IET to excel as an enterprise, the ELC needed to become an authentic learning community that could lead the enterprise through a transformation in each of these six strategic initiatives. Each division president was teamed with a function leader to co-lead a Strategic Initiative for the enterprise. They had to “pitch” their improvement agenda to all six business units, and they had to “catch” pitches from the other five teams within their own organization. These efforts became the center-point of an enterprise-wide community-building process.

Community Building Through the first six months, Kaz and his partners worked with the CEO to build various teams, groups, and organizations into authentic communities. In addition to the ELC, an Operations Council was initiated, comprised of 200 of the ELC’s direct reports and most important leaders. They were required to work as a community of 200 and were deployed into the Strategic Initiative teams to implement the Strategic Initiatives. Community-building sessions were used to develop an enterprise-wide ability to move beyond working in hierarchically siloed pseudocommunities into more authentic communities. Over years of small and large group sessions, an IET Stage III communal culture began to emerge across the enterprise. That required various members to begin to learn to conduct themselves as practicing Stage III leaders and aspiring Stage IV leaders, a process that often takes years to move through. One notable community-building event centered around enterprise-wide manufacturing excellence for a group of about 100 leaders who occupied leadership roles in the organization’s factories around the world. To bring the Dual Bottom-Line to the factory floor, where most of the organization’s employees worked, many in this group would need to mature beyond Stage II leadership. They had a particularly hard time letting go of the mental models and fundamental assumptions blocking authentic community at work. They were habituated as a community into a WOS worldview, and shifting them toward a Systems Worldview took significant attention on the part of the CEO. Kaz asked the CEO to co-facilitate this three-day process with the group because manufacturing leaders are routinely habituated to Stage II cultural

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environments. It is important to keep in mind that the CEO continued to offer a Stage III-type leader development training that he personally taught to many of these mid-managers and executive leaders. In addition, the two of them had practiced building community in multiple settings before, so the group did eventually become an authentic community, and building community on the shop floor became an organization-wide norm. A CEO operating from a Stage IV perspective has significant influence in moving the organization through the early stages of development. Over the course of a decade, and having practiced personal development through daily work, IET’s CEO was able to lead and operate routinely as a StageIV, phronetic leader. Several years into the process, he described the meaning of the full release of human possibility as: We believe each human being comes to the world with a perfect soul fully worthy of dignity and greatness, bearing their own unique set of aptitudes and capabilities, forged to purse a certain destiny. The pursuit of this destiny is uniquely a lifelong journey for each individual. [IET] is committed to providing an environment that enables this process to unfold for everyone.

An issue in any company intending to sustain its developmental growth is whether the organization’s Operating Philosophy and culture will be embraced or overturned by subsequent leadership. To sustain a Dual Bottom-Line cultural context, multiple generations of leaders need to embrace and sustain the Dual Bottom-Line Framework as a system of thought and action. This means that, not only is it essential that the CEO and other senior executives learn to practice Stage III leadership and to aspire to become Stage IV leaders, but that a transition plan be put into place to maintain that level of leadership for several generations to come.

CHAPTER 22 A SMALL, PRIVATELY-OWNED HI-TECH COMPANY: GLOBAL INORGANICS

The company we’re calling Global Inorganics (GI) was a privately owned, Canada-based specialty chemicals manufacturer established in 1987 by a recently graduated PhD chemist. In an archetypal story of entrepreneurship, Ragi (pseudonym) started the company in the equivalent of his garage. His future wife, Anna (pseudonym), also a PhD chemist, joined shortly thereafter. With a lean yet loyal production staff and sales force, and a few outside investors, they built themselves into a small, highquality, global specialty chemicals company. Over the course of thirty years, GI slowly gained a global reputation for their Scale-Up Science technologies. The company supplied both custom and high-volume stocks of a particular set of chemicals at parts-per-million levels of purity. Their products were used in industrial processes, pharmaceutical applications, and in the production of advanced technology materials for the semiconductor industry. They specialized in producing small sample-quantities of these fine chemicals in their research labs using bench chemistry, and then speedily producing them in larger manufacturing batches in their Canadian facility. Building the company meant constant trials and sacrifices from all involved. There were lean financial times with vendors and banks lining up to be paid, and countless production challenges to be mastered. Ragi recounted: We were heavily reliant on one customer for revenue. When they switched to someone else, I was in the hole for two million dollars. It took discipline, sacrifice, and soul searching, but our people circled the wagons. We had a lot of help from our people to stay afloat. Our workforce collectively made sacrifices.

For these sacrifices, over time, the workforce was rewarded through an employee stock-ownership plan.

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By 2012, success and legitimacy were attained, and with it, a chance for this serial entrepreneur to take on even greater risks and opportunities. Ragi arranged to sell a non-controlling interest of the company to a first-tier world-class electronics technology innovator. The deal was intended to springboard the company’s current plateau in technological and financial performance to a completely new stage of development by stimulating organizational learning and knowledge creation at scale. Having learned of Robert Kegan’s description of Deliberately Developmental Organizations (Kegan, 2017), and having read the book Source (Jaworski, 2012), both of which describe Kaz’s work, Ragi reached out to Kaz for assistance. Since, in the chemical business, environmental responsibility and workforce safety are equal in importance to profitability and workforce development, his goal was to transform GI into a Triple Bottom-Line Learning and Knowledge Creating Organization. Triple Bottom-Line organizations balance economic growth with environmental integrity and social responsibility. Each bottom line is measured independently, but the company functions holistically when considering the impact of their actions. It was not enough to become a learning organization: being a learning organization is not sufficient for rapid product and process innovation. GI needed to develop the capability to practice heuristic discovery at scale, from the chemist’s bench to the factory floor, at parts-per-billion quality standards. In 2014, Kaz began a client engagement with GI that ended six years later in 2021, when GI was acquired by a large, global competitor. In an early generative dialog session, Ragi related that his passion for product discovery emanated from the deepest parts of his core: My fundamental duty is to Source, it’s not just to the company, it’s to myself. If I do not take this company to its fulfillment, I will feel like it was a failure. This completion is part of why I was born, why I am here on Earth. I go with my heart and with my gut. I do not stress it. I do it because I am called to do so. We are all servants. I am here to serve Source and to design the material world, and to change that reality by the way we think and act.

To enable his vision, however, Kaz advised Ragi that he was going to need to relinquish his personal operational control of the company and invite in a new generation of leadership. While Ragi personally held a Stage IV worldview, he tended to act as a Stage I/II leader when he was stressed. The company needed a Stage III/IV culture and Ragi was not going to be able to lead that transformation without his own development.

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The owner of this family-owned business needed to engage in his own vertical development by turning over aspects of the company’s leadership to others.

