This presentation - shown in Notes View to include the underlying script - summarises a variety of underlying large-scale strategic changes that impact on all organisations in the early 21st century. [Copyright (c) Tetradian Consulting 2001]

1. Tetradian Consulting
Unit 215, 9 St Johns Street
Colchester
Essex CO2 7NN
United Kingdom
[+44] (0)781 560 6624
www.tetradian.com
December 2001
1

2. Change.
That‟s what‟s driving the so-called „new economy‟.
Changes in business practice, in technology, in regulations, in social
expectations: it‟s happening all the time.
And it‟s getting faster, and faster, all the time.
So how do we cope?
The short answer is that most of us don‟t - not well, at least. We survive, but
we don‟t exactly thrive. And neither do our businesses and other organisations.
There‟ve been many attempts to „fix‟ this by changing the system: downsizing,
rightsizing, restructuring. Sometimes there‟s been a shortlived improvement;
most often it‟s just made things worse.
But there is a better way. An obvious way.
It‟s called „treating people as people‟.
Because people - treated not as „work-objects‟, or „human resources‟, but as
people - have the power to do anything that they want. Such as making their
organisation a great success.
So far, most organisations have managed only to hinder them from doing that.
But it‟s easy to learn how to help them instead - and make the organisation a
success, for everyone.
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3. Embracing change - rather than hiding from it - will be essential for each
organisation‟s survival. As the economist Peter Drucker put it, in a recent
article:
“The most effective way to manage change successfully is to create it. But
experience has shown that grafting innovation on to a traditional enterprise
does not work. The enterprise has to become a change agent.
This requires the organised abandonment of things that have
been shown to be unsuccessful, and the organised and continuous
improvement of every product, service and process within the enterprise. It
requires the exploitation of successes, especially unexpected and unplanned-
for ones, and it requires systematic innovation.
The point of becoming a change agent is that it changes the
mindset of the entire organisation. Instead of seeing change as a threat, its
people will come to consider it as an opportunity.”
(„The Way Ahead‟, in The Economist, 3 Nov 2001)
In practice, the new focus for each organisation will be its purpose, its
relationships and its knowledge, its shared learning.
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4. Confusions about power - what it is, where it comes from, who has it, who
doesn‟t, how to gain it, how to maintain it - cause enormous difficulties in
almost every organisation. „Power-struggles‟ of one kind or another invariably
reduce the organisation‟s effectiveness, and can destroy an organisation‟s
relationships with its staff, its customers, its shareholders or the wider
community very quickly indeed - sometimes leading to the death of the
organisation.
Most people seem to think that these problems are inevitable - a fact of
business life. But in fact they all arise from one single, simple, easily-made
mistake: the delusion that „dumping‟ our discomforts on others solves the
problem - whatever the problem might be.
It‟s a common mindset: everyone falls into it from time to time, especially
under stress. But paying attention to this, and addressing it consistently
throughout an organisation, will improve the organisation‟s overall
performance - often showing spectacular improvements as the energy wasted
in infighting is at last released for practical work.
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5. Many of the power-confusions arise from mistaken ideas about „winning‟ and,
especially, „losing‟. One of the most common beliefs is the „zero-sum‟ concept
- the idea that it‟s only possible to win by making others lose. In reality, as
Roger Fisher and William Ury demonstrated many years back, in their classic
study “Getting To Yes”, there‟s only „win/win‟ or „lose/lose‟: either everyone
wins from a transaction, or everyone loses. „Win/lose‟ is just an illusory form
of „lose/lose‟, in which a short-term gain in one area masks an overall loss for
everyone - including the supposed „winner‟.
In a sustainable business - one that‟s still going to be around long-term - the
only way to win is to ensure that everyone wins, in every transaction. Creating
awareness of this fact sometimes isn‟t easy - but it‟s the only way to create
lasting success.
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6. In the past, organisations could just about get by whilst still ignoring these
issues. But not any more: the background to business has changed too radically
for that.
In the past decade or so, as Peter Drucker described in another „Economist‟
article, every one of the basic assumptions about „business as usual‟ has been
turned on its head. The relationship between corporation and employee; the
nature of employment; the scope of management; the source of industry
knowledge; and the relationship between industries and technologies: these are
all now almost the exact inverse of where they were in the 1950s. But most
businesses are still trying to run their organisations with a 1950s mindset. And
not tackling power-problems means that organisations lose access to the
creativity, flexibility and innovation they need for their present and future
business.
Facing these issues is no longer a luxury: it‟s a matter of survival.
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7. Let‟s look briefly at some of Drucker‟s examples.
