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This is a summary of 31 pages of notes I took while listening to the 6 hr. *CD ROM of THE DANCE OF CHANGE. This is the first time to do a book review in this style. When I directly quote from the CD, I will state the Track it came from.

Oberto Monteranto describes in the Santiago Theory of Cognition that all movement occurs while it is being inhibited. That is the Dance of Change. All processes of growth occur because there is a potential for growth that is seeking to be realized. There is a set of reinforcing growth processes seeking to become what they might become. And a set of constraints or balances and it is this interaction between the constraints and the growth processes that occurs everywhere in nature where something is growing. Nothing grows within the absence of limits or constraints. (Track 4)

The Dance of Change focuses on one particular type of organizational change: that which combines inner shifts in people's values, aspirations, and behaviors with outer shifts in processes, strategies, practices and systems. This kind of change is called PROFOUND CHANGE. The organization builds its capacity for doing things in new ways. There is not only change, there is also learning! (Track 5)

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1. Challenge of Control over One's Time = the challenge of finding enough time to devote to reflection and practice.
2. Challenge of Inadequate Coaching, Guidance and Support = the support needed for innovation within groups and of ultimately developing internal resources for building capacity to change.
3. Challenge of Relevance = making a case for change; articulating an appropriate business focus and showing why new efforts such as developing learning capabilities are relevant for business goals.
4. Challenge of Leadership Clarity and Consistency = preventing a mismatch between behaviours and espoused values especially for those championing change.
   The next three challenges fall under the category of Challenges of Sustaining Momentum:
5. Challenge of Fear and Anxiety = getting beyond the feeling that this is a waste of time or that things are out of control (deep concerns about exposure, vulnerability and inadequacy triggered by the conflict between increasing levels of candor and openness at low levels of trust among members of pilot groups).
6. Challenge of Negative Assessment of Progress = the lack of connection between the traditional ways of measuring success, both metrics and time horizon and the achievement of a pilot group.
7. Challenge of Isolation and Arrogance = what occurs when the true believers in the pilot group confront the non-believers outside the pilot group.
   
   The final category deals with the challenges that arise when a system is being redesigned or rethought:
   
   
8. Challenge of the Prevailing Governance Structure: = the conflict of pilot groups seeking greater autonomy and managers concerned about greater autonomy leading to chaos and internal fragmentation.
9. Challenge of Diffusion = when people can't easily transfer knowledge across organizational boundaries making it difficult to build on each other's success around the system
10. Challenge of Strategy and Purpose = the challenge of revitalizing and rethinking the organization's intended business focus, its contribution to the community and its identity.

Personal Mastery: Organizations need people who can balance passionate aspiration with keen awareness of the world around them.
Shared Vision: Organizations need the collective ability to translate their purpose and vision into a coherent set of priorities for action.
Mental models: They need the ability to conduct their business with reflection, inquiry and well-designed communication.
Team Learning: They need the ability to hold generative conversation, (conversations that help teams operate with consistently more effectiveness).
Systems Thinking: They need the conceptual ability to recognize interdependencies and understand the short versus the long-term dynamic of all change

3 Powerful Reinforcing Processes
1) Personal Results
2) Network of Committed People
3) Business Results

1. Make more information and resources available to pilot group members. They may fail to see how the change initiative is connected to both their personal aspirations and the organizational goals.
2. Revisit relevance periodically. Initial goals of a change initiative are problem oriented. Gradually team may turn to more long term or vision-oriented aspirations.
   1Recognition resources. Unless it's clear that learning oriented work can lead to advancement, then informal networks will not hold together for the long haul. Therefore, a powerful network leader should keep pressing to have learning initiative results recognized. This is why you need to discuss the projects with Executive Leaders as early as possible. Needs a relationship with the immediate chain of command. If they can't see a link between your new efforts and the business results, then they and you will start to mistrust each other. I try to build the kind of relationship where I can let them know of progress in small ways. Could be vital if the learning initiative runs into trouble.

1. The Challenge of Walking The Talk
Essence is the challenge of authenticity
To what extent to the people who are championing the change initiative walk the talk
Most people within organizations expect their leaders to say one thing and do another
Once a learning initiative takes off the standards start to elevate
I.e. if this is really about honesty, if this is really about talking about tough issues openly, how come the boss refuses to discuss the stupid decisions he was involved in three years ago.
     

Underlying limit here is the fear to being vulnerable because when we're honest, we're vulnerable.

For people to be develop personal initiative to a transformational initiative, they need to be able to reflect openly about their own personal values and aims. Their ability to do this depends on trust. The reflection that matters occurs publicly. To engage in reflective conversations that test each others attitudes and assumptions openly, people need to feel safe. This safety is affected to the extent that mgmt is seen as walking the talk. Change initiatives require people to look at themselves much more than those around them. If people at all levels don't do this as individuals then we won't be able to develop high alignment of personal and organizational aims.