Leading Cultural Transformation – Uncovering and Transforming Cultural Bias The organization needed to be designed, governed, and led differently to make the step-change necessary to deliver parts-per-billion chemistry rather than their previous parts-per-million chemistry. For nearly 25 years, as its CEO and Chairman of the Board, Ragi had ruled over the company with unquestioned dominance. Now, however, the company needed a stepchange into hyper-learning and collective intelligence driven, not by its CEO, but by its technical community. It needed Ragi to play an even greater strategic leadership role to position the company for value creation while he tuned over its operations to a new generation of Stage III leader. This turned out to be his wife and business partner of 25 years, whom we’re calling Anna. With scaffolding and support, Anna took on the day-today operation of the company with compassion and determination. As she reflected later: Kaz joined us at a time when the company was doing well enough financially but was suffering from a high degree of organizational and interdepartmental dysfunction. Although this was what I considered my family’s company, and I was involved in it from day one, I felt like an outsider looking in. While I was on the functional staff, I had always been Ragi’s advisor. Soon after I shared my feelings with Kaz, he proposed … that I become COO. To go from my staff position to being put in charge was pretty mind-blowing but, as they say, ignorance is bliss, and I was blissfully unaware of what I was personally undertaking. Running and, at the same time, transforming the company into a Triple Bottom-Line organization was a big ask for me and for all of us. We did change the company’s culture and we outgrew the dysfunctional behaviors. The company did transform. It became a significantly safer company and for a company that produces highly hazardous chemicals, that is no small achievement. As important is the fact that it became an emotionally safe place for its employees.

Shortly after taking control of GI, Anna directed the company through a very difficult set of cultural transformations. Historically, the company’s manufacturing was led by PhD chemists rather than engineers; they lacked

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a safety culture and an engineering core competence. GI could not build and sustain parts-per-billion chemistry without world-class engineering at the center of its manufacturing capability. Kaz advised the company to center their organizational transformation around growing the company safer before growing it financially. Anna took on the multi-year challenge of adopting a zero-incident safety culture and mindset, but to do so, she had to overturn decades of cultural bias toward the engineering discipline. Anna recruited and hired an exceptional Stage III engineer and community builder, whom we’re calling Julia, to transform their manufacturing operations. Together, over four years, they built an interdisciplinary hyper-learning scientific community comprised of PhD chemists and engineers who established a core competence in parts-perbillion chemistry at scale, as well as a zero-incident safety mindset. The Director of R&D, whom we’re calling Lloyd, reflected on the process: Before building a Triple Bottom-Line company, [GI] had several battling silos. The business was basically run by chemists. This one-sided bias had helped [GI] develop innovative chemistry solutions; however, the implementation at scale proved difficult and nonreproducible. This caused great frustration to our customers having to deal with [GI]’s constant lateness on products that they claim to have commercialized. It was 20+ years into the company history before an engineer was hired. [GI] naively thought that one engineer was all that was needed. Even outside of [GI], there has always been a quiet rivalry between engineers and chemists, with each group having respectful yet condescending thoughts about the other. This violated everything about building and working in community. It came down to simple respect for each other. [GI] worked hard on this mindset and hired several engineers to help run the facilities properly. Scale-Up Sciences required that these two groups work seamlessly to achieve our goals and outcomes. Working on self-development, being authentic, and being in community allowed Scale-Up Sciences to blossom. The rivalries still exist in a respect manner and with good-natured ribbing.

Anna and Julia demonstrated an unequivocal commitment to human safety that led to organizational trust and a commitment to learning and development in the workforce. The company became, not only physically safer, but also psychologically safer—whether in the executive offices or on the manufacturing floor. Lloyd reflected: An important council was developed to breakdown previous silos and improve our manufacturing efficiency: the Operations Council. Like the Executive Council, the Operations Council would be more technically

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focused on chemistry, engineering, supply chain, manufacturing, shipping, etc. The same individual, communal, and organizational developmental goals of building a Triple Bottom-Line business applied: Stage III and IV leadership practices with renewing and serving leaders; scaffolding development through daily work (and scheduling); and practicing the five activities that included business and analytical practices, technical skills and capabilities, self-mastery and self-awareness, and community building. The Operations Council had its good and bad days as they continually evolved into a functioning unit.

One of the more difficult Stage IV leadership challenges for the group entailed finding a new identity and role for the former head of manufacturing, an exceptionally talented PhD chemist. As one of the company’s first employees, and as one of its most important technical contributors, his knowledge, expertise, and experience were central to the company’s ongoing success. With great humility and in the spirit of community, he stepped out of his role as head of manufacturing into a new role, guiding product and process innovation. This was done through a comprehensive set of community-building processes that reached into every aspect of the company’s operations.

Community Building and Organizational KnowledgeCreating Community Kaz worked with his consulting partner, Beth, through all six years of the GI engagement. They worked as a team to build community at the scale of all one hundred employees through monthly community-building sessions in groups of around fifty at a time. The entire culture needed to move from occasionally performing as a Stage II community during a crisis into a group that could engage in authentic and hyper-learning community consistently, by choice. According to Nonaka and Takeuchi (1995, 2019), a knowledge creating company excels at converting tacit to explicit knowledge at scale. GI’s organizational innovation practices were built based on the SECI knowledge creating process as depicted in the chart explained in Section Three, above, and repeated below:

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Figure 22-1. The SECI knowledge-creation process (source: Nonaka and Takeuchi, 1995).

The scientific communities within GI needed to meet in community to exchange tacit-to-tacit knowledge through Socialization, then learn to convert their tacit insights on new products discoveries or manufacturing process through Externalization. Prototypes and samples needed to be codified into explicit-to-explicit manufacturing and safety processes through Combination and Internalization by PhD chemists, engineers, and skilled manufacturing chemists into new forms of tacit knowledge. GI needed to build and strengthen this innovation engine in its organizational practices of heuristic discovery. It did so through its community-building practices. Lloyd, as R&D director, said it this way: We invented the Scale-Up Science community to take R&D chemistries into the next level of scale up. Kaz challenged me to critically think about our system gaps. The initial concepts were devised and began to really show promise once other people’s contributions were brought into the discussions. This reminded me of the learnings of Professor Ed Hess’ teaching in Humility is the New Smart that stated having diverse minds working on a problem leads to innovative solutions. Scale-Up Science’s development can be described as core competency community rather than a group of people with diverse backgrounds. The community that became the Scale-Up Science Council included chemists, engineers, production staff, and others.

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The initial infrastructure of understanding and practicing community was critical to the work performed in the integrated and systems-oriented ScaleUp-Science manner. Various teams formed and disbanded as needed to complete the project. Scale-Up Sciences was becoming GI’s competitive edge for quickly assessing, developing, and implementing new projects and legacy issues.