In Frederick Taylor‟s now century-old model of „scientific management‟, the
corporation controlled all the assets, including the „human resources‟. There
were clear and sharp divisions between the „owners‟, who owned everything;
the owners‟ managers, who decided everything; and the „workers‟, who did
what they were told, and could be disposed of at once if they didn‟t. It looked
productive - but it only worked when markets were stable, and products so
simple that everything could be decided by management.
Those days are gone. In the new knowledge-based economy, the „knowledge-
workers‟ themselves provide their own capital - intellectual capital. The
physical capital can be small, almost non-existent - perhaps just an office and a
handful of computers. So knowledge-workers regard themselves as
professionals, controlling the „means of production‟. And they won‟t - in fact
can‟t - work well unless they‟re treated as equals.
This changes the power-dynamics completely: the old bullying ways never did
work well, but they simply won‟t work in the new economy. If the organisation
wants access to their skills, their experience, their knowledge, it needs to
create and maintain a working relationship with them.
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8. In the old days, most employees worked full-time for one corporation, and
often worked there till the day they retired or died. Since their only income
came from the corporation, it placed them in a dependent position. The
corporation gained the illusion of control, but the inevitable power-problems
were concealed, surfacing only through the safety of the occasional collective
outburst - and in a very poor real level of efficiency and synergy.
That „control‟ mindset still remains common, but it can‟t cope with the current
realities: part-time work, job-share, mandatory maternity leave, long-service
leave, contractors, outsourced „deployees‟ and the rest. Unwanted individuals
can be „disposed of‟, perhaps: but the key knowledge-workers are highly
mobile, and may choose to leave at any moment - leaving the corporation
stranded without the knowledge it needs to do its business.
So once again, the onus is now on the corporation to create, and maintain,
functional relationships with all of „its‟ people - or they‟re gone, perhaps
taking the business with them.
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9. Management in the 1950s was usually a simple hierarchy: everything came
down from the top. The company rule-book defined procedures for every
eventuality - or, more often, anything which wasn’t in the rule-book was
deemed not to exist. It seemed to scale well enough: a larger corporation only
needed an extra layer or two of middle-management. Corporations grew larger,
and larger, and larger…
…until the inefficiencies finally caught up with them. One-way hierarchies
can easily become lumbering dinosaurs, collapsing under their own weight.
The much faster pace of current business demands much more flexible
management models: outsourcing, rightsizing, federal structures and so on.
Transcultural complexities can destroy the apparent efficiency of the global
corporation.
So we can‟t run a company by „edicts from head-office‟ any more: instead, we
need clarity on common purpose, to hold a shared vision for the organisation;
and active maintenance of human relationships, to help each other fulfil that
shared purpose.
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10. The old „scientific management‟ model viewed management as the „brain‟ of
the organisation, holding all its knowledge, and making all its decisions. By
the same analogy, the Public Relations department was the organisation‟s eyes,
ears and mouth - controlling all information moving between the organisation
and the outside world.
We still see this mindset in „position statements‟ and the like: but it makes
little sense any more. Like the human organism, the greatest efficiency in the
organisation comes from local autonomy provided with overall direction, and
from synergy - the working of the whole. Despite databases of ever-increasing
size and complexity, most corporate knowledge resides in its people - and
nowadays, as the Cluetrain Manifesto demonstrated, there may be more
knowledge about the company‟s products outside the company than within.
Building relationships with those „insider outsiders‟, and systematically
sharing knowledge in a secure way, makes that information available in ways
that help everyone win.
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11. Even a decade or two ago, it was still mostly true that each industry had its
own specific technology, and each technology was specific to one industry.
Knowledge about steel-making applied only to the steel-industry, and so on.
This was what made research laboratories so common in large organisations.
But many of their greatest inventions - such as Bell Labs‟ invention of the
transistor - were at first deemed irrelevant to their own industry‟s needs, and
were all but given away to „outsiders‟ - who then created a whole new industry
based on that invention.
As more and more technologies span many different industries, we need to be
able to see new opportunities for our ideas, our products and processes, in
industries very different from our own. And that calls for a new approach - a
new mindset - that comes from new relations across all the old boundaries of
„Us‟ and „Them‟.
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12. The ability to invent opportunity is not something that can be ordered, created
on demand. It doesn‟t come from robotic „human resources‟: it comes from
people treated as people. It only arises, and is only available, from a
relationship that works - and one in which everyone wins. So it‟s in the
organisation‟s interest that such relationships are created, nurtured, maintained.
And that requires a very different mindset from the old notions of „command
and control‟.