1. Don't go it alone. We all have blind spots that limit our credibility and our ability to generate safety and trust in others. We cannot see our blind spots. Have genuine partners: inside/outside. A thinking partner. Someone who can challenge your thinking, your assumptions. Mainly a partner is ruthlessly compassionate, telling you what you really need to hear but might have the most difficulty acknowledging. Leaders without partners are dangerous to themselves, to others and to their dreams.
2. Look at your own expectations of people. Changing your assumptions about people can lead to dramatic surprises.
   

• Those positions as nobody knows quite how to address the problem areas and in doing this, the organization becomes more and more dysfunctional.
• Be easier to move people laterally and make better use of their talents.
• Engagement: was very little belief in the beginning that transformation would last. People expected that they would have to attend a few meetings about vision and values and that it would all pass with very little effect on anybody or anything in the end.
• Meanwhile at the top, we communicated a vision and a set of values and began to communicate them to our 22,000 people. We felt if we could explain our ideas clearly enough in one-way communication, then our success could be assured. But I don't think transformational leadership works that way. Engagement is a process of listening TO people, not communicating AT them. 18 mths. Into the process, it began to dawn on the members of the leadership council that we didn't have the basic skills of listening to the people and allow them to make an impression on us. It took a series of deep reflective meetings to learn to listen more effectively. As that happened, people began to trust us more. I began to hear talk of transformational change at offshore drilling base camps or at refineries. Didn't happen in a clean, crisp way. We penetrated in a jagged, messy way into the organization.
• Many of the most difficult things you have to face you fear because you have been trained to fear them in the old culture. Learning to expose your failures is one of the most liberating parts of the old journey. If we are not expected to be perfect, then so many new things are possible. Then stubbing your toe is not so painful. You can stand up and say, I stubbed my toe and now I am going to stand up and do something different.
• Is it possible that Shell will return to a paternalistically, homogenous, centrally controlled society? It might/ But after 6 yrs. it will be hard to put the toothpaste back in the tube. The changes have made Shell an employer of choice.

* * *

Challenges involved in Sustaining a Learning or Change Initiative
As the seedlings of profound change begin to take root, your difficulties really begin. They come into contact with new features of their environment. There are predators, rivals and other life forms within the organization that will resist the prescence of a new entity. Now your challenge is to maintain life over a period of not a few months but a few years. You can't ignore the environment. Must carve out an identity for your pilot group within it. Now your concerns move to boundaries. Internal boundaries: the individual thoughts and feelings of members of the team. Also broach the external boundaries of the team: dealing with organizational culture. Can no longer keep your group from the larger scale priorities of your company, from it's values, from it's ways of measuring success and from it's members attitudes from you. Hence, the next 3 challenges:

5) Challenge of Fear and Anxiety: triggered by openness and candidness of the pilot group
6) Challenge of Assessment and Measurement: gap between your initiative and the organization's way
    of measuring results
7) Challenge of True-believers and Non-believers: tendency to fall into an escalation of perceived threat
    and siege mentality

Challenge of Fear and Anxiety (opening by Peter Senge)
People don't really know that they should be fearful. Takes a while for people to realize that they have to go inside and get personal. When a pilot group begins to develop the capacity for real conversation, for exploration of deeper issues, for seeing the systemic causes of problems, there is fear that begins to develop. Fear is not unhealthy. It is a very healthy part of the learning process. What is important is how we deal with the fear.
Fred Kaufman: used this analogy: It's like lowering the water level. When you begin to lower the water level in a lake, rocks start to show up. There were down there all along, but you didn't see them. There's a good reason people aren't talking about real issues.

Undiscussable issues are often not dealt with or brought to the surface. Challenge of fear and anxiety is a very real one and one which will emerge in any group that is committed to developing learning capabilities. The question is, are we prepared to deal with it? What happens to us when we start to encounter the anxiety? Most of us tend to run. A lot of CEO's and others responsible for change initiatives are willing to deal with "outside" or external issues but not prepared to bring it deeper on a personal level and see how our deeper issues and assumptions affect our team, our interactions and quality of work...
The underlying constraint is the level of trust. People can confront a high level of fear and anxiety if they really trust one another but trust in this sense is a rare commodity. Chris Arygyis said, "The ultimate measure of trust is can I put my wellbeing in the trust of another" That is a level of trust very rare in a business environment. (Rockclimbing metaphor or other team initiatives were that evolves over a short period of time).

This challenge only unfolds as the waterline begins to expose the deeper issues. At that point, the initiative can come to an abrupt change if the change is unable to deal with this challenge.