Everyone was involved in building the company into a more authentic hyper-learning community. They created multiple councils, including an Executive Leadership Council, Science Council, Safety and Manufacturing Council that practiced hierarchical and communal governance and conducting themselves as authentic communities. This shift, from exclusively hierarchical governance into an agile and adaptive hierarchical and communal governance model, took several years. First, the senior executives needed to learn to lead both hierarchically and communally, then they were able to build and lead councils with their subordinates on their own. The Executive Leadership Council, an interdisciplinary group led by Anna, took complete responsibility for transforming the entire enterprise. Slowly, councils began to work with councils across the enterprise. According to Lloyd: We learned that building community is a never-ending job. People’s lives and work situations can change and cause entropy (chaos) in the community. Constant openness and transparency were key to building community with others during times of change and chaos. I’ve found that the openness of community diminishes over time if connections with individuals were not maintained. Building community was constantly stressed, because the real building of a Triple Bottom-Line organization can begin with people in community.

Community building requires a commitment to authenticity, personal vulnerability, and an openness to self-development that needs to be scaffolded and supported over time. One of the new engineers shares his insights: I was lucky to join [GI] at the very beginning of their transformation journey, as an engineer. I was left intrigued by the first few communitybuilding sessions we had together. I remember our first offsite meeting about 5 months after I joined, and the company sat together for what I joked about years after as the “airing of the grievances.” It was an intense series of days, each one leaving a more painful vulnerability hangover than the last. There were confrontations, confessions, sharing of personal viewpoints, and apologies. The truth was, when we started, we were a pseudo-community. There was a toxic culture at [GI] with an artificial narrative of being a “family” that left

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Chapter 22 people weary and disgruntled. People were clearly desperate for connection, to feel something real. It felt electric while we were in that circle, when we reached authenticity, but in the beginning, it didn’t feel great right after. It felt like a prolonged discomfort that you just can’t shake. It was only after many months of practice that I was able to stop replaying my personal exposure in my mind at night. I know now that this was part of the development I was undergoing, learning to not be afraid to be seen. Lordy, I had the hardest time with I statements! I had worked long and hard my whole life to communicate exclusively in veiled generalities, thank you very much. The early days I was continually prompted to restate myself in I statements, and I literally could not. Honestly, I did not know how to own my words and their impact on others. That was the first and most important developmental milestone for me. Personally, I was ready for this level of challenge and so, despite having so far to grow, I was willing and able to make the climb.

Community building is culture building and leader development. Individuals grow into a more authentic and complete version of themselves and, in doing so, set in motion new ways of communicating, interacting, and deciding that establishes a new culture within an organization.

Endings and New Beginnings The challenges of capitalizing such an aggressive growth strategy led to selling the company as the best way to take it to its full potential. Over the course of the six-year engagement, Ragi successfully cultivated several new investors to infuse expertise and capital into GI. After guiding the company’s growth for nearly 30 years, however, it was time for the family to sell and move on to their next endeavors. Ragi became a serial entrepreneur, enfolding the GI Operating Philosophy and Stage IV approach to leadership in another start up in another branch of chemistry. He has followed his heuristic passion by forming a new company and inventing new ways to create new knowledge to reshape the world as we know it.

CHAPTER 23 MILITARY LEARNING ORGANIZATIONS (MLO)

Out of respect for our client’s military disclosure requirements, this heuristic portrait will differ in style from its private sector counterparts. Kaz has had several client engagements with branches of the U.S. military determined to become learning organizations (MLO). The first engagement involved the Army and the others involved multiple Navy commands. All of them were based on a recognized necessity to prepare military leaders who can empower agile and adaptive individual and organizational learning within their commands. Their needs are best summarized by Edward Hess’ definition of hyper-learning: “human capability to learn, unlearn, and relearn continually in order to adapt to the speed of change,” without a crisis (Hess, 2020; 1). Kaz was asked to participate in the Navy’s 2017 Strategic Readiness Review (U. S. Navy, 2017; 74), which was an inquiry into a series of mishaps involving the 7th Fleet. This report identified the need to build the Navy into a learning organization as a necessary strategic imperative. Their definition of a learning organization and a learning culture is founded in Peter Senge’s (1994) theoretical and practice foundations: A learning organization is an enterprise that encourages, and ultimately embraces, learning though Systems Thinking, personal mastery, mental models, shared vision, and team learning. Faced with a dynamic environment, a learning culture is critical to ensuring adaptability of the organization. A culture that makes people eager to understand risk enables early identification of systemic risks and behaviors before problems occur. It is a culture that embraces a willingness to investigate, analyze, assess, and learn from mistakes. (U. S. Navy, 2017; 74)

The report went on to say that while the Navy espouses a learning culture, in the aggregate it has failed to embrace and practice a culture of learning. While they acknowledge that the Navy had pockets of learning culture excellence, they stated that it lacks means and methods to systematically transform commands into learning organizations. (U. S. Navy, 2017; 78) Through various engagements, Kaz had been educating

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multiple commands on how they can, not only become learning commands, but also Dual Bottom-Line Learning Commands where mission accomplishment and human development at scale are co-equal goals. Kaz has led various leader-development, operational, and acquisition commands through the process of community building to enable authentic community and to build hyper-learning cultures. Building community and hyper-learning in the military, as in other organizations, is an ongoing process, in which the leadership’s development is key. During periods of crisis, however, military commands—like other organizations—can often operate as high performing learning organizations and authentic and hyper-learning communities. The senior civilian leader of a large Naval Acquisition command reported how the 9/11/2001 attacks catalyzed their command into hyper-learning: It was as if a curtain was suddenly lifted and suddenly the entire Acquisition Command was acting as a single unified community achieving remarkable results. I was working in the Command after 9/11 in 2001, and it was as if we shifted gears on September 12th. I got to see funding documents processed through this Command at an amazing rate. I saw Congress give us funding authorities without any appropriations attached to them. I saw our contracting officers go out to industry with unlimited warrant authorities to sign letter contracts to immediately start procuring equipment and weapons. I watched us redesign our industrial lines to prepare for a 30 percent increase in throughput in our sustainment commands. I watched the fleet send an urgent request for improved weapons to combat terrorists and not harm innocent civilians. And I watched us produce, time and time again. We had a sense of urgency.

Once the crisis passes, though, most organization return to their prior developmental levels of functioning, typically as Stage I/Stage II pseudocommunities (Peck, 1993) and this has been the military experience, as well. In response to their request, Kaz’ss work with military organizations has centered around introducing commanders to a deliberate and systematic approach to building commands into advanced learning organizations, based on a military version of the DBBLO Methodology as depicted below:

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Figure 23-1. Overview of Military DBLLO Methodology.