Drucker also makes an important point about the need to identify and exploit
unexpected achievements. Most large companies have excellent risk-
management, disaster-recovery planning and the like; but their management of
opportunities often ranges from poor to non-existent. Statistically, serendipity
is just as probable as disaster: it‟s up to us to learn to notice it, and work with it
- and help everyone in our organisations to do likewise.
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13. These changes remind us that there are three key attributes at the core of every
organisation:
- its purpose, and its means of fulfilling that purpose;
- its relationships, within itself, with other organisations, and with all of its
wider stakeholders; and
- its knowledge, its shared learning about its past, its present and its future.
In the past, it‟s been easy to forget this; but not any more. We can‟t afford to be
distracted by side-issues, however important they may seem.
One of these is „making money‟, making a profit. Yes, it‟s important - very
important - but we should never make the mistake of thinking that it‟s the sole
reason why the organisation exists. Profit is an indicator of successful
conformance to purpose - not the purpose itself. As Charles Handy put it, “it‟s
like saying that we play cricket to get a good batting average”. We need a good
„batting average‟ to continue playing in the first league; but to get there we
first need to be clear why we‟re playing at all. To do anything well, we need a
compelling reason to work - or even to get out of bed in the morning.
To be compelling, that „corporate purpose‟ needs to be something deeper, and
a lot more meaningful for everyone involved, than merely „making money‟.
Sony‟s purpose for being in business is „to enhance the reputation of the
people of Japan‟: what‟s yours?
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14. These are big issues, right at the core of every corporation. And at first sight,
the scale of the changes needed to make most organisations really work - to
come alive, to be places where people really want to work - will often seem
impossibly large. So much so, in fact, that most organisations give up before
they even start - and remain inefficient and unprofitable, until they finally fade
into oblivion.
But it‟s nothing like as hard as it looks. It‟s not a change in system, or
structure: it‟s just a change in mindset. And in practice, that comes from just
three steps:
- create a new understanding of power - what it is, and what it isn‟t
- create new understandings of a number of key related business concepts,
such as the nature and purpose of competition
- and assess, audit and enhance for continuous improvement.
We do this by providing tools for the organisation‟s change-agents and other
individuals, to create and anchor those changes in everyday practice.
And those „internal consultants‟ then repeat those three steps , over and over,
wider and wider, until it spreads throughout the whole organisation - an
organisation that works, for everyone.
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15. Most organisations operate at only a tiny percentage of their true potential.
And the main reason for this is confusions about power, at individual and
collective levels. It‟s often so severe that even a small amount of effort in
addressing the issues can create spectacular improvements in the corporate
bottom-line - the so-called „miracle recovery‟ of many a large corporation.
True, we can also achieve some short-term gains through aggressive
„restructuring‟ and the like: but they don‟t last. For long-term stability and
long-term gains, we must resolve those confusions about power.
Many people say they want to be powerful. But in practice what most of us
really want is the „right‟ to not feel powerless - which is very different. We try
to „export‟ that feeling to others in two main ways: propping ourselves up by
putting others down; and manipulating others into taking it on for us.
Because both of these approaches seem to work for us - for a short while, at
least - they‟re highly addictive.
That one addiction - in many, many different forms - is what really cripples
most corporations.
And everyone is addicted to it to some extent - including us.
Ouch…
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16. The only way forward is to keep reminding ourselves, individually and
collectively, of what power really is.
In which case, we need a meaningful definition. And if we start from physics,
we find that power is the ability to do work - whatever that work happens to
be.
In human terms, we need to expand that definition a bit. We need to include
human needs for choice, for purpose, for responsibility - the ability to choose
appropriate responses to any given context. And we need to understand that
„work‟, „play‟, „learn‟ and „relate‟ are so closely interwoven that they‟re really
just aspects of the same thing. This is obvious any school playground - though
the fact seems to have been forgotten in most adult workplaces!
Power is the ability to do work - to work/play/learn/relate. By working
together - sharing that power, and helping each other find that power from
within ourselves - we get more done. And that sharing is why organisations
exist.
It really is that simple: though sometimes, of course, it can seem
extraordinarily difficult to reach that level of simplicity…
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17. We can help that process along by re-framing some other key concepts.
A sense of purpose becomes central to business, because it‟s from there that
power really arises.
Ownership shifts in emphasis, from rights to responsibilities - the kind of
personal commitment we mean when we talk about „owning‟ a project.
Since the power of synergy arises from sharing, it‟s much more in our interest
to engage others‟ ideas and involvement in our work; and it becomes obvious
that shared knowledge - shared learning - helps everyone.