It manifests in diverse symptoms. People express their defensiveness in so many different ways: there is Forthright negation: this learning stuff is a waste of time: we're not here for therapy, we're here to serve customers. Objection to it's ambiguity and alleged side affects: You've got to be kidding me, this stuff is out of control, besides raising all these negative issues only demoralizes people. [YUKO's LEAVING CREATING... HAD TO DO WITH THIS CHALLENGE OF FEAR AND ANXIETY -- when the work got tough and the deep issues began to emerge, she bailed/ I forced the issue be addressed rather than go underwater again as I knew that if this were not addressed and growth come from it, the dysfunctionality would start and never stop or at least be harder to stop later on.] There is superficial support: this learning stuff is very interesting. It reminds me of stuff I studied in school. But in private, the same person says, but it has nothing to do with the business. And there is silent. People are afraid to say anything that goes counter to the partyline.

What you have to do at minimum to deal with this Challenge:
1. Listen deeply to what is being said or not said and how it is being said.
2. Leaders must listen to the music behind the words. Underneath these defensive behaviors are recurring
    questions that arise for us all in the context of deep change that may not come to the surface easily.

1. Are we safe?
2. Are we vulnerable? People sometimes put on their corporate mask or persona when they come into the office. Now they are being asked to take off that mask and reveal their true reactions. Ie. To express disagreement with the boss if they feel it in a constructive manner. How can they be sure if they speak openly now, that it won't be used against them later? How do they do they know they won't be scapegoated?
3. Are we adequate? Do we measure up? People learn to succeed by playing the game. When the game changes, people wonder if their lack of competency will be exposed. They know they can put on a good slide show but they are unsure whether they can collaborate or reliably produce real time business results. If they fear they can produce under the new rules, then they fear their career is under jeopardy.
4. Can we trust ourselves? Can we trust others? Value of treating people with respect and grace. But they know they can't always control their temper or abusesiveness. May not trust themselves or others fully. May think it is only time for these old ways to resurface. Effective openness does not just happen with intent. It takes real skill. For example, raising difficult issues without invoking defensiveness is a highly skillful behavior. The general level of skill and capacity for openness depends on the overall feeling of safety the pilot group creates for itself. Psychological safety requires creating a balance of aspiration and trepidation. Aspiration drives learning.
   (i.e. build new business capabilities to serve customer needs, to shorten time to market through increasing intelligence rather than through increasing effort). But if people feel their well being is at stake, they may be unwilling to go forward.

Strategies to deal with the Challenge of Fear and Anxiety
Leverage to deal with this challenge can be gained in two ways:
1. Accelerate the development of safety and the capacity for openness
2. Can weaken the consequences of fear and anxiety when they occur

• Start small and build momentum. Take small fears and anxieties before leaping off a cliff to deal with major business blunders in public for ex.
• Avoid frontal assaults: fear can't be commanded or exhorted away (Walker-11 yrs. old-crying: asked why are you crying? I don't know. Then stop crying. You can't cry if you don't have a reason or can't say.) Nor can safety be mandated. Only way to sustain an environment of safety is to create an environment condusive to it in which people feel gradually more mutuality and trust with one another. It takes time and dedication to develop these which is why in most organizations fear and anxiety are so prevalent. Set an example of openness. Most effective use of hierarachal power is for leaders to become role models of openness. Vulnerability is a very important quality in leadership says Phil Carrol. If you don't have a fundamental commitment to the truth and to telling the truth, you can't lead. And telling the truth is so much more difficult than just not lying.
• Learn to see diversity as an asset. Acknowledge and respect the different learning styles, views that different people will bring. Allow those that support and those that are cynical to express their opinions. This will increase trust in leadership and in each other.
• Use breakdowns as opportunities for learning. Unanticipated breakdowns offer a unique opportunity for leaders to demonstrate real trust. When people see they are not punished when a breakdown occurs, that there is a genuine willingness to share responsibility and a genuine curiosity to see how we can do better in the future, it sends a message of real trust. In the Quality movement, a defect is seen as a treasure. Real learning occurs when we can see the source of our errors.
• Do everything possible to see that participation in pilot groups is a matter of choice and not coercion. Safety and trust are perceived by choice. Allow people to talk about their real reservations.
  Skills matter. Offer the training for people to develop the skills of openness. May also need support to deal with those around them who don't want them to change. (A change initiative at Digital Equipment Corp. in 80's, a number of abrasive, withdrawn engineers became more communicative and responsive. HR mgr began getting calls from their spouses. Stop messing around with my husband. He keeps coming home and asking how I'm feeling. He's being nosy. I want you to snap him back to the way he was. (HEM: not wanting anything to change-for our spouses to stay forever the same).
• As a mgr work to develop a common frame around vision and current reality. Let people know that you recognize the gap where we want to be and where we are. Take modest steps. Let people know that you know it will take time. Much less anxiety provoking than a boss that says, everything has got to change. Consult with them on how to judge success and failure and how to look for signs of success. Let them know you expect steady progress but that you know that there will be setbacks.
• Remind people that fear and anxiety are normal.
• Learning by definition means being uncertain and figuring things out as you go along. If you feel comfortable, it probably means you are doing it wrong.
  Essay: GRAY STAMPS by Rick Ross: far reaching effects of fear and anxiety