The Military DBLLO Command Transformation Methodology that Kaz has been facilitating introduces the progression of Stage I, II, III, and IV leader, organization, and cultural context development. In addition, he has identified six military specific organizational learning and development practices relevant to driving mission excellence: x Teaching a Dual Bottom-Line Command Philosophy x Implementing Collective Command and Control Governance x Framing the Command (10-15 years) and Commander’s (3-4 years) Strategic Intent x Community Building from Pseudo-community to Authentic and Hyper-Learning Community x Implementing a Nothing Extra Approach to Scaffolding Human Development x Stage III/Stage IV Leader and Organization Development The methodology begins with evaluating the stage of development of the Command’s Cultural Context, and then it poses the questions: x How would each stage of leader and organization development impact the Command’s Mission or Goals favorably or unfavorably? x What stage of Cultural Context is required to achieve the organization’s mission with excellence? After identifying the type and depth of organizational learning culture they are operating within, the command is asked to evaluate its performance against Kaz’ss six Organizational Learning Practices. A plan is then

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developed to implement the various practices at the appropriate stage of development. The Dual Bottom-Line approach to military commands anticipates the need for leader development as a driver of mission performance. Former Chief of Naval Operations, Admiral J. M. Richardson (Retired) anticipated the concept of developmental learning in his charge to advance leader development in The Naval Leadership Framework V3.0 (Richardson, J.M.; 2019), when he spoke of top leaders inspiring their teams to perform “at or near their theoretical limits,” by inspiring best ever performance: Navy leaders inspire us to relentlessly chase “best ever” performance. They study, innovate, experiment, practice, sustain, seize every moment, expend every effort – all to outfox our competition. They connect, communicate, challenge, and train with us. Our Navy leaders are humble; they are open to our meaningful feedback. They are ready to learn and make all of us better. When they win, they are grateful, and spent from the effort. Navy leaders form our teams into a community, with a deeply shared commitment, dedicated to the pursuit of victory (Richardson, 2019; 4).

When individuals, teams, and commands are performing at what Richardson calls their “best ever performance” (at or near their theoretical limits), they are performing at what Kaz refers to as their “horizontal and vertical developmental horizon.” It is important to recall that traditional leaders relate to their workforce at their current stage of development, while DBLLOs scaffold and lead them beyond their theoretical limits of one stage of development onto their next higher stage or horizon of performance capability—scaffolding them from Stage II into Stage III, for example. As in any organization, the process of creating authentic community through deliberately developing Stage I and Stage II leaders into Stage III and Stage IV leaders within military units makes it possible for all units to function in a cohesive manner. This process was implemented by the Navy Seals, as described in Stealing Fire (Wheal and Kotler, 1995), which we used as an example earlier in this book. Such streamlined units are highly effective in the constantly changing, high-focus, creative problem-solving environments of the emerging military. To create such units across any branch of service requires streamlining the training process at every level. Ultimately, using the Nothing Extra approach, the fundamental renewal of character and competence for commanders and their organizations occur through mission-critical and daily work. With that approach, vertical development opportunities are integrated into horizontal developmental experiences within the framework of daily operations and missions, and self-development within authentic

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communities becomes a fundamental aspect of being in military service— with powerful, effective responses to threats to the nation’s security being a consistent outcome in action.

CHAPTER 24 NONPROFIT SERVICE ORGANIZATIONS

The concept of Dual Bottom-Line is traditionally measured in terms of profits and financial success, but applies equally in those organizations where earning money is only a means to accomplishing other goals. The structure and operation of organizations in the nonprofit sector is just as subject to the developmental level of their leadership—and the capacity to achieve measurable objectives and a mission is just as amenable to the heuristic discovery of knowledge-creating communities. While both Kaz and Ruth have worked to build community within and among nonprofit organizations, the bulk of Ruth’s applications of the concepts and methods outlined in this book have been in that sector—both as a consultant to and as the official head of such organizations. In her role as a consultant, she has assisted organization leaders in creating a participative community of creative learners, jointly clarifying a mission, goals, and the strategies for achieving them. Through a series of one-on-one sessions, she sets the field with the CEO and core leaders, during which they jointly design a retreat for the “20%”—the active participants in the organization. During that retreat, usually 1-2 days, the group works through community-building exercises and defines the organization, its mission, and their vision for it. A series of follow-up sessions with team leaders across the organization help to bring the results of the retreat into day-to-day operations. This process is typically repeated a couple times a year until it’s become a normal part of the organization’s function. When hired as the official head of an organization, Ruth has often been expected to operate as an authoritarian leader, in which she sets the vision and informs the staff and volunteers what is theirs to do and how to do it. In practice, though, she has learned to facilitate the emergence of a shared vision among the staff and volunteers, and to encourage them to implement the portion of that vision that they feel most called to make manifest. For the first few months, she simply participates and observes. Then, once she has a sense of who is doing what, rather than declare the why, what, and how for the organization, she facilitates vision sessions by which the members create and confirm those fundamental values and expectations.

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She then invites them to develop maps of potential activities to accomplish the What, always keeping in mind the Why. How these activities are to be accomplished is left up to those who choose to do them—in alignment with the organization’s agreed-upon Why and What. Typically, those doing the How form teams to implement the agreedupon activities. These teams often have overlapping membership, including at least one person acting as coordinator (to call meetings and maintain records of decisions made and pending), and one member from the board of volunteer directors or trustees who are legally responsible for the fiscal and legal health of the organization. Her job as the official head of the organization, then, is to encourage, mentor, and appreciate the work of both staff and volunteers, while maintaining a regular series of inspirational and mind-expanding activities that involve all the members in deepening their understanding of Why the organization exists. It’s also to let go of any expectations that the How will happen in any preconceived way—the work must be done however those who are doing it feel best as they do it. Ruth occasionally joins in, working and learning alongside other staff and volunteers, and may offer a suggestion if there appears to be a difficulty, but it’s their process, not hers. Her other job is to listen. Information on how to reach her is available to all members, her office door is open most of the time, and people know they can come to her with any kind of issue and will be given some kind of assistance. It may be simply that they’ve been heard, or it may be as complex as help in creating a process by which their issue is addressed by one or more of the action teams in the organization. If there are personal problems, she works with a member-care team within the organization that has been set up to offer whatever services can help the member through the problem, so they may become, once more, active and effective contributors to the organization. If a member is ready for greater involvement or has a developmental goal, Ruth’s job is to help them see how they can work toward that goal through their involvement within the daily operations of the organization. Finally, she is the “back-up, in-fill” person, picking up whatever small but essential job that may have gotten missed or that no one was available to volunteer for in the moment. The emphasis here is on the word “small.” If it’s a major task and no one is available to do it, then the operational system is not working and a process is put in place for the organization to address it—either by setting up a system to accomplish it or by tabling it for the current cycle of budget and projects. The result is a level of excitement and anticipation among the members that keeps volunteer involvement high, and encourages others to become

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members and participate as volunteers. The organization’s membership grows (typically by three-to-five times in 3 years), its service to and visibility in the community is increased, and the level of warmth and excitement among those both providing and receiving benefits is palpable.