Competition becomes something we need, not for a short-term illusion of
dominance, but as a challenge to continuous improvement. The same applies
to winning and losing: it becomes something that shows us what works, and
what doesn‟t - something to help expand our own knowledge.
This isn‟t some idealistic notion of „being nice to others‟, by the way: time and
time again, it‟s been shown that this is the only way that works well long-term.
Though it‟s just that it‟s kind of easy to forget this in the sometimes desperate
rush of here-and-now!
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18. But because it‟s so easy to forget this, what we really need to do is instill a
kind of background awareness of this in the whole organisation - a new
organisational habit, part of the corporate culture. This isn‟t something that can
be imported from outside, or imposed from above: it has to be encouraged to
grow outward from within the individuals of the organisation themselves.
External consultants can help to start this process, especially if there is clear
support from senior management, who tend to set examples that others will
follow. The consultants provide conceptual tools and techniques which address
these issues: power, ownership, structures, dynamics and so on.
Once the process is started, though, it needs to be expanded and maintained by
the organisation‟s own internal consultants and change-agents - of which there
are many. In effect, everyone becomes a change-agent - supporting
constructive change throughout the organisation.
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19. And it isn‟t just „fit and forget‟: it needs to become part of that process that
Peter Drucker described, of “organised and continuous improvement of every
product, service and process within the enterprise”.
As with TQM and ISO 9000, there‟s a three-stage audit/improvement cycle:
assess, audit and enhance, repeated at regular intervals. The quantitative
results from the audit process can be compared across a team, or department,
or the organisation as a whole, producing a „river diagram‟ showing the
strengths and weaknesses of each area. But we have to remember that the
purpose of this comparison is not to blame, or to create „winners‟ and „losers‟
all over again, but to identify organisational best-practice - and thus the
„internal consultants‟ who can share that specific knowledge throughout the
whole organisation.
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20. In a way, none of this is new: all of the components have long since been
proven elsewhere.
Those concepts of power may seem „new‟ to the business world, but they‟re
essentially the standards that have been used for decades in skills-education
and conflict-resolution.
They‟re merged with concepts and models that have been used with real
success in small software teams, medium-sized businesses and organisations as
huge as the US Army.
And they link exactly to the proven principles and practice of the Quality
movement, and more recent „sustainable business‟ developments such as
Balanced Scorecard and triple-bottom line accounting.
So unlike downsizing and restructuring and the like, none of it is new or
uncertain. What is new is the way they‟ve all been brought together into an
integrated whole, to provide - perhaps for the first time - a unified view of the
business process.
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21. As I mentioned, the concept of power used here is derived from proven
research and practice in skills education, and in conflict-resolution. In skills-
education especially, the nature of power not just as the ability to do
something, but the integration of work, play and learning, is well understood.
I do recognise that including the word „play‟ there, in a business context, may
seem to be a cause for concern! Think about it for a moment, though. When
children learn new skills, they practice what they‟ve learnt, both on their own,
and through relating with others, gaining a sense of enjoyment and
achievement in doing so - and that‟s what we call „play‟. Adults are no
different: but in a work-context we seem to be so afraid of the word „play‟ that
we allow no space for practice, or for relating with others, developing shared
learning with others - and then wonder why people have difficulty in learning
new skills… So there‟s an important lesson there, from the schoolyard: that
real productivity arises only when we integrate play - purpose, practice, shared
learning, a sense of enjoyment - into every aspect of our work.
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22. We also know that whilst new systems can help in business, what really works
long-term is the development of better disciplines and habits, linked to
personal power and personal purpose.
And the best tools for this are those which apply in many different contexts.
For example, Peter Sengé‟s group at MIT Sloan School of Management
emphasise five key disciplines of the „learning organisation‟: systems thinking,
personal mastery, mental models, shared vision, and team learning.
The value of Stephen Covey‟s „seven habits‟ model has been demonstrated in
businesses, in families, in schools and many, many individual stories.
The US Army gained an enormous increase in effectiveness through its „After
Action Reviews‟, with their four simple questions: „What was supposed to
happen?‟, „What actually happened?‟, „What caused the difference?‟ and
„What have we learned?‟.
And the Open Source movement - as documented by writers like Eric
Raymond - has been extraordinarily successful in unifying the work of tens of
thousands of volunteers to create the freely-available software on which the
Internet and much else now depends.
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23. In the same way, as Deming demonstrated long ago, we won‟t get „quality‟
automatically from any externally-imposed system. Instead, it can only arise
from the disciplines and habits of each individual involved in the process.