1. Recognize it.
2. Learn to talk through your gray stamps openly. Be courageous and compassionate.
3. Learn skills of reflection and inquiry. Without them you will drown in a sea of gray stamps and never be able to overcome the challenge of fear and anxiety.

1. Problem of delay: Most of the most important results show up years after the innovative practices that led to those results were innovated. Meantime the innovators are at risk because what they've done looks really different. Moreover those people are operating in an environment that want results yesterday. Phil O'Brien said, "Mgrs always want to pull up the radishes to see how they are growing". Our whole assessment apparatus in business are not designed to include delay.
2. Innovation is complex. Many things are changing and you get a lot of different results. Some are worse.One company whose pilot group was making all these change requests received really hard feedback simply because they were being more open. Most are afraid of looking bad.
3. Many organizations are running a metrics analysis that are simply inappropriate and nobody is asking the questions if the metric is the problem. (I.e. Property and liability company: we started to develop a systems theory to leverage long term profitability in the business. The essence of the insight came down to something very simple. The company had simply underinvested in skilled adjustors. Claims adjusting used to be a highly skilled job. It is poor adjusting that sets the stage for all the litigation. Our strategy was a long term investment in building adjustor capacity; skills, knowledge, support and pay. To reestablish claims adjusting as a real profession. Consequences we believed was that litigation cost and settlement costs would come down dramatically. We believed the investment would be more than payed for in the savings of those other costs. At end of the presentation, the VP's looked at the Claims VP and asked, "what will that do your expense ratio. An expense ratio is a metric of how much money is being spent on salary and direct costs of the claims adjustors compared to total premium value. The VP said, it will go up. The other VP looked at him and said, don't you already have a higher expense ratio than any of our other competitors. The meeting ended at that point. That metric ended the case. It is those metrics that make and break careers.
   It is actually impossible for local line leaders to criticize metrics in force. This is an area where executive leadership is necessary. But very few executives are involved in this area.
   Tom: Toyota and Sconnia (Swedish car co.) took a different approach to metrics led by the executives that made a huge difference because it was one of the highest leverage areas where leaders could make a difference.

1. Time delays-from few months to few years. If these visible improvements lie too far behind expectations, then people within the team begin to say, we've been trying this for weeks; what do we have to show for it. How we continue to justify the time we are showing for it. May not have expected a miracle but the gap created by the delay has raised their concerns. Some pilot group members will have no problem being patient. They see tangible changes in business practices and they are confident that results will follow. Others are less patient and begin to Q gaps more quickly.Their negative assessment undermine the credibility of the initiative.
2. Within the larger organization: Side effects of the initiative appear as negative results on the traditional metrics in use. People within the team see the results as natural consequences of their efforts. I.e. # of customer complaints might rise looking like a visible sign of crisis but actually reflecting that complaints are gathered more accuragtely and attended to in a more timely fashion. But for those looking from the outside not having a big picture, these metrics appear as signs of problems not progress. People throughout organization conclude that things are worse.

1. Learn to appreciate the time delays inherent in profound change
2. Don't judge the success or failure of your efforts on early results. Developing new capabilities is a matter of practice; of new tools and methods over a course of years. Line leaders and executives have a great deal of leverage in managing expectations, leverage that they don't use. Mgrs are often their own worse enemy:promising better results than they need to thus reinforcing the expectoation of quick fixes. Miss the leverage in helping people understand the reality of gestation periods.
3. Build a partnership with executive leaders around assessing the assessment processes. As Ford's Quality Strategy Director Edward Baker notes -conventional measurements present a trap that can kill change in learning initiatives by requiring them to report their results that can hamstring innovation. This challenge involves changing or at least
4. Learn to recognize and appreciate progress as it occurs. One of the most important tasks of teams involved in change is that they are making progress. To help people guage their progress, establish interim short-term targets. These might be modest. Increased openness with key suppliers for ex/ but they will be meaningful b/c they will allow patience to follow with long term goals.
5. Make assessments and ability to assess a priority among advocates of change. Learning to assess the consequences of significant change initiative is a complex new territory often neglected by leaders of those changes. This implicitly forces those who may be negative toward those initiatives to bare responsibility for the measurement
6. Raise conversations early on about the criteria that determine success or failure. What is the appropriate amt. Of time before you see results. How will you know if you have won or lost. Much ground to be won by making these explicit grounds for conversation both among the pilot team and among leaders who oversee the efforts. Managing up the hierarchy this way can lay a frame for partnership in assessing as a project unfolds
7. Link business literacy to new thinking about the numbers. A business literacy or open book mgmt initiative can help break that habit by raising awareness of the many types of measurements to make and how they fit the goals of the pilot group and the whole organization.