PART FIVE. SUMMARY & FINDINGS

CHAPTER 25 FORMING DUAL BOTTOM-LINE LEARNING ORGANIZATIONS: A HEURISTIC DISCOVERY PROCESS

While most of us have experienced the power of working with a group that is totally in synch while addressing a crisis, those events are rare and far-between—and do not last. The research described in this book, however, has demonstrated that organizations don’t need a crisis to enable such experiences of authentic community and hyper-learning. Instead, they can build a culture to sustain these as normative ways of working, using the DBLLO Framework that we have summarized here. DBLLOs learn to build the conditions for individual and organizational development proactively and by design instead of waiting for a pseudo-development version of authentic community to occur through crisis. This third generation of learning organizations, which we’re calling here Dual Bottom-Line Learning Organizations, make it possible for leaders, communities, and whole organizations to overcome what Robert Kegan calls being “in over their heads” (1984). They do so by communally legitimizing and systematizing both horizontal and vertical developmental growth, across management and the workforce. Implementing the DBLLO Framework led to the discovery of a means by which organizations can enable human development at scale that is affordable and manageable within their need to deliver business/mission results. We call it the Nothing-Extra approach. Using Nothing-Extra, the daily work itself is the vehicle through which human development is cultivated. Managers and workforce alike become adequate to meet and overcome an organization’s most pressing existential problems by working with and through those problems to grow into their next, most complete and evolved level of development. The process of creating the DBLLO Framework was a journey of heuristic discovery—and so is its implementation. From the earliest generative interviews and dialogues through discovering and codifying the Essence of the organization, through all the hours of community-building practice, through defining an economic engine, through decentralizing

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power structures, and scaffolding learning all along the way, each phase of development involves discovering and working with a heuristic passion— and becoming far more than was thought possible in the process.

CHAPTER 26 FINDINGS & GUIDING PRINCIPLES

By following his heuristic passion, Kaz has woven together a set of theories, principles, and practices that, when applied in organizational settings, have transformed individuals and the entire organization into systems for ongoing development—in both human and production terms. To summarize the results of this discovery process, we offer the following findings—which may be the basis for further application and research. 1.

Heuristic discovery is a powerful scientific method for development, knowledge creation, and innovation as it is motivated by a passionate quest to discover. The process Kaz used to develop the methods and practices outlined in this book was not the standard, experimental Scientific Method, but instead, he used Heuristic Discovery, an important but lesser-known scientific method for innovation and knowledge creation. He was intent on translating his community building and transpersonal psychology knowledge into a new generation of learning organization that enabled full human development in the workplace. To do so, he needed to follow his intuition and an inner Calling, while taking one practical step after another. He had the felt understanding, and mastered the skills necessary, to accomplish his passion: provide a way for workers to develop themselves as human beings in the course of their daily work in an organization. This Heuristic Discovery approach was based on the work of Michael Polanyi, described in some detail earlier in this text. In doing research for his doctoral thesis, Kaz discovered that Polanyi’s concepts of personal knowledge and phases of heuristic inquiry described his own knowledge-creation experience. Polanyi’s structure of knowledge creation described perfectly what he was experiencing—and provided a systematic method he could use to accomplish his initial goal of helping develop the workforce, and, ultimately, develop the DBLLO Framework. In the workplace, as we saw in the cases of the companies called Premier Holdings and Global Inorganics, applying this approach leads to new, previously unconsidered solutions to what would normally be seen as

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intractable problems. For individuals, as the senior executives Kaz has worked with and both Kaz and Ruth have discovered in their own lives, applying the Heuristic Discovery approach leads to profound expansion of capacity to understand and manage complexities and disruptive environments. 2.

When people are seen as ends unto themselves, with their own inherent dignity, as well as means to an end, superior financial return and human development become synergistic, mutually reinforcing. While the mechanistic WOS worldview of organizations has treated people as means to an end, to be closely monitored and supervised, the mental model that Kaz has worked from since his first management position has been that workers are human beings with inherent dignity and innate capacities that are rarely given opportunity for development. His experience in various positions demonstrated that, when the people doing the work are encouraged to develop their full selves at work, they perform at significantly higher levels—which, in turn, leads to an improvement in the financial bottom line of the company. This principle was clearly demonstrated in the cases described above— from the level of senior executives to the frontline workforce. As they saw the possibility for developing themselves, they were willing to develop, and the company benefitted at least as much as they did. 3.

Humans and organizations can develop both horizontally (professional, technical, or artistic skills and knowledge) and vertically (shifts in awareness of ego, self, identity, mental models, worldview). While most companies provide at least some of their workers with opportunities to develop skills and knowledge relevant to their role in the operation of the organization, there is untapped potential for both the individual and the organization to function at a higher level of selfawareness, and to use their human capacities more fully. Horizontal development increases skill and knowledge, but vertical development is essential for developing an individual’s capacity as a human being. Through community-building processes and scaffolding individual development, each member of an organization has the opportunity to explore and become more fully aware of their sense of identity, their mental models, their limitations, and their potential—and they have opportunities to practice and receive feedback as they work on their own vertical development and see that of the people around them.

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In the cases described above, vertical development of the senior executives was a top priority, essential for the organization to function at a higher level. Kaz used a variety of group and one-on-one methods, including Dialogues for Development and scaffolding, to bring this about— and experienced developing himself, in the process. 4.

Humans construct their metaphysics, worldview, and mental models based on their own developmental level, which then becomes the basis for their culture and experience. Whatever culture we grow up in, there’s both tacit and explicit assumptions about who people are and how the world works. Parents, peers, teachers, and the media all provide very definite, if not always consistent, messages about who and what we should understand ourselves to be, acceptable norms of behavior, and expectations for who and what we can become. We are enculturated to the society’s worldview. Yet, as the above section on systems thinking documents, the reductionistic, mechanistic, the WOS, Industrial-Age view of people and the world, while it has accomplished great things for all humanity, has demonstrated itself to be limiting for individuals and destructive of the planetary environment. At some point, some people, Kaz being an example, break away from that worldview and begin to explore other options. While traditionally the liberal arts curriculum and college environment was designed to expand and clarify a person’s worldview, a college education no longer serves this function. New kinds of experiences are needed if individuals are to be able to develop in that way. In his journey, Kaz found that fully functioning human beings have the need and obligation to choose their mental models and worldview—and the process of building authentic communities at work and at home aids that maturation process. In several of the cases described above, the organization used the process of choosing their fundamental operating principles, the worldview to be used as a filter for all decisions, as an opportunity for individuals to examine and choose their own values and assumptions. As these workforces continue to operate in authentic community, they will continue to discover new possibilities for their own mental models—thus expanding their developmental potential and undoing more of the limitations of the cultural worldview in which they were socialized—and improving their capacity for productivity, learning, and innovation in the process.