Everyone matters; everyone contributes to quality - or lack of it.
So the principles of TQM, for example, are all founded in individual power
and purpose.
The same applies to ISO9000 - in fact the later version, ISO9000:2000,
requires a purpose-statement as the anchor for any functioning quality-system.
And quality will falter if we ever forget these facts. Quality systems fail
whenever - and because - we rely on the system rather than the people.
Quality, in turn, is central to the organisation‟s effectiveness. New accounting
models such as Balanced Scorecard recognise that we need to measure
qualities as well as quantities: for example, the qualities of our stakeholder
relationships - such as staff morale or public reputation - are almost impossible
to measure in monetary terms, but we can‟t run the business without them!
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24. So it‟s all about a shift in mindset, about power and purpose; it‟s about a shift
in habits, not a change in system; and it‟s all based in proven principles and
practice. In other words, it works. And it‟s something you will want to see in
your organisation.
The next question, of course, is about what to do next. If it applies everywhere,
in every business context, where would you start? Where would you use this
first?
The key indicator is change, and potential for conflict: somewhere where you
know there‟s a major change in progress - such as before or just after a merger,
or for a new project team - or where change is definitely needed, such as in a
poorly performing team, or one in which there‟s constant argument and
infighting. Almost by definition, the best gains come from facing the worst
problems - though it‟s always a good idea to deal with them before they
happen!
The tools also provide direct incentives to reduce conflict, because it becomes
personally obvious that‟s in everyone‟s interest to do so: everyone wins.
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25. Much as was proven with other mindset-shifts, such as the uptake of quality-
systems and knowledge-management, it‟s always best to start small, with a
pilot-project, and expand outward from there.
The aim is to create new disciplines, new habits, and spread them by example:
a spiralling process of „apply, evaluate, review‟. External consultants can help
to start the ball rolling, but because trust and personal example are central to
success in expanding the process beyond the pilot project, it‟s best to use the
organisation‟s own change-agents for this - especially people who can convey
their enthusiasm to others.
Because power and purpose are generic human issues, most of the tools are
fully transcultural. Whilst the language will change from country to country,
there‟s little or no need for contextual translation - which simplifies creation of
unity across multinational or multicultural organisations.
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26. Before applying any new process to a business, we need to assess the risks.
And here - unlike downsizing or restructuring - the risks are actually very
small.
It‟s a change in mindset, not system - so there‟s no upfront disruption or
demoralising disorientation, as there would be with any structural change. The
organisation is likely to develop new systems as the shift in mindset settles in -
but they‟ll evolve from those changes, rather than the other way round.
The only significant risks come from failing to recognise that whilst people
don‟t resist change as such, they do resist being changed by others. As with
quality-systems and knowledge-management systems, any attempt to impose a
new mindset all at once over an entire organisation all but guarantees failure.
And whilst enthusiasm is essential, over-enthusiasm puts people off in a big
way: we need to be wary of this!
Even so, the worst we‟re likely to do is fail to make any improvement. Unlike
downsizing and restructuring, the risk of causing actual damage to the
organisation is very low indeed.
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27. And if we do avoid those mistakes, the payoffs can be huge. The existing
interpersonal inefficiencies in most organisations are so great that even small
improvements can bring large returns on expended effort.
Simply by gaining a true understanding of purpose, we end up with an
organisation that actually works - and one that‟s improving all the time.
By gaining a direct, experiential understanding that everyone wins if we set
out to ensure that everyone wins, and that everyone - including ourselves -
loses if we don‟t, we end up with an organisation where everyone wants to
work together.
And the results in that kind of organisation can only be described as
spectacular - whichever way we measure the bottom-line.
Shifting the organisation‟s mindset about power and purpose, to something
more constructive than the usual one, may not be easy at times, but the results
- for everyone - are definitely worthwhile.
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28. I hope it‟s clear that we can‟t afford to ignore these issues any more. The
current confusions about power and purpose are crippling our corporations -
and often making life a misery for everyone who works with them.
And even without outside help, without systematic support from „above‟,
there‟s a lot we can do as individuals - because it‟s from within us as
individuals that purpose and power arise. We can watch our own and others‟
power-transactions, and, with that better definition of power, we can intervene
to create better „response-ability‟ - the ability to choose appropriate responses
to any given context. We can explore our own sense of purpose, and our
relationship with the organisation‟s collective purpose. (If there isn‟t one, help
to create it!) With that wider awareness, anything we do will help that purpose.
In today‟s business environment, getting everyone in an organisation to reach
that understanding can sometimes be hard work - but it is worthwhile, because
everyone wins as we do so.
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