Track 12:00:00 Thomas Johnson, Portland University Professor, co-author of Relevance Lost
Moving Upstream: Essay by an Accountant
Companies of the early 1900's were bleeding red. Gave away vital markets and technology, yet expected growth. Overhead costs had risen but were allocated so they could not be seen. Activity based Costing (ABC) distinguished costs which were more meaningful to improving production. Costs of Machine set up, quality inspections could be spelled out and could give producers more clarity about where costs were coming from-sources of their expenses. Relevance Lost.

When you organize your work around quality, you don't need to worry about costs. Cost savings came from the way companies organized work. Mistakes were easy to identify. Workers brain power. Drawn to work of Edward Deming. Toyotas working costs were a fraction of the US companies. Production systems and use of workers brain power made it easy to find errors and make improvements. Relevance Regained.

Toyota's decision making is not based on the accounting information but on the flow of work. When Toyota opened the Georgetown US Plant, about 300 Japanese spent one year there shadowing workers...Started looking for the underlying assumptions behind traditional measurement methods. I was drawn to epistemologist Gregory Bateson . Most problems stem from the difference between the way people work and the way nature works. Nature deals with the patterns that connect, not with quantification. People did not quantify their world. Aristotle's days deal with quanitfication as comparisons. Galileo Galilee gave us the concept of measurement. Motion could be measured against the scale. From there to Descarte, the Cartesian coordinates to Newton- separate parts... steam engines, high rises were some of the benefits. Practice of measurement over time leads to mechanistic thinking over time and a fragmented look at work. Quantifying instruments has become accustomed to conscious purposes. Nature has no ends. It builds continuously on the interplay of evolution and biology. In work by contrast, based on measurement, the ends justify any perversion of the means because information about the way in which things get done and about how people get work do not show up in the measurements. WE've got a gut sense that discovering and embodying nature's patterns is the essence of our being and our core work as human beings.

Means are the ends in their making. Given the right means, the ends take care of themselves. Marken Walleby went into shops to listen to the music. He could distinguish harmony from discord. You must be able to develop the capability to continually evaluate and improve your thinking about assessment. How do you know you have chosen the right elements to measure and that you have weighted them effectively. If the assumptions you put into the measurement are false, how do come to recognize the problem. Although nature does not quantify, nature does count. I do not recommend not quanitifying. But when measurement becomes a tool for fragmenting our understanding and assessing one process or one person as better than another based on some objective scale-then it is inherently unnatural.

How are we doing? This question is never answered in terms of quantities.

Toyota: Everyone knows by sight and sound if something is amiss. People inform one another not through numbers but through stories. There is standarization, but it is inherently flexible. People are always thinking about how to reshape the work. Since people are the measurement system, great attention is paid to treating the people very well and respecting them. Jobs are varied to keep people alert. There are ergonomics specialists to check stress levels. If someone reports feeling uncomfortable, that indicates that there is something wrong with the process. Measurement should flow with the natural flow of sensibility. As Gregory Bateson might have put it:
Are we undoing the way that mechanization makes us to think? Are we putting in a deeper appreciation of the way in which nature works? Quality, learning and performance are facets of the same reality!

* * *

Challenge of Believers and Non-believers
Pilot groups: as they proceed, more distance they are becoming from rest of workforce and often they
   are not aware of this. Increased frustration with bigger company.
Paradox of the challenge of believers and non-believers is that the bigger the changes going on in a pilot
   group, the more at risk they are of these dynamics.
Several things go on:

1. Exhibiting new behaviours that are threatening to others. Using jargon and a language others don't understand. Jargon threatens people. S.t's been identified as cults by the outside of organization.
2. Some outsiders are curious about what is going on. Those threatened on outside are asking accusatory questions. Cause the group to become defensive and s.t's develop a siege mentality. Becomes part of a vicious cycle. A death spiral-explains why so many innovators find themselves into a corner or out of the organizations. Paradoxically, the more successful they are, the more convinced they are they have the right answer and the more they plant the seed of defensiveness and attack. Humility is the key!! Without adequate humility, success will breed arrogance and this is what is potentially threatening and unattractive to others. Favorite philosophers: Eric Hoffer The True Believer: Roots of fanaticism: are certainty. Once we become certain, we become a zealot, we become closed.