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5.

Daily work can be used as a curriculum to scaffold human development and discovery, both horizontally and vertically. While all jobs include routine tasks that involve little skill, most work involves the development of specific skills and knowledge to be performed adequately. The horizontal development necessary to develop those skills has typically occurred outside of the job site, in a classroom setting. The method being described here uses the development of such skills and knowledge as part of the process by which community is built and through which people develop their own mastery. Using daily work as a means of development is a principle that Kaz has applied throughout his journey of developing the DBLLO Framework. As he engaged with clients, he was scaffolded horizontally—technically, in various fields of expertise—and they helped him grow vertically by giving him feedback and guidance on how he could become a more competent leader and businessperson. Throughout his engagements, daily work has been an opportunity for growth and discovery. In the cases described above, this process became particularly evident in the company we’ve called Industrial Engineering Technologies (IET). A number of their factories became communities where front-line workers were scaffolded to learn financial, analytical, and managerial skills, usually reserved for supervisors and managers. The entire manufacturing process was treated as a learning system, rather than exclusively as a production system. It also is fundamental to the work Ruth does in smaller nonprofits and businesses: each member of the organization is encouraged to learn from doing all the tasks involved in accomplishing the organization’s goals, and to develop themselves into leaders of others doing those tasks. 6.

There is a transpersonal source of wisdom and intelligence available to human awareness at higher levels of development. In this method, humans are seen with not only physical, psychological, and social, potential for growth, but spiritual growth, as well. In transpersonal psychology, spirituality is not synonymous with religion, although they can be mutually reinforcing. Full human capacity includes awareness that self and others are connected in a universe that is animated with the potential for expanding into something more. Transpersonal psychologists have demonstrated that full human awareness extends beyond the body and our culture’s limited definition of self. One can cultivate a developmental awareness that we are all connected, and that we occupy a universe where this awareness is present and available to all. For Kaz, engaging in the practice of building authentic community has cultivated his awareness of collective consciousness and access to wisdom

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beyond himself. Scott Peck, Dr. Robert Frager, Michael Ray, Willis Harman, Dean Brown, Joseph Jaworski, and Peter Senge were among those that scaffolded Kaz through disciplined Stage III and IV practices to access and tap into a source of wisdom above and beyond his personal self. Ruth’s journey on this path began at a very young age, with exposure to other cultures and spiritual norms. Through academic studies ranging from comparative religions in anthropology to general systems theory, she developed an intellectual framework supporting her youthful adoption of the existence of a higher power “as a working hypothesis,” and through a lengthy healing process discovered a spiritual practice that conformed to her understanding. Today she is considered by many to be a spiritual teacher, and has been a guide to Kaz, as she has been for many, in his journey to discover how source can be accessed in learning organizations. Coming to acknowledge a “higher power” or “infinite intelligence” requires a kind of humility. It is, after all, a form of hubris to consider oneself and one’s kind to be the only form of intelligence there is. In the cases described in this text, a few people made the shift from feeling isolated from any outside influence to feeling connected with, part of, and supported by a larger intelligence. In the corporate setting, it takes the opening experience of community-building processes to begin to see that there is more available to us than our own mental models and intellect. So, as the companies began to examine their core values and moved from pseudo-community through chaos and emptiness into authentic community, the leaders began to see a new vision of themselves—and of the source of their being. 7.

Individuals and organizations learn, unlearn, and relearn (they function as hyper-learning entities) best, and reach higher levels of development, in authentic communities. Communal hyper-learning, as Edward Hess and Kaz noted in an article written in 2018, is a high-level process that requires the ability to collectively learn, unlearn, and relearn quickly and effectively in a variety of settings. To be willing to accept that the knowledge one brings to a situation may not be adequate, then to be willing to let it go and accept a new set of knowledge, requires a strong sense of identity combined with a level of humility that doesn’t need to defend “being right, regardless.” Both of these qualities emerge and are encouraged in the environment of authentic community, encouraging the development of members of that community into Stage III and IV leaders who can participate in and facilitate hyper-learning experiences, openly developing one another in the workplace.

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While none of the cases described above have consistently achieved hyper-learning, all of them have had glimpses of it, and many of these organizations are striving for more. As they continue to create and recreate authentic community, these organizations accelerate their hyper-learning capacity and begin building hyper-learning cultures, functioning at new levels of capacity and collective function. 8.

Third-generation, Dual Bottom-Line learning organizations not only encourage the individual and collective acceptance and humility requisite to attain higher-stage leadership, they encourage hyper-learning at all levels of operation. The concept of learning organizations has been developed and applied for almost 40 years, as of this writing, and the organizations built around it have generally done very well. As we described earlier, Peter Senge came to realize that the qualities of community are essential for any organization to learn in meaningful and effective ways. Working with Senge in that understanding, Kaz realized that not just the experience of community, but the stated and acted-upon intention to develop, to be developmental, was equally important—hence, the emergence of a third generation of learning organizations. Creating communities where development is encouraged, and building infrastructures and activities that encourage individual, group, and enterprise-wide hyper-learning and development, is the culmination of Kaz’s journey and defines his work with organizations. Each of the above-described cases, in its own way, illustrates that workplace development is possible. In each of them, the CEO, senior executives, and leaders from across the organization, accepted and adopted the Dual Bottom-Line model, and the results proved themselves—in both personal and financial returns. 9.

When organizations are designed, managed, governed, and led as authentic communities, they facilitate the highest reaches of human performance and productivity and can thrive in a disruptive environment. The 21st-century enterprise needs to be structured as a community of communities where such development is encouraged in and through every activity. This requires maturing leaders to Stage III and IV levels, where devolving power close to the point where the work is performed becomes the norm. It also requires that these same leaders cultivate and sustain openness, vulnerability, and trust through performance dialogues that treat people with

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dignity, respect, and a will to grow. In fact, these same leaders need to give and receive feedback based on love and discipline, as Scott Peck defined the terms. They will act with love, defined as the will to nurture their own or another’s growth and development. And they will act with discipline, defined as the assumption of responsibility, dedication to the truth or reality, and the ability to delay gratification. Through what Kaz calls Dialogues for Development, they can implement these values and create the opening for individual empowerment. “Devolution of power,” or decentralization of governance, is a way to structure the organization to place authority and responsibility in the hands of the people doing the work, rather than at some arbitrarily assigned central office. Top-heavy organizations, like the one we’ve called Grail Oil, get radically restructured, and single-person leadership, as in the company we’re calling Global Inorganics, becomes shared leadership. The case studies described above also touch on the need to address “outside of work” issues. When relationship issues came up at Global Inorganics, adjustments were made. In the organizations Ruth works with, committees are formed to ensure that people have the care they need to address personal crises and make it possible for them to continue to contribute as they are able.