1. Cultural flexibility within the organization
2. Reflective openness within the pilot team

* * *

Developing cultural flexibility is critical but takes a long time.
Reflective openness represents the capacity of people to continually question their own assumptions. Greatest safeguard against certainty and arrogance. To what extent, no matter how successful a team is, can they continually challenge their own thinking. To what extent can they hear from other outsiders as possible sources for their own learning. To what extent are they skeptical, particularly with their own set of ideas, about why things are the way they are.
Nurturing reflective openness also represents an important strategy for leaders who strive to balance passionate commitment to new innovations with respect for the mainstream culture and the ways of doing things.
Not easy to find leverage.

1. Become bi-cultural within your organization. Most effective local leaders live in two worlds-within their pilot innovative culture and within mainstream culture. Innovators need incubation. Value experience that resides in the mainstream culture.
   Must become adept at crossing the divides that exist between the two worlds. Operate on their bosses terms when they are dealing with him/her. Develop their awareness of when they are in which domain. I.e. Stealth Transformation: aim was to keep transformative efforts in his facility below the corporate radar level. When he reported up the hierarchy, he made every attempt to measure using the same results used across the organization. Goals aligned with organizations. Didn't talk about the innovative areas unless someone asked about it.
2. Having mentors is so valuable. Unintended misconceptions. Can help local leaders know when outsiders are asking helpful Q's. Encourage peers to learn from one another.
3. Respect peoples inhibitions about personal change. Many pilot group members also need to learn others people inhibitions about personal change. Tacit messages that "You must change to" are unwelcomed. Wonder if st is wrong with them.
   We're here now. We're not at the Lake Resort. SO, don't throw st others haven't experienced into their faces-they won't understand and may feel threatened. If you can tell your story of your teams efforts showing that you understand how it is seen from a variety of perspectives,then you have gone a long way to breaking through the challenge of believers and non-believers, while keeping your aspirations and purpose.
4. Deploy language consciously. Exclusion happens by using language others don't understand. One's jargon is hard to recognize-take them for granted. Unaware they are speaking in tongues. Developing awareness of one's language is a powerful strategy to becoming bi-cultural.
5. Ary Dehois, The Living Company: A strong sense of identity: knowledge of who they are as a company is based on common values. Provides a stable foundation that paradoxically makes the organization more flexible.

• Cannot create a new culture. Can immerse yourself in a culture, your own or someone elses until you understand it. Then you can propose new values or suggest doing new things and articulate new governing ideas. These actions will set the stage for new behaviour. If people who adopt those new behaviours think it helps them operate better, they may try it again. And after many more tries and 5-10 yrs of experience, the organizational culture may embody a different set of assumptions and a different way of looking at things than before. Even then, you haven't changed the culture. You've set the stage for the culture to evolve. Process may seem slow and uncertain but preferably to the Al Dunlaps wholesale strategy, which creates culture destruction amid an atmosphere of crisis and resentment and backlash. They get rid of top level of management and install a new set of rules. Still have not created a new culture, only destroyed an old one.
• A culture is a pattern of basic shared assumptions that have been learned by the members of their group. Stem from people's experience as they do their business over and over again. Cultures resist change as it is an attack against one's own values.
• Accurate diagnosis of your culture requires a look from 10-50 people , ideally chosen to represent a cross-section of your organization that relates to a problem at hand.
• Questions to help clarify your thinking as a preparatory inquiry before you move into working with a group. Be aware that your preconceptions, no matter how well informed may be wrong.
  
  1. What is your purpose? Why do you need to change your culture at all?
     Try to articulate the concrete business problems that have brought you to a cultural impasse. What will learning or openness get you? More closely you can articulate the forces compelling you to change, the more capable you will be at discerning the shared assumptions that no longer seem to fit reality. So why do you want to change?
  2. What are the visible artifacts of your culture? Observable signals of the organizations way of life. Simply list or name the artifacts. Next, try to establish the reason which underlies the artifacts. What has led the people of this organization to do things this way? Some ex's of espoused values: We value problem-solving rather than formal authority. We think a lot of communication is a good thing. Or We don't think bosses should have a lot more rights than subordinates.What are some of the espoused values of your organization.?
  3. Look for inconsistencies in the artifacts and the espoused values. Your challenge is to bring to the surface the attitudes that trigger the, "You can't be serious" knee-jerk reflexes. The following questions may be helpful as you proceed:
     1. How does your culture define truth? At DEC, truth was decided by argument. At C-Begaigi, qualifications were how truth was defined.
     2. What does your culture believe about human nature? About best way to organize time, place, authority, openness? Gender differences?
     3. Consider the bottom line issues that brought to this inquiry in the first place? What results and new ways of thinking do you want to create? Which characteristics of the culture, especially cultural assumptions are likely to hinder the change? Which characteristics are likely to help?
     4. In order to develop the results you want to develop, what attitudes have to shift? How much of a change of viewpoint would that require? From average employee? Manager? How would their self-imageshift? How would their concept of the place in the organization shift?

1. Formal Design involves the conscious intentional architecture of organizations: the design of guiding ideas and strategies, established structures, policies and rules.
2. Emergent Design is more natural. It represents the way people naturally reconstruct and recreate an organization as they live in it.

*Real challenge is to make formal and emergent designs harmonious which will help overcome the challenges of rethinking and redesign.
Material is more speculative than other challenges.

Overview by Peter Senge on the Challenge of Governance:

• Some degree of autonomy is required for innovation
• How much autonomy can a company tolerate? Dilemma of goverance is how to strike a balance between freedom and coherence.
• What is governance? To govern is to orient or to steer. Controlling is a second definition. Bill O'Brien says the fundamental problem with most corporations in the US is that they are governed by inadequate ideas.
• What would it mean to begin running an organization by developing governing principles that really matter to us?
• VISA international is largest corporation in the world-Constitution is based on a set of governing rules. Took 2 years to hammer out a statement of purpose and a set of guiding values. Their purpose is to be the premiere system for the exchange of value.
  Also governed by a set of values.
• Power is constantly in the hands of a small group of individuals. Essence of a true democratic system is that you reverse it. Power lies in the ideas.
• Pilot group as they self-determine might expect to have all kinds of powers. However the larger organization may not support the new found desire and expectation for autonomy of the pilot group and may come down with restrictions. Conflict results. Both assume the other doesn't understand. Result is less motivation and enthusiasm. Pilot group looks less attractive to its members, esp. to potentially new members.
• Underlying limit is the organizations tolerance for independent self-governance.
  How flexible are self-governance systems in allowing more decision making authority to migrate to capable local units? How capable is the organizations management in dealing with creative, self-confident local units. How able and willing is the organization in assessing the capability of the pilot groups ability to self-manage effectively?
• Another problem of governance can occur if and when a pilot group expands the scope of its initiatives. May find itself at odds with other groups or senior mgmt. Senior mgmt. May not be ready for pilot groups to expand the scope of their initiative across internal boundaries especially if they have seen other pilot groups who achieved success within their group but cause problems for other groups.
• Consequences: little lasting change occurs if:only limited local innovative teams succeed in developing new capabilities. Little lasting change occurs if only courageous executives implement more flexible goverance mechanisms. Either both must occur or the status quo is likely to prevail. Local and executive strategies are both necessary to bring change

Strategies for Pilot Group Members:

• Learn to deal with actual and potential conflicts early on can be vital for local line leaders
• Pay attention to your boundaries and be strategic when crossing them. Will need sponsors with authority to carry your plan to fruition.
• Don't short change your vision but recognize that part of the task of expanding your vision is finding links into the existing governancestructure which will mean expanding the scope of your influence rung by rung as you build credibility and capability.
• Invite the people from the other group to a meeting or a meal and lay open the reasons for your project to them. We have this project in mind and they overlap with your area in these ways. Then ask them, what is your reaction? What can and can't we do from your perspective? Articulate a clear and compelling business case with regards to results. Work from outside in: meeting outside market demands and competitive threats.
• Make executive leaders priorities, part of your teams creative abilities.Develop the ability to understand and internalize the pressures that senior executives feel and the opportunities they perceive.
• Avoid the tendency to attribute resistance to anybody's personalty. Look for systemic causes instead. This may mean interviewing executive leaders about what keeps them awake at night, particularly where the problems occur with the boundaries or connection points in the current goverance structure.
• Recognize the leaders concerns about balancing immediate business quarterly perforamance with long term growth.
• Experiment with cross-functioning, cross-boundaries teams if you can get them sponsored by the hierarchy. Can be a good mechanism to demonstrate the value of new forms of governance.
• Avoid of creating any permanent matrix or other structure that could scare people.
• Demonstrate results first and later negotiate a transition from the temporary cross-funcitional group to something more permanent.
• Are two power structures within the organization: the top down formal authority of top management and the bottom up informal authority of pilot groups where new projects and processes were being invented. Neither form of authority can be overcome through brute opposition and neither can be neglected. The ongoing challenge is to get the two structures working together.