Guiding Heuristic Principles A set of invariant heuristic principles have become clear through the process of implementing DBLLO methods with clients. We offer them here in the same spirit that Michael Ray and Rochelle Myers did in their classic study, Creativity in Business (1986), as rules of thumb or guidelines for discovery, they relate to exploring your creativity as a road map relates to exploring a new area. Just like a road map, our heuristics don’t tell you exactly what to do on your trip, when to leave, what vehicle to use, what route to take, or how far to go in what time period. They allow your own creativity to determine its own path (Ray and Myers, 1986; 4-5).

These principles represent a broad understanding of our findings from this multi-decade heuristic discovery process, and we invite readers to experiment with them on their own heuristic journey to building Dual Bottom-Line Learning Organizations.

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1. Use the science of heuristic discovery for knowledge creation. Heuristic discovery is a powerful scientific method for development, knowledge creation and innovation as it is motivated by a passionate quest to discover. 2. Treat people as ends unto themselves. When people are seen as ends unto themselves, with their own inherent dignity, as well as means to an end, superior financial return and human development become synergistic and mutually reinforcing. 3. Proactively pursue horizontal and vertical development. Humans and organizations can develop both horizontally (professional, technical, or artistic skills and knowledge) and vertically (shifts in awareness of ego, self, identity, mental models, worldview). 4. Build culture by building community. Community building is culture building. Building authentic and hyper-learning community is a means, first, to explore the pseudocommunity culture people have been socialized into by discovering its deeper metaphysical and cultural assumptions and biases, and then, to clarify and solidify the cultural assumptions congruent with the world the participants choose to co-create. 5. Practice applied metaphysics to reinterpret experience. People and organizations construct their metaphysics, worldview, and mental models based on their own developmental level, which then becomes the basis for their culture and experience. 6. Use every daily life task as a means of development. Daily work can be used as a curriculum to scaffold human development and discovery, both horizontally and vertically. 7. Attend to sources of wisdom beyond your egoic self. There is a transpersonal source of wisdom and intelligence available to human awareness at higher levels of development. 8. Learn by un-learning first. Individuals and organizations learn, unlearn, and relearn (they function as hyper-learning entities) best, and reach higher levels of development, in authentic communities. 9. Use a Nothing Extra approach to transform self and organization. Nothing needs to be added to the flow of work to make it a developmental curriculum; when organizations are designed, managed, governed, and led as authentic communities they become the means to enable the highest reaches of human performance and productivity.

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The research is ongoing, but the results are clear: third-generation Dual Bottom-Line Learning Organizations are not only possible, but they also encourage the individual and collective acceptance and humility requisite to attain higher-stage leadership, and they encourage hyper-learning at all levels of operation. Applying the framework and principles outlined in this book can lead to the development of an ongoing process and structure in which higher-stage leadership at every level across the organization leads to higher returns on investment—both human and financial.

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AFTERWORD

Kaz’s Journey of Discovery has been used here as the model for the Heuristic Discovery process that all organizations and humans must go through if they are to develop beyond the limitations of the cultural context in which they were raised and trained to create new knowledge. His journey led him to transcend the traditional WOS view of organizational and human development that he had so fully accepted as a young student and manager, as he saw more and more clearly the limitations—and even destructive influences—of that worldview. His heuristic passion for finding a way to facilitate the development of the workers in organizational settings led him into a deep and profound study of the nature of the human mind and interpersonal interactions. Completing an apprenticeship-through-mastery cycle in Scott Peck’s methods of community-building, he experienced both horizontal (skill) development and vertical (worldview, identity) development that made it possible for him to shepherd large groups of people into a state of authentic community in which such development is not only possible, but intrinsic to the experience. Deepening his understanding of that process through the study of the field of transpersonal psychology led him to develop a new set of skills and expanded his understanding of the process, which led to more vertical development in his own sense of identity and worldview. His work with Michael Ray and Stanford, and Peter Senge at the Massachusetts Institute of Technology Organizational Learning Center gave him another cycle of apprenticeship-through-mastery; this time working with CEOs and senior executives at their operational and personal development skills and levels—and an opportunity to integrate his own community-building and transpersonal methods in business settings. Working as an independent consultant with several organizations through their development into Dual Bottom-Line companies has provided yet another cycle of development, and demonstrated that his discoveries can, in fact, be applied in a variety of settings and achieve significant progress in both human development and financial returns. This process of opening up to an internal awareness of possibility, experiencing and following through on an inner drive to achieve that possibility, and testing the new understandings experientially, is the essence of Heuristic Discovery—and of all knowledge-creation. Hence the title of this book.

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Afterword

While we’ve focused on Kaz’ss journey and methods, the underlying theories and metaphysics that he discovered have been the domain of Ruth’s journey. Unlike Kaz, Ruth grew up in academia (she’s a fifth-generation college professor), and although she was expected to study the sciences (she was a member of Future Scientists of America and received a Heart Association research grant when she was 16 years old), her first “adult” book (at age 5) was Gardiner’s classic Art Through the Ages, and she ended up with an undergraduate major in anthropology, rather than pre-med as anticipated. She went back into the sciences with degrees in environmental studies (focusing on the impacts of radiation on human systems) and cybernetics (focusing on the nature of consciousness and the use of intuitive/transpersonal methods in policy development) and worked with Willis Harman, Duane Elgin, and Oliver Markley at SRI International. Seeking more exposure to this way of thinking, she accepted an assistantship with a PhD program, joined the Association for Transpersonal Psychology, and was elected to the board of the Society for General System Research. Her dissertation focused on ways to include human system dynamics in impact assessment methodology while she supported herself community-building in inner-city neighborhoods and nonprofits, and working as a futurist with government agencies and small businesses. She taught classes ranging from “Technology/Engineering and Society” to “Research Methods,” “Team Processes,” “Computer Modeling and Systems Dynamics,” and “Futures Studies” at both graduate and undergraduate levels, managed a couple programs, and facilitated the design of several curricula over her years in academia, but found, as Kaz did, that the dominant WOS cultural worldview was preventing both her students and her clients from being able to fully use the insights gained in the classes. So, like Kaz, she pulled away from the path for which she had been prepared since childhood, and went into a period of deep personal searching. A combination of circumstances, including a major illness, her parents’ death, a divorce, and the dissolution of a company she had just started to work for, led her to the same understanding that Dean Brown was able to clarify for Kaz: “As we think, so we experience.” Seeing that the world was not yet ready to hear that message in business and government settings, Ruth felt called to work with “spiritual seekers,” so completed the coursework in a New Thought seminary, was ordained, and began to teach and apply the principles of applied metaphysics in a variety of centers and congregations around the Pacific Northwest— growing several of them from a handful of members to thriving organizations. Soon, it became clear that most of what had been written on these subjects was from a different era, using language that was difficult for