Strategies for Executives when dealing with the challenge of redesign:

• Begin at the beginning with governing ideas. We hold these truths to be self-evident
• A set of governing ideas that do not evoke passion, that do not inspire imagination and excitement can never be the basis for an organization worthy of peoples commitment. Two key governing ideas we have seen articulated in many settings are Localness (encourages local individual decision making) and merit (criteria for good decision making is based on what benefits the company as a whole). Tension created by this juxtaposition requires leaders at all levels to wrestle with tradeoffs, rather than leaving top management to align global and local interests.

Track 11:03:21
Deploy new rules and regulations judiciously. Rules change behavior says Donella Meadows, Systems writer. Power over rules is real power. If you want to understand the deepest malfunctions of systems, pay attention to the rules and who has power over them. Those with power over the rules have special responsibilities. Yet executive power to reorganize and change governance systems is often exercised with little attention to the many effects on many people. People who complain that all the reorganizing within some organizations is all a power game, they may be correct. Never underestimate the power of small changes in complex situations, if they are the right changes.

• Everyone involved must be prepared for an ardous journey and don't embark alone.
  Real change in governance structures is connected to capacity building and this takes time. NO less than a year and often much longer. Coming to real consensus on purpose, principles and structures is the hardest work you will ever do. Pointless to start out without some staunch partners. Be prepared to receive and feel an incredible amount of emotional heat. Shifting to a much less authoritarian governance structure can involve a great internal shift as occurs when giving up control.
  Many in positions of hierarchical authority find that they must confront complex reactions from within the organization. Some mgrs will resist if they will lose any control. No substitute for patience and perseverance along with compassion for those who seem to not be on board.
• Jack Stack:The Great Game of Business and the CEO of the Springfield Manufacturing Plant. Essay: The Community of Companies
• 1981, a group of Harvesters managers enginnered a leveraged buyout of a troubled truck engine remanufacturing plant in Springfield, Missouri. Called new company The Springfield Manufacturing Plant: Missouri was a great place to live. No way we could payback our debt load unless everyone in the company understood the fundamentals in the business and had a stake in our financial success. Thus we greated the Great Game of Business. Second, we put every employee into an employee stock ownership plan, ESOP. Had no idea what we were doing. At first we wanted to provide every staff with stock. S.b. told us no bank will loan money to 300 people. So, we said, let's go public. But would have cost $250,000 in filing fees and expenses. ESOP was last opportunity. By 1988, we were up to $40,000,000 in sales after diversifying and buying an auto parts business to help carry us through recessions when people keep their cars but need parts. Company was privately owned with 15% of the shares owned by the staff and the rest managed by the managers. Value of our shares were high, morale was great...Steve Shadwick, a mgr was retiring one day –where's the money going to come from selling back all our stocks? We ran the numbers. Turned out we'd have to sell the company to be able to pay back all our stock options. Did we want to sell or to turn the company over to our employees, our kids... Ultimately decided we didn't want to sell. Why don't we begin to build mini-companies with limited liability corporations or parternships.
• A group suggested getting into a new line of business-rebuilding and reselling the recooling systems and engines we'd been discarding. WE invited them to create a business out of it. We gave them 22% of the new company in return for their fulltime sweat equity and Springfield kept a majority interest of 78%. Explicitly stated we might sell our shares at any time. Invested 67,000 plus our expertise. The new company, Engines Plus started with about $286,000. Grew to be worth about $2,000,000.
• Accidentally,we had worked out a perennial problem of industrial society. There is not room in the hierarchy for all the people who have worked long enough to be chiefs. In effect, we'd become our own venture capitalists.We wanted to build up companies with equity ownership. The financial aspect of ownership wasn't as important as the freedom to make their own decisions. Did excellent jobs.
  
  

* * *

The Challenge of Diffusion: We keep on reinventing the wheel

• Symptoms are that there are no systems: nobody is worried about it:
  Sherlock Holmes story: Sherlock turns to Watson: then there was the curious incident of the barking dog. And Watson says, "What barking dog?" There was no barking dog. I didn't hear anything. Nobody heard anything. And Sherlock responds, "And that was what was curious!"
• I don't know what we need to do in this organization to learn from each other. Yet we keep on reinventing the wheel.
• Research on Communities of Practice- a phrase that has come to mean the informal networks in organizations.
• No set of rules could be effective for a human community to produce outcomes it seeks to produce. Cannot reduce knowledge to rules.
• New practices always diffuse through informal networks, not through a list of rules. Knowledge diffuses through people helping each other solve in solving their issues, through people coming together and trying to produce something. Diffuses through the Communities of Practice.
• Internal community builders are a critical type of leader in organizations, precisely because of the challenge of diffusion. They are the masters of the nurturing and continuing enhancing communities of practice.

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