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21st century readers, so Ruth began writing “translations” of the key writings of 19th-century transcendental philosophers, ranging from Ralph Waldo Emerson to Emma Curtis Hopkins; James Allen to Florence Scovel Shinn— many of which books were published by Simon and Schuster as explanatory texts for Rhonda Byrnes’ movie and book The Secret. Recently, as people have begun to express concern about the “state of the nation,” Ruth picked up the mantle of futurist again, and has begun to offer a series of informal seminars and community-building processes integrating her culture-systems modeling methods with her understanding of metaphysics so that individuals and communities can find ways to understand—and thrive— through this period of environmental disruption. The merging of our two paths was brought about by Oliver Markley, a colleague of Dean Brown’s and of Ruth’s who had become aware of the work Kaz was doing, and thought Ruth’s understanding of metaphysical and psychosocial processes might be useful as Kaz encountered issues in those areas. And, of course, the process of working together—on this and other projects—has been a powerful exercise in Heuristic Discovery, as well as the use of the methods of scaffolding, as each of us learns the particular ways the other interprets and applies these principles. In terms of horizontal development, we’ve both developed our skill in clarifying and expressing specific interpretations of these ideas. In vertical development, we’ve each learned to relax a little more into the process, to express more frequently our appreciation for the skill the other brings, and to allow ourselves to trust more fully that what needs to be said and done will be said and done, for the good of all involved. So, the process of Heuristic Discovery, leading as it does to new forms of knowledge and innovation, becomes a way of life as well as work, and everyone involved develops—is evolved—to a higher level of function. Everyone begins to operate in more complete alignment with the innate wisdom that, while the WOS worldview denies its existence, has been experienced and documented by hundreds of researchers over the millennia—and the principles and processes of authentic community, combined with scaffolding and clarity of Essence, make it possible for groups of all sizes to experience the wisdom that is their birthright.

INDEX

abduction, 15, 16, 18, 57, 109 Absolute, the, 15 Achieving-Expert leader, 48 adult development, 42 anti-structure, 33 axioms, 66, 70, 135 ba, 56 Bohm, David, 14, 17, 64, 78, 92, 105, 173 Brown, Dean, xxix, 12, 14, 66, 92, 108, 168, 173, 180, 182, 183 collective intelligence, xxi, xxvi, xxix, 39, 46, 58, 65, 80, 81, 96, 109, 110, 115, 124, 141, 142, 147 core values, 66, 70, 123, 125, 126, 134, 168 corporate culture, 24, 30 council(s), 71, 122, 127, 148 cybernetics, xiii, 3, 176, 178, 180 deep listening, 95 developmental culture, 76, 91 devolution of power, vii, 63 disruption, xiv, xxx, xxxi, 45, 183 double-loop learning, 20, 22, 23, 31 empire culture, 30 enculturation, xx, 33, 49 environment, xiii, xxxi, 6- 8, 13, 18, 20, 49, 50, 51, 56, 58, 67, 74, 77, 78, 85, 95, 96, 100, 113, 114, 139, 144, 153, 166, 168, 169 essence, xxiii, xxvii, 13, 16, 19, 53, 54, 64, 92, 118, 130, 181 explicate order, 14 explicit knowledge, 55 generative learning, xxviii, 52, 57 grace, xv, xxiv, 15, 17, 19, 52, 54 Harman, Willis, xxv-xxvii, xxix, 12, 13, 21, 33, 66, 168, 175, 182

Hess, Edward xxx, 45, 57, 58, 107109, 113, 150, 153, 168, 175 hierarchy, 19, 20, 30, 46, 69, 78, 80, 98, 101, 115, 121, 125, 142 horizontal development, 22, 69, 98, 121, 132, 142, 167, 183 humanistic approaches, xviii, xix, xxii, xxiv, 104 implicate order, 92 Jaworski, Joseph, xxiv, xxx, 12, 14, 15, 53, 54, 66, 78, 97, 108, 109, 146, 168, 176 Kegan, Roger xxiii, xxix, 13, 14, 42, 43, 45, 97, 146, 162, 174, 176 liminal, 34 mental models, xxiii, 7, 9, 11, 80, 85, 106, 143, 153, 165, 166, 168, 171 metanoia, xxviii, 12, 13, 45, 93 Nonaka, , Ikujiro xi, xvii, 12, 50, 54-56, 108, 111-113, 133, 149, 150, 177 passion, 15, 52, 57 Peck, Scott xiii, xviii-xxi, xxiii, xxiv, xxvi, xxix, 16, 17, 33, 35, 38, 40-43, 47, 65, 80, 83, 106, 154, 168, 170, 178, 181 personal practice, xxi phronesis /phrnetic leaders, 108110, 133 Polanyi, Michael xvi, xvii, xxiv, 15, 17-19, 52, 53, 54, 55, 130, 164, 178 pseudo-community, xx, xxvi, 33, 38, 41, 42, 45, 72, 80, 83, 113, 121, 137, 151, 168, 171 Ray, Michael xv, xvi, xxv-xxvii, xxix, 53, 130, 168, 170, 178, 179, 181

Developing Third-Generation Learning Organizations: A Heuristic Discovery Process rites of passage, 34, 40, 41 rituals, 26, 35, 38, 39, 41, 116 Schein, Edgar xxviii, 11, 24, 31, 33, 39, 118, 179 SEALs, 156 self-actualizing, 49 self-renewal, 50, 109 Senge, Peter, xxiv, xxviii, xxix, xxx, 8, 9, 13, 44, 45, 52, 54, 66, 78, 88, 97, 105, 120, 122, 153, 168, 169, 176, 179, 181 single-loop learning, 20, 23 tacit knowledge, 50, 52, 54, 55, 112, 113, 150 toku, 108 transformative, 61, 64, 94, 97, 98

185

transpersonal, xiii, xv, xxii-xxviii, xxx, 23, 47, 54, 137, 164, 167, 171, 179, 181, 182 triple-loop learning, 177 Turner, Victor 25, 31, 33, 34, 35, 36, 37, 38, 40, 41, 42, 54, 179 vertical development, xxiii, 22, 49, 66, 98, 99, 102, 122, 132, 137, 138, 147, 156, 165, 166, 171, 181, 183 worldview, xvi, xviii, xix, xx, xxiixxv, xxvii, 4, 6, 13, 14, 21, 4447, 55, 66, 82, 85, 95, 97-99, 104, 105, 109, 110, 124, 143, 146, 165, 166, 171, 181-183